All about Pradhan mantri jan dhan yojana and micro finance

1. Pradhan Mantri Jan Dhan Yojna
Mohit Chauhan
9802309547

2. Hon'ble Prime Minister,
Sh. Narendra Modi on 15
August, 2014 announced
"Pradhan Mantri Jan-
Dhan Yojana (PMJDY)"
which is a National
Mission for Financial
Inclusion.
The task is gigantic and is a
National Priority.

5. Cont…
Ensuring access to various financial services like
availability of basic savings bank account
Access to need based credit.
Remittances facility
Insurance and pension to the excluded sections i.e.
weaker sections & low income groups.
This deep penetration at affordable cost is possible only
with effective use of technology.

9. Cont…

15. Direct / special benefits attached to PMJDY?
i. Interest on deposit.
ii. Accidental insurance cover of Rs.1.00 lac
iii. No minimum balance required. However, for withdrawal of money
from any ATM with Rupay Card, some balance is advised to be kept in
account.
iv. Life insurance cover of Rs.30,000/-
v. Easy Transfer of money across India.
vi. Beneficiaries of Government Schemes will get Direct Benefit Transfer in
these accounts.
vii. After satisfactory operation of the account for 6 months, an overdraft
facility will be permitted.
viii. Access to Pension, insurance products.

17. Micro- finance

18.  Microfinance is the provision of loans and other financial services to the poor
i) To promote self-employment
ii)Contribute to poverty alleviation
iii)Provision of social security.
iv) To create opportunities for economic growth
with the efforts of rural development, women empowerment and wealth generation by
providing:
i)Small scale savings
ii) Credit
iii) Insurance and
iv) Other financial services to low income households.
 Microfinance also known as microcredit or micro lending means making provision for
smaller working capital loans to the self-employed or self-employment seeking poor.

19. Comparison of micro-finance & micro-credit
• In Microcredit, The mobilization of funds is restricted to external
sources such as banks & moneylenders and physical collateral may
be needed.
• In Microfinance, the small loan can be garnered not just from the
external sources but also through self-mobilization, by way of saving
and sale of assets.
• Lack of any physical collateral.
• The options available with microfinance, therefore, are much broader
and flexible than the ones available with microcredit

20. The Important Features of Microfinance are:
• Tool for the empowerment of poor women.
• Loans are very small.
• Targets the poor rural and urban households.
• Credit under microfinance follows thrift i.e. mobilize savings and lend the same.
• Low transaction cost due to group lendings.
• Transparencies in operation.
• Short repayment period.
• Simple procedure for reviewing, processing and approving loan applications and delivery
credit.
• Chances of mis-utilization are rare and there is assured repayment.
• Peer pressure act as the collateral security required for loans.
• Need based loan disbursement.
• Prompt repayment and
• There is no ceiling from the RBI in respect of minimum and maximum amounts.

21. Microfinance in Africa
•The United Nations (UN) has paid close attention to and recognised the important role of
microfinance in the socio- economic advancement of communities.
•This has included the declaration of the year 2005 as the year of microfinance, conducting
studies and producing publications on the subject, and strengthening activities of its
specialized fund for small-scale investment (UNCDF).
•More recently, the UN Secretary General has designated a Special Advocate for Inclusive
Finance, to champion the microfinance agenda.

22. • This UN’s intense interest is in recognition of the emerging importance
of microfinance as a tool for poverty reduction in African. Although the
recent financial and economic crises adversely affected many African
economies, microfinance grew on the continent at a remarkable pace
even at the height of the crisis in 2008.
• At the end of 2008, Microfinance Institutions (MFIs) in SSA reported
reaching 16.5 million depositors and 6.5 million borrowers.
• Moreover, even when the region witnessed a slowed growth in
borrowers in 2008, there was a continued and strengthened uptake for
depositors, as their growth rate increased by 10 per cent to reach 40 per
cent, which is more than for any other region.

23. Microfinance in Africa is developing at all the
three levels of the financial system
1. Micro (financial service providers)
2. Meso (support service providers) and
3. Macro (policy, regulatory framework and
supervision).

24. • At the micro level, there are many stakeholders and growing interest
from banks and private investors. Microfinance institutions (MFIs)
are having a predominant role, with a strong credit unions
membership, although the bulk of savings is still mobilized through
the banks.
• At the meso level, MFIs have scaled up provision of services such
as training or auditing, and indications are that some associations are
active in coordinating the activities of MFIs.
• At the macro level, countries are increasingly shifting to a
conducive paradigm of market based policies, while also putting in
place regulatory and supervisory frameworks.

25. Profile of Microfinance in India
• Microfinance translates to approx. 75 million households.
• Annual credit demand ---- about Rs. 60,000 crores.
• Cumulative Disbursement -- about Rs. 5000 crores.
• Total outstanding -- Rs. 1600 crores.
• Only about 5% of rural poor(access to microfinance) ---- cumulative of about 20
million families
• The non poor --- 29% of the outreach.
• While 10% lending to weaker sections in commercial banks; they does not have
(i) Network for lending and
(ii) Lack of supervision on a larger scale.
(iii) Confidence to offer term loan to big microfinance institutions.

26. Need for Microfinance
• Assisting poor communities economically to achieve greater
levels of asset creation.
• Income security at the household and community level.
• Major poverty alleviation strategy in India.
• To make poor self-reliant economically.
• Poor contribute directly to the well being of poor families.
• To confront systematic gender inequalities.
• For overcoming the inevitable and common imbalance between
income and expenditure among poor societies.

27. Evolution of Micro Finance
• The idea of microfinance strictly rolls around the philosophy of Muhammad Yunus of Bangladesh (Nobel
laureate) who initiated organization ‘poorest of the poor’ into self-help groups namely Bangladesh Grameen
Bank (BGB) in the year 1976, and proving the basic "theory of survival".
• The interest in Grameen Bank reached a new peak with a micro-credit summit held in February 1997 in
Washington which was considered the first step of a decade-long campaign that seeks to ensure delivery of credit
for self-employment by 2005 to hundred million of the world's poorest families especially women.

28. Participants in the Microfinance System :
• National Bank for Agricultural and
Rural Development (NABARD)
• Reserve Bank of India (RBI)
• Self Help Groups (SHGs)
• Micro-finance Institutions (MFIs)
• Non Government Organizations (NGOs)

29. SHGs
• The ideal size of an SHG is 10 to 12 members.
• The group need not be registered.
• From one family, only one member.
• Mixed groups are generally not preferred.
• Members have the same social and financial
background (interact more freely).
• Compulsory attendance (Full attendance for
larger participation).

30. Functions of SHGs
• Principle of thrifts(saving).
• 'Savings first - credit later' is the motto.
• The savings to be used as loans to members. The purpose, amount, rate of
interest etc. to be decided by the group itself.
• Enabling members to attain loans from banks, and repaying the same.
• Discussion and to find solution of the problem faced by the members of group.

31. Functions of NGOs
• Organising the poor people into groups.
• Training and helping them in the organizational, managerial and financial matters.
• Helping them across micro credit and linkage with formal financial agencies.
• Channelizing the group effort for various developmental activities.
• Availing opportunities.
• Widening the options available for economic development.
• Sustaining the group efforts independently even after withdrawal of the NGO.

32. Micro-finance Institutions:
Based on asset sizes, MFIs can be divided into following categories:-
• Converted into for-profit, regulated entities mostly Non-Banking
Finance Companies (NBFCs):-- SKS INDIA, SHARE and Grameen
style programs(2000).
• Institutions with high growth rate, including both news recently form
for-profit MFIs:- Grameen Koota, Bandhan and ESAF(10-15).
• The bulk of India's MFIs are NGOs struggling to achieve significant
growth.

33. Thank you