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1.1 ABOUT TOPIC: Micro-finance refers to small savings, credit and insurance services extended to socially and economicall...
shocks. It can also be a powerful instrument for self-empowerment by enabling the poor,especially women, to become economi...
2.1 INTRODUCTION:India Info Line Ltd was founded in 1995 by a group of professionals with impeccable educationalqualificat...
2.3 PRODUCT PROFILE:1. Equity Broking:2. Portfolio management services:3. Investment banking:4. Home loans:5. Mutual funds...
Mutual funds, fixed deposit, IPO’s, bonds, post office:It includes saving and several other investment products. Like Mutu...
2.4 MANAGEMENT TEAM:The management team of the INDIA INFOLINE includes the following members:Mr. Nirmal Jain:Nirmal Jain i...
3.1 HISTORY OF MICRO FINANCE:The history of micro financing can be traced back as long to the middle of the 1800s when the...
 ORIGIN OF MICRO-FINANCE IN INDIA:A self-help group (SHG) is a group of about 10 to 20 persons from a homogenous backgrou...
 Growth and Origin of Micro Finance:Year                                          MilestoneMiddle of     Lysander Spooner...
3.2 CURRENT SCENARIO: The International year of Microcredit consists of five goals:1. Assess and promote the contribution...
means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in thecontinuing efforts to achieve it, ...
banks, creation of specific funds to address the regional imbalances in the SBLP, formation ofSHGs around activities of ru...
3.3 MICRO FINANCE IN INDIA:The absence of savings in Indian microfinance has distinguished it till now from microfinance i...
liberalization of the economy, opportunities for the unskilled and the illiterate are not increasingfast enough, as compar...
survey done by the National Sample Survey Organization (NSSO), 43rd round, which hasrevealed that there is a wide variety ...
illness, calamities, death in the family, etc; as a source of equity or margin to take loans; andfinally, as a liquid asse...
Source: (formal institutional sources 2000) Among formal institutional sources, banks andco-operatives provided credit sup...
 Share of Debt from Institutional and Non-institutional Sources, by Asset   Holdings of Households:   Household Assets   ...
As a result of these programs, India has one of the largest banking networks in the world withclose to 50,000 CB outlets; ...
 Supply of Savings and Insurance Services:   In the case of savings services, again while banks have provided access to a...
Sa-Dhan Quick-data set is the most timely – the quickest – of any segment of the financial sector.  India Microfinance is ...
 Percentage distribution of debt among indebted labor households by source of debt:      Sr.no.       Source of debt     ...
3.4 Banking Expansion:Starting in the late 1960s, India was the home to one of the largest state interventions in therural...
FinancialInstitution                                                         SHG                                          ...
4.1 PROBLEM OF STUDY:      To know the awareness of schemes and services of Micro Finance Institutes Among Surat       Ci...
4.4 DATA COLLECTION:Research Methodology means tools and method used by researcher to gathering data andanalyzing them. Th...
4.6 BENEFITS OF STUDY:    This study will help to know the view of customer towards the microfinance.    For this study ...
5.1 INTRODUCTION: Microfinance is defined as any activity that includes the provision of financial services such as credit...
founded on the philosophy of cooperation and its central values of equality, equity and mutual self-help. At the heart of ...
financial services, which includes various types of savings products, payment and remittance  services, and various insura...
 “Microfinance can pay for itself.” Subsidies from donors and government are scarce and   uncertain, and so to reach larg...
5.3.1 Financial needs and services:In developing economies and particularly in the rural areas, many activities that would...
5.4 BENIFITS OF MICRO FINANCE:    Customarily, one had to apply for a loan in order to start a business, but that proved t...
5.5 MICRO FINANCE PRODUCT:Micro Credit:It is a small amount of money loaned to a client by a bank or other institution.Mic...
5.6 MICRO FINANCE INSTITUTIONS: 5.6.1 Working method of micro finance institute:  Role of micro finance:The micro credit ...
“should be to control the use made of money for economic improvements, and to improvethe moral and physical values of peop...
Countries gathered in Washington D.C. for the first Micro Credit Summit. This was the startof a nine yearlong campaign to ...
5.7 INDIA TOP MICRO FINANCE INSTITUTIONS:Sr.no.                  Name of MICRO FINANCE INSTITUTE  1.                      ...
25.                       Rashtriya Seva Samithi (RASS)26.                  Sahara Utsarga Welfare Society (SUWS)27.      ...
5.8 MAJOR SCHEMES OFFERED BY MFIs:1. GIDKA (Group Insurance Scheme for Khadi Artisan)With a view to provide safe and secur...
(PMGSY) was taken up by the Government of India with an objective to provide connectivityto the unconnected Habitations in...
Data Analysis of Questionnaire:   1. Which alternative do you prefer to get financial help?                         Instit...
2. Do you know which agency provide MF?                          Institutes            no. of               % of          ...
3. How do you come to know about MFIs?                         source                       no of          % of respondent...
4. Have you ever use micro finance from any MFIs?                                                    yes               no ...
5. Are you aware about basic lending methodology that followed by the MFIs?                                         yes   ...
6. Which basic lending methodology do you know for providing MF?                                                     no. o...
7. Are you aware about different Schemes offered by MFIs?                                       yes                 no    ...
8. If yes which schemes do you aware about that MFIs provided for rural development   purpose?                            ...
9. Are you aware about different product/services provided by MFIs?                                   yes                n...
10. Which Product/Services do you aware about provided by MFIs?                                                     no. of...
11. Which non-financial service do you know that provided by MFIs?                                                    no. ...
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
Awareness of schemes and services of mf is
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Awareness of schemes and services of mf is

  1. 1. 1.1 ABOUT TOPIC: Micro-finance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. In the Indian context terms like "small and marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly define micro-finance customers. The recent Task Force on Micro Finance has defined it as "provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi urban or urban areas, for enabling them to raise their income levels and improve living standards". At present, a large part of micro finance activity is confined to credit only. Women constitute a vast majority of users of micro-credit and savings services. Microfinance providing very poor families with small loans to help and them engage in productive activities or grow their very small businesses. Like, many poor people need and use financial services all the time. They save and borrow, invest in home repairs and improvements and meet occasional and domestic expenses such as food d and school fees. However, there are some 500 million very low income entrepreneurs in the world and about 5% have access to financial services. Indeed, financial services available to the poor often have serious limitations in terms of cost, risk and convenience. As a result, microfinance has come to include a broader range of services. The industry has come to realize that the poor and the very poor that lack access to traditional formal financial institutions require a variety of financial products. In 1980s, microfinance programs have improved upon original methodologies and extended beyond conventional thinking. First, microfinance demonstrated that poor people, and especially women, had excellent repayment rates (and often, rates that performed better than those in formal financial sectors). And second, that the poor were willing and able to pay interest rates that would allow the microfinance institutions (MFIs) to cover costs.1.2 PURPOSE OF MICRO FINANCE: Microfinance brings the power of credit to the grassroots by way of loans to the poor, without requirement of collateral or previous credit record. Experience shows that microfinance can help the poor to increase income, build viable businesses, and reduce their vulnerability to external Awareness of Schemes and Services of Micro Finance Institutes 1|Page
  2. 2. shocks. It can also be a powerful instrument for self-empowerment by enabling the poor,especially women, to become economic agents of change. Poverty is multi-dimensional, and byproviding access to financial services, microfinance plays an important role in the fight against themany aspects of poverty. Access to credit allows poor people to take advantage of economicopportunities - for their homes, their domestic environments and their communities. For instance,income generation from a business helps not only the business activity expand but also contributesto household income and its attendant benefits on food security, childrens education, etc.Moreover, for women who, in many contexts, are secluded from public space, transacting withformal institutions can also build confidence and empowerment.Recent research has revealed the extent to which individuals around the poverty line are vulnerableto shocks such as illness of a wage earner, weather, theft, or other such events. These shocksproduce a huge claim on the limited financial resources of the family unit, and, absent effectivefinancial services, can drive a family so much deeper into poverty that it can take years to recover.1.3 IMPORTANCE OF TOPIC:The biggest importance is to bringing financial services to poor people and making them financialsustainable by economies of scale effect. In India the National Bank for Agriculture and RuralDevelopment (NABARD) finances more than 500 banks that on lend funds to self help groups(SHG). SHGs comprise twenty or fewer members, of whom the majorities are women from thepoorest castes and tribes. Nearly 1.4 million SHGs comprising approximately 20 million womennow borrow from banks, which make the Indian SHG-Bank Linkage model the largestmicrofinance program in the world. Similar programs are evolving in Africa and Southeast Asiawith the assistance of organizations like Opportunity International, Catholic Relief Services,CARE, APMAS and Oxfam. Also helps in the development of an economy by giving everydaypeople the chance to establish a sustainable means of income. Eventual increases in disposableincome will lead to economic development and growth.1.4 IMPORTANCE OF STUDY: To learn about various aspect of micro finance. To analyze the history of micro finance. To get familiar with the organization culture and environment. Awareness of Schemes and Services of Micro Finance Institutes 2|Page
  3. 3. 2.1 INTRODUCTION:India Info Line Ltd was founded in 1995 by a group of professionals with impeccable educationalqualification and professional credentials. India Info Line is listed on BSE and NSE with a marketcapitalization of over $ 150 million.5paisa is the trade name of the India Info Line securities private limited, a wholly ownedsubsidiary of India Info Line ltd. 5paisa holds membership of both the leading stock exchange ofIndia viz. the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and is also adepository participant with NSDL and CDSL. It has tied up with the leading banks for fundstransfer facilities Viz. City Bank, Centurion Bank, ICICI Bank and UTI Bank. The group has amembership of a Multi Commodities Exchange (MCX), National Commodities and DerivativeExchange of India (NCDEX) and the Dubai Gold and Commodities Exchange (DGCX).The India info Line group has a significance presence across the country with over 500 branchesin over 300 cities across India. All these offices are networked and connected with the corporateoffice in Mumbai. The group has invested significantly in technology and research, the result ofwhich are there for everyone to see. The 5paisa trading interface is one of the most advancedplatforms available to retail investor in India. The group has membership on BSE and NSE forequities trading. It has a SEBI license for portfolio management under which, various schemes areoffered, which have been continentally beating the benchmark indices since inception.2.2 VISION OF COMPANY:Our vision is to be the „Most Respected Financial Services Company‟ in India. We can remaintrue to our vision by being the best and not necessarily the biggest or the fastest. Many-a-time,expectations of employees, customers, shareholders and society seem conflicting, but a deeperinsight reveals that they complement one another and in fact, can be achieved only together. Awareness of Schemes and Services of Micro Finance Institutes 3|Page
  4. 4. 2.3 PRODUCT PROFILE:1. Equity Broking:2. Portfolio management services:3. Investment banking:4. Home loans:5. Mutual funds, fixed deposit, IPO’s, bonds, post office:Equity Broking:It offers trading in both the cash as well as the derivative segments. It is one of the largest onlineplayers. It provides Cash trading in NSE and BSE Market as well as commodity trading alsooffered by India Infoline in these two markets.Portfolio management services:It includes provide advisory base services based on the requirement of the clients. This includesportfolio creation, portfolio restructuring and portfolio management. A portfolio managementservice which is offered by India Infoline is as a SEBI registered portfolio manager and all theactivities is perform by India Infoline in order to guide its clients so that they can make goodinvestment decision.Investment banking:It means Investment banking and corporate advisory under the category-1 merchant-bankinglicense. It includes service like Consultancy to guide or give advice related to the different area ofinvestment and in investment banking also.Home loans:It includes Home loans and other loan products. All the work related to the loan and services isalso offered by company (IIFl) Awareness of Schemes and Services of Micro Finance Institutes 4|Page
  5. 5. Mutual funds, fixed deposit, IPO’s, bonds, post office:It includes saving and several other investment products. Like Mutual fund (equity based and debtbased both). Risk free return that is government bond other bond, fixed deposits, saving in postoffice etc. BSE cash NSE cash trading trading NSE Future and Financial Commodities Option Markets Trading Services IPO Trading Mutual Funds (Financial Services Provided by IIFl) Awareness of Schemes and Services of Micro Finance Institutes 5|Page
  6. 6. 2.4 MANAGEMENT TEAM:The management team of the INDIA INFOLINE includes the following members:Mr. Nirmal Jain:Nirmal Jain is the founder and Chairman of India Info Line Ltd. He holds an MBA degree fromIIM Ahmadabad, and is a Chartered Accountant (All India Rank 2) and a Cost Accountant. Hehas had an impeccable professional and academic track record. He started his career in 1989 withHindustan Lever Limited. During his stint with Hindustan Lever, he handled a variety ofresponsibilities, including exports and trading in agro commodities with Rs.3bn annual turnover.He then joined hands with two local brokers to set up their equity research division, Inquire, in1994. His work set new standards for equity research in India. In 1995, he founded his ownindependent financial research company, now known as India Info Line Ltd.Mr. R. Venkataraman:R Venkataraman is the co-promoter and Executive Director of India Info Line Ltd. He holds a B.Tech degree in Electronics and Electrical communications engineering from IIT Kharagpur andan MBA degree from IIM Bangalore. He has held senior managerial positions in various divisionsof ICICI Limited, including ICICI Securities Limited, their investment banking joint venture withJ P Morgan of USA and with BZW and Taib Capital Corporation Limited. He has also held theposition of Assistant Vice President with G E Capital Services India Limited in their privateequity division. He has varied experience of more than 14 years in the financial services sector.The Board of Directors:Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Info Linecomprises:Mr. Sat Pal Khattar (Non Executive Director)Mr. Arun K. Purvar (Independent Director)Mr.Nilesh Vikamsey (independent director)Mr.Kranti Sinha (independent director) Awareness of Schemes and Services of Micro Finance Institutes 6|Page
  7. 7. 3.1 HISTORY OF MICRO FINANCE:The history of micro financing can be traced back as long to the middle of the 1800s when thetheorist Lysander Spooner was writing over the benefits from small credits to entrepreneurs andfarmers as a way getting the people out of poverty. But it was at the end of World War II withthe Marshall plan the concept had a big impact.The today use of the expression micro financing has its roots in the 1970s when organizations,such as Grameen bank of Bangladesh with the microfinance pioneer Mohammad Yunus, wherestarting and shaping the modern industry of micro financing. Another pioneer in this sector isAkhtar Hameed Khan. At that time a new wave of microfinance initiatives introduced manynew innovations into the sector. Many pioneering enterprises began experimenting with loaningto the underserved people. The main reason why microfinance is dated to the 1970s is that theprograms could show that people can be relied on to repay their loans and that it‟s possible toprovide financial services to poor people through market based enterprises without subsidy.Shore bank was the first microfinance and community development bank founded 1974 inChicago.An economical historian at Yale named Timothy Guinnane has been doing some research onFriedrich Wilhelm Raiffeisen´s village bank movement in Germany which started in 1864 and bythe year 1901 the bank had reached 2 million rural farmers. Timothy Guinnane means that alreadythen it was proved that microcredit could pass the two tests concerning people‟s payback moraland the possibility to provide the financial service to poor people.Today the World Bank estimates that more than 16 million people are served by some 7000microfinance institutions all over the world. CGAP expert means that about 500 million familiesbenefits from these small loans making new business possible. In a gathering at a MicrocreditSummit in Washington DC the goal was reaching 100 million of the world‟s poorest people bycredits from the world leaders and major financial institutions.The year 2005 was proclaimed as the international year of Microcredit by The Economic andSocial Council of the United Nations in a call for the financial and building sector to “fuel” thestrong entrepreneurial spirit of the poor people around the world. Awareness of Schemes and Services of Micro Finance Institutes 7|Page
  8. 8.  ORIGIN OF MICRO-FINANCE IN INDIA:A self-help group (SHG) is a group of about 10 to 20 persons from a homogenous backgroundwho come together for addressing the common problems. They collect voluntary savings on aregular basis and use the pooled resources to make small interest bearing loans to their members.In 1991-92, a pilot project for linking about 500 SHG with banks, in order to formally utilize theirsavings and financing them was launched by National Bank for Agriculture and RuralDevelopment (NABARD). In 1994, the Reserve Bank of India (RBI) constituted a working groupof (Non-government Organization) NGOs and SHGs. Based on the recommendation of thisgroup, RBI took some serious measures in April 1996 like starting SGH – bank linkageprogramme.In 1999, Government has taken active interest and then in the successive Budgets some or theother announcements are made by Finance Ministers. However, in Budget Speech of 2005,Finance Minister has put thrust on Micro Finance Institutes (MFIs) and advised the RBI issueliberal guideline for MFIs. Finance Minister has also announced “Micro Finance Developmentand Equity Fund” of Rs. 200 crore. Awareness of Schemes and Services of Micro Finance Institutes 8|Page
  9. 9.  Growth and Origin of Micro Finance:Year MilestoneMiddle of Lysander Spooner was writing over the benefits from small credits tothe 1800s entrepreneurs and farmers as a way getting the people out of poverty.1864-1991 An economical historian at Yale named Timothy Guinnane has been doing some research on Friedrich Wilhelm Raiffeisen´s village bank movement in Germany which started in 1864 and by the year 1901 the bank had reached 2 million rural farmers.1970 At that time organizations, such as Grameen bank of Bangladesh with the microfinance pioneer Mohammad Yunus, where starting and shaping the modern industry of micro financing.1974 Shore bank was the first microfinance and community development bank founded 1974 in Chicago.1991-92 A pilot project for linking about 500 SHG with banks, in order to formally utilize their savings and financing them was launched by National Bank for Agriculture and Rural Development (NABARD).1994 In 1994, the Reserve Bank of India (RBI) constituted a working group of (Non-government Organization) NGOs and SHGs.1996 Based on the recommendation of NGOs and SHGs, RBI took some serious measures in April 1996 like starting SGH – bank linkage programme.2000 Lok capital initiative launched with grant from Rockefeller Foundation.2003 Incorporated lok-foundation2005-07 In 2005 Launched India operations, In 2005-06 Fundraising, marketing team building, pipeline. The year 2005 was proclaimed as the international year of Microcredit by The Economic and Social Council of the United Nations in a call for the financial and building sector to “fuel” the strong entrepreneurial spirit of the poor people around the world.2008-09 Enter for MFI partnerships in 2008 to 20092010 Enter to continue partnerships till sep 2011 Awareness of Schemes and Services of Micro Finance Institutes 9|Page
  10. 10. 3.2 CURRENT SCENARIO: The International year of Microcredit consists of five goals:1. Assess and promote the contribution of microfinance to the MFIs2. Make microfinance more visible for public awareness and understanding as a very important partof the development situation3. The promotion should be inclusive the financial sector4. Make a supporting system for sustainable access to financial services5. Support strategic partnerships by encouraging new partnerships and innovation to build andexpand the outreach and success of microfinance for all.The economics professor Mohammad Yunus and the founder of Grameen Bank were awarded theNobel Prize 2006 for his efforts. The press release from nobelprize.org states: “The NorwegianNobel Committee has decided to award the Nobel Peace Prize for 2006, divided into two equalparts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and socialdevelopment from below. Lasting peace cannot be achieved unless large population groups findways in which to break out of poverty. Micro-credit is one such means. Development from belowalso serves to advance democracy and human rights. Muhammad Yunus has shown himself to bea leader who has managed to translate visions into practical action for the benefit of millions ofpeople, not only in Bangladesh, but also in many other countries.Loans to poor people without any financial security had appeared to be an impossible idea. Frommodest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank,developed micro-credit into an ever more important instrument in the struggle against poverty.Grameen Bank has been a source of ideas and models for the many institutions in the field ofmicro-credit that have sprung up around the world. Every single individual on earth has both thepotential and the right to live a decent life. Across cultures and civilizations, Yunus and GrameenBank have shown that even the poorest of the poor can work to bring about their owndevelopment. Micro-credit has proved to be an important liberating force in societies wherewomen in particular have to struggle against repressive social and economic conditions.Economic growth and political democracy cannot achieve their full potential unless the femalehalf of humanity participates on an equal footing with the male.Yunus‟s long-term vision is to eliminate poverty in the world. That vision cannot be realized by Awareness of Schemes and Services of Micro Finance Institutes 10 | P a g e
  11. 11. means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in thecontinuing efforts to achieve it, micro-credit must play a major part. SHG-Bank linkage program failed to benefit poorer states:A Self Help Group is a group of 10-20 women or men who work for the capacity building ofthemselves. The goal of Self help groups (SHG) is to become effective agents of change. Theyserve as a platform to establish the banking with the poor which is reliable, accountable and aprofitable business. SHG also enables livelihood opportunities for village women through micro–credit with the existing banks in the area.The SHG-Bank linkage program that evolved in India as a micro-credit model has provedsuccessful in southern states but failed to achieve its goal to benefit poorer states, says anoccasional paper by Pankaj Kumar and Ramesh Golait titled „Bank Penetration and SHG-BankLinkage Programme: A Critique‟, published by RBI this month.The report says, “SBLP was conceived to fill the existing gap in the formal financial networkand extending the outreach of banking to the poor. However, the present distribution of the SBLPis skewed against the poorer regions of the country. While less than one-fifth of total loans toSHGs went into the Eastern and Central Regions taken together, they accounted for more thanthree-fifth of the total poor in India.”Introduced in 1991-92, the SHG-Bank linkage program (SBLP) reached 3.4 million as of March2008, received Rs. 22,268 crore in credits, benefitted 4.1 crore poor households in gaining accessto the formal banking system. While the number of beneficiary SHGs shot up from 32,995 in1998-99 to 34, 77,965 in 2007-08 or recording a two-third rise, the banks have almost doubledtheir cumulative loans to SHGs each year, the paper said.In turn it has led to a four-fold increase in the average loans per SHG from Rs. 16,816 in 1999-2000 to Rs. 63,926 in 2007-08Even the SHGs per lacs population varied in southern and eastern states. As of March 2008, 891SHGs in Andhra Pradesh and 435 in Kerala benefitted while Assam accounted for 3.1% of thetotal SHGs and the rest of the six States had a negligible share. Since the impact of the SHGmodel is uneven, the paper suggests remedial measures like performance-linked incentives to Awareness of Schemes and Services of Micro Finance Institutes 11 | P a g e
  12. 12. banks, creation of specific funds to address the regional imbalances in the SBLP, formation ofSHGs around activities of rural such as construction and renovation of minor irrigation tanks,feeder channels and rural roads.“The aftermath of nationalization witnessed a remarkable spread of the banking system to theunbanked and under-banked rural areas. However, the dependence on informal sources of credithas not decreased in rural areas. The problem accentuated as banks veered away from rural tourban India. The relative decline of commercial banking network in the rural areas runs contraryto the objective of financial inclusion and is a formidable challenge in the way of faster and moreinclusive growth,” remarked the authors. The other activities suggested in the paper suggestedincluded embedding livelihood activities, micro-insurance and grain banks in the SHG model tomake it successful across all the states in the country. Financial Performance of MFIs:The RBI had brought in a condition of Qualifying Asset by which the MFIs should create loansassets that would meet certain conditions like maximum loan amount of Rs. 50000, at least 75percent of loan to be given for income generation purpose etc. for availing loan under prioritysector credit schemes from the banks.The data provides evidence to reasonably conclude that Indian MFIs in general possessQualifying Asset.The cost structure of MFIs showed that the operating cost of MFIs has been, in general, higherthan what the “Malegam” Committee had estimated last year. MFIs, in all likelihood, would findit difficult to contain the Margin Cap (Yield over Borrowing cost) of 12 percent set by the RBI.MFIs may be able to restrict their loan interest rate within the cap of 26 percent. Awareness of Schemes and Services of Micro Finance Institutes 12 | P a g e
  13. 13. 3.3 MICRO FINANCE IN INDIA:The absence of savings in Indian microfinance has distinguished it till now from microfinance inmost other countries, and has been likened to "walking on one leg" since without savingsmicrofinance is not microfinance at all but microcredit. There is a widespread misconception thatthe poor are too poor to save, and that they need credit, not savings facilities. On the contrary,savings is probably a more widely felt need than credit, and takes place through a variety ofsavings mechanisms and institutions in the informal sector.29 Like the rest of us, the poor arelooking for savings services which are convenient, safe, liquid, and can preferably be used toleverage loans.3.3.1 Demand of Micro Finance Services in India:Due to its large size and population of around 1000 million, Indias GDP ranks among the top 15economies of the world. However, around 300 million people or about 60 million households, areliving below the poverty line. It is further estimated that of these households, only about 20percent have access to credit from the formal sector. Additionally, the segment of the ruralpopulation above the poverty line but not rich enough to be of interest to the formal financialinstitutions also does not have good access to the formal financial intermediary services,including savings services.A group of micro-finance practitioners estimated the annualized credit usage of all poor families(rural and urban) at over Rs 45,000 corers, of which some 80 percent is met by informal sources.This figure has been extrapolated using the numbers of rural and urban poor households and theiraverage annual credit usage (Rs 6000 and Rs 9000 pa respectively) assessed through variousmicro studies.Credit on reasonable terms to the poor can bring about a significant reduction in poverty. It iswith this hypothesis; micro credit assumes significance in the Indian context. With about 60million households below or just above the austerely defined poverty line and with more than 80percent unable to access credit at reasonable rates, it is obvious that there are certain issues andproblems, which have prevented the reach of micro finance to the needy. With globalization and Awareness of Schemes and Services of Micro Finance Institutes 13 | P a g e
  14. 14. liberalization of the economy, opportunities for the unskilled and the illiterate are not increasingfast enough, as compared to the rest of the economy. This is leading to a lopsided growth in theeconomy thus increasing the gap between the haves and have-nots. It is in this context, theinstitutions involved in micro finance have a significant role to play to reduce this disparity andlead to more equitable growth.3.3.2 Demand for Credit:In terms of demand for micro-credit, there are three segments:At the very bottom in terms of income and assets, and most numerous, are those who are landlessand are engaged in agricultural work on a seasonal basis, and manual laborers in forestry, mining,household industries, construction and transport. This segment requires, first and foremost,consumption credit during those months when they do not get labor work, and for contingenciessuch as illness. They also need credit for acquiring small productive assets, such as livestock,using which they can generate additional income. The next market segment is small and marginalfarmers and rural artisans, weavers and those self employed in the urban informal sector ashawkers, vendors, and workers in household microenterprises. This segment mainly needs creditfor working capital, a small part of which also serves consumption needs. In rural areas, one ofthe main uses of working capital is for crop production. This segment also needs term credit foracquiring additional productive assets, such as irrigation pump sets, bore wells and livestock incase of farmers, and equipment (looms, machinery) and work sheds in case of non-farm workers.This market segment also largely comprises the poor but not the poorest.The third market segment is of small and medium farmers who have gone in for commercial cropssuch as surplus paddy and wheat, cotton, groundnut, and others engaged in dairying, poultry,fishery etc. Among non-farm activities, this segment includes those in villages and slums,engaged in processing or manufacturing activity, running provision stores, repair workshops, teashops, and various service enterprises. These persons are not always poor, though they live barelyabove the poverty line and also suffer from inadequate access to formal credit. One marketsegment, which is of great importance to micro-credit, is women. The 1991 Census figures revealthat out of total 2.81 million marginal workers, 2.54 million were women and their further break-up shows that out of a total of 2.67 million rural marginal workers, 2.44 million were females.Further, many more women were willing to work. This has been corroborated by the results of a Awareness of Schemes and Services of Micro Finance Institutes 14 | P a g e
  15. 15. survey done by the National Sample Survey Organization (NSSO), 43rd round, which hasrevealed that there is a wide variety of work which rural women combine with household work.In the NSSO survey it has also been estimated that a large percentage of rural women in the agegroup of 15 years and above, who are usually engaged in household work, are willing to acceptwork at household premises (29.3%), in activities such as dairy (9.5%), poultry (3 %), cattlerearing, spinning and weaving (3.4%), tailoring (6.1%) and manufacturing of wood and caneproducts etc. Amongst the women surveyed, 27.5% rural women were seeking regular full-timework, and 65.3% were seeking part-time work. To start or to carry on such work, 53.6 % womenwanted initial finance on easy terms, and 22.2 % wanted working capital facilities, as can be seenfrom the table below: Assistance Required (by women Percent of marginal workers seeking or available Women Seeking For work at their household premises). Assistance No assistance 2.1 Initial finance on easy terms 53.6 Working capital facilities 22.2 Raw materials availability 4.6 Marketing 1.7 Training 10.5 Accommodation 0.4 Other assistance 4.9 Total 100 (Source: NSSO survey 2007)3.3.3 DEMAND FOR SAVING AND INSURANCE SERVICES:The demand for savings services is ever higher than for credit. Studies of rural households invarious states in India show that the poor, particularly women, are looking for a way to save smallamounts whenever they can. The irregularity of cash flows and the small amounts available forsavings at one time, deter them from using formal channels such as banks. In urban areas also thisis true, in spite of better banking facilities, as shown by the experience of the SEWA Bank,Ahmadabad. The poor want to save for various reasons – as a cushion against contingencies like Awareness of Schemes and Services of Micro Finance Institutes 15 | P a g e
  16. 16. illness, calamities, death in the family, etc; as a source of equity or margin to take loans; andfinally, as a liquid asset. The safety of savings is of higher concern that interest rates. The demandfor savings services is high in rural areas as well, as can be seen from a recent study of women‟ssavings and credit movement in Andhra Pradesh. Almost all women‟s groups in their early yearsbegin with regular savings and their savings exceed the loans they give from their funds. Ofcourse, part of this lower demand for credit is the inadequate absorption capacity of women,which comes from long years of exclusion from the economic sphere outside their homes. Thedemand for insurance services, though not very well articulated, is also substantial. This comesfrom the fact that not only incomes of microfinance customers low, but are also highly variable.Insurance by the poor is needed for assets such as livestock and pump sets, for shelter. Cropinsurance could be very useful to the rural poor. Finally, insurance against illness, disability anddeath would also reduce the shocks caused by such contingencies, which lead the poor into takingloans at such times at high interest.3.3.4 SUPPLY OF MICRO FINANCE SERVICES: RBI data shows that informal sources provide a significant part of the total credit needs of the rural population. The magnitude of the dependence of the rural poor on informal sources of credit can be observed from the findings of the All India Debt and Investment Survey, 1992, which shows that the share of the non-institutional agencies (informal sector) in the outstanding cash dues of the rural households was 36 percent. However, the dependence of rural households on such informal sources had reduced of their total outstanding dues steadily from 83.7 percent in 1961 to 36 percent in 1991. This is shown in the table below. Outstanding from Informal Sources as a Percentage of Total Dues, for Various Occupational Categories of Rural Households: YEAR CULTIVATOR NON CULTIVATOR ALL 1961 81.6 89.5 83.7 1981 36.8 63.3 70.8 2001 30.7 48.7 38.8 2011 24.5 39.2 36.0 Awareness of Schemes and Services of Micro Finance Institutes 16 | P a g e
  17. 17. Source: (formal institutional sources 2000) Among formal institutional sources, banks andco-operatives provided credit support to almost 56 percent of the rural households, whileprofessional and agricultural money lenders were providing credit to almost one sixth of therural households. The details by source are given below: Sources of Credit for Rural Households, 1991: (Source: All India Debt and Investment Survey, 1992) Credit agency households Percentage of rural Government 6.1 Co-operative societies 21.6 Commercial banks and RRBs 33.7 Insurance 0.3 Provident fund 0.7 Other institutional sources 1.6 All institutional sources 64 Landlord 4 Agricultural moneylenders 7 Professional moneylenders 10.5 Relatives and friends 5.5 Others 9 all non institutional agencies 36 All agencies 100Though the overall share of institutional credit for rural households has gone up steadily,households in the lower asset groups were more dependent on the non-institutional creditagencies. The share of debt from the non-institutional credit agencies was 58 percent in thecase of lowest asset group of "less than Rs 5,000" as against a low of 19 percent in thehighest asset group of "Rs 2.5 lakh and above". Awareness of Schemes and Services of Micro Finance Institutes 17 | P a g e
  18. 18.  Share of Debt from Institutional and Non-institutional Sources, by Asset Holdings of Households: Household Assets Institutional Non-institutional ALL (Rs 000) Agency Agency Share as % Share as % Less Than 5 42 58 100 5-10 47 53 100 10-20 44 56 100 20-30 68 32 100 30-50 55 45 100 50-70 53 47 100 70-100 61 39 100 100-150 61 39 100 150-200 68 32 100 250 And Above 81 19 100 All Classes 64 36 100 (Source: Debt and Investment Survey, GoI, 1992) Over the decades following Indias independence in 1947, Government of India (GOI) has made concerted efforts to provide micro-finance to the rural poor through the formal financial sector namely the co-operatives. However, the limited success of the co-operatives in the mid fifties to the sixties forged the need for nationalization of commercial banks (CB) in 1971 and the establishment of a large network to reach every village, and every segment of the population. In the mid-1970s, Regional Rural Banks (RRB) was also established to continue further the outreach of the banking sector in reaching the rural poor. All these programs were supported by a policy of mandated credit programs for the low-income households that were supported by the Integrated Rural Development Program (IRDP), launched in 1980. The IRDP was designed to provide a mix of subsidy from the government and credit from the banking system to enable the asset acquisition of the poor. Awareness of Schemes and Services of Micro Finance Institutes 18 | P a g e
  19. 19. As a result of these programs, India has one of the largest banking networks in the world withclose to 50,000 CB outlets; 14,420 RRBs; and 90,000 primary agricultural co operativesocieties. Close to 43 percent of the CB, and RRB branches are located in the rural areas.Even more impressive is the fact that, there is a financial intermediary branch for every15,000 households, and a co-operative in every village.Due to the extensive expansion of the banking network and emphasis on lending to smallborrowers, there have been a lot of small loans by banks. In terms of amount, this was 13.2percent of the total credit outstanding from commercial banks and RRBs. As per RBI data forMarch 1994, the number of accounts below Rs 25,000 was 5.6 million, or 93.6 percent oftotal loan accounts, with 18.6 percent of the outstanding amount. Of these, accounts withoutstanding below Rs 7500 comprised 80.5 percent of the number of accounts and 49.5percent of amount outstanding. In terms of purpose, 45.8 percent of amount was for smallagricultural loans, 20.2 percent for industry and 18.8 percent for trade and services. By March1997, the number of small borrowable accounts with a credit limit below Rs 25,000, hadcome down by as many 0.6 million accounts to 5.0 million, or 90.1 percent of the outstandingloan accounts. This decline in number of accounts clearly shows the post liberalization trend,with banks concentrating their efforts on larger loans and becoming ever more reluctant toextend credit to small borrowers.While banks have been engaged in financing small borrowers, the manner in which this isbeing done can hardly be called micro-finance. The procedures are cumbersome, the staffunfriendly and the transaction costs high. Repeat loans, except for crop production, are rare,even for borrowers who have repaid fully. Furthermore, even though the many of the loansextended to the poor by the public sector financial institutions are subsidized, their ultimatecost to the borrowers is high: factoring in out-of-pocket costs, payments to middle men, wageand business loss due to time spent in getting the loan approved. Effectively, the total cost offunds to the borrower ranges between 22–30 percent as against the 12-14 percent nominallending rates specified for commercial bank loans below Rs 200,000. All this results in lowrepayment rates, leading to a vicious cycle of non-availability and non repayment. Awareness of Schemes and Services of Micro Finance Institutes 19 | P a g e
  20. 20.  Supply of Savings and Insurance Services: In the case of savings services, again while banks have provided access to a large number of small depositors, the demand is nowhere near being met, particularly for small frequent "recurring" deposits. Hence the poor turn to other means such as chits, bishis and savings mobilization companies like Peerless and Sahara. Many such companies are fly-by night and as a result, the poor lose their money. The RBI has tightened up deposit taking activity since 1997, but this has, perversely, also led to legitimate MFIs being not allowed to take deposits and thus provide savings services to the poor. Transaction costs of savings in formal institutions were as high as 10 percent for the rural poor, because of small average transaction size and distance of the bank from villages. The supply of insurance services to the poor has been increased substantially over the 1990s, and there are a large number of low premium schemes covering them against death, accidents, natural calamities, and loss of assets due to fire, theft, etc. However, the usage is limited by low awareness among the poor. Crop and livestock insurance, however, are quite expensive and their reach to the poor is negligible. Livestock and asset insurance was extended to the poor along with the IRDP subsidized loans, and thus remained scheme driven, with little awareness among the customers. Highlights of the Bharat Microfinance Report: Outstanding Portfolio (in Rs. Crore) SBLP 10,644 16,900 Sa-Dhan, 223 MFIs 3,456 5,954 Total 13,582 21,961 Client Outreach (in million persons) SBLP 16.01 21.57 Sa-Dhan, 223 MFIs 10.04 14.1 Total 24.55 33.55 Awareness of Schemes and Services of Micro Finance Institutes 20 | P a g e
  21. 21. Sa-Dhan Quick-data set is the most timely – the quickest – of any segment of the financial sector. India Microfinance is proud to take once again the lead in disclosing performance over the last financial year which ended on 31st March 2008. Highlights recorded are Growth of MFI- loan portfolios passed 70% annually between March 2006 and March 2008. The strongest impulse came from medium – often urban – MFIs in 2006/07 and from large MFIs in 2007/08. Indian MFIs are true to their mission of serving the poor strata of society. A stable 8 out of 10 clients have been provided loans sized less than Rs. 10,000. The loan segment between Rs. 5,000 and Rs 10,000 has been growing strongest. This can be explained by two impulses: On one hand, microfinance customers mature to bigger loans over the loan cycles. On the other hand, urban microfinance starts with comparatively bigger loans than rural finance. Indian MFIs serve 4.1 million clients from the SC/ST background. The reported number of SC/ST has been growing alongside the rate of total outreach, thus the SC/ST-share is stable at 3 out of 10 clients. Indias MFIs operate in 209 out of 331 poorest districts of the country; up by 5% over the previous year. Large MFIs are particularly active in expanding their operations to the poorest districts; many of them serving poorest than other districts. Urban Microfinance is emerging as a strong growth driver; between March 2006 and March 2008, 1 out of 3 new clients was from the urban background. One Quarter of all MFI clients is from the urban background. Moreover, the microfinance bill excludes the larger, and more rapidly growing part of the sector: One of the major omissions in the bill is that it excludes MFIs registered as NBFCs and S 25 companies, which account for nearly all the large MFIs, and the larger part of total microcredit in the country. Their number is steadily increasing, as more and NGO-MFIs transform themselves into companies for the reasons discussed above. The argument usually adduced for keeping NBFCs outside the purview of the bill is that they are already regulated by the RBI. Awareness of Schemes and Services of Micro Finance Institutes 21 | P a g e
  22. 22.  Percentage distribution of debt among indebted labor households by source of debt: Sr.no. Source of debt Households With cultivated Without cultivated All land land 1 Government 4.99 5.76 5.37 2 Co-operative societies 16.78 9.46 13.09 3 Banks 19.91 14.55 17.19 4 employers 5.35 8.33 6.86 5 Money lenders 28.12 35.23 31.70 6 Shop keepers 6.76 7.47 7.13 7 Relatives/friends 14.58 15.68 15.14 8 Other sources 3.51 3.52 3.52 Total 100 100 100 Source: Rural labor enquiry report on indebtedness among rural labor households (55th Round of N.S.S.) 1999-2000 The table above reveals that most of the rural labor households prefer to raise loan from the non- institutional sources. About 64% of the total debt requirement of these households was met by the non-institutional sources during 1999-2000. Money lenders alone provided debt (Rs.1918) to the tune of 32% of the total debt of these households as against 28% during 1993- 94. Relatives and friends and shopkeepers have been two other sources which together accounted for about 22% of the total debt at all-India level. The institutional sources could meet only 36% of the total credit requirement of the rural labor households during 1999-2000 with only one percent increase over the previous survey in 1993-94. Among the institutional sources of debt, the banks continued to be the single largest source of debt meeting about 17 percent of the total debt requirement of these households. In comparison to the previous enquiry, the dependence on co-operative societies has increased considerably in 1999-2000. During 1999-2000 as much as 13% of the debt was raised from this source as against 8% in 1993-94. However, in the case of the banks and the government agencies it decreased marginally from 18.88% and 8.27% to 17.19% and 5.37% respectively during 1999-2000 survey. Awareness of Schemes and Services of Micro Finance Institutes 22 | P a g e
  23. 23. 3.4 Banking Expansion:Starting in the late 1960s, India was the home to one of the largest state interventions in therural credit market. This phase is known as the “Social Banking” phase. It witnessed thenationalization of existing private commercial banks, massive expansion of branch network inrural areas, mandatory directed credit to priority sectors of the economy, subsidized rates ofinterest and creation of a new set of regional rural banks (RRBs) at the district level and aspecialized apex bank for agriculture and rural development (NABARD) at the national level.The Net State Domestic Product (NSDP) is a measure of the economic activity in the state andcomparing it with the utilization of bank credit or bank deposits indicates how much economicactivity is being financed by the banks and whether there exists untapped potential forincreasing deposits in that state.E.g. In the year 2003-2004 the percentage of bank deposits to NSDP is pretty high ataround75%-80% in Bihar and Jharkhand or these states are not as under banked as thought tobe.2.5 Microfinance Social Aspects Micro financing institutions significantly contributed togender equality and women‟s empowerment as well as poor development and civil societystrengthening. Contribution to women‟s ability to earn an income led to their economicempowerment, increased well being of women and their families and wider social and politicalempowerment. Microfinance programs targeting women became a major plank of povertyalleviation and gender strategies in the 1990s. Increasing evidence of the centrality of genderequality to poverty reduction and women‟s higher credit repayment rates led to a generalconsensus on the desirability of targeting women. Awareness of Schemes and Services of Micro Finance Institutes 23 | P a g e
  24. 24. FinancialInstitution SHG SHG Donors MFI SHG Private equity Awareness of Schemes and Services of Micro Finance Institutes 24 | P a g e
  25. 25. 4.1 PROBLEM OF STUDY: To know the awareness of schemes and services of Micro Finance Institutes Among Surat City. 4.2 OBJECTIVES OF THE PROJECT: To know exact and depth concept of the Micro Finance. To apply theoretical knowledge of Finance subject in practical way in business field. To know the working methodology of microfinance in India. To gain knowledge about functioning of microfinance with the help of participating organization of Micro Finance A brief analysis of various institutions providing financial assistance to poor people. Assessing development impact of microfinance programs on various aspect like poverty, economy etc. Analyze the various kinds of effects of microfinance institution. To know how the women can be empowered through these microfinance programs. 4.3 RESEARCH DESIGN: There are three types of research design. 1. Exploratory research design 2.descriptive research design. 3. Casual research design. Here Descriptive Research Design is opted. Descriptive Research focuses on particular aspects or dimension for formulating more sophisticated study. Like here we only considering schemes and services of MFIs. Descriptive Research provides data about population being studied. Awareness of Schemes and Services of Micro Finance Institutes 25 | P a g e
  26. 26. 4.4 DATA COLLECTION:Research Methodology means tools and method used by researcher to gathering data andanalyzing them. The data can be collected mainly by two types of methods primary andsecondary data here researcher use primary data.PRIMARY DATA:The data which are collected by own and are not been collected by any other person in thepast are known as primary data. Here researcher collects data through structuralquestionnaire.4.5 SAMPLING:Sampling includes all the activity related to the how, when, from whom we collectinformation.4.5.1 Sampling Method:Here researcher used convenient and random sampling Method.4.5.2 Sample Size:Researcher uses 200 people out of total population so sample size is 200.4.5.3 Target Population:In this study target population is General people.4.5.4 Time Period:For this study time period is 2 month.4.5.5 Geographical Area:Here researcher selects varachha region in Surat city. Awareness of Schemes and Services of Micro Finance Institutes 26 | P a g e
  27. 27. 4.6 BENEFITS OF STUDY: This study will help to know the view of customer towards the microfinance. For this study MFIs know how to improve their performance and market potential for MFIs. For this we are easily know customer requirement and their preference For this study we can know the approaches of bank towards MFIs. For this we can easily know the customer approach.4.7 SCOPE OF THE STUDY:1. There is Huge demand and supply gap.2. Employment opportunity.3. Huge un-tapped Market.4. Opportunity for Pvt. Banks, NBFCs, Foreign Banks to enter this business segment.5. High number of people access to informal sources of finance.6. Concentrating on few people only and mainly in urban areas.4.8 LIMITATION OF STUDY:1. Primary data: for the collection of data the questionnaire is used but it takes more time to collect data as compare to the secondary one.2. Lack of reference: for studying the topic in depth more information are require but to fill up the questionnaire decide sample frame is very difficult.3. Micro Finance is very vast topic so it‟s not possible to connect each and every aspects of this topic into my project and it is not possible to collect all the data and information necessary for the deep study as certain data and documents were confidential. Awareness of Schemes and Services of Micro Finance Institutes 27 | P a g e
  28. 28. 5.1 INTRODUCTION: Microfinance is defined as any activity that includes the provision of financial services such as credit, savings, and insurance to low income individuals which fall just above the nationally defined poverty line, and poor individuals which fall below that poverty line, with the goal of creating social value. The creation of social value includes poverty alleviation and the broader impact of improving livelihood opportunities through the provision of capital for micro enterprise, and insurance and savings for risk mitigation and consumption smoothing. A large variety of actors provide microfinance in India, using a range of microfinance delivery methods. Since the ICICI Bank in India, various actors have endeavored to provide access to financial services to the poor in creative ways. Governments also have piloted national programs, NGOs have undertaken the activity of raising donor funds for on-lending, and some banks have partnered with public organizations or made small inroads themselves in providing such services. This has resulted in a rather broad definition of microfinance as any activity that targets poor and low-income individuals for the provision of financial services. The range of activities undertaken in microfinance include group lending, individual lending, the provision of savings and insurance, capacity building, and agricultural business development services. Whatever the form of activity however, the overarching goal that unifies all actors in the provision of microfinance is the creation of social value.5.2 WHAT IS MICRO FINANCE? According to International Labor Organization (ILO), “Microfinance is an economic Development approach that involves providing financial services through institutions to low Income clients”. In India, Microfinance has been defined by “The National Microfinance Taskforce, 1999” as “provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards”. "The poor stay poor, not because they are lazy but because they have no access to capital." The dictionary meaning of „finance‟ is management of money. The management of money denotes acquiring & using money. Micro Finance is buzzing word, used when financing for micro entrepreneurs. Concept of micro finance is emerged in need of meeting special goal to empower under-privileged class of society, women, and poor, downtrodden by natural reasons or men made; caste, creed, religion or otherwise. The principles of Micro Finance are Awareness of Schemes and Services of Micro Finance Institutes 28 | P a g e
  29. 29. founded on the philosophy of cooperation and its central values of equality, equity and mutual self-help. At the heart of these principles are the concept of human development and the brotherhood of man expressed through people working together to achieve a better life for themselves and their children. Traditionally micro finance was focused on providing a very standardized credit product. The poor, just like anyone else, (in fact need like thirst) need a diverse range of financial instruments to be able to build assets, stabilize consumption and protect themselves against risks. Thus, we see a broadening of the concept of micro finance--- our current challenge is to find efficient and reliable ways of providing a richer menu of micro finance products. Micro Finance is not merely extending credit, but extending credit to those who require most for their and their family‟s survival. It cannot be measured in term of quantity, but due weighting to quality measurement. How credit availed is used to survive and grow with limited means. Who are the clients of Micro Finance? The typical micro finance clients are low-income persons that do not have access to formal financial institutions. Micro finance clients are typically self-employed, often household- based entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as food processing and petty trade. In urban areas, micro finance activities are more diverse and include shopkeepers, service providers, artisans, street vendors, etc. Micro finance clients are poor and vulnerable non- poor who have a relatively unstable source of income. Access to conventional formal financial institutions, for many reasons, is inversely related to income: the poorer you are the less likely that you have access. On the other hand, the chances are that, the poorer you are, the more expensive or onerous informal financial arrangements. Moreover, informal arrangements may not suitably meet certain financial service needs or may exclude you anyway. Individuals in this excluded and under-served market segment are the clients of micro finance. As we broaden the notion of the types of services micro finance encompasses, the potential market of micro finance clients also expands. It depends on local conditions and political climate, activeness of cooperatives, SHG & NGOs and support mechanism. For instance, micro credit might have a far more limited market scope than say a more diversified range of Awareness of Schemes and Services of Micro Finance Institutes 29 | P a g e
  30. 30. financial services, which includes various types of savings products, payment and remittance services, and various insurance products. For example, many very poor farmers may not really wish to borrow, but rather, would like a safer place to save the proceeds from their harvest as these are consumed over several months by the requirements of daily living. Central government in India has established a strong & extensive link between NABARD (National Bank for Agriculture & Rural Development), State Cooperative Bank, District Cooperative Banks, Primary Agriculture & Marketing Societies at national, state, district and village level.5.3 NEED FOR MICRO FINANCE:  India is said to be the home of one third of the world‟s poor; official estimates range from 26 to 50 percent of the more than one billion population.  About 87 percent of the poorest households do not have access to credit.  The demand for microcredit has been estimated at up to $30 billion; the supply is less than $2.2 billion combined by all involved in the sector.  Due to the sheer size of the population living in poverty, India is strategically significant in the global efforts to alleviate poverty and to achieve the Millennium Development Goal of halving the world‟s poverty by 2015.  Microfinance has been present in India in one form or another since the 1970s and is now widely accepted as an effective poverty alleviation strategy.  Over the last five years, the microfinance industry has achieved significant growth in part due to the participation of commercial banks. Despite this growth, the poverty situation in India continues to be challenging.  Some principles that summarize a century and a half of development practice were encapsulated in 2004 by Consultative Group to Assist the Poor (CGAP) and endorsed by the Group of Eight leaders at the G8 Summit on June 10, 2004:  Poor people need not just loans but also savings, insurance and money transfer services.  Microfinance must be useful to poor households: helping them raise income, build up assets and/or cushion themselves against external shocks. Awareness of Schemes and Services of Micro Finance Institutes 30 | P a g e
  31. 31.  “Microfinance can pay for itself.” Subsidies from donors and government are scarce and uncertain, and so to reach large numbers of poor people, microfinance must pay for itself. Microfinance means building permanent local institutions. Microfinance also means integrating the financial needs of poor people into a country‟s mainstream financial system. “The job of government is to enable financial services, not to provide them.” “Donor funds should complement private capital, not compete with it.” “The key bottleneck is the shortage of strong institutions and managers.” Donorsshould focus on capacity building. Interest rate ceilings hurt poor people by preventing microfinance institutions from covering their costs, which chokes off the supply of credit. Microfinance institutions should measure and disclose their performance – both financially and socially. Microfinance can also be distinguished from charity. It is better to provide grants to families who are destitute, or so poor they are unlikely to be able to generate the cash flow required to repay a loan. This situation can occur for example, in a war zone or after a natural disaster. Awareness of Schemes and Services of Micro Finance Institutes 31 | P a g e
  32. 32. 5.3.1 Financial needs and services:In developing economies and particularly in the rural areas, many activities that would beclassified in the developed world as financial are not monetized: that is, money is not used tocarry them out. Almost by definition, poor people have very little money. But circumstancesoften arise in their lives in which they need money or the things money can buy. In StuartRutherford‟s 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, primarilythrough creating and exchanging different forms of non-cash value. Common substitutes forcash vary from country to country but typically include livestock, grains, jewelers andprecious metals. As Marguerite Robinson describes in The Microfinance Revolution, the1980s demonstrated that “microfinance could provide large-scale outreach profitably,” andin the 1990s, “microfinance began to develop as an industry”. In the 2000s, the microfinanceindustry‟s objective is to satisfy the unmet demand on a much larger scale, and to play a rolein reducing poverty. While much progress has been made in developing a viable,commercial microfinance sector in the last few decades, several issues remain that need tobe addressed before the industry will be able to satisfy massive worldwide demand.The obstacles or challenges to building a sound commercial microfinance industry include: Inappropriate donor subsidies Poor regulation and supervision of deposit-taking MFIs Few MFIs that mobilize savings Limited management capacity in MFIs Institutional inefficiencies. Need for more dissemination and adoption of rural, agricultural microfinance. Awareness of Schemes and Services of Micro Finance Institutes 32 | P a g e
  33. 33. 5.4 BENIFITS OF MICRO FINANCE: Customarily, one had to apply for a loan in order to start a business, but that proved to be an obstacle to people with poor credit. However, microfinance institutions now offer basic financial services like savings, insurance and loans to unprivileged people. Microfinance institutions provide such services to the less fortunate; it can be a commercial bank, credit union, credit cooperative, or a financial non-government organization. Provide access to funding Typically, the less privileged acquire financial services such as loans through an informal relationship, which might prove to be costly and unreliable. In addition, most banks do not view the unprivileged as viable clients due to employment history or unstable credit and lack of financial security. Microfinance institutions often dismiss such requirements by providing small loans at flexible rates. Encourage self-sufficiency and entrepreneurship Unprivileged people might have profitable business plans, but they lack sufficient funds to meet the start-up costs. These loans give clients enough capital to get their plans off the ground and then begin turning revenue. They can pay off their loans in time then continue to gain revenue from the business indefinitely. Manage risk Microfinance can give unprivileged people enough capital stability, which gives them financial security from sudden monetary problems. Also, savings allow for improved nutrition, reduced illness, better living conditions and educational investment. Empower Women Microcredit also empowers women since they are the major beneficiaries. In the past, women were not able to participate in economic activities. Microfinance institutions now provide women with the capital they require to start business projects. This gives them more confidence and allows them to participate in decision making, thereby encouraging gender equality. Awareness of Schemes and Services of Micro Finance Institutes 33 | P a g e
  34. 34. 5.5 MICRO FINANCE PRODUCT:Micro Credit:It is a small amount of money loaned to a client by a bank or other institution.Microcredit can be offered, often without collateral, to an individual or through grouplending.Micro Savings:These are deposit services that allow one to save small amounts of money for future use.Often without minimum balance requirements, these savings accounts allow households tosave in order to meet unexpected expenses and plan for future expenses.Micro Insurance:It is a system by which people, businesses and other organizations make a payment to sharerisk. Access to insurance enables entrepreneurs to concentrate more on developing theirbusinesses while mitigating other risks affecting property, health or the ability to work.Remittance:These are transfer of funds from people in one place to people in another, usually acrossborders to family and friends. Compared with other sources of capital that can fluctuatedepending on the political or economic climate, remittances are a relatively steady source offunds. Awareness of Schemes and Services of Micro Finance Institutes 34 | P a g e
  35. 35. 5.6 MICRO FINANCE INSTITUTIONS: 5.6.1 Working method of micro finance institute:  Role of micro finance:The micro credit of microfinance programmed was first initiated in the year 1976 inBangladesh with promise of providing credit to the poor without collateral , alleviatingpoverty and unleashing human creativity and endeavor of the poor people. Microfinanceimpact studies have demonstrated that Microfinance helps poor households meet basic needsand protects them against risks.The use of financial services by low-income households leads to improvements in householdeconomic welfare and enterprise stability and growth. By supporting women‟s economicparticipation, microfinance empowers women, thereby promoting gender-equity andimproving household well being. The level of impact relates to the length of time clients havehad access to financial services.  The Origin of Micro Finance:Although neither of the terms microcredit or microfinance were used in the academicliterature nor by development aid practitioners before the 1980s or 1990s, respectively, theconcept of providing financial services to low income people is much older. While theemergence of informal financial institutions in Nigeria dates back to the 15th century, theywere first established in Europe during the 18th century as a response to the enormousincrease in poverty since the end of the extended European wars (1618 – 1648). In 1720 thefirst loan fund targeting poor people was founded in Ireland by the author Jonathan Swift.After a special law was passed in 1823, which allowed charity institutions to become formalfinancial intermediaries a loan fund board was established in 1836 and a big boom wasinitiated. Their outreach peaked just before the government introduced a cap on interest ratesin 1843. At this time, they provided financial services to almost 20% of Irish households.The credit cooperatives created in Germany in 1847 by Friedrich Wilhelm Raiffeisen‟sserved 1.4 million people by 1910. He stated that the main objectives of these cooperatives Awareness of Schemes and Services of Micro Finance Institutes 35 | P a g e
  36. 36. “should be to control the use made of money for economic improvements, and to improvethe moral and physical values of people and also, their will to act by themselves.”In the 1880s the British controlled government of Madras in South India, tried to use theGerman experience to address poverty which resulted in more than nine million poor Indiansbelonging to credit cooperatives by 1946. During this same time the Dutch colonialadministrators constructed a cooperative rural banking system in Indonesia based on theRaiffeisen‟s model which eventually became Bank Rakyat Indonesia (BRI), now known asthe largest MFI in the world.  Micro Finance Today:In the 1970s a paradigm shift started to take place. The failure of subsidized government ordonor driven institutions to meet the demand for financial services in developing countries letto several new approaches. Some of the most prominent ones are presented below. BankDagan Bali (BDB) was established in September 1970 to serve low income people inIndonesia without any subsidies and is now “well-known as the earliest bank to institutecommercial microfinance”. While this is not true with regard to the achievements made inEurope during the 19th century, it still can be seen as a turning point with an ever increasingimpact on the view of politicians and development aid practitioners throughout the world. In1973 ACCION International, a United States of America (USA) based nongovernmentalorganization (NGO) disbursed its first loan in Brazil and in 1974 Professor MuhammadYunus started what later became known as the Grameen Bank by lending a total of $27 to 42people in Bangladesh. One year later the Self-Employed Women‟s Association started toprovide loans of about $1.5 to poor women in India. Although the latter examples still weresubsidized projects, they used a more business oriented approach and showed the world thatpoor people can be good credit risks with repayment rates exceeding 95%, even if the interestrate charged is higher than that of traditional banks. Another milestone was thetransformation of BRI starting in 1984. Once a loss making institution channelinggovernment subsidized credits to inhabitants of rural Indonesia it is now the largest MFI inthe world, being profitable even during the Asian financial crisis of 1997 – 1998.In February 1997 more than 2,900 policymakers, microfinance practitioners andrepresentatives of various educational institutions and donor agencies from 137 different Awareness of Schemes and Services of Micro Finance Institutes 36 | P a g e
  37. 37. Countries gathered in Washington D.C. for the first Micro Credit Summit. This was the startof a nine yearlong campaign to reach 100 million of the world poorest households with creditfor self employment by 2005. According to the Microcredit Summit Campaign Report67,606,080 clients have been reached through 2527 MFIs by the end of 2002, with41,594,778 of them being amongst the poorest before they took their first loan. Since thecampaign started the average annual growth rate in reaching clients has been almost 40percent. If it has continued at that speed more than 100 million people will have access tomicrocredit by now and by the end of 2005 the goal of the microcredit summit campaignwould be reached. As the president of the World Bank James wolfensohn has pointed out,providing financial services to 100 million of the poorest households means helping as manyas 500 – 600 million poor people.5.6.2 Strategic policy initiative:Some of the most recent strategic policy initiatives in the area of Microfinance taken by thegovernment and regulatory bodies in India are:Working group on credit to the poor through SHGs, NGOs, NABARD, 1995The National Microfinance Taskforce, 1999Working Group on Financial Flows to the Informal Sector (set up by PMO), 2002Microfinance Development and Equity Fund, NABARD, 2005Working group on Financing NBFCs by Banks- RBI. Awareness of Schemes and Services of Micro Finance Institutes 37 | P a g e
  38. 38. 5.7 INDIA TOP MICRO FINANCE INSTITUTIONS:Sr.no. Name of MICRO FINANCE INSTITUTE 1. SKS Micro Finance Ltd (SKSMPL) 2. Spandana Sphoorty pvt Ltd (SSFL) 3. Share Microfin Ltd (SML) 4. Asmitha Microfin Ltd (AML) 5. Shri Kshetra Dharmashala Rural Development Project (SKDRDP) 6. Bharatiya Samruddhi Finance Ltd (BSFL) 7. Bandhan 8. Cashpor Micro Credit (CMC) 9. Grama Vidiyal Micro Finance Pvt Ltd (GVMFL) 10. Grammen Financial Service Pvt Ltd (GFSPL) 11. Madura Micro Finance Ltd (MMFL) 12. BSS Micro Finance Pvt Ltd (BMPL) 13. Equitas Micro Finance India Pvt Ltd (Equitas) 14. Bandhan Financial Service Pvt Ltd (BFSPL) 15. Sarvodaya Nano Finance Ltd (SNFL) 16. BWDA Finance Limited (BFL) 17. Ujjivan Financial Services Pvt Ltd (UFSPL) 18. Future financial Services Ltd (FFSL) 19. ESAF Microfinance Investments Pvt Ltd (EMFIL) 20. S.M.I.L.E Micro Finance Ltd 21. SWAWS Credit Corporation India Pvt Ltd (SCCI) 22. Sanghmithra Rural Financial Services (SRFS) 23. Saadhana Microfin Society (Saadhana) 24. Gram Utthan Awareness of Schemes and Services of Micro Finance Institutes 38 | P a g e
  39. 39. 25. Rashtriya Seva Samithi (RASS)26. Sahara Utsarga Welfare Society (SUWS)27. Sonata Finance Pvt Ltd (Sonata)28 Rashtriya Gramin Vikas Nidhi (CSP)29. Arohan Financial Services Ltd (AFSL)30. Janlakshmi Financial Services Pvt Ltd (JFSPL)31. Annapurana Financial Services Pvt Ltd (Annapurana)32. Hand in Hand Tamil nadu (HiH)33. Payakaraopeta Women‟s Mutually Aided Co-operative Thrift and Credit Society (PWMACTS)34. Aadarsh Welfare Society (AWS)35. Adhikar36. Village Financial Services Pvt Ltd (VFSPL)37. Sahara Uttarayan38. RORES Micro Entrepreneur Development Trust (RMEDT)39. Centre For Rural Reconstruction through Social Action (CReSA)40. Indur Intideepam Macs Federation Ltd (IIMF)41. Welfare Organisation For Multipurpose Mass Awareness Network (WOMAN)42. Initiative For Development Foundation (IDF)43. Swayamshree Micro Credit Services (SMCS)44. Janodaya Trust45. Community Development Centre (CDC) Awareness of Schemes and Services of Micro Finance Institutes 39 | P a g e
  40. 40. 5.8 MAJOR SCHEMES OFFERED BY MFIs:1. GIDKA (Group Insurance Scheme for Khadi Artisan)With a view to provide safe and secured life to Khadi Artisan a Group Insurance Scheme forKhadi Artisans has been introduced. The Scheme covers all the spinners, weavers, prespinning artisans and post-weaving artisans engaged in Khadi activity, associated with KhadiInstitutions (NGO‟s) throughout the Country. Contribution: Under the scheme, a yearlycontribution of Rs. 200 is made per artisan out of which Rs. 25 is paid by the Artisan and restis borne by Khadi Institution (NGO), CKVI and Social Security Fund of Government ofIndia.2. DRDA (The District Rural Development Agency)The district Rural Development Agency is visualized as specialized and professional agencycapable of managing the anti-poverty programmes of the Ministry of Rural Development onthe one hand and to effectively relate these to the overall effort of poverty eradication in thedistrict.3. NIRD (National Institute of Rural Development)National Institute of Rural Development (NIRD) facilitates rural development throughgovernment and non-governmental initiatives. NIRD is the country‟s apex body forundertaking training, research, action and consultancy functions in the rural developmentsector. It works as an autonomous organization supported by the Ministry of RuralDevelopment, Government of India.4. NRRDA (National Rural Road Development)Construction of rural roads brings multifaceted benefits to the hitherto deprived rural areasand also an effective poverty reduction strategy. Pradhan Mantri Gram Sadak Yojana Awareness of Schemes and Services of Micro Finance Institutes 40 | P a g e
  41. 41. (PMGSY) was taken up by the Government of India with an objective to provide connectivityto the unconnected Habitations in the rural areas. In 2002 the National Rural RoadsDevelopment Agency (NRRDA) was established to extend support to PMGRY throughadvice on technical specifications, project appraisal and management of a system of NationalQuality Monitors, Management of Monitoring Systems and submission of Periodic Reports tothe Ministry of Rural Development.5. CAPART (Council for Advancement of People‟s Action and Rural Technology)Council for Advancement of People‟s Action and Rural Technology (CAPART) is anautonomous body registered under the Societies Registration Act, 1860 and is functioningunder the aegis of the Ministry of Rural Development. CAPART is involved in catalyzingand co-coordinating the emerging partnership between Voluntary Organizations and theGovernment of India for sustainable development of Rural Areas.6. RIDF (Rural Infrastructure Development Fund)Beneficiaries:It provides by State Governments, Panchayat Raj Institutions (PRIs), Non- GovernmentalOrganizations‟ (NGOs) and Self-Help Groups (SHGs). Activities Covered: Primary Schools,Primary Health Centres, Village Haats, Joint Forest Management, Terminal and RuralMarket, Rain Water Harvesting, Fish Jetties, Mini Hydel and System Improvement Projectsin Power Sector, Rural Drinking Water Supply Scheme, Citizen Information Centres,Anganwadi Centres and Shishu Shiksha Kendras.Methodology:All new “project concepts” received are placed before the Projects Sanctioning Committee(PSC) for the approval before accepting detailed projects. Awareness of Schemes and Services of Micro Finance Institutes 41 | P a g e
  42. 42. Data Analysis of Questionnaire: 1. Which alternative do you prefer to get financial help? Institutes no. of % of Respondent respondent Government Subsidies 40 20 private institute 50 25 MFIs 20 10 Bank loan 90 45 Other 0 0 Total 200 100 no.of respondent and % no.of respondent 90 50 40 20 0 Govrnment Subsidies private institute MFIs Bank loan OtherInterpretation:From above chart it is clear that Most of people are used to get financial help from Bank as Bank Loanand it‟s about 22.5% and about 12.5%, 10% and 5% from private institute, government subsidies andMFIs respectively. Awareness of Schemes and Services of Micro Finance Institutes 42 | P a g e
  43. 43. 2. Do you know which agency provide MF? Institutes no. of % of respondent respondent NGO 30 15 SHG Federation 40 20 Bank 80 40 All of above 50 25 Total 200 100 no.of respondent and % no.of respondent 80 50 40 30 NGO SHG Federation Bank All of aboveInterpretation:From above it is clear that 25% of people are aware about all agencies which Micro Finance andrest are known about only few agencies as 40%, 20%, 15% of people aware about Bank, SHG-federation and NGO respectively. Awareness of Schemes and Services of Micro Finance Institutes 43 | P a g e
  44. 44. 3. How do you come to know about MFIs? source no of % of respondent respondent Through reference 120 60 Advertisement 68 34 Internet 92 46 Radio 88 44 T.V 122 61 Other 0 0 Total 200 100 no.of respondent and % no of respondent 120 122 92 88 68 0 Through Advertisement Internet Radio T.V Other referenceInterpretation:Most of people are come to know about Micro Finance institutes through reference and TV and46%, 44% and 34% of people are from internet, radio and advertisement. So, TV and reference areeffective source of MFIs to spread awareness Awareness of Schemes and Services of Micro Finance Institutes 44 | P a g e
  45. 45. 4. Have you ever use micro finance from any MFIs? yes no Total no. of respondent 16 184 200 % of respondent 8 92 100 % of respondent 8% yes no 92%Interpretation:From the above chart it is clear that only 8% of population is using Micro Finance fromMicro Finance Institutes. Awareness of Schemes and Services of Micro Finance Institutes 45 | P a g e
  46. 46. 5. Are you aware about basic lending methodology that followed by the MFIs? yes no total no. of respondent 32 168 200 % of respondent 16 84 100 % of respondent 16% yes no 84%Interpretation:Most of people (84% of people) are not aware about basic lending methodology used by MicroFinance Institutes; however 16% of people are aware about basic lending methodology which ismore than uses of Micro finance. Awareness of Schemes and Services of Micro Finance Institutes 46 | P a g e
  47. 47. 6. Which basic lending methodology do you know for providing MF? no. of % of respondent respondent Grameen bank 9 28.13 ASA methodology 5 15.63 Village banking 9 28.13 Individual lending 11 34.38 Other 0 0 no.of respondent and % no.of respondent 11 9 9 5 0 Grameen bank ASA methodology Village banking Individual lending OtherInterpretation:From the above chart we can say that Individual Methodology is well known because itsawareness is 34% which is more than rest of. Also 28% of people are aware about Grameenbank and village banking Methodology. Awareness of Schemes and Services of Micro Finance Institutes 47 | P a g e
  48. 48. 7. Are you aware about different Schemes offered by MFIs? yes no Total no. of respondent 30 170 200 % of respondent 15 85 100 % of respondent 15% yes no 85%Interpretation:As usual, from the above chart we can conclude that only 15% of people are aware about differentSchemes which are offered by various Micro Finance Institutes. Awareness of Schemes and Services of Micro Finance Institutes 48 | P a g e
  49. 49. 8. If yes which schemes do you aware about that MFIs provided for rural development purpose? no. of respondent % of respondent GIDKA (Group Insurance Scheme for Khadi 18 60 Artisan) DRDA (The District Rural Development 8 26.67 Agency)NIRD (National Institute of Rural Development) 4 13.33 NRRDA (National Rural Road Development) 10 33.33CAPART (Council for Advancement of People‟s 8 26.67 Action and Rural Technology)RIDF (Rural Infrastructure Development Fund) 6 20 RIF (Rural Innovation Fund) 4 13.33 Other 0 0 no.of respondent and % no.of respondent 18 10 8 8 6 4 4 0 GIDKA (Group DRDA (The NIRD NRRDA CAPART RIDF (Rural RIF (Rural Other Insurance District Rural (National (National (Council for Infrastructure Innovation Scheme for Development Institute of Rural Road Advancement Development Fund) Khadi Artisan) Agency) Rural Development) of People’s Fund) Development) Action and Rural Technology)Interpretation:Here we can see that 60% of people are aware about GIDKA scheme and 33%, 26%, 26% ofpeople are aware about NRRDA, RIDF and DRDA schemes provided by MFIs. Other schemes arenot very much aware to the people as compare to above. Awareness of Schemes and Services of Micro Finance Institutes 49 | P a g e
  50. 50. 9. Are you aware about different product/services provided by MFIs? yes no Total no. of respondent 44 156 200 % of respondent 22 78 100 22% yes no 78%Interpretation:From above we can say that Most of people (78% of people) are not aware about product andservices offered by Micro Finance Institutes only 22% of population is aware about Productand services. Awareness of Schemes and Services of Micro Finance Institutes 50 | P a g e
  51. 51. 10. Which Product/Services do you aware about provided by MFIs? no. of % of respondent respondent Insurance: Burial 6 13.64 Insurance: Property 12 27.27 Insurance: Medical 24 54.55 Credit loans/Business Loan 14 31.82 Credit Consumption 12 27.27 Housing Finance 24 54.55 Saving Plans 12 27.27 Training 6 13.64 Remittance 2 4.55 no.of respondent and % no.of respondent 24 24 14 12 12 12 6 6 2Interpretation:Insurance (Medical) and Housing Finance are most known product of Micro Finance. 27% ofpeople aware about product i.e. Insurance (property) credit consumption, saving plan. 32% ofpeople are aware about credit loan or business loan. Other services or product is not very muchfamiliar by people. Awareness of Schemes and Services of Micro Finance Institutes 51 | P a g e
  52. 52. 11. Which non-financial service do you know that provided by MFIs? no. of % of respondent respondent Financial literacy training 8 18.18 Skill training 18 40.91 Business management training 2 4.55 Record keeping training 10 22.73 Marketing 18 40.91 Technology improvement 2 4.55 Technical assistance 14 31.82 Technology transfer 6 13.64 Market Referrals 12 27.27 Market Link-aging 2 4.55 Other 0 0 no.of respondent and % no.of respondent 18 18 14 12 10 8 6 2 2 2 0 Awareness of Schemes and Services of Micro Finance Institutes 52 | P a g e

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