MICRO

FINANCE

By:-
Manoj Kumar Singh
9910845011
mkumarsingh@hotmail.com
FortuneFortune Institute of International
Institute of International
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 Introduction to Micro
Finance
• Financial services given to poor &
low Income people (including
women) of Rural Areas to raise their
standard of living & can make them
economically sound.
• It is the supply of loans, savings and
other financial services to poor to
help them engage in productive
activities or grow their tiny business.
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Micro Finance in
India
Evolution of Micro finance in India
 Micro finance has been in practice for
ages ( though informally).
 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.
 NABARD established as an apex agency
for rural finance in Business
1982.
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The Profile of Micro
Finance in India
• Estimated that 350 million people live Below
Poverty Line.
• 95 % have no access to microfinance.
• Considerable gap between demand and supply for
all financial services. Majority of poor are excluded
from financial services.
• Limited access to Capacity Building support which is
an important variable in terms of quality of the
portfolio, MIS, and the sustainability of operations.
• About 56 % of the poor still borrow from informal
sources.
• 70 % of the rural poor do not have a deposit
account. Fortune Institute of International
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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 model of SHGs.
 Large concentration in South India
 600 MFI initiatives have a cumulative
outreach of 1.25 crore poor households
 NABARD’s bank linkage program has
cumulatively reached a total of 9.4 lakh
SHGs with about 1.4 crore households.
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 Services offered in Micro
Finance

• Loan
• Deposits
• Insurance
• Pensions

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Role &
Benefits
• Targeting the poor
• Poverty Reduction through Social
Protection
• Women’s empowerment
• Widening of social capital
• Business development Services
• Other development services
• Insurance services
• Pension services
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 Micro Financial Institutions
Any institution that provide financial
services to the poor, it includes:-
• Co-operatives
• Financial NGO
• Credit Unions
• Commercial Bank
• Post Offices
• Insurance Companies etc

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 MFI’s working in India
• NABARD
• SIDBI
• Cashpor
• Grameen koota
• Various amalgamation of
SBI, BOB, BOI, PNB, UCO, Axis,
Syndicate etc
• LIC, GIC, ICICI Lombard & many more

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 PROJECTIONS FOR THE
FUTURE
 Annual growth rate of about
20 % during the next five
years.

 75 % of the total poor

households of 80 million (i.e.
about 60 million will be
reached in the next five
years.

 The loan outstanding will

consequently grow from the
present level Fortune
of Institute
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of International
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CHALLENGES AHEAD
 Appropriate legal structures for the
structured growth of MF operations
 Ability to access loan funds at reasonably
low rates of interest.
 Ability to attract and retain professional
and committed human resources.
 Design of apt MIS including user friendly
software for tracking accounts and
operations.
 Ability to innovate, adapt and grow.
 Bring out a compendium of small and micro
enterprises for the MF clients.
 Identify and prepare a panel of locally
available trainers.
 Ability to train trainers.
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 Capacity to provide backward
Business linkages or
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 “IF You are
Uplifting
The Poor
Your
Uplifting
The Nation”
-> Mahatma
Gandhi
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