PROJECT REPORT

ON
“MICRO FINANCE IN BANKING”

A PROJECT SUBMITED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF
BACHELOR IN COMMERCE (BANKING AND INSURANCE)

UNDER THE FACULTY OF COMMERCE

SUBMITED BY:
MR. SHIVAM MITHILESH BHARADWAJ

RESEARCH GUIDE:
ASST. PROF. SANTOSH ROHRA

S. I. C. E. S. DEGREE COLLEGE OF ARTS, SCIENCE AND

COMMERCE, AMBERNATH (WEST) – 421505
2019-2020
 S.I.C.E. SOCIETY’S

DEGREE COLLEGE OF ARTS, SCIENCE & COMMERCE

JAMBHUL PHATA, CHIKHLOLI, AMBERNATH (WEST), THANE –

421505

CERTIFICATE

This is to certify that MR.SHIVAM MITHILESH BHARADWAJ has worked and

duly completed his Project Work for the degree of Bachelor in Commerce (BANKING AND
INSURANCE) under the Faculty of banking and insurance and project is entitled, “MICRO

FINANCE IN BANKING” under my supervision.

I further certify that that the entire work has been done by the learner under my guidance
and that no part of it has been previously for any Degree or Diploma of any University.

It is his own work and facts reported by his personal findings and Investigations.

Date of submission:
ASST. PROF. SANTOSH ROHRA
(PROJECT GUIDE)
 DECLARATION BY LEARNER

I the undersigned MR. SHIVAM MITHILESH BHARADWAJ here by, declare that
the work embodied in this project work titled “MICRO FINANCE IN BANKING”, forms
my own contribution to the research work carried under the guidance of ASST. PROF.
SANTOSH ROHRA is a result of my own research work and has not been previously
submitted to any other University for any other Degree/Diploma to this or any other University.

Wherever reference has been made to previous works of others, it has been clearly
indicated as such as included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

Seal of the college

MR. SHIVAM MITHILESH BHARADWAJ

(Learner)

Certified by
ASST. PROF. SANTOSH ROHRA
(Project Guide)
 ACKNOWLEDGEMENT

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.

I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.

I take this opportunity to thank the UNIVERSITY OF MUMBAI for giving me chance
to do this project.

I would like to thank my Principal, DR. HARSHAL M. BACHHAV for providing the
necessary facilities required for completion of this project.

I take this opportunity to thank our Coordinator ASST. PROF. RAKHI GULATI, for
her moral support and guidance.

I would also like to express my sincere gratitude towards my project guide ASST.
PROF. SANTOSH ROHRA whose guidance and care made the project successful.

I would like to thank my COLLEGE LIBRARY, for having provided various

reference books and magazines related to my project.

Lastly, I would like to thank each and every person who directly or indirectly helped
me in the completion of the project especially my parents and who supported me throughout
my project.
 METHODOLOGY

Assigned project task is completed by going through various books committee report
regarding micro finance in banking.

The project report entitled here is purely study project and does not include any
predictions or forecast regarding the future trends in the rural sector.

The project is based on various references taken from guide, and survey (primary)
books and report mentioned in the bibliography at the end of the assign project.
 METHODOLOGY

Assigned project task is completed by going through various books committee report
regarding micro finance in banking.

The project report entitled here is purely study project and does not include any
predictions or forecast regarding the future trends in the rural sector.

The project is based on various references taken from guide, and survey (primary)
books and report mentioned in the bibliography at the end of the assign project.
 INDEX

CHAPTER CONTENT PG.

NO. NO.

1 INTRODUCTION OF MICROFINANCE 10-

16
 WHAT IS MICROFINANCE 11
 DEFINITION 12
 MICROCREDIT 13
 NEED FOR EMERGENCE OF MICROFINANCE 14

 ORIGIN OF MICROFINANCE 15
 MICROFINANCE SECTOR IN INDIA 15
 CONCEPT AND FEATURES OF 16
MICROFINANCE

2 INTRODUCTION TO THE COMPANY (BANDHAN 17-

BANK Ltd.) 28
 INTRODUCTION OF BANDHAN BANK 18
 HISTORY 18
 BOARD OF DIRECTORS 19
 OPERATIONS 22
 FIXED DEPOSIT INTEREST RATES 23
 PRODUCTS AND SERVICES 26

3 SELF HELP GROUP (SHG) 29-

40
 INTRODUCTION 29
 SHG MODEL 30
  VAAGDHARA HELPS (SHG) WOMEN 32
BECOME CHANGE AGENTS FOR THE
COMMUNITY
 VARIOUS PLAYERS PROVIDING 34
MICROFINANCE
 CHALLENGES FOR MICROFINANCE 37
 CONSTRAINTS IN THE OPERATING 39
ENVIROMENT

4 SWOT ANALYSIS 41-

45

5 DATA ANALYSISAND INTERPRETATION 46-

60
FINDING AND SUGGESTIONS 61-
63
CONCLUSION 64
ANNEXURE 6
QUESTIONNAIRE 65-
68
BALANCE SHEET OF BANDHAN BANK 69-
70
BIBLIOGRAPHY 71
WEBLIOGRAPHY 72
EXECUTIVE SUMMARY:
Microfinance is yet another area where banks can play an active role. The objective of
microfinance is to deliver a wide range of financial services like deposits, advances, insurance
and other related products to people engaged in agricultural, small enterprise and poor people
in order to increase their standard of living.Finance, which is basically an institutional/group
finance instead of lending to individual beneficiaries unlike in the case of priority sector/rural
lending, is extended to SHGs or NGOs. Moreover, there are no subsidies or interest concessions
and the basic concept in microfinance is to give a timely finance to the needy people. Therefore,
transaction costs are cheaper and profitability is better under microfinance when compared to
the conventional rural lending. In view of these factors in the long run, microfinance is likely
to replace the conventional and concessional rural lending. There is ample scope for private &
foreign banks to venture into this activity due to the above mention advantage. Rural India and
its economy is mainly depend on monsoons. Famine and floods both occur at the same time in
different parts of the country causing damage to the crops. Therefore, rural insurance has to be
an effective tool in hedging these risk factors. Government, banks and insurance agencies have
to together evolve more proactive and vibrant measures to deal with this issue, both at micro
and macro level.
  VAAGDHARA HELPS (SHG) WOMEN 32
BECOME CHANGE AGENTS FOR THE
COMMUNITY
 VARIOUS PLAYERS PROVIDING 34
MICROFINANCE
 CHALLENGES FOR MICROFINANCE 37
 CONSTRAINTS IN THE OPERATING 39
ENVIROMENT

4 SWOT ANALYSIS 41-

45

5 DATA ANALYSISAND INTERPRETATION 46-

60
FINDING AND SUGGESTIONS 61-
63
CONCLUSION 64
ANNEXURE 6
QUESTIONNAIRE 65-
68
BALANCE SHEET OF BANDHAN BANK 69-
70
BIBLIOGRAPHY 71
WEBLIOGRAPHY 72
INTRODUCTION:

India is the largest democratic country and one of the fastest growing economies in the world.
It is the second most populous country after China, with 1.1 billion populations in 2007.The
improving economic conditions and steady rise in Gross Domestic Product (GDP) growth rate
have put the country in the centre of focus in global business environment. With a huge
population and an increasing number of the consuming class, the Indian economy was ranked
among top 15 economies of the world. The agricultural growth coupled with steady expansion
of industry and services contributed to a high GDP growth rate.

According to the data available for the year 2006, more than 35% of the population in India
earned about less than dollar a day. Nearly 70% of the total population lived in rural areas,
while about 30% lived in urban areas in 2006. According to the government statistics, 70% of
the poor (nearly 225 million) lived in the villages, with precipitate consumption expenditure of
Rest. 356 ($8.70) a month or Rest. 11.70($0.28) a day. The majority of rural poor were mainly
involved in the agricultural activities employed by the local landowners. The others followed
caste-oriented occupations like priests, carpenters, blacksmiths, barbers, weavers, potters, oil-
pressers, leatherworkers, sweepers, etc. Thus, the incomes generated from such activities were
far from ‘acceptable’.

The majority of the rural population was neither prosperous nor had enough security to
approach formal financial institutions for its credit needs. It lacked access to formal financial
intermediaries, including basic saving services. This created the need for microfinance, which
meant any activity that provided financial services as credit, savings, and insurance to low-
income individuals with a goal of creating social value. The social goal included poverty
alleviation and improving livelihood opportunities through the provision of capital for micro
enterprise and insurance and savings.

WHAT IS MICROFINANCE?

Microfinance refers to the provision of financial services to low-income clients, including the
self-employed. The term also refers to the practice of sustain ably delivering those services.

More broadly, it refers to a movement that envisions “a world in which as many poor and near-
poor households as possible have permanent access to an appropriate range of high quality
financial services, including not just credit but also savings, insurance, and fund transfers.”
Microfinance could be defined as the provision of a broad range of financial services such as
deposits, loans, money transfers and insurance tithe poor, low income households and micro-
enterprises. Another definition of microfinance is the small scale financial services provided to
the people who work in agriculture, fishing, herding; who operate small or microenterprises;
who provides services; who work for wages or commission; another individuals or groups at
the local level of developing countries, both rural and urban. Financial services usually include
credit and savings, but there are micro-finance institutions who provide additional services
also, such as issue of cheques, drafts, guarantees etc. The Task Force constituted by NABRD
defined micro-finance as ‘provision of thrift, credit and other financial services and products
of very small amounts to the poor in rural and semi-urban or urban areas for enabling them to
raise their income levels and in improving living standards.

Improving the access of these bypassed people to financial services is one of the tools to
improve their financial condition and also to enable them to contribute optimally to the overall
economic development of thecommunity.The origins of institutionalizing micro-finance could
be traced to the beginning of the cooperative movement in Germany. The famed
RaiffeisenSocieties were perhaps the first institutional structures which attempted toprovide
loans to the peasants for developing their businesses and freeing them from the money lenders
who charged very high rates of interest. In India, the enactment of the cooperative societies Act
in 1904 was the beginning of micro-finance. The objectives of the enactment were the same
which had led to the establishment of Raiffeisen Societies i.e. to provide credit to the farmers
and combating the problems of usury and indebt nest the village money lenders. The urgency
to improve agriculture and keeping in view the widespread poverty, oppression and ignorance,
the state became increasingly involved in the financial markets. On the recommendation of the
All India Rural Credit Survey Report, the State partnership in credit cooperatives started.

Over time, the Government’s involvement in the credit cooperatives increased and the credit
cooperatives (by and large) ceased to be autonomous people’s institutions and are now seen
more as a state instrument. The Government of India has also taken a number of steps to
improve the flow of institutional credit to the small and marginal farmers (SMF) in particular
and other rural population in general. The expansion of the branch network of the nationalized
banks, establishment of the RRBs,the priority sector and other targets [agricultural loans, loans
to weaker sections etc.] for commercial banks, the Differential Rate of interest scheme,
programmes like IRDP, SGSY etc. were intended to improve the access of the rural people to
credit and to improve their incomes. However, some of these, particularly the Differential
interest rate lending the IRDP, SGSY etc. Were more in the nature of poverty alleviation
schemes and not so much for improving the access of the bypassed rural population to the
financial services? The expansion of the network of the banking system in the rural areas helped
in bringing banking to the masses. The institutional credit which accounted for only 7% of the
borrowings of the rural households in 1951-52increased to 61.2% in 1981, but came down to
56.6% in 1991. Tanks to the efforts of the banking system, the agriculture credit flow during
2003-04 has reached a massive Rest. 80000 core. The credit flow to the agriculture sector has
been registering as decade annual growth rate of around 14 to 15%which means the doubling
of credit flow in about every five years or so.Inspite of these massive gains, it is believed that
the formal sector only accounts for the tip of the iceberg of rural finance. A large part of the
rural financial flows is transacted in the informal sector and remains unreported.
INTRODUCTION:

India is the largest democratic country and one of the fastest growing economies in the world.
It is the second most populous country after China, with 1.1 billion populations in 2007.The
improving economic conditions and steady rise in Gross Domestic Product (GDP) growth rate
have put the country in the centre of focus in global business environment. With a huge
population and an increasing number of the consuming class, the Indian economy was ranked
among top 15 economies of the world. The agricultural growth coupled with steady expansion
of industry and services contributed to a high GDP growth rate.

According to the data available for the year 2006, more than 35% of the population in India
earned about less than dollar a day. Nearly 70% of the total population lived in rural areas,
while about 30% lived in urban areas in 2006. According to the government statistics, 70% of
the poor (nearly 225 million) lived in the villages, with precipitate consumption expenditure of
Rest. 356 ($8.70) a month or Rest. 11.70($0.28) a day. The majority of rural poor were mainly
involved in the agricultural activities employed by the local landowners. The others followed
caste-oriented occupations like priests, carpenters, blacksmiths, barbers, weavers, potters, oil-
pressers, leatherworkers, sweepers, etc. Thus, the incomes generated from such activities were
far from ‘acceptable’.

The majority of the rural population was neither prosperous nor had enough security to
approach formal financial institutions for its credit needs. It lacked access to formal financial
intermediaries, including basic saving services. This created the need for microfinance, which
meant any activity that provided financial services as credit, savings, and insurance to low-
income individuals with a goal of creating social value. The social goal included poverty
alleviation and improving livelihood opportunities through the provision of capital for micro
enterprise and insurance and savings.

WHAT IS MICROFINANCE?

Microfinance refers to the provision of financial services to low-income clients, including the
self-employed. The term also refers to the practice of sustain ably delivering those services.

More broadly, it refers to a movement that envisions “a world in which as many poor and near-
poor households as possible have permanent access to an appropriate range of high quality
financial services, including not just credit but also savings, insurance, and fund transfers.”
capacity building, social and cultural programmes. Thus, microfinance has an element of
‘Credit plus’ while microcredit is ‘only credit’.

NEED FOR EMERGENCE OF MICROFINANCE

Most of the countries in the world are either in the category of developing or underdeveloped
economy. When compared with developed countries, developing and underdeveloped
countries have more population and less resources.

In any economy, most of the day-to-day activities require money. Money is mandatory for
education, wedding, health, etc. The financial needs of any human being can be divided into
lifecycle, needs, personal emergencies, disasters, invest opportunities, etc.

Agriculture is the main occupation for those in rural areas. The farmers have to invest money
to buy seeds, fertilizers, land and various requirements for agriculture. But because of their
financial crisis, they find it difficult to buy them. So they usually depend on moneylenders and
other informal financial sources. The formal financial institutions do not much interest in
lending to the rural poor. There are millions of them who are presently suffering from the high
interest rates and debt overhang in the developing and underdeveloped countries.
There are two basic strategies that can help the poor to meet their needs. The strategy of
providing money before the need arises is known as ‘Saving Up’. When a need arises, to fulfil
the need, people borrow money. Later they save money to repay the loan. It is known as ‘Saving
Down’.

The above fact has given rise to microfinance. This is purely based on the fact that poor can
save, borrow or lend and even repay their debts. These findings have led to other great
inventions like liquid-yields options. The fundamentals financial services, like savings, credit
and insurance provide an opportunity to people to borrow, save, invest and protect against risks.
Poor people require basic insurance option, saving services and realistic remittance systems to
manage their assets and generate income. But with little income, they are unable to manage
their lives and, moreover, they are not able to borrow money from banks. Hence, they tend to
rely on informal financial institutions, like village moneylenders, pawn-brokers, Rotating
Savings and Credit Associations (ROCSAs), Accumulating Savings and Credit Associations
(ACSAs), savings collections, supply shops, money guards etc. which usually charge a high
rate of interest on whatever is lent. In India the apex financial institution which provide
microfinance are National Bank for Agriculture and Rural Development
(NABARD),Commercial Banks, Small Industries Development Bank of India
(SIDBI),Regional Rural Banks, Co-operative Banks, Non-Banking Financial Companies
(NBFCs), etc.

ORIGIN OF MICROFINANCE

In order to reduce poverty, Bangladesh had introduced microfinance in the name of Graeme
Bank in 1976. The major objects of this project waste facilitate and promote the standard of
living of the poor by providing the thrift (savings), credit and other financial services such as
microcredit, micro savings, micro insurance, etc. These institutions are financial non-
governmental organizations, financial cooperatives, etc. They provide small amounts of credit
at reasonable interest rates. Although credit is an important part of microfinance, it is just one
of the assorted financial services which help to improve the lives of poor across the world.
These institutions help to spread the business in rural areas and stimulate the local economic
growth.NABARD was carved out of the Reserve bank of India in 1982; the apex financial
institution for the development of the agriculture and rural areas was constantly challenged to
strengthen the rural credit delivery system so as to enable the rural poor to access small loans
from financial institution. With perhaps one of the most impressive institutional infrastructures,
this should not being difficult task, particularly given the fact that most of the banks were
government-owned. To supplement credit provision in the rural areas, Regional Rural Banks
(RRBs) were established across the country in 1975, in addition to the already existing
institutional infrastructure of the cooperative and land development banks. Coupled with
statutory priority-sector lending obligations, the flow of finance to the rural poor under poor
under this regime should not have been an issue.

MICROFINANCE SECTOR IN INDIA

Microfinance has demonstrated the potential of building the social capital of the poorest
communities. The Asian journey begins with India where the country’s first microfinance
institution was set up in 1974, earlier than the famous Graeme Bank which was set up in 1976.
However, the microfinance movement accelerated in the 1980s only. Like in other Asian
countries the operation was through small loan to ‘Self Help Groups’ of women. From this
small beginning, the microfinance sector grown significantly in the past decade and half.

National bodies like the Small Industries Development Bank of India (SIDBI) and the National
Bank for Agriculture and Rural Development (NABARD) are devoting significant time and
financial resources on microfinance. These points to the growing importance of the sector. The
strength of the microfinance sector in India is the diversity of approaches and forms that have
evolved over time. In addition to the home grown models of SHGs and Mutually Aided
Cooperative Societies (MACS), the country has learnt from other microfinance experiments
across the world, particularly Bangladesh, Indonesia, Thailand and Bolivia, in terms of delivery
if microfinance services

CONCEPT &FEATURES of MICRO-FINANCE

1. It is a tool for empowerment of the poorest.

2. Delivery is normally through Self Help Groups (SHGs)
3. It is essentially for promoting self –employment, generally used for.
a. Direct income generation
b. Rearrangement of assets and liabilities for the household to participate in future
opportunities and
c. Consumption smoothing
4. It is not just a financing system, but a tool or social change, especially for women.
5. Because micro credit is aimed at the poorest, micro-finance lending technology needs
to mimic the informal lenders rather than the formal sector lending. It has to;
a. Provide for seasonality
b. Allow repayment flexibility
c. Fix a ceiling on loan sizes.
capacity building, social and cultural programmes. Thus, microfinance has an element of
‘Credit plus’ while microcredit is ‘only credit’.

NEED FOR EMERGENCE OF MICROFINANCE

Most of the countries in the world are either in the category of developing or underdeveloped
economy. When compared with developed countries, developing and underdeveloped
countries have more population and less resources.

In any economy, most of the day-to-day activities require money. Money is mandatory for
education, wedding, health, etc. The financial needs of any human being can be divided into
lifecycle, needs, personal emergencies, disasters, invest opportunities, etc.

Agriculture is the main occupation for those in rural areas. The farmers have to invest money
to buy seeds, fertilizers, land and various requirements for agriculture. But because of their
financial crisis, they find it difficult to buy them. So they usually depend on moneylenders and
other informal financial sources. The formal financial institutions do not much interest in
lending to the rural poor. There are millions of them who are presently suffering from the high
interest rates and debt overhang in the developing and underdeveloped countries.
INTRODUCTION

Banana Bank Ltd. is an Indian banking and financial services company headquartered in
Kolkata, West Bengal. Banana, which started as a micro-finance company in 2001, received
banking licence by Reserve Bank of India in 2014.

On 23 August 2015, Union Finance Minister ArunJaitley officially inaugurated the bank in
Kolkata. Initially it opened with 501 branches, 50 ATMs and 2,022 Door step Service Centres
(DSCs) across India. Banana Bank was incorporated on 23 December 2014 as a wholly owned
subsidiary of Banana Financial Holdings. Banana received the in-principle approval of the
(RBI) for setting up a universal bank in April 2014; the banking regulator gave its final nod in
June 2015.
Kolkata-headquartered Banana is the first bank to be set up in eastern part of India after
Independence. Currently, the Bank has 3,667 touch points pan India consisting of 840 bank
branches, 2,444 Doorstep Service Centres (DSCs) or banking outlets and 383 ATMs.

Banana Financial Holdings is owned by Banana Financial Services Limited (BFSL), the largest
micro finance organization in India. Its public shareholders include International Finance
Corporation (IFC), Small Industries Development Bank of India (SIDBI), Caladium
Investment Pt. Ltd. (a company managed by GIC Special Investments Private Limited), Banana
Employees Welfare Trust, and a few individuals.
HISTORY OF BANDHAN BANK

Previously, Banana Bank was – one of the largest microfinance companies of India and
world’s largest non-deposit-accepting microfinance institution (MFI). The microfinance
company was founded by Chandra ShekharGhosh, who is also its Chairman and Managing
Director. The microfinance company lent money to small-scale business, low income women
entrepreneurs and Self Help Groups (SHGs). Bandhan was established in 2001 and has total
assets of approximately Rs.6, 770crore at the time of gaining a bank licence. With more than
13,000 employees, Banana was operating from more than 2,000 branches across the country.

BOARD OF DIRECTORS

DR. ANUP KUMAR SINHA

(CHAIRMAN)
 Banana Bank Board approved the appointment of An up Kumar Sinha as part-time
Chairman with immediate effect. He will be serving as the part-time Chairman for three years
pursuant to approval of RBI.

An up Kumar Sinha and Santana Mukherjee were both appointed as Additional

Directors (Independent) of Banana Bank as well.

A Ph.D. in Economics from University of Southern California, LA, Sinha is currently

the Director of Heritage Business School. Sinha has also taught at Presidency College and
Indian Institute of Management Calcutta (IIM-C). He served as Professor of Economics at IIM-
C for 25 years.

Sinha has also served on the Board of NABARD and is currently the IRDAI
representative on the Life Insurance Council of India. He also served three terms on the Board
of Governors at IIMC and also as the Dean during 2003-06. Additionally, Sinha has held
visiting appointments at Calcutta University, Indian Statistical Institute, University of Southern
California, Washington University at St. Louis, Curtin University at Perth and Kyoto
University.

Not only is a scholar, Sinha also a much-loved teacher. He received the Best Faculty
Award from the IIM-C Alumni Association in 2003 and 2004. He also won the Most Popular
Teacher Award from the outgoing MBA students of Aimed in 2012, 2014 and 2015.

He has been actively engaged in training and consulting for a number of organizations
in the public and private sector, as well as for international agencies in the fields of economics.
He has also authored publications on various topics including economics, rural economy,
management and more.

Santana Mukherjee is a B.Sc. Honours from Presidency College under Kolkata

University and CAIIB from the Indian Institute of Bankers. Mukherjee is the former Managing
Director of State Bank of Hyderabad and has around four decades of experience in the field of
banking, finance, and risk management in various capacities.
CHAPTER 2
INTRODUCTION
TO THE COMPANY
(BANDHAN BANK
Ltd.)
INTRODUCTION

Banana Bank Ltd. is an Indian banking and financial services company headquartered in
Kolkata, West Bengal. Banana, which started as a micro-finance company in 2001, received
banking licence by Reserve Bank of India in 2014.

On 23 August 2015, Union Finance Minister ArunJaitley officially inaugurated the bank in
Kolkata. Initially it opened with 501 branches, 50 ATMs and 2,022 Door step Service Centres
(DSCs) across India. Banana Bank was incorporated on 23 December 2014 as a wholly owned
subsidiary of Banana Financial Holdings. Banana received the in-principle approval of the
(RBI) for setting up a universal bank in April 2014; the banking regulator gave its final nod in
June 2015.
FIXED DEPOSITS INTEREST RATE

BANDHAN BANK FD RATES 2019

BANDHAN BANK FD INTEREST FOR DIFFERENT TENURE ARE AS FOLLOWS:

TENURE REGULAR CITIZENS SENIOR CITIZENS

7 days to 14 days 3.50% 4.25%

15 days to 3 months 4.00% 4.75%

3 months to less than 6 months 4.50% 5.25%

6 months to less than 1 year 6.80% 7.55%

1 year to 18 months 7.35% 8.10%

Above 18 to less than 2 year 7.65% 8.40%

2 years to less than 5 years 7.40% 8.15%

5 years to 10 years 6.40% 7.15%

Note –

 Banana Bank Fixed Deposit Interest rates effective from Dec. 10, 2018.
 Interest rates on NRE (Non Resident External) and NRO (Non Resident Ordinary) term
deposits are same as those applicable on domestic term deposits.
FEATURES OF BANDHAN BANK FD

Banana Bank Fixed Deposits have some salient features of their own. Some of these features
are as follows:

 The bank offers attractive interest rates on its range of FD schemes.

 Investors can open FD accounts through multiple channels such as online banking,
mobile banking and by visiting the branch.

 Depositors can choose from various deposit plans with traditional as well as
reinvestment features.

 Depositors get maximum liquidity on FD schemes with facilities such as part

withdrawal and premature closure. That is, you can withdraw the funds accumulated in
the FD partially during the tenure and even close the FD before the allotted time.
 Depositors also have the option to choose monthly or quarterly interest pay-outs and
even quarterly compounding of interests.

 Another great feature of Banana Bank’s fixed deposit is that the bank can extend a loan
or overdraft on the FD, should the depositor be in need of funds. This option is best for
individuals who need funds immediately and have a low credit score, making it difficult
for them to get a personal loan or any other unsecured loan.

 Depositors have to make a minimum deposit of Rest 1000 and in multiples of Re 1

thereafter in fixed deposit schemes. However, this minimum deposit amount may differ
for every scheme.
 Banana Bank Board approved the appointment of An up Kumar Sinha as part-time
Chairman with immediate effect. He will be serving as the part-time Chairman for three years
pursuant to approval of RBI.

An up Kumar Sinha and Santana Mukherjee were both appointed as Additional

Directors (Independent) of Banana Bank as well.

A Ph.D. in Economics from University of Southern California, LA, Sinha is currently

the Director of Heritage Business School. Sinha has also taught at Presidency College and
Indian Institute of Management Calcutta (IIM-C). He served as Professor of Economics at IIM-
C for 25 years.

Sinha has also served on the Board of NABARD and is currently the IRDAI
representative on the Life Insurance Council of India. He also served three terms on the Board
of Governors at IIMC and also as the Dean during 2003-06. Additionally, Sinha has held
visiting appointments at Calcutta University, Indian Statistical Institute, University of Southern
California, Washington University at St. Louis, Curtin University at Perth and Kyoto
University.

Not only is a scholar, Sinha also a much-loved teacher. He received the Best Faculty
Award from the IIM-C Alumni Association in 2003 and 2004. He also won the Most Popular
Teacher Award from the outgoing MBA students of Aimed in 2012, 2014 and 2015.

He has been actively engaged in training and consulting for a number of organizations
in the public and private sector, as well as for international agencies in the fields of economics.
He has also authored publications on various topics including economics, rural economy,
management and more.

Santana Mukherjee is a B.Sc. Honours from Presidency College under Kolkata

University and CAIIB from the Indian Institute of Bankers. Mukherjee is the former Managing
Director of State Bank of Hyderabad and has around four decades of experience in the field of
banking, finance, and risk management in various capacities.
I. Retail Loans: The retail loan category includes the common types of loans that are
necessary at different stages of life. The types of loans are home loan, vehicle loan, and
personal loan, loan against property, loan against term deposit, and gold loans. All these loans
are a necessity at some point in life for almost every person. The only thing that stands between
you and these loans is the skyrocketing interest rates that compel people to wait and curb their
desires. However, Banana bank offers competitive interest rates that allow you to fulfil your
dreams.

II. MSME Loans: The bank offers a wide range of MSME loans to start or aid your small
or medium enterprise. Such loans help you enhance liquidity in your business and create
income generating assets. With immediate access to such instruments, you can grow
your business substantially without wasting time. The MSME category includes:

 Samriddhi Business Loan: Can be taken as working capital loan or a term loan. The
maximum loan can be up to Rs. 25 lakh with a maximum tenure of up to 5 years.

 Commercial Vehicle Loan: Maximum loan amount of Rest. 10 lakh and a tenure of
up to 5 years.

 Term Loan: The loan amount depends on requirement and due assessment done by
Banana Bank. The maximum loan tenure is of 7 years.

 Equipment Loan: Offers a maximum loan amount of Rest. 10 lakh and a maximum
tenure of 60 months.

 Working Capital Loan: This is another loan that is given based on the bank’s
assessment. Being a working capital loan, it is repayable on demand.

I. Small Enterprise Loan (SEL): This loan is designed for small enterprises that cannot
afford to keep collateral as security and need finance for working capital or income generating
activities. This product is specially offered to the people who need both working capital and
term/demand loan. The loan amount can range from a minimum of Rest. 1 lakh to a maximum
of Rest. 10 lakh. The loan tenure is kept at 3 years with comfortable payment mode that allows
 individuals to manage the repayment easily. These are composite loans that offer doorstep
assistance and simplified documentation.

II. Microloans: These are granted to individuals who want to establish a small business
from their home. This product is especially created for women who want to start a co-
owned/co-run business. The loan amount can start from Rest. 1,000 and can go up to
Rest. 1 lakh depending on the specific scheme. The schemes that come under this head
are Such, Suresh, Rishi, and Sushiksha.
III. Agra Loans: As the name suggests, Agra Loans are created for farmers who want to
build quality farms producing superior quality crops. This product helps you organise and
optimise your farming and other allied operations. The maximum loan amount available under
the several schemes under this head can go up a maximum of Rest. 10 lakh. The schemes
include Kian Credit Card, AgriAllied and Equipment Loan.

 Deposits: Term deposits offered by Bandhan Bank can be utilised for various needs
and future plans. You can fix the amount for the education of your children, foreign
vacation, and wedding or for an early retirement. Such deposits are a good way to keep
your money in a safe and protected environment for the long term and avail the benefit
of incurred interest. The deposits offered by Banana Bank include FDs and RD. The
several types of FDs available are FD Premium, FD Standard, FD Tax-Saver, FD
Advantage and FD DhanSamriddhi. The minimum deposit amount for FDs starts from
Rest. 1,000 which goes up to a minimum of Rest. 1 core for FD Premium. The bank
offers a maximum interest rate of 7.15% per annum for regular customers and 7.65%
interest rate per annum for senior citizens.

 NRI Banking: NRI banking from Banana Bank includes world-class services and
benefits for non-residents. This allows NRIs to invest and take benefit of the several
savings and time deposit schemes offered by the bank. Non-Resident Ordinary (NRO)
and Non-Resident External (NRE) account is available for NRIs for opening savings
and deposit accounts. This section of the services is handled by experienced banking
professionals. The bank is committed to delivering efficient, transparent and customer-
friendly services that offer maximum benefits to this group of customers.
2 It started operations with 1.43 core accounts and Rest. 10,500 core loan book across the
country.

3. It opened 2022 service centres and 50 ATMs across 24 states.

4. It has hired 19,500 employees as of now.

5.It has opened branches in few states – 220 in West Bengal, 67 in Bihar, 60 in Assam, 21 in
Maharashtra, 20 in Tripura and Uttar Pradesh and 15 in Jharkhand.

6.It is said that 71% of its branches will be in rural areas, which will include 35% branches in
unbanked rural regions.

7.It garnered the deposit of Rest. 80 core and 60,000 new accounts on the first day of its
operations.

8.It will have 18 such branches, out of all the branches, which will be open seven days a week.

9.It plans to increase the number of branches to 632 and add 250 ATMs in 27 states by the end
of the current fiscal year.
INTRODUCTION

SHG is unregistered group of less than twenty people (any structure of more than twenty has
to be registered) from a homogeneous class who come together for addressing their common
economic problems. They are encouraged to make voluntary savings on a regular basis. They
use this savings to make interest-bearing loans to their members. This process i.e. saving,
lending and recovering it back imbibes the essentials of financial intermediation including
prioritization of needs, setting terms and conditions and keeping financial accounts. This helps
in building financial discipline and more impotently credit history for themselves, as the money
involved in landings is their own ‘warm money’, the lending is done very carefully and the
entire money is recovered [zero tolerance default].

The group members also learn to handle larger sums of money which are much beyond their
individual savings. This process also makes them to understand the basic principle of banking
that money has a time value and Isa scare resource. The groups which learn this basic proves
of savings, lending and recovering it back, are ready to be linked to the bank. Linking means
access to larger resources as well as the security of their saving when they have surplus. The
banks take the advantage of lending to the group and the group rakes the responsibility of
prioritizing the loan demands from the members and fixing the terms and conditions of
sanction. In other words, the banks get the advantage of lending to those who have experience
in borrowing and repaying and additionally major part of their costs of sanctioning, disbursing,
monitoring and recovering are externalized. Theban’s loan amount adds to the small savings
which the group had accumulated and thereby the availability of resources increases. The banks
are able to lend at the normal commercial rate of interest; there are no subsidies and the money
comes back. The peer pressure among the group of members ensures timely repayment as the
group’s own accumulated savings are part and parcel of the aggregate loans made by the group
to their members and there are other members waiting as to when their demands loan would be
prioritized by the SHG. The conventional collateral is substituted by more effective collateral
[the peer pressure].

The crucial judgment of the banker is to assess when the SHG is ready for receiving bank loan
and how much should be sanctioned. In the Pilot Project (1992), NABARD had suggested that
the bank loan should be in multiple of the accumulated thrift of the SHG. The idea was not to
exceed1:4 and the suggestion was to start slowly by 1:1 or 1:2 and gradually increase. It was
also suggested that the credit linkage was not to be done before six months of the members of
the SHG doing regular thrift and the money so collected was used for lending among them and
recovered. Many, particularly the non-bankers were unhappy with the ‘waiting period’ of six
months. Fortunately, NABARD and the banks stuck to it and ensured that only mature SHGs
were credit linked. The important features of the product developed under the SHG-Bank
linkage Programme are as under:

 Groups of homogeneous people from similar economic background living in the

neighbourhood.
 Focus on woman.
 Saving first, credit later. Small fixed saving at regular interval. It helps in building up
financial discipline.
 Shorter repayment period.
 Progress lending.
 No subsidies.
 The SHG deciding the quantum as also the terms as conditions for loans to members.
 No subsidization of interest.

The linkages were in the two main areas:-

1. Institution – linkage between the SHG and the Banks, directly or through the NGO
or other self-help group promoting institutional (SHGPI).
2. Financial linkage between savings and credit (discussed earlier)

SHG MODEL

The strategy involved in this model is that of forming small, cohesive and participative group
of the poor, encouraging them to pool their savings regularly and using the pooled savings to
make small interest-bearing loans to members and, in the process, learning the nuances of
financial discipline. Subsequently, bank credit also becomes available to the group to augment
its resources for the purpose of lending to its members. The SHG-bank linkage program has
proved to be the major supplementary credit delivery system with a wide acceptance by banks,
NGOs and various government departments. There are three models of SHG-bank linkages
that have evolved over time, especially in India.
Model 1: SHGs Formed and Financed by Bank:

In this model, the bank itself takes up the work of forming and nurturing the groups, opening
their bank accounts and providing them with bank loans after satisfying itself regarding their
maturity to absorb credit. Here, the bank acts as the Self-help Group Promoting Institution
(SHGPI).

Model 2: SHGs Formed by NGOs and Formal Organisations, but Directly

Financed by the Banks:

In this model, groups are formed by NGOs (in most cases) or by government agencies like
Vetluga project in AP. The groups are nurtured and trained by the agencies. The bank then
provides credit directly to the Shafter observing their operations and maturity absorb credit.
While the bank provides loans to the groups directly, the facilitating agencies continue their
interaction with the SHGs. The model has also been popular with and more acceptable to banks,
especially in India, as most of the difficult functions of social dynamics are taken care of either
by NGOs or government agencies. Around 75% of the total numbers of SHGs are financed
under this model.

Model 3: SHGs Financed by Banks Using NGOs and Other Agencies as

Financial Intermediaries:

For various reasons, banks in some areas are not in a position even to finance SHGs promoted
and nurtured by other agencies. In such cases, things act as both facilitators and microfinance
intermediaries. First, they promote the groups, nurture and train them and then they approach
banks for bulk loans for on-lending to SHGs. Of late, this model is becoming more popular
with private sector banks in India as they are in a position to partlyfulfill their social lending
obligation by giving bulk loans to intermediaries(like NGO/MFI) for their onward lending to
weaker sections. Where the SHGPI was a NGO, the promoting institution also took upon itself
the role of keeping an eye on the SHG, providing technical support in the matters of account
keeping, holding of meetings, elections and training etc. besides the NGOs, the banks also
started promoting the SHGs.In certain areas, the Panchayat Raj institutions or
certaingovernmentalorganizations have also promoted SHGs.
VAAGDHARA HELPS (SHG)WOMEN BECOME CHANGE AGENTS
FOR THE COMMUNITY

Women members of Self Help Group (SHG) were identified as community nutrition advocates
and named as Annapurna. These members are trained through developed modules over various
components related to nutrition and health education.

As a chain process, they are imparting trainings to other SHG women, pregnant and
lactating women and their family members. On the occasions such as Village Health Nutrition
day, they provide counseling to pregnant and lactating mother and children, and are coming
out as change agents in the villages.

It is a very well-known fact that patriarchal system of India bound women to eat only
after feeding the entire family, both in rural and urban areas. But in the tribal regions of South
PRODUCTS AND SERVICES OF

BANDHAN BANK

The services offered by Banana Bank cover almost every array of financial services such as
accounts, loans, deposits, and NRI banking. An explanation of all the services offered by the
bank is given here.

 Accounts: Banana Bank offers two basic types of accounts savings account and current
account. Both the accounts have a few sub-categories designed for specific individual
needs.

 Savings Account: Savings account at Banana Bank offer higher interest rates and
greater convenience across a wide network of branches and ATMs. The basic savings
accounts offer all the facilities including ATM cum Debit card, shopping, and online
fund transfer. However, customers can also choose the other account options in this
category such as Premium, Standard, Special, Advantage, and Sancho. All these
accounts are particularly designed for different needs of people depending on their
financial capability. The bank offers a 6% interest rate to accounts with balance above
Rest. 1 lakh and 4% interest rate for accounts with balance less than Rest. 1 lakh.

 Current Account: These are high-convenience current accounts created for enhancing
the expediency factor in your day to day business operations. Whether you have a small
business or a big one, you can easily manage it with Banana Bank current accounts.
These accounts have higher daily withdrawal limits and come with overdraft facility as
well. The range of current accounts includes Biz Premium, Biz Standard, Biz
Advantage, and Biz Sarahi accounts.

 Loans: Being a microfinance company from the start, Banana Bank understands the
rising needs of today’s population and offers loans accordingly. The loan category
comprises of a few loans created specifically for your dynamic needs. This category
has 4 sub-categories.
2. Member-owned Organizations:-

This category includes Self-Help Groups (SHGs), financial cooperatives and a variety of hybrid
organizations like Financial Service Associations (FSA) and Self-managed Village Savings
and Credit Associations (SVSCAs). Generally, these are small, situated in local areas and have
access to each other’s financial circumstances. Hence, these groups offer convenient and
flexible services. They have low cost of operations and are managed by the poor.
Simultaneously due to lack of awareness about financial services, poor are getting into trouble
when they are in need of money to perform their daily activities. Hence, these member-owned
organizations are playing vital role in the lives of poor.

3. NGOs:

They play significant role in lending microfinance. They began their operations by promoting
financial services to the poor and low-income households in rural areas of the developing
countries. Recently, the RBI has permitted NGOs to merge with microfinance activities for the
promotion of the External Commercial Borrowing (ECB) up to $5mn. Of late, the Siddhas
provided a need-based financial support to poor and assembled efficient and well-performing
NGOs and microfinance institution in Orissa.

4. Formal Financial Institutions:-

This category consists of commercial Banks, state-owned banks, agricultural development

banks, savings banks and NBFCs, which are well-regulated and supervised. They have branch
network spread over nationally and internationally which offers a wide range of products. But,
they have an expensive operation framework which enables them to serve the poor or remote
population.

So, to solve the microfinance problems, these institutions can bridge leverage through
appropriate regulation and supervision. It helps the microfinance movement to achieve its goals
rather quickly and effectively.

5. NABARD:-
NABARD should promote and ensure a rapid growth of microfinance sector in terms of
formulating policies for good governance and transparency, supervising with benchmarks,
facilitating the maturity in credit-rating norms and maintaining specific accounting and
auditing norms, etc.

Various thrift services that are offered by every MFI should obtain a certificate of registration
from NABARD and those who do not offer thrift services are required to file their returns with
Tabard. There are some imitations which require certification from Tabard if the MFIs are
ready to accept the confines such as the general character of the management is not prejudicial
to the interest of eligible clients; the act owned funds of the Mafias at least Rest. 5 Lakhs; the
MFI has been in existence for at least three yarest. NABARD possesses the authority to revoke
the registration, if an MFIwhich ceases the thrift services or fails to comply with any of the
conditions on which the registration is granted or any direction issued by NABARD or does
not tender account books or other documents for inspection. If an MFIdisobey any prescribed
provision, NABARD may also forbid such MFI fromaccepting thrift services. Every MFI has
to generate a reserve fund byallocating a minimum of 15% of its net profit or surplus realized
out of saving services and microfinance services. This fund will be invested insome specified
securities suggested by Nabard.

NBFCs play a vital role in distributing and using microfinance inIndia. Microfinance is offered
through two channels, i.e., SHG Bank Linkage and MFIs. About 70% of the loans distributed
in the rural areas in India are through MFI channels. Few other important recommendations
are pertaining to MFIs such as reducing the foreign equity requirement to $1lakh from $5 lakh,
transferring the regulation of NBFC MFIs over tabard and also to furnishing tax concessions
of 40% of their profits if they work in exclusive districts as identified by NABARD.

The uniqueness of SGHs is to empower the poor to enable and control the direction on own
development by categorizing their felt needs. TheseSGHs add a very significant dimension to
microfinance. In 1992, NABARDgave stimulus to the movement by starting the SHG Bank
linkage program. It was the first major effort to link the conventional financial institutions with
the informal groups.

6. Microfinance in banks:
Traditionally, banks incurred substantial cost in managing the client’s accounts. This is true
irrespective of sum of money involved. Generally, poor people possess small amount of money.
If banks decide to serve these people, their break-even points in loans and deposits will be
affected seriously and they have to incur loss. But, with economic growth in rural areas through
microfinance, banks are developing an interest in microfinance. In the case of ICICI bank, there
has been a huge development in rural microfinance and agri-business loans within 9 months’
time and there is growth in financial turnover with an average of Rest. 5,200 cry to Rest.
10,000cr. Microfinance shows its impact on the bank’s growth, customer relationship and
accumulates 3.2 million low-income customers. India’s largest international bank, Standard
Chartered Bank is planning to involve in microfinance to increase the Bank’s turnover from
Rest. 100 cry to Rest. 500 crate ABN Amor Bank believes that microfinance is a powerful tool
for addressing poverty, empower the socially-marginalized poor and strengthen the social
fabric.
CHAPTER 3
SELF HELP GROUP
(SHG)
  Co-OPERTATIVE:-

Unlike rural banks, cooperatives are considered semi-formal institutions; they are regulated
and supervised by the CDA but this supervision is known to be weak. Lack of transparency has
historically been a major difficulty in assessing cooperative performance. Cooperatives, like
the rural banks, suffer from a lack of an effective network. Access by cooperatives to support
services also remains weak.

 MICROFINANCE NGOs:-

With the growing scarcity of donor funds for microfinance on lending, most microfinance
NGOs are now faced with the challenge of finding funds from commercial sources or from
deposits of their member-clients. Because deposits are considered a cheaper source of funds
than commercial loans, the inability of NGOs to mobilize deposits legally poses a significant
internal challenge. Lack of legal identity stemming from weak ownership and governance
structures poses the greatest challenge to microfinance NGOs in accessing funds to provide
microfinance on a commercial basis.

Commitment to balancing social and commercial objectives is also an important internal

challenge faced by most microfinance NGOs. Most microfinance NGOs, therefore, remain
small and weak and dependent on fresh infusions of subsidized funds for their survival. Related
to constraints stemming from small size and weak capacity, many microfinance NGOsface the
constraint of poor access to appropriate systems and support services.

Moreover inadequate management information systems and the lack of capacity to undertake
market research as two major constraints curtailing their growth. Although computerization of
systems has been identified as essential to the growth of MFIs, there still appears to be a supply
problem in terms of affordable, commercially available, off-the-shelf software packages that
suit the system and information requirements of MFIs.

Market research is a relatively new concern for most MFIs, prompted by increased client exit
(heightened drop-out rates) and the desire to improve repayment performance. Given the strong
recent interest in undertaking market research, the need to build this capacity in MFIs is great,
especially in microfinance NGOs, which face limited funding to support their increased lending
CONSTRAINTS IN THE OPERATING ENVIRONMENT

 Threat of Policy Reversal:-

The very convenient nature of direct credit provision by government makes it politically
expedient and tempting for policymakers to revert to the previous policy of regulating interest
rates and supporting directed credit programs. The challenge to prevent this lies not only with
the Government but also with private sector MFIs. It is imperative for all types of MFIs to close
ranks and advocate actively that the Government continue moving away from outright credit
provision and focus its interventions where it has distinct comparative advantage.

 Unclear Regulation and Supervision Concerning Microfinance Operations:-

Significant improvements have been made in the last few years by the Government in
recognizing microfinance and adapting regulation and supervision to the specialized nature of
microfinance operations. Until the rules of engagement of formal financial institutions in
microfinance are complete, uncertainties regarding the final form of regulation and supervision
of microfinance-oriented banks may curtail efforts by formal institutions to downscale their
operations.

 Inadequate Access to Commercial Sources of Funds:-

One of the consequences of not being able to mobilize deposits overtly is that many
microfinance NGOs remain highly dependent on external funding, which has historically come
from donors.

 No Credit Information Bureau that Captures Microcredit Information:

With increasing microcredit provision by microfinance NGOs, rural banks, and cooperatives,
creation of a credit bureau that captures microcredit information from these actors is becoming
increasingly vital to the continued health of the industry.
  Lack of Microfinance Training Centres:-

There is a variety of microfinance training programs. However, no “one-stop shop” yet exists
for the provision of regularly scheduled, demand-driven, and affordable technical courses on
microfinance program management and operation. CARD’s microfinance training centre is
perhaps the best known and most widely used, but it cannot be considered as wholly
professional training institution that would attract a wide variety of regular students from
different types of MFIs. The institution that seems most suitable for offering additional
microfinance training on a regular basis is Pula, provided that its management focuses on
developing demand-driven courses suitable for a wide range of viable MFIs. To serve as the
one-stop shop to build the technical capacity that the industry needs for further
professionalization and commercialization, Pula will need to shift its focus more toward
serving the complex and varied needs of commercial microfinance providers.
Model 1: SHGs Formed and Financed by Bank:

In this model, the bank itself takes up the work of forming and nurturing the groups, opening
their bank accounts and providing them with bank loans after satisfying itself regarding their
maturity to absorb credit. Here, the bank acts as the Self-help Group Promoting Institution
(SHGPI).

Model 2: SHGs Formed by NGOs and Formal Organisations, but Directly

Financed by the Banks:

In this model, groups are formed by NGOs (in most cases) or by government agencies like
Vetluga project in AP. The groups are nurtured and trained by the agencies. The bank then
provides credit directly to the Shafter observing their operations and maturity absorb credit.
While the bank provides loans to the groups directly, the facilitating agencies continue their
interaction with the SHGs. The model has also been popular with and more acceptable to banks,
especially in India, as most of the difficult functions of social dynamics are taken care of either
by NGOs or government agencies. Around 75% of the total numbers of SHGs are financed
under this model.

Model 3: SHGs Financed by Banks Using NGOs and Other Agencies as

Financial Intermediaries:

For various reasons, banks in some areas are not in a position even to finance SHGs promoted
and nurtured by other agencies. In such cases, things act as both facilitators and microfinance
intermediaries. First, they promote the groups, nurture and train them and then they approach
banks for bulk loans for on-lending to SHGs. Of late, this model is becoming more popular
with private sector banks in India as they are in a position to partlyfulfill their social lending
obligation by giving bulk loans to intermediaries(like NGO/MFI) for their onward lending to
weaker sections. Where the SHGPI was a NGO, the promoting institution also took upon itself
the role of keeping an eye on the SHG, providing technical support in the matters of account
keeping, holding of meetings, elections and training etc. besides the NGOs, the banks also
started promoting the SHGs.In certain areas, the Panchayat Raj institutions or
certaingovernmentalorganizations have also promoted SHGs.
There are four major elements / components of SWOT analysis - Strengths, Weaknesses,
Opportunities, and Threats.

STRENGTHS OF BANDHAN (B): SUSTAINABLE BANKING IN INDIA WHAT ARE

"STRENGTHS" IN SWOT ANALYSIS?

Strengths are the firm's capabilities and resources that it can use to design, develop, and sustain
competitive advantage in the marketplace

 Talent management at BandhanMfi and skill development of the employees -

Human resources are integral to the success of BandhanMfi in Strategy & Execution
industry.

 Market Leadership Position -BandhanMfi has a strong market leadership position in

the Strategy & Execution industry. It has helped the company to rapidly scale new
products successes.

 Success of new product mix -BandhanMfi provides exhaustive product mix options to
its customers. It helps the company in catering to various customers segments in the
Strategy & Execution industry.

 High margins compare to Strategy & Execution industry's competitors - Even

though BandhanMfi is facing downward pressure on profitability, compare to
competitors it is still racking in higher profit margins.

 Wide geographic presence -BandhanMfi has extensive dealer network and associates
network that not only help in delivering efficient services to the customers but also help
in managing competitive challenges in Strategy & Execution industry.

 Track record of innovation - Even though most players in the Strategy & Execution
strive to innovate, BandhanMfi has successful record at consumer driven innovation.
WEAKNESSES OF BANDHAN (B): SUSTAINABLE BANKING IN INDIA WHAT
ARE "WEAKNESSES" IN SWOT ANALYSIS?

Weaknesses in case study Bandhan (B): Sustainable Banking in India can either be absence of
strengths or resources of capabilities that are required but at present the organization doesn't
have. Leaders have to be certain if the weakness is present because of lack of strategic planning
or as a result of strategic choice.

 Business Model of BandhanMfi can be easily imitated by the competitors in the

industryname industry. To overcome these challenges company name needs to build a
platform model that can integrate suppliers, vendors and end users.

 Loyalty among suppliers is low - Based on the evidence provided in the case study
Banana (B): Sustainable Banking in India it seems that there is low level of allegiance
among the members of supply chain partners.

 Declining per unit revenue for BandhanMfi - competitiveness in the industry name
industry is putting downward pressure on the profitability. A starting guide to manage
this situation for company name is – objectively assessing the present value
propositions of the various products.

 Extra cost of building new supply chain and logistics network - Internet and
Artificial Intelligence has significantly altered the business model in the Change
management, Emerging markets, Entrepreneurial finance industry and given the
decreasing significance of the dealer network BandhanMfi has to build a new robust
supply chain network. That can be extremely expensive.

 Low investments into BandhanMfi's customer oriented services - This can lead to
competitors gaining advantage in near future.
  Declining market share of BandhanMfi with increasing revenues - the Strategy &
Execution industry is growing faster than the company. In such a scenario BandhanMfi
has to carefully analyze the various trends within the Change management, Emerging
markets, Entrepreneurial finance sector and figure out what it needs to do to drive future
growth.

OPPORTUNITIES - BANDHAN (B): SUSTAINABLE BANKING IN INDIA WHAT

ARE "OPPORTUNITIES" IN SWOT ANALYSIS?

Opportunities are potential areas where the firm Chan identify potential for - growth, profits,
and market share.

 Opportunities in Online Space - Increasing adoption of online services by customers

will also enable BandhanMfi to provide new offerings to the customers in Change
management, Emerging markets, Entrepreneurial finance industry.

 Rapid Expansion of Economy as the US economy is improving faster than any other
developed economy, it will provide BandhanMfi an opportunity to expand into the US
market. BandhanMfi already have know-how to operate into the competitive US
market.

 Trend of customers migrating to higher end products - It represents great

opportunity for BandhanMfi, as the firm has strong brand recognition in the premium
segment, customers have experience with excellent customer services provided by
BandhanMfi brands in the lower segment. It can be a win-win for the company and
provides an opportunity to increase the profitability.

 Customer preferences are fast changing - Driven by rising disposable incomes, easy
access to information, and fast adoption of technological products, customers today are
more willing to experiment / try new products in the market.
  Lowering of the cost of new product launches through third party retail partners and
dedicated social network. BandhanMfi can use the emerging trend to start small before
scaling up after initial success of a new product.

 Increasing customer base in lower segments - As customers have to migrate from

un-organized operators in the Change management, Emerging markets, Entrepreneurial
finance industry to licensed players. It will provide BandhanMfi an opportunity to
penetrate entry level market with a no-frill offering.

THEATS IN BANDHAN (B): SUSTAINABLE BANKING IN INDIA CASE STUDY

WHAT ARE "THREATS" IN SWOT ANALYSIS?

Threats are factors that can be potential dangers to the firm's business models because of
changes in macro economic factors and changing consumer perceptions. Threats can be
managed but not controlled.

 Competitive pressures - As the new product launch cycles are reducing in the Change
management, Emerging markets, Entrepreneurial finance industry. It has put additional
competitive pressures on players such as BandhanMfi. Given the large customer base,
BandhanMfi can't respond quickly to the needs of the niche markets that disruptors are
focusing on.

 Growing technological expertise of local players in the export market - One of the
biggest threat of tie-up with the local players in the export market for Bandhan (B):
Sustainable Banking in India is threat of losing IPR. The intellectual property rights
framework is not very strong in emerging markets especially in China.

 Distrust of institutions and increasing threat of legal actions for BandhanMfi - As

the WTO regulations and laws are difficult to enforce in various markets. Legal
procedures have become expensive and long drawn process. It can lead to less
investment into emerging markets by BandhanMfi thus resulting in slower growth.
2. Member-owned Organizations:-

This category includes Self-Help Groups (SHGs), financial cooperatives and a variety of hybrid
organizations like Financial Service Associations (FSA) and Self-managed Village Savings
and Credit Associations (SVSCAs). Generally, these are small, situated in local areas and have
access to each other’s financial circumstances. Hence, these groups offer convenient and
flexible services. They have low cost of operations and are managed by the poor.
Simultaneously due to lack of awareness about financial services, poor are getting into trouble
when they are in need of money to perform their daily activities. Hence, these member-owned
organizations are playing vital role in the lives of poor.

3. NGOs:

They play significant role in lending microfinance. They began their operations by promoting
financial services to the poor and low-income households in rural areas of the developing
countries. Recently, the RBI has permitted NGOs to merge with microfinance activities for the
promotion of the External Commercial Borrowing (ECB) up to $5mn. Of late, the Siddhas
provided a need-based financial support to poor and assembled efficient and well-performing
NGOs and microfinance institution in Orissa.

4. Formal Financial Institutions:-

This category consists of commercial Banks, state-owned banks, agricultural development

banks, savings banks and NBFCs, which are well-regulated and supervised. They have branch
network spread over nationally and internationally which offers a wide range of products. But,
they have an expensive operation framework which enables them to serve the poor or remote
population.

So, to solve the microfinance problems, these institutions can bridge leverage through
appropriate regulation and supervision. It helps the microfinance movement to achieve its goals
rather quickly and effectively.

5. NABARD:-
CHAPTER 5
DATA
ANALYSISAND
INTERPRETATION
I. IN MY OPINION, HOW MUCH YOU KNOW ABOUT MICROFINANCE?

PARAMETER RESPONES IN NO. IN (%)

IN DETAIL 15 30
IN BRIEF 17 34
NO IDEA 18 36

INTERPRETATION:

According to the table no. 1, 30% response are known IN DETAIL about microfinance and
34% response are known IN BRIEF about microfinance and the remaining 36% are have NO
IDEA about the microfinance.
 II. ACCORDING TO THE DEFINITION, MICROFINANCE IS AN ATTEMPT TO
IMPROVE ACCESS SMALL DEPOSITS AND SMALL LOANS FOR POOR
HOUSEHOLDS NEGLECTED BY BNAKS (SCHREINER AND COLOMBET
[2000,p.339]). DO YOU AGREE WITH DEFINITIONOF MICROFINANCE?

PARAMETER RESPONES IN ON. IN (%)

YES 44 88
NO 6 12

INTERPRETATION:

According to the table no. 2, 88% YES response are agree with the above definition of
microfinance and the remaining 12% NO are not agree with the definition of microfinance.
  Co-OPERTATIVE:-

Unlike rural banks, cooperatives are considered semi-formal institutions; they are regulated
and supervised by the CDA but this supervision is known to be weak. Lack of transparency has
historically been a major difficulty in assessing cooperative performance. Cooperatives, like
the rural banks, suffer from a lack of an effective network. Access by cooperatives to support
services also remains weak.

 MICROFINANCE NGOs:-

With the growing scarcity of donor funds for microfinance on lending, most microfinance
NGOs are now faced with the challenge of finding funds from commercial sources or from
deposits of their member-clients. Because deposits are considered a cheaper source of funds
than commercial loans, the inability of NGOs to mobilize deposits legally poses a significant
internal challenge. Lack of legal identity stemming from weak ownership and governance
structures poses the greatest challenge to microfinance NGOs in accessing funds to provide
microfinance on a commercial basis.

Commitment to balancing social and commercial objectives is also an important internal

challenge faced by most microfinance NGOs. Most microfinance NGOs, therefore, remain
small and weak and dependent on fresh infusions of subsidized funds for their survival. Related
to constraints stemming from small size and weak capacity, many microfinance NGOsface the
constraint of poor access to appropriate systems and support services.

Moreover inadequate management information systems and the lack of capacity to undertake
market research as two major constraints curtailing their growth. Although computerization of
systems has been identified as essential to the growth of MFIs, there still appears to be a supply
problem in terms of affordable, commercially available, off-the-shelf software packages that
suit the system and information requirements of MFIs.

Market research is a relatively new concern for most MFIs, prompted by increased client exit
(heightened drop-out rates) and the desire to improve repayment performance. Given the strong
recent interest in undertaking market research, the need to build this capacity in MFIs is great,
especially in microfinance NGOs, which face limited funding to support their increased lending
IV. DO YOU KNOW SOMEONE WHO HAS BEEN A CLIENT OF
MICROFINANCE?

PARAMETER RESPONES IN ON. IN (%)

YES 24 48
NO 26 52

INTERPRETATION:

According to the table no. 4, 48% YES response are know some clients of microfinance and
the remaining 52% NO are don’t know any clients of microfinance.
 V. IN MY OPINION, DO YOU THINK THAT YOU MIGHT BE INSTERESTED
IN GETTING MICROFINANCE SERVICES (for eg. Small loans without
presenting any collateral) IN FUTURE ?

PARAMETER RESPONES IN ON. IN (%)

YES 35 70
NO 15 30

INTERPRETATION:

According to the table no. 5, 70% YES response are that they are interested to taking the service
of Microfinance. And 30% people say NO, maybe because that need to know more about
Microfinance.
VI. IN MY OPINION, ARE YOU ELIGIBLE FOR BEING A CLIENT OF
MICROFINANCE SERVICES?

PARAMETER RESPONES IN ON. IN (%)

YES 34 68
NO 16 32

INTERPRETATION:

According to the table no. 6, 68% of them are eligible to take the services of Microfinance and
32% of them are not.
WEAKNESSES OF BANDHAN (B): SUSTAINABLE BANKING IN INDIA WHAT
ARE "WEAKNESSES" IN SWOT ANALYSIS?

Weaknesses in case study Bandhan (B): Sustainable Banking in India can either be absence of
strengths or resources of capabilities that are required but at present the organization doesn't
have. Leaders have to be certain if the weakness is present because of lack of strategic planning
or as a result of strategic choice.

 Business Model of BandhanMfi can be easily imitated by the competitors in the

industryname industry. To overcome these challenges company name needs to build a
platform model that can integrate suppliers, vendors and end users.

 Loyalty among suppliers is low - Based on the evidence provided in the case study
Banana (B): Sustainable Banking in India it seems that there is low level of allegiance
among the members of supply chain partners.

 Declining per unit revenue for BandhanMfi - competitiveness in the industry name
industry is putting downward pressure on the profitability. A starting guide to manage
this situation for company name is – objectively assessing the present value
propositions of the various products.

 Extra cost of building new supply chain and logistics network - Internet and
Artificial Intelligence has significantly altered the business model in the Change
management, Emerging markets, Entrepreneurial finance industry and given the
decreasing significance of the dealer network BandhanMfi has to build a new robust
supply chain network. That can be extremely expensive.

 Low investments into BandhanMfi's customer oriented services - This can lead to
competitors gaining advantage in near future.
  Declining market share of BandhanMfi with increasing revenues - the Strategy &
Execution industry is growing faster than the company. In such a scenario BandhanMfi
has to carefully analyze the various trends within the Change management, Emerging
markets, Entrepreneurial finance sector and figure out what it needs to do to drive future
growth.

OPPORTUNITIES - BANDHAN (B): SUSTAINABLE BANKING IN INDIA WHAT

ARE "OPPORTUNITIES" IN SWOT ANALYSIS?

Opportunities are potential areas where the firm Chan identify potential for - growth, profits,
and market share.

 Opportunities in Online Space - Increasing adoption of online services by customers

will also enable BandhanMfi to provide new offerings to the customers in Change
management, Emerging markets, Entrepreneurial finance industry.

 Rapid Expansion of Economy as the US economy is improving faster than any other
developed economy, it will provide BandhanMfi an opportunity to expand into the US
market. BandhanMfi already have know-how to operate into the competitive US
market.

 Trend of customers migrating to higher end products - It represents great

opportunity for BandhanMfi, as the firm has strong brand recognition in the premium
segment, customers have experience with excellent customer services provided by
BandhanMfi brands in the lower segment. It can be a win-win for the company and
provides an opportunity to increase the profitability.

 Customer preferences are fast changing - Driven by rising disposable incomes, easy
access to information, and fast adoption of technological products, customers today are
more willing to experiment / try new products in the market.
IX. DO YOU KNOW ABOUT ANY MICROFINANCE?

PARAMETER RESPONES IN ON. IN (%)

YES 33 66
NO 17 34

INTERPRETATION:

According to the table no. 9, 66% people are know about any microfinance. And the remaining
34% people doesn’t know about any microfinance.
 X. ACCORDING TO YOUR KNOWLEDGE, MICROFINANCE SERVICES ARE
ALL ABOUT:

PARAMETER RESPONES IN ON. IN (%)

LOANS 9 18
LOANS AND SAVINGS 16 32
LOANS, SAVING AND INSURANCE 22 44
NONE OF THESE 3 6

INTERPRETATION:

According to the table no. 10, 18% people have knowledge about LOANS in microfinance
services. 32% people have knowledge about LOANS and SAVINGS. 44% people have
knowledge about LOANS, SAVINGS AND INSURANCE. And the remaining 6% people not
have knowledge about microfinance services.
XI. IN LITERATURE, THE AGE OF THE CLIENTS OF MICROFINANCE IS
DEBATED. IN YOUR OPINION, WHAT AGE GROUP SHOULD PREFERRED
TO BE PROVIDED WITH MICROFINANCE SERVICES?(Please rank your
preference)

PARAMETER RESPONES IN ON. IN (%)

21-30 21 42
31-40 16 32
41-50 6 12
50 ABOVE 7 14

INTERPRETATION:

According to the table no. 11, 42% literature people choose 21-30 age groups should preferred
to be provided with microfinance services. 32% literature people choose 31-40 age groups
should preferred to be provided with microfinance services. 12% literature people choose 41-
50 age groups should preferred to be provided with microfinance services. And remaining 14%
literature people choose 50 ABOVE age groups should preferred to be provided with
microfinance services.
XII. IN MY OPINION, PROVIDING LOANS TO WOMEN INSTEAD OF MEN
WOULD RESULT IN POSITIVE IMPACT (decrease in poverty)?

PARAMETER RESPONES IN ON. IN (%)

YES 30 60
NO 8 16
INDIFFERENT 12 24

INTERPRETATION:

According to the table no. 12, 60% people say YES to providing loans to women instead of
men. 16% people say NO to providing loans to womeninstead of men. And remaining 24%
people say INDIFFERENT to proving loans to women instead of men.
XIII. DO YOU THINK THAT THE MICROFINANCE INSTITUTES ARE THE BEST
METHODS FOR POVERTY REDUCTION?

PARAMETER RESPONES IN ON. IN (%)

YES 40 80
NO 10 20

INTERPRETATION:

According to the table no. 13, 80% people say YES that the microfinance institutes are the
best methods for poverty reduction. And remaining 20% people say NO that the microfinance
institutes are not best methods for poverty reduction.
XIV. DO YOU THINK IF THERE ARE PROPER CHANNELIZED AND
ORGANIZED PROGRAMS INITIATED BY MICROFINANCE INSTITUTES
THEN POVERTY CAN BE REDUCED?

PARAMETER RESPONES IN ON. IN (%)

YES 42 84
NO 8 16

INTERPRETATION:

According to the table no. 14, 84% people say YES if there proper channelized and organized
programs initiated by microfinance institutes then poverty can be reduced. And remaining 16%
people say NO if thereis proper channelized and organized programs initiated by microfinance
institutes then poverty can not be reduced.
XV. OVERALL, DO YOU THINK THAT MICROFINANCE INSITUTIONS ARE
DOING A GOOD JOB?

PARAMETER RESPONES IN ON. IN (%)

YES 42 84
NO 8 16

INTERPRETATION:

According to the table no. 15, 84% people say YES that the microfinance institutes doing
good job. And remaining 16% people say NO that the microfinance institutes do not doing
good job.
 V. IN MY OPINION, DO YOU THINK THAT YOU MIGHT BE INSTERESTED
IN GETTING MICROFINANCE SERVICES (for eg. Small loans without
presenting any collateral) IN FUTURE ?

PARAMETER RESPONES IN ON. IN (%)

YES 35 70
NO 15 30

INTERPRETATION:

According to the table no. 5, 70% YES response are that they are interested to taking the service
of Microfinance. And 30% people say NO, maybe because that need to know more about
Microfinance.
 opinion is for WOMEN EMPOWERMENT. 20% people opinion is for
IMPROVEMENT IN EDUCTION SECTOR. Remaining 10% people opinion is for
NONE OF THESE

IX. According to the table no. 9, 66% people are know about any microfinance. And the
remaining 34% people doesn’t know about any microfinance.

X. According to the table no. 10, 18% people have knowledge about LOANS in
microfinance services. 32% people have knowledge about LOANS and SAVINGS.
44% people have knowledge about LOANS, SAVINGS AND INSURANCE. And the
remaining 6% people not have knowledge about microfinance services

XI. According to the table no. 11, 42% literature people choose 21-30 age groups should
preferred to be provided with microfinance services. 32% literature people choose 31-
40 age groups should preferred to be provided with microfinance services. 12%
literature people choose 41-50 age groups should preferred to be provided with
microfinance services. And remaining 14% literature people choose 50 ABOVE age
groups should preferred to be provided with microfinance.

XII. According to the table no. 12, 60% people say YES to providing loans to women instead
of men. 16% people say NO to providing loans to women instead of men. And
remaining 24% people say INDIFFERENT to proving loans to women instead of men.

XIII. According to the table no. 13, 80% people say YES that the microfinance institutes are
the best methods for poverty reduction. And remaining 20% people say NO that the
microfinance institutes are not best methods for poverty reduction.

XIV. According to the table no. 14, 84% people say YES if there proper channelized and
organized programs initiated by microfinance institutes then poverty can be reduced.
And remaining 16% people say NO if there is proper channelized and organized
programs initiated by microfinance institutes then poverty can not be reduced.
VI. IN MY OPINION, ARE YOU ELIGIBLE FOR BEING A CLIENT OF
MICROFINANCE SERVICES?

PARAMETER RESPONES IN ON. IN (%)

YES 34 68
NO 16 32

INTERPRETATION:

According to the table no. 6, 68% of them are eligible to take the services of Microfinance and
32% of them are not.
6.CONCLUSION
AND
SUGGESTION
VII. IF YOU ARE TOLD THAT YOU ARE ELIGIBLE AND CAN GET SMALL
LOAN THROUGH MICROFINANCE, HOW WILL YOU USE THAT MONEY?
You will:

PARAMETER RESPONES IN ON. IN (%)

INVEST IN BUSINESS 14 28
EDUCATIONAL PURPOSE 17 34
HEALTH 8 16
TO HELP SOCIETY 3 6
JUST TO BE OCCUPIED 1 2
PURSUE YOUR HOBBIES 7 14
OTHER 0 0

INTERPRETATION:

According to the table no. 7, 28% people are eligible to take loan INVEST IN BUSINESS,
34% people are eligible to take loan in EDUCATIONAL PURPOSE, 16% people are eligible
to take loan in HEALTH, 6% AND 2% people are eligible to take loan in TO HELP SOCIETY
and JUST TO BE OCCUPIED respectively, and the remaining 14% people are eligible to take
loan in PURSUE YOUR HOBBIES.
  SUGGESTIONS:

As such if we look microfinance at corporation bank, it is just at the initial stage.

They are providing loans to FWWB and Vardan trust.

They have launched Kisan credit card so farmers so that they can easily access bank.

And some other activities like Loans to dabawalas, hawkers etc…

1. They should provide loans to the NGOs like Vikas Development centre. If they directly
provide loan to small NGOs then rate of interest can be low for NGOs so it will be
benefialfor the NGOs as well as Bank
2. They can directly contact village people to open an a/c for free of charge and organized
somekind of lottery system so that new customers can be attracted.
3. In order for easy access to the branch, they should launch satellite branches (banking in
thevan) in villages so that it can reduce the overall cost.
4. They can also go for SIM embedded with bank account toolkit for urban people. This
willreduce the transaction cost for the bank.
5. Some small innovative products that can be accepted in India area.
 Insurance for prescribed medicine and laboratory tests.
 Funeral Insurance.
 A loan to rehabilitate one’s credit record.
 “Incentivized” savings.
 Contractual savings for education.
ANNEXURE

QUESTIONNAIRE

MICRO FINANCE IN BANKING

FULL NAME: ________________________________

SELECT YOUR AGE GROUP:

 Less than 26
 26-35
 36-45
 46-55
 Older than 55

GENDER:

 Female
 Male

1. In Your opinion, how much you know about microfinance ?

 In Detail
 In Brief
 No Idea

2. According to the definition, microfinance is an attempt to improve access to small

deposits and small loans for poor households neglected by banks (schreiner and colombet
[2000,p.339]).Do you agree with definition of microfinance ?

 Yes
 No
3. Have you ever been a client of microfinance ?

 Yes
 No

4. Do you know someone who has been a client of microfinanace ?

 Yes
 No

5. In your opinion, do you think that you might be interested in getting microfinance
services (for egg? Small loans without presenting any collateral) in future?

 Yes
 No

6. In your opinion, are you eligible for being client of microfinance?

 Yes
 No

7. If you are told that you are eligible and can get small loans through microfinance, how
will you use that money? You will :

 Invest in Business
 Educational Purpose
 Health
 To help Society
 Just to be occupied
 Pursue your Hobbies
8. In your opinion what is the main objectives of microfinance?

 Circulation of Money
 Poverty Alleviation
 Women Empowerment
 Improvement in Education Sector
 None of these

9. Do you know about any microfinance institute?

 Yes
 No

10. According to your knowledge, microfinance services are all about:

 Loans
 Loans And Savings
 Loans, Saving and Insurance
 None of these

11. In literature, the age of the client’s microfinance is debated. In your opinion, what age
groups should preferred to be provided with microfinance services ?(PLEASE RANK YOUR
PREFERENCE )

 21-30
 31-40
 41-50
 50 and above

12. In your opinion, providing loans to women instead of men would result in positive
impact (decrease in poverty)?
 Yes
  No
 Indifferent

13. Do you think that the microfinance institutes are the best methods for poverty
reduction?

 Yes
 No

14. Do you think if there are proper channelized and organized programs initiated by
microfinance institutes then poverty can be reduced?

 Yes
 No

15. Overall, do you think that microfinance institutions are doing a good job?

 Yes
 No
BIBLIOGRAPHY

 Annual Report by the Reserve Bank of India –Banking Ombudsman Scheme 2007-
2008.
 Microfinance in India: A Performance Evaluation by S. M. FEROZE (Author)
 Microfinance and self-help group: a Non-financial perspective by VIRAL M PANDYA
(Author)
WEBLIOGRAPHY

 http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=159
 http://www.rbi.org.in/Scripts/PublicationsView.aspx?id=11113#2
 http://www.nos.org/Secbuscour/25.pdf