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Total States Total Branches Total Members ('000) Amount Outstanding (INR Crore) Total Staff
19 1117 3,152 2,287 6,467
SHARE Microfin Limited (SHARE) is a regulated Non-Banking
Financial Company (NBFC) providing financial and support services to the marginalised sections in society, particularly to poor rural and urban women across India. Through its income generating loans and business development services, SHARE reaches out to help these women build productive microenterprises, thereby contributing to the development of sustainable communities.
Microfinance has emerged as a key tool to reduce poverty and promote social development. India is estimated to have about 400 million poor people, i.e., one-third of the world's poor. However, microfinance picked up momentum in India only after the economic liberalization in the 1990s. The success of microfinance organizations like SHARE Microfin Limited (SML) resulted in the greater participation of the commercial banks in the microfinance sector. Established as a non-profit society in 1989 by Udaia Kumar, SHARE transformed itself into a public limited company SHARE Microfin Limited (SML) in 1999.
With an outstanding loan portfolio of USD 37.3 million (as on February 28, 2005), SML was the largest microfinance organization in India in terms of size of the loan portfolio. The organization had around 0.4 million members who had availed of microfinance services. As on March 31, 2004, women members owned over 98.4% of the equity of the company, making it a truly communityowned organization. The case details the challenges the organization had to face during the initial growth years with regard to customer acceptance, fund mobilization, government regulation, and operational issues. It also discusses the operational model of SML, which was an adapted version of the Grameen model. SML sustained its growth momentum over the years, through innovative fund mobilization efforts using partnership models with private sector banks and structured deals like securitization. The organization also planned to source cheaper funds through bond issues and external commercial borrowings. The success of SML attracted funding from venture capitalists. The case includes video clips of the field operations and interviews with members/ non-members to help sensitize the learner to the impact of microfinance on the lives of the poor. Interviews with SML's senior management and field executives give an insight into the challenges faced by microfinance entities. This case will help the learner to Understand the nature of the challenges faced by microfinance institutions in India, especially during the growth phase. Appreciate the innovative methods used by microfinance institutions such as SML to access capital from banks and financial institutions. Evaluate the pros and cons of the operating model followed by SML. Gain awareness of the impact of microfinance as a poverty reduction tool.
807 8. To create self employment opportunities for the underprivileged.063 2. JLGs are central to the Grameen lending methodology that SHARE has replicated. Our Mission To mobilise resources in order to provide financial and support services to the poor. of Branches No.202 479 400 87 97.410 1. of Members ('000) Amount Disbursed (Cumulative) INR in Crore USD in Mn Loan Portfolio INR in Crore USD in Mn Repayment Rate Total Capital ( Tier .259 57.363 31.289 3. It was the first microfinance institution (MFI) in India to obtain a Non Banking Financial Company (Non Deposit) licence.9% 392 85 2.945 2. one of the largest microfinance institutions in india. Objectives To provide financial services predominantly for poor women.217 265 99. of JLGs No.6% 178 39 1.314 1.408 87. particularly women.04 18 990 5.775 364. for viable productive incomegenerating enterprises enabling them to reduce their poverty.083 2.868 5.595 564 128% 0.945 1.249 706 609 132 98.730 1. of States No.I + Tier. Our Vision To improve the quality of life of the poor by providing access to financial and support services and to be a viable financial institution developing sustainable communities. of Centres No.BACKGROUND SHARE.208 480 99.03 1 USD = 46 INR .246 271 126% 0.236 550. OPERATIONAL & FINANCIAL INFORMATION and income Key Indicators March-07 March-08 March-09 March-10 No.404 1.II ) % INR in Crore USD in Mn Total Assets INR in Crore USD in Mn Operational Self Sufficiency Cost per unit of money lent % INR 5 312 2. started its operations for the poor in 1989 as a not-for-profit society. of Staff No.022 37.3% 37 8 301 65 108% 0.283 252.797 213.155 1.06 10 462 3.05 16 766 4. SHARE has adopted a for-profit approach to create social returns by channelling funds from development institutions and commercial banks as collateral-free loans to Joint Liability Groups (JLGs). To train the rural poor in simple skills and enable them to utilise all available resources and contribute to employment generation.5% 119 26 666 145 106% 0.
Out of the earnings from the business. To improve the family¶s income. Bihar. she is able to send her children to an English medium school. Since their financial position was not stable. The elder son became a helping hand to his father. her financial condition failed to improve. Unfortunately while they were in the fourth year of their relationship with SHARE. They lead a comfortable life and are in a position to provide good education to their children. Around that time she happened to hear about SHARE. they wanted to start a small business of their own but lacked the necessary capital. their family¶s tradition. Yasudaya met with an accident.OUTREACH SHARE currently serves more than 3. Uttar Pradesh. Mallishwari was introduced to SHARE. Then they married her off to Yasudaya of Chilakaluripeta. possess one acre of land and run their own business. She has so far recommended 62 clients to SHARE to help them improve their lives. The couple was soon blessed with five children. they had two children ± a boy and a girl. two boys and three girls. That was ten years ago. She joined SHARE and took a loan of Rs 2000 to set up a petty shop selling snacks.Andhra Pradesh. Rajasthan. they managed to educate her till Intermediate.75 lakh and is planning to expand the footwear shop into a showroom.287 crore (USD 497. Himachal Pradesh. Soon after. Bathula managed to pay the hospital charges and also the loan installments without any difficulty. Mallishwari always dreamt of providing education to the children. Delhi. Maharashtra. they had to continue to stay in a small hut. She has been with SHARE for the last six years and today she employs four workers to help her in the business. Bathula attended one of its meetings conducted at Chilakaluripeta. Today they own a house.1. It was around that time. Orissa . Soon. they were blessed with two sons. Bathula Vijaya Bathula Vijaya was born in Macharla town of Guntur district. Chandragiri is grateful to SHARE for saving her family and keeping her free from financial constraints. Chandragiri took her first loan from SHARE to start a small footwear shop. One day her husband died all of a sudden and she found it very difficult to make both ends meet. At present she owns property worth Rs. She spent her childhood in poverty helping her father both in agriculture and in chappal making. Andhra Pradesh. Her parents were daily labourers. On being told about SHARE. She was born into a large poor family and her parents were not able to send her to school. Chhattisgarh. Madhya Pradesh. Mallishwari and her husband are grateful to SHARE for helping them transform their lives.467 staff members spread across 1117 branches (as on 31 July 2010). their business started to flourish. She enrolled herself as a member. They were also trying to get a loan to invest in the pickle business. She was married off at the age of fourteen to Yadagiri. It was around that time Yasudaya began to sell pickles to augment their earnings. a daily labourer at the age of 18. They could afford to send only their younger son to school.15 million members across 19 Indian states . a cobbler. Jharkhand. She is grateful to . She took Rs 6. Today Bathula has her house renovated. West Bengal. After six months of her husband¶s death. Haryana. CLIENT STORIES Mallishwari Mallishwari hails from Nandigama village of Krishna district in Andhra Pradesh. Uttarakhand. Mallishwari was married off to Nagayya of Nakakallu village.15 million). SHARE caters to the needs of poor rural women through its 6. Even after marriage. Gujarat. At the age of fifteen. Karnataka. Chandragiri Lingamma Chandragiri Lingamma was the second child of Jangaiah and Lakshmamma of Samsthana Narayanapuram village in Nalgonda district of Andhra Pradesh. In spite of their meagre income.000 as her first loan and invested the amount in the pickle business. Chandragiri got her two elder daughters married off using the little earnings she got from her son and husband. The total outstanding portfolio is more than Rs 2. Tamil Nadu. In course of time.Kerala and Assam. and she has diversified her business to sell spices along with pickles.
as the group is responsible for collecting the loans. Effectively Reaching the Poorest A study by the International Food Policy Research Institute (IFPRI) has revealed that SHARE targets the bottom most segment of the poor. Members go through additional social development programmes that cover topics ranging from children¶s education to health. Field staff members facilitate weekly group meetings. the money is given in a staggered manner to the group members and subject to satisfactory assessment by the field credit officers. The members assume the responsibility of approving loans and disbursement. Family members or relatives cannot be part of the same group. In this methodology the group lending technique is used to extend loans to women members who have formed themselves into groups of five each. Further studies conducted show that 76 per cent of SHARE¶s members have experienced significant poverty reduction. Members of each group receive seven days of training on various aspects of the operating model. For-profit Approach for Social Returns SHARE has adopted a for-profit approach to create social returns by channelling funds from development institutions and commercial banks as collateral-free loans to Joint Liability Groups (JLGs). METHODOLOGY SHARE¶s business model generates greater economic benefits by way of supporting the development of micro-entrepreneurs and their communities in a complex economic situation. indicating SHARE¶s effectiveness in identifying the poorest of the poor. and known to one another. . Transparent Operations The loans have to be repaid in 50 weekly instalments.SHARE for helping her become financially comfortable. as the group is responsible for collecting the loans. The top ratings provided by rating agencies reflect SHARE¶s strong performance. There is no collateral to back these loans and repayment is ensured using social/peer pressure. of the same area. with the general criteria that they have to be of the same age group. SHARE¶s continued efforts to improve organisational efficiency have yielded rich dividends raising its efficiency level and promoting transparent systems and processes. leading to greater control over income. in which members undertake the responsibility of approving loans and repayments. during which they learn their own signature to have an identity for themselves. SHARE has stood by its commitment to working towards poverty alleviation with responsive systems. After forming groups of their choice and agreeing on the income generating activity they would like to pursue. ultimately helping SHARE emerge as a premier microfinance institution in the country. while at the same time fostering a responsible financial culture. assets and expenditure. nutrition and sanitation. and ensuring repayment. The loans have to be repaid in 50 weekly instalments. SHARE assists its members by equipping them with basic business development skills such as pricing. To ensure that the loan is utilised only for the intended purpose. The approach has paid off and today SHARE has a platform that would allow it to launch a more ambitious campaign to reach out and serve many more poor women in the country and outside. Client Focus and Client Understanding are the key words that define SHARE¶s approach towards microfinance. SHARE's Model JLGs are central to the lending methodology that SHARE has replicated. About 85 per cent of its members belong to this segment. SHARE¶s members learn about the company¶s loan delivery method through a public orientation meeting that briefs them on loan disbursements and related procedures. marketing and quality management. There is no collateral to back these loans and repayment is ensured using social/peer pressure. Eight groups come together at a µcentre¶ for weekly meetings.
SHARE believes in innovation as a tool to offer customised products and services to address the needs of its clients.3.000/- 24. regardless of the client¶s gender. SHARE has created this secured product to build deeper relationships with group-lending clients who want to grow their businesses.to 5.000/. Such programmes build awareness on various aspects of social development such as children¶s education. Credit Life Insurance: SHARE provides all its borrowers credit life insurance on the entire loan amount for a tenure payback period. Group loans are used by women.to 3.60% to 28.50% to 15.000/.13% (effective) 12. SHARE supports productive projects.20. SHARE conducts training programmes for its staff on teaching and motivational skills so that they can provide services to the clients in a more effective manner. and their families.2. spouse and children on a floating basis.13% (effective) 12.000/. The product provides in-patient care to the borrower.6. employees.50% to 15. and at the same time expand the client base by reaching out to new clients. Other kinds of group loans offered by SHARE are special loans and education loans.00% (flat) SERVICES SHARE¶s long association with the poor has enabled it to truly understand the market and develop suitable products. facilitating .13% (effective) 12.000/- 24. SHARE organises various programmes and workshops for its clients.50% to 15. equivalent to the Health Insurance: SHARE is one of the first few MFIs to enter into a Memorandum of Understanding with µMicroEnsure¶ to offer Health Insurance services to its clients. non-formal education.to 20.91% (effective) 14.000/. SHARE participates in a range of social initiatives.00% (flat) Special Loans Group Income Generation 50 Weeks Rs. which allow its clients to increase their incomes and generate well-being for their families and communities. Money Remittance Service: SHARE offers money transfer service in partnership with the UAE Exchange and Money transfer of funds even in remote locations.000/- 23.60% to 28.00% (flat) Personal Loans Individual Personal needs 6-24 months Rs.000/. Loan products Types of loans Purpose Loan term / Duration Loan size Rate of interest General Loans Group Income Generation 50 Weeks Rs. fostering the development of the communities in which SHARE operates.00% (flat) Micro Enterprise Loans Individual Developing Business 3-24 months Rs.00.91% (effective) 14. SHARE lends unsecured personal loans to salaried employees in semi-urban and urban areas. Gram. SHARE offers valueadded products and services in addition to credit products to transform the lives of the poor. health.to 25. Social Development In order to enhance the quality of life of its clients.to 99.60% to 28. In addition. SHARE offers two kinds of loan products . adult literacy and sanitation. For individual loans.group loans and individual loans. nutrition.000/- 23.PRODUCTS Loan Products Since inception.000/- 23. SHARE targets small and medium enterprises. for income generating activities. SHARE has nurtured a vision to provide financial services to people in the low-income segment.9.00% (flat) Education Loans Group School / College fee 50 Weeks Rs. SHARE¶s main clients.
which is applicable as per the policy of the company. This programme is conducted by the Field Credit Assistant (FCA) or a designated staff member. Social Development Loan Proposals and Processing In the first step. FCA should verify the loan application of identification product for interest of by the borrower¶s family member / the the relevant JLG and provide the following information: application particulars details amount loan rates loan particulars members Date Borrower Loan Loan Need Applicable Term Repayment Acceptance The expected date of loan disbursement should be mentioned on the loan application form and it should be intimated to the borrower / member. The Company gives prior notice of any change in the interest rate and other charges to the borrower / member. every member who intends to access credit from the Company has to complete the compulsory group training programme and Group Recognition Test. The Company takes a decision whether to recall / accelerate the payment or performance under the loan agreement / promissory note as agreed with the borrower/ member under intimation.FAIR PRACTICES SHARE has committed itself to adopting and implementing fair practices in all activities and transactions with its members while providing microfinance loans as per the guidelines of the Reserve Bank of India (RBI). not earlier disclosed by the borrower has come to the notice of the Company. Loan appraisal and Terms & Conditions FCA or designated staff of the Company should convey to the borrower/ member the amount of loan sanctioned along with the terms and conditions. General The Company does not interfere in the affairs of the borrower except for the purposes provided in the terms and conditions of the loan agreement unless the new information.e. objection of the Company if any will be conveyed within 21 days from the date of receipt of request. effective interest rate and other processing charges etc. persistently bothering the borrowers at odd hours. the consent or otherwise i. surety/guarantee letter documents premises. Disbursement procedure of loans Authorised staff members of SHARE should verify the loan application along with all securities. If there is any specific request from the borrower for transfer of borrower account. Primary data are collected in a prescribed format from borrower/ member to comply with the KYC (Know Your Customer) norms. use of muscle power for recovery of loans. including the annualised rate of interest and method of repayment of the loan. respective Loan passbook has to be given to every borrower/ member for each loan. authorised by SHARE. Review of the compliance of the Fair Practice Code The Chairman and Managing Director of SHARE Microfin Limited will review the compliance of the Fair Practices Code and functioning of the grievances redressal mechanism every quarter. A report on the compliance of the Fair Practices Code and the functioning of the grievance redressal . sureties and approvals.e. The loan passbook contains the repayment schedule. Such transfer shall be as per transparent contractual terms in consonance with law. The Company will not resort to undue harassment i. The Board of Directors periodically reviews the compliances of the Fair Practices Code and functioning of the grievances redressal mechanism at various levels of management. processing charges if any and Documentation for hypothecation or charge creation or any security or The acceptance Letter of confirmation of deposit of security The Company keeps all the documents in the safe custody at the note guarantee acceptance acceptance repayment terms. Demand promissory Surety or Centre¶s/Group¶s Family members¶ Acceptance of the terms and conditions by the borrower/member for rate of interest. Grievance Redressal Mechanism The Company has laid down a grievance redressal mechanism within the organisation to resolve any disputes arising in this regard.
has undertaken a study on ³Assessing the Poverty Level of MFI Clients´. they are eager to look for better prospects in life. Women are able to solve their social problems. Washington. enrolling about 85 per cent of the clients from them. assets and expenditure.8 per cent) of SHARE¶s clients have experienced significant reduction in poverty over the past four years.Bath. SHARE targeted the bottom most segment of the poor. This has proved that the tool used by SHARE is effective in targeting the poorest of the poor.mechanism will be placed before the Board of Directors of the Company once a year. Impact Study by IDS The Impact assessment studies conducted by the Institute of Development Studies (IDS) in the United Kingdom in association with three Universities in the UK . and with increased opportunities coming their way. According to the survey. supported by CGAP. using their collective strength to address village issues more openly and boldly even before bureaucrats. CURRENT LENDERS . and half of them are no longer poor. Significant decrease in child labour has been noticed and the importance of education both boys and girls is felt. Women have started to break social barriers by interacting with other people in society. Micro credit and Women Empowerment Study by UNDP A study conducted by the United Nations Development Program (UNDP) on µMicrocredit and Women Empowerment through SHARE¶ has come out with the following observations: There is a sign of significant poverty reduction and it has been found that women have better control over income. Sheffield and Sussex has indicated that three out of four (76. Letter submitted to RBI IMPACT ASSESSMENT Target Study by IFPRI International Food Policy Research Institute (IFPRI). USA.
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