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ACKNOWLEDGEMENT The satisfaction and euphoria that accompanied the successful completion of any task would beincomplete without

the mention of the people who made it possible, whose constant guidance andencouragement crowned out effort with success. I take this opportunity to express our deep sense of gratitude and respect to our Supervisor BARNASREE CHANDRA Faculty Member of FINANCE for the valuable guidance, BRAINWARE BUSINESS SCHOOL ADMI THEN ADDRESS TYPE.. THEN CO. NAME SUREVEY ETC. for providing us with essential facilities for completing and presenting this project. I am greatly indebted to their help, which has been of immense value and has played a major role in bringing this toa successful completion. I would like to thank our family and friends for their constant support and encouragement throughout our project Learning from the project The History of Modern Microfinance. I learnt in detail the process of Micro Finance, from its needat the grass root level.*Functioning of various Govt:, Semi Govt: & various other delivery channels.*Practical learning of how SHGs are formed.*Practical learning of how the MFIs work.*Most important learning, how it can change the life of the Economic disadvantaged people. Learning from the Company Microfinance Regulation in India.*Micro Finance Model. *Microfinance Management,Critical Analysis.*Practical learning of Equity, Future & Options market by terminal trading.*Various strategies of Market.*Apart from Micro Finance, Nine mine projects, which helped to relate to thePresent Market conditions.*Business Model.

Introduction A. About Microfinance: Microfinance is a general term to describe financial services to low-incomeindividuals or to those who do not have access to typical banking services.Microfinance is also the idea that low-income individuals are capable of lifting themselves out of poverty if given access to financial services. While some studies indicate that microfinance can play a role in the battleagainst poverty, it is also recognized that is not always the appropriate method, and that it should never beseen as the only tool for ending poverty.Microfinance is defined as any activity that includes the provision of financial services such as credit, savings,and insurance to low income individuals which fall just above the nationally defined poverty line, and poor individuals which fall below that poverty line, with the goal of creating social value. The creation of social valueincludes poverty alleviation and the broader impact of improving livelihood opportunities through the provisionof capital for micro enterprise, and insurance and savings for risk mitigation and consumption smoothing. Alarge variety of actors provide microfinance in India, using a range of microfinance delivery methods. Since theICICI Bank in India, various actors have endeavored to provide access to financial services to the poor in creative ways. Governments also have piloted national programs, NGOs have undertaken the activity of raising donor funds for on-lending, and some banks have partnered with public organizations or made small inroads themselves in providing such services. This has resulted in a rather broad definition of microfinance as any activity that targets poor and low-income individuals for the provision of financial services. The range of activities undertaken in microfinance include group lending, individual lending, the provision of savings and insurance, capacity building, and agricultural business development services. Whatever the form of activity however, the overarching goal that unifies all actors in the provision of microfinance is the creation of social value. Microfinance refers to small scale financial services for both credits and deposits- that are provided to people who farm or fish or herd; operate small or micro enterprise where goods are produced, recycled, repaired, or traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and local groups in developing countries in both rural and urban area. 2. The History of Modern Microfinance A. ABSTRACT: In the late 1970s the concept of microfinance had evolved. Although, microfinance have a long history from the beginning of the 20th century we will concentrate mainly on the period after 1960.Many credit groups have been operating in many countries for several years, for example, the "chit funds" (India), tontines" (West Africa), "susus" (Ghana), "pasanaku" (Bolivia) etc. Besides, many formal saving and credit institutions have been working for a long time throughout the world. During the early and mid 1990s various credit institutions had been formed in Europe by some organized poor people from both the rural and urban areas. These institutions were named Credit Unions, People's Bank etc. The main aim of

these institutions was to provide easy access to credit to the poor people who were neglected by the big financial institutions and banks. In the early 1970s, few experimental programs had started in Bangladesh, Brazil and some other countries. The poor people had been given some small loans to invest in microbusiness. This kind of micro credit was given on the basis of solidarity group lending, that is, each and every member of thatgroup guaranteed the repayment of the loan of all the members.Many banks and financial institutions have been pioneering the microfinance program after 1970.These are listed below. B.ACCION International: This institution had been established by a law student of Latin America to help the poor peopleresiding in the rural and urban areas of the Latin American countries. Today, in 2008, it is one of themost important microfinance institutions of the world. Its network of lending partner comprises not onlyLatin America but also US and Africa. C.SEWA Bank: In 1973, the Self Employed Women's Association (SEWA) of Gujarat (in India) formed a bank,named as Mahila SEWA Cooperative Bank, to access certain financial services easily. Almost 4thousand women contributed their share capital to form the bank. Today the number of the SEWABank's active client is more than 30,000. D.GRAMEEN Bank: Credit unions and lending cooperatives have been around hundreds of years. However, thepioneering of modern microfinance is often credited to Dr. Mohammad Yunus, who beganexperimenting with lending to poor women in the village of Jobra, Bangladesh during his tenure as aprofessor of economics at Chittagong University in the 1970s. He would go on to found GrameenBank in 1983 and win the Nobel Peace Price in 2006.Since then, innovation in microfinance has continued and providers of financial services to the poor continue to evolve. Today, the World Bank estimates that about 160 million people in developingcountries are served by microfinance. Grameen Bank (Bangladesh) was formed by the Nobel PeacePrize (2006) winner Dr Muhammad Younus in 1983. This bank is now serving almost 400, 0000 poor people of Bangladesh. Not only that, but also the success of Grameen Bank has stimulated theformation of other several microfinance institutions like, ASA, BRAC and PROSHIKA . 3.Overview A. Microfinance Definition: According to International Labor Organization (ILO), Microfinance is an economic development approach that involves providing financial services through institutions to low income clients.In India, Microfinance has been defined by The National Microfinance Taskforce, 1999 as provision of thrift,credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urbanareas for enabling them to raise their income levels and improve living standards."The poor stay poor, not because they are lazy but because they have no access to capital."Microfinance is the supply of loans, savings, and other basic financial services to the poor."

As these financial services usually involve small amounts of money - small loans, small savings, etc. - the term"microfinance" helps to differentiate these services from those which formal banks provideIt's easy to imagine poor people don't need financial services, but when you think about it they are using theseservices already, although they might look a little different."Poor people save all the time, although mostly in informal ways. They invest in assets such as gold, jewelry,domestic animals, building materials, and things that can be easily exchanged for cash. They may set asidecorn from their harvest to sell at a later date. They bury cash in the garden or stash it under the mattress. Theyparticipate in informal savings groups where everyone contributes a small amount of cash each day, week, or month, and is successively awarded the pot on a rotating basis. Some of these groups allow members toborrow from the pot as well. The poor also give their money to neighbors to hold or pay local cash collectors tokeep it safe."However widely used, informal savings mechanisms have serious limitations. It is not possible, for example, tocut a leg off a goat when the family suddenly needs a small amount of cash. In-kind savings are subject tofluctuations in commodity prices, destruction by insects, fire, thieves, or illness (in the case of livestock).Informal rotating savings groups tend to be small and rotate limited amounts of money. Moreover, these groupsoften require rigid amounts of money at set intervals and do not react to changes in their members' ability tosave. Perhaps most importantly, the poor are more likely to lose their money through fraud or mismanagementin informal savings arrangements than are depositors in formal financial institutions.Poor rarely access services through the formal financial sector. They address their need for financial servicesthrough a variety of financial relationships, mostly informal." B. Role of Microfinance: The micro credit of microfinance prename was first initiated in the year 1976 in Bangladesh with promise of providing credit to the poor without collateral , alleviating poverty and unleashing human creativity andendeavor of the poor people. Microfinance impact studies have demonstrated that1. Microfinance helps poor households meet basic needs and protects them against risks.2. The use of financial services by low-income households leads to improvements in household economicwelfare and enterprise stability and growth.3. By supporting womens economic participation, microfinance empowers women, thereby promoting gender-equity and improving household well being.4. The level of impact relates to the length of time clients have had access to financial services.C. Difference between micro credit and microfinance: Micro credit refers to very small loans for unsalaried borrowers with little or no collateral, provided by legallyregistered institutions. Currently, consumer credit provided to salaried workers based on automated creditscoring is usually not included in the definition of micro credit, although this may change.Microfinance typically refers to micro credit, savings, insurance, money transfers, and other financial productstargeted at poor and low-income people. As these financial services usually involve small amounts of money - small loans, small savings, etc. - the term"microfinance" helps to differentiate these services from those which formal banks provideIt's easy to imagine poor people don't need financial services, but when you think about it they are using theseservices already, although they might look a little

different."Poor people save all the time, although mostly in informal ways. They invest in assets such as gold, jewelry,domestic animals, building materials, and things that can be easily exchanged for cash. They may set asidecorn from their harvest to sell at a later date. They bury cash in the garden or stash it under the mattress. Theyparticipate in informal savings groups where everyone contributes a small amount of cash each day, week, or month, and is successively awarded the pot on a rotating basis. Some of these groups allow members toborrow from the pot as well. The poor also give their money to neighbors to hold or pay local cash collectors tokeep it safe."However widely used, informal savings mechanisms have serious limitations. It is not possible, for example, tocut a leg off a goat when the family suddenly needs a small amount of cash. In-kind savings are subject tofluctuations in commodity prices, destruction by insects, fire, thieves, or illness (in the case of livestock).Informal rotating savings groups tend to be small and rotate limited amounts of money. Moreover, these groupsoften require rigid amounts of money at set intervals and do not react to changes in their members' ability tosave. Perhaps most importantly, the poor are more likely to lose their money through fraud or mismanagementin informal savings arrangements than are depositors in formal financial institutions.Poor rarely access services through the formal financial sector. They address their need for financial servicesthrough a variety of financial relationships, mostly informal." B. Role of Microfinance: The micro credit of microfinance prename was first initiated in the year 1976 in Bangladesh with promise of providing credit to the poor without collateral , alleviating poverty and unleashing human creativity andendeavor of the poor people. Microfinance impact studies have demonstrated that1. Microfinance helps poor households meet basic needs and protects them against risks.2. The use of financial services by low-income households leads to improvements in household economicwelfare and enterprise stability and growth.3. By supporting womens economic participation, microfinance empowers women, thereby promoting gender-equity and improving household well being.4. The level of impact relates to the length of time clients have had access to financial services. C. Difference between micro credit and microfinance: Micro credit refers to very small loans for unsalaried borrowers with little or no collateral, provided by legallyregistered institutions. Currently, consumer credit provided to salaried workers based on automated creditscoring is usually not included in the definition of micro credit, although this may change.Microfinance typically refers to micro credit, savings, insurance, money transfers, and other financial productstargeted at poor and low-income people.