role of mfi's a case study of cashpor micro crdit in mirzapur
TRANSCRIPT
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ROLE OF MICRO FINANCE INSTITUTIONS-A STUDY OF CASHPOR MICROCREDIT IN MIRZAPUR.
Dissertation
Submitted in partial fulfillment ofThe requirements for the degree of
MASTER OF BUSINESS ADMINISTRATATION
In
AGRI BUSINESS
Under th e supervision of Submit te d by
Dr. Subhash Pratap Singh (Asst.Professor) Pradeep Kumar Bharti
Mr.Apurba Mukherjee MBA-Agribusiness
FMS-BHU (2010-12)
FMS-BHU
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CERT IFICAT E
This is to certify that research report entitled “ROLE OF MICRO FINANCE
INSTITUTIONS-A STUDY OF CASHPOR MICROCREDIT IN MIRZAPUR .” has
been prepared under my supervision by Mr. Pradeep Kumar Bharti a student of MBA (Agri-
Business) session 2010-12 of Faculty of Management Studies as part of his course
curriculum. This report is his original work and up to the standard expected from an MBA
(Agri-Business) student of Management faculty.
I recommend this thesis be forwarded for evaluation.
SUPERVISOR
Dr. Subhash Pratap Singh (Asst. Professor)
Mr.Apurba Mukherjee
FMS-BHU
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ACKNOWLEDGEMENT
First of all I owe my deep sense of gratitude to the god for His blessing, mercy,
guidance and strength that made for me to accomplish this herculean task of
writing this dissertation.
I sincerely thank Dr. Subhash Pratap Singh & Mr.Apurba Mukherjee, Assistant
Professor (Agri-Business Management) for giving me an opportunity to pursue this
study entitled “ROLE OF MICRO FINANCE INSTITUTIONS-A Study of
Cashpor Micro Credit in Mirzapur.” The project not only helped me to
understand the Role of microfinance in rural area but widen my vision in this
sector.
I sincerely thank and express my gratitude to Prof.S.K.Singh, Dean& Head and
Chairman (Training), Faculty of Management Studies, Banaras Hindu
University, Varanasi, for providing me this opportunity of learning.
I express my thanks to my friends also who helped me a lot during my work.
Last but not the least; I convey my whole –hearted thanks to my entire batch
mate for their sustained co-operation.
Date: Pradeep Kumar Bharti
Place: MBA (Agri-Business)
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FMS-BHU
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CONTENTS
Sr. No. Title Page no.
1. Introduction 04-17
2. Review of Literature 18-22
3. Methodology 23-25
4. Description of Study Area 26-28
5. Results and Discussions 29-40
6. Summary and conclusions 41-46
7. References 47-48
8. Appendices 49-51
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Background of the Study
The newly emerging (and internationally more established) Microfinanacial
Institution (MFI) model is a different ball game altogether. Here the sponsor is a profit-
oriented venture capitalist, who sees the rural credit market as a fresh business
opportunity. The MFI apparently brings great professionalism, innovation and
technology to its enterprise. It also ventures to provide loans that banks do not. But
MFIs form no groups that are engaged in governance functions la SHGs. Even when
they operate through NGOs, MFIs are primarily concerned with lending and recovering
(mostly every week) what they lend to cohorts of people, at times at very high rates of
interest. The recent suicide episode in Andhra Pradesh (see Gate, 2007) is a grim
reminder of the possible extreme consequences of MFI lending. Since profits are the
overwhelming consideration for an MFI, there is enormous pressure to lend at all costs
("dumping money on borrowers" as Ghate calls it).36 and concomitantly to recover.
Added to this is the requirement of MFIs of a security deposit as cash collateral. As also
high rates of interest, inevitable because of high transaction costs and a relatively low
scale of operations. Another dubious practice of many MFIs is that they charge
borrowers interest on the entire remaining period as well, even if they were to return a
loan early. This could become a killing penalty with long remaining periods. There is
also a great lack of transparency, especially in "start-up" MFIs, about such practices
(Ghate, 2007). Join this to the fact that borrowers are often illiterate people, without
adequate information on the terms of the loan, and we get a potentially explosive
Situation. Which in a vulnerable context such as Andhra (already riddled with suicides)
was bound to explode? Finally, the really poor do tend to be implicitly or deliberately
excluded as they are unable to bear the pressure of recovery (Ciravegna, 2005; Scully,
2004; Marr, 2004; Simanowitz, 2002).
People are reported to have had to borrow from moneylenders in
order to repay MFIs. Other borrowers have "absconded", migrated or at times
tragically committed suicide .This is linked to abusive collection practices that MFIs
sometimes resort to. "Abusive" is a well -defined technical term with strict usage in
the literature (CGAP, 2004). It includes "(I) adjusting over dues against the security
deposit, (ii) holding the weekly meeting in front of the defaulter's house, (iii) MFI
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staff sitting in front of the defaulter's house, (iv) offensive language used by group
leaders or staff, (v) putting up a loan overdue notice in front of a defaulter's house"
(Ghate, 2006, p.66). Instances are also mentioned of recovery of large individual
loans by encashing signed blank cheques, legal action to enforce blank promissory
notes and physical force used by group leaders. There is huge pressure on all
members because of joint liability. No one gets another loan until all repayments are
made.
A major demand of MFIs is that they should be allowed to raise interest rates in an
unfettered manner. "No regulation can control supply and price simultaneously. So if
more credit has to flow to farmers, the price (interest rate) must be deregulated"
(Mahajan, 2004, p.33).37 the Enactment of anti-usury laws is said to have led to a
reduction in supply of credit and rise in interest rates. Our earlier discussion and data
clearly show that this is simply not true. There was a massive expansion in the supply
of credit to the poor in the social banking era. And this was at low rates of interest. It
is only in the reform era that the supply of institutional credit has contracted and the
usurious moneylender has made a comeback.
The suggestion that it is not the price of credit but its supply that is the real
problem, appears ludicrous in a socio-historical context where usurious money
lending has been at the heart of relations of power, which made credit easily available
to the poor but at a "price “that they could just not afford. However, today there are
calls, even in official documents, for the poor to pay if they want to get out of
poverty. The RBI's Micro-Credit Special Cell proclaims. Interest has not helped
matters much. Micro-credit has to be commercialized where all patrons – Micro
Finance providers, intermediaries, NGOs, facilitators and the ultimate clients - must
get compensated appropriately... The cell believes that freedom from poverty is not
for free. The poor are willing and capable to pay the cost” (RBI, 1999b, p.12,
emphasis added).
There are many presumptions implicit in this view that needs to be questioned:
1. That social banking was a mistake (ignoring the real achievements of the period
listed earlier).
2. That social banking was all about "dollops of sympathy" (overlooking the theoretical
basis on which it was grounded and continues to operate in large parts of the world).
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3. That all "patrons" need "appropriate compensation" (it is clear that the goal has
shifted away from eradication of poverty as a moral obligation of the welfare state
towards those. In whose name it rules and through whose votes it derives its own
legitimacy).
4. That "freedom from poverty" is nigh, now that profit-oriented MFIs are here
DEFINITION OF MICROFINANCE:
The task force of NABARD has defined microfinance as “provision of thrift, credit and
other financial services and product of very small amounts to poor in rural, semi urban or
urban areas for enabling them to raise their income level and improve their living standards”
Micro Finance is defined as formal scheme designed to improve the well being of poor
through better access to saving and services loans (Schreiner, 2000).
Micro finance is the tool that can bring the positive change in the life of the poor people of
India. Micro finance is more than simply credit.
ADB´s micro finance development strategy defines microfinance as providing a broad range
of financial services, such as;
Deposits
loans
Payment services
Money transfers
Insurance to poor and low income households and their micro-enterprises
ADB´s definition of micro finance is not restricted to the poor; it includes low income
households (ADB, 2008).
According to Robinson, Marguerite (2001), “microfinance refers to small-scale financial
services primarily credit and savings provided to people who farm or fish or herd; who
operate small enterprises or micro enterprises where goods are produced, recycled, repaired,
or sold; who provide services; who work for wages or commissions; who gain income from
renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to
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other individuals and groups at the local levels of developing countries, both rural and urban.
Many such households have multiple sources of income”.
MICROFINANCE INSTITUTION (MFI):
According to the definition on „‟Microfinance Gateway‟‟ an MFI is the organization that
Offers financial services to the low-income people (Microfinance gateway, 2008).
There is a wide range of micro financial institutions. Mostly when we talk about these,
financial NGO`s come into the mind. These financial NGO‟s Provide micro credit and micro
finance services too and in most cases these financial NGO‟s are not allowed to capture
saving deposits from general public. Many NGO‟s provide other financial services along with
the micro finance and similarly some commercial bank are also providing micro finance
along with their routine financial activities so because of these micro finance services which
are quite bit part of the whole of the activities of these commercial banks we can call these as
a micro finance institutions (Rehman, 2007). There are some other MFI´s that can be
considered in the business of micro finance. These institutions are the community based
financial intermediaries such as credit union; cooperative housing societies and some other
are owned and managed by the local entrepreneur and municipalities. This type of institution
is varying from country to country (Rehman, 2007)
SIGNIFICANCE OF MICROFINANCE INSTITUTIONS:
The microfinance institutions have a pivotal role to play in a society marked by economic
classes. By providing small loans to poor people, these institutions attempt to provide
remedies to the woes of the deprived class. Apart from this, it is through these institutions
that poor people are able to avail small loan facilities on reasonable terms and interest rates.
In the absence of these institutions the poor people are more likely to fall prey to the
exploitation of money lenders, who are more likely to exploit the poor masses by providing
loans on enormously high rates. As a result the problems of the poor class are likely to be
multiplied instead of being nullified. According to Robinson, Marguerite (2001), poor people
are exploited by informal money lenders who provide loans at high costs which can range
from ten to more than a hundred percent.
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LEADING VIEWS ON MICROFINANCE:
According to Marguerite (2001), there are two leading approaches to microfinance:
Poverty lending approach.
Financial systems approach.
Both these approaches tend to provide the availability of financial services for the poor,
despite having consonance in their goals, each approach tends to adopt a different modus
operandi for the achievement of their desired aim. We look at how these two approaches tend
to operate:
POVERTY LENDING APPROACH
According to Robinson & Marguerite (2001), the basis focus of the poverty lending approach
is the reduction of poverty through institutions which receive funds from donors or
governmental authorities. The basic aim of the poverty lending approach is to reach the
poorest of the poor. In poverty lending approach to microfinance saving is only limited to a
trivial status i.e. only as a compulsion for receiving credit. Institutions adopting the poverty
lending approach are not sustainable, the reason being that the interest rate on their loans is
too low for the recovery of even their costs. These institutions also do not cater to the demand
for micro saving services among the poor. The focus of poverty lending approach is upon
micro-credit not microfinance.
FINANCIAL SYSTEMS APPROACH:
According to Robinson, Marguerite (2001), the financial systems approach focuses on
financial intermediation between the poor borrowers and savers on commercial basis. This
approach lays its emphasis on the institutional self-sufficiency. The world has witnessed the
emergence of many commercial microfinance intermediaries in the past decades. These
commercial microfinance intermediaries provide credit and saving services to the
economically active poor. The loans of these institutions are financed by savings, commercial
debts and through profitable investments. The financial systems approach represents a more
globally acceptable model of microfinance.
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Current status of microfinance in India:
An attempt is made to highlight the current status of microfinance sector in India in
terms of potential demand for microfinance services, current level approaches and
supply in relation to the potential, and extent of involvement of various type of
institutions. There are no clear systematic estimates available regarding the actual as
well potential demand and supply of microfinance in the country. Regarding the
estimation of target group for MF services one can base it on the official estimation of
the number of poor in the country given the fact that microfinance is meant for the
poor. The estimated size of the below poverty line (BPL) population give some idea
about the potential client base of the sector. Taking the official estimation of BPL
population of 260 million during 1990-2000 and the average household size, we find
that there are about 52.04 million household in rural area comes to 38.6 million, the
same in urban areas comes about 13.4 million. There is however, argument whether
the entire BPL household should be considered for the purpose of providing
Microfinance But gave the fact that even very poor household below BPL as potential
client base of microfinance. Adjusting change for like population growth and
household crossing poverty line during in the interval, one can say about 50 million
household in the country presently constitute the basic target group of the MF sector.
As regard the demand, based on the available estimates, the task force of NABARD
on microfinance had put the annual credit requirement to be in the range of Rs. 15000
crore to Rs 50000 per year (NABARD) A recent unofficial estimates puts the total
credit demand by the poor household in the order of Rs 15000 to 45000 crores
(Mahajan and Ramola 2003). These estimates are based on the actual credit usages as
reported by various studies and not potential demand. Due to variation in the average
household credit use as estimated by different studies, there is a wide gap in the total
estimated range of credit demand.
Again there are no clear estimates about saving and insurance demand by the poor.
The same unofficial study based on the assumption that the poor can save up to 5 to
10 % of their annual income, and can pay insurance premium equivalent to 3 to 5% of
their income, puts the annual
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Demand for saving product in the range for Rs. 5000 crore to Rs 10,000 crore, and
demand for insurance premium in the range of Rs. 3000 crore to Rs. 5000 crore.
Talking to for credit saving and insurance, the annual total demand for microfinance
by the poor households Can be put in the range of Rs. 2300 crore to Rs. 6500 crore in
the country.
Given such a demand potential, actual coverage of the target group and the extent
of supply of microcredit by various agencies indicate that there is a big gap in the
demand and supply of microfinance in the country. Since there are no real figures
available on the actual supply of microfinance.
Top 40 Microfinanacial Institutions in India
MFIs No. Of borrower
Spandana 916,261
Share 826,517
SKS 513,108
Bandhan 449,304
AML 416,829
Microcredit Foundation of India 410,329
KAS 394,462
Cashpor 201,692
BISWA 200,912
BASIX 198,282
BFL 185,448
GV 181,328
Mahasemam 175,089
Sarvodaya nano finance 116,625
ESAF 110,122
Sanghamitra 104,614
SEWA 91,096
Kotalipara 84,458
AMMACTS 83,236
GK 82,562
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SWAWS 81,818
BSS 63,315
Sadhana 55,569
Krushi 42,242
GU 41,353
VWS 41,167
SMS 39,577
Adhikar 35,210
KBSLAB 32,498
AWS 26,852
SMSS 25,938
RGVN 24,982
RASS 23,410
SU 22,860
Sangamam 22,326
CReSA 21,871
Ujjivan 19,474
OMI 16,779
IASC 14,813
BSA 14,400
Total 6,408,728
Source: The Geographic Distribution of Microfinance Services in India, 2008
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Top 20 Districts by MFI Penetration
State District FemalePopulation
Total # ActiveBorrowers
MFI Penetration
Karnataka Kannada 724766 141840 19.57Karnataka Udupi 6413333 124377 19.39
Karnataka Kannada 1042739 177315 17.00Orissa Nayagarh 449832 74489 16.56AP Khammam 1376397 204287 14.84AP Kurnool 1873497 226325 12.08AP Krishna 2237932 266049 11.89AP Adilabad 1337118 158252 11.84Orissa Puri 794948 92834 11.68Orissa Bargarh 714886 77111 10.79AP Medak 1424245 145460 10.21AP Nalgonda 1725103 175081 10.15Orissa Khordha 957548 95698 9.99AP Guntur 2394041 235211 9.82Maharashtra Wardha 660404 62060 9.40AP Nizamabad 1278463 120005 9.39Orissa Sambalpur 495157 45742 9.24Tamilnadu Sivaganga 622631 57333 9.21Orissa Boudh 199160 17626 8.85AP East Godavari 2639313 225336 8.54
Source: The Geographic Distribution of Microfinance Services in India, 2008
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MFI penetration in Top 10 Urban Areas:
State DistrictMFIpenetration within district
MFIpenetration of surrounding state
growth rate growth rateof surrounding state
AndhraPradesh
Hyderabad 5.159789 7.4629326 0.711432 1.9776701
Delhi Delhi 0
Gujarat Ahmadabad 0
Gujarat Surat 0
Karnataka Bangalore(R) 3.272099 3.5712678 0.5000384 1.8682336
Karnataka Bangalore(U) 0.692674 3.5712678 0.225682 1.8682336
Maharashtra Mumbai 0
Maharashtra Mumbai(Suburban) 0
Maharashtra Pune 0.002635 0.8092153 0.002635 0.7347145
Maharashtra Thane 0.109339 0.8092153 0.109339 0.7347145
Tamilnadu Chennai 3.176365 3.3829474 3.382944 1.7011636
WestBenal Kolkata 1.02714 1.3645169 1.364519 0.8180745
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Bank Loan provided to MFIs – 2007-08 and 2008-09
(Amount Rs. Crore)
Agency Years Amount of loandisbursed
to NGOs/ MFIs
Loan OutstandingagainstNGOs/ MFIs as on31 March
PercentageRecovery of loans
No. ofMFIs
Amount No. ofMFIs
Amount
CommercialBanks (Public and Private)
2007-08 327 115134 541 158427 92-100
2008-09 497 1,968.60 1,072 2,745.24 82 – 100
% growth 52.2 71.0 98.2 73.3
RegionalRural Banks(RRBs)
2007-08 7 0.22 8 0.20 90
2008-09 8 1.51 24 3.58 95.5 – 100
% growth 14.3 586.4 200.0 1,690.0
Co-op. Banks 2007-08 0 0 1 0.01 100
2008-09 13 0.04 13 0.02 NA
% growth 1200.0 100.0
Total2007-08 334 1,151.56 550 1,584.48
2008-09 518 1,970.15 1109 2,748.84
% growth 55.1 71.1 101.6 73.5
Source: NABARD
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Keeping in view the above facts it become necessary to know the current status of micro
financial institutions in mirzapur district and their target group .The prominent MFIs in this
region is CASHPOR MICRO CREDIT Ltd. CASHPOR India started its operations in mid
1997 by disbursing its first loan on 15the September in Mirzapur District of Uttar Pradesh. The entity was working with an objective to reduce poverty in eastern U.P. and western Bihar through the provision of Micro finance services to the rural poor women timely, honestly and efficiently. Its first six branches were set up in July 1997, to cover the southern part, which was poorer part of the district. Its next six branches were opened in October 1998, to cover rest of the District. Its original branches having acute poverty level were finding it difficult to become financially viable, because of little demand of loan amount, low population density and frequent casualties in the client’s family leading to high portfolio at risk. The lack of market infrastructure limited the avenues of profitable enterprise for the poor.
One most important survey of our dissertation that how it is helpful for poverty alleviation
in mirzapur and what criteria is adopted by CASHPOR MICRO CREDIT Ltd. for choosing
their target customers. This study was undertaken with following objectives:
1. To study the various financial services model provided by Cashpor and other
Microfinance Institutions and its impact on poverty eradication in the study area.
2. To examine the development process through Cashpor micro-Credit and
understanding the role of women in microfinance.
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Aghion and Morduch (2005) studied the most of the microfinance programmes are not
sustainable and heavily depend upon external findings. Morduch studied that only one
percent of these are sustainable and rest will either close or keep relying on subsidies
(Morduch, 1999). Now the question is that should a microfinance programme be given
subsidies in the form of low interest rates by the government and external funding by the
donors and what if the donors decided to stop their funding. If subsidies are worthy for
poverty alleviation then other investments then it is better to continue with them. Reaching
poor is an expensive job. The formal Institutions left the poor because poor didn’t approach
themselves and the financial institution were not ready to outreach poor because of high cost.
The microfinance tried to outreach the poor which has its financial costs. In these
circumstances, external funding is justifiable.
Krishnaswamy (2005) examined that Indian microfinance has seen unprecedented growth.
For instance, during 2005–6, major Indian microfinance institutions (MFIs) were able to
expand their active borrower base by about 110 per cent making the sector one of the fastest
growing worldwide. Loans outstanding of Sa-Dhan’s members almost doubled from Rs
1095.1 Crore to Rs. 2070.2 crore during the same time period. In fact, in 2005, five leading
MFIs from India ranked in the list of top 20 fastest growing MFIs in the world.1, 2 This trend
was reinforced by and in turn further accelerated the commercialization of the industry.
Commercialization is characterized by increased competition for clients and a clear objective
to seek profitability.
The Majority of India's top 25 MFIs already are, or are working to become, profit-oriented
NBFC–MFIs (Non-bank finance company–microfinance institutions). Despite the growth,
there is considerable unmet demand for credit in India. According to a World Bank report,
only 9% of poor families in India are covered by microfinance. Of the projected credit
requirement of $10909 million, only $1050 million is met by microfinance.
Mahajan and Nagasri (1999) analyzed India is perhaps the largest emerging market for
microfinance. Over the past decade, the Microfinance sector has been growing in India at a
fairly steady pace. Though no microfinance institution (MFI) in India has yet reached
anywhere near the scale of the well-known Bangladeshi MFIs, the sector in India is
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characterised by a wide diversity of methodologies and legal forms. However, very few
Indian MFIs have achieved sustainability yet. Sustainability itself has to be seen in a broader
sense than just financial sustainability. The sustainability of Demand, of the MFI‟s mission,
of its ownership and governance structure and the legal and regulatory framework under
which it works, are all contributory to overall sustainability of an MFI. Further, the
sustainability of an MFI by itself may not be enough unless a full-fledged micro-finance
sector (MFS) is established on sustainable lines.
Ledgerwood (1998) analysed that the key factors that contribute to the success and
sustainability of the many micro financial institutions are,
Favourable macro economic conditions,
Managed growth,
Deposit mobilization,
cost control
Shekhar (1995) studied The Village Welfare Society (VWS) has been operating as a
microfinance institution (MFI) since1995. Since then, the organization has not only
established itself as one of India‟s leading MFIs with a sizeable customer base of about
60,000, but has made visible improvements in the lives of thousands in West Bengal. VWS
has truly emerged as an organization completely dedicated to socioeconomic development of
the poor, particularly women in disadvantaged groups and the
Unorganized sector, by continuing to help individuals realize their dreams with
Financial assistance.VWS has adopted a strategy of vertical expansion by penetrating deeper
in existing areas of operation. However, their model has not been shielded from current
sectoral Issues, such as process intensiveness, gender perspectives, overemphasis on credit,
slow growth in per capita credit, and the limited availability of holistic financial services. The
microfinance movement has centred mainly on the provision of credit and VWS is no
exception. It appears, therefore, that in the case of urban microfinance, if organizations are
providing financial services to the poor to reduce their clients‟ financial vulnerability, the
entire gamut of financial services, including savings,
investments, and remittances, poor to lift themselves out of poverty through income
Smoothing, asset-building, and greater risk-taking capacity, thereby facilitating their
participation in the larger economy.VWS‟ expansion strategy must also be assessed within
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the context of increasing competition in its existing areas of operation. For example, as VWS
faces increased competition from credit-only MFIs, is the vertical expansion model
conducive to VWS‟ intention to expand its customer base? Are VWS‟ strong client reputation
and resource base sufficient to drive this expansion amidst such competition? These concerns
have to be addressed while considering current industry trends and benchmarks.
This Case study was conducted between April and May 2006 and reflects VWS‟s business
model at that time. Since then, VWS has undergone a major transition, part of which was a
transformation of their business model from August 2006 onward.
Otero et al (1994) examined to be successful, financial intermediaries that provide services
and generate domestic resources must have the capacity to meet high performance standards.
They must achieve excellent repayments and provide access to clients. And they must build
toward operating and financial self-sufficiency and expanding client reach. In order to do so,
microfinance institutions need to find ways to cut down on their administrative costs and also
to broaden their resource base. Cost reductions can be achieved through simplified and
decentralized loan application, approval and collection processes, For instance, through group
loans which give borrowers responsibilities for much of the loan application process, allow
the loan officers to handle many more clients and hence reduce costs.
Gupta (1992) examined In India today, there are over 150,000 retail outlets offering banking
services to the country‟s vast citizenry of over 1 billion. In spite of the presence of a large
branch network, however, approximately38% of the population continues to depend on
informal sources, such as moneylenders and pawnbrokers, to meet their financial needs. In
1992, in order to reduce the number of households turning to these often exorbitantly priced
sources, the National Bank for Agriculture and Rural Development (NABARD) developed
the self-help group (SHG)-Bank linkage model by utilizing and building upon the work of
several prominent NGOs, such as MYRADA and PRADHAN.Initially, the SHG movement
began with a pilot testing phase in which 500 groups were linked with rural branches of six
major financial institutions across India. Local NGOs assisted in the formation of groups and
provided training to poor women in areas such as record-keeping and arithmetic. Today, this
home grown model of microfinance has exploded with over 440 banks, with a combined
SHG portfolio of over Rs. 1,200 crores , lending to over 500,000 groups that have been
formed and trained by 2,000 NGOs and development organizations. The result is that
financial services have been made available, in effect, at the doorsteps of over 8 million
Indians who previously lacked access to products that could help smoothen consumption or
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increase income generating capacities. Indian Bank is a financial institution that has taken
part in this movement by not only lending to SHGs but pioneering the public sector‟s
involvement in the microfinance sector as a whole. Established in 1907 as part of the
Swadeshi Movement, Indian Bank has evolved into a well-established financial institution
with its overall business totalling Rs. 63,290 crores as of the end of the financial year 2006.
Beginning in 1989, inAssociation with the International Fund for Agriculture Development
and the Tamil Nadu Corporation for Development of Women (TNCDW), Indian Bank
commenced its microfinance operations. To capitalize on its first-mover advantage, the Bank
opened a special branch in 2005, Microsate, which was intended to run with the sole intention
of managing the microfinance business, particularly through SHGs. In the Indian context, this
decision was particularly noteworthy since establishing a separate branch was something that
was previously unheard, unseen, and unpractised, given that many financial institutions were
working on microfinance through distinct divisions.
Yunus (1976) approaches The Grameen Bank lending system is simple but effective. To
obtain loans, potential borrowers must form a group of five, gather once a week for loan
repayment meetings, and to start with, learn the bond rules and "16 Decisions" which they
chant at the start of their weekly session. These decisions incorporate a code of conduct that
members are encouraged to follow in their daily life e.g. production of fruits and vegetables
in kitchen gardens, investment for improvement of housing and education for children, use of
latrines and safe drinking water for better health, rejection of dowry in marriages etc.
Physical training and parades are held at weekly meetings for both men and women and the
"16 Decisions" are chanted as slogans. Though according to the Grameen Bank management,
observance of these decisions is not mandatory, in actual practice it has become a
requirement for receiving a loan. Yunus (1976) studied and look the growing enthusiasm for
promoting microfinance as a strategy for poverty alleviation. The microfinance sector
blossomed in many countries, leading to multiple financial services firms serving the needs of
micro entrepreneurs and poor households. These gains, however, tended to concentrate in
urban and densely populated rural areas.It was not until the mid-1990s that the term
"microcredit" began to be replaced by a new term that included not only credit, but also
savings and other financial services. "Microfinance" emerged as the term of choice to refer to
a range of financial services to the poor, that included not only credit, but also savings and
other services such as insurance and money transfers.
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Block
Croppin g
Intensity (%)
Productivit y (Qtls/Ha)
Foodgrai n Area
(%)
Net Irrigate d Area
(%)
SC/ST Populatio
n (%) Marginal farmer
%
Total Milch
Animal
Chhanvey 114.54 20.70 97.10 39.65 20.2 81.50 9735
Kon 112.53 22.00 82.70 43.05 27.7 81.97 10782
Majhawa 159.23 22.49 82.70 62.47 22.8 81.10 34702
Nagar(City) 155.37 21.85 88.20 60.85 27.6 82.48 9412
Pahari 133.82 19.17 97.10 41.42 30.6 67.98 5830
Lalganj 143.65 22.10 100.00 69.24 41.1 65.91 27502
Hallia 130.91 18.79 88.00 41.36 44.3 44.25 49016
Marihan 150.04 20.87 93.50 63.94 55.2 63.39 39675
Rajgarh 156.16 22.65 91.70 71.84 34.2 39.32 62018
Shikhar 139.50 21.23 71.00 61.37 21 65.59 19096
Narainpur 165.85 21.98 88.50 77.89 17.4 74.86 34134
Jamalpur 175.13 22.59 95.50 93.13 14.4 77.82 302 7
SAMPLI NG TECHNI QUE :-
The Mirzapur District was selected purposively because of low concentration of MFI and
existence of poverty. There are twelve blocks in the districts, out of which three blocks
were selected purposively. Selection indicators are given in table .On the basis of
indicators one developed block i.e. Naryanpur and one underdeveloped block Marihan
and Mirazapur City were selected for study purpose.
Table Selection Criteria of Blocks in MIRAZAPUR DISTRICT
2
26
SOURCES OF DAT A: -
Data were collected from primary and secondary sources.
Primary data collection: The primary data were collected from Cashpor Micro Credit
Limited through Pre- structured questionnaire (open and close ended)
Secondary data collection: The secondary data provides ready to be used information
regarding an issue or event. Journals, articles, research papers, magazines, statistics reports,
catalog and books (Ghauri & Gronhaug, 2005) can gather this.
The use of secondary data has a number of benefits:
Time conservation
Better quality of material due to expert people involvement.
Easy to compare
Sample survey:-
Type of respondents. No. of respondents
Urban poor peoples 50
Rural poor peoples 30
Total 80
Respondents were classified into two groups‟ poor peoples of rural area and urban area
respectively. Total 80 respondents were selected for data collection as indicated in the above
table.
Analytical tools:-
Simple tabular and pie diagram analysis will be done to achieve the above objectives.
27
28
LOCATION, BOUNDRIES, AREA AND POPULATION:
The District of Mirzapur lies between the parallels of 23.52 & 25.32 North
latitude and 82.7 and 83.33 East longitude. It forms a portion of the Varanasi Division. On
the north and north-east it is bounded by the Varanasi district ; on the south bounded
by district Sonbhadra. On the south west by the district of Allahabad. The shape to the
north and west is somewhat irregular. In no direction, except for about 13 km. in the north
east where he Ganga separates the Tehsil of Chunar from the district of Varanasi , has
Mirzapur a natural frontier. According to Central Statistical organisation, the district of
Mirzapur had an area of 4521 Sq.Km. At the census of 2001, the population of the district
is 1657140(males 1093849 and females 980860) of which 1788203 were living in rural and
286506 in the urban area of the district.
Dist r ict M i rz a pu r At A G la n c e 1- Geographical Area 4521 sq. Kms.
2- Population2074709.001093849.00980860.00554102.001302.001788203.00286506.00
(a) Total(b) Male(c) Female(d) Schedule Caste(e) Schedule Tribe(f) Rural Population(g) Urban Population3- No. of Educated Personals(a) Total 917960.00(b) Male 611282.00(c) Female 306678.004- No. of Tehsils 045- No. Of Development Blocks 1206- No. Of Branches Of Nationalized banks 6107- No. Of Gramin Bank Branches 3508- No. Of Co-operative Bank Branches 1509- No. Of Branches Of Development Banks 0310- No. Of Other Commercial Banks 1811- No Of MFIs 01
29
Place of visit:
Mirzapur city
Naryanpur
Madihan
30
31
Model of financial services provided by MFI’s and its impact on poverty
eradication in the study area.
Microfinance is the provision of a broad range of financial services such as
Loans Payment services Money transfers Insurance to poor and low-income households and their micro enterprises
Microfinance is often considered one of the most effective and flexible strategies in the fight
against global poverty. It is sustainable and can be implemented on the massive scale
necessary to respond to the urgent needs of those living on less than $1 a day, the World’s
poorest. Microfinance consists of making small loans, usually less than $200, to
individuals, usually women, to establish or expand a small, self-sustaining business. For
example, a woman may borrow $50 to buy chickens so she can sell eggs. As the chickens
multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls
her further from the devastation of poverty.
Microfinance, the Grameen way, includes several support systems that contribute
greatly to its success. Microfinance institutions offer business advice and counseling, while
clients provide peer support for each other through solidarity circles. For example, if a client
falls ill, her circle helps with her business until she is well. If a client gets discouraged, the
support group pulls her through. This contributes substantially to the extremely high
repayment rate of loans made to microfinance entrepreneurs.
An equally important part of microfinance is the recycling of funds. As loans are repaid,
usually in six months to a year, they are re-loaned. This continual reinvestment multiplies the
impact of each dollar loaned.
Microfinance has a positive impact far beyond the individual client. The vast majority of
the loans go to women because studies have shown that women are more likely to reinvest
their earnings in the business and in their families. As families cross the poverty line and
micro-businesses expand, their communities benefit. Jobs are created, knowledge is shared,
civic participation increases, and women are recognized as valuable members of their
families and communities
32
A new paradigm that emerges is that it is very critical to link poor to formal financial system,
whatever the mechanism may be, if the goal of poverty alleviation has to be achieved. NGOs
and CBOs have been involved in community development for long and the experience shows
that they have been able to improve the quality of life of poor, if this is an indicator of
development. The strengths and weaknesses of existing NGOs/CBOs and microfinance
institutions in India indicate that despite their best of efforts they have not been able to link
themselves with formal systems. It is desired that an intermediary institution is required
between formal financial markets and grass root. The intermediary should encompass the
strengths of both formal financial systems and NGOs and CBOs and should be flexible to the
needs of end users. There are, however, certain unresolved dilemmas regarding the nature of
the intermediary institutions. There are arguments both for and against each structure. These
dilemmas are contextual and only strengthen the argument that no unique model is applicable
for all situations.
MICRROFINANCE-CREDIT LENDING MODELS:
The credit delivery channel is mainly by four operating models – Self Help Group models,
Grameen model, Individual Banking model and a mixed model. These are the major
methodologies employed by MFIs for delivery of financial services to the poor people. The
SHG model is the dominant model of microfinance delivery.
SHG MODEL:
The operation of SHGs is based on the principle of revolving member’s own savings, which
are augmented by funds borrowed by banks (SHG-Linkage Programme) or MFIs (the
alternate channel). Saving thus precede borrowing by the members. The volume of member
saving or the saving of the group as a whole determines the borrowings of the individual. In
this, MFIs/NGOs obtain external funds in bulk and channelize it to the members via SHGs.
NABARD has facilitated the SHG-Bank linkage programmed which entails banks lending
directly SHGs rather than via bulk loans to MFIs. NABARD refinances the loans of the
commercial banks to SHGs. The SHGs are linked to commercial bank (58%), Regional Rural
Banks (33%) or Cooperatives (9%).There is three models of SHG-Bank linkages that have
evolved over time. These are:
33
MODEL I. SHG’s FORMED AND FINANCED BY BANKS. (20% of SHGs financed):
MEMBERS Saving
SHG Saving BANKS
Credit at rates decided by the members
Forming and Nurturing of groups.
Credit at rates decided by the banks
M ODEL II. SHG’s FORMED BY NGOS AND FORMAL ORGANIZATIONS BUT
DIRECTLY FINANCED BY THE BANKS. (72% of SHGs financed)
MEMBERS SHG BANKS
Credit at rates decided by the members Credit at rates decided by bank
Formed, nurtured and trained byNGOs and agencies.
NGO/ GOVERNMENT AGENCIES
M ODEL III. SHG’s FINANCED BY BANKS USING NGOS AND OTHER
AGENCIES AS FINANCIAL INTERMEDIARIES (8% of the SHGs financed):
MEMBERS
Saving
SHGs
Support and Linkage Services Credit at ratesDecided by NGO
BANK NGO
Credit at rates decided by the bank/ grants
GRAMEEN MODEL:
The Grameen Bank of Bangladesh initially promoted this model. Grameen MFIs undertake
individuals lending but all borrowers are required to form into five member groups. The
groups, in turn, get together with 7-10 other neighboring groups to form a centre. Peer
pressure among the members is the key factor in ensuring repayment.
Each borrower’s credit-worthiness is determined by the overall credit-worthiness of the
group. Savings are a compulsory component of the loan repayment schedule but do not
determine the magnitude or timing of the loan. The important MFIs following this model are
Share Microfinance Limited (registered as NBFC) in Andra Pradesh and Cashpor in Uttar
Pradesh. .
Joint Liability Group
5 Individual Members
Centre
8 groups
Individual credit worthiness
determined by groups
Bank Branch
150-200 centers
MIXED MODEL:
Under mixed model, some of the MFIs started with the Grameen model but later on went on to adopt some aspects of the SHG model. A prominent MFI that follows a hybrid model with features of both Grameen and SHG is “Spandana”, which operates in the Guntur region of Andra Pradesh.
There are others MFIs that have chosen to adopt either Grameen or SHG model to cater individual‟s market segments. Few organisations are also providing individual banking type products and methodologies, in addition to group based methods to provide financial services. An important example is BASIX that uses diverse methodologies each suited to a particular market segment. Others such as the Indian Association of Savings and Credit (ISAC), a section 25 company promoted by the Housing Development Financial Corporation (HDFC) gives individual as well as group loans.
INDIVIDUAL BANKING MODEL
This model includes the provision of financial services by MFIs to individual clients.
There are two sub models in it – one where JLGs are formed and provide the social collateral
to the lending institution and, the other being direct lending to individual client. However, the
models are appropriate for larger client. Many MFIs like BASIX.
LOAN DELIVERY SYSTEM OF CASHPOR MICRO CREDIT
Loan Delivery Models
Conventional /Branch Model
Partnership Model
Under both the models the loan deliver to individual member on their joint liability. Each
model is almost similar except infrastructure and Group size, which are described as under-
Conventional Model :
In Conventional Model Cashpor has adapted FI (Financial Intermediation) methodology,
where Cashpor takes money from different banks in a pool and lend it to clients. Here the
outstanding occurs in the books of the Cashpor.
Operational Features :
Under this model we have 10 Branch offices associated with a District office.
Each branch has 8 CM (Center Manager).
CM reports to Branch Manager, whereas Branch Manager reports to Area Manager and Area
Manager reports to District Manager.
A group consist 5 members and a Center consist 4 groups.
Center Meeting happens once in a week .
Partnership Model :
In Partnership Model Cashpor has adapted SI (Social Intermediation) methodology, where
Cashpor manages the money of its partner Banks/FIs. Here the outstanding occurs in the
books of the partner (Banks/FIs). Cashpor takes service charges in lieu of its services. As a
Social Intermediary Cashpor undertakes following functions: -
Identification of poor clients.
Group formation.
Imparting training to the groups.
Grading/Recognizing the groups.
Taking loan proposals.
Disbursing loans to poor clients and
Taking care of repayments and managing delinquency.
Operational Features :
Under this model we have a District office divided into 4 units, whereas units don't have it
offices.
District office is headed by District Manager and units are headed by their Unit Managers.
Each unit has 20 CM.
CMs reports to Unit Manager, Unit Managers reports to District Manager and District
Manager report Managing Director.
All the center managers and Unit Managers report ones in week to District office.
Cashpors house index method:
The CASHPOR Housing Index is a cost effective method to identify poor households
through visual inspection from the road or lane outside the house. It uses a points system that
allocates a predetermined number of points for each main component of house e.g.its size, the
material of roof and walls and its structural condition. Points are allocated according to the
appropriate amount of investment required to buy or build this particular component.
This means that the index is locally determined and is weighted towards the most expensive
components of the house in the local context.
The points scored by any house are added into a total. Each MFIP determines its own cut-off
levels for points scored on the House Index. Two cut-off levels are set. Each house is then
assigned according to the cut-off points into three groups:
1. Very poor
2. Moderate Poor
3. Non- poor
Alleviation of poverty through public sector bank:
Kisan Credit Card: The scheme aims at providing adequate and timely credit for the comprehensive credit requirements of farmers for taking up agriculture and allied activities under single window, with flexible and simplified procedure, adopting whole farm approach, including the short-term credit needs and a reasonable component for consumption needs, through Kisan Credit Card including repayment of farmer's dues to non-institutional lenders.
Crop Insurance under NAIS:
All Crop loans under KCC are to be covered under National Agricultural Insurance Scheme (NAIS) in respect of the notified crops. It is implemented with the approval/consent of State Government concerned, which is monitored and followed up by SLBC of that State.
The following crops are covered under NAIS:-
a) Food crops (cereals, millets, pulses)
b) Oil seeds
c) Sugar cane, cotton and potato (annual commercial / annual horticulture crops)
All farmers both loanee and non-loanee farmers growing the above notified crops in the notified areas are eligible for insurance coverage.
In each district, there is a Nodal Branch for receiving premium for insurance coverage and remitting the premium to the Agricultural Insurance Corporation of India. Subsidy on premium is allowed in respect of small and marginal farmers.
Personal Accident Insurance Scheme (PAIS):
The coverage under PAIS is also compulsory for all KCC holders. The premium payable
under the scheme is to be shared by the issuing Branch and the KCC holder in the ratio of
2:1.
The premium payable for a one-year policy is Rs.15/- while the same for a three-year policy
will be Rs.45/- only. The insurance coverage will be from the date of receipt of premium by
the Insurance Co.
The development process through micro-finance and understanding the
role of women in microfinance.
Micro finance is expected to play a significant role in poverty alleviation and development.
The need, therefore, is to share experiences and materials, which will help in not only
understanding successes and failures but also provide knowledge and guidelines to strengthen
and expand micro finance programmes.
In India, a variety of micro-finance schemes exists and various approaches have been
practised by both GOs and NGOs. In the development sector, credit has been viewed as one
of the missing inputs and therefore, a growing emphasis on re-formulating and re-
strengthening micro credit programmes is observed. There are examples of spectacular
successes and there are examples of not-so-successful programmes, which experienced high
default rates and were unable to provide financial services in the end. Ultimately, the aim is
to empower the poor and mainstream them into development. Amongst different approaches
of micro-finance schemes, the process and stages remain more or less the same.
The ultimate aim is to attain social and economic empowerment. Successful intervention is
therefore, dependent on how each of these stages has been carefully dealt with and the
capabilities of the implementing organisations in achieving the final goal, e.g., if credit
delivery takes place without consolidation Of SHGs, it may have problems of self-
sustainability and recovery. A number of schemes under banks, central and state governments
offer direct credit to potential individuals without forcing them to join SHGs. Compilation
and classification of the communication materials in the directory is done based on this
development process.
The socio-economic benefits of microfinance are threefold:
1. Job creation
2. Poverty reduction
3. Empowerment
ROLE OF WOMEN:
Criticality of women and gender issues in microfinance programmes is best
highlighted by a quote from Mohammed Yunus, founder of Grameen Bank.
Explaining why 94 percent of Grameen Bank's loans go to women, he said, "Women
have plans for themselves, for their children, about their home, the meals. They have a
vision. A man wants to enjoy himself." Availability of finance to women ensures that
resources and profits generated are ploughed back into the development of the
immediate household and family. Protection of family values, of health and safety of
household members, of a more even distribution of income, can be seen as a result.
Better distribution of income and other resources in the household essentially means
that personal health and well-being is protected - a key to broader development
processes. As a result, experimentation and innovation is attempted, and risk of
environmental accidents or hazards reduced, particularly in home-based or household-
based enterprises, where women play a significant role. This enablement also
introduces a sensitivity of environmental problems and effects to a household in its
everyday life
42
43
The newly emerging (and internationally more established) Microfinanacial
Institution (MFI) model is a different ball-game altogether. Here the sponsor is a profit-
oriented venture capitalist, who sees the rural credit market as a fresh business
opportunity. The MFI apparently brings great professionalism, innovation and
technology to its enterprise. It also ventures to provide loans that banks do not. But
MFIs form no groups that are engaged in governance functions la SHGs. Even when
they operate through NGOs, MFIs are primarily concerned with lending and recovering
(mostly every week) what they lend to cohorts of people, at times at very high rates of
interest. The recent suicide episode in Andhra Pradesh (see Gate, 2007) is a grim
reminder of the possible extreme consequences of MFI lending. Since profits are the
overwhelming consideration for an MFI, there is enormous pressure to lend at all costs
("dumping money on borrowers" as Ghate calls it).36 and concomitantly to recover.
Added to this is the requirement of MFIs of a security deposit as cash collateral. As also
high rates of interest, inevitable because of high transaction costs and a relatively low
scale of operations. Another dubious practice of many MFIs is that they charge
borrowers interest on the entire remaining period as well, even if they were to return a
loan early. This could become a killing penalty with long remaining periods. There is
also a great lack of transparency, especially in "start-up" MFIs, about such practices
(Ghate, 2007). Join this to the fact that borrowers are often illiterate people, without
adequate information on the terms of the loan, and we get a potentially explosive
Situation. Which in a vulnerable context suchas Andhra (already riddled with suicides)
was bound to explode? Finally, the poor do tend to be implicitly or deliberately
Excluded, as they are unable to bear the pressure of recovery (Ciravegna, 2005; Scully,
2004; Marr, 2004; Simanowitz, 2002).
People are reported to have had to borrow from moneylenders in order to repay
MFIs. Other borrowers have "absconded", migrated or at times tragically committed
suicide .This is linked to abusive collection practices that MFIs sometimes resort to.
"Abusive" is a well -defined technical term with strict usage in the literature (CGAP,
2004). It includes "(I) adjusting over dues against the security deposit, (ii) holding the
weekly meeting in front of the defaulter's house, (iii) MFI staff sitting in front of the
defaulter's house, (iv) offensive language used by group leaders or staff, (v) putting
up a loan overdue notice in front of a defaulter's house" (Ghate, 2006, p.66). Instances
are also mentioned of recovery of large individual loans by encashing signed blank
44
cheques, legal action to enforce blank promissory notes and physical force used by
group leaders. There is huge pressure on all members because of joint liability. No
one gets another loan until all repayments are made.
A major demand of MFIs is that they should be allowed to raise interest rates in
an unfettered manner. "No regulation can control supply and price simultaneously. So
if more credit has to flow to farmers, the price (interest rate) must be deregulated"
(Mahajan, 2004, p.33).37 the Enactment of anti-usury laws is said to have led to a
reduction in supply of credit and rise in interest rates. Our earlier discussion and data
clearly Show that this is simply not true. There was a massive expansion in the
supply of credit to the poor in the social banking era. In addition, this was at low rates
of interest. It is only in the reform era that the supply of Institutional credit has
contracted and the usurious moneylender has made a comeback.
Keeping in view of developmental roll of MFIs this study was undertaken
following objectives:
1. To study the various financial services model provided by Cashpor Micro credit
and other MFI‟s and its impact on poverty eradication in the study area.
2. To examine the development process through micro-finance and understanding
the role of women in microfinance.
The Mirzapur District was selected purposively because of low concentration of
MFI and existence of poverty. There are twelve blocks in the districts, out of
which three blocks were selected purposively. Selection indicators are given in
table .On the basis of indicators one developed block i.e. Naryanpur and one
underdeveloped block Marihan and Mirazapur City were selected for study
purpose.
Data were collected from primary and secondary sources. Respondents were classified into two groups‟ poor peoples of rural area and urban area respectively. Total 80 respondents were selected for data collection.
45
MFIs and public sector bank helps in poverty eradication:
Microfinance is often considered one of the most effective and flexible strategies in the fight
against global poverty. It is sustainable and can be implemented on the massive scale
necessary to respond to the urgent needs of those living on less than $1 a day, the World‟s
poorest. Microfinance consists of making small loans, usually less than $200, to
individuals, usually women, to establish or expand a small, self-sustaining business. For
example, a woman may borrow $50 to buy chickens so she can sell eggs. As the chickens
multiply, she will have more eggs to sell. Soon she can sell the chicks. Each expansion pulls
her further from the devastation of poverty.
MICRROFINANCE-CREDIT LENDING MODELS:
SHG MODEL: The operation of SHGs is based on the principle of revolving member‟s
own savings, which are augmented by funds borrowed by banks (SHG-Linkage Programme)
or MFIs (the alternate channel). Saving thus precede borrowing by the members. The volume
of member saving or the saving of the group as a whole determines the borrowings of the
individual. In this, MFIs/NGOs obtain external funds in bulk and channelize it to the
members via SHGs. NABARD has facilitated the SHG-Bank linkage programme which
entails banks lending directly SHGs rather than via bulk loans to MFIs. NABARD refinances
the loans of the commercial banks to SHGs. The SHGs are linked to commercial bank (58%),
Regional Rural Banks (33%) or Cooperatives (9%).
GRAMEEN MODEL: In this model, each borrower‟s credit-worthiness is determined by
the overall credit-worthiness of the group. Savings are a compulsory component of the loan
repayment schedule but do not determine the magnitude or timing of the loan. The important
MFIs following this model are Share Microfinance Limited (registered as NBFC) in Andra
Pradesh and Cashpor in Uttar Pradesh.
MIXED MODEL: Under mixed model, some of the MFIs started with the Grameen model
but later on went on to adopt some aspects of the SHG model. A prominent MFI that follows
a hybrid model with features of both Grameen and SHG is “Spandana”, which operates in the
Guntur region of Andra Pradesh.
46
INDIVIDUAL BANKING MODEL: This model includes the provision of financial services by MFIs to individual clients.
There are following types of financial services are provided for poverty alleviation:
Loans Deposit Payment services Money transfers Insurance to poor and low-income households and their micro enterprises
The microfinance provides various socio-economic benefits via:
1. Poverty reduction2. Empowerment3. Job creation4. Empowering the women
47
SUGGESTIONS:-
The new Micro finanacial institution launches new financial scheme.
The amount which are provided to borrower should be somewhat increased.
Interest rate should be minimized.
The duration of repayment period should be increased.
Some educational purpose-financing scheme should be increased.
Not all financial schemes are being provided by the all the Microfinanacial
Institutions, it must be compulsory to provide all same financial schemes.
The MFIs should be focus same to all segment of instead women.
There are various new schemes are launches to poverty alleviation for male and
female both.
MFIs must be involved in some social works, such as opening the school for poor,
hospital etc.
48
Aghion and Morduch (2005) “why all the microfinance programmes are not sustainable”.
Krishnaswamy Karuna (2005) “Indian microfinance has seen unprecedented growth”.
Mahajan and Nagasri (1999) “India is perhaps the largest emerging market for microfinance”
Ledgerwood (1998) “key factors that contribute to the success and sustainability of the many
micro financial institutions.”
Churchill C.F. (1996) " An Introduction to Key Issues in Microfinance: Supervision and
Regulation, Financing Sources, Expansion of Microfinance Institutions,"
Mahajan Vijay and Bharti Gupta Ramola (1996) “Financial Services for the Rural Poor
and Women in India: Access and Sustainability”, Journal of International Development, Vol.
8, No.2, 211-224 ”
Web Portals:-
Microfinance Portal ( w w w.mic r o f inan ce g a t e w a y . o r g)
Micro finance Development Strategy ( w w w . a db. o rg)
w w w . g r a m ee n_info.o r g
w w w.n a b a rd.o r g
w w w.unitus.org
www.icici.or g
49
50
51
Questionnaire:
1: Why MFIs Charges High rate of interest on loan amount?
A) Because do not require any collateral.
B) Because it provide small amount of loan.
C) Because it provide loan at right time.
2: Why MFIs give more emphasis on the women.?
A) Because they are more reliable than man in repayment of loan.
B) For empowering the poor women.
C) Because of high unemployment rate.
3: Why MFIs had better than public sector bank?
A) Because they have not required the more formalities as PSU.
B) They provide less amount of loan.
4: What are the Poverty lending approaches Of the MFIs?
A) The reduction of poverty through institutions.
B) Receive funds from donors or governmental authorities.
5: What are the financial lending approaches of MFIs?
A) Focuses on financial intermediation between the poor borrowers and savers.
B) Give the emphasis on the institutional self-sufficiency
6: Why MFIs prefer to provide loan to self help group (S.H.G.)?
7: What is the Strength and weakness of MFIs?
52
Strength:
A) Because they provide less amount of loan.
B) The accessibility is very fast.
Weakness:
A) The high rate of interest.
B) They provide only low amount of loan.
8: Why the repayment rate of MFIs is very high.?
A) Because customer is very reliable.
B) Because of low amount of loan.
C) Because of companies creditability.
9: Why MFIs is different from other loan program?
10:Why Women SHGs are more successful?