10 August 20101

Microfinance in Assam:

An Overview

Presented by:

Dr. Debabrata Das

Associate Professor

Tezpur University

Tezpur: Assam.

10 August 2010 2

• The objectives of the study are:

– To know the current status of the MF in

Assam.

– To study the informal micro finance

practices existing in the State.

10 August 2010 3

Research questions

• What are the microfinance providers working in Assam?

• What are the different practices and business models of

MFIs working in Assam?

• What are the other informal microfinance providers and

practices existing in the state?

10 August 20104

Data collection

Type of

institution

Name of

district

List of MFIs

Formal

microfinance

institutions

Dibrugarh • Community Health for Advanced Initiative

• North East Region Finservices Ltd

Kamrup

(Metro)

• ASOMI finance Pvt Ltd

• RGVN-CSP

• Prochesta

• Nightingale Charitable Society

Informal

microfinance

providers

Kamrup

(Rural)

• Gyandeep Pvt Society

• Ashirbad Fin Society

Nalbari • Grayma Khudra Sanchay Aachani

• Ashadeep Saving

Baksha • Jivan Bikash Sanchay Aachani

• Jananshree Khudrra Sanchay Aachani

• Family Mission Saving

Data collected from four districts of Assam

10 August 2010 5

Research Methodology

• Structured schedule

• Personal interview/discussion

• Data:– Information about the location, branches, and total staff of the

MFIs.

– Financial data about the MFIs (in last 5 years) :

– Loan portfolio size

– Total disbursement

– Number of beneficiaries

– Interest rate and Tenure of loan

– Repayment period and Repayment percentage

10 August 2010 6

Data• Activities of the MFIs

• Data about the lending model of the MFIs.

• Various products and level of micro lending.

• Loan structure and process

• MF plus activities

• Business model of the MFIs.

10 August 20107

Microfinance

Provirs

in Assam

Formal Informal

Private

Societies

Village

Societies/

Namghar

Committee /

Bathow

Village

Head/

Landlord

Goot/

Mutual

Group

Banks NFI MFIs SGSY

Commercial

banks

Co-oprative

Bank

RRBs

NABARD

SIDBI

NEDFi

NGO

NBFC

Microfinance

Providers of Assam

Village

Societies/

Namghar

Committee /

Bathow

Banking network in Assam

– 741 branches of

Commercial Banks

– 343 branches of AGVB,

– 42 branches of LDRB and

– 39 branches of

Cooperative Banks (Source: State Level Bankers’ Committee,

Assam, March 2010 )

Total loan disbursed

during the year 2009-

10 in Assam

Cumulative position

as on 31st

March 2010

Name of the Bank Amount

*

No. of

SHGs

Amount

*

No. of

SHGs

RRBs

Assam Gramin Vikash

Bank 5797.01 12253 25811 83665

Langpi Dehangi Rural

Bank 801.22 1164 2725.05 5449

Co-operative Banks

State Cooperative

Bank 1531.38 1256 5094.25 9741

Commercial Banks 10334.9 10,914 49971.03 65000

GR. TOTAL 18464.5 29583 83601.33 163855

* In lakhs

Data about microfinance disbursed by financial

institutions in Assam

10 August 2010 9

List of Microfinance organizations in

Assam

Sl. no. Name Legal form Lending model

1 Assam Gandhi Smarak Nidhi, Kamrup Society Individual

2 Associated Gramya Unnayan Society, Sivasagar Society

Individual

member

3 ASTHA, Sonitpur Society SHG

4

Centre for Development Action and Appropriate

Technology (CADAT), Sonitpur Society SHG member

5 Chaiduar Rural Development Centre, Sonitpur Society Individual

6 Dainijan Gaon Mahila Society Society Mixed

7 Deshabandhu Club Behara Bazar, Cachar Society SHGs

8 Gana Chetana Samaj Balipara, Sonitpur Society MFI-Federation

9 GRAMIN, Biswanath Chariali, Sonitpur

Society

MFI

10 August 2010 10

Sl. no. Name Legal form Lending model

10

Jyoti Puthibharal and Yuvak Sangha,

Sonitpur Society MFI-SHG member

11 Manab Seba Sangh, Kamrup Society SHG

12

North East Regional Human

Resource Dev. Society

(NERHURDS), Kamrup Society Mixed

13 PROCESTS, Guwahati Society SHG

14 RGVN, Guwahati

Society transforming

to NBFC others

15 Singkhap Mahila Samity ,Sivasagar Society SHG

16

Sipajhar Diamond Club Community

Centre, Darrang Society MFI-NGO-SHG

17

Social Action for Appropriate and

advancement in Rural Areas (

SATRA), Darrang Society Bank-NGO-SHG

10 August 2010 11

Name Legal form Lending model

18

The North East Centre for All Round

Development (CARD), Darrang Society MFI-SHG member

19

Tinsukia Gaon Tribal Mahila

Samittee Society Mixed

20 CHAI, Dibrugarh Project MFI

21 North east Finservices ltd NBFC MFI

22 Nightangle Charitable Society NGO JLG

23 Asomi Fin PVT Ltd MFI SHG, JLG, Individual

10 August 2010 12

Comparative profile of the MFIs

MFIs Number of

branches

Total staff Total number

of

beneficiaries

RGVN-CSP 78 467 29,309 groups

NEDFi Offices in 8

states of NE

79 83367 (10177

groups

ASOMI Finance

Pvt ltd

50 196 37,439 (2897

SHGs

PROCHESTA 6 48 2897 groups

NCS 4 13 9526

NERFS 72 500 49,475

CHAI 1 11 400

10 August 2010 13

Continued…

MFIs Fund providers

RGVN-CSP FWWB, Opportunity International, IDBI, NABARD, SIDBI,

NEDFI, HDFC and ICICI

ASOMI

Finance Pvt ltd

Loan from Nationalised banks and Iincofin of Belgium

NEDFi IDBI, ICICI ,IFCI, Small Industries Development Bank of

India, Insurance Companies – LIC, GI, UTI bank and SBI

PROCHESTA Loans from Nationalised banks, NABARD, AGVN, SIDBI,

Gyan Vigyan Samiti Assam, State Resourse Centre

Assam, Jan hikshan Sansthan, FWWB, IIBM

NCS Nationalised banks, NEDFI, RGVN, SIDBI

NERFSPL Nationalised banks, NEDFI, RGVN, SIDBI

CHAI All India tea association, Tazo Tea, Mercy corps

*Informal institutions collect money from the depositors and disbursed the

same to the creditors

10 August 201014

Financial portfolio of the MFIsMFIs Loan

portfolio [In

Rs] as on

June 2010

Interest rate of Loan Tenure for

loan

Repayment

schedule

RGVN-CSP 56.42 crore 10% and 7 % 1 year Weekly and

monthly

ASOMI Finance

Pvt ltd

45.82 crore 15 % (per annum) 1 year Weekly

NEDFi 25.27 crore# PLR+0.5% 1-5 years Monthly

PROCHESTA 23.269 crore 18 % (per annum) 1-7 years Monthly

NCS 4.73 crore 13% (per annum) 1 year Monthly

NERFS 103 crore* 30 % (per annum) 1 year Flexible

CHAI3.010 crore

7.5 % (per annum) 1 year Fortnightly

and

monthly

*As on 31st September 2009, # as on 31st December 2009

Repayment percentage: 97 – 99 %

10 August 2010 15

Products of some of the MFIs

RGVN-CSP CHAI PROCHESTA NCS

•SHG preliminary-Rs 500

– Rs 2,000

•SHG – Rs 4,000- Rs

20,000

•JLG- Rs 3,000-Rs

30,000

•Microenterprise

Development- Rs 25,000

– Rs 50,000

•EDP – Rs 16,000- Rs

14,000

•EPM – sponsored

•Individual

enterprise loan – Rs

20,000- Rs 50,000

•Joint liability loan –

Rs 5,000- Rs 50,000

•SGH loan – Rs

1,000 – 10,000

• SHG loan

• Individual loan

•The three loan

levels are:

Rs. 1,000 – Rs.

10,000

Rs 5,000 –Rs.

15,000

Rs. 10,000 –

Rs. 20,000

• JLG

•Rs.3,000-

25,000

10 August 2010 16

Microfinance Plus activities

Asomi

Fin.(Pvt)Ltd

Accident policy from United India, and

health insurance with APOLLO MUNICH

Health Insurance Company.

PROCHESTA Housing Finance for rural women.

CHAI Emergency medical help, vocational training

and scholarships to school dropouts.

Business development service centre.

RGVN –CSP Employment Generation Mission and

Insurance Cover.

NEDFi 3 Workshop cum Training Programs

10 August 2010 17

Informal microfinance providers

Saving society Amount

require to

open an a/c

Deposit limit Interest

on

deposit

Loan

against

deposit

Interest

on loan

Janashree Khudrrs

Sanchay Aachani

Rs. 10 Rs. 5 (min)

Rs. 200 (max)

per day

12 % per

annum

90 % 3 % per

month

Jivan Bikash

Sanchay Aachani

Rs. 10 Rs. 100 (min)

Rs. 200 (max)

Per month

12% p.a. 80 % 3 % per

month

Gyandeep Pvt

Sociey

Rs.10 Rs. 50 (min)

Per week

12 % per

annum

80 % 3 % per

month

Ashirbad Fin

Society

Rs.10 Rs. 50 (min)

Per week

12 % per

annum

80 % 4 % per

month

Ashadeep Saving Rs. 10 Rs.50 (min)

Per month

12 % per

annum

80 % 3 % per

month

Family Mission

Saving

Rs.10 Rs. 5 (min)

Per day

12 % per

annum

100 % 3 % per

month

Grayma Khudra

Sanchay Aachani

Rs.10 Rs. 50 (min)

Per month

24 % per

annum

90 % 4 % per

month

10 August 201018

Key findings• Micro finance industry in the State is in initial growth

phase. Microfinance is witnessing a faster growth in the state which is reflected in the increasing number of microfinance providers and quantum of finance provided.

• There are different types of microfinance providers in Assam. Many National level MFIs are emerging in the scene recently (Bandhan, ASHA, etc).

• Major role is played by the banks. The role of RRBs is very prominent in financing SHGs in relative terms.

• A few local MFIs have stepped strongly in the sector.

10 August 2010 19

Continued…

• Informal microfinance practices are very strong and active in lower part of Assam.

• Most of the informal microfinance providers are not having any legal status (except one which was registered as NGO)

• The interest rate charged by informal microfinance providers is very high. It ranges from 36 – 48 % per annum whereas in case of formal MFIs it ranges 7.5 % to 30 % per annum.

• Availability of credit is given preference over the cost of credit by the borrowers.

Continued…

• Demand for micro credit is very high and a wide gap of demand-supply is observed specially in the rural areas.

• Most of the MFIs are deviated from the social mission to commercial goal.

• Unethical competition led to multiple lending.

Concerns of MFIs

• Legal hassles specially in renewal of registration

• Problem in fundraising

• Market distortion by SGSY

10 August 2010 22

Issues while carrying out research

• Weak MIS of the microfinance providers.

It is difficult to get data in proper format.

• MFIs are reluctant to share information.

10 August 2010 23

Future research questions

• Possibility of making credit available to

small borrowers at a lower cost.

• Issues to deal with the problem of multiple

lending.

10 August 2010 24

THANK YOU