Study on MICRO FINANCE Sustainable Finance for the Poor

SUBMITTED TO

THE UNIVERSITY OF MUMBAI

In Partial fulfillment of the requirement of the Masters Degree in MANAGEMENT STUDIES (MMS). By: -

Ms. RUJUTA AJAY PAREKH

K.J.Somaiya Institute of Management Studies & Research. Roll No: 38

SEMESTER: FOUR (IV)

TO WHOMSOEVER IT MAY CONCERN

This is to certify that the Study entitled MICRO FINANCE (MF) has been successfully completed by Ms. RUJUTA AJAY PAREKH (Roll No 38) during the Second Year of her course in Partial Fulfillment of the Masters Degree of Management Studies (Finance) under the University of Mumbai through K.J.SOMAIYA INSTITUTE OF MANAGEMENT STUDIES & RESEARCH, VIDYA VIHAR.

This project represents the work done by Ms. Rujuta Ajay Parekh under my guidance. Date Prof. Ranjini (Project Guide Finance)

Prof Narsimham (Director SIMSR)

CERTIFICATE

This is to certify that project entitled Micro Finance is submitted in March 2005 to K. J. Somaiya Institute of Management Studies & Research by Ms. Rujuta Ajay Parekh, Roll No 38 in partial fulfillment on the requirements of the awards of the degree of Master of Management Studies (M.M.S) affiliated to the University of Mumbai for the batch of 2003 - 05

Prof. Ranjini (Project Guide)

Prof. P. V. Narasimham (Director General)

Acknowledgments and Thanks!

INSPIRATION HELP SUPPORT GUIDANCE & BACK OFFICE WORK. These are some of the keywords that are popping & roller coasting in my mind after I have finished this STUDY. Although one always expresses gratitude at the END of an arduous endeavor I think its appropriate that this page appears in the BEGINNING. To remind all the people who matter that they are IMPORTANT FIRST and for the bringing up the material from a FLEDGLING IDEA to a complete study. Firstly, I would like to thank my college Director Prof. NARSIMHAM for always supporting me in my ideas & thoughts and being there whenever I needed any help academic or otherwise. THANK YOU! Thereafter a noted mention for my project guide Prof. RANJINI. Thank you for your patience and for making my base strong. DANKE! Also, a special thanks to my brother in - law, Prof. KAPIL MARWAHA, who is conducting a research on Corporate Social Responsibility, SPJIMSR and his colleague Prof. VISHAL PAREKH, who is writing a paper on Micro Finance. AABHAR! And in the end a warm and heartfelt thank you to my parents & immediate family. They have borne with me patiently and have stayed up many a late night reading & editing this study. Owing to which they themselves have become masters in this Subject. MERCI! And no matter in which language I say my thanks today this study is put together with a joint effort & labor of many hours & many people other than me. I know this has been

worth it and it has been a tremendous learning opportunity for me the time has now come for me make the hand over & await your evaluation.

Executive Summary
The inertia of our experience pulls us into conventional directions. We must engage in group entrepreneurship to collaborate and become far more than the sum of the parts. Bill Drayton. Micro Finance is a field, which imbibes feeling of togetherness, of oneness. It is absolutely essential for people at all levels to work together for a common cause Building the nation! The movement that initially started in Bangladesh has now taken shape on a global level and has been solely responsible for alleviating many a people from the clutches of abject poverty to a decent standard of living.

The main objective of micro finance is that if you are not working for some one else, you are working for yourself. It has developed the spirit of leadership in people and has empowered women by helping them to start their own start up firms.

The project starts with an introduction of the topic and highlighting various issues involved. The first lesson covers a whole of issues on why micro finance. It explains in brief the reach and statistics to prove the potential in this much-avoided sector. The second lesson explains the difference between micro credit and micro finance. The third explains who is included in the customer base and how micro finance has been a vital instrument in changing their perspective towards life.

The fourth lesson explains the ideology of three grand institutions in this field Grameen Bank, NABARD and SIDBI. However, there are a host of institutions that have made their own significant contribution to the field. A reference of the same has been made where ever and whenever required. This is followed with case study discussion on how the institutions are currently functioning and how they handle the balance between limited resources and the vast demand for the same.

Finally, we come towards the suitable recommendations. First an attempt has been made to analyze the possible growth in this sector on the basis of the budget 2005. Also the possible solutions for further boosting of this sector have been made. Here, I include some ratios that can help us evaluate the areas, which need attention to reduce costs along with a case on Social Return on Investment.

Opening Thoughts
As we work to develop the New Metrics, we must not let the perfect be the enemy of the good. Steve Rochlin Boston College Some funders have been wedded to below market options for nonprofits, whether or not these organizations have the possibility of using more market-like vehicles in which foundations might truly invest. Luther Ragin F.B. Heron Foundation All these silos share a blended quality and related challenges. The question is How do we understand the very real differences between them and whether or not those differences really matter? Michelle Kahane Ford Foundation The most significant challenge before us is not deciding which company or NGO is best or which of the many competing standards will win outit is looking at how firm practice and the standards we hold them to will ultimately translate into stable systems that actually achieve the impacts we seek. The goal of mainstreaming a better practice is not a question of simple aggregation, but rather a complete transformation of total activity. Simon Zadek AccountAbility

INDEX
Sr. No. Particulars
1 2 3 4 4.1 4.2 4.3 5 5.1 5.2 5.3 6 6.1 7 7.1 7.2 7.3 7.4 7.5 Why Micro finance? Micro Finance An Overview Knowing The People and Their Needs Important Bodies in Micro Finance Grameen Bank, Bangladesh NABARD SIDBI Case Study Discussion Case Study on Andhra Pradesh Case On Sewa and Shi Mahila Sewa Sahakari Bank Conclusion of Case studies Quotable Quotes An Excerpt of Budget 2005 Analysis of Budget 2005 Recommendations Searching a New Paradigm Micro Insurance SROI: Social Return on Investment - Case Study on SROI Analyze through Ratios Appendix How this study was conducted Bibliography 47 50 56 64 68 26 32 39 41 42 16 20 24

Page No.
1 7 10