Community at the Core: A Study of Sarvodaya Nano Finance Limited

This paper describes the evolution of Sarvodaya Nano Finance Limited (SNFL), a part of the BASIX group of companies, Hyderabad, and its growth since it was taken over by the community trusts promoted by Association of Sarva Seva Farms (ASSEFA), which is registered as a society under the Tamilnadu Societies' Registration Act since 1979.

The paper explains:

• The background of SNFL;
• The rationale behind its formation as an entity.

It further discusses the formation of Mutual Benefit Trusts (MBTs) as block level entities, used for financial intermediation with ASSEFA promoted self help groups (SHGs):

• The funds of ASSEFA were scattered across a large number of SHGs, and it was not possible to pool in and leverage these funds to get external institutional credit.
• The new entity, designed in close consultation with BASIX, ensured that the collective ownership rested with the communities, and external funds could be channelized to provide impetus to the SHG movement.

The paper analyzes MBTs and SNFL with regards to the following:

• Governance and management;
• Pros and cons of having a community ownership based structure;
• Structuring of community based funds into individual stakes for long term institutional sustainability.

Finally, the paper:

• Discusses the scaling-up, replicability and modifications in the current structure of the ASSEFA-SNFL model.
• Suggests that there may be a case for certain modifications, such as providing stakes to financial institutions in SNFL, to facilitate scaling up of operations.
• Proposes a case for including not-for-profit companies at the intermediary level to provide stability to the organizational structure.