The given training is a logical continuation of a series of knowledge sharing initiatives on the most pressing issues of microfinance and delivery of microfinance services, including, social performance management, financial reporting, taxation of MFIs, as well as the previously conducted internationally-recognized course “Making microfinance work: Managing for improved performance”, initiated by the UNDP “Support to microfinance sector development” Project.

With an aim to develop new innovative microfinance products and approaches contributing to the growth of small and private enterprises, as well as to grant an easier access to the sources of financing for the rural poor, MFIs need developing a strategy on introduction of group lending methodology.

Group lending is one of the most widespread microfinance methods in the developing world, and is based on self-help groups, predominantly consisting of women. The group lending mechanism was initiated by the Foundation for International Community Assistance (FINCA) and was widely introduced by Gramin bank. Group lending is an effective tool of micro loan provision to start-up entrepreneurs, micro-entrepreneurs, and rural poor on a non-collateralized basis. In Uzbekistan, the methodology of group lending was first introduced in 1999 within the framework of a joint project of UNDP and the Association of Business Women of Uzbekistan. In present, group lending methodology is widely practiced by microcredit organizations (MCOs) of Uzbekistan, mostly in rural areas.

It is important to note, that the specialists of the “Support to microfinance sector development” Project developed the training module on group lending methodology within the framework of the component focused on the creation of a sustainable network of microfinance institutions and capacity and skill-building of staff of local MCOs and banks, as well as within the initiative to introduce the best international practice into the microfinance activity in Uzbekistan. One of the major objectives of the course is to harness knowledge and skills of the specialists of MFIs directly involved in group lending initiative, thus facilitating the effectiveness of their activity and stimulating their commitment to the social impact of microfinance.

Over the course of the training, the specialists of the Project, familiarized the listeners with the major approaches to group lending in international practice, in particular, the participants analyzed the Latin-American model, Gramin bank model and village banking model. The participants have also reviewed the main differences between the group lending approach and individual lending, the types of group lending, the group formation processes, as well as the mechanisms of self-governance in the groups.