Group – 1

Project on Micro-finance and Dairy

Submitted to:

Dr. Nilanjan Sengupta

Submitted on:

23rd May 2019

Submitted by:
Gongalla Aishwarya

Lara Vazquez Cao

Natalia del Rio Collado

Joyce Guillen Balderas

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Table of Contents
Executive Summary...............................................................................................................................2
Acknowledgement.................................................................................................................................3
Introduction...........................................................................................................................................4
Review of Literature..............................................................................................................................5
Interview of the beneficiaries:.......................................................................................................7
Secondary Data.....................................................................................................................................8
ACTIVITIES OF SKDRDP..........................................................................................................................8
FINANCIAL STATUS OF SKDRDP.............................................................................................................9
MANPOWER STRENGTH OF SKDRDP.....................................................................................................9
Learnings from the Project..................................................................................................................14
Individual Learnings- EAE Business School.......................................................................................14
References...........................................................................................................................................16

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EXECUTIVE SUMMARY
As a part of International Student exchange program between EAE Business School, Spain
and SDMIMD, India. We were put into groups of two SDMIMD students and three EAE
University student to work on a mini joint project on social responsibility. Our group was
assigned with the project on Micro-finance programme and Dairy of Shri Kshetra
Dharmasthala Rural Development Project, popularly known as SKDRDP

This report is mainly divided into two parts. First part consists of Introduction, literature
review, Primary and secondary data collect and analysis. In introduction SKDRDP and its
history is explained. How SKDRDP’s work contribute in the development of the society.
SKDRDP has many programs and activities which is helping people especially women in
rural areas to develop themselves and making them self-reliant. The report contains how the
SKDRDP is helping financially as well as non-financially for the betterment of the society.

‘Shri Kshethra Dharmasthala Rural Development Project’ (SKDRDP) is a charitable

development project aimed at the rural areas of India, where issues such as poverty, access to
education and lack of women empowerment can be high. The project has many programs
however the focus of this report will be on the Micro-financing and Dairy aspect of the
Organization.

The financial opportunities and needs for those living in rural India are a lot different to that
of a standard loan applicant. Firstly, those in the rural areas often live in poverty and thus
lack any collateral to gain a loan from and would be rejected by a typical bank. They may
also lack education about how to manage finances correctly, as although now improving
historically access to full education in rural areas was very limited. On top many don’t want
to access physical banking services or online banking opportunities.

To help solve these issues, SKDRDP have implemented the strategy of ‘micro-financing’ into
these rural areas with small loans. The role of SKDRDP is to provide a link between the
banks and the rural people and act as a grantor for the loans, with now 8,508 crores
outstanding with them as the grantor. However, this is not the only role they play and the
reason for their success. SKDRDP is focused on providing self-help to empower the rural
people and supports them with the loan in several ways to guarantee success.

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ACKNOWLEDGEMENT
We wish to acknowledge Dr. Nilanjan Sengupta Faculty and chairman-CDS at SDMIMD,
Mysore, and Mr. Sridhar C V for their guidance and support they extended throughout the
duration of this project. The acknowledgement would be incomplete without extending our
gratitude to the Director of SDM-IMD, Dr. N.R. Parasuraman who has been the driving force
behind the Socially Relevant Project and who enlightened us about the importance of doing
this project at Shri Kshetra Dharmasthala Rural Development Project. We would also like
acknowledge the principal and staff of SKDRDP, Mysore centre and Prof. Alexia faculty at
EAE Business School, Spain for her support.

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INTRODUCTION
Latest statistics expect that over the next 10 – 15 years India will be one of the top three
economic powers. India has developed as the fastest rising major economy in the world. It is
also foreseen that by 2025 India will be the third largest consumer economy.1

However, if India’s population is considered, nearly 70% live in rural areas where the people
don’t have access to education.2 They also don’t have the chance to find work. This is where
non-profit organizations step in. They try to help and raise the rural people to avoid that the
gap between the rural and rich people, which gets bigger with the economic growth.

Already in 1982 Dr. D. Veerendra Heggade promoted “Shri Kshethra Dharmasthala Rural
Development Project” (SKDRDP) project. Since then he is the chairman of the program. All
features of enriching the rural life is covered in SKDRDP. They focus on the empowerment
of people by organizing self-help groups on the lines of joint liability groups and provide
infrastructure and finance through micro credit for the rural people. Their main objective is to
develop and educate people in rural areas. Furthermore, they give support and help by
offering computer or sewing classes or built sanitary and drinking water facilities to the rural
people and animal husbandry and many more. Nowadays they have 451,548 active self-
helping groups with total members of 3,985,039 members.3

For poverty alleviation SKDRDP provides microfinance activities. In 1996 they initiated a
micro-financing scheme known as Pragathinidhi. The provided loans help the members to
promote their livelihoods or develop infrastructure. SKDRDP itself does not give any loans.
They function as a bank linkage between the banks and the members. Furthermore, they have
implemented self-help groups in which the women have to participate in order to receive a
loan. With these groups the project helps the rural people to inculcate a habit of saving and a
responsible use of the money.4

India ranks first among the world’s milk producing Nations since 1998 and has the largest
bovine population in the World. Dairying has become an important secondary source of
income for millions of rural families and has assumed the most important role in providing
employment and income generating opportunities particularly for marginal and women
farmers. Animal husbandry is an agricultural practise of breeding and raising livestock. Many
1
India brand equity foundation
India.
2
India.
3
SKDRDP 2014.
4
SKDRDP 2014.

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farmers are of the opinion that animal husbandry is not necessarily profitable as farmers look
for direct benefit such as milk and meat and ignore indirect benefits like manure and gobar
gas. SKDRDP conducts regular awareness camps and demonstrations for farmers across
villages. The organisation also educates farmers on the full range of products that can be done
from animal husbandry. It also provides training on various activities involved in in dairy
farming.

( http://skdrdpindia.org/programmes/agriculture/#animal )

The trust and the entire associate Institutions benefit from the visionary leadership of
Chairman, Padma Vibhushan Dr. D. Veerendra Heggade, is the 21 st Dharmadhikari (Chief
Administrator) of SKDMT. The S.D.M. Education Society (Education)

REVIEW OF LITERATURE
The following will describe about the primary and secondary information related to how they
get loans what is the limit up to which they can get loans at what rate of interest and for what
objects various women took loan. First day we went to the organization SKDRDP and got a
chance to interview on of its functionaries Mr. Vishwas V Shetti BC Project Officer, who is
also an alumina of our college. He gave us insights about how they can bridge the gap
between the bank and the rural people, and they also act as a guaranteed party on behalf of
rural people. They told about the 99% loan recovery rate is estimated and how they are
helping people building their dreams. Second day we went on a field visit to a near by village
where the SHG women told their stories that how they got loan and they were able to come
up with their business of tailoring, diary or boutique or parlour. Third day we went to a model
village where we witnessed animal husbandry and renewable energy utilities.

As a part of secondary information, we got to have a look on the POS machines and the
accounting/balancing books maintained by the organization in which the record of loans,
instalments paid as well as due and the purpose for which the loan is being taken is recorded
and kept as a proof record.

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During the visit to the Head office of SKDRDP in Mysore, the work of SKDRDP and its
activities was shared with students in the form of lectures and presentations by SKDRDP
staff. The structure of a Self-Help Group (SHG) is designed in this manner. There is a person
in charge called as Principal who keeps track of all the SHG in Mysore, under the principal
there are 12 circles, which is managed by a field supervisor. Each circle has 9 sub circles.
Each sub circle has 5 to 10 SHG’s.

The amount of loan that can be borrowed is based on how old the SHG is; a 3-year-old SHG
can borrow up to 4 lakhs; 5-year-old SHG up to 6 lakhs. Members get into dairy farming
after borrowing loans from the SHG. The advantage of borrowing loans from an SHG is the
low interest rate. The interest rate is 15% per annum in a SHG without any paperwork,
whereas if borrowed from money lenders it is 10% per month and if borrowed from banks it
involves lots of paperwork.

Many members do not do dairy farming as a sole business but do it as supplementary

business along with their various businesses. This way their sources of income is diversified.
SKDRDP also trains the farmers in Dairy farming activities free of cost. This training
involves how to treat cows, what is the first aid, how to maintain its health, medicines to be
given, how to maintain a shelter or shed, how to select the breed of a cow. After purchasing
the cow where to sell the milk, what are the value-added products that can be created by milk
such as cheese, chocolates etc. Another important aspect is the usefulness of the by-products,
for example that the cow dung can be used for alternative energy production or as a fertilizer
for fields.

( http://skdrdpindia.org/programmes )

Interview of the beneficiaries:

Name of the beneficiary – Sachin: He takes care of the dairy farm which was passed down
from generation to generation. After coming back from college every day, he works on the
dairy farm. The name of the SHG his mother belongs to is called Chamundeshwari. He is part
of another group called Jente Bhathyatha Sangha. After getting trained from SKDRDP, if
there are any health issues with the cow, he can give first aid and the medicine himself
instead of going to the vet which saves him money. He also knows what healthy food that has
to be fed to the cows. They now own four cows and two calves as well as modern equipment
for the efficient production of milk such as an automatic milking machine.

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He has borrowed a loan from the government to buy cows, so the cows have an ear tag which
shows that the cow is registered under the insurance scheme of the government, in case the
cow dies due to health issues the government will pay compensation money. He also told us
that the cows they have are cross breed cows and not if a single breed like jersey.

(Photo courtesy – Clicked by us during the field visit to Halekesare)

SECONDARY DATA
To achieve the upliftment of poor marginalised, under privileged, impoverished and
downtrodden SKDRP has come up with three main things for individuals They are Loans,
Insurance & Pensions which ushered Financial Stability.

ACTIVITIES OF SKDRDP
 SKDRDP as a BC and BF of the Banks

• SKDRDP took an active part in implementing the Financial Inclusion plan of the
Government of India by working as Banking Correspondent and Business
Facilitator (BC and BF) in several districts of Karnataka.

• Under the programme SKDRDP is promoting Self Help groups enabling the poor
people in the remote villages to access banking facilities at their door steps.
 Promotion of Self-Help Groups

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  A total number of 38,800 SHGs were promoted during the year 2015. As on 31st
March 2015 a total of 3,06,940 SHGs were active. There is a 14% growth in the
number of SHGs promoted during the year. The total number of members
associated with these SHGs was 31.86 lakhs
 Financial performance of SHGs

• A total of Rs. 355.00 crores were saved by the SHGs during the year taking the
total savings since inception to Rs.779.00 crores. During the period, the groups
have availed a loan of Rs. 3,479.00 crores from various banks to meet their
financial needs.
 Agricultural Development  Self-employment
• Around 1,99,600 members have taken up self-employment in various fields like
transport, business, service etc.
 Renewable Energy Program  Sanitation and Hygiene
• Programs are implemented to create awareness among the people on keeping
their villages clean, disposing the wastes and civic sense in general.
 Housing

• The public is financially assisted under micro finance for house repair, new
construction, extension and renovation, electrification of the houses etc. 
Sujnana Nidhi Scholarship Scheme
• Providing with a monthly scholarship ranging from Rs. 400 to 1,000/- per month
for taking up higher technical education.  Destitute Pension
• Providing pensions ranging from Rs. 500/- to 1,000/- per month for families who
are in dire straits to enable them to buy food and medicines.
 Sampoorna Suraksha Health Insurance Program  Shudda Ganga Project
• This is a unique project where the drinking water in remote rural villages are
purified by removing the toxic fluoride content and hardness.

FINANCIAL STATUS OF SKDRDP

The total outstanding of loans of SKDRDP is ₹8,356 crores. A total of Rs. 355.00 crores
were saved by the SHGs during the year taking the total savings since inception to Rs.779.00
crores. During the period, the groups have availed a loan of Rs. 3,479.00 crores from various
banks to meet their financial needs.

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MANPOWER STRENGTH OF SKDRDP

Constraints: They collect money from the groups (members) on weekly basis. If people do
not have money, they have no chance they must pay their weekly instalment, but in some
cases the other members of groups lend on behalf of that person on a mutual trust to repay
back. Geographically operations are only in Karnataka

SHG Model

A self-help group (SHG) is a village-based financial intermediary committee usually

composed of 10–20 local women or men. A mixed group is generally not preferred. Most
self-help groups are in India, though SHGs can be found in other countries, especially in
South Asia and Southeast Asia.

They are formed by usually rural citizens on a co-operative basis with self-help and mutual
help. They come collectively to promote the interest of all its members.

Unlike banks they cannot take deposits. They merely help in lending.

Structure

A SHG may be registered or unregistered. It typically comprises a group of micro

entrepreneurs having homogeneous social and economic backgrounds, all voluntarily coming
together to save regular small sums of money, mutually agreeing to contribute to a common
fund and to meet their emergency needs based on mutual help. They pool their resources to
become financially stable, taking loans from the money collected by that group and by
making everybody in that group self-employed. The group members use collective wisdom
and peer pressure to ensure proper end-use of credit and timely repayment. This system
eliminates the need for collateral and is closely related to that of solidarity lending, widely
used by micro finance institutions. Usually there are 2 types of SHGs. One for the farmers
which would go on to consist around 20% of the total SHGs and the other for the women

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which would consist approximately 80%. Totally 3,73,000 SHGs are managed and the total
members would exceed anywhere above 375000 in number totally.

Microfinance institutions

They give away loans to the poor section of the society usually to SHGs. They see a low rate
of default and almost 99% of the loans are paid back due to high peer pressure. The loans are
taken from banks and are then provided to the groups at a higher interest rate. This is done
merely to cover for the higher risks that they undertake.

Some prominent microfinance institutions in the country are SKDRDP, Ujjivan Financial
institution, SKS etc.

Microfinance activities of SKDRDP

SKDRDP in order to develop the rural masses provides 3 main financial instruments.

 Loans

 Insurance

 Pensions

These microfinance activities provide stable ground for poverty alleviation. The loans are
called as Pragathi Nidhi and come in different varieties and purposes. SKDRDP also brings
banking closer to people with its BC Suvidha Scheme. The BC Suvidha also mobilises
savings causing people to inculcate habit of saving. The loans and Banking Correspondence
lay the foundation of stronger growth. To make the families stronger from the uncertainties of
life, SKDRDP provides Insurance and Pensions. SKDRDP acts as an aggregator/ collection
agency for National Pension Scheme by central government. Being a very important program
NPS works as division of SKDRDP. There are 2 Insurance programs of SKDRDP. Jeevan
Madhura Life Insurance and Sampoorna Suraksha Health Insurance. The Jeevan Madhura is
sponsored by LIC and SKDRDP acts as Insurance Broker. Sampoorna Suraksha is a section
25 company and Subsidiary of SKDRDP. Sampoorna Suraksha provides health insurance.

Steps for taking Loans:

1. For taking loan he/she should be member of any SHG or Pragati Bandhu Group.

2. All the members should accept the region for which the individual is taking loan,
individual can keep their proposal in front of the other members in weekly meeting.

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3. Then they must fill a form and within 15-30 days their request will be passed.

The conditions for taking the loans are same for both SHG and Pragati Bandhu Group. The
SHG and Pragati Bandhu are given ratings. The loans are sanctioned to them according to age
and rating of the group.

WHAT CAUSES THE SUCCESS OF SHG?

In probing for an answer, it becomes necessary to undermine the factors that would go on to
enhance the effectiveness of SHGs as one major factor around which everything revolves can
be attributed to the cohesiveness of the members of the group. If at all there is strong bonding
only then can such a programme be successful.

It is based on the idea of collectivism where emphasis is laid on group and team effort rather
than having individual ties. Every member feels that he is responsible not to forget
accountable, to all the other members in the group.

Hence it is such a cooperative attitude of ‘one for all and all for one’ that contributes and
brings about the necessary success. Had such an activity been built around individual gain,
then everyone would carry on their activities in isolation not giving any hoots and turning a
blind eye to the needs of its members.

It is only such a positive spirit of team play that brings about all the success. It is the very
same attitude that induces peer pressure having forced the member to be totally accountable
and responsible for the actions that it takes that gives him the necessary encouragement to
carry on a timely payment. When such a group pressure exists, it is but natural for the person
to own the responsibility of his undertaking, carry it with integrity and utmost prudence and
then sculpt it into a successful one.

Only in an environment of where there is merely mutual trust on when another would such a
success be possible. It is because of the atmosphere of trust that is created, makes the
members give in their best, understanding that each other would carry out their responsibility
diligently with utmost care.

Dairy Activities

Animal Husbandry is an agricultural practice of breeding and raising livestock. Many farmers
in India are of the opinion that animal husbandry is not profitable as farmers look for direct
benefits such as milk and meat and ignore indirect benefits like manure and gobar gas.

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SKDRDP conducts regular awareness camps and demonstrations on animal husbandry to
educate farmers on the full range of products that animal husbandry can be used for.
SKDRDP constructs low cost sheds, compost and vermi units and gobar gas units. The
organisation also introduces modern technologies and exotic breeds and high yielding fodder
grass varieties such as Azola in order to increase the income of farmers. SKDRDP has also
expanded its services to become a corporate agent of National Insurance Company and has
formally popularized animal insurance for cattle.

To bring in structure into the dairy farming industry and aid with setting up dairy farms, the
Department of Animal Husbandry, Dairying and Fisheries launched the “Venture Capital
Scheme for Dairy and Poultry” in 2005. The scheme provided for interest free loans for
setting up dairy units. As of 18th May 2019, nearly 16,000 dairy farms have enjoyed interest
free loans up to Rs.146.91 crores in India. Following the success of the Venture Capital
Scheme for Dairy and Poultry, the Government in 2010 decided to launch the Dairy
Entrepreneurship Development Scheme through NABARD as well.

(https://www.nabard.org/content.aspx?id=591 )

(Photo courtesy – Clicked by us during the field visit to Halekesare)

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The following is some of the assistance provided under the NABARD subsidy for Dairy
Farming scheme:

Type: Establishment of small dairy units with crossbred cows/ indigenous descript milch
cows like Sahiwal, Red Sindhi, Gir, Rathi etc. / graded buffaloes upto 10 animals.

Investment: Rs 5.00 lakh for 10 animal unit – minimum unit size is 2 animals with an
upper limit of 10 animals.

Subsidy: 25% of the outlay (33 .33 % for SC / ST farmers) as back ended capital
subsidy subject to a ceiling of Rs 1.25 lakh for a unit of 10 animals (Rs 1.67 lakh for
SC/ST farmers,). Maximum permissible capital subsidy is Rs 25000 (Rs 33,300 for
SC/ST farmers) for a 2-animal unit.

Type: Rearing of heifer calves – cross bred, indigenous descript milch breeds of cattle and of
graded buffaloes – upto 20 calves.

Investment: Rs 4.80 lakh for 20 calf unit – minimum unit size of 5 calves with an
upper limit of 20 calves.

Subsidy: 25% of the outlay (33.33 % for SC / ST farmers) as back ended capital
subsidy subject to a ceiling of Rs 1.20 lakh for a unit of 20 calves (Rs 1.60 lakh for
SC/ST farmers). Maximum permissible capital subsidy is Rs 30,000 (Rs 40,000 for
SC/ST farmers) for a 5-calf unit. Subsidy shall be restricted on a prorata basis
depending on the unit size.

Type: Purchase of milking machines /milk testers /bulk milk cooling units (upto 2000 lit
capacity).

Investment: Rs 18 lakh.

Subsidy: 25% of the outlay (33.33 % for SC / ST farmers) as back ended capital
subsidy subject to a ceiling of Rs 4.50 lakh (Rs 6.00 lakh for SC/ST farmers).

Type: Purchase of dairy processing equipment for manufacture of indigenous milk products.

Investment: Rs 12 lakh.

Subsidy: 25% of the outlay (33.33 % for SC / ST farmers) as back ended capital
subsidy subject to a ceiling of Rs 3.00 lakh (Rs 4.00 lakh for SC/ST farmers).

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Government of India is making efforts for strengthening infrastructure for production of
quality milk, procurement, processing and marketing of milk and milk products through
following Dairy Development Schemes:

 National Programme for Dairy Development (NPDD)

 National Dairy Plan (Phase-I)
 Dairy Entrepreneurship Development Scheme (DEDS)
 Support to Dairy Cooperatives
 Dairy Processing and Infrastructure Development Fund (DIDF)

( https://www.indiafilings.com/learn/how-to-get-nabard-subsidy-for-dairy-farming )

LEARNINGS FROM THE PROJECT

Individual Learnings- EAE Business School

Individual Learning-Gongalla Aishwarya, SDMIMD-Mysore

First and foremost, I would like to thank SDMIMD and SKDRDP for providing me to be the
part of joint mini project with EAE Business School Students and to have a very enriching
experience at SKDRDP. I would also like to thank our faculty guide Prof C.V. Sridhar and
Dr. Nilanjan Sengupta for the continuous support throughout the project.

Rapid urbanisation, industrialisation has brought in a lot of changes in the lifestyle of the
people and it has led to economic well-being of people. But at the same time, the one who is
uninformed about the way the world is moving towards is always left behind. The
‘development’ of such people is not happening. It is in this context the work must be done to
make people aware of things which are happening and work to improve their quality of life to
reach the state of well-being. This is what exactly ‘SKDRDP’ is doing from its various
activities. Microfinance and Dairy activities are two such initiatives. Banks trust people who
borrow large amount of money for business but when people ask for short amount primarily
from not-so-well economic background, the question of credit history, capability to repay the
loans comes into picture and in most cases these people are not able to get their loans. The
concept of ‘Microfinance’ solves this problem. Through this project it was possible for me to
know how systematically SKDRDP manages this microfinance activities and achieve a very
good credit history.

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In our project that is dairy activities, dairy activities are usually not done alone but it is done
alongside with other business or ventures and is used as a supplementary source of income.
Milk is sold locally or to KMF. Along with dairy other animals like sheep’s, goats are breed
and sold for meat and wool. Even poultry is done, and the eggs and meat are sold. SKDRDP
has provided loans and training for dairy activities such as buying of cows, building shelters,
buying milking machines and because of this program of SKDRDP the people are now able
to earn income, sustain themselves and come out of poverty.

After this joint project I have lots of confidence that organizations like SKDRDP can have a
major impact on the society and the country as well because the organization cater to the poor
and underprivileged. This also taught me that Social Initiatives can also be a huge success
and SKDRDP sets a benchmark for other institutions in this aspect.

REFERENCES
http://skdrdpindia.org/

http://skdrdpindia.org/about-skdrdp/our-subsidiaries/

http://skdrdpindia.org/about-skdrdp/

http://skdrdpindia.org/programmes/agriculture/#animal
http://dahd.nic.in/about-us/divisions/cattle-and-dairy-development
http://skdrdpindia.org/programmes
https://www.nabard.org/content.aspx?id=59
https://www.indiafilings.com/learn/how-to-get-nabard-subsidy-for-dairy-farming

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