Microfinance
Upcoming SlideShare
Loading in...5
×
 

Microfinance

on

  • 450 views

Dr.BishnuCharan Nag

Dr.BishnuCharan Nag
Assistant Professor of Economics
University of Delhi

Statistics

Views

Total Views
450
Views on SlideShare
450
Embed Views
0

Actions

Likes
0
Downloads
39
Comments
0

0 Embeds 0

No embeds

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Microfinance Microfinance Presentation Transcript

  • MICROFINANCE:A RAY OF HOPE
    Dr.BISHNU CHARAN NAG
    MOTILALNEHRU COLLEGE(E)
    UNIVERSITY OF DELHI
  • Microfinance is an approach of economic development that involves providing financial services, through institutions, where the market fails to provide appropriate services, to low-income clients including consumers and the self- employed
    The Canadian International Development Agency (CIDA) defines microfinance as, “the provision of a broad range of financial services to poor, low income households and Micro-enterprises usually lacking access to formal financial institutions”.
     
    MEANING
  • Microcredit and Microfinance
    Microcredit - A small amount of money loaned to a client by a bank or other institution
    Microfinance-Loans savings, insurance, transfer services, microcredit loans and other financial products targeted at low-income clients
  • MuhammadYunnus-
    Department of Economics, Chittagong University
    NOBLE PEACE PRIZE-2006
    Grameen Bank-Established on the outskirts of the village of Jobrain Bangladesh in 1976.
    Credit is a fundamental human right.
    Objective: To help poor people escape from poverty by providing loans on terms suitable to them and by teaching them a few sound financial principles so they could help themselves
    BACKGROUND
  • About three billion people, half of the world’s population, living on the income of less than two dollars a day
    Among the poor communities, one child in five does not live to see his or her fifth birthday
    The ratio of the income between the 5% richest and 5% poorest of the population
    74 to 1 in 2006
    30 to 1in 1960,
    REALTY-WORLD
  • Growth not sustainable, as benefits of growth are not widespread
    While Indian economy has shown an average growth of around 7 to 8 per cent in last eight years, the benefits have not equitably percolated to the different segments of the society
    Rural agricultural sector has not gained the desired momentum of growth and development
    In spite of so many developmental strategies undertaken by the government of India, poverty ratio is 28 per cent which subsists on less than US$ 1 a day, 74.9 per cent live on US$ 2 a day
    214 million people are chronically food insecure
    About 50 per cent people are undernourished
    68 out of 1000 die before the age of one year
    REALITY-INDIA
  • Formal financial services are not available to poor people because of
    High interest rate,
    Collateral requirements,
    Complicated application,
    Long admission procedures
    Lack of awareness
    Inaccessibility of Credit
  • POVERTY RATIO OF INDIA
  • VICIOUS CIRCLE
  • SOLUTION
  • Joint Liability Mechanism
    charging lower interest rates and generating high repayment rates
    Cross-Reporting Mechanism
    truthful-telling about the state of the project and subsequently can minimize the deadweight loss
    MECHANISM
  • PERFORMANCE
    In 2009 more than 8.6 crore poor households were associated with banking agencies under SHG-Bank Linkage Programme
  • Net household income between pre-SHG and post-SHG registered a significant growth per year at 6.1 per cent.
    The annual growth rate per household consumption expenditure on food and non-food items recorded 5.1 per cent and 5.4 percent, respectively.
    Per household annual expenditure on education and health recorded 5.6 per cent and 5.5 per cent growth, respectively.
    The average loan amount per household grew at an annual rate of 20.5 per cent between the pre-SHG and the post-SHG periods.
    About 93 per cent of households reported that loans had been taken in the post-SHG situation as compared to that of 46.5 per cent during pre-SHG
    On the issue of repayment of loan by SHG members, the findings showed that 96.4 per cent of households had reported regularity in repayments of loans.
    The share of households living below the poverty line reduced from 58.3 per cent in the pre-SHG period to 33 per cent in the post-SHG situation. The average annual poverty reduction rate was 10 per cent.
    About 92 per cent of households reported that the social empowerment of women had increased after joining membership in SHGs over a period of time.
    Impact Assessment Study –National Council of Applied Economic Research (NCAER)-2008-09
  • 1.Corruption free development
    2.Overall development
    • Increase in level of education
    • Increase in standard of living
    • Increase in level of awareness
    • Gradual removal caste system
    • Increase in self-dignity and confidence
    • Peace and harmony in family and society
    3.Realization of democratic values
    • Training for self-employment opportunities
    • Gradual increase in loan amount
    • Supervision
    RECOMMENDATIONS
  • THANK YOU