Ujjivan Financial Services An Urban Microfinance Institution

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  • Their risk and purchasing power profile forces them to resort to usurious money lenders
  • Ujjivan Financial Services An Urban Microfinance Institution

    1. 1. Ujjivan Financial Services An Urban Microfinance Institution February 15 th 2008.
    2. 2. Microfinance a panacea for poverty alleviation? <ul><li>Impact evaluation of Microfinance in Andhra </li></ul><ul><li>50% + </li></ul><ul><li>30% 0 </li></ul><ul><li>20% - </li></ul><ul><li>Education </li></ul><ul><li>Healthcare </li></ul><ul><li>Basic Infrastructure </li></ul>
    3. 3. Microfinance <ul><li>Major tool for poverty alleviation </li></ul><ul><li>Urban poor household average borrowing Rs.50K frpm multiple sources </li></ul><ul><li>Servicing debt one of the biggest items on the income statement of the poor. </li></ul>
    4. 4. Can Microfinance exist without revolutionary cost saving? <ul><li>MFI Cost Structure: </li></ul><ul><li>Borrowing Cost- 12% </li></ul><ul><li>Operating Cost- 10% </li></ul><ul><li>Bad Debts & </li></ul><ul><li>Return on Capital- 2% </li></ul><ul><li>Lending Rate- 24% </li></ul><ul><li>Borrowing Cost- Regulatory Issue </li></ul><ul><li>Operating Cost- Process & Technology </li></ul>
    5. 5. Microfinance - Technology <ul><li>Back-end: Homegrown-not robust </li></ul><ul><li> Cut & Paste banking software </li></ul><ul><li>solution-expensive </li></ul><ul><li>Front-end: Experimental – Handheld devices & mobile </li></ul><ul><li>phones </li></ul><ul><li>Communications: Issue for remote rural areas </li></ul>
    6. 6. New Frontier <ul><li>600 million working poor in the next 20 years for financial institutions & IT service providers. </li></ul><ul><li>New Solutions taking advantage in the tremendous advances in technology in the last two decades. </li></ul><ul><li>Back-end – Robust systems which can handle very large volumes in cost effective manner. </li></ul><ul><li>Solutions which reduce depence on cash. </li></ul><ul><li>Solutions which take advantage of the great leaps in communication technology. </li></ul>
    7. 7. The Prize <ul><li>Those who are able effectively serve the 600 million working poor will be the new leaders of the financial service industry in the next 20 years. </li></ul><ul><li>Remember: Hindustan Levers sells 70% of shampoos today in sachets. </li></ul>
    8. 8. Thank you very much for your time and interest! Thank you very much for your interest and time. Samit Ghosh www.ujjivan.com

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