Professional Documents
Culture Documents
Microfinance: An Overview: With Special Reference To India
Microfinance: An Overview: With Special Reference To India
Presented By:-
Rashi Jain (83)
Robin Bhartiya (85)
funding where needed
Shreyansh Sharma (100)
Vivek Singh (116)
19th October, 2010
Justina Francis
• Introduction
– Setting the Tone
– Microfinance – An Introduction
– Microfinance Institutions
• Microfinance – Indian perspective
– Why Banks are reluctant and flipside of it
– Demographic presence
– Trend so far
– Access to microfinance
– Present Scenario
• Models of Microfinance
• Case Discussion
• Strengths & Weaknesses
• Conclusion
INTRODUCTION
funding where needed
However many argue that more than subsidies poor need access to credit
Absence of formal employment makes it tough for the poor to get credit from
banks
“Credit is a human right. Every person has the right to credit to improve her/his livelihood.
Once this right is established, the entitlement to other rights becomes easier”
Mohammed Yunus, Founder Grameen Bank
" This is not charity. This is business: business with a social objective, which is to help
people get out of poverty."
Mohammed Yunus, Founder Grameen Bank
"Microfinance stands as one of the most promising and cost-effective tools in the fight
against global poverty."
Jonathan Murduch, Chairman, UN Expert Group on Poverty Statistics
Microfinance – An Introduction
funding where needed
"Microfinance is the supply of loans, savings, and other basic financial services to
the poor”
It is a service for poor people that are unemployed, entrepreneurs or farmers who
are not bankable
Because of these reasons they can´t even meet the minimal qualifications for a
ordinary credit
MFIs can have the potential to attract more resources given that –
they become financially viable and self sustaining
they are integral to the communities in which they operate
they have the ability to expand services to clients
MFIs need to find ways to cut down on their administrative costs and also to
broaden their resource base
Microfinance according to Indian perspective
funding where needed
Above $20000
$4000-$20000
$1800-$4000
Below $1800
12/08/21
Trend So far
funding where needed
12/08/21
Access to microfinance in India
funding where needed
On average, a rural bank branch in India serves almost three times the
number of people served by a non-rural branch.
Micro-loan sizes vary from an initial loan size between $100 and $150 to
subsequent loans of $300 to $500.
The term loans are structured with weekly or monthly repayment
schedules and a 6-month to 2 year term.
12/08/21
Present Scenario
funding where needed
Growing Suicide
Issue in Andhra
RBI Intervention
12/08/21
Models of Microfinance
funding where needed
Microfinance –Credit Lending Models
funding where needed
1: Associations
An association is formed by the poor in the target community to offer
microfinance services (micro savings, microcredit, micro-insurance, etc.) to
themselves.
It can form on the basis of gender, religion, or political and cultural
orientation of its members.
The association then gathers capital and intermediates between banks, MFIs
and its members.
2: Bank Guarantees
A donor or government agency guarantees microloans made by a
microfinance/commercial bank to an individual or group of borrowers.
Compulsory deposits by borrowers in such banks are also included in this
model.
4: Cooperatives
Cooperatives are very much like ‘associations and Community Banks’ except
that their ownership structure does not include the poor.
A group of middle or upper class individuals may form a co-op to offer
microfinance services to the poor.
5: Credit Unions
In a credit union, members of a target community gather their money and
make loans to one another at low interest rates.
Compared to community banks, credit unions are smaller and non-profit
oriented, charging interest rates that merely allow sustainability.
7: For-profit Banks
The business base was small & hence operations were well organized (100%
repayment, 100% trust, smooth run towards the vision of eradication of
poverty)
Helping the poor with small loans at the easiest terms possible.
All is well?
funding where needed
The business base has expanded to the entire bottom part of the pyramid