Towards partial fulfillment the requirements of the PGDM program of Jaipuria Institute of Management, Indore

Micro Finance Institution

---------------------------------- 28-December 2016 -------------------------------------

Submitted to Submitted by

Dr Priti Bhakshi Charul Sharma

Satyam KesarwaniShreta

Maheshwari

Shreya

Surbhi Shrivastav

Vijit Sharma

ContentsIntroduction.................................................................................................................................................3

Benefits of Micro finance........................................................................................................................4

Challenges of Micro finance....................................................................................................................4

Suryoday Micro Finance.............................................................................................................................5

Mission statement of Suryoday................................................................................................................5

Vision statement of Suryoday..................................................................................................................5

Values of Suryoday.................................................................................................................................5

Board of Directors...................................................................................................................................6

The road traveled till now........................................................................................................................6

Operations of Suryoday Micro Finance...................................................................................................7

Social Initiatives of Suryoday Microfinance............................................................................................7

Major Investors........................................................................................................................................8

SWOT Analysis.......................................................................................................................................8

PESTEL Analysis....................................................................................................................................9

Blue Ocean Strategies..............................................................................................................................9

Financial Highlights................................................................................................................................9

Branding and Marketing Strategy..........................................................................................................10

Risk Management and policy................................................................................................................10

Major players.........................................................................................................................................11

Conclusion.................................................................................................................................................12

Learning’s..............................................................................................................................................12

References.................................................................................................................................................12

Introduction

Micro finance is the organization which provides financial services to unemployed or low income individuals, or groups. The vision of micro finance organizations is to provide financial support to those who are low income in order to provide an opportunity to become self sufficient.

Institution participating in the sector of micro finance companies offer additional services, like opening bank account, insurance, transfer fund. Many institutions provide information and knowledge to their clients in order to support them in their business.

Micro finance was never a new concept in the economy, it was in existing from the 18th century. The 1st micro lending was attributed to the Irish Loan Fund system, introduced by Jonathan Swift.1

The two main mechanisms of financial services are

1. Relationship based banking 2. Group based models

Microfinance is the wider term, it includes micro credit. Microcredit is the provision to provide credit facility to the poor. Micro finance and Micro credit enhance the financial inclusion in order to lift people out of poverty.

1 http://www.investopedia.com/terms/m/microfinance.asp

Benefits of Micro finance1. Small loans are produce and accessible2. It is based on philosophy that even small accounts of credit in order to end the cycle of

poverty.3. New opportunity area such as extending education , job4. Set out to improve the standard of living amongst impoverished communities.

Challenges of Micro finance Challenges for microfinance are social as well as financial

1. More articulate and better- off community members may cheat poor or neighbours.2. Rate of inflation may cause fund to lose their value (time value of money).3. Gender discrimination.

Suryoday Micro Finance

Suryoday Micro Finance Ltd is a registered NBFC (Non Banking Financial Company), engaged in providing loans to women from economically weaker section who do not have access to traditionally banking services.

Suryoday is the Sanskrit word which signifies the dawn of a new beginning. The objective of Suryoday is to give an impetus to the economically disadvantage women to make a fresh start by utilizing loans for income generating activity and enameling sustainably socio-economic progress.

Mission statement of SuryodayTo cater to 1 million households by the year 2016

Vision statement of SuryodayTo be a world-class financial services organization that provides products and value-added services to the economically challenged, helping them generate higher income, build an assets base and achieve a sustainably better standard of living.

Values of Suryoday

Board of Directors1. Dr. Sheela Bhide

2. Dr. R Ramachandran3. Mr. Venky Natarajan4. Mr. Mathew Joseph5. Mr. Aleem Remtula6. R. Baskar Babu7. MrutunjaySahoo

The road traveled till nowSource: http://suryodaymf.com/

Operations of Suryoday Micro Finance

Social Initiatives of Suryoday MicrofinanceAim of Suryoday is to enable customers to enhance their income levels and overall social well-being. Towards this objective, they had since inception, a separate, dedicated Social Initiatives Team that works directly with our customers and endeavors to nurture a relationship so that the customers feel comfortable enough to reach to the team for solutions to the problems they face within the sphere of Financial and Social well-being. 

Major Investors1. Response Ability2. Evolvence India3. Gaja Capital4. Lok Capital5. Developing World Markets6. International Finance Corporation 7. HDFC life8. HDFC 9. IDFC Bank

SWOT Analysis

PESTEL AnalysisPolitical and economical factor

1. Demonetization has become both good and evil for the microfinance sector. The borrowers of MFI are not able to pay their EMIs as they do not have supply of new currency. The MFIs are also facing lack of liquidity because of which they are not able to disburse loans.

2. Rumors that the citizen of Maharashtra would receive a loan waiver shock the footholds of the MFI industry and they stop lending there.

Social and technological factors

1. Digitization of Micro Finance sector can help reduce the operation and personnel cost. They could also help in maintaining good relationship with their clients.

2. The micro finance industry gets impacted by the social behavior of people towards it. These companies tries to build the trust of their clients by conducting activities like digging well, building toilets and other sanitation facilities and educating them.

Environmental and Legal factors

1. Giving adequate knowledge of the various crops to the farmers has been one of the major contribution of MFIs.

2. The MFIs have to follow the various rules and regulations of RBI which keeps changing from time to time.

Blue Ocean StrategiesThe open area for the Suryoday Microfinance for growth,

1. Access to low cost funding2. Diversification of products 3. Lending to micro and small enterprises.

Financial Highlights1. Gross loan portfolio – Rs 1040 Cr2. Customer Base – 6.5 lakhs3. Employees – 17084. Geographical coverage – 8 States5. Branches – 1796. Disbursements – Rs 1279 Cr7. Field Staff – 995

8. Balance sheet Size – Rs 1196 Cr9. PAT – Rs 27.4 Cr10. Operating expenses ratio – 7.7%11. Gross NPA – 0.16%12. Capital Adequacy Ratio – 22.43% (Tier 1 capital ratio – 21.5% & Tier 2 capital ratio –

4.4%)13. Growth rate –

AUM- 78% Net profit – 61%

14.

Key RatiosParticulars FY 15 FY 16Debt/Equity 4.5 4.8Return on Assets 2.90% 2.80%

Return on Equity15.40

% 16.70%

Cost to income ratio53.90

% 54.70%Operational Expenses ratio 7.50% 7.60%

Branding and Marketing StrategyThe company has starting its marketing activity on small scale through various experiments of launching new products and variants in existing products. Proposed Small Financial Bank need to gain trust of the target customer. Therefore branding and marketing plays an important role in the success of the organization.

Risk Management and policyThe risk management policy is always overlooked by the Board of Directors and they are continuously benchmarked with the best practices.

Source: http://suryodaymf.com/document/Suryoday_Annual_Report_2016-17_Sept-08-2016.pdf

Major players 1. Disha2. Ujjivan Financial Services ltd3. Janalakshmi Financial Services Pvt ltd.4. ESAF Microfinance

Conclusion

In the year 2015 Suryoday was transformed from a mere NBFC- MFI to a Small Finance Bank (SFB). Achieving such a great height in a small time frame has become the strength of Suryoday. Over the previous year, its Net interest income has increased from 55.48 cr last year to a whopping 93.93cr in the present year. The company is following the CAR norms prescribed by RBI. It has made borrowings with the bank and financial institutions, and deposited their FDs as collateral earning an interest upon them.

Learning’s

1. History of Microfinance, introduction of Malegam Committee2. Micro –finance: Lessons from international experience3. Models of Micro-finance4. Difference between moneylenders, commercial bank, financial institution5. What is Financial Inclusion6. Financial Product and services.

References

 1. http://suryodaymf.com/document/Suryoday_Annual_Report_2016-17_Sept-08-2016.pdf

2. http://suryodaymf.com/

3. http://www.investopedia.com/terms/m/microfinance.asp

4. https://www.linkedin.com/pulse/3-types-micro-finance-institutions-ojijo-p

5. https://www.linkedin.com/pulse/macros-microfinance-swot-analysis-asim-mohapatra

6. http://www.slideshare.net/prabhus1988/microfinance-industry-turn-around