Micro financing & Micro Borrowers

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    MICRO FINANCING&MICRO BORROWERS

    By Group 1

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    ySecond fastest developingnation .. HDI rank at 134 in 2009

    BPL rank at 89 in 2009

    25% of population below BPL

    75% of population survives on lessthan 1 $ / day

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    oBusinesses involved inremoving poverty Microfinance Institutions (MFIs) Self Help Groups (SHG) SME GOV of INDIA

    is there still any gap ..What happens to poorest of poor

    Shankar Datta, it is not enough to give the poormoney

    then what else should have to be

    done.

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    EQUIP MICRO BORROWERSWITH KNOWLEDGE.

    Is this really being

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    Gov of India initiatives

    CAPART

    NREGA

    PMGSY

    Bharat Nirman - these schemes objective is to have a

    rural development..

    ..not only in monetary terms, but something beyond

    it

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    CAPART- Council for Advancementof Peoples Action and RuralTechnology It was established in1986

    12,000 voluntary organizations and 9 regional committeesacross country

    Up to Rs 25 lakhs can be sanctioned to each organization

    Up to 1998, has sanctioned 18126 projects of Rs. "2"95.20crore. Against this, an amount of Rs. 363.8"2" crore hasbeen releasedSCHEMES

    Public cooperation Organization of beneficiaries

    Information TechnologyDivision

    Watershed development

    Disability Action Division Rural Technology Division

    Young Professional Scheme Marketing Division

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    CAPART

    Regional Centre No of Projects Amount Sanctionedin Rs Lakhs

    Ahmedabad 31 146

    Bhubaneswar 77 351

    Chandigarh 82 439

    Dharwad 86 570Guwahati 101 375

    Hyderabad 229 484

    Jaipur 44 118

    Lucknow 80 539

    Patna 92 282

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    NREGA- National RuralEmployment Guarantee Act Established in 2005

    Wages of Rs.100/ day and employment not less than 100days per year

    Rs.30,000 crore is the budgeted expenditure for 2009

    Proportion of money from Disinvestment of PSU has beenplanned to spent on NREGA

    Employment provided tohouseholds

    3.57 crore

    Person days in crores

    Total 154.04

    Women 78.01

    Total no of works taken up 28.44 lakhs

    Works completed 9.09 lakhs

    Work in progress 19.35 lakhs

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    PMGSY- Pratan Mantri Gram

    Sadak Yojana

    The primary objective is to provide Connectivity

    368,000 km of new road construction

    370,000 km of up gradation/renewal

    At a cost of about $26 billion

    PHASES POPULATIONCRITERIA

    1 1000

    2 500

    3 250

    No of Road WorksCleared

    95124

    New connectivity 63466

    Up gradation 31655Completed 62942

    Progress 31831

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    Bharat Nirman

    Rural infrastructure 2005 -2009 with total investment ofRs.1,74,000 crore

    ELECTRICITY: for remaining 1,25,000 villages A.P, Gujarat, Goa, Haryana , Maharastra, Kerala,

    Nagaland, Punjab,

    Tamil nadu are 100% electrifiedROADS : 1,46,185 Kmsroad length is proposed to be

    constructed by 2009 benefitting 66,802 unconnectedeligible habitations in the country

    DRINKING WATER : 55,067 uncovered habitations to becovered by 2009.

    TELEPHONE :Every village to be connected by telephone: Achieve 40% rural teledensity by 2014HOUSES : 60 lakh houses to be constructed for the rural poor by

    2009 New target of 1.2 cr houses by 2014 adopted

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    Some aspects of MFIs:

    SHG-Bank linkage programme of NABARD - emerged as theprimary model for microfinance services

    Rashtriya Mahila Kosh-rewarded with a corpus of Rs 500crore from the present Rs 100 crore

    Geographically unevenly distribution

    Lack of systems to check the loan-utilization

    Primary objective diluted by targeting richer clients toincrease profits

    Cannot mobilize large amount of lending funds due to theinappropriate legal and financial structure

    Present IRDA guidelines do not permit the convergence oflife and nonlife insurance policies by the same insuranceprovider

    Most of the large MFIs are not allowed to accept savings

    Venture firms and private equity funds are waiting to enter

    the industry

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    SHGs

    1.Out reach SHG members

    Who does not join?

    Drop outs2.The social role

    Politics

    Social harmony

    Social justice Community action

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    Sustainability & financialaspects

    1.Record keeping

    2.Equity

    3.Default & recoveries

    4.Sustainability

    5.

    6.

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    Implications

    SHGs for what? SHGs for whom? Improve transparency & record keeping

    Realising the social potential How much external credit? Group enterprises

    Dealing with defaults & drop-outs Promotion what, how much & for how

    long? Bank & national reporting

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    SME Scenario

    Total no.of SMEs nearly 10.52 million as on3rd All India Census of SSI

    Accounts for almost 50% of total output

    and 42% of Indias total exports Clusters nearly 636 (industrial)

    Total employment is 24.93 million, with perunit employment being 2.37 persons

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    growth rate of employment in SSI sector

    3.3

    4

    5.2

    4.1

    4.84.5

    2.6

    4 43.6

    3.9

    0

    1

    2

    3

    4

    5

    6

    1992

    -199

    3

    1993

    -199

    4

    1994

    -199

    5

    1995

    -199

    6

    1996

    -199

    7

    1997

    -199

    8

    1998

    -199

    9

    1999

    -200

    0

    2000

    -200

    1

    2001

    -200

    2

    2002

    -200

    3

    growthrate(%)

    Series1

    : & ,Source Ministry of commerce industries GoI

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    SME in poverty reduction

    High contribution to domestic production

    Significant export earnings

    Low investment requirements

    Operational flexibility

    Low intensive imports

    Capacity to develop appropriate indigenous

    technology Import substitution

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    SME Development

    Interest rate cut by SBI SIDBI awarded as Outstanding

    Development Project Award for settingup SMERA

    Partnership with HP to establish colourprinting solution

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    Information Initiatives

    1.MYSMEnews: blend of the power oftechnology with existing realities andsocial networks.

    Launched in slums of Kolkata with 3,00,000micro entrepreneurs

    Delivery models

    Personally customized information Closing info gap

    Potentially broad reach

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    2.Airtel rural service

    combination of distribution and service.

    Identification and training of

    entrepreneurs Consumer queries

    3.Spoken web

    4.Micro finance Management Institution5.SME Chamber of India

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    CONCLUSION

    Positive growth in the last two quarters

    Limitations like:-

    qRegulatory Restricitons

    qProblem of Human Resource

    qLack of Information

    "Doing Good and Doing Well: The

    need for balance Bright Future