Micro Fiannce

7/31/2019 Micro Fiannce

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IN

DEPARTMENT OF MANAGEMENTSTUDIES

SNS COLLEGE OF TECHNOLOGYCOIMBATORE-35.


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Source-www.rbi.org.in


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Defined


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Source: Malegam Commitee Report on Micro Finance 2010


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Source:www.mixmarket.org/crossmarket-analysis

0

20,000,000

40,000,000

60,000,000

80,000,000

100,000,000

2001 2002 2003 2004 2005 20062007 2008 2009 2010

Assets (sum)


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Source:www.mixmarket.org/crossmar

ket-analysis

0

1000000

2000000

3000000

4000000

5000000

6000000

2001 2002 2003 2004 2005 20062007

20082009

2010

Deposits (sum)


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In 1904, Microfinance has been in practice for ages(though informally).Legal framework for establishing theco-operative movement set up.

In 1934, Reserve Bank of India Act provided for theestablishment of the Agricultural Credit Department.

In 1969, Nationalisation of banks.

In 1975, Regional Rural Banks created.

In 1976,Grameen Bank, Yunus

In 1982, NABARD established as an apex agency for

rural finance.

In 1995, Passing of Mutually Aided Co-op. Act in AP.


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NGO MFIs Registered under SocietiesRegistration Act 1860 and / or Indian Trust Act1880

Co-operative MFIs Registered under State Co-

operative Societies Act or Mutually Aided Co-operative Societies Act (MACS) or Multi-StateCo-op. Societies Act, 2002

NBFC MFIs under Section 25 of Companies Act,1956 (Not for profit).NBFC MFIs incorporatedunder Companies Act,1956 & registered withRBI



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Source-Economic Times


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Clients (Mn)

2008 2009

Growth

rate %

Loans (bn)

2008 2009

Growth

rate %

SKS 1.88 3.52 87 7.81 24.6 214

Spandana 1.19 2.43 104 5.95 18.7 214

Share 1.29 1.50 16 7.28 12.2 67

Bandhan 0.76 1.45 91 2.78 5.3 91

Asmita 0.70 0.88 26 3.36 7.1 111

Source:CRISIL report 2010


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NO OF PLAYERS INTHE MICROFINANCE

INDUSTRY


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Source-CRISIL Ratings India MFI Institutions 2010


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Source-CRISIL Ratings India MFI Institutions.


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Entrust the function of development andregulation of the micro financial sector

Define various entities engaged in the activity

of micro finance Define various categories of beneficiaries of

micro financial services Provide for extending micro financial services

to eligible clients Provide for acceptance of thrift, i.e., savings

eligible clients

Source-CRISIL Ratings India MFI Institutions.


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Provide for constitution of Micro FinanceDevelopment Council to advise the NationalBank

Provide for registration of Micro FinanceOrganisations

Provide for creating of a reserve fund andmaintenance of accounts

Provide for functions and powers of theNational Bank

Provide for constitution of Micro FinanceDevelopment and Equity Fund


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Empower the National Bank to frame ascheme for appointment of one or moreMicro Finance Ombudsman for settlement ofdisputes

To provide for offences and penalties To empower the Central Government to

prescribe Rules To empower the National Bank to make

regulations with the previous approval of theCentral Government for carrying out thepurposes of the bill.


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Ways to get Foreign Funds by Micro fiance:

Acceptance of Foreign Contribution:

Foreign Direct Investment

NBFCs can obtain foreign capital in the form

of equity subject to approval by the Foreign

Investment Promotion Board (FIPB)


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Private Equity(PE) Group Legatum andAavishkaar Goodwell have invested $25million capital in Share which is a MFI

Sequoia and Unitus, the Seattle-based

company that invests in MFIs, have ploughed$11.5 million into SKS Microfinance

Morgan Stanley and Switzerland-based BlueOrchard raised $108 million from the issue of

a securitized bond backed by MFI loans. Themoney will be invested in 21 MFIs in morethan 10 countries including India.


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Private Equity (PE) funding from foreignplayers has provided the much needed easeof funding for the MFI sector.

Help Indian MFIs to improve upon theirdelivery system with the adaptation of goodmanagement practices brought about byforeign players


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Too aggressive on giving out loans to thepoor with proper due diligence.Y V Reddy,former Governor, RBI has compared this tothe Sub Prime crisis lending of 2007-08 inthe US.

Pressure of repayment on individuals leadingto suicide cases in Andhra Pradesh, the state

having the largest number of MFIs Risk of Foreign Investors moving out with the

slum in the MFI sector in 2010-11.


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The future role MFIs might play in serving the poor isnot clear, particularly with regard to microfinanceNGOs.

It is difficult for NGOs to charge the same low interestrates as banks, yet it was pointed out that NGOsmight be better placed to disburse loans quickly andto do doorstep lending, which reduces transactioncosts for borrowers.

Cap on Interest pricing to further limit theprofitability of the sector

Increase in defaults on loan will hamper the MFI

sector in India. To the above it is highly disappointing that in this

2012-13 Union Budget no extra provision for IMEFAnnounced by our finance minister

Reference: RBI report on MFIs, Jan 2011.


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"Microfinance is going to put poverty into themuseum Muhammad Yunus, Nobel Prize Winner &

Founder of Grameen Bank

Micro finance has crossed many miles from its birth and it is about

to go many miles to achieve its goal of alleviating poverty not only inIndia but also all over the world. It can achieve its goal only when

the way it goes through is bed of roses that is with proper legal

framework let the announcement in Union Budget 2012-13 gives

Micro finance Institutions a way with bed of roses for miles to go.

How much of that is going to be true only time will tell, but one thingis certain where ever there will be poor people wanting loans, therewill be lenders ready to oblige!


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Documents

Micro Fiannce