SAGE UNIVERSITY

2021-2022
TOPIC – Microfinance And
Its Emerging With Development And
Developed Country.

PRESENTED TO: PRESENTED BY:

Yashasvini Varde Jyotika Chhabra
Sakshya Suresh
Tanisha Patel
 INTRODUCTION
 Microfinance is defined as any activity that includes
the provision of financial services such as credit ,
savings , insurance to low income individuals,
remittance and also non financial services like
training, counselling etc. which fall just above the
nationally defined poverty line.
 Finance is also required by every section of the
society. But from the beginning of the civilization,
only the financial needs of the upper section the
society is fulfilled.
 Ultimately, the aim of microfinance is to give low
income people provide them an opportunity to
become self-sufficient by providing a means of saving
their money, borrowing money and insurance.
 LITERATURE REVIEW
 Susy cheston (2002)
Has examined that microfinance has the potential to have a powerful impact on
women’s empowerment. Although microfinance is not always empowering for
all women, most women do experience some degree of empowerment as a
result.

 Linda Mayoux(2006)
Has examined that micro-finance programmes not only give women and men
access to savings and credit, but reach millions of people worldwide bringing them
together regularly in organized groups.

 Mohammed Anisur Rahaman (2007)

Has examined that about microfinance and investigate the impact of microfinance
on the poor people of the society with the main focus on Bangladesh. We mainly
concise our thesis through client’s perspective and build up our research based on
it.
 ORIGIN OF MICROFINANCE
 Although neither of the terms microcredit or microfinance
were used in the academic literature nor by development and
practitioners before the 1980’s and 1990’s respectively. The
concept of providing financial services to low income people is
much older.
 While the emergence of informal financial institutions in
Nigeria dates back to 15th century. They were 1st established in
Europe during the 18th century as a response to the enomorous
increase in poverty since the end of the extended European
wars(1618-1648).
 In 1720 the first loan fund targeting poor people was founded
in Ireland by the author Jonathan swift.
 FEATURES OF MICROFINANCE
It is a tool for empowerment of the poorest.
Delivery in normally through self-help groups (SHGs).
It is essential for promoting self-employment, generally used for.

It is not just a financing system but a tool for social change specially for
women.
Because microcredit is aimed at the poorest , microfinance landing technology
needs to mimic.
Microfinance helps poor households meet basic needs and protect them against
risks.
The use of financial services by low income households leads to improvements
in household economic welfare and enterprise stability and growth
By supporting women’s economic participation . Microfinance empowers
women, thereby promoting gender equity and improving household well
being .
 The level of impact relates to the length of time clients have had access to
financial services.
 TYPES
MICROFINANCE

• MICRO CREDIT
• MICROSAVINGS
 MICRO CREDIT- is a provision of credit and other financial
services and products of very small amount to the poor in
rural , semi urban and areas for enabling them to raise their
income levels and improving standards.

 MICRO SAVINGS - savings made by low Income or poor

people made the savings In particular institution.
 BENEFITS
 Rural Development
 Growth In Education

 Employment Generation

 Reduction Of Poverty

 Awareness Among People

 Low Rate Of Interest On Loan

 Not A Charity

 Size Of Loan And Savings

SCENARIO OF MICRO FINANCE IN
INDIA
 India’s population is more than 1000 million, around
350 million , are living below the poverty.
 Only 20% access loan from the formal sources and 80%
from the informal source.
 Out of that 20% only 10% have access to Micro
finance.
 Annual credit demand by the poor is estimated to be
about Rs 60,000 crores. And only 12,000 Crores are
disbursed .(April 09).
 Customers of Micro finance are “Small and marginal
farmers”. “rural artisans” and “economically weaker
sections”.
WHO PROVIDES MICROFINANCE IN
INDIA ??
 Microfinance is largely provided by specialized
“microfinance institutions” of MFIs.
 In India, microfinance institutions are registered as Non
banking financial companies(NBFC-MFIs)not for profit
companies.
 Microfinance is also provided by banks which undertake
microfinance activities through self help groups (SHGs).
MICROFINANCE CHANGING THE
FACE OF POOR INDIA

Research across globe has shown that overtime ,

microfinance clients increase their income and
assets , increase the no of year of schooling their
children and improving the health and nutrition
of their families.
MAIN INSTITUTIONS PROVIDES
MICROFINANCE FACILITY IN INDIA
 SKS (swayam krishi sangam) microfinance ltd
 Bandhan society

 Grama vidiyal micro finance pvt. Ltd.

 Madura micro finance ltd

 S.M.I.L.E microfinance limited

 Grameen financial services pvt. Ltd

 Ashirvad microfinance pvt ltd

 janalaksahmi microfinance
 IMPACT OF MICROFINANCE IN
WOMEN EMPOWERMENT
 Economic empowerment – such as helps in
employment generation, enhance the contribution
to the household income etc.
 Social empowerment – helps in gain confidence,
gain respect etc.
 Political empowerment – helps in increase no. of
women’s in decision making etc.
 Education, skills & training empowerment –
improves the literacy level of families etc .
WHY DO POOR PEOPLE NEED FINANCIAL
SERVICES ??
I. LIFECYCLE NEEDS: such as weddings , funerals ,childbirth
,education ,widowhood , old age.
II. PERSONAL EMERGENCIES: such as sickness, injury,
unemployment, theft, harassment or death.
III. DISASTERS: such as fires, floods, cyclones, and manmade
events like war.
IV. INVESTMENT OPPORTUNITIES: expanding a business,
buying land and equipment, improving housing etc.
EXAMPLE : MRS. BHARTI, 48 YEARS
OLD
 Unemployment husband
 4 children

 No savings

 Good sewing skills

 Mrs. Bharti decides to start a home based sewing business.

 She goes to the bank and makes a demand for a loan at her
bank.

MRS. BHARTI’S DEMAND IS REJECTED

MRS. BHARTI’S DEMAND IS REJECTED
Traditionally banks and lending institutions do not lend money to low
income individuals.
The reason being:
 High transaction cost of processing.

 Lack collateral of guranters.

 Gap in communication/lack of

confidence in the banks.

 Doubt of the bank of the repayment capacity.

 Lack of access to the financial infrastructure and services in

remoted areas.

MICROFINANCE PROVIDES A SOLUTION FOR

THE ABOVE PROBLEM.
SHORTCOMINGS OF MICRO SAVINGS

 Not available the micro services at vast

level.
 Unawareness among people.
 Infrastructure facilities.
 Doubts in mind of people.
CHALLENGES FACED BY MICRO FINANCE
 FINANCE ILLTERACY - one of the major challenge in India towards the
growth of the microfinance sector i.e. illiteracy of the people. This makes it
difficult in creating awareness of microfinance and even more3 difficult to
serve them as microfinance client.
 HEAVY DEPENDENCE ON BANKS AND MFI’S – MFI’s are dependent on
borrowing from banks and FIS. For most of the MFI’s funding source are
restricted to private banks and apex MFI’s. in these available banks funds are
typically short term i.e. maximum 2 years period.
 WEAK GOVERNANCE – many MFI’s are not willing to convert to a
corporate structure ; hence they trend to remain closed to transparency and
improved governance , thus unable to attract capital. MFI’s also facing a
challenge to strike a balance between social and business goals. Management
needs to adapt business model based on changing scenarios and increased
transparency ; this will enable attracting capital infusion and private equity
funds.
SOLUTIONS TO OVERCOMING
PROBLEMS
 Improving proximity.
 Less costly services to the poor people.
 Improving the security.
 Organizational staff’s attitude , culture is
user friendly.
 CONCLUSION
This study concludes that microfinance is an important tool for
improving standard of living of people. In India microfinance
has succeeded with repayment rates upto 98% reported in all
across the country with consists states like Andhra Pradesh,
Tamil Nadu, West Bengal ,Karnataka And Orissa etc. This tells
us that microfinance has certainly has the capacity to reduce
poverty by a great margin. The challenging issue in
microfinance helps to reduce financial problems faced by poor
people. Inability of MFI’s in getting sufficient funds is a major
challenge in the microfinance growth and so these institutions
should look for alternative source of funds. The impact of
microfinance is appreciable in bringing confidence, courage
skill development among poor people. Thus, external factors
such as microfinance institutions are needed to help fix these
problems.
EXPANSION OF MFIS