micro finance

1. MICRO FINANCE- EMPOWERMENT OF SOCIALLY DISADVANTAGES GROUP;
CHALLENGES AHEAD
• Supervisor’s name – Prof. Sunita Agarwal
• The name(s) - Veena Mahesh Baghel
• Affiliations(s) - Research Scholar-PAHER Society, Udaipur
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2. Microfinance
• Microfinance is defined as the provision
of saving, credit and other financial services
and products of small amount to the poor
for enabling them to raise their income level
and improve living.
• The institution that provides these
services to the poor is called as Microfinance
Institution.
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3. INTRODUCTION
As suggested by the name, micro finance,
most transactions involve small amounts of
money, frequently less than Rs.5,000.
Some governmental organizations define
micro finance as amounts below Rs.25,000.
Microfinance has been hailed as one of the
greatest innovations in attempts to alleviate
poverty in the third world in the recent
history.
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4. Current secenrio
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The Indian microfinance
sector is expected to grow
nearly ten times by 2011 to
a size of about Rs250
billion from the current
market size of Rs27 billion,
at a compounded annual
growth rate of 76%.

5. Research methodology
• Methodology
• The study is based on secondary data
derived from various published sources.
The required data has been collected from
NABARD reports on Banking, journals and
books. The collected data is compiled and
analyzed for the purpose of the study.
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6. Impact of Microfinance on women
• Increasing women’s income level
• Control over income leading to greater
levels of economic independence.
• Enhancing perceptions of women’s
contribution to household income and
family welfare
• Increasing women’s participation in
household and decision making.
• Access and control over assets.
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7. Determinants of empowering women
• Microfinance influences the following
determinants of empowering low income
women:
• participation in household decision making,
• self confidence,
• status in the family,
• involvement in the community,
• Awareness of rights.
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8. SELF HELP GROUPS(SHGs)
• Major role on poverty alleviation in rural india
• Actively engage in saving and credit
• Create some contorl over capital-very small amounts
• Gradually away form explotation and isolation
Definition-NABARD (1997) defines SHGs as "small,
economically homogenous affinity groups of rural poor,
voluntarily formed to save and mutually contribute to a
common fund to be lent to its members as per the group
members' decision". The programme has reached to
linking of 69.5 lakh saving-linked SHGs and 48.5 lakh
credit-linked SHGs and thus about 9.7 crore households
are covered under the programme fromformal financial
system and informal sector.
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9. Models of micro finance
 SHG - Bank Linkage Model-three are three models in this :
• Model – I: BANK –SHG-Member; Formation and promotion of SHG
IS done by Bank by opening a saving account & then provide credit.
• Model – II: BANK (Facilitating Agency) – SHG – Members; NGOs,
Government Agencies (DRDA/DWDA/COOPERATIVES) or
Community based organizations act as facilitating agencies to form
SHGs. Seventy % SHG are linked with this.
• Model – III: Bank- NGO –MFI- SHG – Members; Here SHGs are
nurtured, promoted and financed by NGOs Who worked as facilitator
and Micro finance intermediaries (MFIs).
 M FI Bank linkage model
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10. Types of Microfinance Institutions
Formal / Banks
Comprises of Apex Development Financial Institutions, Commercial
Banks, Regional Rural Banks, and Cooperative Banks providing
micro finance services in addition to their general banking activities -
referred to as microfinance service providers
Informal /Non-Banks
Informal institutions that undertake micro finance services as their
main activity are generally referred to as micro Finance Institutions
(MFIs)

11. Challenges ahead
• Regional Imbalances
• From credit to enterprise
• Impact of SGSY
• Role of State Governments
• Emergence of Federations
• Financial inclusion of rural women
• Livelihood promotion
• Capacity building
• Low bank loan per SHG
• Micro Insurance products
• Loan repayment
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12. My Findings are,
• Govt should concentrate on the structure of micro finance
institutions and its functions by monitoring, regulating, providing
subsidy component in different schemes, such as SGSY Govt.
providing subsidy of Rs 15000, it has dampened the impact on
SHG-BLP switch over the clients due to subsidy component.
• Private and foreign banks should open their branches in rural
sectors.
• Grameen bank has repayment system of 50 weekly equal
installments; it’s not feasible as rural women do not have stable
work so pressure on high repayment may drive them to money
lenders that defeat the micro finance concept. RRBs lacks due to
collateral based lending, inequitable distribution of assets resulted
skewed distribution of institutional credit and access, less extension
of branches, lack of motivation of staff in rural areas is a major
problem.
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13. Findings
• The SHG Bank-Linkage programme needs to introspect whether it is
sufficient for SHGs to only meet the financial needs of their
members, or on their part to meet the non-financial requirements
necessary for setting up businesses and enterprises.
• SHGs are local institutions having an inherent potential to flower as
decentralized platform for development, but multiple expectations
could overload them, impair their long-term sustainability.
• Appropriate legal structures for the structured growth of
microfinance operations.
• Ability to attract and retain professional and committed human
resources.
• Ability to innovate, adapt and grow.
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14. conclusion
• The principles of Self Help and micro credit thus hold the key
to economic and socio-cultural freedom for India’s millions of poor
undoubtedly have long term socio economic benefits by serving
human enterprise. Only spreading the outreach of micro finance will
bring down the cost of capital and the operating cost and to
strengthen the bonding between micro finance and the formal
financial system.
• Microfinance in India appears to be positive remains a powerful tool
for development. It may not be a panacea, but it has brought a sea
of change in the lives of many. Effort must be made to ensure that
microfinance institutions are efficient, well resourced and structured
in other to sustain the institution.
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