MICROFINAN CE

Jijo Mathew 08BS00013

Microfinance?
• “ A provision of financial services to low income level clients mainly the self employed & women with little or no collateral” • Poverty eradication • Continual recycling of funds.

Microfinance in India
• New generation microfinance moved in late. • Signs of change- Nationalization of banks, creation of new RRB’s, NABARD & NGO’s. • Policy changes..
– Priority sector lending – The National Microfinance Task force, 1999

Distribution of Indebted Rural Households: Agency wise

Self Help Groups
• "small, economically homogenous affinity groups of rural poor, voluntarily formed to save and mutually contribute to a common fund to be lent to its members as per the group members' decision". • How do they operate? • SHGs-Bank linkage models by NABARD:
– Model -1 Banks act as SHGPI (16%)

Microfinance Models
• MFIs
– Not for profit MFIs – For profit MFIs – Mutual Benefit MFIs

• Bank Partership Model • Banking correspondents • Service company model

Major players in Microfinance
• ICICI (CMFR,Center for Microfinance research, Chennai) • Bandhan (Poverty eradication & women empowerment) • SKS Microfinance • Grameen Bank

What's Exciting about Indian Microfinance?
• Considerable untapped market
– 350 million Below Poverty Line – 95 % have no access to microfinance – 36 % people still borrow from informal sources – 70 % don't have any deposit account – Annual credit demand is about Rs.70,000 crore – 95 % of the households are without any kind of insurance

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