...Microfinance From Wikipedia, the free encyclopedia Jump to: navigation, search This article may be too technical for most readers to understand. Please help improve this article to make it understandable to non-experts, without removing the technical details. The talk page may contain suggestions. (January 2010) Community-based savings bank in Cambodia. There are a rich variety of financial institutions which serve the poor. Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is "a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers."[1] Those who promote microfinance generally believe that such access will help poor people out of poverty. Microfinance is a broad category of services, which includes microcredit. Microcredit is provision of credit services to poor clients. Although microcredit is one of the aspects of microfinance, conflation of the two terms is endemic in public discourse. Critics often attack microcredit while referring to it indiscriminately as either 'microcredit' or 'microfinance'. Due to the broad range of microfinance services, it is difficult to assess impact, and very few...
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...MP A R Munich Personal RePEc Archive Attracting Microfinance Investment Funds: Promoting Microfinance Growth through Increased Investments in Kenya Jeffrey Ben Matu Duke University, International Development Program 18. April 2008 Online at http://mpra.ub.uni-muenchen.de/12084/ MPRA Paper No. 12084, posted 12. December 2008 17:42 UTC Attracting Microfinance Investment Funds: Promoting Microfinance Growth Through Increased Investments in Kenya Master’s Project Master of Arts in International Development Policy Terry Sanford Institute of Public Policy Duke University Jeffrey Ben Matu Principal Policy Advisor Dr. Graham Glenday April 18, 2008 Acknowledgements This paper could not have been written without Dr. Graham Glenday who not only served as my policy advisor, but also encouraged and challenged me to do my best. I would also like to thank my other committee members; Dr. Cory Krupp and Dr. Rosemary Fernholz for patiently guiding me through the writing process and for their suggestions and continued support. To my family and friends, I thank you for your encouragement with reading and commenting on the paper. And to my wife Sharon, for believing in me and encouraging me to never accept less than my best efforts. Finally I would like to thank Jennefer Sebstad, Leila Webster, Stefan Staschen, and Jerry Grossman for reading and making comments on my drafts. Thank you all. 2 Table of Contents List of Acronyms…………………………….…………………………………………….……………………...
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...Urban Microfinance 9 5. Financial Inclusion in India 11 6. Microfinance as an Anti-Poverty Vaccine 15 7. Transformation of Microfinance in India 19 8. Scaling up Microfinance 22 9. Microfinance in India - A Tool For Poverty Reduction 26 10. SWOT Analysis of Microfinance 29 11. Delivery Models of Microfinance 32 12. Interest Rates in MFIs and prevailing trends 36 13. Scope of further study 42 14. Conclusion 44 15. Bibliography 46 OBJECTIVE OF THIS PROJECT WORK This project work tries to outline the prevailing condition of the Microfinance in India in the light of its emergence till now. Microfinance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. It is emerging as a powerful tool for poverty alleviation in India. The prospect of Micro-Finance is dominated by SHGs (Self Help Groups) - Banks linkage Program. Its main aim is to provide a cost effective mechanism for providing financial services to the poor. To understand the transformation experiences better, the issues that trigger transformation were identified viz.: size, diversity of services, financial sustainability and focus. It is argued that the transformation experiences in India are not large in number. However, I found that there are three forms of organizations that seem to be popular in the microfinance sector...
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...Microfinance - “the provision of financial services to low-income individuals and households, as well as micro, small and medium enterprises (MSMEs), using specially designed methodologies that will ensure sustainability for the lenders, and lead to improvement in the standard of life for the consumers, while ensuring a triple bottom-line of “developing the person; positively impacting lives; and leading to economic development of the region” as it facilitates large numbers of clients with relevant financial services at affordable prices” - provides an enormous potential to support the economic activities of the low income people and thus contributes to poverty alleviation. Widespread experiences and research have shown the importance of savings and credit facilities for the low income people and MSMEs. This puts emphasis on the sound development of MFIs as vital ingredients for investment, employment and economic growth. There is therefore, need for new, innovative, and pro-poor modes of financing low-income households and MSMEs based on sound operating principles. Implying that, an appropriate policy, legal and regulatory framework to promote viable and sustainable systems of microfinance in a country must be developed (Omino, 2005). The existing microfinance regulation in Kenya, (Microfinance Act 2006), while putting regulation and supervision of Deposit Taking Microfinance Institutions (DTIs) under Central Bank of Kenya (CBK), has, through Section 3(2) of the Act, empowered...
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...1.0 Background to the Study It is the goal of every institution to attract the best workforce for enhanced productivity and profitability. Employees, when employed should be monitored to ensure that they are working as required and meeting organizational goals. If workers are left unattended, there is the tendency for them to use working hours for personal and other things which are unrelated to the work for which they have been employed. It is therefore imperative for employers to measure the performance of employees to know their actual contribution towards the achievement of organizational goals. According to Aurel Brudan, performance indicators are “the selected measures that provide visibility into the performance of a business and enable decision makers to take action in achieving the desired outcomes.” Bernard Marr also defines performance indicators as “the most important performance information that enables organizations or their stakeholders to understand whether the organization is on track or not.” Performance indicators or key performance indicators are used in assessing the performance of workers. They help an organization define and measure progress toward organizational goals. Performance indicators are financial and non-financial indicators that org’s use in order to estimate and fortify how successful they are, aiming previously established long lasting goals. They are quantifiable measurements, agreed to beforehand, that reflect the critical success...
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...Microfinance Industry in India Lok Capital March 2010 Microfinance Industry in India 2 March 2010 EXECUTIVE SUMMARY • The microfinance sector in India has developed a successful and sustainable business model which has been able to overcome challenges traditionally faced by the financial services sector in servicing the low income population by catering to its specific needs, capacities and leveraging preexisting community support networks. As of March 2009, microfinance institutions (“MFIs”) in India reached over 22 million borrowers and had a portfolio outstanding in excess of $2.3 billion. The microfinance business model in India typically generates a Return on Equity (“ROE”) of between 20% and 30%, driven by financing from commercial banks, strong operating efficiency and high portfolio quality.1 Despite achieving rapid growth with a CAGR of 86% in loan portfolio outstanding and 96% in borrowers over the last five years, the microfinance sector still faces a large unmet demand which means that it still has great potential for continued growth. The microfinance sector is maturing and beginning to diversify its product and service base to address other unmet financial and non-financial needs of the low income population either directly or by acting as a conduit for third-party providers – savings, insurance, remittance and low cost education and healthcare services being some of the key examples. Given this growth and maturity dynamic, the Indian...
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...Master Thesis Entrepreneurship and Microfinance: A Framework for Impact Evaluation Abstract The idea and implementation of Microfinance has become a hot topic and is currently at the central stage in debates on poverty alleviation. Microfinance can be defined as the sustainable delivery of financial services to the poor that aims at creating a world in which as many poor households as possible, have access to a suitable range of financial services (Christen, Rosenberg and Jayadeva, 2004). However, the large majority of impact studies of microfinance lack empirical support and several limitations and obstacles continue to haunt the potential outcomes of microfinance, such as selection bias (Tedeschi, 2007) and lack of integration with the commercial banking sector (Copestake, 2007). In my thesis, I will focus on yet another limitation, that of lack of entrepreneurial knowledge amongst lenders in microcredit. I will develop on the marginal impact of entrepreneurial training on microcredit and suggest an empirical framework. The paper will start by presenting the topics of entrepreneurship and microfinance and the current situation in Tanzania. In Part II a review of an important study by Karlan and Valdivia will be discussed and in the following section a suggestion for a framework for an empirical study will be made. Conclusions and limitations will be presented in the final sections. Student: Eva Teekens ID: 5704871 Study: Master Business Studies Specialization: Entrepreneurship ...
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...affects their lifestyles both socially and economically. Along with poverty, many other social problems or issues can be pointed out including unemployment, lack of education, lack of proper governance and over population. These problems are associated with poverty and most of the time regarded as causes or effects. In government’s bid to eradicate poverty from the rural areas, it adopted strategies and one of such strategies is microfinance. Microfinance involves the application of innovative methodologies that make financial services available to relatively poor households and microenterprises. Microfinance can also be termed as the practice of providing financial services including micro credit, micro savings and micro insurance to poverty stricken or poor individuals, such that they are assisted to collect large sums of money in order to expand their choices and help them reduce the risk faced by them in their societies. HISTORY OF MICROFINANCE Microfinance activities date as far back as in the early 1900’s where Susu, which is one of the current microfinance schemes was practiced. Available evidence also suggests that the first credit union in Africa was established in Northern Ghana in 1955 by the Canadian...
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...Could Microfinance Be the End of Poverty? Lending money to a small business or individual that may or may not be able to repay the debt can be complex and lead to banks having to make difficult decisions. Lenders are known for acting with caution and avoiding a risky investment, yet millions of people worldwide are gaining access to capital. These small corporations or family owned start-ups are using microfinance institutions to supply them with the necessary loans they need for various business or personal expenses. The ability of these applicants, who otherwise would have never been approved, to gain the funding through microcredit loans has had a remarkable impact globally. Heads are turned, and many ask the question “Could microfinance be the solution to help end poverty?” Historically, many businesses have faced difficulty with applying for a loan. Bankers are renowned for requiring a huge amount of paperwork and proof of income, insurance, etc. This can be a time consuming and stressful process. Some investors expect that the company asking for the loan will be unable to provide the documents that are required and therefore will be denied. While lenders are able to adjust such details as interest rates and length terms for their own benefit, they are hesitant to take an applicant that will put the repayment at risk. The economic shifts have had an impact on the lives of people worldwide. Small companies are unable to support the cost of staying open and many eventually...
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...Abstract Contents: Context- Objectives of group lending- Methodology- Some experiences of FINGOs, Potentialities- Limitations-Further improvements suggested- Conclusion Micro credit was visualized as a specialized sector by central bankers in 1970s as a necessity to serve small business and rural poor households who were out of reach of banking services in Nepal. Historically priority sector credit, small farmer development program, production credit for rural women, micro credit for women, and saving, credit cooperatives, and deprived sector credit programs are major initiatives from formal financing system. Thousands of informal occupational groups and community groups function informally. Main thrust of both formal and informal agencies is group mechanism to generate saving, serve micro credit and other social development inputs to their group members. Poor households variously called low income families, Janajati, backward Madhesi, Dalit, Women, and unemployed youth who live in rural areas have low saving, low capital base are excluded by banks and financial institutions intentionally from their service folds. They lack general and financial literacy. As an individual they are ineligible to take loans. They are recognized by financing institutions under Groups as legal entity. The Financial Intermediary Act 2055 recognizes groups including 4 to 10 members from disadvantaged households as a unit to receive social and financial inputs. From lenders’ as well as borrowers’...
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...A PROJECT ON MICRO FINANCE MANAGEMENT AND ITS ANALYSIS IN INDIA BANKING MANAGEMENT CONTENTS PAGE NO. 1. ABSTRACT 3 2. OBJECTIVE 3 3. METHODOLOGY 3 4. INTRODUCTION 4 5. EMERGENCE OF MICRO FINANCE 5 6. CLIENTS OF MICRO FINANCE 6 7. MICRO FINANCE NEED IN INDIA 6 8. MICRO FINANCING REGULATIONS IN INDIA 7 9. ACTIVITIES IN MICRO FINANCE 8 10. LEGAL REGULATIONS 9 11. GOVERNMENT ‘S ROLE IN SUPPORTING MICRO FINANCE 12 12. MICRO FINANCE SUPPORTING WOMEN 13 13. MICRO FINANCE MODELS 14 14. SUCCESS OF MICRO FINANCE IN INDIA ...
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...State of Microfinance in Bangladesh Prepared for Institute of Microfinance (InM) As part of the project on State of Microfinance in SAARC Countries By Dewan A. H. Alamgir 2009 Disclaimer Any opinions expressed and policy suggestions proposed in the document are the author’s own and do not necessarily reflect the views of Institute of Microfinance (InM). The report also does not represent the official stand of the Government of the countries studied. 2 | State of Microfinance in Bangladesh List of Acronyms ADB ASA BBS BDT BEES BIDS BKB BMDA BRAC BRDB BSBL CARB CBO CBN CDF CFPR CIDA COSOP CPD DANIDA DFID DOL DOF EC FSP FSS FY GB GDP GOB HCP HIES IBBL IFAD IGA IGVGD InM JC LGED ME MFMSP Asian Development Bank Bangladeshi NGO (formerly Association for Social Advancement) Bangladesh Bureau of Statistics Bangladesh Taka Bangladesh Extension Education Services Bangladesh Institute of Development Studies Bangladesh Krishi Bank Barind Multi-Purpose Development Authority Building Resources Across Communities (Largest NGO) [Formerly Bangladesh Rural Advancement Committee] Bangladesh Rural Development Board Bangladesh Sanchya Bank Limited Center for Agricultural Research-Barind (a Bangladeshi MFI) Community Based Organization Cost-of-basic-needs Credit and Development Forum Challenging the Frontiers of Poverty Reduction Programme Canadian International Development Agency Country Strategic Opportunities Paper (of IFAD) Centre for Policy Dialogue Danish International...
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...Spandana Case Study: An Analysis This essay is based on the first randomized Impact evaluation of Microfinance. Section 1 explains the methodology of the study, Section 2 presents the data analysis and results, Section 3 presents the Caveats to be considered while interpresting the results, Section 4 presents some conclusions derived from the study and Section 5 talks about how some of the problems identified with respect to MFIs can be addressed. In a paper named “Miracle of Microfinance: Evidence from a randomized evaluation”, Abhijit Banerjee, Esther Duflo, Rachel Glennerster and Cynthia Kinnan analyze the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. This study also follows the households over the longest period of any evaluation (three to 3.5 years after the introduction of the program in their areas) to trap impacts not only in the short run but also over the medium run. The results of this study compel us to think about the functional difference that the microfinance initiatives are making in the target community and whether it’s time to address this sphere of developmental finance with less fancy and more caution. SECTION 1: METHODOLOGY OF THE STUDY CONSTRUCTION OF THE RCT Baseline Survey A baseline neighbourhood survey (2005) was conducted to assess baseline conditions such as household composition, education, employment, asset ownership, expenditure, borrowing, saving, and any businesses...
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...International Center for Business Research Issue: Volume 2 – Apr 2013; Link: icbr.net/0204.37 Case Study Of SKS Microfinance Ltd.: India’s Lone Microfinance Company in the Stock Market Devendra Prasad Pandey1 1 MGCG University, Chitrakoot, Satna, MP, India Abstract: Started as an NGO in 1988, SKS is today a for-profit NBFC regulated by the Reserve Bank of India. As of January 31, 2013 it has 48 lakh members associated with 1307 branches. It has disbursed 26195 crore as of September 2012. SKS Microfinance operates across 17 states in the country, including Andhra Pradesh, Karnataka, Maharashtra, Odisha, Madhya Pradesh, Bihar, Uttar Pradesh, Rajasthan, Uttaranchal, Haryana, West Bengal, Jharkhand, Chhattisgarh, Gujarat, Kerala, Punjab and Delhi. In August 2010, SKS completed an IPO that from the global financial perspective was a great success: it was 13 times oversubscribed, and the company's valuation reached the top of the offer band price (which initially listed the value of the company at $1.5 billion), and the share price rose 13% on its first day of trading and rose 29% within four weeks of the IPO. In the process, SKS raised $348 million in fresh capital that, in theory, was supposed to help further grow the business and allow SKS to serve more people with financial services and microcredit than it reached before the IPO. Shares of SKS Microfinance rose by over eight per cent in early trade, after the company reported a net profit of Rs 1.2 crore for the third...
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...Microfinance is the provision of financial services such as loans, savings, insurance, and training to people living in poverty. It is one of the great success stories in the developing world in the last thirty years and is widely recognized as a just and sustainable solution in alleviating global poverty. The Specialist of a Microfinance Software can offer up a number of other much-needed services, and those services include: Business process analysis and technology needs assessment, Software development for system integration with other applications, Modification of Microfinance Software to suit local requirements, Business consulting and IT strategy development to map out technology investment, Implementation and training of a social performance management through a tool like PPI, Data migration and testing, and they also offer Training and general technology readiness. Microfinance has many database components such as; supports loan and savings portfolio management, centralized operational reporting, social performance measurement, and can be integrated with other technology solutions. It was launched as a community-driven platform to address the entire industry's need for cost-effective flexible technology that scales and evolves with the rapid growth of microfinance. Microfinance has many components to their database. Microfinance is considered one centralized platform with a global community and its purpose is to provide support for group meetings, training &...
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