Presentation includes Introduction to Microfinance Industry, Business Process, Strategies, Key Challenges, Future Outlook and Special Issues like Urban Microfinance & Rating of Microfinance Institutions
Presentation includes Introduction to Microfinance Industry, Business Process, Strategies, Key Challenges, Future Outlook and Special Issues like Urban Microfinance & Rating of Microfinance Institutions
The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost” in a fair and transparent manner by mainstream institutional players”
The Committee on Financial Inclusion
(Chairman: Dr. C. Rangarajan, 2008)
In advanced economies, Financial Inclusion is more about the knowledge of fair and transparent financial products and a focus on financial literacy.
In emerging economies, it is a question of both access to financial products and knowledge about their fairness and transparency.
This is a simple presentation about microfinance and important of it in developing country. I briefly described about service and impact of it.
I prepared it to present in university.
University of Economics in Katowice, Poland.
Suman Bhattarai (Nepal)
It gives u a brief details about what is micro finance, how it works, y there is need for such institutions, the NGO's involved and the different types of MFI involved. the steps taken by India for micro finance.
This is a overview of the business of banking, including retail, business and investment banking. We have also included introductions to other financial services like credit cards, credit rating agencies, mutual funds and the business processes used to process loan transactions, credit card payments, and a range of other banking services and products. Useful for anyone who would like an overview of the banking industry. Downloads will be allowed for 30 days. After that you can contact me if you would like the file.
The process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost” in a fair and transparent manner by mainstream institutional players”
The Committee on Financial Inclusion
(Chairman: Dr. C. Rangarajan, 2008)
In advanced economies, Financial Inclusion is more about the knowledge of fair and transparent financial products and a focus on financial literacy.
In emerging economies, it is a question of both access to financial products and knowledge about their fairness and transparency.
This is a simple presentation about microfinance and important of it in developing country. I briefly described about service and impact of it.
I prepared it to present in university.
University of Economics in Katowice, Poland.
Suman Bhattarai (Nepal)
It gives u a brief details about what is micro finance, how it works, y there is need for such institutions, the NGO's involved and the different types of MFI involved. the steps taken by India for micro finance.
This is a overview of the business of banking, including retail, business and investment banking. We have also included introductions to other financial services like credit cards, credit rating agencies, mutual funds and the business processes used to process loan transactions, credit card payments, and a range of other banking services and products. Useful for anyone who would like an overview of the banking industry. Downloads will be allowed for 30 days. After that you can contact me if you would like the file.
This was the presentation made at Government Brennen College, Thalassery, Kerala, India; in the Seminar organized by the Islamic History Department on 27th October, 2014.
Micro-finance In India, Opportunity and Challenges Mayank Singh
The Economic Pyramid of India is being explained with Analysis on the role of Microfinance through the special case of Bandhan Financial service Pvt. limited.with Formulated current and future challenges and their solutions to the business model.
a presentation on the work done during the Management Internship Program done at Vitruvian Technologies, a company developing IT products directed at the Real Estate sector
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
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Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
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The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
2. “I would say that I did
something that challenged the
banking world. Conventional
banks look for the rich; we look
for the absolute poor. All people
are entrepreneurs, but many
don’t have the opportunity to
find out that”
-Mohammad Yunus
(founder of Grameen Bank)
MICROFINANCE
INDIA
4. INTRODUCTION TO MICROFINANCE
• “Microfinance recognizes that poor people are remarkable reservoirs of
energy and knowledge. And while the lack of financial services is not just
a sign of poverty, today it is looked as an untapped opportunity to create
markets, bring people in from the margins and give them the tools to help
themselves."
– Kofi Annan (Sec. General of UN)
• The poor stay poor, not because they are lazy but because they have no
access to capital.“
– Laureate Milton Friedman
5. Mrs. Bharti, 48 years old
• Unemployed husband
• 4 children
• No savings
• Good sewing skills
• Mrs. Bharti decides to start a home based sewing business
• She goes to the bank and makes a demand for a loan at her bank
MRS. Bharti‟s DEMAND IS REJECTED
6. MRS. Bharti‟s DEMAND IS REJECTED
Traditionally banks and Lending Institutions do not lend money to low income Individuals
The reasons being
• High Transaction cost of processing
• Lack collateral or guarantors
• Gap in the communication / lack of confidence in the Banks
• Doubt of the bank of the repayment capacity
• Lack of access to financial infrastructure and services in remoted areas
Microfinance provides a solution for the above
problem
7. MICROFINANCE
“Microfinance is an economic Development approach that involves providing financial
services through institutions to low income clients”.
• Micro finance is emerged in need of meeting special goal to empower under-
privileged class of society.
• The principles of Micro Finance are founded on the philosophy of cooperation and
its central values of equality, equity and mutual self-help.
Microfinance is a tool against poverty by enabling the beneficiaries to :
• Create sustainable activities to increase their incomes
• Reduce external shocks
• Improve the living conditions of entrepreneurs and of their families
• Empower people and mainly the women
8. How did all start?
On the field Prof. Yunus saw that
• Even poor people and women need loans
• They can have an activity and repay
Grameen Bank of Bangladesh with the microfinance pioneer Mohammad Yunus, where starting and
shaping the modern industry of microfinancing.
• Set up financial institutions with a social mission
• Listen to the needs and constraints of the excluded & offer them adapted financial tools to
empower themselves ( solidarity groups)
Spirit: SUSTAINABILITY
Prof. Muhammed Yunus
Founder of the Grameen Bank,
Bangladesh
9. MICROFINANCE
INSTITUTIONS (MFIs)
(NGO, ASSOCIATIONS & BANKS)
Commercial Banks
COMMERCIAL BANKS &
INVESTMENT FUNDS
FOUNDATIONS & DONORS
(incl. enterprises)
GOVERNMENT &
LOCAL BODIES
SUPPORT
ORANIZATIONS
(e.g. PF)
BENEFICIARIES
Mechanisms
10. 4 Final Repayment 12 weeks later
( Demand for a 2nd loan over
Rs. 1500 to expand her business)
2 Purchase of the SEWING MACHINE
Starts sewing clothes & sale
(Daily benefits amount Rs 100)
1Visit of Mrs. Bharti to the MFI
Meeting wit the Loan Officer
Convinced, reception of a loan of
Rs 1,000 (+ 30 interest rate)
3Weekly Repayment ( Rs 86)
Remaining money is used to buy
accessories
Regular contact and
follow up between the
MFI and the client
Micro-credit ( case study contd.)
Mrs. Bharti needs Rs 1,000
11. PRESENT SCENARIO OF INDIA
• India falls under low income class according to World Bank.
• It is second populated country in the world and around 70 % of its population
lives in rural area
• 60% of people depend on agriculture, as a result there is chronic
underemployment and per capita income is only $ 3262
• Result is abject poverty , low rate of education, low sex ratio, exploitation
• Low asset base-According to Reserve Bank of India, about 51 % of people
house possess only 10% of the total asset of India.
• resulted low production capacity both in agriculture (which contribute around 22-
25% of GDP) and Manufacturing sector
• Rural people have very low access to institutionalized credit( from commercial
bank).
12. MICROFINANCE IN INDIA- THE NEED IN INDIA
• 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.
• 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
• 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.
13. MICROFINANCE IN INDIA (CONTD.)
• The Indian Microfinance sector has been rated as one of the fastest
growing sectors in the world
• There are 1,000 MFIs operating in India (as of March 2009)
• MFIs have reached 234 of the 331 poorest districts identified by the government
• At present lending to the economically active poor both rural and
urban is pegged at around Rs 7000 crores in the Indian banks‟ credit
outstanding.
• As against this, according to even the most conservative estimates,
the total demand for credit requirements for this part of Indian society
is somewhere around Rs 2,00,000 crores.
14. • More than 350mn people in India live below the poverty live
• MFIs cater to over 55mn people in India, with 90% of them being
women
• The total market potential is to have a reach of about 275-300mn people in
India
28%
47%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2002 2007
Share of MFIs (in small loans) Marginal farmers (access to credit)
Non- institutional
credit
Institutional credit
15. SOCIAL IMPACT OF MICROFINANCE
Personal/Household level
Community level
Regional level
16. A NEED FOR FINANCIAL INCLUSION
• A great need for a 100% financial inclusion is being felt by the
economists and practitioners
• The un-bankable population of India promises a huge market in itself
• Poor people are trapped in poverty, because:
• Commercial banks will not lend them money as they are often neither
in a position to offer collaterals nor are they considered “creditworthy”
enough; while
• Local money-lenders, who are often their only source of
credit, charge exorbitantly high interest rates, thereby depleting them
of whatever little possible savings they can manage
• Hence, there is a need for micro credit institutions offer small
amount of loans to the people in the bottom of the pyramid
17. A NEED FOR FINANCIAL INCLUSION (CONTD.)
• There is a tremendous demand from 100mn poor &
vulnerable households in India
0
20
40
60
80
100
120
Finance (Accessed by Poor
households)
Finance (Needed by Poor
households)
Demand (US$ billion)
20x
growth
potential
Unmet
demand
18. WHO REQUIRES MICROFINANCE?
• In India, generally microfinance is sought by:
• Small and marginal farmers;
• Rural artisans; and
• Economically weaker sections
• Women constitute a vast majority of users of microcredit
and micro savings facilitates
10%
90%
Microfinance facilities
Men
Women
19. RURAL POOR
• Dependent on agriculture as primary source of income
• Majority of them are small or marginal farmers
• Poorest households are landless
• Uncertain & irregular income streams
20. URBAN POOR
• KYC norms of Banks and NBFC require proof of residence
(unable to provide)
• Reluctance of urban clients to dedicate timely commitment that
is required both in the case of Gramin and self-help group
(SHG) models. In the form of Periodic and regular
meetings, group-based decision-making
• Requires facilities like housing finance, health
insurance, remittances, savings & investments
22. VARIOUS MODELS OF MFIS
• Various models of MFIs differ on basis of:
• Lending model (explained in the next slide)
• Loan repayment structure:
• Weekly or fortnightly repayment structure (JLR model)
• Monthly repayment structure (SHG model)
• Mode of interest rate calculation
• JLR model charges flat 12-18% interest on loans
• SHG model charges 18-24% interest on reducing balance method
• Product offering
• Micro credit, investments, insurance, saving, etc..
• Legal structure
• Cooperatives, NBFC, unregistered, societies, trusts, for-profit, non-
profit
23. Microfinance
Institutions
Lenders to group
Self Help group
model
Lends to groups
of 10 to 20
women
NGO promotes a
group & gets
banks to extend
loans
Joint Liability
group model
Loans are
extended to each
member of the
group
Lenders to
individuals
25. Steady access to
capital
Heavy dependence
on Banks & FIs
Political sensitivity
of interest rates
Operational issues
while aggressive
growth
Weak governance
Competition
26. STEADY ACCESS TO CAPITAL
• Indian MFIs are highly leveraged, in some cases more than
50x (one of the highest in the world)
• Access to steady capital can remain a cause of concern for the
medium term
Debt/Networth (# of times)
> 15x
10-15x
7-10x
5-7x
<5x
27. HEAVY DEPENDENCE ON BANKS & FIS
• MFIs are dependent on borrowings from banks & FIs
• For most MFIs, funding sources are restricted to private banks &
apex MFIs
• As public sector banks prefer lending through SHG-bank linkage model
• Available bank funds are typically short-term (max. 2 years period)
• Also, there is a tendency among some lending banks to sanction
and disburse loans to MFIs around the end of the accounting year
in pursuit of their targets
• This leads MFIs to draw and deploy the funds sub-optimally for a
period, till they find better avenues for deployment in loans to the needy
clients
28. POLITICAL SENSITIVITY OF INTEREST RATES
• Interest rates charged by MFIs are primarily to the poor
people, thereby it can become a politically-sensitive issue
• Over the past few years, MFIs in Southern India states
were accused of excessively charging high interest rates
and have been targeted by local administrations
• The states include Andhra Pradesh, Tamil Nadu, Karnataka
30. OPERATIONAL ISSUES WHILE AGGRESSIVE
GROWTH
• MFIs risk management practices have weakened over the past fee years in
search for growth & expansion
• Credit sanctioning & monitoring practices have weakened
• Also high debt ratios are also a cause of concern
31. WEAK GOVERNANCE
• Many MFIs are not willing to convert to a corporate structure, hence :
• They tend to remain „closed‟ to transparency and improved governance, thus unable
to attract capital
• MFIs also face a challenge to strike a balance between social and business goals
• Managements need to adapt business models based on changing scenarios & increased
transparency
• This will enable attracting capital infusion and private equity funds
32.
33. COMPETITION
• India's microfinance sector is fragmented, having more than 3,000 MFIs, NGO-MFIs
present
• Top 10 microfinance companies in India account for ~74% of the total loans
outstanding
• More than 17 MFIs have more than Rs.1mn outstanding loans
• Also, entry of commercial banks present to be a key competitor to MFIs
36. INTRODUCTION
• There is growing interest in microfinance as one of the avenues to enable low income
population to access financial services.
• There have been various initiatives to promote microfinance in India since the 1970s, the
sector witnessed rapid growth only in the 1990s.
• The RBI has since the mid 1990s helped in attracting funding for the sector by including
microfinance in the “priority sector”
• MFIs have started offering products such as insurance, remittances and pensions by tying
up with mainstream providers that calls for coordinated regulation of the sector
37. MICRO FINANCIAL SECTOR BILL
• Though major MFIs are against the Microfinance Bill, it is still required to address the
needs of small and start-up MFIs, especially in the NGO segment
• Major MFIs are under RBI purview as non-banking financial companies (NBFCs)
• The self-help group (SHG) or cooperative model MFIs come under the NABARD
• The Bill would cover the MFIs left out of these two categories
38. MICRO FINANCIAL SECTOR BILL (CONTD.)
• Objective:
• To ensure development and orderly growth of the micro-finance sector in rural and
urban areas in the country.
• Key Provisions:
• The empowerment of NABARD to frame a scheme for appointment of one or more
microfinance ombudsman for settlement of disputes between eligible clients and
micro finance organizations.
• Creation of a micro finance equity and development fund facilitating the development
of the sector in India.
• Creation of a reserve fund by every MFI that accepts deposits with a minimum of 15
percent of the MFI‟s net profit realized out of its thrift and micro finance services to
be transferred to the fund.
39. MICRO FINANCIAL SECTOR BILL (CONTD.)
2007 Bill Provisions:
• Every MFI accepting deposits had to be registered with the NABARD. Conditions for
registration as laid down in the old Bill include:
• net owned funds of at least Rs. 5 lakh and
• at least three years in existence as a microfinance organization.
• All MFIs, whether registered or not, to submit annual financial statements to NABARD.
Budget 2010-11 Provisions:
• Micro finance development equity fund corpus doubled to Rs 400cr
• Rs 4000cr for promotion of micro finance
41. INTRODUCTION
• SKS Microfinance is India‟s largest and the world‟s fastest- growing microfinance
organization
• Started in 1998 as an NGO, SKS transformed into an NBFC in 2005 and is regulated by
the RBI.
• SKS has been able to ensure a repayment rate of over 99 % on its loans
44. OPERATIONAL STATISTICS
Operational Information Mar 06 Mar 07 Mar 08 Sep 09
Total no. of Branches 80 275 771 1,676
Total no. of Districts 19 102 217 345
Total no. of Staff 574 2,389 6,425 17,520
Total No. of Members (In Millions) 0.20 0.60 1.87 5.30
Amount Disbursed (INR. In
Millions)
1,525 4,454 16,789 31,994
Portfolio Outstanding (INR. In
Millions)
921 2,756 10,506 32,080
45. FINANCIAL STATISTICS
Financial Information Mar 06 Mar 07 Mar 08 Sep 09
Incremental Debt
(INR in Crores)
88 277 1,063 1,247
Total Revenue
(INR. In Crores)
10 46 170 385
PAT (INR. In Crores) 0.44 3.67 16.64 55.60
Total Assets (INR. In Crores) 98 332 1,083 3,643
ROA 0.48% 1.00% 2.51% 4.09%
ROE 3.08% 18.1% 16.3% 15.15%
48. SKS FINANCE – CAPITAL NOT A CONSTRAINT
• SKS has been a sector leader in sourcing capital
• In July 2009, Bajaj Allianz made a strategic investment of US$10mn in SKS
Microfinance which was the first-ever investment by an insurance company in an
Indian microfinance institution
• In November 2008 SKS raised equity worth US$75mn, the largest equity raised by
an MFI in the world
• The third round of equity worth Rs.147cr was raised in January 2008
49. “ICICI Bank is one bank that has developed a very clear strategy to expand the
provision of financial products and services to the poor in India as a profitable
activity”
- Haruhiko Kuroda (ex-president of Asian Development Bank)
ICICI BANK – INNOVATION IN MICROFINANCE
50. AN OVERVIEW – ICICI GROUP
• Second largest bank with total assets of US$77bn
• Offers a wide range of:
• Banking products & financial services
• Investment Banking services
• Insurance
• Asset Management
• Venture Capital & Private Equity
51. AN OVERVIEW – MICROFINANCE INITIATIVES
• ICICI Bank is one of the largest microcredit institutions in India
• It has financed ~3.5mn low income customers in collaboration with MFIs and lent more than
Rs.2,582cr (2009)
• Key aim of the bank‟s microfinance initiative was to increase penetration into rural areas by utilizing its
expertise in distribution and strong financial position
• ICICI Bank‟s micro credit initiative involves lending small amounts to the people below the poverty line
• It provided basic banking services like savings and withdrawal along with micro investment products
like mutual funds
• The bank increased its presence in the rural areas through innovative distribution channels as setting up
branches in the rural areas would have proved costly
• Tied up with NGOs and MFIs already working in the area of rural finance
52. STRATEGIES ADOPTED BY ICICI BANK
• To develop its presence in microfinance business in
India, it developed 3 strategies:
1. Initiate measure to improve efficiency and reach of microfinance services in India
2. Finance MFIs – improving liquidity of MFIs & NGOs providing rural finance
3. Provide credit and savings services to the poor directly, through its rural branch
network
53. MODELS ADOPTED BY ICICI BANK
• The bank developed 2 models to expand its presence:
Bank-led model
• Involved direct lending by ICICI
Bank
Partnership model
• Partnering with NGOs & MFIs
providing rural finance
• Make best use of their
networks, relationships &
knowledge
54. THE BANK-LED MODEL
• Derived from SHG-Bank linkage program of NABARD, involves banks financing SHGs
• ICICI Bank aggressively drew up plans for growth
• Acquired Bank of Madura
• This acquisition gave them a significant presence in South India, especially Tamil
Nadu
• Through this initiative, ICICI Bank had formed, trained and initiated small groups of
women to undertake financial activities like banking, saving & lending
55. PARTNERSHIP MODEL
• SHG model was successful, but its reach was limited only to
those areas where the bank had branches
• The Partnership model aimed to reach where ICICI bank didn‟t
have any branch
• This model aimed at synergizing the operational advantages of
NGOs & MFIs and financial strength of the bank
Operational advantages Financial strength
• Mobilization power &
infrastructure
• Lending, monitoring &
collection activities
• Financial strength of
ICICI Bank to lend to
MFIs & SHGs
56. PARTNERSHIP MODEL (CONTD.)
• ICICI Bank was instrumental in designing new structures through which capital constraint
issues of NGOs & MFIs were resolved
• It bought microfinance portfolio of MFIs (selectively or of the entire area/branch) and entered
into partnership with them
• In this model, both the parties shared risks of losses
• This model was also known as securitization model, since it involved creating of a secondary
market for microfinance
• The main advantage of securitization was the differentiation between operational risk &
financial risk
• In 2009, ICICI Bank financed SKS Microfinance with a Rs.200cr securitization deal.
• This will provide loans to 200,000 unbanked families
57. WAY FORWARD FOR ICICI BANK
• Enhance use of technology
• Improve operational efficiency
• Partnering with Indian postal department to enhance reach
• Access to secondary markets to improve the depth of securitization
• Looking beyond micro-credit
• Insurance, savings, remittances, investment products
58. For a sustainable future
THE WAY FORWARD…
FOR THE MICROFINANCE SECTOR
59. CORRECTING LARGE GEOGRAPHIC ASYMMETRIES
Large no. of MFIs
Economically Vibrant
High micro credit
penetration
Very Few MFIs
Economically Backward
Low level of micro credit
penetration
…Requires reduction
of geographic
asymmetries and
increasing depth of
outreach…
60. ACCESS TO CAPITAL
• Access to raise capital through banks, venture capitals, and capital markets & debt
markets
• Venture capitals are ready to provide funds to quality players primarily due to near
100% recovery of loans coupled with high interest rates charged by MFIs
• This can be provided once MFIs choose to opt for:
• Better governance
• Get themselves registered
• Recognized by RBI
• Transparent business practices
61. OTHERS
• Successful implementation of the Microfinance Bill after considering the key changes
recommended
• Cellular finance: Use of cellular phone operators‟ network for making money transfers is a
distant possibilities
• Possible after the recent RBI mandate to telecom operators‟
• Diversification:
• Micro insurance has a tremendous potential, but key concerns on distribution and
marketing products should be taken care of
• Others areas such as micro investments, savings & remittances
• Human resources: investment in training & infrastructure required
Only 5 % of the rural poor have access to Microfinance-the credit demand by the poor is estimated to be a little over 60,000 crores.(2007 Estimate)
Rural Poor:India’s rural poor are dependent on agriculture as their primary source of income;Themajority are marginal or small farmers, and the poorest households are landless. Thus they have uncertain and irregular income streams and expenditure patterns.
have a very temporary address and are mobile on account of -the slums being subject to evacuation. -unsteady livelihoods leading to migration from one part of the city to another or from one city to another .The KYC norms require a proof of identity and residence, which urban poor cannot provide- They remain excluded from formal finance unless a voter identity card or a migrant identity card is issued to them.Reluctance of urban clients to dedicate timely commitment that is required both in the case of Gramin and self-help group (SHG) models. In the form of Periodic and regular meetings, group-based decision-making. Needs of the Urban Poor:Housing loans- not taken off in a big way because of large volume of loans required and long period of repayment.Health insurance- risky existence in the form of health diseases arising from insanitary conditions in the urban slums force the people to spend more on their wellness.Remittance- Majority of the migrant population periodically sends money home. It is a hassle for people who do not have a bank account at both ends and who are unable to access banks easily. The post office based remittance services are of high cost and time consuming. Hence, migrants look for better means of transfer of money from the city to their homes in the rural area.
NGO – Non Government OrganisationNBFC – Non Banking Financial Corporation
However
However
The initiatives helped ICICI Bank to expand its presence into the rural areas without major investments
The initiatives helped ICICI Bank to expand its presence into the rural areas without major investments