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Microfinance

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  • 1. Microfinance : An issue and future PRESENTED BY : SUDHIR KUMAR
  • 2. What is Microfinance CREDIT SAVING INSURANCETRAINING
  • 3. Evolution of microfinance in India  Microfinance has been in practice for ages through informally way.  Legal framework fro establishing the co-operative movement set up in 1904 .  Reserve bank of India Act , 1934 provided the establishment of the Agriculture Credit Department .  Nationalization of banks in 1969 .  Regional rural banks created in 1975.  Set up of gamin bank in Bangladesh by Muhammad. Yunus in 1976.  NABARD established as a apex body for rural finance in 1982 .
  • 4. Scenario of Microfinance in India  India population growth is more than 100 Crore , around 32 Crore are living below the poverty .  only 20 % access loan from formal sources and 80 % from informal sources .  out of that 20% , only 14% have access to microfinance .  During 2011-2012 ,the microfinance through MFI channel has grown 16.25 % in 2012 in terms of client out reach and 13.75% in term of credit portfolio .  Customers of microfinance are “ small and marginal farmers”, “rural artisan and economically weaker sections” .
  • 5. Salient feature of microfinance  Borrowers are from the low income group.  Loans are of small amount – micro loans.  Short duration loans.  Loans are offered without collaterals.  High frequency of repayment.  Loans are generally taken for income generation purpose.
  • 6. Channels of Microfinance 1. SHG-Banking linkage programe (SBLP) 2. Microfinance institutions SHG BLP CustomerMFIs
  • 7. Issues of microfinance in India  High rate of interest  Lending for non productive purposes.  Multiple borrowing and lending  Ghost loans  Coercive practices
  • 8. Malegaon report on MFIs  On the recommendation of Malegaon report , RBI put up a regulation on MFIs , by put a cap on lending rate of MFIs at 26 % per annum and a margin cap of 12 % over cost of funds, whichever is lower .  In order to control overleveraging, RBI laid down rule that only two MFIs lend to one borrower and both together cannot provide loans beyond Rs50,000.  For controlling coercive practices , RBI also set up a grievance redressed machinery .
  • 9. Problem face by MFI  Financial illiteracy  Managerial problems  In ability to generate fund .  Drop out and migration of Group members .
  • 10. Future  Legislation and regulation by RBI to a great extent addressed the flaws in MFIs in India. It can play a big role in poverty elevation , empowerment and sustainable development.
  • 11. References : file:///C:/Users/SCHOOL/Desktop/micro%20finance%20institution%20analysis%20in%20india.htm . http://www.halfmantr.com/display-national-issues/955-microfinance-issues-and-future-in-india http://www.thehindubusinessline.com/industry-and-economy/banking/the-future-of-microfinance-looks-pretty- good-vijay-mahajan/article2430120.ece file:///C:/Users/SCHOOL/Desktop/MicroFinance%20%E2%80%93%20Current%20Status%20and%20Growing%20 Concerns%20in%20India%C2%A0%20%C2%A0AvantGarde.htm file:///C:/Users/SCHOOL/Desktop/micro%20finance%20institution%20analysis%20in%20india.htm