Micro finance and financial inclusion


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The main purpose of the research paper is to demonstrate the effects of Microfinance as a part of Financial Inclusion in India.

Microfinance: One of the Key drivers of Financial Inclusion

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  • Growth rate is not enough….. Focus on root…. Lies in rural area….. To achieve high growth rate Fastest growing economy
  • Rural nd semi urban got the majority…incrsd 22 in 69 to 41 in 07……51 ot of 100 in 93 nw 56 in 09….31727brnches popltn coverd by each branches come down frm 63000 in 69 to 16000 in 09…
  • Micro finance and financial inclusion

    1. 1. Presented By :- Shrawan Kumar Dwivedi Nitesh Kumar Narayan Masarrat Ali Rajnagalwala
    2. 2. OBJECTIVE <ul><li>The main purpose of the research paper is to demonstrate the effects of Microfinance as a part of Financial Inclusion in India. </li></ul><ul><li>Is Microfinance really a tool to fight against poverty? </li></ul>
    3. 3. <ul><li>Our research paper is totally based on the secondary data available on websites of different financial institution. </li></ul>
    4. 4. <ul><li>Microfinance can be defined as a broad range of financial services such as deposits, loans, payment services, money transfers and insurance to poor and low-income households and their micro-enterprises. </li></ul><ul><li>Financial Inclusion  is the delivery of banking services at affordable costs to vast sections of disadvantaged and low income groups. </li></ul>
    5. 5. Microfinance – the key tool of financial inclusion <ul><li>Microcredit – small loans to the poor </li></ul><ul><li>Microfinance savings, insurance, money transfer services and other financial products targeted at low-income clients </li></ul><ul><li>Clients – women; low income; no access to formal financial services </li></ul><ul><li>Providers – NGO/MFIs, government programs, commercial banks, development banks. </li></ul><ul><li>Funders – development community; foundations; private sector. </li></ul>
    6. 6. FINDINGS
    7. 7. Distribution of Bank Offices in India
    8. 8. Why low income families Likes/Dislikes Banking Services in India <ul><li>LIKES </li></ul><ul><li>DISLIKES </li></ul><ul><li>Lower Interest rates, </li></ul><ul><li>Very little pressure to repay, </li></ul><ul><li>Waiving of loans, </li></ul><ul><li>Enabling schemes for the farmers. </li></ul><ul><li>Time consuming, </li></ul><ul><li>Bribe officials, </li></ul><ul><li>Loans subject to favoritism, </li></ul><ul><li>No collateral security, </li></ul><ul><li>Illiteracy . </li></ul>
    9. 9. Less constrained spending Low cost services Free Use of Money Easy pathway out of poverty Good Social, economic High standard of living Financial lliteracy Good financial habits Good education Macro -environment Personal characteristics Social/wider inclusion Financial inclusion Low or controlled debt Asset ownership Employment High Income
    10. 10. ‘ ABC’ of Financial Inclusion <ul><li>A dvice – solving money and debt problems at low cost </li></ul><ul><li>B anking – increasing the take up of basic bank accounts and other similar services like those a credit union could provide </li></ul><ul><li>C redit – providing affordable loans and other forms of credit </li></ul>
    11. 11. Financial Inclusion – Steps Taken <ul><li>Co-operative Movement </li></ul><ul><li>Setting up of State Bank of India </li></ul><ul><li>Nationalization of banks </li></ul><ul><li>RRBs </li></ul><ul><li>Self Help Groups </li></ul><ul><li>--- Still We Failed! </li></ul><ul><li>--- Why? </li></ul>
    12. 12. ----because <ul><ul><li>Large Population </li></ul></ul><ul><ul><li>Absence of reach and coverage </li></ul></ul><ul><ul><li>Delivery Mechanism </li></ul></ul><ul><ul><li>High maintenance costs for accounts </li></ul></ul><ul><ul><li>Lack of electricity </li></ul></ul>
    13. 13. Major Milestones <ul><li>1969 : Nationalization of Banks </li></ul><ul><li>1975 : Establishment of Regional Rural Banks </li></ul><ul><li>1982 : Establishment of NABARD </li></ul><ul><li>1992 : Launching of the SHG – Bank Linkage </li></ul><ul><li>1998 : NABARD sets a goal for linking one million SHGs by 2008 </li></ul><ul><li>2000 : Establishment of SIDBI Foundation for Microcredit </li></ul><ul><li>2005 : One million SHG linkage target achieved 3 years ahead of date </li></ul><ul><li>2006 : Committee on Financial Inclusion </li></ul><ul><li>2007 : Proposed bill on microfinance regulation introduced in parliament </li></ul><ul><li>2008 : Number of Kisan Credit cards – 76 million </li></ul><ul><li>2009 : No.of rural bank branches – 31,727 constituting 39.7% of total bank branches, </li></ul><ul><li>2010 : Increased Rs.100 crore each for Financial Inclusion and Financial Inclusion Technology. </li></ul>
    14. 14. CONCLUSION
    15. 15. <ul><li>THANK YOU </li></ul>