microfinance

Microfinance : 

1 Microfinance Presented by: Dr. Narendra Dhaka

Overview : 

2 Overview Microfinance is the supply of loans, savings, and other basic financial services to the poor. In India it generally provided by SHG-Bank linkage, and by MFIs itself. SHG-Bank – 54 million members. MFI – 22.6 million members. MFIs added 8.5 million new members in 2008-09. ` 3732.33 crore was disbursed to 581 Micro Finance Institutions (MFIs) during 2008-09. Source: http://www.microsave.org/briefing_notes/india-focus-note-40-state-of-microfinance-in-india-2010

Key Players : 

3 Key Players SKS Microfinance Ltd. Spandana Sphoorty Financial Limited Share Microfin Limited Bandhan Asmitha Microfin Ltd. Shri Kshetra Dharmasthala Rural Development Project (SKDRDP) BASIX

Slide 4: 

4 www.sharemicrofin.com www.bandhanmf.com www.spandanaindia.com www.sksindia.com

Slide 5: 

5 www.sharemicrofin.com www.bandhanmf.com www.spandanaindia.com www.sksindia.com

Slide 6: 

6 www.sharemicrofin.com www.bandhanmf.com www.spandanaindia.com www.sksindia.com Upto 2010 SKS- More number of clients so more amount dispersed.

Grameen Bank : 

7 Grameen Bank Established in 1976 in Jobra village in Bangladesh by Professor Muhammad Yunus . It provides credit to the poorest of the poor in rural Bangladesh without any collateral. By June 2010: -2,564 branches in 81,362 villages -8.28 million borrowers (90% are women). Total equity: -90% - Borrowers -10% - Government Source- http://www.grameen-info.org

Contd.. : 

8 Contd.. Owned by the Poor. No Collateral, no legal instrument, no group-guarantee or joint liability. Over Tk 546 billion Disbursed in 2009-10. Loan recovery rate is 97.20 percent. Low Interest Rates- 20% - Income generating 8% - Housing loans 5% - Students 0% - Beggers. Source- http://www.grameen-info.org

Objectives : 

9 Objectives Extend banking facilities to poor people. Eliminate the exploitation of the poor people by money lenders. Create opportunities for self-employment for unemployed people in rural Bangladesh. Reverse vicious circle of "low income, low saving & low investment", into virtuous circle of "low income, injection of credit, investment, more income, more savings, more investment, more income".

NBFC : 

10 NBFC A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares, stock, bonds, debentures, securities issued by Government or local authority. Profitability of NBFC in 2008-09 stood higher at 18.90 per cent compared to commercial banks whose average profitability was 10.08 per cent. Source:- http://indiamicrofinance.com/nbfc-frequently-asked-questions-rbi.htmlce

Different types of NBFC registered with RBI : 

11 Different types of NBFC registered with RBI Asset Finance Company (AFC). Investment Company (IC). Loan Company (LC) Source:- http://indiamicrofinance.com/nbfc-frequently-asked-questions-rbi.htmlce

Slide 12: 

12 The aggregate total income of NBFC grew by 57.3 per cent to Rs 28,208.72 crore in FY’09 from Rs 17,906.84 crore in the previous fiscal. Shares of non-banking financial companies such as LIC Housing Finance, IFCI and Bajaj Auto Finance surged by as much as 81 per cent over a period of five months. Source:- http://www.financialexpress.com/news/nbfc-stocks-zoom-onspeculation/654994/

Difference between Banks & NBFC : 

13 Difference between Banks & NBFC NBFC cannot accept demand deposits. NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks. Source:- http://indiamicrofinance.com/nbfc-frequently-asked-questions-rbi.html

Commercialisation of Microfinance : 

14 Commercialisation of Microfinance “Down-scaling” of commercial banks to serve the poor, and the “transformation” of NGO-MFIs into commercial banks. Link to commercial providers of capital. Way of formalise and professionalise microfinance. Sequoia made the first private equity (PE) investment in Indian microfinance, buying shares in SKS for an investment of $11 million. Source:- http://www.microfinancegateway.org/p/site/m/template.rc/1.9.43770/

Contd…. : 

15 Contd…. Transformation of four large Indian MFIs into commercial entities:- SKS Microfinance. Spandana Spoorthy Financials Limited. Share Microfin Limited. Asmitha Microfin Limited. SKS Microfinance, India’s largest MFI, which serves about 5.5 million clients intends to raise $347 million in an initial public offering. Source:- http://www.microfinancegateway.org/p/site/m/template.rc/1.9.43770/

Commercialisation is Essential : 

16 Commercialisation is Essential Allowed a massive increase in outreach and expansion of credit to the poor in India, at rates of interest that are relatively modest. To provide credit- Require trillions of dollars. To provide safe and secure savings services

Concerns : 

17 Concerns An opportunity to make money for commercial banks rather than worrying about what happens to the poor people Organizations are becoming loan sharks themselves. Growth of an organisation erode its mission to tackle poverty.

Slide 18: 

18 Thank You