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  1. 1. IMPACT OF MICROFINANCE ON THE RURAL DEVELOPMENT IN ASSAM 1 Priyabrata Bhattacharjee Microfinance a new development in Assam, its origin can be traced back 1997-98, since then several microfinance institutions came up and have succeeded in reaching the poorest of the poor, and have devised new strategies with time for the fulfillment of their vision. Government, being the front runner in developing the new schemes and implementing through its different modes like NABARD, SIDBI etc. The credibility of the RRBs cannot be denied, and also AFC. It’s been a short, but sweet journey for MFIs in the region, in comparison to the whole of India, which is presently going through rough phase. Microfinance is now being considered as one of the most important and an effective mechanism for poverty alleviation. In microfinance, borrowers are organized into groups and peer pressure among them, which reduced the risk of default. Many Micro-credit programs in the region are targeting one of the most vulnerable groups in society – women, who live in households with little or almost no assets. By providing opportunities for self-employment and status within the household. The project is about microfinance and to investigate the impact of microfinance on the rural development, with the main focus on Assam. Therefore it is more focused on both Microfinance Institutions and the Beneficiaries (the poor people, who borrowed loan from microfinance institutions) perspective and build up my research based on it. Therefore, the objective of this study is to show how microfinance works, what is the role of MFIs in reducing poverty and how it affects the living standard (income, saving etc.) of the poor people in Assam. Several microfinance institutions/NGOs are working in Assam for the last few years. Asomi, Assam Grameen Vikash Bank, NERFS, NEDFI, Bandhan, RGVN-CSP, Bosco Reach Out are some of the prominent MFIs in Assam. These institutions are working effectively for the empowerment, poverty reduction and improvement of living standards for the poor people in Assam. 1 Alumni, Indian Academy School of Management Studies, Bangalore. Currently Analyst. “TAS Analytic Services Pvt Ltd, A Time Warner Company”
  2. 2. I have chosen my sample based on the simple random sampling technique, from two districts (Kamrup and Cachar) in Assam and I interviewed the MFIs through a structured questionnaire. Therefore, the accuracy of the analysis heavily relies on the data provided by the people, I interviewed. From the analysis of data, I found that microfinance has the positive impact on the standard of living of the poor people and on their life style. It has revolutionized the life of women to a large extent. Though there is still Govt support needed for developing the better delivery system and to provide support to the small MFIs, the scope of new innovation in the microfinance field is also there INTRODUCTION “This is not charity. This is business, business with a social objective, which is to help people get out of poverty.” Mohammad Yunus. Microfinance is a form of financial development that has primarily focused on alleviating poverty through providing financial services to the poor. Most people think of microfinance, if at all, as being about micro-credit i.e. lending small amounts of money to the poor. Microfinance is not only this, but it also has a broader perspective which also includes insurance, transactional services, and importantly, savings. Fig: 1.1 Structures of MFIs in India “Microcredit, or microfinance, is banking the unbankables, bringing credit, savings and other essential financial services within the reach of millions of people who are too poor to be served
  3. 3. by regular banks, in most cases because they are unable to offer sufficient collateral. In general, banks are for people with money, not for people without.” (Gert van Maanen, Microcredit: Sound Business or Development Instrument, Oikocredit, 2004) According to James Roth, “Microfinance is a bit of a catch all-term. Very broadly, it refers to the provision of financial products targeted at low-income groups. These financial services include credit, savings and insurance products. A series of neologisms has emerged from the provision of these services, namely micro-credit, micro-savings and micro-insurance”. The study focuses into issues like the development or transformation going on in Assam, i.e. the rural part, which is till today vast, untapped and unnoticed, though lots of NGOs along with Govt. are trying to provide employment to the underprivileged people, by training them regarding handicrafts, handlooms etc. At present, microfinance is proving to be an effective tool to make the people come out from the poverty level. Twenty years ago, it was nearly impossible for a farmer to get the loan in Assam from the traditional financial sectors like banks. Now, it is possible due to the microfinance activities. There is a positive effect of microfinance on socio economic environment in rural areas. On December 18, 2007, General Assembly of United Nations passed a resolution (resolution No. 52/194) which emphasized on reducing the poverty through national and international co-operations. Its focus was on the impact of microfinance throughout the developing countries of the world. In case of Assam, it is only in 1997-98 that microfinance movement had really begun and has been rapidly picking up since then. The growth rate of both the member of SHG linked to bank and also the credit disbursed has quite impressive. The SHGs in the State need cheaper micro finance for improving their productivity. As a pilot scheme to give a thrust to SHGs, Sri Tarun Gogoi (Chief Minister, Assam).have provided for Rs.10 Crore in the budget proposals for 2008-09 as an interest- free loan to the Assam Financial Corporation [AFC] for micro financing SHGs at a subsidized rate of interest. More funds will be made available for this purpose during the year if required. It has been recognized that the poor people who are capable of coming out from poverty with dignity and can improve their living standard when the right environment and opportunities exist.
  4. 4. Many MFIs has put emphasis on the improvement, empowerment of the women, who live in absolute poverty and experience the constant hindrances to grow. Generally, in the region, the small-scale firms based on agriculture, poultry and fisheries need to have their own land, which few of them have. Most of the times, people who do not own land are deprived of getting loan from a bank due to the lack of collaterals. In these cases, microfinance organizations help them to spread out their business by offering them different kinds of small loans, which is a common feature of microfinance institutions. Major problem which the study highlights is the lack of Infrastructure in the region and lack of trained personnel, most of the NGO’s are going through a transformation phase. As certain part of Assam is situated in distant areas and a lot of communication problem are there it is creating a major setback for MFI. Though many MFI’s have sound villages reach out due to local ground level staff. Many are trying to join hands with government and simultaneously reach the customer and trained the SHGs. The MFI business model is not yet the full answer (and recent issues have highlighted the areas to improve), but it definitely bears the seeds of low-cost banking required for inclusion. REVIEW OF LITERATURE There are about three billion people, half of the world’s population, living on the income of less than two dollars a day. Among these poor communities, one child in five does not live to see his or her fifth birthday. One study in 2006 showed that the ratio of the income between the 5% richest and 5% poorest of the population is 74 to 1 as compared to the ratio in 1960, which was 30 to 1. To enhance international development, the United Nations Organization (UNO) announced the millennium development goals, aimed to eradicate poverty by 2015. In this regard, microfinance is the form of financial development that has its primary aim to alleviate the poverty. Governments, donors and NGOs around the world responded enthusiastically with plans and promised to work together towards the realization of these goals. In the recognition of microfinance, the UNO celebrated the year 2005 as a year of micro-credit, as a result this financing instrument is perceived worldwide as a very effective mean against hunger and poverty, mainly in developing countries.
  5. 5. World is like a two side of a coin, where one side are the rich wealthy people with all the financial facilities, on the other side are the underprivileged poor who are unaware of those financial benefits. The level of a country’s poverty has long been linked with measures of its economic development. Many underdeveloped countries of the world are still unaware of the recent development in micro-finance. A country cannot be said developed until and unless the poorer sections of the society play a vital role in the development process. In Stuart Rutherford recent book The Poor and Their Money, he cites several types of needs:  Lifecycle Needs: such as weddings, funerals, childbirth, education, homebuilding, widowhood, old age.  Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or death.  Disasters: such as fires, floods, cyclones and man-made events like war or bulldozing of dwellings.  Investment Opportunities: expanding a business, buying land or equipment, improving housing, securing a job (which often requires paying a large bribe), etc. Poor people find creative and often collaborative ways to meet these needs, primarily through creating and exchanging different forms of non-cash value. Common substitutes for cash vary from country to country but typically include livestock, grains, jewellery and precious metals. Microfinance is a credit methodology, which employs effective collateral substitute for short- term and working capital loans to micro-entrepreneurs. The level of a country’s poverty has long been linked with measures of its economic development. Little consideration was given to the social reorganization of the natural resources (e.g. empowerment vs. alienation of people, sustainable use vs. depletion of the environment). The economies with positive growth rate of Gross National Product (GNP) were measured by their poverty mitigation. This emphasized on the achievement of wealth and technology as a path for development and assumed that improved lives for all would be the natural consequence. In his autobiography released in 2006 Muhammad Yunus, has taken the world and tried to turn it on its head. Banker to the Poor takes us about the story Yunus entrance into the world of micro-
  6. 6. credit, wherein the poorest of the poor are given small loans without any collateral and with the expectation that the loan will be repaid in full. From his first gut-reaction loan to a person clearly in need, to a multi-national, billion dollar enterprise, Yunus has created an organization whose goals are nearly completely opposite of any other financial institution. The most exciting part about the book is the personal stories, the experiences of those whose lives have been changed by the micro-credit model. It is amazing to realize what a difference $40 can make to a person who earns pennies every day. The set-up of the bank itself was interesting, although sometimes the economic discussions got thick and might turn some readers off. I like to feel more informed about Bangladesh itself, since Yunus does take time to give us some of his personal background and experiences in his home country. While doing my research, it was found from some of the research paper, which sight more into the informal evolution of Microfinance or lending procedure which was to be prevailing in the region for a certain period, till date there is little bit trace of this kind of informal lending, without any regulatory. A survey on informal practices of microfinance was conducted in three districts of lower Assam- Kamrup (rural), Nalbari and Baksha to gather information regarding informal practices that are prevailing in these districts. In these parts of the state, Kabuliwala (1969) was the main source of credit. After 1999, NGO- based and block based SHGs created a change in the scenario. STATEMENT OF THE PROBLEM This paper presents the interim findings of a state level impact assessment of microfinance in Assam. The study aims to assess on a scale the outreach and development impact of MFI programmes in relation to different product designs and delivery systems in various parts of Assam. The present scenario of MFI in Assam is not as satisfactory. Due to lack of a ground level structure, better financial amenities, difficult geographical terrain and literacy among the users, about the MFI’s. Being the gateway of northeast, the growth of the region is not satisfactory.
  7. 7. Assam comprises of twenty seven administrative districts, of which a part comprises of International Border with Bangladesh. There is lots of SSI’s prevailing, but due to lack of financial support the industries are facing a tough situation. The paper tries to analyze the microfinance providers prevailing in Assam, the working models and their reach in Assam, the unregulated MFI’s providers and their practice in Assam, the future prospective of MFI’s in Assam. SCOPE FOR THE STUDY This research has been done in order to indicate the impact of Microfinance in economic and social enhancement of the rural areas of Assam. It also highlights the development going on in Assam through Microfinance. The scope of this section is broad and attempts to address soft as well as hard issues involved in the development of composites. Therefore it addresses issues such as design, methodologies, Govt and funding agencies support to MFIs, different product and services of MFIs, the services offer for the rural development both in context to training and financial services providence, lending methodologies for better reach – out. Empowerments and self- employment of women were the other key factors of this study. The concept that will be highly important in near future will be the technological innovation in the Microfinance delivery , better the innovation in Microfinance delivery, better can be the competitiveness of any organization. OBJECTIVES OF THE STUDY 1. To identify the role of institutions, organizations and other bodies engaged with microfinance activities in Assam. 2. To see whether microfinance help quantitatively in order to improve level of rural population. 3. To check the Characteristics and criteria for formal and informal finance education in order to accelerate the growth and delivery of micro-finance. 4. To identify the need of technological advancement to trigger the growth of MFIs in Assam 5. To explore the growth and development and status of microfinance in Assam.
  8. 8. METHODOLOGY Primary sources:- A planned effort is made using structured questionnaire to interview the respondents. The respondents are the Microfinance provider, who are interviewed, are chosen using Simple random sampling method. The survey is done through personal interviews with both MFIs, self help group/Ngo .In this study respondent are interviewed personally so that the errors involved in gathering primary data are minimized. Secondary sources:- The secondary sources used for collecting data are:- 1. Internal Sources:-  MFI Reports/Financial statements.  MFI Publications.  Government reports  Annual Annexure 2. External Sources:- Information is gathered from Magazines & Journals like –ICFAI Journals, & Business Today. Business dailies like –The Economic Times, The Business Line, etc News Paper like – The Hindu, Assam Tribune & the Telegraph. Apart from this information was also taken from internet. The population chosen for the study, taking in to consideration the objective of the study is defined as, Major Microfinance institutions/Ngo’s in Assam.The sample consist of 10 Microfinance Institutions had taken as sample from the Assam using Simple random sampling method. Out of the MFI’s selected for the study, 3 MFI’s selected from Kamrup District and 7 MFI are from Cachar District. Tools for Analysis:-
  9. 9. The data collected from various sources is carefully computed, classified, tabulated, analyzed and interpreted. The technique used for analyzing would be with the help of graph, chart, tabulation and sampling analysis to express and draw the inference from the findings. Data collected from two districts of Assam NAME OF THE DISTRICT LIST OF MFI’S/NGO’S KAMRUP( METRO)• ASSAM FINANCIAL CORPORATION • ASOMI FINANCE PVT. LTD • RGVN-CSP CACHAR • DESHBANDHU CLUB • NORTH EASTERN DEVELOPMENT FINANCE CORPORATION LTD. • BANDHAN FINANCIAL SERVICES PVT. LTD • ASSAM GRAMIN VIKASH BANK • RURAL EDUCATION DEVELOPMENT INSTITUTE • FOUNDATION FOR DEVELOPMENT OF NORTH EAST TERRITORY • UNNACO FINANCIAL SERVICES PVT LTD LIMITATIONS OF THE STUDY There are number of limitations in this study. Firstly, the respondents were limited (10 respondents or samples) in terms of size and composition. Secondly, the data collection was restricted only within the Cachar and Kamrup district of Assam, which may fail to represent the actual scenario of the whole State. While interviewing the people, some problems faced were in explaining the questions as most of the people, who are involved in microfinance program, are Field Officers, who are not aware of all the things about microfinance. Therefore, it was too difficult to make them understand some of the technical terms: like Funding agencies, lending
  10. 10. methodologies etc. Another problem faced while collecting the data was that, the MFIs are reluctant to share information. Moreover, theories were other problem when I wrote the theoretical framework. Because, no established theories were particularly defined in microfinance field yet. Grameen model has been used as an ideal theory for microfinance. Besides this, some other related things to microfinance like, eligibility criteria, problem facing institutions, mobilizations, solidarity, etc. were also used in theoretical framework. Finally, the accuracy of the analysis heavily relied on the data provided by the MFI’s involved in microfinance program in Assam. The study is taken only for the Microfinance institutions like Nedfi and AFC’s; whereas Microfinance Beneficiaries are not taken into account. MAJOR MFIs AND THEIR ROLE IN ASSAM Source: “Microfinance in Assam”- an overview’, presentation by Dr. Debabrata das, Tezpur University in the MRAP researchers meet in CMF, Chennai. Since its Inception in the region in 1997-98 MFI’s has become an integral part in helping the people in meeting their daily needs and at the same time building their assets. There are many MFIs working in Assam and in the other parts of world, which have differences in their
  11. 11. organizational structure and working methodology, but they all work on the common theory, philosophy and goal. It has been stated in The World Bank Economic Review that microfinance has not only helped people to develop in their material capital but also in the human capital, by better access to health care and education system, and general awareness among the people about their rights and duties towards society. One of the most important features has been the reduction of gender biased in the society. MFIs have helped women acquire assets of their own, educated them and thus gave them the right and power in the household decision making. The most of the microfinance institutions and agencies all over the world focuses on women in developing countries. In Assam also the scenario is almost same, Observations and experience shows that women are a small credit risk, repaying their loans and tend more often to benefit the whole family. In another aspect it´s also seeing as a method, giving the women more status in a socioeconomic way and changing the current conservative relationship between gender and class when women are able to provide income to the household. Women are in most cases responsible for children, and in poor conditions it results in physical and social underdevelopment of their children. 1.2 billion People are living on less than a dollar a day. There are many reasons why women have become the primary target of microfinance services. A recent World Bank report confirms that societies that discriminate on the basis of gender pay the cost of greater poverty, slower economic growth, weaker governance, and a lower living standard for all people. At a macro level, it is because 70 percent of the world’s poor are women. Women have a higher unemployment rate than men in virtually every country and make up the majority of the informal sector of most economies. They constitute the bulk of those who need microfinance services. Giving women access to microcredit loans therefore generates a multiplier effect that increases the impact of a microfinance institution’s activities, benefiting multiple generations. The existence of informal MFI’s in Assam is also high; they provide savings services to the public. Surprisingly, the number of such institution is reportedly large and significant savings are mobilized by them without any regulatory oversight. When there is a shortage of regulated institutions to mobilize savings, other organizations find a niche for operations and occupy the space. If the geographies are remote, impeding easy access for the regulatory, then enforcement
  12. 12. of laws that prohibit deposit taking activities becomes difficult. Preventing such informal finance activities when a viable alternative has not been put in place is another aspect of the problem. The most active savings generation and credit providers in these areas are private savings and credit societies. These saving and credit societies are run by local people. These saving and credit societies are run by local people. These societies perform basic functions of the banks. Most of these societies are informal and do not have a formal registration under any law. Five or Six local persons pool their funds and offer credit to the people at an interest rate ranging from 3 percent to 5 percent per month. They also collect deposits from members daily or weekly, offering interest of 12 % to 24% per annum. However, there are few societies which are under some NGOs registered as society. These societies function under a name and brand with their logo and offices in different places. They carry the pretence of a formal MFI with their signboards and other paraphernalia. They issue record books of transactions similar to pass books to the members. MFIS FUND PROVIDERS DESHABANDHU CLUB SIDBI ASOMI LOANS FROM NATIONALISED BANKS AND LINCOFIN BELGIUM NEDFI IDBI, ICICI,IFCI, SIDBI, INSURANCE COMPANIES- LIC,GI, UTI BANK AND SBI UNNACO NEDFI, BANK OF BARODA ASSAM FINANCIAL CORPORATION GOVERNMENT OF ASSAM, SIDBI, IDBI RGVN_CSP TATA SOCIAL WELFARE TRUST, FWWB, OPPORTUNITY INTERNATIONAL, IDBI, NABARD, SIDBI, NEDFI, HDFC AND ICICI
  13. 13. DONET NIL RURAL EDUCATION INSTITUTE NIL BANDHAN SIDBI, ALLAHABAD BANK, UBI , SBI ASSAM GRAMIN VIKASH BANK UBI, GOVERNMENT OF ASSAM FUND PROVIDERS OF THE MFI The Government is flowing fund in the region for the MFIs, through its different mode like NABARD, SIDBI, and AFC. Some of the funding agencies have also taken initiative in the development process, but till date no International donor or Religious organization has taken step forward for providing financial assistance, like the scenario prevailing in others parts of India. Two of the institutions which didn’t receive any assistance are of very small in size, and they are presently funding themselves on their own. Most of the Respondents provide two training simultaneously i.e. either Business Development support and financial literacy or gender and social issues and health and nutrition. Though Microfinance is not very old in Assam, the development in the process of expansion, providing financial services, reaching out to distant villages and helping SHGs in Capacity Building is immensely appreciated. Majority of the respondents focus on financial literacy, in the region .Financial literacy among the Shgs is done in the region with the help of NABARD, UBI, and M, S, M, E. Deshabandhu Club being an NGO mainly provide training in Health and Nutrition. MFIs also provide awareness program by the respective block, through farmers club with the help of NABARD.
  14. 14. Problems Respondent Security/Peace and Order Situation 1 Travel time to clients 0 Lack of business opportunities 1 Lack of basic infrastructure 5 Inadequate information about clients 2 Lack of trained personnel 5 Inadequate financial resources 3 Till date Microfinance is not very popular in the region, due to lack of proper marketing in the region, and illiteracy among the beneficiary. Lack of knowledge regarding microfinance among the personnel is also one of the reasons. Lack of financial resources for large medium and small MFI in the region is also affecting, mainly small Mfi/Ngo are facing lot of problem due to strict govt measures. Terrorist’s problem is also one of the reasons; United National Liberation Front (UNLF) has been using microfinance schemes like women's cooperatives and has already covered 2500 beneficiaries in Manipur and Assam. Though unreported, this has been going on for the last four years and has regained much of their eroded mass base by a unique grassroots experiment, called Phunga Marup, a microfinance scheme aimed at small entrepreneurs which threatens to render conventional counter insurgency operations futile. This type of unsocial activities are arising due to the lack in the system, as they are using the tool of “Poverty Alleviation Programme” in a more sophisticated way and simultaneously building their own base in the region. One of the reason for these cause, is the village people are not so educated and poor, they are not so bother regarding the organization, they are more interested towards the lending money, moreover there is no such other NGOs or MFIs in that area who offers at a lucrative price.
  15. 15. FINANCIAL PORTFOLIO OF THE MFIs MFIS INTEREST RATE OF LOAN TENURE FOR LOAN DESHABANDHU CLUB 12% 1 year ASOMI 15% 1 year NEDFI PLR + 1-3% 5 year UNNACO 15% 46 weeks ASSAM FINANCIAL CORPORATION 6% Reducing p.a. 18 months RGVN_CSP 7% TO 10% 50 weeks DONET 3% 36 months RURAL EDUCATION INSTITUTE 12% 10months BANDHAN 18.97% 44 weeks ASSAM GRAMIN VIKASH BANK 7% KCC LOAN-12% 1-10year Financial Portfolio of the MFIs Out of all the respondents, equal no of respondents provides loan less Than Rs.15000-Rs.24000 and more than Rs.25000. The Structure of Microfinance in the region has also got boost up due to entry of National MFIs like Bandhan, Anjali Microfinance, which have a sound Lending programme and more financially stable. 3 MFIs in the region provides more than Rs.50 crore depending upon the project viability.
  16. 16. FINDINGS 1) Though Microfinance is prevalent in India for a long period, but in Assam it is in initial growth phase. Microfinance in Assam is witnessing a faster growth due to the entry of many national level MFIs like Bandhan, Anjali Microfinance. 2) Almost maximum no of clients of MFIs are women, who hold basic primary education. Almost all of them have started their business by lending loans from MFI. Due to this self reliability most of the women has bought a change in their social and financial situation of their family. 3) Most of the small MFIs provide training not only in financial literacy, but also by teaching them weaving, preparing handloom crafts etc. It is benefiting, by creating the employment opportunity for the poor, by teaching the tool for surviving. If one can help, a poor person to stand on his own that cannot only bring about a revolution in their lives but also in the society. 4) Most of the beneficiary feels that the procedure of obtaining loans from MFIs is easier than conventional banking as no collateral security is needed to take the loan from MFIs, which have made it possible for everyone to join the formal monetary process unlike the conventional banking which requires collateral security. Moreover it is not a complex system to take loan from MFIs. 5) During the study it was seen regarding the savings of the client, which is increasing day by day due to the motivation for becoming self reliable. As the saving or income is increasing, it will have a positive impact upon the rural development of Assam, it is also benefiting the youth by starting to build their own business. 6) While the MFIs lend money to the SHGs or JLGs, they also keep a strict vigil upon the activities of the borrower, which pressurizes the borrowers for not indulging in antisocial activities. 7) Throughout the study it was noticed, regarding the support that the Government is providing by flowing fund in the region for the MFIs, through its different agencies like NABARD, SIDBI, and AFC.
  17. 17. 8) Majority of the MFIs focus on financial literacy, which is fore most important thing in financial inclusion of India .Financial literacy among the SHGs is done in the region with the help of NABARD, UBI, and M, S, M, E. 9) The main problem MFIs are facing in the region is the lack of basic infrastructure and lack of trained personnel. 10) Almost all the MFIs prevailing in the region follow Self Help Group Lending model. 11) In the survey, it was seen that most of the savings of SHGs with bank is with RRBs. 12) NABARD has chosen 13 priority states and among which Assam holds a place, where priority is assigned to awareness in building and for identification of NGOs and other partners in the region. NABARD is also providing training to the NGOs, SHGs and government agencies for better effectiveness in the field of Microfinance. 13) The eligibility criterion that most of the MFIs use for screening their clients is to verify the activities of the group, after the reports of the coordinator or Field officer. Some small MFIs at first provide training regarding handlooms practices then they judge the active workers and provide finance depending upon the needs. Another thing they judge is the community based organization/traditional organization willing to take up development activities. Almost all the organization prefer Women groups, due to better credibility, some other things are: a. Registration of NGO should be more than 3 years b. Age 18-55 years for married Women c. Age 45-55 years for unmarried women d. Domicile in same area e. Not involved in anti-social activities f. Some social status g. Should be Indian 14) During the secondary data collection, it came to the notice regarding the influence of informal Microfinance, in the region, though they don’t have any legal status, and also they possess high interest rates.
  18. 18. 15) The interest rates of formal MFIs range between 7%-20%per annum. 16) Though MFIs are providing financial literacy, but they lack in the social objective of Microfinance. 17) Demand for Micro-credit in the region is high, but in accordance the gap between demand and supply is seen in the area. 18) During the study, no technological innovation was found in microfinance delivery. But, due to launch of different national Level MFIs in the region, it can bring certain changes in the whole scenario. CONCLUSION “Maybe our great-grandchildren will go to museums to see what poverty was like” Muhammad Yunus The growth story of Microfinance in Assam has just started, till date it has made a lot of impact improving the living standard of the family not only in economic term but also in social term. Amazingly a idea which is generated and become popular in a neighboring country, is also gripping up the small state of Assam through its objective of rural development, employment generation, poverty eradication, better health facilities etc. A lot of Govt. support is there in Assam, but the main part is the implementation of those supports. Though the government regulation regarding MFIs in India has become more strict and vigil, it can be taken as a positive impact for the overall rural development in Assam .From this study and research, To conclude, it has been seen that there is a noticeable and positive impact of microfinance activities on the living standards, empowerment and employment generation among the poor people in Assam.
  19. 19. SUGGESTIONS 1) The recruitment of the field officer for MFIs/NGOs must be from the local area itself, so that better reach out can be achieved, also the selection must be based on merit, and proper training must be given, based upon the ground level banking knowledge requirements. 2) Though the Microfinance in Assam is still in its growth phase, but lack of infrastructure is creating obstacle, the best way to get rid of these is creating more ground for microfinance by educating the SHGs and motivating them, by doing proper marketing activities, market research and marketing audit in the village. Another important suggestion will be merging of small informal MFIs with the formal MFIs, which will provide benefit to all the stakeholder and the reach of MFIs will be larger. 3) MFIs should give full information about interest rate, other hidden costs charged, and any condition applied, to their clients. 4) Better environment must be created for MFIs to work as agents of commercial banks, by making commission rate negotiable and permitting the MFIs to loan back the savings mobilized by them on agreed terms. 5) The credit delivery at the door step of the client must be there, at a reasonable cost to the clients, visits to branches impose extra costs on the borrowers in terms of transportation cost and time spent. 6) More guidance and counseling regarding, the idea of income generation activities training for skill and entrepreneurial development, etc. for which suitable grant assistance from Government or donors is necessary. 7) The clients of MFIs are mostly those people who survive upon seasonal or periodic income, therefore MFI must insist on two different schemes i.e. one interest rate during usual time period and other during the seasonal time, this is for those who prefer this scheme, this may increase better credit management and can also reduce burden upon the beneficiaries.
  20. 20. 8) As the competition is growing day by day in the region the MFIs must look for ways to lower the operational costs via efficiencies, technological innovations, etc. Effective monitoring and management will be a successful tool for lowering the interest rate to sustain in the industry. In mere future, interest rate will be a real challenge for the MFIs for their sustainability. 9) MFIs mostly in the region face difficulty in differentiating their products from their competitors, for that purpose the MFIs must bring innovative features or differentiated features like scheme related to housing insurance, EDP trainings, for nonfarm loan customer. MFIs must also make packed with rural health mission and open a centre of it along with their branches, they can also give suggestion regarding like soil testing, pesticides, yield seeds, fertilizers, and also regarding their expertise etc. MFIs can also bring different product for different region dependent upon its necessity in that area. 10) MFIs must also take customer feedback at regular basis and develop products upon the client’s requirement. 11) The growth of mobile technology in the region is enormous, almost every member of SHGs have it, therefore after every meeting of SHGs, the member of SHGs can sent a text message regarding the attendance, collection and proceedings of meeting, which will save the client and the field officer time. They can also bring payments, remittances and other related services through mobile phone technology which can help in microfinance delivery in the region. 12) MFIs need to concentrate more on opening new branches and creating proper channel for delivery of Microfinance.
  21. 21. SCOPE FOR FURTHER STUDY The current study is based on small sample size taken from only few villages of Kamrup and Cachar district of Assam. Therefore, the results cannot be generalized to other district of Assam especially in the analytical terms. Further research done on a bigger scale with large sample size could shed light on how microfinance activities affect the average living standard of poor people, and also on the rural development of Assam, analytically. The current study did not consider the reasons of motivation to join the Microfinance program. Another area that has not been investigated is the difficulties that the borrowers face to repay the loan. These areas deserve to be studied by future researchers in the field. Further research could be conducted in this area and for finding the reasons for the gap between demand and supply in terms of Microfinance services.
  22. 22. BOOKS: Yunus, Muhammad (1999), “Banker to the Poor: Micro-lending and the Battle Against World Poverty”, New York: Public Affairs Kirkpatrik, Colin H.; Clarke, R.; Charles, P. (2002), “Handbook on Development Policy and Management” Edward Elgar Publishing, p. 173 C.R.Kothari; (2009), “Research Methodology-Methods and Techniques”, New Age International Publisher, India Harper, M. (2003), “Microfinance – Evolution, Achievements and Challenges”, ITDG Publishing, UK, p.11 Stuart Rutherford (2009), The Poor and Their Money, Practical Action Publishing, UK, EDITED VOLUME AND JOURNALS: Hubka, A.; Zaidi, R. (2005), “Impact of Government Regulation on Microfinance”, World Development Report: Improving the Investment Climate for Growth and Poverty Reduction, p. 1 Khan, Penn F. (2005), “Microfinance and Development”, Master’s Thesis, Umea School and Business and Economics (USBE), Sweden, p. 1 Seibel, Hans D. (2005), “Does history matter? The old and new World of Microfinance in Europe and Asia”, An interdisciplinary workshop, Asia Research Institute, Department of Economics and Department of Sociology, National University of Singapore, pp. 1-2 ‘Microfinance in Assam –an overview’, presentation by Dr Debabrata Das, Tezpur University in the MRAP researchers meets in CMF, Chennai. Tanmooyee Banerjee (chatterjee), Chandralekha Ghosh and Malabika Roy.(2009), “Different Persons Different Needs: An Analysis of Various Types of Loans in a Village Economy” The ICFAI Journal, Aug-Nov, Vol- VIII, No-3 and 4, pp95-108
  23. 23. Prof.G.V.Jagapathi Rao. (2010), “Microfinance a Booming for the poor”-Anvesha, June-July, Vol-3 No.1, pp.1-6 CS Reddy, APMAS CEO Sandeep Manak, (2005) “Self-Help Groups: A Keystone of Microfinance in India - Women empowerment & social security”, APMAS Intern Ghalib, Asad K. (2007), “Measuring the Impact of Microfinance Intervention: A Conceptual Framework of Social Impact Assessment”, the Singapore Economic Review Conference, p. 2 Barr, Michael S. “Microfinance and Financial Development”, 2005, p. 278 Murray, U. and Boros, R. (2002), “A Guide to Gender Sensitive Microfinance”, p. 10 Roy, Mark A. (March 2003), “Microfinance as a Tool for Development” Fotabong, Leonard A.; Kedju, Akanga F. (2005), “The Impact of Microfinance Institutions on Poverty Reduction in the South-East Province of Cameroon”, Master’s Thesis, Umea Business School (USBE), Sweden, p. 35 Murray, U. and Boros, R. (2002), “A Guide to Genders Sensitive Microfinance”, p. 11 Cited in Fiebig, M.; Hannig, A.; Wisniwski, S. (1999), “Savings in the Context of Microfinance –State of Knowledge”, Working Group on Savings Mobilization, Consultative Group to Assist the Poorest (CGAP), Eschborn, p. 1 Nem Nei Lhing, Shoji shinkai, Kazuhiko Hotta and Teruaki Nanseki,(2010), “The effects of the pact microfinance program in the dry zone area of Central Myanmar” Zeller, M.; Meyer, Richard L. (2002), “The Triangle of Microfinance – Financial Sustainability, Outreach, and Impact”, Published for the International Food Policy Research Institute, The Johns Hopkins University Press, Baltimore and London, p. 21 Aryeetey, E. (Summer 2005), “Informal Finance for Private Sector Development in Sub- Saharan Africa”,
  24. 24. Montgomery, R. (1996), p. 290, cited in, Mohindra, Katherine S. and Haddad S. (November 2005), “Women’s Interlaced Freedoms: A Framework Linking Micro credit Participation and Health”, p. 355 Mohindra, Katherine S.; Haddad, S. (November 2005), “Women’s Interlaced Freedoms: A Framework Linking Micro credit Participation and Health”, p. 363 Barr, Michael S. (2005), “Microfinance and Financial Development”, the John M. Olin Centre for Law & Economics Working Paper Series, University of Michigan Law School, p. 271 Hubka, A.; Zaidi, R. (2005), “Impact of Government Regulation on Microfinance”, World Development Report: Improving the Investment Climate for Growth and Poverty Reduction, p. 1 Fallavier, P. (1998), “Developing Micro-Finance institutions in Vietnam”, Thesis (MSc.), University of British Columbia, Vancouver, Canada, pp. 15-18 Khan, Penn F. (2005), “Microfinance and Development”, Master’s Thesis, Umea School and Business and Economics (USBE), Sweden, p. 1 REPORTS AND GAZETTES Annual Report (2010), AFC Annual Report (2010), NABARD Annual Report (2009), Assam Gramin Vikash Bank Annual Report (2010), Bandhan Annual Report (2009), RGVN-CSP Directorate of Economics & Statistics, Government of Assam The World Bank Economic Review, Vol. 19, No. 2 Journal of Microfinance, Vol. 7, No. 1, p. 22
  25. 25. WEBSITES NDTV websites (2010) “Terror outfit takes the microfinance”, Viewed on 02/04/2011 supporters-66086 Assam Financial Corporation (2011) “About us”, Viewed on 02/04/ 2011 Assam Gramin Vikash Bank (2011) “About us”, Viewed on 02/04/ 2011 North Eastern Development Finance Corporation Ltd. (2011) “Microfinance”, Viewed on 02/04/ 2011 Asomi finance Pvt LTD. (2011) “About us”, Viewed on 02/04/ 2011 Rashtriya Gramin Vikash Bank (2011) “About us”, Viewed on 04/04/ 2011 Bandhan Financial Pvt. LTd (2011) “Reach”, Viewed on 04/04/2011 Microfinance Information Exchange (2011) “India scenario”, Viewedon04/04/2011 Ministry of Health and Family Welfare (2011) “ASSAM SCENARIO”, Viewed on 26/03/2011 Assam Government (2011) “Assam State Scenario”, Viewed on 27/03/2011 Directorate of Economics & Statistics, Assam (2011) “Assam Economy”, Viewed on 27/03/2011 The Global Development Research Center (2011) “Credit Lending Model”, Viewed on 28/03/2011
  26. 26. Public Broad casting service (2011) “Regulators crack down on Microfinance industry in India”, Viewed on 28/03/2011 on-micro-finance-in-india.html The Hindu (2011) “Malegam Report”, Viewed on 28/03/2011, The Economic Times (2011) “Financial inclusion lies with MFIs”, Viewed on 29/03/2011 The Hindu (2011) “MFI crisis in perspective”, Viewed on 29/03/2011 Manipur Online (2011) “Microfinance Program in North-East India”, Viewed on 29/03/2011 Microfinance and microcredit (2011) “Microfinance”, Viewed on 29/03/2011 Yale University Microfinance Brigades (2011) “Fighting Poverty Abroad”, Viewed on 29/03/2011 International Year of Microcredit (2005) “Microfinance”, Viewed on 01/04/2011 NABARD (2011) “MF in India - An Overview”, Viewed on 10/02/2011 RBI (2011) “Micro Credit : A Lifeline for the Poor”, Viewed on 12/02/2011 Banker Institute Of Rural Development (2011) “Microfinance”, Viewed on 12/02/2011 Planet Finance (2011) “Business Lines”, Viewed on 03/03/2011
  27. 27. Grameen Bank (2011) “Introduction”, Viewed on 03/03/2011 Roy, Mark A. (March 2003), “Microfinance as a Tool for Development”, BSUS 6900, (This Para is mainly taken from Yunus, Mohammad, “Banker for the Poor, Introduction”,