Micro-finance

Different models of MF

• Grameen Bank model

• SHG-Bank Linkage Model

• Microfinance Institutions

16 principles of Grameen Bank

1. We shall follow and advance the four principles of

Grameen bank -- discipline, unity, courage and hard

work --- in all walks of our lives.

2. Prosperity we shall bring to our families.

3. We shall not live in dilapidated houses . We shall repair our houses

and work towards constructing new houses at the earliest.

4. We shall grow vegetables all the year round. We shall

eat plenty of them and sell the surplus.

5. During the plantation seasons, We shall plant as many

seedlings as possible.

6. We shall plan to keep our families small. We shall

minimize our expenditures. We shall look after our health .

7. We shall educate our children and ensure that

we can earn to pay for their education.

8. We shall always keep our children and

the environment clean.

9. We shall build & use proper latrines.

10. We shall boil water before drinking or use alum to

purify it. We shall use pitcher filter to remove arsenic.

11. We shall not take any dowry at our son’s weddings,

nor shall we give any dowry at our daughters

wedding. We shall keep our centre free form the curse

of dowry. We shall not practice child marriage.

12. We shall not inflict any injustice on anyone, neither

shall we allow anyone to do so.

13. We shall collectively undertake bigger investments for higher incomes.

14. We shall always be ready to help each other. If anyone is

in difficulty, We shall all help him or her.

15. If we come to know of any breach of discipline in any

centre, We shall all go there and help restore discipline.

16. We shall take part in all social activities collectively.

 Grameen Bank Model
• 1976. Muhammad Yunus

• Manager first makes round to the appointed area to introduce Grameen

Bank policy and programme

• Tries to make group of five people

• Only two members can obtain loans first

• After six weeks of successful repayments other two can apply

• Leader is the last to get loans

• Repayment is the responsibility of individual. However if one member

defaults, that group will never receive loan from GB

• One year loan with equal weekly installments

• Repayment starts after first week

• 2% payment per week for 50 weeks.

SHG
• It is a smal economically homogenous and close group of rural poor who
come together to:

• Save

• Contribute to a common fund

• Meet their emergency needs

• Have collective decision-making

• Resolve conflicts through collective leadership and mutual discussions

• Provide collateral free loans on the terms decided by the group at market
rate
 Role of NABARD
• Conceptualization and introduction of pilot program in February 1992 for
linking 500 SHGs with banks after consultation with the RBI. Initially in TN
then in Meghalaya

• Bulk Lending Scheme in 1993 for encouraging the NGOs

• Developing a proper policy framework

• Training and awareness

• Financial support to NGO for the promotion of SHGs

• Close monitoring

• Introducing computer software for maintaining accounts for SHGs

• Training the youth

• Dissemination of information through seminars, workshops articles

• Microfinance Development Fund for meeting the costs

Examples in India
• MYRADA – mysore Resettlement and Development Agency

• SEWA – association owned by women of small trade group established on

co-operative principles in Gujarat

• PRADAN – Professional Assistance for Development Action – it is a large

rural livelihood development NGO reaching to over 80,000 women in the 7
states

• WWF – Working Women Forum – started promoting working women co-

operative societies in Tamil Nadu

• Bandhan was set up with dual objective of poverty alleviation and women
empowerment.
• ICICI bank – reaches to 1.2 million clients through MF partners like SHARE
Microfin Ltd.

• Shreyas in Kerala has got involved in MF activities since 1988.

• Rashtriya Mahila Kosh – was established with objective of MF to poor

women to start income generating activities like dairy, agriculture, etc.

• SIDBI

• Gameen Bank of Bangladesh

• Role of NABARD

• HDFC and MF

• Microinsurance