• The Gini index, or Gini coefficient, is a

measure of the distribution of income

across a population developed by the
Italian statistician Corrado Gini in 1912. It is
often used as a gauge of economic
inequality, measuring income distribution
or, less commonly, wealth distribution
among a population. The coefficient ranges
from 0 (or 0%) to 1 (or 100%), with 0
representing perfect equality and 1
representing perfect inequality. Values over
1 are theoretically possible due to negative
income or wealth.

• KEY TAKEAWAYS
• The Gini index is a measure of the
distribution of income across a population.
• A higher Gini index indicates greater
inequality, with high income individuals
receiving much larger percentages of the
total income of the population.
And there is a similar correlation in terms of
subjective well-being. 

As this chart shows, low-income countries tend to

have lower self-reported life satisfaction; and richer
people within these countries tend to have higher self-
reported life satisfaction.
Compiled By: Prof. Srikant Kapoor

TOOLS TO FIGHT POVERTY

 Microfinance Through Window of Relevance

Micro-finance is defined as “financial services such as savings, insurance, fund, credit etc., provided to poor and low
income clients in rural, semi-urban or urban areas so as to help them raise their income levels, thereby improving their
standard of living”.
Banks
• Institutional Reliability Assurance of timely
• Multi-product credit
• Low branch penetration
• Design constraint

MFI Increased income

• Doorstep service Risk
and saving
Mitigation
• No collateral
(Insurance)
• Small ticket loans only

SHGs and Co-Ops Impact of MFI

• Closest institutions
• Collateral Substitutes
• Scale up constraint
• Limited credit

Moneylenders Improved Literacy

Empowerment
• Convenience
• Very high interest rates
• Attached collateral
• Exploitative 28
 Demand for Micro-Credit in India

About 220 mn Households and USD 44 bn market

size
NBFC-MFIs + SFBs+ Non profit
Ric MFIs
h
= USD 10 bn, as of Mar’17
2  ~220 mn households in
High Mn
Income the poor to middle
income category
53 Mn HHs
 Assuming that even
Middle Income 50% of the households
can be financially
80 Mn HHs Micro supported
Low Income
Finance  Potential market size
Customer assuming basic lending
84 Mn HHs at ~USD 400 per HH
base
 An estimated
Poor
market opportunity
56 Mn HHs
of USD 44 billion
Average monthly income of Households (HHs) in USD: Rich ~1,450; High Income 460; Middle Income ~200;
Low Income ~115; Poor is less than USD 55 per month

29
 Women-Centric Sustainable Development : Microfinance

Women constitute the core fabric of microfinance and are also the critical success factor

Women are often among the Financially

most vulnerable and poorest Responsible &
members of low-income More Reliable
societies

Improved High in Social

70% of the world’s poor are Sustainability Collateral
women

Microfinance is a powerful
instrument of social
change, particularly for
women
Obvious economic and Influence children’s
Controlled
social benefits to involving nutrition, health,
Household Income
and education
women in microfinance
programs
Women are the family Work for
Betterment of
nucleus, that is vital for Entire Family
societal improvement and
progress
Case Study-1: Grameen
Bank
 Venture Start…..Origins

• Founded by Dr. Mohammed Yunus in 1976 in

Jobra village in Bangladesh
• Began with lending $27 to 42 families
– Were forced to borrow under oppressive
terms (dadan system)
– Considered non-creditworthy by traditional
banks
– $300 capital secured from Janata Bank with
Dr. Yunus as guarantor
 Why Lend to Women?
97% of Grameen Bank’s borrowers are women

• Benefits reach the family more directly

– Dr. Yunus: “When a destitute mother starts making some
income, her dreams invariably center around her children ”
• Women are often the worst affected by poverty – they are left
totally insecure and have few opportunities
– Have more at stake, and given the smallest opportunity are
willing to work extra hard
– Adapt quicker to self-help groups
• Boosts self-confidence of women
• Gender equality key to socio-economic development
• Higher repayment rates than loans to men

Challenges with lending to women

• Hard to reach women overcoming societal barriers like purdah
system
• Handle conflict within the family when the woman is designated
to hold purse-strings
• Support system to help women
 How Grameen Bank Works - I

5 member groups Grameen Bank

Group fund for
• No offices
emergencies
• Trained women
bank workers
who live with the
poor
• 90% owned by
borrowers
• Organizes
workshops
Repayment
• Established
• One year loans Sixteen
• Equal weekly installments Decisions as
guidelines to give
• Repayment starts 1 week meaning to lives
after loan of borrowers

•Grameen is not just a lender –

Sixteen Decisions make it a
close partner in improving the
living standards of the poor
Centers made of
upto 8 groups •Relationship built on trust -
99% repayment rate
 Analysis of Grameen

Achievements Issues / Continuing

problems
• 99% repayment rate
• Improved status of  Changing the mind-
exploited women in
set of people in villages
Bangladesh
 High interest rates for
• Helped in economic micro loans.
development of small  Ineffective measures to
villages tackle problems of
interest rate.
• Reached out idea of
microcredit to
other countries as
well.
Case Study-2: Kudumbashree
 KUDUMBASHREE- truth

• A multifaceted women based poverty reduction

programme
• Jointly initiated by Government of Kerala and
NABARD.
• Scaled up from two UNICEF assisted initiatives
in Alappuzha Municipality (UBSP) and
Malappuram district (CBNP)
• Implemented by Community Based
Organizations(CBOs) of Poor women in co-
operation with LSG Institutions
 How Kudumbashree Works…

• Identification of beneficiaries
• Pooling like-minded individuals into self-help
groups, thus giving it a community based
organization (CBO)
 Neighborhood groups (NHG) - One woman each
from 15 – 40 families at risk
 Area Development Society (ADS)- Federation of
all NHGs in a ward
 Community Development Society (CDS)- The
Apex body at the Local Body Level
 Area Development Society

Neighborhood Groups

Area Development Society Community

Development Society
 Example of Micro Credit Loans
Micro-Credit Client takes loan of USD 80 to
buy two goats. Fortnightly payments (incl.
interest) of USD 3.50. Completed repayment
within one year. Goats give birth during year,
yearly income from sale of USD 80 plus goats
as asset. Thus now has capital and future
income production. Plus self-confidence!

Micro-Credit Client takes loan of USD 150 to

set up small roadside shop. Fortnightly
payments (incl. interest) of USD 6.50.
Completed repayment within one year. Shop
produces weekly income of USD 16.50. At year
end net profit approximately USD 400, plus
shop & stock on hand. Thus now has capital
and income production, and, increased self-
esteem.
Flight of steps to success
Women Empowerment

Group action to access

services, resources and against social evils

Micro-enterprises

Resource assessment-prioritization of needs-

Implementation of action plan

Problem Identification, need Assessment-Micro-plan

Day-to-day management and financial management

Collection of saving, Micro Credit &

Repayment monitoring

Regular weekly meetings and sharing of information

 SCNL’s Model of Microfinance
SCNL has adopted the Joint Liability Group (JLG) Model for
microfinance
Group Formation
• 4-6 women come together to
form a homogeneous group
• Formed on the basis of Social
Collateral
• A Group Leader is chosen from
amongst the group members
Centre Formation
• 3-5 such Groups come together
to form a Centre
• Hence a Centre has 12-30
members
• A Centre Leader is chosen
• All members of a Centre are
jointly liable to repay on behalf
of defaulting members
Disbursement and
Repayment
• Post KYC check and Credit
Bureau check, loans are
disbursed to each of the
members belonging to a
particular Centre
• On specific repayment dates
Centre members come together
to repay the amount due
44
 Field Operation Process: SCNL

1. Village Survey & 2. Open General 3. Group formation with 4. KYC collection & giving loan 5. Raising Credit
Village Selection Meeting (OGM) GL & CL acknowledgement form to Bureau Enquiry
members

11. Date & time of center meeting 10. Approving Loan 8. Group Recognition Test 7. Compulsory Group 6. House visit by
is communicated to member Application (GRT) & House verification Training (CGT) CSO

45
 Impact and Achievements of SCNL

Sustainable Social
Impact on Clients

Su B+
"M ding
Gr MFI

b -D
BB RE
CA 1"

CA
RE
FI
a

eb
t
External
Assessment

BA B+

Pa m.
A r
m
SE

pe
BB RE
CA

Co

RE
CA 2
Dedicated Client Operational Effectiveness:

L-I
I
Support : “SPARSH” --Robustness of process
--Experienced and professional
field team NCD
Self Assessment: BBB+
Dedicated Social Audit CARE
to measure our social
performance
 Final Summary
• Provision of Microfinance, and specifically,
Microcredit, changes lives - dramatically.
• It provides individuals and families with tools to
help themselves. ‘give the net, not the fish’
• It is empowering and contributing to increased
well-being and happiness of individuals and
families.
• It contributes to the overall GDP and economic
health of the country.
• It stimulates creativity and initiative, thus
reducing social and civil unrest.
• A clear WIN-WIN Solution: Everyone benefits!!