Microfinance & its impact on women entrepreneurship develop


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Microfinance & its impact on women entrepreneurship develop

  1. 1. By:-
  2. 2. Vasudhaiv Kutumbakam
  4. 4. United Nation 2005 International year of credit Millennium Development Goal Gender Eqality Women empowerment Nobel Peace prize 2006 Md. Yunus
  5. 5. Provision of Financial services Utilizes credit, saving, & micro insurance Better cope with risk M I C R O F I N A N C E CLIENTS CLIENTS
  6. 6. “Loans of very small amount not exceeding 50,000/borrowers provided by bank either directly or indirectly through SHG/NBFC/MFI” Easy access to credit Least formal & official obligation
  7. 7. Utilize social collateral to ensure loan repayment. Higher interest rate often 30% to 70% annually (<300% to 3000% of traditional money lenders) Shorter loan cycles & weekly payments. The peer pressure encourage loan repayment (>95%)
  8. 8. MICROSAVING Difficulty in filling up the formalities Least in amount Ensure right to save Mix with the mainstream
  9. 9. Education Eat well Health access MICROINSURANCE
  10. 10. Why Microfinance Can Change the Way the World Works 500 million poor entrepreneurs and producers, mainly women Microfinance •Lending •Savings •Insurance •Housing Increases: •Income •Assets •Security •Confidence in future Better: Health Education Community participation Banking for the majority
  11. 11. Key Non-Financial Products and Services Health and education Business advisory services Financial counseling and training Commercial linkages Dealing with legal barriers
  12. 12. Microcredit Bank Conventional Bank To bring economic & social change to the poor. To make profit. Based on trust Based on collateral Looks at what the borrower can have Look at what the borrowers already has Located in rural areas Located in urban areas The bank goes to the customer Customers have to go to the bank Flexible payment scheme Strict payment scheme borrowers are poor people borrowers are wealthy men
  13. 13. Poverty alleviation. Promotion of saving Better nutrition, health care & education for children. Brings gender equality. Induces wider movement of women for political & social change. MF: Value creation for women
  14. 14. Microfinance in INDIA • The credit requirement of the poor in India has been estimated to be around Rs.50,000 crore/annum. But the formal banking sector is meeting only Rs.5000 crore i.e. 10% of the total demand despite the fact that India has the 4th largest banking infrastructure in the world. • Linking with SHG to the banks has become a workable way of channelizing mc to the poor as group lending rather than individual lending ensures high repayment rate.
  15. 15. Gov.organisation promoting MF Small Industries & Development Bank of India (SIDBI) • The mc scheme was formulated & put into operation in March 1994. • It aims at boosting the small-scale sector growth, employment generation & upliftment of rural poor, Mahila Vikash Nidhi(MVN) • MVN is specially designed fund for economic empowerment of women. • Training & employment opportunities are provided to them through creation of necessary infrastructure.
  16. 16. National Bank for Agriculture & Rural Development (NABARD) • A pilot project for linking SHG with banks was launched by NABARD in 1992. • The RBI persuaded commercial banks, regional rural banks & cooperative banks to actively participate in the linkage programme. • Under the RBI guidelines, banks were given permission to open saving bank account in the name of SHGs & relaxation of security requirements. • Thus an informal credit system was evolved with assistance from formal financial institutions. • The agencies involved in the schemes were NABARD, Banks, NGOs & SHGs members.
  17. 17. •The SHG-bank linkage programme was started as an Action Research project in 1989 & later introduced by NABARD in 1992. •There are approx. 2.3 lakh SHGs in the country covering about 35 mn BPL household which is more than 50% of the total no. of households in the country. •The outreach of the programme has enabled an estimated 427 lakh poor households to gain access to micro-finance from the formal banking system. •More than 90% of the groups linked with banks are exclusive women groups. •More than 400 women join the SHG movement in India every hour. •An NGO joins Mf programme every day.
  18. 18. Microfinance Institution (MFI)? • a microfinance institution is an organization that offers financial services to low income populations. • The no. of MFIs is estimated to be around 800. • in 2005, five leading MFIs from India ranked in the list of top 20 fastest growing MFIs in the world. • The majority of India's top 25 MFIs already are, or are working to become, profit-oriented NBFC–MFIs. • 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 $10,909 million, only $1,050 million is met by microfinance.
  19. 19. • Spandana 9,16,261 • Share 8,26,517 • SKS 5,13,108 • Bandhan 4,49,304 • AML 4,16,829 • Microcredit Foundation of India (MFI) 4,10,329 • KAS 3,94,462 • Cashpor 2,01,692 • BISWA 2,00,912 • BASIX 1,98,282 MFI Total no. of Active Borrowers (2007) Top 10 India MFI by Number of Active Borrowers
  20. 20. MFIs are not evenly distributed despite the fact that the demand is widespread. MFIs are clustered primarily in the south, with two-thirds of all MF clients being in AP, TN and Karnataka. Data shows that 65% of MF is only found in South India among that around 55% is only found in Andhra Pradesh.
  22. 22. No. of MFIs operating in district,2007
  24. 24. In the year from 2006 to 2007, the MFIs expanded operations to 65 districts. Out of these 65 districts, only 13 were in the South and several were in states such as UP, Bihar, and Rajasthan with relatively low levels of microfinance.
  25. 25. Financial institution To visit Bank Banking loan culture • Less receptive • Less welcoming • Recquires time & resources • Discriminatory towards women • Bureaucratic in nature Exclude poor women
  26. 26. In 2006,Over 3,300 MFIs reached 133 mn clients with microloan Among them 93 mn of the clients were poorest when they took their 1st loan 85% of these poorest clients were women. By the end of 2006, mf services had reached over 79 mn of the poorest women in the world. Women Entrepreneurs & MICRO FINANCe Source: Microcredit summit compaign Report 2007
  27. 27. MFI borrowers as a Share of female population,2007
  28. 28. As the 70% of world’s poor are women targeting women borrowers make sense from a public policy standpoint. The business case for focusing on female client is substantial, as they register higher repayment rates. They contribute larger portions of the income to household consumption than their male counterparts. Children of women mf borrowers also reap the benefits, as there is an increased likelihood of fool-time school enrolment & lower drop out rates.
  29. 29. Studies show that new incomes generated from microenterprises are often 1st invested in children’s education, particularly benefiting girls. Giving women a chance to be entrepreneurs creates a powerful catalyst towards greater social equality Studies show poor women who secure micro-loans experience significantly lower domestic violence rates. In addition to helping families emerge from poverty it is helping to move towards a better life for the next generation.
  30. 30. has reduced the incidence of poverty through increase in income Families participating in the programme have reported better school attendance & lower drop out rates. It has contributed to a reduced dependency on informal money lenders & other non – institutional sources.
  31. 31. higher income help women to better perform their reproductive role as brokers of the health, nutritional, & educational status of other household members. Increasing women’s employment & improving the productivity of women’s income generating activities. In certain areas it has reduced child mortality, improved maternal health & the ability of the poor to combat disease through better nutrition, housing & health especially among women & children. It has empowered women by increasing the value of their assets & generally by giving them better control over decisions that affects their lives. Enhancing their self confidence and status within the family as independent procedures and providers of valuable cash resources to the household economy.
  32. 32. Even when women loose control over the use of their loans, their overall status in the household may improve due to their role as a financial mediator. Handing over loans to men may help to secure stability by easing cash flow bottlenecks in the households. Women may also use credit as a bargaining chip to gain access to other opportunities offered by financial institutions, such as training, education & information.
  33. 33. •The World Bank estimates as there are now over 7000 microfinance institutions, serving some 16 million poor people in developing countries. The total cash turnover of MFIs world-wide is estimated at US$2.5 billion and the potential for new growth is outstanding. •There is a potential demand for microcredit services from seven million borrowers, as there is an estimate that only less than 2 per cent of poor people have access to financial services (credit or savings) from sources other than money lenders.
  34. 34. IMPACT OF BUISINESS TRAINING MICROFINANCE CONFERENCE January 18, 2008SOURCE:- •Acess to resources alone does not automatically translate into empowerment or equality. •In order to resources to empower women, they must be able to use them for a purpose that they choose.
  35. 35. Women who have been excluded from decision making for most of their lives often lack this sense of agency that allows them to define goals & act effectively to achieve them. “There is education in the family, first you should not speak because you are a girl, then later you shouldn’t speak because no one will marry you, then later you shouldn’t speak because you are a new bride Finally, you might have the chance to speak but you don’t speak because you have forgotten how to”
  36. 36. Although the result are not visible immediately but they have long lasting effect on the society  Poor Women who are neglected for credit many years on giving resources proves to be better borrowers than men. Due weightage should be given to equipping the poor with the necessary skills to become efficient money managers & successful entrepreneurs so as to avoid more & more people falling into debt traps. Govt. should create an environment conducive to the growth of micro-enterprises by providing the required infrastructural facilities, technical & marketing support.