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  1. A Study of Micro Finance Institutions (MFIs) In India Dr. Harshal A. Salunkhe Asst. Prof. SIBMT
  2. INTRODUCTION • Provision of financial services such as credit, saving, and insurance • Poor individuals which fall below the poverty line • Impact of improving livelihood opportunities through the provision of capital • Founded of the Grameen bank in Bangladesh by Yusuf • Group lending, individual lending , the provision of savings and insurance, capacity building, and agricultural business development services • Creation of social value
  3. • Due to its large size and population of around 1000 million, Indias GDP ranks among the top 15 economies of the world • A group of micro-finance practitioners estimated the annualized credit usage of all poor families Sat over Rs 45,000 crores, of which some 80percent is met by informal sources. • There are about 60 million households below or just above the austerely defined poverty line and with more than 80 percent unable to access credit at reasonable rate. • As on 31 March 2009, there are more than 61 lakh saving- linked SHGs and more than 42 lakh credit-linked SHGs and thus, about 8.6crore poor households are covered under the programme and 4 out of 5microfinance clients in India are women.
  4. SELF HELP GROUPS(SHGs) • Major role on poverty alleviation in rural India as they Actively engage in saving and credit • Create some control over capital-very small amounts • Gradually away form exploitation and isolation • 10-25 members and collect savings from members typically once a week • Government of government and non-governmental agencies, they non-governmental agencies, they now make up 90 % of all SHG’s • Start without any external financial capital • Small internal loans for micro finance enterprise
  5. Problems for Alternative Micro-Finance Institutions • The alternative finance institutions have not been fully successful in reaching the needy. There are many reasons for this: • Financial problems leading to setting up of inappropriate legal structures and Inappropriate Legal Forms • Lack of commercial orientation • Lack of proper governance and accountability • Isolated and scattered
  6. The Problems of Mainstream MFIs • Borrower Unfriendly Products and Procedures • Inflexibility and Delay • High Transaction Costs, both Legitimate and Illegal • Social Obligation and not a Business Opportunity • Financing to Alternative MFIs • Complexity in Legal and Regulatory Framework
  7. Solutions • Greater legitimacy, accountability and transparency in MFIs • There is a need to recognize a separate category of Microfinance • It should be specified that at least 80% of the assets of MF- NBFCs should be in the form of microcredit of up to Rs. 50,000 for agriculture, allied and non farm activities and in case of housing, loans up to Rs. 1,50,000, per individual borrower. • MF-NBFCs as Business Correspondents (BCs) for a local feel. • Relaxation in FIPB guidelines and Unifying regulatory oversight • Tax Concessions and Accounting and Disclosure Norms. • As micro-insurance agents
  8. CONCLUSION • India’s achievement of the MDG of halving the population of poor by 2019 as well as achieving a broad based economic growth also hinges on a successful poverty alleviation strategy. In this backdrop, the impressive gains made by SHG-Bank linkage programme in coverage of rural population with financial services offers a ray of hope. • Underlying Belief of Self Help Groups.............. “Give a man a fish and you feed him a day but teach him how to fish and you feed him a lifetime” • Many little things done in many little places, by many little people, will change the face of the world. - An old Chinese saying