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Microfinance Institutions: The following are the some of leading microfinance institutions in India working in the sector. Association for Sarva Seva Farms (ASSEFA) Mitrabharati - The Indian microfinance Information Hub Mysore Resettlement and Development Agency (MYRADA) SADHAN - The Association of Community Development Finance Institutions SEWA: Self-help Women's Association SKS India - Swayam Krishi Sangam Streedhan - Banking with Rural Women Working Women's Forum, Madras, India Some other NGO s that provide loans of financial asset.. • ACCION International, it is a Latin America’s one of the prime microfinance institution working with the poor. In an early pioneer, ACCION was founded by a law student, Joseph Blatchford, to address poverty in Latin America's cities. Begun as a student-run volunteer effort in the shantytowns of Caracas with $90,000 raised from private companies, ACCION today is one of the premier microfinance organizations in the world, with a network of lending partners that spans Latin America, the United States and Africa. • SEWA Bank. In 1972 the Self Employed Women's Association (SEWA) was registered as a trade union in Gujarat (India), with the main objective of "strengthening its members' bargaining power to improve income, employment and access to social security." In 1973, to address their lack of access to financial services, the members of
SEWA decided to found "a bank of their own". and accrual of a disproportionate share of the benefits of subsidized credit to larger farmers. especially poor loan recovery. It spread rapidly to hundreds of villages.000 active clients. Through a special relationship with rural banks. through the support of donors. They feared it was too expensive and risky in spite of his success. which viewed credit not as a productive input necessary for agricultural development but as just one type of financial service that should be freely priced to guarantee 2 . he disbursed and recovered thousands of loans. he designed an experimental credit programme to serve them. etc. Since then it has been providing banking services to poor. Through the 1980s. agricultural development bank insolvency. The basic tenets underlying the traditional directed credit approach were debunked and supplanted by a new school of thought called the "financial systems approach". high administrative costs. Professor Muhammad Yunus addressed the banking problem faced by the poor through a programme of action-research. Proshika. Eventually. ASA. subsidized rural credit came under a slow but increasing attack as evidence mounted of the disappointing performance of directed credit programs. The initial success of Grameen Bank also stimulated the establishment of several other giant microfinance institutions like BRAC. Four thousand women contributed share capital to establish the Mahila SEWA Co-operative Bank. but the bankers refused to take over the project at the end of the pilot phase. illiterate. the policy of targeted. the Grameen Bank was founded in 1983 and now serves more than 4 million borrowers. In Bangladesh. With his graduate students in Chittagong University in 1976. self-employed women and has become a viable financial venture with today around 30. • Grameen Bank.
could be defined as a set of services comprising the following activities: Micro-credit: 1 savers benefited larger scale producers more than small scale. Commercial Banking Development in India: A Study in Regional Disparity. it would be worthwhile to understand the term micro-credit as the two terms are closely related to each other. Jaipur: Printwell Publishers. Chippa. investors. and discouraged producers. 3 . Brothers. Poor people need micro credit for various and different purposes. Brij Raj (1990). M. There are two main systems of micro credit 1. banks and co-operatives. The financial systems school held that the emphasis on interest rate ceilings and credit subsidies retarded the development intermediation between of financial and intermediaries. as is being practiced by the National Credit Fund for Women or the Rashtriya Mahila Kosh (RMK). Etawah: A. Rural – Urban Articulations. which provide micro-credit to the poor people under different schemes for livelihood support or helping them to start micro-enterprises.its permanent supply and eliminate rationing. low-income . Chauhan. The other is informal system comprising traditional moneylenders. emergency needs or even basic livelihood support. (1987). Concept and Features of Micro-Finance Micro-finance. Both the systems have their own positive and negative aspects. It may be to meet the major household expenses. One is formal financial institutions. pawnbrokers and trade specific lenders.L. 50-51. Concept of Micro-Finance Before we understand the concept of micro-finance. p. C.
the opportunities of wage employment are limited in developing countries . The thrift is the basic element for the success of microfinance. but also for consumption and contingency needs. The main features of the micro-finance 1. It is a tool for empowerment of the poorest women. but a tool for social change. micro-finance lending technology needs to mimic the informal lenders rather than the formal sector lending. 2.micro finance increases the productivity of self-employment in the informal sector of the economy . Micro-savings: SHGs micro savings are called as thrift. It is essentially for promoting self-employment. 3. Micro credit is aimed at the poorest.Here. primarily for income generation activities. Thrift or small savings from borrowers’ own resources. It is not just a financing system. specially for women 4. the following activities can be activated such as Small loans.generally used for (a) direct income generation (b) rearrangement of assets and liabilities for the household to participate in future opportunities and (c) consumption smoothing. RMK and 4 . Micro-Finance Institution Strategy The approach of promoting MFIs is based on the premise that AFIs like SIDBI (Small Industries Development Bank of India).
Bombay: Himalaya Publishing House. Desai. Vasant. soft loan and some grant to such NGOs which can act as MFIs by on-lending the money to the poor people/ SHGs/ Federations/ smaller NGOs. There are number of programmes which are aimed at providing informational or managerial inputs required by a new entrepreneur. At the same time they meet their cost of funds. These MFIs stimulate the credit demand of the poor people. It inculcates entrepreneurial traits into a person and develops his/her personnel. 5 . Economic growth and industrialization are the byproducts of entrepreneurship. It is a breeding ground for the development of small-scale enterprises. cost of credit management and cost of default through the spread of interest and generate surplus for the viable operation of micro-finance. managerial and marketing skills. The term EDP (Entrepreneurship Development Programme) means a programme of entrepreneurship development designed to help a person in strengthening his/ her entrepreneurial motive and in acquiring skills and capabilities necessary for playing his/her entrepreneurial role effectively. However. 2 .other donor agencies provide bulk lending. Programmes and Polices. a programme not touching upon entrepreneurial motivation and behaviour cannot be called an EDP2. I): Principle. 1991. financial. technical. Orissa and Bihar. Entrepreneurial Development (Vol. 8. BASIX in Andhra Pradesh and RGVN (Rashtriya Grameen Vikas Nidhi) in north-eastern states. They also provide technical support for the beneficiaries to ensure proper utilization of loans and repayment.3 Micro-Enterprise Development Strategy Entrepreneurship is one of the most important inputs in the economic development of a country and of the regions within the country. The examples of such MFIs are Sewa Bank & FWWB in Gujarat.
selection of potential entrepreneurs. monitoring and follow-up mechanism. institutionalization of MEDPs through NGOs can be an alternative approach of rural development in India. Moreover. The examples are CDF (Co-operative Development Foundation) in Andhra Pradesh. Some of the NGOs in India have adopted the approach of microenterprise development through micro-finance.NGOs are actively involving in microfinance to make successful and effective in terms of identification of place or location. Micro-finance sector can provide help to solve this problem. Thus. 6 . prepromotional activities. UPLDC (Uttar Pradesh Land Development Corporation) in Uttar Pradesh and Group Enterprise Development Project of EDI (Entrepreneurship Development Institute of India) in Nagaland. NGOs are playing important role as catalyst in helping the rural unemployed persons to acquire training through MEDPs (Micro-Enterprise Development Programmes) so that they can become self-employed by starting their enterprises in RNFS. entrepreneurial training. they can also become job providers instead of job seekers. Micro-finance for microenterprise development is a proper approach in India. LHWRF (Lupin Human Welfare Research Foundation) in Rajasthan. The success of any MEDP in terms of starting the enterprises by the trainees trained under it depends mainly upon the availability of loan.
the founder of "Grameen Bank" As of July. GB provides credit to the poorest of the poor in rural Bangladesh. SPANDANA Institution's Mission Spandana envisions itself as a financially self sustainable Micro Finance Institution with a diversified ownership. 2004. GB provides services in 46. covering more than 68 percent of the total villages in Bangladesh.7 million borrowers.Models of Micro Finance There are different models followed by the different microfinance institutions in India. The following are the some of established microfinance and their activities in microfinance can be seen here. It is committed to 7 . participation and creativity. accountability. Professor Muhammad Yunus.000 villages. 96 percent of whom are women. it has 3. With 1267 branches. • • • • • Grameen bank Spandana Grameen koota Swayam krishi sangam Danda credit society Grameen Bank Grameen Bank (GB) has reversed conventional banking practice by removing the need for collateral and created a banking system based on mutual trust. without any collateral.
8 . SKS established its first women’s banking sangams (centers) in the Narayankhed region. Indian Overseas Bank. As of July 2005. SIDBI.000 clients. FWWB. SKS began operating its main activity. HDFC. IDBI Bank. SKS Microfinance has grown to include 32 branches in Six Districts of Telangana and serves over 100.strengthening significantly the socio-econmic status of poor women in Rural and Urban areas by providing technical and financial services on a continued basis for establishing their identity and self-image Largest funder for Micro Finance The following institutions are the important funders: ICICI Bank. In June 1998. microfinance. ING Vysys Bank. which follows the Grameen Bank model by seeking to eradicate poverty by providing small loans for income generating activities through a process of collective peer lending. Swayam Krishi Sangam began its education activities by implementing a Preschool (Balwadi) Program in February 2001 in one of the poorest parts of India—the Narayankhed region of Medak district in Andhra Pradesh. HDFC Bank. ABN AMRO Bank. UTI Bank Swayam Krishi Sangam Swayam Krishi Sangam (self-cultivation society) is an initiative in rural India to empower the poorest of the poor to become self-reliant.
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