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30 Dollar Finance

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30$f

  1. 1. 30 Dollar Finance By Snehal Fulzele 12/12/2009
  2. 2. Agenda <ul><li>Problem – vicious cycle of poverty </li></ul><ul><li>Microfinance - a solution?? </li></ul><ul><li>30 Dollar Finance </li></ul><ul><ul><li>Goal </li></ul></ul><ul><ul><li>Operation </li></ul></ul><ul><ul><li>30DF system </li></ul></ul><ul><ul><li>Risk </li></ul></ul><ul><li>Questions </li></ul>
  3. 3. Problem – Vicious Cycle of Poverty <ul><li>Poverty, low earning capacity </li></ul><ul><li>No collateral </li></ul><ul><li>No credit history </li></ul>Formal Banking Sector <ul><li>Loan Sharks </li></ul><ul><li>Charges 60-120% interest rate </li></ul><ul><li>Zero growth </li></ul><ul><li>No entrepreneurial activities </li></ul><ul><li>Only repayment to loan sharks </li></ul><ul><li>Stunted mental and physical growth </li></ul><ul><li>Poverty continues </li></ul>
  4. 4. Problem – Vicious Cycle of Poverty <ul><li>Wrong notions </li></ul><ul><ul><li>Poor can’t be entrepreneurs </li></ul></ul><ul><ul><li>Microfinance is a riskiest investment </li></ul></ul><ul><li>What do poor need? </li></ul><ul><ul><li>Access to formal banking and credit </li></ul></ul><ul><ul><li>Thereby, raise income and become self sufficient </li></ul></ul><ul><ul><li>Maybe, informal training in using the credit towards small business </li></ul></ul>
  5. 5. Microfinance – Bank the un-banked! <ul><li>Extension of loans to the un-banked </li></ul><ul><li>Small (micro!!) loans for small informal businesses </li></ul><ul><li>Microfinance Institutes (MFI) </li></ul><ul><ul><li>Non-profit, NGOs turned in to MFI </li></ul></ul><ul><ul><li>Provides micro credit to poor </li></ul></ul><ul><ul><li>Provides training to poor to succeed in their informal businesses </li></ul></ul>
  6. 6. Microfinance – Bank the un-banked! <ul><li>Poor Beneficiaries </li></ul><ul><li>No collateral </li></ul><ul><li>No credit history </li></ul><ul><li>Informal businesses </li></ul><ul><li>(e.g. Dairy, Agriculture related) </li></ul><ul><li>Source of Funds </li></ul><ul><li>NGOs </li></ul><ul><li>Investor </li></ul><ul><li>Banks </li></ul><ul><li>Microfinance Institute </li></ul><ul><li>Does on-field transactions </li></ul><ul><li>Lending, auditing and collection </li></ul><ul><li>Trains poor beneficiaries </li></ul>
  7. 7. Microfinance – Effective yet costly! <ul><li>MFI Operations </li></ul><ul><ul><li>Funds from banks @ high interest rate </li></ul></ul><ul><ul><li>High operating cost </li></ul></ul><ul><ul><li>Resulting in to high interest rate (around 20%) for end beneficiaries </li></ul></ul><ul><li>Really, 20 % ………..! </li></ul><ul><ul><li>How would you feel if you were to pay 20% interest rate on your loan </li></ul></ul><ul><ul><li>Ironically, the repayment rate is almost always very high </li></ul></ul>Poor are paying 20% instead of 100% ROI, good huh!
  8. 8. 30DF - Goals <ul><li>Lone goal of reducing the interest rate!! </li></ul><ul><li>By products  </li></ul><ul><ul><li>Making credit affordable for poor!! </li></ul></ul><ul><ul><li>Making it readily available for poor!! </li></ul></ul><ul><ul><li>Doing a bit to engage poor in self-employment!! </li></ul></ul>
  9. 9. 30DF - Model <ul><li>An online system to </li></ul><ul><ul><li>Allow the social investors to browse beneficiaries </li></ul></ul><ul><ul><li>Hosts beneficiary profiles detailing what her plans are with the money </li></ul></ul><ul><ul><li>Constant updates for tracking your investment in the poor </li></ul></ul><ul><li>A Glimpse….. </li></ul><ul><ul><li>http://www.30df.org/ </li></ul></ul>
  10. 10. 30DF - Model
  11. 11. 30 Dollar Finance (30DF) <ul><li>A non profit 501(c)(3) based on the concept of microfinance </li></ul><ul><li>An ‘ Investment based ’ non-profit </li></ul><ul><li>Provides platform for social investors to invest in specific beneficiaries </li></ul><ul><li>Provides high level of transparency in the way investor’s money is being used </li></ul>
  12. 12. 30 Dollar Finance (30DF) - Transparency <ul><li>Specific Beneficiary </li></ul><ul><li>Business and background information </li></ul><ul><li>Contact information </li></ul>Social Investor Invests in <ul><li>Regular updates via email </li></ul><ul><li>When money reaches the beneficiary </li></ul><ul><li>Repayment plan </li></ul><ul><li>Each repayment/defaulter information </li></ul>hosts
  13. 13. 30DF - Risks <ul><li>Microfinance model itself makes it less risky </li></ul><ul><ul><li>Group ownership </li></ul></ul><ul><ul><li>Poor do not want to lose the only access to formal banking </li></ul></ul><ul><li>In India, banks believe in micro finance, can’t you? </li></ul><ul><li>Ask yourself a question, which investment is risk free? </li></ul><ul><ul><li>Wise men will say – None!! </li></ul></ul>
  14. 14. 30DF – A Tour <ul><li>http://www.30df.org </li></ul>
  15. 15. 30DF – Q n A <ul><li>Questions </li></ul><ul><ul><li>Send questions to [email_address] and [email_address] </li></ul></ul>

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