Microfinance And Its Different Models in India

Views:
 
Category: Entertainment
     
 

Presentation Description

No description available.

Comments

Presentation Transcript

Microfinance And Its Different Models in India:

Microfinance And Its Different Models in India Presented By: Samsher Singh (10df 002) Satish Kumar (10df 018) Dipayan Satpathy (10df 020) Anjumala Nisishatika (10df015) Abshishek Charabarty (10df017)

Contents:

Contents Introduction to Micro Finance Scenario of Micro Finance in India Benifits of Micro Finance The Different Models of Microfinance Self Help Group Model Grameen Model Joint Liability Group Cooperative Model Conclusion

Introduction to Micro Finance:

Introduction to Micro Finance Microfinance is the provision of financial services to low income clients lending groups including consumers and the self employed , who traditionally lack access too banking and related services. Microfinance is a broad category of services which include microcredit. Microcredit can be defined as the provision of credit services to poor clients.

Scenario of Micro Finance in India:

Scenario of Micro Finance in India India’s population is more than 1000 million, around 350 million, are living below the poverty. Only 20% access loan from the formal sources and 80% from the informal sources. Out of that 20% only 10% have access to Micro finance. Annual credit demand by the poor is estimated to be about Rs 60,000 crores . And only 12,000 crores are disbursed. (April 09) Customers of Micro Finance are “Small and marginal farmers", " rural artisans" and "economically weaker sections“

Advantages of Micro Finance:

Advantages of Micro Finance •It allows the poor to receive a loan It empowers women •It creates long-term financial independence

Self Help Group Model:

Self Help Group Model In SHG Model the members form a group of around twenty members. The group formation process may be facilitated by an NGO or by the MFI or bank itself, or it may evolve from a traditional rotating savings and credit group (ROSCA) or other locally initiated grouping.

CHARACTERSTICS OF SHG:

CHARACTERSTICS OF SHG SMALL GROUP OF POOR (10-20) PREFERABLY WOMEN SIMILAR SOCIO-ECO BACKGROUND UNITED FOR COMMON CAUSE NO NEED FOR REGISTRATION GROUP FUNCTIONING / DISCIPLINE SAVINGS / BORROWING / LENDING

Stages of Group Dynamics:

Stages of Group Dynamics There are four stages to form an SHG : Forming : In this stage, people come together informally and meet. They are encouraged to talk about their problems and solutions. During this stage, based on the felt need, homogeneous groups emerge naturally. Storming : During this stage conflicts between individual interest and groups interest surface and are dealt with. The leadership emerges. The procedures, rules and roles are established. Norming : Trust develops among group members leading to cohesiveness in the group. Performing : This is the final stage when the group becomes operational and starts functioning for the benefit of its members.

WHO FORMS SHG:

WHO FORMS SHG FACILITATOR RETIRED SCHOOL TEACHER/ GOVT. SERVANT HEALTH WORKER/ FIELD STAFF/ STAFF OF ANY DEVELOPMENT AGENCY BANKER UNEMPLOYED EDUCATED PERSON HAVING INCLINATION TO HELP A MEMBER OF FARMERS’ CLUB

GOALS OF SHGS:

GOALS OF SHGS Self-help groups are started by non-profit organizations (NGOs) that generally have broad anti-poverty agendas. Self-help groups are seen as instruments for a variety of goals including empowering women, developing leadership abilities among poor people, increasing school enrolments, and improving nutrition and the use of birth control. Financial intermediation is generally seen more as an entry point to these other goals, rather than as a primary objective. This can hinder their development as sources of village capital, as well as their efforts to aggregate locally controlled pools of capital through federation, as was historically accomplished by credit unions.

BENEFITS OF FINANCING TRROUGH SHGS:

BENEFITS OF FINANCING TRROUGH SHGS An economically poor individual gains strength as part of a group. Besides, financing through SHGs reduces transaction costs for both lenders and borrowers. While lenders have to handle only a single SHG account instead of a large number of small-sized individual accounts, borrowers as part of an SHG cut down expenses on travel (to & from the branch and other places) for completing paper work and on the loss of workdays in canvassing for loans

NABARDS SHG BANK LINKAGE PROGRAM:

NABARDS SHG BANK LINKAGE PROGRAM Many self-help groups, especially in India, under NABARD's SHG-bank-linkage program, borrow from banks once they have accumulated a base of their own capital and have established a track record of regular repayments. This model has attracted attention as a possible way of delivery microfinance services to poor populations that have been difficult to reach directly through banks or other institutions. "By aggregating their individual savings into a single deposit, self-help groups minimize the bank's transaction costs and generate an attractive volume of deposits. Through self-help groups the bank can serve small rural depositors while paying them a market rate of interest.“ NABARD estimates that there are 2.2 million SHGs in India, representating 33 million members, that have taken loans from banks under its linkage program to date. This does not include SHGs that have not borrowed.. "The SHG Banking Linkage Programme since its beginning has been predominant in certain states, showing spatial preferences especially for the southern region – Andhra Pradesh, Tamil Nadu, Kerala and Karnataka. These states accounted for 57 % of the SHG credits linked during the financial year 2005-2006.".

Steps Followed by SHG:

Steps Followed by SHG The SHG members decide to make regular savings contributions. These may be kept by their elected head, in cash, or in kind, or they may be banked. The members start to borrow individually from the SHG, for purposes, on terms and at interest rates decided by the group themselves. The SHG opens a savings account, in the group’s name, with the bank or MFI, for such funds as may not be needed by members, or in order to qualify for a loan from the bank. The bank or MFI makes a loan to the SHG, in the name of the Group, which is then used by the Group to supplement its own funds for on-lending to it members.

The Grameen Model:

The Grameen Model Introduction The Grameen Bank started in 1976 by the Nobel Laureate, Professor Muhammad Yunus in Bangladesh. Grameen today has some 2468 branches in Bangladesh, with a staff of 24,703 people serving 7.34 million borrowers from 80’257 villages. Grameen’s methods are applied in 58 countries including the United States. Grameen Bank borrowers own 94% of the bank. The remaining 6% are owned by the government.

Working Model of Grameen Bank :

Working Model of Grameen Bank Holding regular and usually weekly meetings which are supervised by a MFI worker who maintains the records, where savings and repayments are collected and handed over to the MFI worker, Organising contributions to one or a number of group savings funds, which can be used by the group for a number of purposes, usually only with the agreement of the MFI which maintains the group fund accounts, Guaranteeing loans to their individual members, by accepting joint and several liability, by raising group emergency funds and by accepting that no members of a Group will be able to take a new loan if any members are in arrears, Arising from the above, appraising fellow-members’ loan applications, and ensuring that their fellow-members maintain their regular savings contributions and loan repayments.

Joint Liability Group (JLG):

Joint Liability Group (JLG) A joint Liability Group (JLG) is an informal group comprising preferably of 4 to10 individuals coming together for the purposes of availing bank loan either singly or through the group mechanism against mutual guarantee. The JLG members would offer a joint undertaking to the bank that enables them to avail loans. The JLG members are expected to engage in similar type of economic activities like crop production.

Working Of Joint Liability Group:

Working Of Joint Liability Group Members should be of similar socio economic status and background carrying out farming activities and who agree to function as a joint liability group. The groups must be organised by the likeminded farmers and not imposed by the bank or others. The members should be residing in the same village/ area and should know and trust each other well enough to take up joint liability for group/ individual loans.

Difference between JLGs and SHGs:

Difference between JLGs and SHGs SHGs (Self Help Groups) JLGs (Joint Liability Groups) Minimum 15 members and maximum 20. Minimum 3 members and maximum 5. Meeting is compulsory. N o necessary of compulsory meeting. Bank loan is available. They get loans only from MFIs. G ets the benefit of government scheme. Individual responsibility. There is no benefit. They share responsibility and stand as guarantee for each other.

Cooperative Society:

Cooperative Society A Co-operative Society is formed as per the provisions of the Co-operative Societies Act, 1912. At least ten persons having the capacity to enter into a contract with common economic objectives, like farming, weaving, consuming, etc. can form a Co-operative Society.

Characteristics of Co-operative Society:

Characteristics of Co-operative Society Open membership Voluntary Association State control Sources of Finance Democratic Management Service motive Separate Legal Entity Distribution of Surplus Self-help through mutual cooperation

Co:

Co