Guidelines on Revolving Funds for Community Managed Water Supply Schemes and Construction of Individual Household Toilets in Urban Slums in Madhya Pradesh, India

8/12/2019 Guidelines on Revolving Funds for Community Managed Water Supply Schemes and Construction of Individual Ho

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GUIDELINES ON

REVOLVING FUNDS FOR

AND

IN

Madhya Pradesh, India

COMMUNITY MANAGED WATER SUPPLY SCHEMES

CONSTRUCTION OF HOUSEHOLD TOILETS

IN URBAN SLUMS

GOVERNMENT OFMADHYA PRADESH

Water for Asian Cities ProgrammeMadhya Pradesh, India


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HS Numb ers: HS/874/06 E

HS/875/06 E

November 2006


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CONTENTS

Preface 5

Introduction 7

Investments and Funding Scenario 7

Revolving Fund and its Modalities 7

Concept 7

Esta blishing Revolving Funds 7

Financing of Revolving Fund 8

Legal Status 8

Building up self-sufficiency 8

Management and Administration 9

Sustainab ility 9

Water for Asian Cities Programme support ing

Revolving Fund mechanism for b enefiting

wa ter and sanitation sector 10

About WAC 10

WAC prog rammes in India 10

Esta blishing a Revolving Water Fund in India 10 Establishing a Revolving Sanita tion Fund in India 11

Guidelines for establishing Revolving Fund on

Community managed water supply schemes and

Construction of individua l household toilets in Urban Slums 12


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With rapid urban development, the g ap b etw een dema nd a nd supply in the w ater and sanitation

sector is widening, imposing stress on the basic infrastructure facilities by the urban local bodies,

which often fails to add ress the g rowing dema nd. In the process, the urban poor suffer the most a ndare forced to live under unhyg ienic conditions in slums and shant y areas, lacking in ba sic amenities.

The efficient use of existing resources and community part icipation are imperative to make increased

water and sa nitat ion coverage. The problem is more predominant in Asian count ries who a re ill

eq uipped to provide the needed sa fe wa ter and sanita tion to their grow ing populat ion. The levels of

investments in the sector within the region are quite inadequate to bridge the w idening dema nd-

supply gap and to extend services to low income and the needy population. External investments

into the sector are inadeq uate. Most g overnments are increasingly becoming a wa re of the significance

of domestic mobilization of funds.

There is need for more intensified funds for ensuring the urban poor to obta in improved services,

which requires to devise innovative financial mechanisms that focus on filling the critical financial

gap by involving NGOs and the community-based orga nizations (CBOs) and provide loans to initiatedevelopment of w at er and sanita tion fa cilities. The a pproach of Revolving Fund wo uld be an

appropriate solution to finance for the community initiatives in w ater a nd sanitat ion sector, particularly

for managing drinking water supply as well as construction of individual household toilets for safe

sanitation, through circulation of fund resources between the Fund and the Users and there by

building up for self-sufficiency and sustainab ility.

Water for Asian Cities (WAC) Prog ramme, a collabora tive initiative between UN-HABITATand Asian

Development Bank (ADB) is supporting the implementa tion of the w ater and sanitat ion related t argets

in Asian cities and promo ting new/innovative investments in the urba n water and sanitat ion sector.

In India, WAC is supporting in four cities of Bhopa l, Gwalior, Indore and Jaba lpur in the stat e of Madhya

Pradesh, India w ith the financial support of ADB for the improvement and expansion of urban w ater

and sanitation services.

The WAC prog ramme has initiated a Revolving Water Fund (RWF) for Community Managed Water

Supply Scheme (CMWSS) as a pilot demonstration project in Gw alior, Jabalpur and Indore with a n

aim to improve the lives of the urban poor and the d isadvantaged by connect ing them to Safe Drinking

water. A Revolving Sanita tion Fund (RSF) has also been created for the Slums Environmental Sanitat ion

Initiative and is being implemented as a demonstrat ion project in Bhopal, Indore, Gwalior and Jaba lpur.

This approach ha s been a special micro-financing measure for providing loans to Community Water

and Sanitat ion Committee/Self Help Groups from the fund and then uses the repayments from the

CWASC/SHG to provide loans to o ther memb ers of the same, thus revolving or reusing the capita l.

The recovery of the cost is expected t o g enerate a sense of ow nership and ensure financial viability

and sustainability.

This Publication provides Guidelines for Revolving Water Fund for Community Managed Water Supply

Schemes in Urban Slums and for Revolving Sanita tion Fund for the Construction of Individua l

Household Toilet in Urba n Slums, evolved on the b asis of the learning a nd experiences through

these pilot demonstrat ion projects a nd in partnership with UN-HABITAT. These guidelines a re ta rgeted

to all the relevant stakeholders to put in practice for increasing the coverage of water as well as

san itat ion facilities for zero op en d efecat ion. These Guidelines a re extremely useful for th e

professionals and those eng ag ed in improving the q uality of life by promoting w ater and sanitation

to adopt and adapt innovat ive mecha nisms for establishing Revolving Water Fund and Revolving

Sanitat ion Fund w ith the involvement of NGOs and CBOs to b enefit the urba n poo r.

Andre Dzikus

Programme ManagerWater for Cities Programme

UN-HABITAT, Nairobi


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Revolving Fund in cooperation w ith the existing institution. Providing the right fund ing as a pa rt of

the project a ctivity w ould solve the institutions funding problems. Considerat ion may be g iven for

improving the a ccess of the target g roup to the existing institutional facilities for strengthening the

cooperation between the target g roup and the institution.

Financing of Revolving Fund

A fund ma y be financed by its users or by users of projects or it ma y be financed by third part ies or by

both. In most cases, the fund w ill take time to become fully established if it depends on small injections

of funds in the form of cont ribut ions, savings deposits or phased d onor financing. Contribut ions may

be voluntary or compulsory. Obta ining contribut ions from outside the funds ta rget g roup is termed

as external financing such as donor funds.

In development cooperation, many Revolving Funds initially draw on d onor funds, which is true of

credit funds and of guarantee funds. In majority o f cases, the involvement of the users in enabling

the fund to be financed by them is minimal or non-existent. Although there are no technical objections

to hundred percent financing, experiences show that the financial involvement of the target groupis a major precondition for successfully achieving the aim of the fund. When set ting up a Revolving

Fund, the aim should be to ensure that the target groups a re financially involved, either volunta rily or

compulsorily. Participation in Revolving Fund by a donor ma y be in the form of g rants, interest-free

advances, loans, combinations of any of these and guarantees. However, dependence on donor

funding should b e temporary and be gradually phased out. As rega rds, advances and loans to the

Revolving Fund, the multi-year financial prognoses relating to the fund should indicate when

repayment w ill be possible and the schedule for phasing out guarantees.

Legal status

It is important to know who is lega lly authorized to represent the fund a nd w ho ow ns or manag es it.

This determines the ma nner in which the fund can act vis--vis the financiers and the users, act ions

to be taken for transfer of funds a nd the influence the financier/donor can b ring to bea r or the

requirements can be imposed on the fund.

It is necessary for the fund to acq uire lega l status for a clear relat ionship betw een the fund, its financiers

and the users, which can be possible by g iving the fund itself a lega l sta tus or by a tta ching the fund

to an existing body w ith lega l personality w hich w ill administer the fund under the terms of ag reement.

The type of legal personality w hich is felt to be appropriate for a fund, will depend o n the a im of the

project. When a fund acquires legal sta tus, it shall be registered a s a fund with appropriate public

authority. Besides the requirement of legal sta tus, it will also be necessary to comply with the statutoryrequirements.

Building up of Revolving Fund for Self-suf fi ciency

There are two possible wa ys of using Revolving Fund, namely, making the fund s capital availab le to

the users and the other, making income from the fund available to the users. In the former case, the

availability of funds capital to users depends on lending period icity and prompt repayments. In the

case of later, the fund s capita l is not directly availab le to the users and only yield from the investment

of the ca pital is made available. The capital is not d epleted a nd the interest received by the fund is

lent to users and even part of these loans are subseq uently repaid to the fund . Thus, the fund s capita l

grow s. If the a ccumulated interest assumes the role of the original capital, the o rig inal capital can berepaid to t he donors, provided the est ab lishment o f Revolving fund is by means of dono r financing.


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The fund itself can provide g uarantees to enable local fund to be b orrowed. The amount of capital

which the fund possess determines the ma ximum guarantee it can provide.

Management and Admin ist rat ion of Revolving Fund

Revolving Fund has financial relat ionships with the financiers and the users of the fund which enta ilobliga tions to ma ke payments or repayments a nd to submit reports. If the fund has independent

legal sta tus, there w ill be a statutory obligat ion to submit regular financial reports. This makes it

necessary to keep sepa rate financial records on the Revolving Fund at all times. In ma ny count ries,

the financial reporting ob ligation and the form in w hich the reports have to be submitted are laid

dow n by Law.

The financial report shall include profit and loss account, cash flow sta tement indicat ing overview of

sources and a pplications of funds and a b alance sheet approved by t he funds trustees and by an

external auditor and shall be finalized annually within three months of the end of the financial year.

It is advisable to produce profit and loss account quarterly for use in monitoring and planning a

Revolving Fund Project together with a cash flow forecast for the rest of the yea r. Depending on thetype of the project, a q uarterly balance sheet may also be useful. The fund s multi-year planning

must consist of a minimum of five year cash flow forecast, which should be adjusted and extended

annually on the basis of the results achieved. The staffing of the Revolving Fund Project should be

such to ena ble maintena nce of adeq uate records including records on premiums, contributions, loans

and ad vances. The information on the personal particulars and all financial aspects relating to the

users should be kept confidential by storing and securing the relevant information and records

appropriately. Third part ies should not have access to them.

A fund may be terminated by premature termination, termination without transfer, termination

comb ined with transfer or by cha nge of funds terms of reference with or without t ransfer. The

termination may be due to the exhaustion of funds, external factors which impede activities or misuse.

Susta inabi lit y of Revolving Fund

The Revolving Fund is expected to become self-sufficient a fter an initial period . Its capital is expected

to remain at a consta nt level more or less without any fresh external financing. The factors that a ffect

the operat ion of a Revolving Fund are the interest rates (for lending and/or borrowing), levels of

premiums; ad ministrative expenses; payments/repayments and failure to make them; inflation a nd

the liab ilities. In order to keep the Revolving Fund self-sufficient and sustainable, appropriate measures

would b e required to be ad opted to effectively appraise and mo nitor these factors for its improved

operations.

The appraising of proposals for Revolving funds should include the reasons for set ting up Revolving

Fund, it purpose, ad ministrative and manag ement practices, financial mecha nisms including auditing

systems, forecasting , monitoring a nd evaluation procedures, etc. The operat ions of Revolving Funds

should be monitored and evaluated periodically ag ainst its objectives in terms of the characteristics

of users, volume of t ransact ions, ad vances, loans a nd claims, promptness of payments/repayments,

write-offs, rate of circulation, procedures for processing and rapidity of collections, organizational

and financial administrat ion and the effects on users and other stakeholders. The pract ice prompt

recovery of the costs is expected to generate a sense of ow nership and ensure the financial viab ility

and sustainability o f the schemes. These measures wo uld help streng then the stakeholders with the

necessary framework for effective formulation and implementation and thereby achievingsustainability.


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Water for Asian Cities (WAC) Programmesupporting Revolving Fund mechanism for benefiting water andsanitation sector

About WACWater fo r Asian Cities (WAC) Prog ramme is a collabora tive initiative between UN-HABITATand Asian

Development Bank (ADB) with its goal set to contribute to the achievement of the internationally

ag reed ta rget s related to wa ter and sanitation in human settlements in the Asia-Pacific region with

part icular focus on the urban poor in order to facilita te eq uitab le social, economic and environmenta l

development . WAC Prog ramme is supporting t he implementation of the w ater and sanita tion related

MDGs and targets in Asian cities, specifically promoting pro-poor governance, water demand

management , increased att ention to environmental sanitat ion, and income g eneration for the po or

linked to w ater supply and sanita tion. The programme seeks to achieve by mob ilizing political will;

raising awareness through advocacy, information and education, training and capacity building; by

promot ing new/innovative investments in the urban w ater and sanita tion sector, and by systematicmonitoring of progress towards MDGs.

WAC Programmes in India

In India, WAC is supporting in four cities of Bhopa l, Gwalior, Indore and Jaba lpur in the state of Mad hya

Pradesh, India w ith the financial support of ADB for the improvement and expansion of urban water

supply, sewerag e, sanita tion, water drainage and solid w aste manag ement. The programme initiat ives

include pro-poor urban water and sanitation governance, development of water demand

manag ement strateg y in four cities, slum environmenta l initiatives, developing st rateg ies for gender

mainstreaming a nd capacity building o f the local bod ies and concerned stakeholders.

Establishing a Revolv ing Water Fund (RWF) in Ind ia

A Revolving Water Fund (RWF) has been created und er WAC for Community Mana ged Water Supply

Scheme (CMWSS) and is being implemented as a pilot demonstration project in Gw alior, Jabalpur

and Indore. The Revolving Fund is being managed by the Municipal Corporat ions (MC) in Gwalior

and J ab alpur and b y the District Urba n Development Agency (DUDA) in Indore. Throug h the

implementa tion o f CMWSS it is possible to q uickly improve the lives of the urban poor and the

disadvantaged by the connect ing them to Safe Drinking w ater.

The RWF not only makes finances availab le for meeting the capita l cost o f the scheme upfront b ut

ensures the ownership and participation of the community in execution as well as the operational

maintena nce of t he scheme. The community is provided a loa n from th e fund t o mee t t he

infrast ructure development cost, which could be pa id ba ck by the community to the DUDA/MC in

easy installments ma tching with their paying capacity thus d emonstrating a pro-poor governance

approach. DUDA/MC will replicate and upsca le these scheme in others slums of the city.

The Revolving Water Fund is a special micro-financing mea sure for providing loans to the Community

Water and Sa nita tion Committee (CWASC), a community based o rganizat ion (CBO), from the fund

and then uses the repayment s from the CWASC to ta ke up a dd itiona l schemes, thus revolving or

reusing the capital and thereby expected to generate a sense of ow nership and ensure the financial

viab ility and sustainability o f the schemes.


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Establ ishing a Revolving Sani tat ion Fund (RSF) in India

A Revolving Sanita tion Fund (RSF) has been created und er the WAC Programme for the Slums

Environmental Sanita tion Initiative (SESI) and is being implemented as a demonstration project in

Bhopa l, Indore, Gw alior and Jaba lpur. Under SESI, the Revolving Fund is being manag ed b y NGOs on

behalf o f the UN-HABITAT/Urban Loca l Body (ULB).

The object ive of the Slums Environmen ta l San ita tion Initiat ive (SESI) is to d emo nstrate how

communities can be empowered to a cquire ad equa te sanitation that meets their needs by g enerating

demand for sanitation facilities in slums through awareness creation, health education, capacity

building and encouraging cost effective and appropriate technologies in all aspect of sanitation. It

seeks to ensure total open defecation-free slums through low cost individual household toilets,

community managed sanitation complexes wherever required, underground drainage and school

sanita tion complexes. The SESI has a pro-poor governance approach a ims to d emonst rate that it is

possible to quickly improve the lives of the urban poor and the disadvantag ed by ensuring provision

of individua l household to ilets facilities through the innovat ive mecha nism of a Revolving Sanitat ion

Fund (RSF).

The Revolving Sanitat ion Fund is a special micro-financing measure ma intained by the Urba n Local

Body (ULB) and managed by a NGO on behalf of t he ULB. The NGO provides loans to CWASC/Self

Help Groups (SHG) from the fund and t hen uses the repayments from the CWASC/SHG to provide

loans to other members of the same CWASC/SHG or different CWASCs/SHGs, thus revolving or

reusing the capital. Recovery of the cost is expected to generate a sense of ownership and ensure

the usag e and maintenance of the toilet in future.

Guidelines for establishing Revolving Fund on

Communi ty Managed Water Supply Schemes and

Construction of individual household toilets in Urban Slums

Based on the learning and experiences in the operation o f Revolving Water Fund and the Revolving

sanita tion Fund throug h pilot demonstration projects, Guidelines have been evolved for Revolving

Water Fund for Community Manag ed Water Supply Schemes in Urban Slums and for Revolving

Sanitat ion Fund for the Construct ion of Individua l Household Toilet in Urba n Slums in partnership

with UN-HABITAT. These guidelines a re ta rget ed to all the relevant sta keholders to put in practice fo r

increasing the coverage o f water as well as sanita tion facilities with zero open defeca tion. These

Guidelines along with the Orders issued are placed below for the benefit of the stakeholders in sett ing

up of Revolving Water Fund and the Revolving sanita tion Fund with the involvement of NGOs and

CBOs to b enefit the needy urban poor.


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1. Background of Revolving Water Fund

With rapid urban development, the g ap between water demand and supply in urban areas is widening,

imposing stress on the basic infrastructure facilities of the local bod ies, which often fa ils to a ddress

the grow ing demand. In the process, the urba n poor suffer the most . While additiona l financial

resources will help to meet these challenges, infrastructure investment alone does not ensuresustainability. Thoug h there are immediate prospects for a rapid increase in the external investment

flow into the w ater sector it is more likely to address the requirements of ma in trunk infrastructures

in the cities. Thus there is a possibility of poor people living in slum a nd squat ter sett lements no t

deriving benefits from such improvements in the city w ater supply system.

There is a need for more intensified funds for ensuring that poor people living in the periphery of the

cities ob ta in improved services. Various types of loans/subsidies have helped to fill gaps in the more

conventiona l financing availab le for development works. Therefore, there is a need to devise means

tha t focus on filling this critical financing gap by providing loans to Community Based Orga nizations

(CBOs) to initiate development of water supply facilities. A revolving fund for financing such

community initiat ives is one such solution.

Such a fund has b een created under Water for Asian Cities Programme for Community Mana ged

Water Supply Scheme (CMWSS) and is being implemented as a pilot demonst ration project in Gw alior,

Jab alpur and Indo re. The revolving fund is being ma nag ed by t he Municipal Corporations in Gwalior

an d J ab alpur and by the District Urban Development Agency (DUDA) in Ind ore. The presen t

Guidelines on Revolving Water Fund have been developed ba sed on these pilots.

2. Rationale for Community Managed Water Supply Scheme

There are existing poverty pockets in the cities which, amo ngst o ther basic services, do not havesustainable water supply, but urban civic bodies have no plans to connect these poverty pockets

with the normal water supply system of the city in the near future. Given this back drop, the Community

Manag ed Water Supply Schemes (CMWSS) seeks demonst rate that it is possible to q uickly improve

the lives of the urban poor and the disadvantag ed by connecting t hem to safe drinking w ater which

wo uld result in users not having to travel long distances or wa ste t ime queuing for water. CMWSS has

a pro-poor governance approach in which, the cost o f construction and the wa ter connection charges

are met upfront from the revolving fund set up fo r this purpose. The consumers are assured o f

continuous service or, at least on a regular basis (same time every day) and provided with enough

water to cover their needs for daily house chores, which would facilita te proper housekeeping.

The enabling framework for CMWSS initiat ive is as fo llow s:

Adoption of a demand-responsive approach along with community participation based on

empow erment of the community to ensure their full participation in the project through a decision

making role in the cho ice of t he drinking water scheme, planning, design, implementat ion, control

of finances and management arrangements;

Full ownership of the assets by the community through a Community Water and Sanitation

Commit tees (CWASCs);

100%responsibility of operation and maintenance (O&M) and loan recovery with the community;


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3. Concept of the Revolving Water Fund:

The Revolving fund is a spe cial micro-finan cing mea sure for providing loans to t he CWASC, a

community ba sed orga nization (CBO), from the fund and then uses the repayments from the CWASC

to take up ad ditional schemes, thus revolving or reusing the capita l. Recovery of the costs is expected

to generate a sense of ow nership a nd ensure the financial viab ility a nd sustainab ility of the schemes.

Homogeneous communities organize themselves to constitute a Community Water and Sanita tion

Committee to improve their financial and managerial capacity to execute and mana ge the funds for

the community as a whole. Thus the mechanism enables the urban poor to tap development resources

directly by building up their ow n capa cities. This approach allows communities to execute and operate

the scheme by themselves, with the facilitation of the urban local body in the form of technical

ad vice and later to link the scheme w ith main infrastructures of the cities.

The revolving w ater fund may be set up by o ther Urban Local Bodies or District Urba n Development

Agencies through their own resources or in partnership with national/international organisations.

The ULB/DUDA will be the Manager of the fund and w ill be responsible for the d isbursements andrepayments to and from the fund.

4. Sanctioning Mechanism

Sanctioning of any specific scheme will have the following stages /activities:

Receipt of demand from the community,

Assessment of initial mobilisation of the community by the ULB/DUDA ,

ULB/DUDA will provide technical support for design &environmental impact assessment (EIA) to

be done in consultation with the community. Design and estimat ion o f the w ater supply scheme

will be based on community cho ice, technical feasibility, afforda bility to the community and users

preferences.

ULB/DUDA wo uld organise stakeholder consulta tions to present the design of the scheme. The

CWASC would be expected to pass clear resolutions on connection /user charges, bulk water

charges and payback installments.

Constitution of Community Water and Sanita tion Committee (CWASC) and its registrat ion as a

lega l entity. CWASC opens and operate a savings ba nk account for project activities and depositing

user charges ( connection charges &monthly user charges);

Signing o f MOU betw een ULB/DUDA and CWASC (aprototype of MOU is attached as Annexure-I). Itwould ment ion tha t a ssets constructed under the scheme will be ow ned b y the CWASC. However

it will be deemed to be mortg ag ed by CWASC in favour of ULB/DUDA during the pay ba ck period.

Release of first instalment from the fund.

5. Execution Mechanism

Capacity building of the community members by ULB/DUDA on record keeping financial

management, maintenance of proceedings of community meetings, technical matters like

designing details of the scheme and procurement procedure.

CWASC completes the procurement process and issues work order to construction ag ency andkeeps records of the process.


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Supervision of construction by CWASC with technical backup from ULB/DUDA, and recording the

measurement of works in a measurement book (Annexure II)

CWASC would be expected to store the construction material at the w ork site in a transparent

manner so t hat it is easily availab le and accessible to community for their qua ntitative and

q ualita tive inspection. It is expected to maintain stock register for procurement .(Annexure III)

The CWASC wo uld ma inta in a cash boo k conta ining full particulars of receipts and payments

(Annexure-IV).

All payments should be ma de ag ainst a payment voucher which would be countersigned by the

receiver (Annexure-V).

Submission o f fund utilisat ion along with measurement book to ULB/DUDA by CWASC, verification

by ULB/DUDA, and release of 2nd instalment

Submission of fund utilisat ion and completion report to ULB/DUDA by CWASC after commissioning

of the system.

Verificat ion by ULB/DUDA, release of last instalment &closure of loan.

6. Recovery Mechanism

CWASC willundertake the follow ing act ivities:-

Operate and maintain the system

Collect w eekly, fortnightly or monthly user charges from each individual household, provide serially

numbered a cknow ledgement receipts for the same (Annexure-VI) and maintain beneficiary w ise

ledger (Annexure VII).

Make payment of monthly instalments to the ULB/DUDA as well as bulk water charges and submit

a monthly stat ement of the income and expend iture to the ULB/DUDA (Annexure-VIII). On completion of the pay back period the CWASC may resolve to hand over the scheme to the

ULB for operation and maintenance and ultimate integration with Municipal supply with the

residents only paying ULB for the w ater user charges as per then prevailing rate, or may continue

to operate and maintain the CMWSS. In the latt er case, CWASC would continue to discharge their

function o f operating a nd maintaining the system, collection of user charges, and payment of

bulk water charges to the ULB.

7. Maintenance of Records and Audit Requirements

The ULB/DUDA will mainta in the cash flow records scheme wise as well as the to ta l fund separately

for proper auditing of fund for the preparation of cash flow forecasting.


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Annexure I

MODEL MEMORANDUM OF UNDERSTANDING(Gwalior Municipal Corporation and Community Water and Sanitation Committee, Gwalior)

This Memorand um of Understanding (MOU) is entered into by the Gw alior Municipal Corporation,Gwalior, established under the Sta te Municipal Corporat ion Act 1956 with Headq uarters in Gw alior,

Mad hya Pradesh, Ind ia (hereinaft er referred a s GMC); and Community Wat er and Sanita tion

Committee, Gwalior (hereina fter referred a s CWASC or committee), a society, registered under Mad hya

Pradesh Society Registration Act, 1973 in Gw alior, Mad hya Pradesh, India.

The GMC is a local authority within the sta te of Madhya Prad esh and is responsible for providing the

civic amenities including services for safe drinking water, sanita tion and solid w aste manag ement to

the citizens of the city of Gw alior; and the CWASC is responsible for planning, designing, supervision

of water supply and sa nitat ion construction activities/scheme; commissioning a nd t aking o ver of

completed water supply and sanitation works for operation and maintenance including revenue

realizat ion, in the a reas of its jurisdiction in the city of Gw alior.

1.0 Proposed work

The community ma nag ed w ater supply scheme to be implemented in Rama ji ka Pura, Islam Pura

and Subhash Nag ar in Gwa lior involve const ruction of a RCC sump w ell of 50 Cubic Metre capacity, a

RCC tank of 420 Kilo Litre capacity and laying of 750 mt length o f pumping main of 150 mm diameter

and d istribution system The cost o f the scheme is Rs 3000,000. The estima te o f the scheme is enclosed

as Annexure-A. The scheme is to b e completed in 6 months. The capita l cost of const ruction is to be

provided by the GMC, which will be paid ba ck by t he community/committee in monthly insta llments.

The community will implement t he scheme and operate and mainta in the same under technicalguidance of GMC. The scheme w ill be initially connecting ab out 1200 households w hich will be

increased to 1500 later on.

2.0 Responsibilities of Gwalior Municipal Corporation (GMC)

1. Coordinate and monitor the implementation of the project;

2. Assist in design, procurement of ma terial and in implementat ion,

3. Provide engineering personnel for guidance in the execution of w orks, and after completion o f

the scheme assist in preparation o f the completion report, operation and management of the

scheme and provide the services of one valve man/plumber, one helper and one revenue collector.

4. Provide Rs 30 lacs to the CWASC for the construction of the scheme as per an ag reed payment

schedule

5. Provide w ater @ Rs 2 per kilo litre to the committee

6. Install a w ater meter for measuring the quantity of the wa ter to be provided for the scheme.

7. Train 20 persons from the community on the accounting, book keeping, engineering and plumbing.

8. In case the agency appointed by the committee does not complete the works of the scheme in

stipulated time, then o n the request of committee complete the execution o f the scheme.

9. After the payback of cost o f capital works, on the request of the community t ake over the operationand maintenance of the scheme


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3.0 Responsibilities of Community Water andSanitation Committee (CWASC)

1. Generation of demand for wa ter in the community and ensuring t hat t he community w ill

participate in the d ecision making of every aspect of the scheme and ready to pay tow ards the

cost of scheme.2. Plan, design and implement the scheme. In the case the committee d ecides to execute the scheme

through an agency, and then it may seek advice from the GMC for entering in to an agreement

with the agency.

3. The members of the committee w ill personally be responsible for quant ity and q uality o f wo rks,

taking measurements a nd recording of measurement in books.

4. The committee will be responsible for providing w ater connection to 1200 households and if

required will increase this connection to 1500 households. CWASC will collect the water charges

from these households which are being charged a t Rs 80.00 per month by the GMC. Present water

connection charges of GMC are Rs 750.00. However looking to the economic condition to the

house holds the connection charges will be taken in 8 monthly instalments , out o f which theseventh and the 8thw ill be Rs 50.00 only.

5. The capital cost of the scheme will be paid back to the GMC in 32 months by the committee in

insta lments @ Rs 150,000 per mont h for the first 8 months and @ Rs 75,000 per month for the next

24 months.

6. If the committee is unab le to provide connection to 1200 households then the payback period of

the capital cost will be increased beyond 32 months. In case the committee is able to provide

connect ions to more then 1200 households then t he pay ba ck period will be reduced .The pay

ba ck of capital cost of the scheme will sta rt from the next month of completion of scheme.

7. The committee will keep the records of measurements boo k, cheq ue book ,cash boo k and

correspond ence w ith implement ing agency including b ills received8. The committee will open a saving a ccount in a bank on the with advise of GMC. The account w ill

jointly be operated by the President o r Secretary and the Treasurer of the committee. All the receipts

and payments pertaining to the scheme w ill be made t hrough this account.

9. The committee will store and mainta in the construction materials, such as pipes and valve in the

project a rea in such a manner that the q uantity and the q uality of the materiel can be inspected

by t he beneficiaries as a nd when required.

10. After the paying ba ck the capital cost of the scheme to the GMC, the committee may decide the

handing over the scheme to the GMC.

11.The construction w orks of the scheme w ill be completed in six months.

4. 0 Payment arrangement

1. As per this Memorandum of Understa nding GMC shall provide CWASC with funds up to a

maximum amount of Indian Rupees 30,00,000.00 (Rupees thirty lakhs only) for implementation

of infrastructural works in accordance w ith the following schedule:

(a) First Insta lment: Indian Rupees 15, 00,000 (Rupees fifteen lakhs only) (50%)

Upon receipt of outputs to be submitted b y CWASC and accepted by GMC:

A copy of agreement with the work executing ag ency

Final construction design and draw ing;

A demand note from supplier of the construction material in lieu of commencing the supply.

A payment request.


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(b) Second &Final insta lment : Indian Rupees 15,00,000 ( Rupees fifteen lakhs only) (50%)

Outputs to be submitted by CWASC and accepted b y GMC:

Report on works execution and commissioning of the system;

Report on operationalisation, billing and collection mechanism; Report on training and imparting skills;

Submission of all outstanding or final outputs;

Financial statement showing the use of funds so far provided, as certified b y CWASCs

competent financial authority a nd a payment req uest.

2. GMC shall make the above payments within seven (7) days follow ing the receipt of the appropriate

Payment Request from CWASC. The stat ements referred to above shall be itemized as per the

estimate in Annexure A. Supporting documents sha ll be made a vailab le to GMC upon request .

3. Payments w ill be mad e by GMC in Indian Rupees into t he following ba nk account:

Bank Name: Punjab National Bank

Bank Address: Naya Bazaar,Gwa lior

Account Title: Community Water and Sanita tion Committee, Ramaji Ka Pura , Gw alior

Account Number: ................................................

Signatory .......................... ... Chairman, CWASC , Ramaji Ka Pura

.......................... ... Treasurer, CWASC, Ramaji ka pura

5.0 Reporting, Maintenance of Records and Audit Requirements

1. Upon completion of the Scheme, the CWASC shall maintain the records relating to the Scheme

for a period of three (3) years. CWASC will submit a ll mea surement bo oks perta ining to the scheme

to GMC.

2. GMC has the right, at its ow n expense, to have t he records of CWASC perta ining to the

implementat ion o f the Scheme reviewed and audited.

3. The assets created/constructed under the scheme will be ow ned by the community /committee.

How ever, it will deem to be mortgag ed b y CWASC with and in favour of GMC during the pay ba ck

period.For Gwalior Municipal Corporation For Community Water Aupply and Maintenance

Committee (CWASC), Ramaji Ka Pura, Gwalior

Name : Name :

Title : Commissioner Title : President CWASC, Ramaji Ka Pura

Ad d : Gw alior Municipa l Co rpora tio n Ad d : Ra ma ji Ka Pura , AB Ro ad, Gw alior

Gwalior, Madhya Pradesh (India)

Tel. : + 91-751-2438301

Fax : + 91-751-5002241

Or to such changed addresses as either Party may subsequently specify by written notice to the

other.


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IN WITNESS WHEREOFthe undersigned duly authorized representat ives of GMC and CWASC, have

signed this Memorandum of Understanding in tw o original copies at the place and on the day below

written.

For GMC For CWASC

Name Name

Designation Designation : Secretary, CWASC, Ramaji Ka Pura

Gw alior Municipal Corporation Add: Ramaji Ka Pura, Gw alior

Place: Gwalior, Madhya Pradesh


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Annexure A

ESTIMATE OF WORKS

Sr. No. Description of works Quantity Unit rate Total

of work AmountRs. in lacs

01 Construction of sump well of 50 cubic meter One work Lump sump 2.50

Capacity

02 Supply and installation of 03 pump sets One work Lump sump 3.50

(60 mt. Head, capa city 50 cubic meter per hour)

with valve, pipe and accessories

03 Installation of pipe line of pumping main pipe 750 mt Rs.1000 7.50

line of 60 mm diameter (from sump well to per meter

over head t ank)

04 Construction of over head tank of One work Lump sump 14.50

4, 20,000 lt. capacity

05 Installation of distribution pipe line One work Lump sump 2.00

80 mm diameter 500 mt

100 mm diameter 300 mt

150 mm d iamet er 200 mt

Total 30.00

( Rs. thirty Lacs Only)


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Particulars

Measurementup to date

No L B D

Conten

t

Rate Totalvalue to

date

Page Qty. Qty.Cols.5,8 ValueCol.9xCol. 6

Remarks

Deductprevious

measurementalready paid

Netmeasure-

ment

1 2 3 4 5 6 7 8 9 10

S.No.

M.B. Number

Measurement

Book

Signature of President Signature of Secretary Signature of Treasurer

(CWASC) (CWASC) (CWASC)

Annexure II

REVOLVING WATER FUND


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Annexure III

Revolving Water Fund

STOCK REGISTER

S.No Item Description Quantity Rate Date of Amount RemarksPurchase




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Annexure- IV


CASH BOOK

Receipts Payments

Date Particulars Amount Date Particulars Amount Ref Receipt

Number




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Annexure-V


PAYMENT VOUCHER

(To be mainta ined in duplicate)

Voucher No. __________________

Date ________________________

CB Folio_____________________

Paid to

Amount in Rs.

Purpose

Signature of Secretary Signature of Treasurer Receivers Signature

(CWASC) (CWASC)


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Annexure VI


ACKNOWLEDGEMENT RECEIPT

(For monthly instalments)(To b e ma intained in duplicate)

Receipt No.

Date

CB Folio

Name of the Beneficiary

Name of the slum/city

Ledger Folio

Received from

Amount in Rs.

Insta lment numb er :

Insta lment Amount

Signature of Secretary Signature of Treasurer Signature of

CWASC CWASC Beneficiary


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Annexure VII


BENEFICIARYWISE LEDGER

Folio No

Name of Beneficiary

Add ress of Beneficiary :

Particulars of repayment : Total Numb er of instalments

No. of insta lments each of Rs.

No. of insta lments each of Rs.

Date Amount Due Amount Refunded Receipt No. Outstanding Balance


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ANNEXURE VIII


MONTHLY STATEMENT OF INCOME AND EXPENDITURE

(To be maintained by CWASC)

At the end of month for the year

Balance w ith CWASC at the beg inning of t he Month:

Add mont hly charges co llected :

Add Interest received if any:

Less expend iture incurred on O&M in month:

Less repayment of mont hly instalment to ULB /DUDA:

Balance at the end of the month:




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1. Background of Revolving Sanitation Fund

Indias rapidly expanding urban centers are facing serious problems with respect to providing urban

basic services. Due to huge a nd widening g ap between demand and supply of essential services,

urban poor are forced to live under unhygienic conditions in slums lacking in basic amenities.

The efficient use of existing resources and community part icipation are imperative to make increasedsanita tion coverag e. Thoug h there are prospects for a rapid increase in the externa l investment flow

for the city sewerag e system, it is more likely to ad dress the requirements of main trunk infrastructures

in the cities. Thus there is a possibility of poor people living in slum a nd squat ter sett lements no t

deriving benefits from such improvements in the city sanitation/sewerage system.

There is a need fo r more intensified funds for ensuring tha t people living in the slum and squat ter

sett lements in the cities obtain improved services. Various types of loans/subsidies have helped to

fill gaps in the more conventiona l financing for development wo rks. Therefore there is a need to

devise means that focus on filling this critical financing gap b y providing loans to community-based

organizat ions (CBOs) to jump-start d evelopment of ind ividual sanita tion facilities. A revolving

sanita tion fund for financing construction of individua l toilets is one such solution.

Such a fund has been created under the Water for Asian Cities Programme for the Slums Environmental

Sanitat ion Initiat ive (SESI) and is being implemented as a demonstration project in Bhopal, Indo re,

Gwalior and Jabalpur. Under SESI, the revolving fund is being managed by NGOs on behalf of the

UN-HABITAT/Urban Loca l Bod y (ULB). The present Guidelines on Revolving Sanitation Fund have

been developed b ased on these pilots.

2. Rationale for Slums Environmental Sanitation Initiative

The object ive of the Slums Environmen ta l San ita tion Initiat ive (SESI) is to d emo nstrate how

communities can be empowered to a cquire ad equa te sanitation that meets their needs by g eneratingdemand for sanitation facilities in slums through awareness creation, health education, capacity

building and encouraging cost effective and appropriate technologies in all aspect of sanitation. It

seeks to ensure total open defecation-free slums through low cost individual household toilets,

community managed sanitation complexes wherever required, underground drainage and school

sanita tion complexes. The SESI has a pro-poor governance approach a ims to d emonst rate that it is

possible to quickly improve the lives of the urban poor and the disadvantag ed by ensuring provision

of individual househo ld to ilets facilities through the mechanism of a Revolving Sanita tion Fund (RSF).

Under SESI, the revolving sanita tion fund is created for construction o f individua l sanitary toilets a t a

pro rata of Rs 2000/- per to ilet and is mana ged by a local NGO on behalf of the ULB /UN-HABITAT. The

NGO creates Self Help Groups (SHGs) in each slum consisting of members from households needing

assistance for const ructing ind ividua l toilets. The SHG gets mo bilized over a period of time as a

cohesive whole doing normal intra-group activities of depositing monthly contribution from the

savings of its members and lending to members as per their need. After some t ime the needy SHG

members request the SHG for providing assistance for construction of their household toilets.

The SHG after ensuring that the interested individua l has arrang ed his contribution o f Rs 1,000/-,

recommends the ca se to the NGO. The NGO after ascerta ining tha t the SHG have b een mobilized a nd

the intra group activities of contribution and lending are taking place satisfactorily, provides loan

from the RSF to the SHGs which in turn lends it (ba sed o n locally ag reed principles for lending and

recovery) to individua l applicants, as per their need up to a maximum o f Rs.2000/- for construct ing

latrines including the superstructure of their choice. The SHG has the responsibility of ensuring thatthe recipients of the fund return the loan amount for further disbursement to newly motivated

households.


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5. Sanctioning Mechanism

Sanctioning of loan will have the following stages /activities:

ULB/NGO provides technical support to individuals to help them to finalize the design and

estimation of the sanitation unit taking preferences, technical feasibility and affordability of the

beneficiary into consideration.

Receipt b y the SHG/CWASC of dema nd/application for loan from the individual with at least t wo

persons providing gua rantee for the refund of loan. Deta ils of contribution o f the beneficiary

either cash or in kind will also b e g iven (Annexure I).

The CWASC/SHG recommend s the mat ter to the NGO /ULB after examining the applicat ion along

with a guarantee for repayment (Annexure II).

The ULB/NGO releases the loan

CWASC/SHG w ill open and operate a saving banks account a nd w ill maintain a cash boo k

containing full particulars of receipts and payments (Annexure III).

6. Execution Mechanism

The CWASC/SHG w ill mainta in a stock register containing det ails of all procurement ( Annexure IV)

CWASC/SHG releases loans to the individua ls only after assessing the readiness of the Individua ls

cont ribut ion in the form o f cash o r kind. The individua l may excavate the pit a s part of his

cont ribution or bring construct ion materials. The CWASC/SHG may provide the loan in the fo rm

toilet pan, cement, bricks, sand and any other construction materials, in lieu of cash.

The individual will construct the household toilet of its own with the help of trained masons in

the community. The ULB/NGO may constantly ad vise the b eneficiary for ensuring construct ion

quality.

After the completion of the toilet the individua l will intimate the CWASC/SHG, which in turninspects the site and records its assessment of the construction.

All payments should be made ag ainst voucher which will be countersigned b y the receiver as

provided a t Annexure V.

7. Recovery Mechanism

The CWASC/SHG will undertake the follow ing a ct ivities:

Col lect monthly insta l lments f rom ea ch household and provide seria l ly numbered

acknowledgement receipts for the same (Annexure VI).

Mainta in beneficiary wise records relat ing to the revolving fund (Annexure VII) In case of default in payments, intimate the g uarantors for assisting in the recovery of the loan.

The CWASC/SHG w ill itself decide the penalty in consulta tion with its members in case of non

repayment of loan installments.

Make monthly payments to the NGO and submit a monthly statement of income and expenditure

(Annexure VIII)

The NGO will make monthly payments to the ULB and submit a monthly statement o f income

and expenditure (Annexure IX)

8. Maintenance of Records and Audit Requirements

The ULB and NGO will mainta in records perta ining to the fund for proper auditing o f fund and for the

preparation of cash flow forecasting.


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Annexure I

Revolving Sanitation FundAPPLICATION FORM

(To be received from each beneficiary)

Name of Beneficiary:

Ad dress:

Name of the CWASC/SHG if any ( to w hich individua l belong ) :

Purpose of loan:

Amount of Loan requested:

Repayment schedule:

Numb er of Insta lments: ___________________

Amount of Instalment: Rs. _________________ Starting d ate of Repa yment: ________________

Declaration by the applicant for repayment:

I hereby promise to pay the loa n amount o f Rs. ___________________________ sanctioned in

_______________number of installments of Rs. ___________________ ea ch.

I also understand that in case of non repayment the CWASC/SHG has the right to ta ke pena l

action a ga inst me as per the a greed operat ional guidelines for the sanitary fund.

I hereby promise to contribute Rs. ___________________ ( in cash/kind) before receiving any

insta lment of loan as my contribution.

Signature of Applicant

Name and address of guarantors Signatures of guarantors

1. __________________________________ __________________________________

2. __________________________________ __________________________________

3. __________________________________ __________________________________

Date: ____________________ Signature of Applicant____________________

(To be filled by CWASC/SHG)


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Amount recommended by CWASC/SHG:

Number of instalment s______________________

Amount of inst alment: Rs. ___________________

Cash Book Folio Numb er ___________________

Led ger Folio Number _____________________


(CWASC/SHG) (CWASC/SHG) (CWASC/SHG)

(To be filled by NGO or ULB)

Amount sanctioned by NGO or Municipal Corporation:

Total amount of sanct ioned : Rs. ________________________

Number o f instalment ________________________________

Amount of inst alment : Rs. _____________________________

Cash Book Folio Number _____________________________

Led ger Folio Numb er ________________________________

Signature of Commissioner OR Signature of Secretary

Municipal Corporation (NGO)


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Annexure II

Revolving Sanitation Fund

To,

Commissioner OR The SecretaryMunicipal Corporation (NGO)

Subject: Sanctioning of Revolving Sanitation Fund

Dea r Sir/Madam,

A meeting of the members/office bearers of the Self Help Group (Name) _____________ _________

was held on __________________ to ta ke decision on the a pplicat ions for loan fo r the co nstruction

of ind ividua l household toilet in the_________________ slum. Applications from _________________number of household scrutinized individually and loans to _________________ (No.) amounting to

Rs. _________________ have been recommended. The applica tions received from the households

are att ached w ith the letter.

The CWASC/SHG und erta kes the g uarantee for the repa yment of loan by its memb ers. It is req uested

that the loan may kindly be sanct ioned from the revolving fund for the construction of household

toilets.

Encl: As above

Signature of Secretary

CWASC/SHG


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Annexure III


CASH BOOK

Receipts Payments

Date Particulars Amount Ref Loan Date Particulars Amount Payment

application voucher

No.


CWASC/SHG CWASC/SHG CWASC/SHG


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Annexure IV


STOCK REGISTER

S.No Item Description Quantity Rate Date of Purchase Amount Remarks




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Annexure V


PAYMENT VOUCHER

(To b e ma intained in duplicate)

Voucher No. ________________

Da te ______________________

CB Folio___________________

Paid to ________________________________________________________________________________

Amount in Rs. ____________________________________________________________________________

Purpose _________________________________________________________________________________

Signature of Secretary Signature of Treasurer Receivers Signature

CWASC/SHG CWASC/SHG


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Annexure VI


ACKNOWLEDGEMENT RECEIPT

(For monthly instalment)(To b e ma intained in duplicate)

Receipt No. ________________

Da te ______________________

CB Folio___________________

Name of the Beneficiary

Name of the CWASC/SHG

Ledger Folio _________________

Received from ________________________________________________________________________

Amo unt in Rs. ________________________________________________________________________

Inst alment number : ___________________________________________________________________

Inst alment Amount ____________________________________________________________________

Signature of Secretary Signature of Treasurer Signature of Beneficiary

CWASC/SHG CWASC/SHG


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Annexure VII


BENEFICIARYWISE LEDGER(To b e maintained by CWASC/SHG)

Name ofCWASC/SHG: Folio No.:

Name of Beneficiary :

Address:

Amount of sanitation loan sanctioned:

Date of sanction:

Number o f memb ers in family:

Particulars of repayment :

No. o f insta llments . Amount per insta lment .

Date Particulars Loan application No./ Refunds Disburse- Balance SignatureAcknowledgement ments outstandingReceipt No.




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Annexure VIII


MONTHLY STATEMENT OF INCOME AND EXPENDITURE

(To b e maintained by CWASC/SHG)

At the end of month ___________________ For the year _____________________

Name of the slum /cit y: ________________________________________________

Balance w ith CWASC/SHG a t the beg inning of the mo nt h: __________________________________________

Add refund received from beneficiary: __________________________________________________________

Add Int erest received if any : __________________________________________________________________

Add revolving fund amo unt received from ULB /NGO _____________________________________________

Less loan disb ursed t o the beneficiary : __________________________________________________________

Less Installments refunded to ULB/NGO: ________________________________________________________

Net fund at the end of month: _________________________




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Annexure VIII


MONTHLY STATEMENT OF INCOME AND EXPENDITURE(To b e ma inta ined b y NGO)

At the end of mo nt h ___________________ For t he year _____________________

Name of the slum /cit y: ________________________________________________

Balance w ith NGO a t t he beg inning of the mo nt h: ________________________________________________

Add refund rece ived from SHG/CWASC: _________________________________________________________

Add Int erest received if any: __________________________________________________________________

Add revolving fund amo unt received from ULB /NGO: _____________________________________________

Less loan disbursed to the SHG/CWASC: _________________________________________________________

Less Amount re funded to ULB: ________________________________________________________________

Net fund at the end of month: _________________________

Signature of Secretary Signature of Treasurer

(NGO) (NGO)


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Contact:

Mr. Andre DzikusProgramme ManagerWater for Cities ProgrammesWater, Sanitation and Infrastructure BranchUN-HABITAT, P.O.Box 30030, Nairobi, KenyaTel: 254-20-7623060, 7625082Fax: 254-20-7623588E-mail: [email protected]

Dr. Kulwant SinghChief Technical Advisor

Water for Asian Cities ProgrammeUN-HABITAT WAC Programme Regional OfficeEP 16/17, Chandragupta Marg, ChanakyapuriNew Delhi - 110 021, IndiaTel: +91-11-42225019 & 42225022Email: [email protected]

Mr. Aniruddhe MukerjeeChief Technical AdvisorWater for Asian Cities ProgrammeE 1/191 Arera Colony Bhopal 462016

Documents

Guidelines on Revolving Funds for Community Managed Water Supply Schemes and Construction of Individual Household Toilets in Urban Slums in Madhya Pradesh, India