Micro Finance Final Presentation

8/3/2019 Micro Finance Final Presentation

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BANKER TO THE POOR(MICRO FINANCING)

Presentated By- Presentated To-Sarita Patidar Prof. Rahul Bhatia

Sandeep Gole IIPM, New DelhiSection SB2

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WHAT IS MICRO FINANCE

Micro Finance is the supply of loans, savings, and otherbasic financial service to the poor .

To most, micro finance means providing very poorfamilies with very small loans (micro credit) to help themengage in productive activities or grow their tinybusinesses.

-> Financial Gateway

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MICRO FINANCE AND MICRO CREDIT

Micro finance refers to loans, savings, insurance,transfer services and other financial productstargeted at low-income clients.

Micro credit refers to a small loan to a client madeby a bank or other institution. Micro credit can beoffered, often without collateral, to an individual orthrough group lending.

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FOUNDER

Professor Muhammad Yunus the founder andManaging Director of Grameen Bank inBangladesh in 1983. He was Born in 1940 in theseaport city of Chittagong.

He studied at Dhaka University in Bangladesh. Hereceived his Ph.D. in economics from Vanderbilt in1969 .

He also got many international awards for

his ideas and endeavors.

Objective was to help poor people.

He is Nobel Price winner.

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GRAMEEN BANK

Around 2468 Branches.

24000 staff in Grameen Bank.

7.34million Borrower.

82,0257 villages covered.

52 countries.

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CONCEPTOFMICROFINANCING

Micro finance can be defined as providing credit,thrift and finance related services and products ofvery small amount so as to improve the livingstandards of poor and the downtrodden.

Develop habits and financial vision among the ruralpoor,

The focus induced development from the above toinitiated development from below.

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MICRO FINANCE IN INDIA

Evolution of Micro finance in India

Micro finance has been in practice for ages (thoughinformally).

Legal framework for establishing the co-operative

movement set up in 1904. Reserve Bank of India Act, 1934 provided for the

establishment of the Agricultural Credit Department.

Nationalization of banks in 1969

Regional Rural Banks created in 1975.

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THE PROFILE OF MICRO FINANCE ININDIA

The scenario

Estimated that 350 million people live BelowPoverty Line.

This translates to approximately 75 million

households. Annual credit demand by the poor in the country is

estimated to be about Rs. 60,000 crores.

Cumulative disbursements under all micro finance

programmes is only about Rs. 12,000 crores. Only about 10 % of rural poor have access to micro

finance

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THE STATUS OF MICRO FINANCE IN INDIA

Considerable gap between demand and supply for all

financial services

Majority of poor are excluded from financial services. Thisis due to the following reasons

Bankers feel that it is fraught with risks and uncertainties.

High transaction costs

Unfavourable policies like caps on interest rates whicheffectively limits the viability of serving the poor.

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CONT

About 56 % of the poor still borrow from informal

sources.

70 % of the rural poor do not have a deposit

account

87 % have no access to credit from formalsources.

Less than 15 % of the households have any

kind of insurance.

Negligible numbers have access to health

insurance

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MICRO-FINANCE SERVICE IS PROVIDED BY-

(a) Formal institutions Regional Rural Bank,cooperatives.

(b) Semi-formal institutions Non-Government

organisations.

(c) Informal Sources Money Lenders andShopkeepers.

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FEATURES OF INDIAN MF

About 60 % of the MFIs are registered as societies.

About 20 % are Trusts

About 65 % of the MFIs follow the operating modelof self help group (SHGs).

600 MFI initiatives have a cumulative outreach

of 1.25 crore poor households

NABARDs bank linkage program has cumulativelyreached a total of 9.4 lakh SHGs with about 1.4crore households.

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CLIENTSOFMICROFINANCE

low-income people

self-employed, often household-basedentrepreneurs

In rural areas, they are usually small farmers andothers who are engaged in small income-generating activities such as food processing andpetty trade.

In urban areas, it include shopkeepers, serviceproviders, artisans, street vendors, etc.

Poor and vulnerable non-poor who has a relativelyunstable source of income.

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SOME FACTS

All over the world, there are nearly 100 crore poor people who haveno access to formal financial services. Of these, nearly 20 per centlive in India.

In the Indian context, at present loans up to Rs. 25,000 are coveredunder Micro-Finance.

As per the 10th Plan document , 26% of population lives below thepoverty line. Of this 19.3 is in the rural area and the remaining 6.7 inurban areas.

There is primarily a huge demand for the microfinance support in thissector. This is met by commercial banks, co-operative banks as wellas Regional Rural Banks.

350 million very poor families now touch the lives of more than oneand half a billion family members around the world. That is half of the

worlds poorest people.

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MICROFINANCE & WOMENS CONTRIBUTION

Micro finance institutions are extremely supportivetowards womens funding needs, bringing about aperceptible change in their status.

the number of migrant male workers on the rise, manywomen in the lower classes are assuming the role of

heads of households.

Bringing women centre stage from where they would beplaying an extremely important part in economic activity.

Womens contribution to GDP has been possible incountries and states where multiple jobs and activitiesare taken into account

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THE IMPACTOF MICROFINANCE: HOUSEHOLDLEVEL

Microcredit leads to an increasein household income

Loans and deposit services canresult in diversification of income

sources or enterprise growthAccess to financial services

enables clients to build andchange their mix of assets

Access to microfinance enablespoor people to manage riskbetter and take advantage ofopportunities

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THE IMPACTOF MICROFINANCE:INDIVIDUAL LEVEL

For women, greater control overresources leads to growth in self-esteem, self-confidence, andopportunities

Microfinance clients tend to havehigher levels of savings than non-clients, important for buildingassets

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THE IMPACTOF MICROFINANCE ENTERPRISELEVEL

Enterprise revenues rise as aresult of microfinance services,but not always where expected

Job creation in single-personenterprises appears negligible,but client households often create

work for others

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MILLENNIUM DEVELOPMENT GOALS

More than one billion people struggle to survive onless than one dollar a day. Another 2.7 billion liveon less than two dollars a day

In 2005, 147 nations (UN) agreed that, together, thecitizens of the world must work to put an end tosevere poverty by 2015. They drafted eightimportant goals which, when achieved, will improvethe lives of the three billion people living in dire

poverty


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THE EIGHT GOALS

1. Eliminate Extreme Poverty and Hunger

2. Achieve Universal Primary Education

3. Promote Gender Equality and Empower Women

4. Reduce Child Mortality

5. Improve Maternal Health

6. Combat HIV/AIDS, Malaria and Other Diseases

7. Ensure Environmental Sustainability and

8. Develop a Global Partnership for Development
http://www.uncdf.org/english/microfinance/yom.phphttp://www.uncdf.org/english/microfinance/yom.php


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Financial Inclusion

Credit CardsBank A/Cs -

Savings

Empowerment

of SHGs

Insurance

Lack of

Assets (for

Collateral)

Affordable CreditFinancial

Advice

Payments +

Remittances

Financial Inclusion : The Indian Perspective


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SWOT ANALYSIS

STRENGTH

Helped in reducing the poverty.

Improve standard of living.

Huge networking available.

Decrease unemployment

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WEAKNESS

Not properly regulated.

High number of people access to informal sourcesof finance.

Concentrating on few people only and mainly inurban areas.

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OPPORTUNITY

Huge demand and supply gap.

Employment Opportunity.

Huge Untapped Market

Opportunity for Pvt. Banks, Foreign Banks to enter

this business segment.

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SKS MICROFINANCE: ANDHRA PRADESH ISSUES

No.1 Microfinance institute in India based in AP.

SKS Microfinance has 31 bank partners.

MFIs lending model is not exactly poor friendly.

MFIs are only for not -for-profit entities. Charged high rate of interest to farmers.

Threaten them for collection.

People committed suicide.

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http://economictimes.indiatimes.com/sks-microfinance/stocks/companyid-30587.cmshttp://economictimes.indiatimes.com/sks-microfinance/stocks/companyid-30587.cms


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IF You are Uplifting The Poor

Your Uplifting The Nation

(Mahatma Gandhi)

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Micro Finance Final Presentation

Documents

Transcript of Micro Finance Final Presentation