A PROJECT REPORT ON

MICROFINANCE IN INDIA

SUBMITTED BY

DIVYA MANDALIYA

TYBFM (SEMESTER V)

DIVISION : A

ROLL NO : 32

ACADEMIC YEAR

2016 - 2017

UNDER THE GUIDANCE OF

DR. SADAF HASHMI

DATE OF SUBMISSION

FEBRUARY 27th , 2017

SVKMS NARSEE MONJEE COLLEGE OF

COMMERCE AND ECONOMICS

VILE PARLE (W), MUMBAI 400056

SUBMITTED TO UNIVERSITY OF MUMBAI

 CERTIFICATE

I, DR. SADAF HASHMI, hereby certify that DIVYA MANDALIYA of

SVKMS Narsee Monjee College of Commerce and Economics of TYBFM
[ SEMESTER VI ] has completed the project on MICROFINANCE IN
INDIA in the academic year 2016-2017 under my guidance. The information
submitted herein is true and original to the best of my knowledge.

____________________ _________________

DR. SADAF HASHMI DR.PARAG AJAGAONKAR

PROJECT GUIDE I/C PRINCIPAL

_______________________

EXAMINER
 DECLARATION

I, Ms. Divya Mandaliya, of SVKMs Narsee Monjee College of Commerce and

Economics of TYBFM [Semester VI ] hereby declare that I have completed my
project, titled MICROFINANCE IN INDIA in the Academic Year 2016
2017. The information submitted herein is true and original to the best of my
knowledge.

________________________

DIVYA MANDALIYA
 ACKNOWLEDGEMENT

It has always been my sincere desire as a financial market student to get an

opportunity to express and share my views and opinions in this field. A project
is one such avenue through which a student who aspires to be future manager
does something creative. This project has given me the chance to research and
gain knowledge about various aspects of the Non-Performing Assets in the
banking industry.

I am extremely grateful to the University of Mumbai for having prescribed this

Project work to me as a part of the academic requirement and thought of me to
be capable of finishing it efficiently.

I wish to appreciate the SVKM management and Narsee Monjee College for
providing all the required facilities which enabled me to work on this project
very smoothly. I would like to thank the I/C Principal, DR.PARAG
AJAGAONKAR for his dynamic leadership.

I also wish to thank my Project Guide Dr.Sadaf Hashmi and BFM Co- ordinator
Mrs.Pooja Singh for guiding me throughout the project because without their
support the project may not have taken shape.

I also appreciate all the support provided by the library staff and the teaching
and supporting staff of Narsee Monjee College for providing with all the
necessary academic content.

Finally, I thank all my friends and family members who have directly or
indirectly helped me towards the execution of this project.
 EXECUTIVE SUMMARY

The study on Micro-Finance in India highlights the microfinance & evaluates

the position of microfinance. The concept of microfinance is not new in India.
Traditionally, people have saved with and taken small loans from individuals
and groups within the context of self-help to start businesses or farming
ventures. Majority of poor are excluded from financial services. Microfinance is
a programme to support the poor rural people to pay its debt and maintain social
and economic status in the villages. Microfinance is an important tool for
improving the standard of living of poor. Inspite of many organizations of
microfinance, microfinance is not sufficient in India. The study explores some
suggestions to make microfinance more effective. The potential for growing
micro finance institutions in India is very high. Microfinance market in India is
expected to grow rapidly, supported by government of Indias initiatives to
achieve greater financial inclusion, and growth in the countrys unorganized but
priority sector.

Microfinance has evolved rapidly into a global movement dedicated to

providing access to a range of financial services to poor and nearpoor
households. The organizations that provide these services, known as
Microfinance institutions (MFIs) may operate as formal micro banks, non-bank
financial institutions, non-governmental organizations, or community-based
financial institutions. These providers offer a range of financial services from
small business loans to savings accounts, money transfers, insurance, and
consumer loans.
Growth of the microfinance industry, however, the microfinance is important as
a minimum condition for achieving these social missions. Major Cross-section
can have benefit if this sector will grow in its fastest pace. On the basis of
growth and evolution related to microfinance, the study predicts the new agenda
for future.

The microfinance industry being very small in terms of value added to the
Indian financial sector. It examines the experience, of India, which has one of
the largest microfinance sectors in the world. Globally, over a billion poor
people are still without access to formal financial services. Some 200 million of
these people live in India. Microfinance, the provision of a wide range of
financial services to poor people, has proved a very successful way of providing
immensely valuable services to poor people on a sustainable basis. Access to
financial services has allowed many families throughout the developing world.
It is incontestable that an efficient and effective microfinance system is essential
for building a sustained economic growth. The Indian Government should find
an avenue for creation of awareness on how microfinance can benefit from
loans and monitors closely to ensure disbursement of loans and grants to
entrepreneurs.
 INDEX

Sr. No Particulars Page No.

1. Introduction Review and Concept 1
2. Evolution of Micro finance in India 3
3. Recent trends in MFI lending 5
4. Literature Review 9
5. The Need in India and its Significance 13
6. Impact of Micro finance on different sectors in the 15
Economy
7. Issue related to Micro finance 17
Problems faced by borrowers
Problems faced by Lenders
8. Products used by Micro finance in India 23
9. Credit Lending models by Microfinance institutions 25
10. Principles of Micro finance 30
11. Government Role supporting Micro finance 31
12. Micro finance and Rural development 33
13. Top 25 Micro finance Institutions 36
14. The SKS Microfinance story 37
15. Self Help Groups ( SHGs) 43
16. Research Methodology 48
17. Primary Data Analysis 49
18. Recommendations 59
19. Conclusion 61
20. Bibliography 63
21. Annexure 64