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Intro To Micro Finance

This document provides an introduction to microfinance. It defines microfinance as the provision of small amounts of thrift, credit, and other financial services to poor people in rural, semi-urban or urban areas. It discusses various informal and formal microfinance providers and models, including self-help groups, credit unions, and individual lending. Key principles of microfinance discussed include focusing on providing diverse financial services to the poor and building sustainable local institutions. The document also outlines some of the largest microfinance institutions globally and in India and Bangladesh.

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Harsha Kiran Bhupalam
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58 views32 pages

Intro To Micro Finance

This document provides an introduction to microfinance. It defines microfinance as the provision of small amounts of thrift, credit, and other financial services to poor people in rural, semi-urban or urban areas. It discusses various informal and formal microfinance providers and models, including self-help groups, credit unions, and individual lending. Key principles of microfinance discussed include focusing on providing diverse financial services to the poor and building sustainable local institutions. The document also outlines some of the largest microfinance institutions globally and in India and Bangladesh.

Uploaded by

Harsha Kiran Bhupalam
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 32

Session on

Indroduction to Microfinance
To

MBA Studesnts of
MATS Institute of Management & Entrepreneurship

By

Vivekanand N Salimath, Managing Trustee


Initiatives for Development Foundation
What is Micro Finance
The Task Force on Supportive Policy and
Regulatory Framework for Micro Finance defines
mF as :

“Provision of thrift, credit and other financial


services and products of very small amounts to the
poor in rural, semi-urban or urban areas for enabling
them to raise their income levels and improve living
standards”

12/07/21
Informal financial service providers
Moneylenders,
Pawnbrokers,
Savings collectors
ROSCAs, and
Input supply shops
Member-owned organizations
Self-help groups
Credit unions
Financial service associations
CVECA: self-reliant village savings and
credit bank
Brief History
Modern microfinance emerged in the 1970s with a
strong orientation towards private sector
solutions.
This resulted from evidence that state-owned
agricultural development banks in developing
countries had been a monumental failure
Nevertheless public officials in many countries
hold a different view, and continue to intervene in
microfinance markets.
Some principles of Micro Finance
Poor people need not just loans but also savings, insurance
and money transfer services.
Microfinance must be useful to poor households: helping them
raise income, build up assets and/or cushion themselves
against external shocks.
Microfinance can pay for itself. Subsidies from donors and
government are scarce and uncertain, and so to reach large
numbers of poor people, microfinance must pay for itself.
Microfinance means building permanent local institutions.
Microfinance also means integrating the financial needs of
poor people into a country’s mainstream financial system.
Some principles of Micro Finance
The job of government is to enable financial services, not to
provide them.
Donor funds should complement private capital, not compete
with it.
The key bottleneck is the shortage of strong institutions and
managers. Donors should focus on capacity building.
Interest rate ceilings hurt poor people by preventing
microfinance institutions from covering their costs, which
chokes off the supply of credit.
Microfinance institutions should measure and disclose their
performance – both financially and socially
Microfinance: delivery models
Self Help Groups
Home grown –co-operative like
Savings based / savings led
Meeting diverse needs
largely promoted by NABARD-Public Sector Banks-Self Help Promoting
Institutions (NGOs)
Performance –mixed
Grameen
Regimented
Loan based
Focussedon enterprise
Pace of growth might be a cause for concern
Individual lending –BASIX and MACS
SHG Bank Linkage Model -1
SHG Bank Linkage Model -2
Grameen Model
Joint Liability
Group

Center
Legal Forms: Indian MFIs
Not –for Profit: Issues
Society
Society - Regulations
Trusts
Section 25 Company
Section 25 Company Regulations
Non Banking Finance Co (NBFC)
NBFC – Regulations -1
NBFC – Regulations - 2
Co-Operative Societies
Co-Operative Societies-Regulations
Urban Co-Operative Bank
UCB - Regulations
Legal forms and Source of Finance
The Top 10 MFIs
Rank Name Country
1 ASA Bangladesh
2 Bandhan (Society and NBFC) India
3 Banco do Nordeste Brazil
4 Fundación Mundial de la Mujer Bucaramanga Colombia
5 FONDEP Micro-Crédit Morocco
6 Amhara Credit and Savings Institution Ethiopia
7 Banco Compartamos, S.A., Institución de Banca Múltiple Mexico
8 Association Al Amana for the Promotion of Micro-Enterprises Morocco
Morocco
9 Fundación Mundo Mujer Popayán Colombia
10 Fundación WWB Colombia - Cali Colombia
The Top 6 MFIs of India
Rank Name
2 Bandhan (Society and NBFC)

13 Microcredit Foundation of India


19 Grameen Koota
23 Sharada's Women's Association for Weaker
Section
29 Asmitha Microfin Ltd.
44 SKS Microfinance Private Limited
MFIs in Bangladesh
Major players in the movement:
• Grameen Bank
• BRAC- Bangladesh Rural Advancement Committee
• ASA - Association for Social Advancement
• Proshika – (Training Education and Action)

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