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Micro Finance SHG PPT 120928142952 Phpapp01
Micro Finance SHG PPT 120928142952 Phpapp01
Agenda
Scenario of Micro Finance in India. Micro-Credits model. Business model of Grameen Bank Self Help Groups (SHGs).
Only 20% access loan from the formal sources and 80% from the informal sources.
Out of that 20% only 10% have access to Micro finance.
Annual credit demand by the poor is estimated to be about Rs 60,000 crores. And only 12,000 crores are disbursed. (April 09)
Customers of Micro Finance are Small and marginal farmers", " rural artisans" and "economically weaker sections
Micro-Credits model
Focus on, providing the capital for poor women to use their innate "survival skills" to pull themselves out of poverty.
Lend mostly to women in small groups (credit circles), say of five or seven.
Draw up a weekly or bi-weekly repayment schedule. In case any member defaults the entire circle is denied access to credit
conti.
Only two members can obtain loan at first. After 6 weeks of successful repayment another two can apply for loan. The leader can only receive loan at last. Repayment responsibility solely rests on the individual borrower. However if one member of a group defaults, that group will never receive a loan from Grameen
16 decisions
1. We shall follow and advance the four principles of Grameen Bank: Discipline, Unity, Courage and Hard work in all walks of our lives. 2. Prosperity we shall bring to our families. 3. We shall not live in dilapidated houses. We shall repair our houses and work towards constructing new houses at the earliest. 4. We shall grow vegetables all the year round. We shall eat plenty of them and sell the surplus. 5. During the plantation seasons, we shall plant as many seedlings as possible. 6. We shall plan to keep our families small. We shall minimize our expenditures. We shall look after our health. 7. We shall educate our children and ensure that they can earn to pay for their education. 8. We shall always keep our children and the environment clean. 9. We shall build and use pit-latrines. 10. We shall drink water from tube wells. If it is not available, we shall boil water or use alum. 11. We shall not take any dowry at our sons' weddings; neither shall we give any dowry at our daughter's wedding. We shall keep our centre free from the curse of dowry. We shall not practice child marriage. 12. We shall not inflict any injustice on anyone; neither shall we allow anyone to do so. 13. We shall collectively undertake bigger investments for higher incomes. 14. We shall always be ready to help each other. If anyone is in difficulty, we shall all help him or her. 15. If we come to know of any breach of discipline in any centre, we shall all go there and help restore discipline. 16. We shall take part in all social activities collectively .
Sources: www.Grameen-info.org
conti.
The Repayment Mechanism:
One year loan . Equal weekly installments . Repayment starts one week after the loan . Repayment amounts to 2% per week for fifty weeks .
Meeting is compulsory.
No necessary of compulsory meeting. They get loans only from MFIs. There is no benefit. They share responsibility and stand as guarantee for each other.
Bank loan is available. Gets the benefit of government scheme. Individual responsibility.
Organizational structure
Board of Director Chairman
Managing Director
Executive Director(4)
Regional Offices(28)
Training Establishment(6)
From where NABARD gets the fund? How NABARD gives loan to the Institutions?
NABARD follows the very strange way of providing the loans. They give loans to the every ODD number institution i.e.3, 5, 7, 9.
Organization Structure
SAKHI had developed a systematic organizational structure for itself.
Board of Trustees
CEO
HR Mgr
Finance Mgr
Audit Mgr
Admin Mgr
Audit Team
Brach Structure
Brach Manager
FCO-JLG
FCO
FCO-GRLN
Rs 3000
Rs 15,000 Monthly 18% 2%
There are three kinds of costs the MFI has to cover when it makes microloans:
The cost of the money that it lends. The cost of loan defaults. Transaction and Operating cost.
conti.
For instance, MFI lends is 10 percent, and it experiences defaults of 1 percent of the amount lent, then total Rs 11 for a loan of Rs 100, and Rs 55 for a loan of Rs 500. And the third cost i.e. transaction cost. :Example Suppose that the transaction cost is Rs 15 per loan and that the loans are for one year. To break even on the Rs 500 loan, the MFI would need to collect interest of Rs 50 + Rs 5 + Rs 15 = Rs 70, which represents an annual interest rate of 13 percent. To break even on the Rs 100 loan, the MFI would need to collect interest of Rs 10 +Rs 1 + Rs 15 = Rs 26, which is an interest rate of 26 percent.
Weakness
Not properly regulated. High number of people access to informal sources of finance. Concentrating on few people only and mainly in urban areas.
Opportunity
Huge demand and supply gap. Employment Opportunity. Huge Untapped Market. Opportunity for Pvt. Banks, NBFCs, Foreign Banks to enter this business segment.
Threat
High Competition. Neophyte Industry. Over involvement of Govt.
Many Pvt. Banks and Foreign Banks would enter this business segment, because of very low NPAs.
Estimated that 5 % of the number of people below the poverty line will get reduced in the next 5 years.(World Bank report)
Functioning of various Govt, Semi Govt, & various other delivery channels.
Practical learning of how SHGs are formed.
Conclusion
Dont wait, the time will never be just right. Start where you stand and work with whatever tools you may have at your commands and the better tolls will be found as you go along.
William Surds
Thank you
References
Mr. Sanjiv Rohilla Asst. General Manager NABARD Anand. Ph No. 9427109121 Websites: www.ifmr.ac.in www.google.com www.microfinanceinsight.com www.investopedia.com www.books.google.com www.seepnetwork.org www.forbes.com www.nationmaster.com www.thaindian.com www.authorstream.com www.knowledge.allianz.com www.familiesinbusiness.net www.indiamicrofinance.com www.gdrc.org Research paper by Prabhu Ghate Research paper by Vishal Sehgal Presentation by N. Srinivasan Mr. Arvind Parmar Operation Manager SAKHI Umreth Ph No. 9925153226 Mr. Mukesh Gandhi Director MAS Finance Ahemedabad Ph No.9825009793