Microcredit In India


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Microcredit In India

  2. 2. Area To Be Covered<br />1) How to reach poor people<br />2) History of Microcredit<br />3) What is microcredit<br />4) Target Group<br />5) Grameen Bank and Its Objective<br />6) Mechanism of Microcredit<br />7) Microcredit and Inclusive Growth<br />8) Present scenario <br />9) Conclusion<br />
  3. 3. Let’s sayyou are a verypoorcitizen. <br />You have the project to developyourtexile plant withyourcolleagues. <br />How canyouachieveit?<br />
  4. 4. MUHAMMAD YUNUS<br />- Founder and Chairperson of GARMEEN BANK, a bank for poor. <br />- He received Noble Peace Prize for his achievements and actions undertaken to improve the life of the deprived people in world.<br />- It was particularly thanks to the creation of the Grameen Bank and the Microcredit.<br />
  5. 5. Contd.<br />- He granted his first loan of 27 USD from its own savings to 42 people.<br />- A majority of them were women eager to create a small business.<br />
  6. 6. What Is Microcredit ?<br />- Small loansaimingatimproving the lives of poor people and theirfamilies.<br />- Sustainingsmall-scaleeconomicsactivities, granted to people not considered as creditworthy.<br />- Microcreditisonly a kind of service providedwithin the global concept of microfinance<br />
  7. 7. The Target Groups<br />* Little or no chance of getting a Bank Loan.<br /> * Good operating skills in the area in which the potential clients are willing to work, but:<br /> «  Usually no financialresources »<br /> * WorkingWithWomen (90%) <br />* The poorest segments of society, living with less than one Dollar per Day.<br />
  8. 8. Grameen Bank :Objective<br /># It is first model of microcredit. Founded as a project in 1976.<br /># To extend the banking facilities to the poor men and women.<br /># To create opportunities for self employment.<br /># To bring the disadvantaged people within the framework of some organizational format.<br /> Creation of Microcredit.<br />
  9. 9. How Does Microcredit Work ?<br />1) Individual Lending Model<br />2) Group Lending Model<br />
  10. 10. Microcredit and Inclusive Growth<br />The Eleventh Five Year Plan visualizes “faster and more inclusive growth”.<br />This implies that we need to/ for – <br />Shift the plan priorities towards the social sectors<br />Put appropriate institutions and linkages in place to bring good to the common man<br />The States to play a facilitating role in encouraging individual-institutional linkages<br />
  11. 11. Government of India<br /> Policy Actor<br /> Role Played<br /><ul><li>Cooperative Credit Societies </li></ul> - Nationalization of Commercial banks <br /> -integrated and sustainable rural income generating activity <br /> - Social and Development banking<br /> - Establishment of RashtriyaMahilaKosh<br /> - “Portfolio Risk Fund”<br /> Government of India <br />
  12. 12. Policy Actor<br /> Role Played<br />- Formulation and coordination <br />- Priority sector lending target for NCBs. <br />- Issuing licenses <br />- Micro Finance Development and Equity fund (MFDEF). <br /> Reserve Bank of India<br />
  13. 13. Role Played<br /> Policy Actor<br /><ul><li> Contribution to MFDEF</li></ul>- SHG – Bank linkage <br />National Bank for Agriculture and Rural Development<br /> Need based assistance <br />Small Industries Development Bank of India<br />
  14. 14. Policy Actor<br /> Role Played<br /><ul><li>commercial or cooperative banks
  15. 15. Local area banks</li></ul>- Kisan Credit Cards<br />Formal / Banking Sector<br /> - Financial access <br /> - promoting and fostering SHGs.<br /> MFI<br />
  16. 16. Example of success:<br /> DAGAR FOUNDATION,BIHAR<br /> -Mrs.Sunitadevi<br />
  17. 17.
  18. 18. Present Scenario<br />
  19. 19. Contd.<br />
  20. 20. Issues of Micro Finance in India<br />Legal Issues<br /> - Seventh schedule declares money lending as State subject<br /> - Doesn’t mention private money lending<br /> - No model money lending act prepared by center.<br />Gender Issues<br />Rate of Interest<br />Choice of productive assets.<br />
  21. 21. Impact<br />1) 76.8% of the clients experienced significant reduction in their poverty over the last four years of which;<br /> a) 38.4% moved from Very Poor to Moderate Poor<br /> b) 17.6% moved from Very Poor to Not Poor<br /> c) 20.8% moved from Moderate Poor to Not Poor<br />2) 38.4% are in the Non Poor category.<br />3) 80% witnessed increase in income levels.<br />4) Women actively participate in family decisions.<br />5) Most of the members’ children are being sent to schools.<br />6) 17 different combinations were used as paths out of poverty.<br />
  22. 22. Conclusion: Future Challenges to Microcredit<br />If wish to succeed in providingmicrofinance services to the poor on a large scale, further contributions are needed. <br />Not only an issue of financing:<br />Regulators and governmentsneed to develop:<br />legal and regulatoryframeworks for microcredit<br />consumer protection<br />financial infrastructure. <br />
  23. 23. Reference<br />IMF: Microfinance: A View from the Fund.<br />Grameen Bank: http://www.grameen-info.org/.<br />Economics Times of India (Date- 13/1/2011)<br />www.indianngos.com/issue/microcredit/operationalissues.htm.<br />www.google.com<br />