The document is a presentation on microfinance in India. It discusses the definition of microfinance and provides statistics on microfinance initiatives in India, including the number of districts and clients served. It also notes trends in loan amounts and growth rates. The presentation outlines some of the key issues and challenges faced by microfinance institutions, such as rapid growth and commercialization leading to lower quality services. It concludes by recommending strategies for microfinance institutions to manage risks and maintain proper systems.

1. Presented by:
Rohit Sethi
Jagan Institute Of Management studies,
Rohini, New Delhi
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2.  To know the extent to which microfinance
initiatives have made a enduring difference
on the inclusive growth of a country
 To recognize the need of micro finance and
its various dimensions on the service sector
 To analyze the critical issues associated with
microfinance
 To come up with the elucidations of the
troubles faced by MFIs
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3. Microfinance is defined as any activity that
includes the provision of financial services
such as credit, savings and insurance to low
income folks who fall just above the
nationality defined poverty line and poor
individuals who fall below that poverty line,
with the goal of creating social value.
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4.  MFIs operate in 517 districts in India spread across 27 states
 The total MFI client outreach as of March 2011 was 3.17 crores, while the
total microcredit outstanding was Rs. 2500 crores which have been
scrutinized to banks
 During 2010-11, the microfinance through MFI channel has grown 18.75
percent in 2011 in terms of client outreach and 13.15 percent in terms of
credit portfolio
 This year loan portfolio growth rate has decreased to 13.15 percent
compared to 56 percent in the previous year
 MFIs collectively disbursed Rs. 33730 crores as loans to clients during
2010-11. Also, the average loan per client stood at Rs. 5706, which is less
than that of Rs.9766 in the last year
 In 2010-11, more than one third of the MFIs displayed negative growth in
client and loan portfolio
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5. The committee headed by Sh. Y.H.Malegam was to
review the scope and objectives of regulations
governing MFIs with regard to :
 Interest rates
 Lending and recovery practices
 Applicability of existing money lending legislations
 Need for grievance redressed machinery
 And other issues concerning this sector
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6.  The NBFC-MFI to hold not less than 90% of its total assets (other
than cash and bank balances and money market instruments) in the
form of qualifying assets. The sub-committee also mentions that a
non NBFC-MFI cannot have loans to the microfinance sector
exceeding 10% of its total assets.
 Individual ceilings to loans to a single borrower of Rs.25, 000 is
applicable.
 Not less than 75% of the loans given by the MFI should be for
income-generating purposes.
 There is a restriction on the other services to be provided by the
MFI which has to be in accordance with the type of service and the
maximum percentage of total income as may be prescribed.
 All NBFC-MFIs to have a minimum net worth of Rs. 15 crores.
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7.  Ethical problems
 Managerial problems
 Legal problems
 Portfolio problems
 High staff turnover ratio
 Consistency problems
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8.  The desire for very rapid (burgeoning) growth
driven by the need to scale up outreach and
enhance financial access through full blown
commercialization has resulted in many MFIs
allowing these (not-so-good) practices (use of
agents to source and target clients, etc) to
creep into their organizations
 The desire for rapid growth and complete
commercialization thus appears to have led
many MFIs to cut corners and provide lower
quality services to its clients
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9.  Maintain proper MIS
 Internal Control System
 Managing financial risk
 Managing portfolio risk
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10.  Report “status of microfinance in India”, NABARD
 Dr. C.Rangarajan, chairman advisory council to the Prime Minister,
”Microfinance and its future directions”
 ‘de Aghion, Beatriz armetariz and Jonathan Mourduch. The economic of
microfinance, The MIT Press, Cambridge,Massachusetts
 The Changing Face Of Microfinance In India by Raven Smith
 Dicher, Thomas and Malcolm Harper. What’s Wrong With Microfinance
Institutions: Practical action
 Ledgerwood, Joana and Victor White. Transforming Microfinance
Institutions: Providing Full Financial Services To The Poor. World bank
 Mas, Ignacio and Kabir Kumar. Banking On Moblies: why, how and for
whom: CGAP Focus Note #48, july, 2008
 Churchil, Craig. Forthcoming. Individual Micro Lending Case Studies.
Toronto. Calmeadow.
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11.  Strategies for poverty alleviation through dovetailing the potential of
microfinance practices with non-timber forest products from
dipterocarps: Lesson from India by B.P.pethiya
 Indian Microfinance Investment Environment Profile by slavea
Chakova, Nathenael Goldberg, Genevieve Meltford, Hind Tazi and Shane
Tomlonson.
 Anil k Khandelwal,”Microfinance Development Strategy For India”’
Economic and Political Weekly
 Vikram Akula,” Business basics At the base of the pyramid” Harvard
Business Review, June 2008
 R Srinivas and M.S Sriram” Microfinance In India- Discussion”
 Piyush tiwari and S M Fahad, HDFC, “ Concept paper- Microfinance
Institutions In India”
 Annie Duflo, Research Co-ordinator, Centre For Micro Finance
Research, “ICICI banks The Poor in India”, Microfinance matters
 Whitepaper on Microfinance: Issues and Analysis by Sarvagya
Upadhyaya, Eric Mitchell, Srinath Reddy and Aaditeshwar Seth
 SIDBI microfinance reports accessed at
www.sidbi.com/micro/COCAUjjivan.pdf
 RBI official website accesses at www.rbi.org.in
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12. Thank you all for being such
a wonderful audience
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