micro-finance for inclusive development
TRANSCRIPT
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1.2 billion people in the world live on less than $1.20 per day,including 900 million women
Another billion people live below the poverty line of $2.40 per day
80% world's population has no access to credit.
500-600 million can, thanks to a microloan, develop an income-generating activity
More than 80 million have benefited from services provided by themore than 10,000 existing MFIs
Total financing currently available for microfinance has risen to US$1billion per year
Only 3% of the need for microfinance is being met 16 million currently use microfinance
500 million could potentially benefit from microfinance
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Microfinance is the provision of financial services to low-income
clients, 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."
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Channels ofDistribution
Self HelpGroups
MicroFinance
Institutions
4 out of 5 microfinance clients in India are
women.
Micro-credit portfolio of India Microfinance
was Rs. 22,000 crore
SHG Linkage reports over Rs. 3,500 crore
savings, only MFI Bank, KBS Bank reports
about Rs. 40 crore savingsPortfolio
MFIs operate in 209 out of 331 districts of
the country, 28% of the new clients are from
Urban areas.
SHG75%
LargeMFIs
20%
Medium& Small
MFIs5%
0%
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People helped
Active borrowers: 604,000
Jobs created or sustained last year: 985,000
Typical borrower: woman (68%)
Children impacted last year: 1.86 million
Loans given
Average loan size: $671.00
Loan repayment rate: 98.7 percent
Loan portfolio: $397 million
Since 1993, World Vision has disbursed 3,500,000 loans, totaling more
than $1.8 billion
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UnutilisedIndustrial
Land
Allottedfor
Cultivationpurposes
Earn aliving
throughagriculture
IncreaseGDP fromprimarysector
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Personallevel
Social
LevelRegionalLevel
Personal Level
Empowerment of women
Better education and development
Ability to cope with economic shocks
Social Level
Creation of jobs
Higher quality of jobs Higher and more stable income
cohesiveness of a community
improving the economic base and
resilience
Regional Level Creation of jobs at the regional level
Strengthening of the microentreprise sector
Reduce migration flows to urban areas
Strengthening of the financial sector as a
whole, widening its scope and outreach
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High Volume of Financial Transaction but value wise very low
Majority of the financial transactions are off-site in nature
Geographic spread of operations and density of customers
Lack of infrastructure facilities like power, broadband etc
Unsecured lending and no documented financial history is
available.
Customer KYC is tough for MFIs as most prospective customers
do not have permanent habitats, bank accounts, stable incomeproof etc.
Illiteracy, bad decision making and lack of business processes.
Combination of above, lead to high operating cost
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Mr Reddy says for-profit MFIs should be
treated at par with money-lenders and
should not be subject to soft regulation
as they are a bigger risk to the system
than individual lenders who extend loansout of their own net worth.
The money lender normally lends outof his own money whereas here, MFIsare actually borrowing money fromdepositors and lending the money. So
essentially, he is a leveraged moneylender.
Therefore there should be good moneylending legislation in every state
Yaga Venugopal Reddy
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1.Existing microfinance institutions can expand their operations to areaswhere there are no microfinance programs.
2.Cooperatives/Credit Unions involvement can play a more proactive role.
3. More NGOs can incorporate microfinance as one of their programs.
4. In places where there are no microfinance institutions, the government
channels at the grassroots level may be used to serve the poor withmicrofinance.
5.Postal savings banks may participate
6. More commercial banks may participate both in microfinance wholesale
and retailing.
7.International NGOs and agencies may develop areas or countries wheremicrofinancing is not a very familiar concept in reducing poverty.
8.Community based organizations may get involved in microfinance Services.
9. Industrialisation can compliment Agriculture, enhance quality of Life at
grass root.
10.Penetration of Banking and accountability
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Private Investors and equity funds are now financing fastgrowing and nascent MFIs
Some state governments are funding SHG-programmes
Govt. of India has appointed NABARD to manage theMicrofinance Development & Equity Fund (MFDEF)
Microfinance Bill pending in Parliament
Banks are leveraging technology to reach out to the Poorand demographically underprivileged.
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Akanksha Sharma-58
Basant Jalan-30
Nitin Sarawagi-53
Pankaj Sharma-57
Samarth Dhawan-11
Vatsal Jariwala-31