ACKNOWLEDGEMENT

This project has been an honest and dedicated attempt to make the analysis on marketing material as authentic as it could. And I earnestly hope that it provides useful and workable information and knowledge to any person reading it. During this period, I had the pleasure of working closely with accomplished organization people who shared with me their experience and helped me in completion of my research. I express my sincere thanks to my project guides and my institute faculty for guiding me. Lastly I am grateful to my parents who been my mentors and motivators. I am also thankful to all my batch mates who have been directly or indirectly involved in successful completion of this project.

TABLE OF CONTENTS:

Topics
Sr.No. 1. 2.

Page no.s

Objectives And Scope Of The Project. Background Introduction / Synopsis Of The Project. a) Company profile, b) Basic introduction of the project, c) Organizational hierarchy, d) Department. Research Methodology. Methods & Tools adopted for analysis, Data collection, Techniques for analysis, Pictorial / Graphic / pie charts, presentation of data. Observations / Findings. Limitations. Suggestions / Recommendations. Conclusion. Bibliography. a) b) c) d)

3.

4. 5. 6. 7. 8.

Microfinance in India
India has 800 million poor people who live on the brink of subsistence. This is one of the largest populations of poor in the world. The bottom 5% of Indias poor, considered ultra poor, face even deeper levels of chronic hunger, persistent poor health and illiteracy. To cope with their vulnerability, the poor have no choice but to take loan for consumption and income generation from money lenders that charge exploitative rates of interest. This can put the poor in a debt trap. If poor people can access loans with fair interest rates, they could break out of the cycle of poverty. Bureaucracy, corruption, illiteracy and challenging logistics prevent the poor from accessing loans from banks and the government. Microfinance in India started in 1974 in Gujarat as Shri Mahila SEWA (Self Employed Womens Association) Sahakari`Bank. Registered as an Urban Cooperative Bank, they provided banking services to poor women employed in the unorganized sector. Microfinance later evolved in the early 1980s around the concept of informal Self-Help Groups (SHGs) that provided deprived poor people with financial services. From modest origins, the microfinance sector has grown at a steady pace. Now in a strong endorsement of microfinance, the National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) have committed themselves to developing microfinance. The microfinance sector has been "witnessing a tremendous growth" during the last few years in India in terms of loan portfolio, geographical area and outreach. With Indias GDP growing at the rate of 7.1 % the countrys socio-economic pyramid is turning around the story with millions of poor people becoming entrepreneurs.

Top five leader and player in microfinance industry as per Crisil Rating 1. SKS Microfinance Ltd (SKSMPL)

Name Headquarter Legal Status Lending Model Number of Branches Loan Outstanding (Rs. Mn) (As on September 30, 2008) Borrowers (As on September 30, 2008)

SKS Microfinance Ltd Secunderabad, Andhra Pradesh Pvt. Ltd. Company (NBFC) JLG 1,413 18,227

2,590,950

2. Spandana Sphoorty Financial Ltd (SSFL)

Name Headquarter Legal Status Lending Model Number of Branches Loan Outstanding (Rs. Mn) (As on September 30, 2008) Borrowers (As on September 30, 2008) Spandana Sphoorty Financial Ltd Hyderabad, Andhra Pradesh Public Ltd. Company (NBFC) JLG, Individual 696 11,987

1,668,807

3. Share Microfin Limited (SML)

Name Headquarter Legal Status Lending Model Number of Branches Loan Outstanding (Rs. Mn) (As on September 30, 2008) Borrowers (As on September 30, 2008) Share Microfin Limited Hyderabad, Andhra Pradesh Public Ltd. Company (NBFC) JLG, Individual 666 8,568

1,231,556

4. Asmitha Microfin Ltd (AML)

Name Headquarter Legal Status Lending Model Number of Branches Loan Outstanding (Rs. Mn) (As on September 30, 2008) Borrowers (As on September 30, 2008) Asmitha Microfin Ltd Hyderabad, Andhra Pradesh Public Ltd. Company (NBFC) JLG 363 4,944

694,350

5. Shri Kshetra Dharmasthala Rural Development Project (SKDRDP)

Name Headquarter Legal Status Lending Model Number of Branches Loan Outstanding (Rs. Mn) (As on September 30, 2008) Borrowers (As on September 30, 2008)

Shri Kshetra Dharmasthala Rural Development Project Dharmasthala, Karnataka Trust SHG 22

4,060

612,482

Microfinance products

INCOME GENERATION LOAN

INCOME GENERATION, ASSET DEVELOPMENT

MID TERM LOAN

same as igl available at middle week

EMERGENCY LOAN
ALL EMERGENCIES SUCH AS HOSPITALIZATION , FUNERAL ,HEALTH

INDIVIDUAL LOAN
INSOME GENERATION ,ASSETS DEVELOPMENT

50 WEEKS LOAN PAID WEEKLY

50 weeks loan paid weekly

20 WEEKS LOAN

1-2 YEARS LOAN REPAID MONTHLY

12.5% FLAT AND 24% EFFECTIVE

12.5% flat and 24 % effective

0% INTEREST RATES

11% FLAT AND 23% EFFECTIVE

1.The Income Generating Loan is used for a variety of activities that generate
income for their families. Clients submit a loan application and based on approval receive the loan after one week. Loans are paid in 50 equal, weekly installments. After completion of a loan cycle, the client can submit a loan application for a future loan. The approach with smaller short-term loan is to avoid long-term economic problems with bigger loans.

2.The Mid Term Loan is available to clients after 25 weeks of repaying their IGL
loan. A client is eligible for a MTL if the client has not taken the maximum amount of the IGL. The residual amount can be taken as a MTL. The terms and conditions of the MTL are otherwise exactly the same as IGL.

3.The Emergency Loan is available to all clients over the course of a fiscal year.
The loan is interest free and the amount and repayment terms are agreed upon by the MFI and the client on a case by case basis. The amount is small compared to the income generating products and is only given in times of dire need to meet expenses such as funerals, hospital admissions, prenatal care and other crisis situations.

4.The Individual Loan is designed for clients and non clients that have specific
needs beyond the group lending model. Loans are given to an individual outside of the group lending process. Amounts are typically higher than that of the income generating loan and repayments are less frequent. Applicants must complete a strict business appraisal process and have both collateral and a guarantor. Microfinance is not panacea from all troubles; this also means that not any poor person can obtain the loan. In particular, representatives of very poor population, lacking stable income, living by means of chance earnings, and particularly having debts (in relation to community facilities, relatives, friends, etc) cannot be clients of microfinance, since in case of microcredit non-repayment they will have more debts, becoming poorer. For such people special programs of social assistance are needed, which are able to support main needs of people living in the poorest dwellings, lacking garments and food. There is some restrictions regarding what the money is used for. Usually micro credits cant be used for the purposes like: Payments of other loans or other debts: Production of tobacco and liquor; Forming turnover capital of trade and intermediary business; Organization or purchasing products for gambling or entertainment services for the population; Establishing trading points; Purchase of property thats not used for business. In the microfinance sector theres other services expanding as well. The poor need, like all of us, a secure place to save their money and access to insurance for their homes, businesses and health. Microfinance institutions are now innovating new products to help meet these needs, empowering the worlds poor to improve their own lives. Products common used in the microfinance sector today is:

5.Micro savings A possibility to save money without no minimum balance. Allows

people to retain money for future use or for unexpected costs. In SHGs the members save small amounts of money, as little as a few rupees a month in a group fund. Members may borrow from the group fund for a variety of purposes ranging from household emergencies to school fees. As SHGs prove capable of managing their funds

well, they may borrow from a local bank to invest in small business or farm activities. Banks typically lend up to four rupees for every rupee in the group fund;

6.Micro insurance Gives the entrepreneurs the chance to focus more on their core
business which drastically reduces the risk affecting their property, health or working possibilities. The is different types of insurance services like life insurance, property insurance, health insurance and disability insurance. The spectrum of services in this sphere is constantly expanded, as schemes and terms of providing insurance services are determined by each company individually;

7.Micro leasing For entrepreneurs or small businesses who cant afford buy at full
cost they can instead lease equipment, agricultural machinery or vehicles. Often no limitations of minimum cost of the leased object;

8.Money transfer A service for transferring money, mainly overseas to family or

friends. Money transfers without opening current accounts are performed by a number of commercial banks through international money transfer systems such as Western Union, Money Gram, and Anelik. On the surface they may seem like small money transfers, but when one considers that such transactions take place millions of times around the world each week, the numbers start to become impressive. According to the World Bank, the annual global market for remittances money transferred home from migrant workers is around 167 billion US dollars. The estimated total is closer to 230 billion dollars if one counts unregulated transactions. Remittances are also an important source of income for many developing countries including India, China and Mexico, all of which receive over 20 billion dollars each year in remittances from abroad.

Ashmitha Microfin Ltd (AML)

Established in year 2002 Ashmitha microfin limited is a microfinance that provides rural poor women access to financial resources in the form of collateral free small loan for income generation and livelihood promotionsThis enables them to set off small start up business which soon translates into adequate nutrition, medical aid and educationWith increased business these low income women economic agents intrinsic to development rather than simply homemaker. Asmitha Microfin Limited was registered as a public limited company with the Registrar of Companies. It was also registered with the Reserve Bank of India under section 45/1A as an NBFC (Non Deposit Accepting). The vision, strategic planning for viability and proper pricing has paved the way to realize the inevitable magic of success. The dynamic partnerships with our investors defined common visions, which helped in managing the agreements with an understanding of the broader programmatic, institutional and financial issues. As a result, both parties enhanced their understanding of effective development, mutual accountability and institutional performance. The company established a landmark by surpassing the targeted numbers of outreach strengthening the portfolio with good quality. The operations have shown a remarkable performance depicting the potentiality in the current market perspective being self-sufficient. Systems and procedures have been strengthened to further cut down the operationalcosts.The institution has developed a sectoral image signaling seriousness about loan collection that reflect nearly 100% repayment rate till date and an excellent portfolio quality.

3.4.1 Working Methodology of Ashmitha Microfinance

Asmitha follows the credit methodology of Self Help Group Lending wherein the loans are disbursed to the members of a group after the joint undertaking of liability by all the members within the group. The members in a group are selected so as to be in the same age group and residing in the same locality being friends but not from family. In case of problems in recovery from even one of the members, the system of joint liability ensures recovery of the dues from all the members within a group. The methodology of loan delivery is initiated by the field staff of Ashmitha by meeting organizes in the village. The prospective women client are briefed about the loan delivery programme and are motivated to form the group of five women member based on specific criteria constraint. The group form a centre consisting of 40 to 45 members and maximum 8 groups. The group members undertake the responsibility of approving the loans, checking the loan utilization and repayment after their enrolment as members. Loans are disbursed in a taggered ratio of 3:2 in order to build up group peer pressure. The loan utilization is closely monitored by the project staff of Asmitha.

Apart from the loan disbursement and recovery schedule, the members are invited to attend workshops and training programs, which is a platform for all the members to come together and share their experiences. The exposure visits enable members to learn about the various activities undertaken by their counterparts in other villages/centers thereby increasing the number of income generation options and levels of confidence among the members.

Products of Asmitha Microfin Ltd

Enterprise Development Assistance Micro Enterprise Loan Products for mature clients Supplementary Loan Products for Diversification / Expansion Business development services

Social Intermediation Collateral-free loans Customised loan products On-time Loan disbursals Access to larger and repeat loans Loan amount based on Repayment capacity

Financial Intermediation Mobilization of clientele Formation of JLGs Building of selfconfidence Training on leadership, group responsibilities, numeracy Business management among the members Capacity building workshops Building awareness in Health, Education, Insurance etc.

Types of loan distributed by Ashmitha Microfin with their detailed information.

Product name Currency Periodicity Maturity of product General loan Indian rupee of payment Weekly of payment 50 weeks Group guarantee 12.50% 15.00% Specific loan India rupee Weekly 50 weeks Group guarantee 12.50% 15.00% Micro enterprice loan Indian rupee Weekly &monthly 6-48 months Title deeds and 2 guarantors 14.00% 15.00% p.a Types of guarantee Interest rates

Case study of Ashmitha microfinance limited

Name SMT NO Village Centre no Project

Uppuluru Rani 1256/a Atukuru 32 Buffalo, Tailoring & Selling Fruits

With loans from Asmitha, Uppuluru Rani, her

husband and their two children are experiencing a newfound hope. Her relationship with Asmitha began when she organized four women to become the first group in their village to participate in the loan program.Uppuluru Rani, one of the most successful clients, used her first loan to purchase a buffalo for selling milk. Based on the good credit history she developed, subsequent loans have helped her to diversify her business range. Uppuluru Rani describes the Asmitha loan support as convenient, flexible and fast. Sales from her business have increased many folds and have helped her think bigger.

Despite ongoing development efforts, poverty remains rampant in Nepal with

Name Village Venture First Loan Current Loan

Laxmi Kukatpally Ironing Shop Rs. 12,000 Rs. 12,000

Plagued by debt and lack of access to credit, Josephine searched for avenues that could provide loans. A woman friend recommended Asmitha. When Asmitha extended a business loan to Polanki Josephine, her small business was able was finally able to meet plans for growth. The loan helped the family in procuring raw materials that helped in getting rid of the mounting debts and also enabled them to expand their existing business. The expanded revenues also enabled them to add two additional employees. With the support of her husband, she was able to expand her business and build a small house with the profits from her micro business. "I thank God for always being with me, and Asmitha for giving me its support when I needed it most." approximately 31% of the population living below the poverty line. The incidence of poverty is highest in remote and rural areas. Microfinance has been one of the few effective tools for poverty reduction over the past years. Through the creation of sound microfinance institutions and systems, poor people can safely deposit money and accumulate funds for future investments or emergencies as well as access loans for productive purposes leading to higher incomes. Additionally, microfinance produces an impact in other areas including good governance, participation in the political processes, women empowerment, social inclusion, and conflict transformation.

Currently, more than 1.6 million individuals in the rural population have access to microfinance services. This figure represents approximately 8% of the population and approximately 26% of the people living below the poverty line. In order to obtain more effective statistics and further diminish poverty, the outreach of sustainable and sound microfinance institutions to the rural and urban poor must be increased. With the conclusion of Microfinance Summit 2008 and the 7th National Steering Committee held on September 11th, 2009, new issues in the microfinance sector have been identified and will be addressed in the upcoming Microfinance Summit 2010. These issues include:

How to increase funding for the microfinance sector so as to improve client retention for microfinance services while simultaneously improving the livelihood of existing clients with entrepreneurial skills; How to make microfinance more inclusive towards excluded groups, the formal financial sector, and the macroeconomic framework of Nepal; How to properly govern Microfinance institutions so that they can not only reach their intended target markets in rural areas, but also provide them with sustainable microfinance practices; How to eradicate the burdens of poverty such as a lack of access to healthcare and education through the incorporation of savings and insurance schemes with microfinance practices; How to improve credit schemes and creating a model for value chain finance in microfinance in cooperation with commercial banks so as to improve the sustainability of the microfinance sector.