1. “To study scope and possibilities for achieving financial inclusion through
Business correspondent relationship of bank with microfinance
Institution”
Guided by: Presented by:
Dr. Apurba Mukhrjee Divya Mishra
Assistant Professor, RGSC,BHU MBA-AB

2. INDUSTRY PROFILE-
 Concept of Microfinance - 1970s.
 Microfinance in India started in the early 1980s with small efforts at forming
informal .
 Founder- Mr. Mohammad Yunus
 First microfinance and community development bank- Shorebank (Chicago-
1974).
 STRUCTURE OF EXISTING MICROFINANCE INSTITUTIONS IN INDIA
80% of Indian Microfinance Institutions are predominantly NGOs.
10 % of organizations operate under the company structure.
5% are under section 25 companies (Section 25 of the Indian Companies Act,
1956).
2% as Cooperatives.
2% as Non Banking Finance Companies (NBFCs).
1% as Local Area Banks (LAB).

3. Models of Microfinance in India-
 There are 2 main models of micro credit in the country-
 Banking Model- In the case of the banking model self help groups are formed
and financed by banks. (As the ASA choose the BC Model )
 MFI Model- In MFI model self help groups are formed and financed by the MFIs
that obtain resource support from various channels.
 In India, majority of micro credit activity is under the ‘Banking model’
(NABARD’s Bank-SHG Linkage) and 10-15% of the activity is through ‘MFI
model’.

4. Company Profile
 ASSOCIATION FOR SOCIAL ADVANCEMENT (ASA).
 ASA INTERNATIONAL MICROFINANCE PVT. LTD. was established in 1978 by
Shafiqual Haque Choudhury in Bangladesh.
 In Bengali ASA means “Hope”
 In India ASAI was established in April 2007-with the mission of financially
empowering the poorest specially women & deprived population of the world.
 Currently has established microfinance operations in the Philippines, India,
Pakistan, Nigeria, Ghana, Kenya & Uganda. In Ghana & Nigeria microfinance
bank licenses have been acquired.

5. STRENGTHS
Cost effective
Sustainable
Microfinance ++ activity
Follow the spirit of the law
Amicable work environment to their employees
Help in reduce the poverty
Focus towards poor
WEAKNESS
Less number of workforce
Less promotional activities
OPPORTUNITIES
Scale up vast market
The Govt. priority to micro sector thereby scope to
spread out and add new product & services
The recent directive of RBI to convert it into
banking
With NBFCs acting as business corporate ,ASA can
join hands with Banks
THREATS
No expansion of special loan due to lack of funds
Loan amount is too small to create an enduring
asset
SWOT

6. Introduction about the Topic
In 2006, RBI permitted banks to use the services of non-governmental organizations,
microfinance institutions.
 Section 25 companies, and other civil society organizations as Business
Correspondents in providing financial and banking services.
 At present few leading NGOs/MFIs have adopted BC model to extend banking
facilities to the deprived sections of the society and bring them into the
mainstream of development.
 BUSINESS CORRESPONDENT SYSTEM-
 Business correspondents are bank representatives.
 They help villagers to open bank account
 Collect loan applications forward them to bank
 Help the bank to collect EMIs and recover loan money

7. 3 Important Initiatives Taken by RBI for
Financial Inclusion
1969  Lead banking scheme(lbs)
 RBI assigns a district to a particular
bank
 That bank will be responsible for
promoting banking services and
financial literacy in that district
2005  No frills account
 Poor people can open bank
accounts with very low balance
2006  Business correspondent system

8. BC MODEL
 In this model the interest rate is 24%.
 The eligibility criteria for selection as BCs
 Better infrastructure
 Customer base
 Appearance in the area
 The rate of BCs in relationship with financial inclusion
 The listed channels IDBI bank utilized as a BC
 SHGs
 MFIs
 IDBI bank imply information and communication based application for the BCs
 KYC norms enough for the level for which BCs are using to open a account
 Only ASA is working for the IDBI bank as business correspondent.
 The relationship of BCs with financial inclusion is good.
 BC model had started in ASA in march 2016.

9. ASA MODEL
 In this model the interest rate is 27%
 The application for second loan can be granted after repayment of first loan.
 The first instalment recovery starts after 7 days from the day of disbursement.
 According to ASA model processing fees are taken.
 The ASA model in ASA was started in INDIA from 2007.
 They do not help villagers to open bank accounts.(only provide loan)
 Create awareness about savings.
 Give advice to villagers, about how to save/invest money and how to
arrange/manage loans.
 Preliminary processing of loan applications for example: verification of person’s
identity, home-address etc.
 Help the Self Help Groups (SHG), to get loans.
 According to ASA model processing fees are taken.
 Nominee photo identification is required.

10. Objectives of the study-
 To study of BC model in financial institution.
 Relationship of bank with microfinance institution with respect to
BC model.
 Comparative analysis of ASA and BC model.
 Impact on financial inclusion due to various model.

11. Research Methodology
 Research Design – Descriptive
 Sampling Universe- Kolkata
 Sampling Frame- Rajarhat, Beliyaghata, Shyam Bazar, Tarakeshwar, Krishna
Nagar, Madhyam gram, Bongaon
 Population Size- 1795 (The target populations were the prime customers of ASAI
who took loan from 2014 to 2016 under the ASA and BC model)
 Sample Size- 212 clients (130 female clients who took the loan under the ASA
model and 82 clients who took the loan under the BC model)
 Sampling Technique – Convenience
 Sampling Unit- Female borrowers

12. Primary data- Through questionnaire
Secondary data- Relevant Books, Journals, Websites
Data collection technique- Questionnaire for clients

13. DATA ANALYSIS-
 No. of dependent in your family  Able to save from your wages (INR)
.
39%
61%
below 1000
1000-2000
0.5
5.7
26.1
40.8
22.3
0.9
0.9
0.5
0.5
1
2
3
4
5
6
7
8
9
0 10 20 30 40 50

14.  Indicate the type of account. (Under the
BC model)
 About Savings
loan
Frequency Percent
.
73%
27%
put in a bank
keep safe at
home

15.  Happy with the services offered by the
BCs.
 The BCs resides in the village and accessible
any time
71%
29% very satisfied
somewhat
satisfied
.
no

16.  Source would you prefer to fulfill your credit
requirement?
 Institution facility-
27%
73%
good
very good
44%
53%
3%
borrow from
friend
borrow from
bank
relative

17. Comparative analysis of BC and ASA model.
 ASAI model
 Village selection
 Group formation and training- Group leaders
President, cashier, secretary
 Group training by loan officer
 After that Documentation and disbursement
(Including disbursement schedule)
 Interest rate (27%), Processing fees (1%), Insurance charges (Rs 5)
 Monitoring and collection process
 Primary loan Special loan
 Loan duration-12 months Loan duration- 24 months
 Loan amount- Rs.1000-15000 Loan amount- 15000-30000
 Total no of installment weekly- 46
 Scheduled of field work
 Group meeting held in early morning (8-12am)

18. BC MODEL
 500 accounts open under the BC model.
 Group consists 5 members
 Open bank accounts at door step
 Bank account open by the bank IDBI
 Loan applications forward them to bank
 Verification of person’s identity and address by bank
 Documentation and disbursement of loan
 Interest rate (24%), processing fee (no), Insurance charges (rs. 5)
 First installment is 15000
 Recovery timeline is 50 weeks
 Application for second loan can be granted after the completion of first loan
 First installment recovery starts by next week

19. FINDINGS-
 Banks and BCs need to give more attention to the financial viability of the
channel. Currently, a lot of focus is on the number of accounts opened and
achieving the financial inclusion targets.
 In April, 2016, ASA adopted the BC model to work as BF. Before the BC model
these branches have more account but when they start the BC model the
number of account is increased.
 ASAI offers savings and credit products to its customers through the BC channel
(offered by the IDBI bank) and gets additional income for the operations. Banks
are able to achieve their financial inclusion mandate and at the same time earn
revenues from the BC operations because of higher account activity.
 Customers get access to a secure banking system and formal financial products
without the need to go to a bank branch. Because its important to save the
money and collect it in the account that is opened by the BCs.

20.  Increases in the number of bank accounts and the volume of loans and
deposits in areas that use the BC model could indicate there is now far greater
awareness of banking services.
 Comparative analysis shows that the BC model is best for the customers as well
as its beneficial for the financial inclusion.
 Financial inclusion the noble mantra of MFIs that has recently been recognized
as a corporate responsibility by business houses, hardly gets the much needed
through study.
 ASA model has its own significance and the role played is a great advantage for
financial inclusion. But, adding up to the BC model in ASA model has enhanced
the scope of financial inclusion.

21. Conclusion
 The study found that MFI- BC model of ASAI has successfully demonstrated
their viability. Comparatively better systems and procedures, better
supervisory mechanisms and closeness to the rural population have given
confidence to the banks to roll out more products, particularly loans, through
them.
 The success of ASAI as a BC comes from providing both savings and credit
services to their clients.
 The operational cost is reduced considerably as they are using existing branch
infrastructure.
 ASA has a large backup service program for customer education and creating
customer awareness and for other social interventions.

22. Suggestions-
 Realizing the full potential of the BC model
 Awareness issues among clients
 People are not aware about BC services
 Cash handling problem
 Role of Technology in Micro Finance
Limitations-
 Less time available to cover such vast topic.
 Behavior of people. Some people were not interested to fill the questionnaire.
 Even some respondents were not aware about all facilities.

23. Learnings from SIP
 Working process of microfinance organization
 Time management
 Communication within organization and outside organization
 Team work
 How poor people generate and increase their income through microfinance by
creating micro-enterprises.