2. Agenda
Introduction of Microfinance & Social Business concepts
by Neville Mehta, Intl. Secretary, ISAAME, LCI
Remarks by AP Singh, Past Intl. Director
Remarks & video from Mr. Binod Chaudhary, Chairman
of Chaudhary Group (CG) & CG Foundation
Questions + Answers
3. Speakers
Lion Arvinder Pal Singh
International Director (2004-2006)
District: 322-B1
Home Club: Calcutta Vikas (45734)
Lion Since: March 1984
Lion A P Singh has been credited with 13 International President’s medals and
the highest award ‘Ambassador of Goodwill’. He is a Progressive Melvin Jones
Fellow and a Major Gift Donor for CSF II. He is also the First Lions Clubs
International Foundation Heritage Club member of 322-B1.
He has regularly served as a faculty on more than 25 LCI and Regional
Leadership Institutes. His latest contribution in extending new initiatives is
the establishment of Eastern India Lions Leadership Academy which includes
video conferencing facility in all districts of MD 322. He has also been
organizing webinars to reach out to clubs in furthest corners.
The Lions of Kolkata (India) have accepted Microfinance under the
leadership of Lion A P Singh and are moving ahead as this can have a radical
impact on facing the menace of poverty and changing lives of people.
4. Speakers
Mr. Binod Chaudhary born on April 14, 1955 is a
Nepalese businessman, industrialist and philanthropist. He is the
current Chairman of Chaudhary Group (CG), a conglomerate that
consists of nearly 80 companies. Mr. Chaudhary is also the first Nepal
billionaire as listed by Forbes. Besides, business, Mr. Chaudhary has
been involved in various other government and social sectors. He
worked as a member on constituent assembly and parliament of Nepal
from April 2008 to May 2012. His CG Foundation works for social
welfare and he often contributes in the areas of art, music and
literature as well. He is also a former Leo member.
5. What is Microfinance
It is estimated that approximately 2.5 billion people around the world live in poverty,
struggling to survive on less than US$2 a day. Yet for people living in poverty, it’s all
they have to provide for the needs of their whole family. Families living in this kind of
poverty struggle to afford even the most basic of items. They are unable to afford
adequate meals, clean water or an education. They go without proper shelter,
transport and even medicine when they are sick.
The Solution: Microfinance…
Microfinance refers to an array of financial services like loans made available to poor
entrepreneurs and small business owners who have no collateral and wouldn’t
otherwise qualify for a standard bank loan. Most often, microloans are given to those
living in still-developing countries who are working in a variety of different trades,
including carpentry, fishing and transportation.
The goal of micro financing is to provide individuals with money to invest in
themselves or their business to help get them out of poverty. When providing loans,
micro financing institutions do not require collateral, but do insist that the loan is
repaid within six months to a year.
6. MICROFINANCE AND ITS RELEVANCE IN
POVERTY ALLEVIATION
Helps poor households meet basic needs
Protects them against risks.
Provides working capital for income generating activities.
Provides additional capital for expanding business.
Helps in asset creation
Provides employment opportunities.
Save poor from the trap of money lenders.
8. Micro Finance & Social Business
A reflection on the topic by
Mr. Binod Chaudhary
9. Powered by In solidarity with
Microfinance
"Lasting peace cannot be achieved unless
large population groups find ways in
which to break out of poverty„
Prof. Mohammed Yunus
10. Powered by In solidarity with
Microfinance
Grameen Bank
Clear definition of poor
Maximum 20 % (int. avg.
30)
Lending groups
Strong decentralized
structure
Real money (M1)
Micro Finance
Financial source
no collateral needed
Focus on the poor
2 main models
Relationship based
model
11. Powered by In solidarity with
History Nepali Micro Finance
1960: first appearance for flood victims
1970: first scale approaches: failed
1980: Social approach: group guarantees
1990: institutionalization: rural development banks
1995: commercialization started: NGO MFI
1998: Regulations of MFI
2003: Banks and Finance Institution act
12. Powered by In solidarity with
Variety of players
Key MFIs
35 MFDB 29 FINGO 16,854 SACCOS
Wholesalers
RSRF
Commercial Banks
RMDC SKBBL
Models
Cooperative SFLC Grameen
13. Powered by In solidarity with
Poverty Line
25 % below
Poverty
Line
33 %
reached by
MFI
14. Powered by In solidarity with
Success-Stories in Nepal
2.5 Million families reached
Maximum 1500 $ without guarantee
Total loan disbursed USD 1.67 billion
Loan recovered ratio 99 percent
15. Powered by In solidarity with
Challenges Include
Lack of Risk Management
Inadequate Use of ICT
Delivery methodology not considering geography
Poor financial literacy
Lack of demand and supply in wholesale fund
Limited penetration in hilly regions
16. Powered by In solidarity with
Microfinance in context
SB
Investment-
Funds
Social Business
Seed-Capital
Microfinance
17. Powered by In solidarity with
Social Business
Next step after Microfinance
Empowers leaders
‘scaleable’ organization
Considers a bigger group of stakeholders
18. Powered by In solidarity with
What is Social Business?
19. Powered by In solidarity with
What is Social Business & NSB
Animated Video
https://www.youtube.com/watch?v=gi5biNDk1Mc
20. Powered by In solidarity with
Why is it different?
Skills to grow
Refined skills and scalability
Macroeconomic more sustainable
Editor's Notes
Microfinance is a source of financial service for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and
(2) group-based models, where several entrepreneurs come together to apply for loans and other services as a group.
Yunus’ grameen bank has put a very clear focus through decentralized structures on reaching out to the really needed.
A variety of models can be found in Nepal. Besides Cooperatives, Small Farmer Cooperative Limited (SFLC) and the Grameen Bank model there are 2 more models: Self reliance Groups and the village Bank Models.
Beside the fact that every commercial Bank has to provide between 3.5 and 4.5 % of their loans to the deprived sectors 3 wholesalers are established in the market, from which 2 have a rural focus and one a agricultural.
Various players are providing the customer with Micro Credits: 36 Micro Finance Development Banks serve in 66 out of 78 districts. 29 FINGs are active in 54 districts and more than 16000 independent co-operatives are acting all over Nepal serving the biggest Market share of 2 Million clients.
Which are the districts
This incompetent manpower as well as the infrastructure is also reflected in a higher risk factors then usually in MFI.
Especially small and medium scale MFIs are struggling to catch up with the adequate IT-Infrastructure to track their activities in an appropriate manner
Many proven concepts like the Grameen Bank Model have been copy-pasted from the flat lands to the hilly regions, which does not work there due to the topography.
Commercially driven MFI from the commercial banks have normally an oversupply and are stuck in outreach, whereas the traditional smaller MFIs normally can’t fill their gap between demand and the limited means they have access to.
Please allow me now to depart slightly from headline of Micro-Finance and move on to what I would call the next step in economical development of the pros: Social Business.
We could say, different development steps need different tools. Where Micro Finance can help the poor to make their first steps towards a small family business or towards industrial farming, it reaches it’s limits, when we talk about growing in stage. That’s where the Social Business and Social Business Funds enter it’s stage.
