This is a presentation i made for my first year as a management student. An overview of micro-credit and it's advantages as also the various organizations that help facilitate the same

1. IMPACT OF MICROFINANCE ON
INDIA
Aishwarya Bhavsar (11)
Meghana Bhogle (13)
Devesh Bhuwad (15)
Kaivalya Biwalkar (17)
Ankit Gehlot (19)

2. MICROFINANCE
Small scale financial services targeting
the rural population

3. BACKGROUND
• Priority sector lending via nationalisation
of banks & IRDP (1980)
• Corruption and leakages
• Village money lenders exploitation

4. FEATURES
• Uncollateralised loans
• Small short term loans
• Preference to women customers
• All kinds of transactions

5. INDUSTRY STRUCTURE
Financial Private
Donors
Institutions Equity
MFI
SHG SHG SHG
Client Client Client Client Client Client
Client Client
Client

6. NABARD
• SHG bank linkage program
• Refinance
• Promoting/bringing about MFI development
• Evaluate, monitor and Inspect clients
• Regulate
• Assistance to Government

7. RBI
• Mainstream micro-credit
• Efforts to provide micro-credit
• Regulatory framework
• Promotion and Training

8. SIDBI
• SIDBI Foundation for Micro-Credit (SFMC)
• Provides financial as well non-financial help
especially to women
• Rating of MFIs
• Customized support to MFI
• Methodology neutral
• Innovation and action research

9. FINANCING MODELS
Direct Financing Model SHG Bank Linkage
Model

10. TYPES OF MFI’S
• Associations
• Bank Guarantees'
• Community Banking/Grameen Bank/Village Banking
• Co-Operatives
• Credit Unions
• Non-Governmental Organizations (NGO’s)
• For-Profit Banks
• Rotating Savings & Credit Associations(ROSCA’s)

11. LENDING PROCESS
• Geo-Economic Survey of Region
• Selection of Village
• Group Formation
• Training of Borrowers
• Scrutiny & Underwriting
• Weekly Financial Transactions

12. TYPES OF MICRO-CREDIT
Product Purpose Terms Interest rate
Income Generation Loan Income generation, asset 50 weeks loan paid weekly 12.5% (appx)
(IGL) development
Mid-Term Loan (MTL) Same as IGL, available at middle 50 weeks loan paid weekly 12.5% (appx)
(week 25) of IGL
Emergency Loan (EL) All emergencies such as health, 20 weeks loan 0%
funerals, hospitalization
Individual Loan (IL) Income generation, asset 1-2 years loan repaid 11% (appx)
development monthly

13. IMPACT
• Financial inclusion
• SHARE, SKS and Spandana serve more than 1.5
million families, most of them very poor when they
started accessing micro-financial services
• MFI’s achieved an overall growth of customer base by
10.8%
• Borrowing base increased from 83.6 to93.9 million

14. IMPACT
• Increase of personal income
• Empowerment of women
• Improvement in nutrition
• Increased education of the borrower’s children
• Pressure on banking institutions to improve

15. CHALLENGES
• Building permanent, sustainable institutions that
provide financial services to the poor on a mass
scale.
• Getting established large-scale financial institutions to
enter the industry.
• Striking a right balance between development and

16. CHALLENGES
• Developing and strengthening appropriate supervision
and regulation
• Developing high quality growing cadre of managers
and professionals.
• Improving financial transparency.

17. RECOMMENDATIONS
• Improve Governance.
• Change our mindset and think microfinance as an
huge business opportunity with high social impact.
• Learn from the past experience and from
neighbouring countries.

18. CONCLUSION
• The industry has evolved.
• Achievements are significant when compared with
the initial situation.
• But the industry has barely scratched the surface
of the market potential.
• Mass outreach can be achieved only if we
approach this as a business proposition with high

19. THANK YOU