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Nabilur Rahman

Pratik Mehtani
The world has also learned that economic growth,
by itself, cannot close the gap between rich and
poor. Dalai Lama
Introduction Development
Major
Players
Challenges Case Study
What is Microfinance
The term refers to small scale services: both credit and savings, that are extended
to the poor in rural, semi-urban and urban areas.
The poor need microfinance to undertake economic activity, smoothen
consumption, mitigate vulnerability to income shocks, increase savings and
support self empowerment.
The loans are in the range of Rs. 5000 Rs 50000 -- Crisil
Key Features of Microfinance
Lend to
the poor
Small
Short term
loans
Group
appraisal
and
guarantee
Prefer
women
customers
over men
Do not
take
security
Introduction Development
Major
Players
Challenges Case Study
1980,
formation of
small help
group(SHG)
for the needy
India has huge
unbanked
population of
41%
-- RBI
MFI estimated
to have 8
million
borrowers as
of 2008
As of March
2013, MFIs
hold Rs.17000
crore of loan
assets
The figure is
expected to
reach Rs
35000 crore
by March
2015
Introduction Development
Major
Players
Challenges Case Study
Rural
Market
Players
Public
Sector
Banks
Regional
Rural
Banks
Cooperat
ive
Banks
SHG MFIs
NGO
Private
Banks
Societies e.g Bandhan
Public Trust e.g Community
Development Centre
Companies e.g Cashpor
Microcredit
Not for
Profit
MFI
Co-operatives such as Pustikar
Laghu
Mutually aided cooperative
societies(MACS) e.g Seva MAC
Mutual
Benefit
MFI
NBFC such as SKS Microfinance
Producer Companies e.g Sri Vijaya
Milk Producers Co. Ltd
Local Area Banks
For
Profit
MFI
Introduction Development
Major
Players
Challenges Case Study
Transaction cost on % basis is high due to small sized loans
High operational cost due to door step service and little or no
deployment of technology
Intense monitoring and evaluation of clients are a cause of cost
escalation
High
Transaction Cost
Irregular flow of income of farmers
High Dependence on monsoon
Lack of tangible proof for assessment of income
Lack of education and skills leading to un-employability
Credit Risk
Diversion of funds to unproductive activities
Regulatory issues
Other Risks
Introduction Development
Major
Players
Challenges Case Study
Introduction Development
Major
Players
Challenges Case Study
Bandhan Financial Services Pvt. Ltd
Initially set up as an NGO in 2001 by Mr. Chandrashekhar Ghosh
Was reconstituted as a NBFC-MFI in 2013
It is the largest MFI in India with a market share of 20% and loan
portfolio of Rs. 4457 crore and borrower base of Rs 50 lakh as of Sept
2013
It has a strong base in WB and other eastern and north eastern states
Introduction Development
Major
Players
Challenges Case Study
Key Performance Indicators
Has relationships with 30
banks and financial
institutions
Earning profile is above
average, with high return on
managed assets.
Profitability is supported by
low operating expense
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