Micro finance is one of the most important antipoverty tools which is considered to be a significant input to increase productivity of both farm and off- farm enterprises. Once the communities are motivated to look for new avenues to expend their earnings and appropriate training is imparted for that, an easy access to credit can have a significant impact on increasing the household income.

A large number of formal and informal institutions in the country render financial assistance and services to individuals and organizations. But the poor farmers, small traders and village artisans cannot make use of these sources because of cumbersome procedures. A poor farmer has to pay a very high price to avail the credit from informal sources and thus the whole investment cycle turn out to be unfeasible. 

The identification of a client by any financial institution is subjected to the availability of collateral. Most of the rural clients specifically women, do not have access to formal credit sources due to the complex system of completing the loan documents and offering collateral. There is, therefore, a dare need to start a credit program to benefit the maximum number of poor communities without any complicated collateral system.  

A hilly terrain of the operational area of AJK-Community Development Program (AJKCDP) makes it more difficult for rural communities to approach the urban-based formal credit sources, which necessitates the availability of credit at people’s doorstep. Different participatory development projects are providing the credit facility to rural people at their doorsteps on quite easy terms and conditions. However, AJKCDP is following a unique credit approach by encouraging communities to use their own savings for providing credit to other needy community members.

The project started its efforts in this direction in June 2007, which needs to be further expanded through its current implementation process and involvement of clusters organizations to benefit the maximum community members through creation of access to finance and other business development support. It has been observed that after establishment of Community Credit Pool within the COs, they feel more strengthened and organized to facilitate their members from the CCP. The CCP is a binding force to remain organized for a longer time.

Objective

• Involving a cross-section of community member in saving and credit delivery system to increase their access in financial products for income generation purposes.

(Focus on mobilization of internal & external financial resources (saving & credit)

• Developing community member’s ability to interact within the CO, and therefore, articulate their financial requirement and address their financial problems.

(Financial management at COs/cluster level)

• Developing financial literate beneficiaries with the capacity to manage efficient enterprises and to eventually access financial resources through formal financial institutions.

Achievements 

Matching funds disbursement to COs

During the period under review one hundred and five (105) COs received matching funds to establish their Community Credit Pool (CCP). An amount of Rs.10.700 million has been disbursed in 43 male, 29 female 33 mixed COs. Table I shows the detail of matching funds disbursement to the COs during the period while table II reflects the cumulative matching funds disbursement as of December, 2008.

Table I. Matching Funds Disbursement (June- December, 2008) (Rs. in million)

S. #	Description	Male	Female	Mixed	Total
1	No. of COs	43	29	33	105
2	Community Share	2.205	1.447	1.698	5.350
3	Project Share	4.410	2.894	3.396	10.700
Total CCP		6.615	4.341	5.094	16.050

Table-II: Cumulative Matching Funds disbursement/ CCP as of December, 2008
(Rs. in Million)

S. #	Description	Male	Female	Mixed	Total
1	No. of COs	120	114	78	312
2	Community Share	4.925	4.591	3.743	13.759
3	Project Share	10.850	9.182	7.486	27.518
Total CCP		15.775	13.773	11.229	41.277

Credit Disbursement within the Cos

To benefit the CO members from the CCP an amount of Rs.19.605 million has been disbursed in 931 members during the last six months. Only 98 (54 male & 44 female) members utilized Rs.0.882 million for purchase of Agri-inputs, where as 386 (230 male and 156 females) made investment of Rs.7.764 million for establishment of different micro enterprises. Whereas 445 (215 male and 232 female) members utilized Rs. 10.959 million for livestock development.   The COs of District Kotli remained on the top with the disbursement of Rs. 6.667 million to 298 (123 male & 175 female) members during this period followed by COs of District Muzaffarabad by disbursing 4.331 million to 249 (180 male & 69 female) members respectively.

Table III shows the details about credit disbursement in all districts and its utilization in different sectors

Credit disbursement during the period (July – December 2008)
Table III.

Districts	Description	No. of COs	Agri Inputs		Enterprise		Livestock		Total
			Loanees	Amount	Loanees	Amount	Loanees	Amount	Loanees	Amount
Muzaffarabad	Male	07	14	0.081	53	1.022	113	1.618	180	2.721
	Female	11	10	0.080	30	0.605	29	0.925	69	1.610
Bagh	Male	-	-	-	-	-	-	-	-	-
	Female	1	3	0.020	8	0.52	8	0.073	19	0.145
Poonch	Male	6	15	0.110	28	0.052	9	0.167	52	0.870
	Female	16	17	0.136	47	1.081	52	1.035	116	2.252
Sudhnoti	Male	3	-	-	8	0.140	11	0.160	19	0.300
	Female	4	3	0.030	11	0.235	23	0.475	37	0.740
Kotli	Male	16	13	o.120	76	1.854	34	0.868	123	2.842
	Female	32	10	0.075	59	0.826	106	2.924	175	3.825
Mzirpur	Male	10	-	-	39	0.878	26	0.608	65	1.486
	Female	2	1	0.010	-	-	11	1.622	12	1.632
Bhimber	Male	11	12	0.220	26	0.463	22	0.441	60	1.124
	Female	1	-	-	1	0.015	3	0.043	4	0.058
Sub Total	Male	53	54	0.531	230	4.950	215	3.862	499	9.343
	Female	67	44	0.351	156	2.814	227	7.059	427	10.224
G. Total		120	98	0.882	386	7.764	447	10.959	931	19.605

207 COs (86 male & 121 female) are successfully operating the credit and enterprise development program with an amount of Rs. 28.569 million. After disbursement of Rs.19.567 million during last six months the cumulative credit disbursement reach to Rs.28.569 million as of December 2008. So far 1447 community members/households have been benefited from credit pool in establishing their micro-enterprises as income generating activity including 670 male and 777 females.  From cumulative disbursement 55% have been utilized in livestock development, 41% in enterprise development and only 4% in agri-inputs.  The share of females in total credit utilization is 56% and in beneficiaries is 54%.  Table IV depicts the cumulative credit disbursement in all districts and its utilization in different sectors as of December 2008.