Grameen (Micro Finance)

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Transcript of Grameen (Micro Finance)

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    GRAMEEN BANK

    MICRO FINANCE

    PRESENTED BYSAMIA MOHAMMED UMER

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    MICRO FINANCE-CREDIT

    Is the most common form of Microfinance

    It means the provision of small loans to

    entrepreneurs who are too poor to qualify for

    conventional bank loans.

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    It presents a series ofexciting possibilities for:

    Extending markets,

    reducing poverty

    and

    Fostering social

    change.

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    FEATURES OF MICRO CREDIT

    The landless

    Having less than 0.4 acres of land

    No collateral

    No guarantee

    Customers are never taken to court for default

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    PROCESS OF MICRO LOAN

    DISTRIBUTION A micro credit program

    gives small loans to the

    poor so that they canprocure whatever they

    need to start a small

    local business of their

    choice

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    PROCESS OF MICRO LOAN

    DISTRIBUTION A micro loan of Rs.5000

    - 20000 at 1 or 1.5%

    interest per month, canempower people to

    start their own business

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    PROCESS OF MICRO LOAN DISTRIBUTION

    By that money they can

    start business of:

    A Kirana Shop

    A Bangle shop

    Buy a cow or buffalo tosell milk

    Candle making

    Small Garment factory

    Fruit or vegetable shop

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    PROCESS OF MICRO LOAN

    DISTRIBUTION In the absence of

    collateral, the loans are

    made to groups of five,mostly women, who

    guarantee each others'

    loans.

    Called Joint liabilityGroup (JLG)

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    PROCESS OF MICRO LOAN

    DISTRIBUTION If a woman wants to

    receive a loan and if her

    idea for a business isaccepted, she is

    encouraged to find four

    other women and form

    a group.

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    PROCESS OF MICRO LOAN

    DISTRIBUTION Then, the first two women

    are given loans and theothers are encouraged to

    help them make theirenterprise a success. Afterabout 6 weeks, if the firsttwo are making theirpayments on time, the next

    two women get their loansand six weeks later the lastone.

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    PROCESS OF MICRO LOAN

    DISTRIBUTION All persons who have

    paid back a first loan,

    are automaticallyeligible for a second

    loan and eventually a

    third so their businesses

    can grow

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    PROCESS OF MICRO LOAN

    DISTRIBUTION At the same time from

    the interest, the loan

    fund is growing, thoughslowly, and loans are

    available to more

    persons.

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    PROCESS OF MICRO LOAN

    DISTRIBUTION If one does not pay

    back one's loan, no one

    in the group will receivea second loan

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    PROCESS OF MICRO LOAN

    DISTRIBUTION To guard against

    emergencies, such as one's

    cow dying and not being

    able to repay the loan, anemergency fund is set up at

    the time of the first loan.

    This simply means that a

    few coins, perhaps anadditional

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    OWNERSHIP

    Borrowers (94%) government (6%)

    LOAN RECOVERY RATE

    99.01%

    In 1996, Grameens repayment rate of 97% was

    considered comparable to Chase Manhattans rate.

    Borrowers

    96% women

    5.58 million (to date)

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    SOURCE OF FUNDS

    100% from borrowers deposits

    No Donor Money, No Loans (since 95)

    PROFITS

    Made profit every year except 83, 91 and 92.

    Audited by two internationally reputed audit

    firms.