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CONTENTS
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Sr. No. Particulars Page Nos.
1 Introduction Of Microfinance 2 – 7
2 Review Of Literature 8 – 9
3 Rationale Of The Study 10
4 Objective Of The Study 10
5 Methodology 11
6 Poverty In Indore & Their Needs 12-14
7 Remittance Requirement 15
8 Microfinance Terminology 16-18
9 Data Analysis & Interpretation 19-28
10 Service Volume 29-42
11 Challenge For Microfinance 43-44
12 Suggestion 45
13 Conclusion 46
14 Bibliography & Webliography 47-48
15 Questionnaire 49-50
INTRODUCTION
Microfinance is the provision of financial services to those who
are excluded from conventional commercial financial services
since most are too poor to offer much - or anything - in the way
of collateral. It presents a series of exciting possibilities for
extending markets, reducing poverty and forecasting social
change.
The concept of microfinance originated in the mid-1970s in
Bangladesh through a pioneering experiment by Dr. Muhammad
Yunus, then a Professor of Economics. His aim was to offer
poor people:
• financial services
• entrepreneurship opportunities
• an end to mistreatment by money lenders
• a system where they could produce, manage and maintain
their own finances
CONCEPT AND FEATURES OF MICRO-FINANCE
a) Micro-
credit:
Small loans; primarily for income generation
activities, but also for consumption and
contingency needs.
b) Micro-
savings:
Thrift or small savings from borrowers ‘own
resources.
The main features of the micro-finance services
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1. It is a tool for empowerment of the poorest; the higher the
income and better the asset position of the borrower, the
lower the incremental benefit from further equal doses of
micro-credit is likely to be.
2. Delivery is normally through Self Help Groups (SHGs).
3. It is essentially for promoting self-employment; the
opportunities of wage employment are limited in
developing countries - micro finance increases the
productivity of self-employment in the informal sector of
the economy - generally used for (a) direct income
generation (b) rearrangement of assets and liabilities for
the household to participate in future opportunities and (c)
consumption smoothing.
4. It is not just a financing system, but a tool for social
change, specially for women - it does not spring from
market forces alone - it is potentially welfare enhancing -
there is a public interest in promoting the growth of micro
finance - this is what makes it acceptable as a valid goal
for public policy.
5. Because micro credit is aimed at the poorest, micro-
finance lending technology needs to mimic the informal
lenders rather than the formal sector lending. It has to
(a) Provide for seasonality
(b) Allow repayment flexibility
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(c) Eschew bureaucratic and legal formalities
(d) Fix a ceiling on loan sizes.
"Microfinance institutions (MFIs) are those which provide
thrift, credit and other financial services and products of very
small amounts mainly to the poor in rural, semi-urban or urban
areas for enabling them to raise their income levels and improve
living standards".
MFIs have emerged broadly under three categories:
i). Not-for-Profit MFIsSocieties registered under Societies Registration Act, 1860 or
similar State Acts
Public Trusts registered under the Indoren Trust Act, 1882
Non-profit Companies registered under Section 25 of the
Companies Act, 1956
ii). Mutual Benefit MFIs
State credit cooperatives
National credit cooperatives
Mutually Aided Cooperative Societies (MACS)
iii). For-Profit MFIs
Non Banking Financial Companies (NBFCs) registered under
the Companies Act, 1956Banks which provide MF along with
their other usual banking services could be termed as mF service
providers.
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INDORE OVERVIEW
An official Census 2011 detail of Indore, a district of Madhya
Pradesh has been released by Directorate of Census Operations
in Madhya Pradesh. Enumeration of key persons was also done
by census officials in Indore District of Madhya Pradesh.
In 2011, Indore had population of 3,272,335 of which male and
female were 1,700,483 and 1,571,852 respectively. There was
change of 32.71 percent in the population compared to
population as per 2001. In the previous census of Indore 2001,
Indore District recorded increase of 34.30 percent to its
population compared to 1991. The initial provisional data
suggest a density of 839 in 2011 compared to 633 of 2001. Total
area under Indore district is of about 3898 s.q. k.m. Average
literacy rate of Indore in 2011 were 82.32 compared to 75.15 of
2001. If things are looked out at gender wise, male and female
literacy were 89.22 and 74.89 respectively. For 2001 census,
same figures stood at 84.60 and 64.81 in Indore District. Total
literate in Indore District were 2,358,338 of which male and
female were 1,324,967 and 1,033,371 respectively. In 2001,
Indore District had 1,575,436 in its total region.
With regards to Sex Ratio in Indore, it stood at 924 per 1000
male compared to 2001 census figure of 912. The average
national sex ratio in Indore is 940 as per latest reports of Census
2011.
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In census enumeration, data regarding child under 0-6 age were
also collected for all districts including Indore. There were total
407,536 children under age of 0-6 against 369,546 of 2001
census. Of total 407,536 male and female were 215,446 and
192,090 respectively. Child Sex Ratio as per census 2011 was
892 compared to 908 of census 2001. In 2011, Children under 0-
6 formed 12.45 percent of Indore District compared to 14.99
percent of 2001. There was net change of -2.54 percent in this
compared to previous census of Indore.
Indore District population constituted 4.51 percent of total
Madhya Pradesh population. In 2001 census, this figure for
Indore District was at 4.51 percent of Madhya Pradesh
population.
Indore district major population is also live in villages. But only
five villages has been considered for the research work. Talking
about the Rau, which is a first village where the research
program is conducting. Rau is a developing industrial area of
Indore. Where live around three - four thousand people. Main
income of source of people is farming, laboring and business.
Chitawad is second village villages where the research program
is conducting with circulate questionnaire. It’s also rural and
developing area of Indore district. People of this village are
working on his farm and some people also working in factory as
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a labour. It’s a small village where live around two thousand
people.
Devguradiya is third village villages where the research program
is conducting. It’s a religious and rural backward area, where
people totally devoting to God. Where live around one thousand
people.
Mangalaya is our next village where conducting all research
program. It’s a well developing area and also part of Indore city.
In this village petroleum companies are establishing his refinery
and it’s also source of people of village. Mangalaya is also part
of Indore city than people are going to city for income. It’s a
develop village where live around four – five thousand people.
Lasudiya mori is our last place villages where the research
program is conducting. It’s also a big and developing village
where people well known about microfinance. This is famous
for showroom of automobile companies. The main source of
income of people is farming & business. Where live around five
thousand people.
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REVIEW LITERATURE
These literatures include books written on the subject by experts
and also journals, manuals etc. In fact, there are very few
literatures available, regarding socio-economic, political and
entrepreneurial development of women.
Dr.C.Rangarajan (2006) in his topic ‘Microfinance and its
future directions’ in the introductory part of the book, outline
the evolution of SHG through microfinance evolve through in
three stages. First, to meet survival requirement need, in the
second stage is to meet the subsistence level through investing
in tradition activities and in the final stage by setting up of
enterprises for sustainable income generation.
Robert Peck Christen (2006) in his paper “Microfinance and
Sustainable International Experience and lesson for Indore”, he
articulates the changing general perception of bankers, that
SHGs are profitable clients or bank.
Lanmdau Mayoux’s study (1998) on Participatory Learning
for Women’s Empowerment in Micro Finance Programs
proposes a participatory approach for integrating women’s
empowerment concerns into ongoing programs learning, which
itself would be a contribution to empowerment. Micro finance
programs for women are currently promoted not only as a
strategy for poverty alleviation but also for women’s
empowerment.
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Article of G. Buckley (1997) microenterprises in the informal
sector in Kenya, Malawi Ghana. It seeks to provoke critical
reflection on the uncritical enthusiasm that lies behind much
proselytizing of microfinance for informal sector
microenterprise. It questions whether the extensive donor
interest in microenterprise finance really addresses the problems
of micro entrepreneurs.
Vinay K Srivatava and Arvind Singh (2010) in their article
stated that the micro finance has contributed to its success is its
credit-plus approach – where the focus has not only been on
providing adequate and timely credit to low income groups, but
to integrate it with other developmental activities. He says it is
important to understand that the concept of microfinance is not
new. The precedence for microfinance lies in the numerous
traditional and informal systems of credit.
Robert peck christen 2006 in his paper “microfinance and
sustainable international experience and lesson for India” he
articulate the changing general perception of bankers that SHGs
are profitable clients are banks.
In the above context, various are the view points given by
researchers in the field of Microfinance. Here, in the present
Study the focus is on villages of Indore, to know the awareness
of microfinance among poor peoples and how the people of
Indore get the benefit of Microfinance.
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RATIONALE OF THE STUDY
Indore’s rural poor are overwhelmingly dependent on
agriculture as their primary source of income; the majority is
marginal or small farmers, and the poorest households are
landless. The financial needs of Indore’s rural poor reflect the
volatile, uncertain and irregular income streams and expenditure
patterns of these households. Many Banks providing Micro
financing aimed at empowering women so that they can be able
to create their own business. Microfinance industry not only
helps them pull themselves out of poverty, but it also promotes
gender equity throughout out the world. Microfinance loans
helps to create sustain impact by educating recipients on how to
create their own business and how to properly manage and grow
their money. Microfinance allows the poor to gate the loans they
need to save invest and create a sustainable life style of financial
independence and growth these loans are used productively by
the poor to create there owns business.
OBJECTIVES OF THE STUDY
1. To measure effectiveness of microfinance on village People of Indore
2. To study how micro financing empower women.
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3. To analyze how microfinance reduce poverty in Indore.
RESEARCH METHODOLOGY
The Study: The present study “an impact of microfinance on
poverty in related to villages of Indore” is exploratory in nature.
Data Collection: Research is based on primary data. Secondary
data is also used. Primary data has been collected by interacting
with various people, through structured Questionnaire. The
secondary data has been collected through various journals,
magazines, website.etc.
Analysis of the Data: The analysis of data has been done on
percentage basis. Graphic representation of the data has been done
through Pie Charts.
Sample size: The sample size is of 100 People of village in Indore
district.
Sampling Method: The method used for sample technique was
stratified random sampling method.
Selection of Study Area: The research has been conducted on
People of village. The sample size used here was 100 people of
villages in Indore district, who belongs to different Villages of
Indore. The study has been conducted by considering 5 villages
of Indore namely Rau, Chitawad, devguradiya, Mangalaya and
Lasudiya mori etc. regarding Microfinance services used in
villages of Indore.
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Poverty in Indore
Poverty in Indore and Indore is still rampant despite an
impressive economic growth. An estimated 0.65 million people
are below the poverty line and approximately 63 per cent of
them are in the rural areas. In general, poverty can be defined as
a situation when people are unable to satisfy the basic needs of
life. The definition and methods of measuring poverty differs
from country to country. According to the definition by
Planning Commission of Indore, poverty line is drawn with an
intake of 2400 calories in rural areas and 2100 calories in urban
areas. If a person is unable to get that much minimum level of
calories, then he/she is considered as being below poverty line.
Causes of Poverty in Indore
• High level of dependence on primitive methods of
agriculture
• High population growth rate
• High Illiteracy (about 27% of adult population)
• Regional inequalities
• Protectionist policies pursued till 1991 that prevented high
foreign investment.
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Problems Faced by village people of Indore
One of the major problems with poverty alleviation programs is
their implementation. Rajiv Gandhi once said that out of 100
paisa allocated for poor only 14 paisa reaches them. But in spite
of their weaknesses, poverty alleviated program can be credited
for their success in alleviating poverty to an extent. Greater
public-private partnership and committed and efficient
bureaucratic machinery is required to tackle poverty.
Since its independence, the issue of poverty within Indore has
remained a prevalent concern. According to the common
definition of poverty, when a person finds it difficult to meet the
minimum requirement of acceptable living standards, he or she
is considered poor.
Many people in Indore are unable to meet these basic standards,
and according to government estimates, in 2008 there were
nearly 0.22 million people living below the poverty line.
Nearly 18.9% of the entire rural population and 21% of the
urban population of Indore exists in this difficult physical and
financial predicament.
The poverty ratios illustrated here are divided in two types:
urban and rural. Specific reasons for poverty vary in the urban &
rural setting; A number of factors are responsible for poverty in
the rural areas of Indore. Rural populations primarily depend on
agriculture, which is highly dependent on rain patterns and the
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monsoon season. Inadequate rain and improper irrigation
facilities can obviously cause low, or in some cases, no
production of crops.
Additionally, the Indoren family unit is often very large, which
can amplify the effects of poverty. The government has planned
and implemented poverty eradication programs, but the benefits
of all these programs have yet to reach the core of the country.
Poor’s and their needs
With the rapid growth of big cities, slums, the breeding grounds
of urban squalor and Poverty, swell primarily due to increased
migration of the poor from the villages in search of better
employment opportunities and improved standard of living. All
poor, however, do not live in slums. In fact, the urban poor
population in the country is estimated to be nearly eight crore
whereas the slum population hovers around four crore. Most of
the working population in urban areas work under utterly
deplorable conditions in unorganized sector with a very few
livelihood options.
The deprivation of urban poor is further accentuated as more
than 40 percent of adult Indoren urban population has no access
to a bank account (this figure would be more if multiple
accounts held by individuals are factored), and, thereby
depriving them of savings, credit, remittance and other financial
service facilities from the formal financial system.
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Against this background, this paper tries to study the issues and
options involving financial inclusion of the urban poor.
Managing savings well by the urban poor is critically important
but often neglected leading to absence of a secured source of
finance to meet life cycle as well as Investment needs.
REMITTANCE REQUIREMENT
In Indore, huge flow of migrants, poor and the not-so-poor,
crises-cross the country in search of a better life for themselves
and their families who mostly stay behind in their villages. They
take up non-contractual and nonpermanent jobs, such as, house
(a) Informal Source □ (b) SHG Groups □ (c) Banks □ (d) Others □ Q.6) from where you come to know about Microfinance?
(a) Family member & Relatives □ (b) Friends & Peers □ (c) Magazines & Generals □ (d) Others □ Q.7) how long have you been using Microfinance?
(a) None □ (b) 0 year to 2 years □ (c) 2 years to 3 years □ (d) More than 3 year’s □
Q.8) what is your basic objective at the use of microfinance?
(a) Reduce Poverty □ (b) Increasing Income □ (c) Empowering of women □ (d) Self Employment □ Q.9) Which Factors influencing the growth of microfinance?