Micro finance


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Micro finance

  1. 1. <ul><li>MICRO FINANCE </li></ul><ul><li>PRESENTED BY </li></ul><ul><li>R.KUMARAVENKATESAN </li></ul><ul><li>ADVOCATE </li></ul><ul><li>PATENTS DEPARTMENT </li></ul><ul><li>ALTACIT GLOBAL </li></ul>PRESENTATION
  2. 2. <ul><li>FINANCE </li></ul><ul><li>A branch of economics concerned with resource allocation , resource management , as well as acquisition and investment . </li></ul><ul><li>Deals with matters related to money and the markets . </li></ul><ul><li>The management of money, banking, investments, and credit classified ob the basis of quantum, period, field, beneficiaries, rural/urban etc. </li></ul>INTRODUCTION
  3. 3. <ul><li>Microfinance providers are “banks for poor”. </li></ul><ul><li>A type of banking service </li></ul><ul><li>  different from the traditional banking system </li></ul><ul><li>the goal: to give low income people an opportunity to become self-sufficient by providing </li></ul><ul><li>a means of saving money, borrowing money and insurance. </li></ul><ul><li>Loans provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services </li></ul>MICROFINANCE
  4. 4. MICROFINANCE <ul><li>Includes, </li></ul><ul><li>deposits, loans, payment services, money transfers and insurance, products, savings and credit services </li></ul><ul><li>Types: Urban microfinance and rural microfinance </li></ul><ul><li>Beneficiaries: microenterprises, poor, women, low-income households </li></ul><ul><li>Act: The micro finance institutions (development and regulation) bill, 2011- </li></ul>
  5. 5. CORE PRINCIPLES FOR MICROFINANCE <ul><li>The poor needs access to financial services </li></ul><ul><li>The poor has the capability to repay loans and generate savings </li></ul><ul><li>  </li></ul><ul><li>an effective tool for poverty alleviation </li></ul><ul><li>  </li></ul><ul><li>to provide financial services to an increasing number of disadvantaged people </li></ul><ul><li>  </li></ul><ul><li>greater reach and sustainable development </li></ul>
  6. 6. <ul><li>to raise their income levels and improve their living standards. </li></ul><ul><li>  </li></ul><ul><li>women, to start or expand very small, self-sufficient businesses. </li></ul><ul><li>tool to fight against poverty, </li></ul><ul><li>The transparency of financial activities </li></ul>CORE PRINCIPLES FOR MICROFINANCE
  7. 7. <ul><li>On the basis of legal status </li></ul><ul><li>Formal Microfinance Institutions – rural/village banks, commercial banks, telecom firms, and cooperatives </li></ul><ul><li>Semi-formal Microfinance Institutions – nongovernmental organizations providing micro-sized loans  </li></ul><ul><li>Informal Microfinance Sources – money lenders and shopkeepers </li></ul>MICROFINANCE INSTITUTIONS
  8. 8. <ul><li>risk of lending to the poor (the loan may be misused easily) </li></ul><ul><li>high costs involved in small loan transactions </li></ul><ul><li>lack of awareness about sources </li></ul><ul><li>the poor’s inability to offer marketable collateral for loans </li></ul><ul><li>difficulty in measuring the social performance of MFIs </li></ul>PROBLEMS FACED BY MICROFINANCE
  9. 9. <ul><li>Continued….. </li></ul><ul><li>mixing of charity with business by microfinance providers </li></ul><ul><li>high interest rates of loans made to the poor </li></ul><ul><li>lack of customized microfinance models for the poor </li></ul><ul><li>inappropriate targeting of poor </li></ul><ul><li>lack of microfinance training for MFIs </li></ul><ul><li>poor distribution system to spread out loan facilities into rural areas </li></ul><ul><li>dual mission of MFIs to be financially sustainable as well as development oriented </li></ul>PROBLEMS FACED BY MICROFINANCE
  10. 10. <ul><li>increased self-employment opportunities especially for women (Women are granted 75% of microcredits) </li></ul><ul><li>micro entrepreneurs development : Small shopkeepers, peddlers, craftsmen or farmers. </li></ul><ul><li>acquired the know-how </li></ul><ul><li>to generate a regular income. </li></ul>ADVANTAGES
  11. 11. <ul><li>started in the early 1980s with self-help groups </li></ul><ul><li>Small Industries Development Bank of India (SIDBI) </li></ul><ul><li>National Bank for Agriculture and Rural Development (NABARD) </li></ul><ul><li>Grameen Financial Services Pvt Ltd, Share Microfin Limited, </li></ul><ul><li>Shri Kshetra Dharmasthala Rural Development Project, </li></ul><ul><li>Grama Vidiyal Micro Finance Pvt Ltd,SKS Microfinance Ltd </li></ul><ul><li>  </li></ul>MICROFINANCE IN INDIA
  12. 12. THANK YOU
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