Awareness of schemes and services of mf is

Awareness of Schemes and Services of Micro Finance Institutes 1 | P a g e

1.1 ABOUT TOPIC:

Micro-finance refers to small savings, credit and insurance services extended to socially and

economically disadvantaged segments of society. In the Indian context terms like "small and

marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly

define micro-finance customers. The recent Task Force on Micro Finance has defined it as

"provision of thrift, credit and other financial services and products of very small amounts to the

poor in rural, semi urban or urban areas, for enabling them to raise their income levels and improve

living standards". At present, a large part of micro finance activity is confined to credit only.

Women constitute a vast majority of users of micro-credit and savings services.

Microfinance providing very poor families with small loans to help and them engage in productive

activities or grow their very small businesses. Like, many poor people need and use financial

services all the time. They save and borrow, invest in home repairs and improvements and meet

occasional and domestic expenses such as food d and school fees. However, there are some 500

million very low income entrepreneurs in the world and about 5% have access to financial services.

Indeed, financial services available to the poor often have serious limitations in terms of cost, risk

and convenience. As a result, microfinance has come to include a broader range of services. The

industry has come to realize that the poor and the very poor that lack access to traditional formal

financial institutions require a variety of financial products.

In 1980s, microfinance programs have improved upon original methodologies and extended beyond

conventional thinking. First, microfinance demonstrated that poor people, and especially women,

had excellent repayment rates (and often, rates that performed better than those in formal financial

sectors). And second, that the poor were willing and able to pay interest rates that would allow the

microfinance institutions (MFIs) to cover costs.

1.2 PURPOSE OF MICRO FINANCE:

Microfinance brings the power of credit to the grassroots by way of loans to the poor, without

requirement of collateral or previous credit record. Experience shows that microfinance can help

the poor to increase income, build viable businesses, and reduce their vulnerability to external


shocks. It can also be a powerful instrument for self-empowerment by enabling the poor,

especially women, to become economic agents of change. Poverty is multi-dimensional, and by

providing access to financial services, microfinance plays an important role in the fight against the

many aspects of poverty. Access to credit allows poor people to take advantage of economic

opportunities - for their homes, their domestic environments and their communities. For instance,

income generation from a business helps not only the business activity expand but also contributes

to household income and its attendant benefits on food security, children's education, etc.

Moreover, for women who, in many contexts, are secluded from public space, transacting with

formal institutions can also build confidence and empowerment.

Recent research has revealed the extent to which individuals around the poverty line are vulnerable

to shocks such as illness of a wage earner, weather, theft, or other such events. These shocks

produce a huge claim on the limited financial resources of the family unit, and, absent effective

financial services, can drive a family so much deeper into poverty that it can take years to recover.

1.3 IMPORTANCE OF TOPIC:

The biggest importance is to bringing financial services to poor people and making them financial

sustainable by economies of scale effect. In India the National Bank for Agriculture and Rural

Development (NABARD) finances more than 500 banks that on lend funds to self help groups

(SHG). SHGs comprise twenty or fewer members, of whom the majorities are women from the

poorest castes and tribes. Nearly 1.4 million SHGs comprising approximately 20 million women

now borrow from banks, which make the Indian SHG-Bank Linkage model the largest

microfinance program in the world. Similar programs are evolving in Africa and Southeast Asia

with the assistance of organizations like Opportunity International, Catholic Relief Services,

CARE, APMAS and Oxfam. Also helps in the development of an economy by giving everyday

people the chance to establish a sustainable means of income. Eventual increases in disposable

income will lead to economic development and growth.

1.4 IMPORTANCE OF STUDY:

To learn about various aspect of micro finance.

To analyze the history of micro finance.

To get familiar with the organization culture and environment.


2.1 INTRODUCTION:

India Info Line Ltd was founded in 1995 by a group of professionals with impeccable educational

qualification and professional credentials. India Info Line is listed on BSE and NSE with a market

capitalization of over $ 150 million.

5paisa is the trade name of the India Info Line securities private limited, a wholly owned

subsidiary of India Info Line ltd. 5paisa holds membership of both the leading stock exchange of

India viz. the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and is also a

depository participant with NSDL and CDSL. It has tied up with the leading banks for funds

transfer facilities Viz. City Bank, Centurion Bank, ICICI Bank and UTI Bank. The group has a

membership of a Multi Commodities Exchange (MCX), National Commodities and Derivative

Exchange of India (NCDEX) and the Dubai Gold and Commodities Exchange (DGCX).

The India info Line group has a significance presence across the country with over 500 branches

in over 300 cities across India. All these offices are networked and connected with the corporate

office in Mumbai. The group has invested significantly in technology and research, the result of

which are there for everyone to see. The 5paisa trading interface is one of the most advanced

platforms available to retail investor in India. The group has membership on BSE and NSE for

equities trading. It has a SEBI license for portfolio management under which, various schemes are

offered, which have been continentally beating the benchmark indices since inception.

2.2 VISION OF COMPANY:

Our vision is to be the „Most Respected Financial Services Company‟ in India. We can remain

true to our vision by being the best and not necessarily the biggest or the fastest. Many-a-time,

expectations of employees, customers, shareholders and society seem conflicting, but a deeper

insight reveals that they complement one another and in fact, can be achieved only together.


2.3 PRODUCT PROFILE:

1. Equity Broking:

2. Portfolio management services:

3. Investment banking:

4. Home loans:

5. Mutual funds, fixed deposit, IPO’s, bonds, post office:

Equity Broking:

It offers trading in both the cash as well as the derivative segments. It is one of the largest online

players. It provides Cash trading in NSE and BSE Market as well as commodity trading also

offered by India Infoline in these two markets.

Portfolio management services:

It includes provide advisory base services based on the requirement of the clients. This includes

portfolio creation, portfolio restructuring and portfolio management. A portfolio management

service which is offered by India Infoline is as a SEBI registered portfolio manager and all the

activities is perform by India Infoline in order to guide its clients so that they can make good

investment decision.

Investment banking:

It means Investment banking and corporate advisory under the category-1 merchant-banking

license. It includes service like Consultancy to guide or give advice related to the different area of

investment and in investment banking also.

Home loans:

It includes Home loans and other loan products. All the work related to the loan and services is

also offered by company (IIFl)


Mutual funds, fixed deposit, IPO’s, bonds, post office:

It includes saving and several other investment products. Like Mutual fund (equity based and debt

based both). Risk free return that is government bond other bond, fixed deposits, saving in post

office etc.

(Financial Services Provided by IIFl)

BSE cash

trading

NSE cash

trading

NSE Future and

Option

Commodities

Markets Trading

IPO Trading Mutual Funds

Financial

Services


2.4 MANAGEMENT TEAM:

The management team of the INDIA INFOLINE includes the following members:

Mr. Nirmal Jain:

Nirmal Jain is the founder and Chairman of India Info Line Ltd. He holds an MBA degree from

IIM Ahmadabad, and is a Chartered Accountant (All India Rank 2) and a Cost Accountant. He

has had an impeccable professional and academic track record. He started his career in 1989 with

Hindustan Lever Limited. During his stint with Hindustan Lever, he handled a variety of

responsibilities, including exports and trading in agro commodities with Rs.3bn annual turnover.

He then joined hands with two local brokers to set up their equity research division, Inquire, in

1994. His work set new standards for equity research in India. In 1995, he founded his own

independent financial research company, now known as India Info Line Ltd.

Mr. R. Venkataraman:

R Venkataraman is the co-promoter and Executive Director of India Info Line Ltd. He holds a B.

Tech degree in Electronics and Electrical communications engineering from IIT Kharagpur and

an MBA degree from IIM Bangalore. He has held senior managerial positions in various divisions

of ICICI Limited, including ICICI Securities Limited, their investment banking joint venture with

J P Morgan of USA and with BZW and Taib Capital Corporation Limited. He has also held the

position of Assistant Vice President with G E Capital Services India Limited in their private

equity division. He has varied experience of more than 14 years in the financial services sector.

The Board of Directors:

Apart from Nirmal Jain and R Venkataraman, the Board of Directors of India Info Line

comprises:

Mr. Sat Pal Khattar (Non Executive Director)

Mr. Arun K. Purvar (Independent Director)

Mr.Nilesh Vikamsey (independent director)

Mr.Kranti Sinha (independent director)


3.1 HISTORY OF MICRO FINANCE:

The history of micro financing can be traced back as long to the middle of the 1800s when the

theorist Lysander Spooner was writing over the benefits from small credits to entrepreneurs and

farmers as a way getting the people out of poverty. But it was at the end of World War II with

the Marshall plan the concept had a big impact.

The today use of the expression micro financing has its roots in the 1970s when organizations,

such as Grameen bank of Bangladesh with the microfinance pioneer Mohammad Yunus, where

starting and shaping the modern industry of micro financing. Another pioneer in this sector is

Akhtar Hameed Khan. At that time a new wave of microfinance initiatives introduced many

new innovations into the sector. Many pioneering enterprises began experimenting with loaning

to the underserved people. The main reason why microfinance is dated to the 1970s is that the

programs could show that people can be relied on to repay their loans and that it‟s possible to

provide financial services to poor people through market based enterprises without subsidy.

Shore bank was the first microfinance and community development bank founded 1974 in

Chicago.

An economical historian at Yale named Timothy Guinnane has been doing some research on

Friedrich Wilhelm Raiffeisen´s village bank movement in Germany which started in 1864 and by

the year 1901 the bank had reached 2 million rural farmers. Timothy Guinnane means that already

then it was proved that microcredit could pass the two tests concerning people‟s payback moral

and the possibility to provide the financial service to poor people.

Today the World Bank estimates that more than 16 million people are served by some 7000

microfinance institutions all over the world. CGAP expert means that about 500 million families

benefits from these small loans making new business possible. In a gathering at a Microcredit

Summit in Washington DC the goal was reaching 100 million of the world‟s poorest people by

credits from the world leaders and major financial institutions.

The year 2005 was proclaimed as the international year of Microcredit by The Economic and

Social Council of the United Nations in a call for the financial and building sector to “fuel” the

strong entrepreneurial spirit of the poor people around the world.


ORIGIN OF MICRO-FINANCE IN INDIA:

A self-help group (SHG) is a group of about 10 to 20 persons from a homogenous background

who come together for addressing the common problems. They collect voluntary savings on a

regular basis and use the pooled resources to make small interest bearing loans to their members.

In 1991-92, a pilot project for linking about 500 SHG with banks, in order to formally utilize their

savings and financing them was launched by National Bank for Agriculture and Rural

Development (NABARD). In 1994, the Reserve Bank of India (RBI) constituted a working group

of (Non-government Organization) NGOs and SHGs. Based on the recommendation of this

group, RBI took some serious measures in April 1996 like starting SGH – bank linkage

programme.

In 1999, Government has taken active interest and then in the successive Budgets some or the

other announcements are made by Finance Ministers. However, in Budget Speech of 2005,

Finance Minister has put thrust on Micro Finance Institutes (MFIs) and advised the RBI issue

liberal guideline for MFIs. Finance Minister has also announced “Micro Finance Development

and Equity Fund” of Rs. 200 crore.


Growth and Origin of Micro Finance:

Year

Milestone

Middle of the 1800s

Lysander Spooner was writing over the benefits from small credits to

entrepreneurs and farmers as a way getting the people out of poverty.

1864-1991 An economical historian at Yale named Timothy Guinnane has been doing

some research on Friedrich Wilhelm Raiffeisen´s village bank movement in

Germany which started in 1864 and by the year 1901 the bank had reached 2

million rural farmers.

1970 At that time organizations, such as Grameen bank of Bangladesh with the

microfinance pioneer Mohammad Yunus, where starting and shaping the

modern industry of micro financing.

1974 Shore bank was the first microfinance and community development bank

founded 1974 in Chicago.

1991-92 A pilot project for linking about 500 SHG with banks, in order to formally

utilize their savings and financing them was launched by National Bank for

Agriculture and Rural Development (NABARD).

1994 In 1994, the Reserve Bank of India (RBI) constituted a working group of

(Non-government Organization) NGOs and SHGs.

1996 Based on the recommendation of NGOs and SHGs, RBI took some serious

measures in April 1996 like starting SGH – bank linkage programme.

2000 Lok capital initiative launched with grant from Rockefeller Foundation.

2003 Incorporated lok-foundation

2005-07 In 2005 Launched India operations, In 2005-06 Fundraising, marketing team

building, pipeline. The year 2005 was proclaimed as the international year of

Microcredit by The Economic and Social Council of the United Nations in a

call for the financial and building sector to “fuel” the strong entrepreneurial

spirit of the poor people around the world.

2008-09 Enter for MFI partnerships in 2008 to 2009

2010 Enter to continue partnerships till sep 2011


3.2 CURRENT SCENARIO:

The International year of Microcredit consists of five goals:

1. Assess and promote the contribution of microfinance to the MFIs

2. Make microfinance more visible for public awareness and understanding as a very important part

of the development situation

3. The promotion should be inclusive the financial sector

4. Make a supporting system for sustainable access to financial services

5. Support strategic partnerships by encouraging new partnerships and innovation to build and

expand the outreach and success of microfinance for all.

The economics professor Mohammad Yunus and the founder of Grameen Bank were awarded the

Nobel Prize 2006 for his efforts. The press release from nobelprize.org states: “The Norwegian

Nobel Committee has decided to award the Nobel Peace Prize for 2006, divided into two equal

parts, to Muhammad Yunus and Grameen Bank for their efforts to create economic and social

development from below. Lasting peace cannot be achieved unless large population groups find

ways in which to break out of poverty. Micro-credit is one such means. Development from below

also serves to advance democracy and human rights. Muhammad Yunus has shown himself to be

a leader who has managed to translate visions into practical action for the benefit of millions of

people, not only in Bangladesh, but also in many other countries.

Loans to poor people without any financial security had appeared to be an impossible idea. From

modest beginnings three decades ago, Yunus has, first and foremost through Grameen Bank,

developed micro-credit into an ever more important instrument in the struggle against poverty.

Grameen Bank has been a source of ideas and models for the many institutions in the field of

micro-credit that have sprung up around the world. Every single individual on earth has both the

potential and the right to live a decent life. Across cultures and civilizations, Yunus and Grameen

Bank have shown that even the poorest of the poor can work to bring about their own

development. Micro-credit has proved to be an important liberating force in societies where

women in particular have to struggle against repressive social and economic conditions.

Economic growth and political democracy cannot achieve their full potential unless the female

half of humanity participates on an equal footing with the male.

Yunus‟s long-term vision is to eliminate poverty in the world. That vision cannot be realized by


means of micro-credit alone. But Muhammad Yunus and Grameen Bank have shown that, in the

continuing efforts to achieve it, micro-credit must play a major part.

SHG-Bank linkage program failed to benefit poorer states:

A Self Help Group is a group of 10-20 women or men who work for the capacity building of

themselves. The goal of Self help groups (SHG) is to become effective agents of change. They

serve as a platform to establish the banking with the poor which is reliable, accountable and a

profitable business. SHG also enables livelihood opportunities for village women through micro–

credit with the existing banks in the area.

The SHG-Bank linkage program that evolved in India as a micro-credit model has proved

successful in southern states but failed to achieve its goal to benefit poorer states, says an

occasional paper by Pankaj Kumar and Ramesh Golait titled „Bank Penetration and SHG-Bank

Linkage Programme: A Critique‟, published by RBI this month.

The report says, “SBLP was conceived to fill the existing gap in the formal financial network

and extending the outreach of banking to the poor. However, the present distribution of the SBLP

is skewed against the poorer regions of the country. While less than one-fifth of total loans to

SHGs went into the Eastern and Central Regions taken together, they accounted for more than

three-fifth of the total poor in India.”

Introduced in 1991-92, the SHG-Bank linkage program (SBLP) reached 3.4 million as of March

2008, received Rs. 22,268 crore in credits, benefitted 4.1 crore poor households in gaining access

to the formal banking system. While the number of beneficiary SHGs shot up from 32,995 in

1998-99 to 34, 77,965 in 2007-08 or recording a two-third rise, the banks have almost doubled

their cumulative loans to SHGs each year, the paper said.

In turn it has led to a four-fold increase in the average loans per SHG from Rs. 16,816 in 1999-

2000 to Rs. 63,926 in 2007-08

Even the SHGs per lacs population varied in southern and eastern states. As of March 2008, 891

SHGs in Andhra Pradesh and 435 in Kerala benefitted while Assam accounted for 3.1% of the

total SHGs and the rest of the six States had a negligible share. Since the impact of the SHG

model is uneven, the paper suggests remedial measures like performance-linked incentives to

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2029

http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=2029


banks, creation of specific funds to address the regional imbalances in the SBLP, formation of

SHGs around activities of rural such as construction and renovation of minor irrigation tanks,

feeder channels and rural roads.

“The aftermath of nationalization witnessed a remarkable spread of the banking system to the

unbanked and under-banked rural areas. However, the dependence on informal sources of credit

has not decreased in rural areas. The problem accentuated as banks veered away from rural to

urban India. The relative decline of commercial banking network in the rural areas runs contrary

to the objective of financial inclusion and is a formidable challenge in the way of faster and more

inclusive growth,” remarked the authors. The other activities suggested in the paper suggested

included embedding livelihood activities, micro-insurance and grain banks in the SHG model to

make it successful across all the states in the country.

Financial Performance of MFIs:

The RBI had brought in a condition of Qualifying Asset by which the MFIs should create loans

assets that would meet certain conditions like maximum loan amount of Rs. 50000, at least 75

percent of loan to be given for income generation purpose etc. for availing loan under priority

sector credit schemes from the banks.

The data provides evidence to reasonably conclude that Indian MFIs in general possess

Qualifying Asset.

The cost structure of MFIs showed that the operating cost of MFIs has been, in general, higher

than what the “Malegam” Committee had estimated last year. MFIs, in all likelihood, would find

it difficult to contain the Margin Cap (Yield over Borrowing cost) of 12 percent set by the RBI.

MFIs may be able to restrict their loan interest rate within the cap of 26 percent.

http://www.microfinancefocus.com/news/category/featured/financial-inclusion/

http://www.microfinancefocus.com/news/tag/micro-insurance/


3.3 MICRO FINANCE IN INDIA:

The absence of savings in Indian microfinance has distinguished it till now from microfinance in

most other countries, and has been likened to "walking on one leg" since without savings

microfinance is not microfinance at all but microcredit. There is a widespread misconception that

the poor are too poor to save, and that they need credit, not savings facilities. On the contrary,

savings is probably a more widely felt need than credit, and takes place through a variety of

savings mechanisms and institutions in the informal sector.29 Like the rest of us, the poor are

looking for savings services which are convenient, safe, liquid, and can preferably be used to

leverage loans.

3.3.1 Demand of Micro Finance Services in India:

Due to its large size and population of around 1000 million, India's GDP ranks among the top 15

economies of the world. However, around 300 million people or about 60 million households, are

living below the poverty line. It is further estimated that of these households, only about 20

percent have access to credit from the formal sector. Additionally, the segment of the rural

population above the poverty line but not rich enough to be of interest to the formal financial

institutions also does not have good access to the formal financial intermediary services,

including savings services.

A group of micro-finance practitioners estimated the annualized credit usage of all poor families

(rural and urban) at over Rs 45,000 corers, of which some 80 percent is met by informal sources.

This figure has been extrapolated using the numbers of rural and urban poor households and their

average annual credit usage (Rs 6000 and Rs 9000 pa respectively) assessed through various

micro studies.

Credit on reasonable terms to the poor can bring about a significant reduction in poverty. It is

with this hypothesis; micro credit assumes significance in the Indian context. With 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 rates, it is obvious that there are certain issues and

problems, which have prevented the reach of micro finance to the needy. With globalization and


liberalization of the economy, opportunities for the unskilled and the illiterate are not increasing

fast enough, as compared to the rest of the economy. This is leading to a lopsided growth in the

economy thus increasing the gap between the haves and have-nots. It is in this context, the

institutions involved in micro finance have a significant role to play to reduce this disparity and

lead to more equitable growth.

3.3.2 Demand for Credit:

In terms of demand for micro-credit, there are three segments:

At the very bottom in terms of income and assets, and most numerous, are those who are landless

and are engaged in agricultural work on a seasonal basis, and manual laborers in forestry, mining,

household industries, construction and transport. This segment requires, first and foremost,

consumption credit during those months when they do not get labor work, and for contingencies

such as illness. They also need credit for acquiring small productive assets, such as livestock,

using which they can generate additional income. The next market segment is small and marginal

farmers and rural artisans, weavers and those self employed in the urban informal sector as

hawkers, vendors, and workers in household microenterprises. This segment mainly needs credit

for working capital, a small part of which also serves consumption needs. In rural areas, one of

the main uses of working capital is for crop production. This segment also needs term credit for

acquiring additional productive assets, such as irrigation pump sets, bore wells and livestock in

case of farmers, and equipment (looms, machinery) and work sheds in case of non-farm workers.

This market segment also largely comprises the poor but not the poorest.

The third market segment is of small and medium farmers who have gone in for commercial crops

such as surplus paddy and wheat, cotton, groundnut, and others engaged in dairying, poultry,

fishery etc. Among non-farm activities, this segment includes those in villages and slums,

engaged in processing or manufacturing activity, running provision stores, repair workshops, tea

shops, and various service enterprises. These persons are not always poor, though they live barely

above the poverty line and also suffer from inadequate access to formal credit. One market

segment, which is of great importance to micro-credit, is women. The 1991 Census figures reveal

that out of total 2.81 million marginal workers, 2.54 million were women and their further break-

up shows that out of a total of 2.67 million rural marginal workers, 2.44 million were females.

Further, many more women were willing to work. This has been corroborated by the results of a


survey done by the National Sample Survey Organization (NSSO), 43rd round, which has

revealed that there is a wide variety of work which rural women combine with household work.

In the NSSO survey it has also been estimated that a large percentage of rural women in the age

group of 15 years and above, who are usually engaged in household work, are willing to accept

work at household premises (29.3%), in activities such as dairy (9.5%), poultry (3 %), cattle

rearing, spinning and weaving (3.4%), tailoring (6.1%) and manufacturing of wood and cane

products etc. Amongst the women surveyed, 27.5% rural women were seeking regular full-time

work, and 65.3% were seeking part-time work. To start or to carry on such work, 53.6 % women

wanted initial finance on easy terms, and 22.2 % wanted working capital facilities, as can be seen

from the table below:

Assistance Required (by women

marginal workers seeking or available

For work at their household premises).

Percent of

Women Seeking

Assistance

No assistance 2.1

Initial finance on easy terms 53.6

Working capital facilities 22.2

Raw materials availability 4.6

Marketing 1.7

Training 10.5

Accommodation 0.4

Other assistance 4.9

Total 100

(Source: NSSO survey 2007)

3.3.3 DEMAND FOR SAVING AND INSURANCE SERVICES:

The demand for savings services is ever higher than for credit. Studies of rural households in

various states in India show that the poor, particularly women, are looking for a way to save small

amounts whenever they can. The irregularity of cash flows and the small amounts available for

savings at one time, deter them from using formal channels such as banks. In urban areas also this

is true, in spite of better banking facilities, as shown by the experience of the SEWA Bank,

Ahmadabad. The poor want to save for various reasons – as a cushion against contingencies like


illness, calamities, death in the family, etc; as a source of equity or margin to take loans; and

finally, as a liquid asset. The safety of savings is of higher concern that interest rates. The demand

for savings services is high in rural areas as well, as can be seen from a recent study of women‟s

savings and credit movement in Andhra Pradesh. Almost all women‟s groups in their early years

begin with regular savings and their savings exceed the loans they give from their funds. Of

course, part of this lower demand for credit is the inadequate absorption capacity of women,

which comes from long years of exclusion from the economic sphere outside their homes. The

demand for insurance services, though not very well articulated, is also substantial. This comes

from the fact that not only incomes of microfinance customers low, but are also highly variable.

Insurance by the poor is needed for assets such as livestock and pump sets, for shelter. Crop

insurance could be very useful to the rural poor. Finally, insurance against illness, disability and

death would also reduce the shocks caused by such contingencies, which lead the poor into taking

loans at such times at high interest.

3.3.4 SUPPLY OF MICRO FINANCE SERVICES:

RBI data shows that informal sources provide a significant part of the total credit needs of the

rural population. The magnitude of the dependence of the rural poor on informal sources of

credit can be observed from the findings of the All India Debt and Investment Survey, 1992,

which shows that the share of the non-institutional agencies (informal sector) in the

outstanding cash dues of the rural households was 36 percent. However, the dependence of

rural households on such informal sources had reduced of their total outstanding dues steadily

from 83.7 percent in 1961 to 36 percent in 1991. This is shown in the table below.

Outstanding from Informal Sources as a Percentage of Total Dues, for

Various Occupational Categories of Rural Households:

YEAR CULTIVATOR NON CULTIVATOR ALL

1961 81.6 89.5 83.7

1981 36.8 63.3 70.8

2001 30.7 48.7 38.8

2011 24.5 39.2 36.0


Source: (formal institutional sources 2000) Among formal institutional sources, banks and

co-operatives provided credit support to almost 56 percent of the rural households, while

professional and agricultural money lenders were providing credit to almost one sixth of the

rural households. The details by source are given below:

Sources of Credit for Rural Households, 1991:

(Source: All India Debt and Investment Survey, 1992)

Though the overall share of institutional credit for rural households has gone up steadily,

households in the lower asset groups were more dependent on the non-institutional credit

agencies. The share of debt from the non-institutional credit agencies was 58 percent in the

case of lowest asset group of "less than Rs 5,000" as against a low of 19 percent in the

highest asset group of "Rs 2.5 lakh and above".

Credit agency households Percentage of rural

Government 6.1

Co-operative societies 21.6

Commercial banks and RRBs 33.7

Insurance 0.3

Provident fund 0.7

Other institutional sources 1.6

All institutional sources 64

Landlord 4

Agricultural moneylenders 7

Professional moneylenders 10.5

Relatives and friends 5.5

Others 9

all non institutional agencies 36

All agencies 100


Share of Debt from Institutional and Non-institutional Sources, by Asset

Holdings of Households:

Household Assets

(Rs 000)

Institutional

Agency

Share as %

Non-institutional

Agency

Share as %

ALL

Less Than 5 42 58 100

5-10 47 53 100

10-20 44 56 100

20-30 68 32 100

30-50 55 45 100

50-70 53 47 100

70-100 61 39 100

100-150 61 39 100

150-200 68 32 100

250 And Above 81 19 100

All Classes 64 36 100

(Source: Debt and Investment Survey, GoI, 1992)

Over the decades following India's independence in 1947, Government of India (GOI) has

made concerted efforts to provide micro-finance to the rural poor through the formal financial

sector namely the co-operatives. However, the limited success of the co-operatives in the mid

fifties to the sixties forged the need for nationalization of commercial banks (CB) in 1971 and

the establishment of a large network to reach every village, and every segment of the

population. In the mid-1970s, Regional Rural Banks (RRB) was also established to continue

further the outreach of the banking sector in reaching the rural poor. All these programs were

supported by a policy of mandated credit programs for the low-income households that were

supported by the Integrated Rural Development Program

(IRDP), launched in 1980. The IRDP was designed to provide a mix of subsidy from the

government and credit from the banking system to enable the asset acquisition of the poor.


As a result of these programs, India has one of the largest banking networks in the world with

close to 50,000 CB outlets; 14,420 RRBs; and 90,000 primary agricultural co operative

societies. Close to 43 percent of the CB, and RRB branches are located in the rural areas.

Even more impressive is the fact that, there is a financial intermediary branch for every

15,000 households, and a co-operative in every village.

Due to the extensive expansion of the banking network and emphasis on lending to small

borrowers, there have been a lot of small loans by banks. In terms of amount, this was 13.2

percent of the total credit outstanding from commercial banks and RRBs. As per RBI data for

March 1994, the number of accounts below Rs 25,000 was 5.6 million, or 93.6 percent of

total loan accounts, with 18.6 percent of the outstanding amount. Of these, accounts with

outstanding below Rs 7500 comprised 80.5 percent of the number of accounts and 49.5

percent of amount outstanding. In terms of purpose, 45.8 percent of amount was for small

agricultural loans, 20.2 percent for industry and 18.8 percent for trade and services. By March

1997, the number of small borrowable accounts with a credit limit below Rs 25,000, had

come down by as many 0.6 million accounts to 5.0 million, or 90.1 percent of the outstanding

loan accounts. This decline in number of accounts clearly shows the post liberalization trend,

with banks concentrating their efforts on larger loans and becoming ever more reluctant to

extend credit to small borrowers.

While banks have been engaged in financing small borrowers, the manner in which this is

being done can hardly be called micro-finance. The procedures are cumbersome, the staff

unfriendly and the transaction costs high. Repeat loans, except for crop production, are rare,

even for borrowers who have repaid fully. Furthermore, even though the many of the loans

extended to the poor by the public sector financial institutions are subsidized, their ultimate

cost to the borrowers is high: factoring in out-of-pocket costs, payments to middle men, wage

and business loss due to time spent in getting the loan approved. Effectively, the total cost of

funds to the borrower ranges between 22–30 percent as against the 12-14 percent nominal

lending rates specified for commercial bank loans below Rs 200,000. All this results in low

repayment rates, leading to a vicious cycle of non-availability and non repayment.


Supply of Savings and Insurance Services:

In the case of savings services, again while banks have provided access to a large number of

small depositors, the demand is nowhere near being met, particularly for small frequent

"recurring" deposits. Hence the poor turn to other means such as chits, bishis and savings

mobilization companies like Peerless and Sahara. Many such companies are fly-by night and

as a result, the poor lose their money. The RBI has tightened up deposit taking activity since

1997, but this has, perversely, also led to legitimate MFIs being not allowed to take deposits

and thus provide savings services to the poor.

Transaction costs of savings in formal institutions were as high as 10 percent for the rural

poor, because of small average transaction size and distance of the bank from villages. The

supply of insurance services to the poor has been increased substantially over the 1990s, and

there are a large number of low premium schemes covering them against death, accidents,

natural calamities, and loss of assets due to fire, theft, etc. However, the usage is limited by

low awareness among the poor. Crop and livestock insurance, however, are quite expensive

and their reach to the poor is negligible. Livestock and asset insurance was extended to the

poor along with the IRDP subsidized loans, and thus remained scheme driven, with little

awareness among the customers.

Highlights of the Bharat Microfinance Report:

Outstanding Portfolio (in Rs. Crore)

SBLP 10,644 16,900

Sa-Dhan, 223 MFIs 3,456 5,954

Total 13,582 21,961

Client Outreach (in million persons)

SBLP 16.01 21.57

Sa-Dhan, 223 MFIs 10.04 14.1

Total 24.55 33.55


Sa-Dhan Quick-data set is the most timely – the quickest – of any segment of the financial sector.

India Microfinance is proud to take once again the lead in disclosing performance over the last

financial year which ended on 31st March 2008. Highlights recorded are Growth of MFI- loan

portfolios passed 70% annually between March 2006 and March 2008. The strongest impulse

came from medium – often urban – MFIs in 2006/07 and from large MFIs in 2007/08. Indian

MFIs are true to their mission of serving the poor strata of society. A stable 8 out of 10 clients

have been provided loans sized less than Rs. 10,000. The loan segment between Rs. 5,000 and Rs

10,000 has been growing strongest. This can be explained by two impulses: On one hand,

microfinance customers mature to bigger loans over the loan cycles. On the other hand, urban

microfinance starts with comparatively bigger loans than rural finance. Indian MFIs serve 4.1

million clients from the SC/ST background. The reported number of SC/ST has been growing

alongside the rate of total outreach, thus the SC/ST-share is stable at 3 out of 10 clients.

India's MFIs operate in 209 out of 331 poorest districts of the country; up by 5% over the

previous year. Large MFIs are particularly active in expanding their operations to the poorest

districts; many of them serving poorest than other districts. Urban Microfinance is emerging as a

strong growth driver; between March 2006 and March 2008, 1 out of 3 new clients was from the

urban background. One Quarter of all MFI clients is from the urban background.

Moreover, the microfinance bill excludes the larger, and more rapidly growing part of the

sector:

One of the major omissions in the bill is that it excludes MFIs registered as NBFCs and S 25

companies, which account for nearly all the large MFIs, and the larger part of total microcredit in

the country. Their number is steadily increasing, as more and NGO-MFIs transform themselves

into companies for the reasons discussed above. The argument usually adduced for keeping

NBFCs outside the purview of the bill is that they are already regulated by the RBI.


Percentage distribution of debt among indebted labor households by source of debt:

Source:

Rural labor enquiry report on indebtedness among rural labor households (55th Round of N.S.S.)

1999-2000

The table above reveals that most of the rural labor households prefer to raise loan from the non-

institutional sources. About 64% of the total debt requirement of these households was met by the

non-institutional sources during 1999-2000. Money lenders alone provided debt (Rs.1918) to the

tune of 32% of the total debt of these households as against 28% during 1993- 94. Relatives and

friends and shopkeepers have been two other sources which together accounted for about 22% of

the total debt at all-India level. The institutional sources could meet only 36% of the total credit

requirement of the rural labor households during 1999-2000 with only one percent increase over

the previous survey in 1993-94. Among the institutional sources of debt, the banks continued to

be the single largest source of debt meeting about 17 percent of the total debt requirement of these

households. In comparison to the previous enquiry, the dependence on co-operative societies has

increased considerably in 1999-2000. During 1999-2000 as much as 13% of the debt was raised

from this source as against 8% in 1993-94. However, in the case of the banks and the government

agencies it decreased marginally from 18.88% and 8.27% to 17.19% and 5.37% respectively

during 1999-2000 survey.

Sr.no. Source of debt Households

With cultivated

land

Without cultivated

land All

1 Government 4.99 5.76 5.37

2 Co-operative societies 16.78 9.46 13.09

3 Banks 19.91 14.55 17.19

4 employers 5.35 8.33 6.86

5 Money lenders 28.12 35.23 31.70

6 Shop keepers 6.76 7.47 7.13

7 Relatives/friends 14.58 15.68 15.14

8 Other sources 3.51 3.52 3.52

Total 100 100 100


3.4 Banking Expansion:

Starting in the late 1960s, India was the home to one of the largest state interventions in the

rural credit market. This phase is known as the “Social Banking” phase. It witnessed the

nationalization of existing private commercial banks, massive expansion of branch network in

rural areas, mandatory directed credit to priority sectors of the economy, subsidized rates of

interest and creation of a new set of regional rural banks (RRBs) at the district level and a

specialized apex bank for agriculture and rural development (NABARD) at the national level.

The Net State Domestic Product (NSDP) is a measure of the economic activity in the state and

comparing it with the utilization of bank credit or bank deposits indicates how much economic

activity is being financed by the banks and whether there exists untapped potential for

increasing deposits in that state.

E.g. In the year 2003-2004 the percentage of bank deposits to NSDP is pretty high at

around75%-80% in Bihar and Jharkhand or these states are not as under banked as thought to

be.2.5 Microfinance Social Aspects Micro financing institutions significantly contributed to

gender equality and women‟s empowerment as well as poor development and civil society

strengthening. Contribution to women‟s ability to earn an income led to their economic

empowerment, increased well being of women and their families and wider social and political

empowerment. Microfinance programs targeting women became a major plank of poverty

alleviation and gender strategies in the 1990s. Increasing evidence of the centrality of gender

equality to poverty reduction and women‟s higher credit repayment rates led to a general

consensus on the desirability of targeting women.


Donors

Private

equity

MFI

SHG

SHG

SHG

Financial

Institution


4.1 PROBLEM OF STUDY:

To know the awareness of schemes and services of Micro Finance Institutes Among Surat

City.

4.2 OBJECTIVES OF THE PROJECT:

To know exact and depth concept of the Micro Finance.

To apply theoretical knowledge of Finance subject in practical way in business field.

To know the working methodology of microfinance in India.

To gain knowledge about functioning of microfinance with the help of participating

organization of Micro Finance

A brief analysis of various institutions providing financial assistance to poor people.

Assessing development impact of microfinance programs on various aspect like poverty,

economy etc.

Analyze the various kinds of effects of microfinance institution.

To know how the women can be empowered through these microfinance programs.

4.3 RESEARCH DESIGN:

There are three types of research design. 1. Exploratory research design 2.descriptive

research design. 3. Casual research design.

Here Descriptive Research Design is opted. Descriptive Research focuses on particular

aspects or dimension for formulating more sophisticated study. Like here we only

considering schemes and services of MFIs. Descriptive Research provides data about

population being studied.


4.4 DATA COLLECTION:

Research Methodology means tools and method used by researcher to gathering data and

analyzing them. The data can be collected mainly by two types of methods primary and

secondary data here researcher use primary data.

PRIMARY DATA:

The data which are collected by own and are not been collected by any other person in the

past are known as primary data. Here researcher collects data through structural

questionnaire.

4.5 SAMPLING:

Sampling includes all the activity related to the how, when, from whom we collect

information.

4.5.1 Sampling Method:

Here researcher used convenient and random sampling Method.

4.5.2 Sample Size:

Researcher uses 200 people out of total population so sample size is 200.

4.5.3 Target Population:

In this study target population is General people.

4.5.4 Time Period:

For this study time period is 2 month.

4.5.5 Geographical Area:

Here researcher selects varachha region in Surat city.


4.6 BENEFITS OF STUDY:

This study will help to know the view of customer towards the microfinance.

For this study MFIs know how to improve their performance and market potential for

MFIs.

For this we are easily know customer requirement and their preference

For this study we can know the approaches of bank towards MFIs.

For this we can easily know the customer approach.

4.7 SCOPE OF THE STUDY:

1. There is Huge demand and supply gap.

2. Employment opportunity.

3. Huge un-tapped Market.

4. Opportunity for Pvt. Banks, NBFCs, Foreign Banks to enter this business segment.

5. High number of people access to informal sources of finance.

6. Concentrating on few people only and mainly in urban areas.

4.8 LIMITATION OF STUDY:

1. Primary data: for the collection of data the questionnaire is used but it takes more time to

collect data as compare to the secondary one.

2. Lack of reference: for studying the topic in depth more information are require but to fill

up the questionnaire decide sample frame is very difficult.

3. Micro Finance is very vast topic so it‟s not possible to connect each and every aspects of

this topic into my project and it is not possible to collect all the data and information

necessary for the deep study as certain data and documents were confidential.


5.1 INTRODUCTION:

Microfinance is defined as any activity that includes the provision of financial services such as

credit, savings, and insurance to low income individuals which fall just above the nationally

defined poverty line, and poor individuals which fall below that poverty line, with the goal of

creating social value. The creation of social value includes poverty alleviation and the broader

impact of improving livelihood opportunities through the provision of capital for micro

enterprise, and insurance and savings for risk mitigation and consumption smoothing. A large

variety of actors provide microfinance in India, using a range of microfinance delivery methods.

Since the ICICI Bank in India, various actors have endeavored to provide access to financial

services to the poor in creative ways. Governments also have piloted national programs, NGOs

have undertaken the activity of raising donor funds for on-lending, and some banks have

partnered with public organizations or made small inroads themselves in providing such services.

This has resulted in a rather broad definition of microfinance as any activity that targets poor and

low-income individuals for the provision of financial services. The range of activities undertaken

in microfinance include group lending, individual lending, the provision of savings and

insurance, capacity building, and agricultural business development services. Whatever the form

of activity however, the overarching goal that unifies all actors in the provision of microfinance

is the creation of social value.

5.2 WHAT IS MICRO FINANCE?

According to International Labor Organization (ILO), “Microfinance is an economic

Development approach that involves providing financial services through institutions to low

Income clients”. In India, Microfinance has been defined by “The National Microfinance

Taskforce, 1999” as “provision of thrift, credit and other financial services and products of

very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise

their income levels and improve living standards”. "The poor stay poor, not because they are

lazy but because they have no access to capital."

The dictionary meaning of „finance‟ is management of money. The management of money

denotes acquiring & using money. Micro Finance is buzzing word, used when financing for

micro entrepreneurs. Concept of micro finance is emerged in need of meeting special goal to

empower under-privileged class of society, women, and poor, downtrodden by natural

reasons or men made; caste, creed, religion or otherwise. The principles of Micro Finance are


founded on the philosophy of cooperation and its central values of equality, equity and

mutual self-help. At the heart of these principles are the concept of human development and

the brotherhood of man expressed through people working together to achieve a better life for

themselves and their children.

Traditionally micro finance was focused on providing a very standardized credit product. The

poor, just like anyone else, (in fact need like thirst) need a diverse range of financial

instruments to be able to build assets, stabilize consumption and protect themselves against

risks. Thus, we see a broadening of the concept of micro finance--- our current challenge is to

find efficient and reliable ways of providing a richer menu of micro finance products. Micro

Finance is not merely extending credit, but extending credit to those who require most for

their and their family‟s survival. It cannot be measured in term of quantity, but due weighting

to quality measurement. How credit availed is used to survive and grow with limited means.

Who are the clients of Micro Finance?

The typical micro finance clients are low-income persons that do not have access to formal

financial institutions. Micro finance clients are typically self-employed, often household-

based entrepreneurs. In rural areas, they are usually small farmers and others who are

engaged in small income-generating activities such as food processing and petty trade. In

urban areas, micro finance activities are more diverse and include shopkeepers, service

providers, artisans, street vendors, etc. Micro finance clients are poor and vulnerable non-

poor who have a relatively unstable source of income. Access to conventional formal

financial institutions, for many reasons, is inversely related to income: the poorer you are the

less likely that you have access. On the other hand, the chances are that, the poorer you are,

the more expensive or onerous informal financial arrangements. Moreover, informal

arrangements may not suitably meet certain financial service needs or may exclude you

anyway. Individuals in this excluded and under-served market segment are the clients of

micro finance.

As we broaden the notion of the types of services micro finance encompasses, the potential

market of micro finance clients also expands. It depends on local conditions and political

climate, activeness of cooperatives, SHG & NGOs and support mechanism. For instance,

micro credit might have a far more limited market scope than say a more diversified range of


financial services, which includes various types of savings products, payment and remittance

services, and various insurance products. For example, many very poor farmers may not

really wish to borrow, but rather, would like a safer place to save the proceeds from their

harvest as these are consumed over several months by the requirements of daily living.

Central government in India has established a strong & extensive link between NABARD

(National Bank for Agriculture & Rural Development), State Cooperative Bank, District

Cooperative Banks, Primary Agriculture & Marketing Societies at national, state, district and

village level.

5.3 NEED FOR MICRO FINANCE:

India is said to be the home of one third of the world‟s poor; official estimates range from

26 to 50 percent of the more than one billion population.

About 87 percent of the poorest households do not have access to credit.

The demand for microcredit has been estimated at up to $30 billion; the supply is less than

$2.2 billion combined by all involved in the sector.

Due to the sheer size of the population living in poverty, India is strategically significant in

the global efforts to alleviate poverty and to achieve the Millennium Development Goal of

halving the world‟s poverty by 2015.

Microfinance has been present in India in one form or another since the 1970s and is now

widely accepted as an effective poverty alleviation strategy.

Over the last five years, the microfinance industry has achieved significant growth in part

due to the participation of commercial banks. Despite this growth, the poverty situation in

India continues to be challenging.

Some principles that summarize a century and a half of development practice were

encapsulated in 2004 by Consultative Group to Assist the Poor (CGAP) and endorsed by

the Group of Eight leaders at the G8 Summit on June 10, 2004:

Poor people need not just loans but also savings, insurance and money transfer services.

Microfinance must be useful to poor households: helping them raise income, build up assets

and/or cushion themselves against external shocks.


“Microfinance can pay for itself.” Subsidies from donors and government are scarce and

uncertain, and so to reach large numbers of poor people, microfinance must pay for itself.

Microfinance means building permanent local institutions.

Microfinance also means integrating the financial needs of poor people into a country‟s

mainstream financial system. “The job of government is to enable financial services, not to

provide them.”

“Donor funds should complement private capital, not compete with it.”

“The key bottleneck is the shortage of strong institutions and managers.” Donorsshould

focus on capacity building.

Interest rate ceilings hurt poor people by preventing microfinance institutions from covering

their costs, which chokes off the supply of credit.

Microfinance institutions should measure and disclose their performance – both financially

and socially.

Microfinance can also be distinguished from charity. It is better to provide grants to families

who are destitute, or so poor they are unlikely to be able to generate the cash flow required

to repay a loan. This situation can occur for example, in a war zone or after a natural

disaster.


5.3.1 Financial needs and services:

In developing economies and particularly in the rural areas, many activities that would be

classified in the developed world as financial are not monetized: that is, money is not used to

carry them out. Almost by definition, poor people have very little money. But circumstances

often arise in their lives in which they need money or the things money can buy. In Stuart

Rutherford‟s recent book The Poor and Their Money, he cites several types of needs:

Lifecycle Needs: such as weddings, funerals, childbirth, education, homebuilding,

widowhood, old age.

Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or

death.

Disasters: such as fires, floods, cyclones and man-made events like war or bulldozing of

dwellings.

Investment Opportunities: expanding a business, buying land or equipment, improving

housing, securing a job (which often requires paying a large bribe), etc.

Poor people find creative and often collaborative ways to meet these needs, primarily

through creating and exchanging different forms of non-cash value. Common substitutes for

cash vary from country to country but typically include livestock, grains, jewelers and

precious metals. As Marguerite Robinson describes in The Microfinance Revolution, the

1980s demonstrated that “microfinance could provide large-scale outreach profitably,” and

in the 1990s, “microfinance began to develop as an industry”. In the 2000s, the microfinance

industry‟s objective is to satisfy the unmet demand on a much larger scale, and to play a role

in reducing poverty. While much progress has been made in developing a viable,

commercial microfinance sector in the last few decades, several issues remain that need to

be addressed before the industry will be able to satisfy massive worldwide demand.

The obstacles or challenges to building a sound commercial microfinance industry include:

Inappropriate donor subsidies

Poor regulation and supervision of deposit-taking MFIs

Few MFIs that mobilize savings

Limited management capacity in MFIs Institutional inefficiencies.

Need for more dissemination and adoption of rural, agricultural microfinance.


5.4 BENIFITS OF MICRO FINANCE:

Customarily, one had to apply for a loan in order to start a business, but that proved to be an

obstacle to people with poor credit. However, microfinance institutions now offer basic

financial services like savings, insurance and loans to unprivileged people. Microfinance

institutions provide such services to the less fortunate; it can be a commercial bank, credit

union, credit cooperative, or a financial non-government organization.

Provide access to funding

Typically, the less privileged acquire financial services such as loans through an informal

relationship, which might prove to be costly and unreliable. In addition, most banks do not

view the unprivileged as viable clients due to employment history or unstable credit and lack

of financial security. Microfinance institutions often dismiss such requirements by providing

small loans at flexible rates.

Encourage self-sufficiency and entrepreneurship

Unprivileged people might have profitable business plans, but they lack sufficient funds to

meet the start-up costs. These loans give clients enough capital to get their plans off the

ground and then begin turning revenue. They can pay off their loans in time then continue to

gain revenue from the business indefinitely.

Manage risk

Microfinance can give unprivileged people enough capital stability, which gives them

financial security from sudden monetary problems. Also, savings allow for improved

nutrition, reduced illness, better living conditions and educational investment.

Empower Women

Microcredit also empowers women since they are the major beneficiaries. In the past, women

were not able to participate in economic activities. Microfinance institutions now provide

women with the capital they require to start business projects. This gives them more

confidence and allows them to participate in decision making, thereby encouraging gender

equality.


5.5 MICRO FINANCE PRODUCT:

Micro Credit:

It is a small amount of money loaned to a client by a bank or other institution.

Microcredit can be offered, often without collateral, to an individual or through group

lending.

Micro Savings:

These are deposit services that allow one to save small amounts of money for future use.

Often without minimum balance requirements, these savings accounts allow households to

save in order to meet unexpected expenses and plan for future expenses.

Micro Insurance:

It is a system by which people, businesses and other organizations make a payment to share

risk. Access to insurance enables entrepreneurs to concentrate more on developing their

businesses while mitigating other risks affecting property, health or the ability to work.

Remittance:

These are transfer of funds from people in one place to people in another, usually across

borders to family and friends. Compared with other sources of capital that can fluctuate

depending on the political or economic climate, remittances are a relatively steady source of

funds.


5.6 MICRO FINANCE INSTITUTIONS:

5.6.1 Working method of micro finance institute:

Role of micro finance:

The micro credit of microfinance programmed was first initiated in the year 1976 in

Bangladesh with promise of providing credit to the poor without collateral , alleviating

poverty and unleashing human creativity and endeavor of the poor people. Microfinance

impact studies have demonstrated that Microfinance helps poor households meet basic needs

and protects them against risks.

The use of financial services by low-income households leads to improvements in household

economic welfare and enterprise stability and growth. By supporting women‟s economic

participation, microfinance empowers women, thereby promoting gender-equity and

improving household well being. The level of impact relates to the length of time clients have

had access to financial services.

The Origin of Micro Finance:

Although neither of the terms microcredit or microfinance were used in the academic

literature nor by development aid practitioners before the 1980s or 1990s, respectively, the

concept of providing financial services to low income people is much older. While the

emergence of informal financial institutions in Nigeria dates back to the 15th century, they

were first established in Europe during the 18th century as a response to the enormous

increase in poverty since the end of the extended European wars (1618 – 1648). In 1720 the

first loan fund targeting poor people was founded in Ireland by the author Jonathan Swift.

After a special law was passed in 1823, which allowed charity institutions to become formal

financial intermediaries a loan fund board was established in 1836 and a big boom was

initiated. Their outreach peaked just before the government introduced a cap on interest rates

in 1843. At this time, they provided financial services to almost 20% of Irish households.

The credit cooperatives created in Germany in 1847 by Friedrich Wilhelm Raiffeisen‟s

served 1.4 million people by 1910. He stated that the main objectives of these cooperatives


“should be to control the use made of money for economic improvements, and to improve

the moral and physical values of people and also, their will to act by themselves.”

In the 1880s the British controlled government of Madras in South India, tried to use the

German experience to address poverty which resulted in more than nine million poor Indians

belonging to credit cooperatives by 1946. During this same time the Dutch colonial

administrators constructed a cooperative rural banking system in Indonesia based on the

Raiffeisen‟s model which eventually became Bank Rakyat Indonesia (BRI), now known as

the largest MFI in the world.

Micro Finance Today:

In the 1970s a paradigm shift started to take place. The failure of subsidized government or

donor driven institutions to meet the demand for financial services in developing countries let

to several new approaches. Some of the most prominent ones are presented below. Bank

Dagan Bali (BDB) was established in September 1970 to serve low income people in

Indonesia without any subsidies and is now “well-known as the earliest bank to institute

commercial microfinance”. While this is not true with regard to the achievements made in

Europe during the 19th century, it still can be seen as a turning point with an ever increasing

impact on the view of politicians and development aid practitioners throughout the world. In

1973 ACCION International, a United States of America (USA) based nongovernmental

organization (NGO) disbursed its first loan in Brazil and in 1974 Professor Muhammad

Yunus started what later became known as the Grameen Bank by lending a total of $27 to 42

people in Bangladesh. One year later the Self-Employed Women‟s Association started to

provide loans of about $1.5 to poor women in India. Although the latter examples still were

subsidized projects, they used a more business oriented approach and showed the world that

poor people can be good credit risks with repayment rates exceeding 95%, even if the interest

rate charged is higher than that of traditional banks. Another milestone was the

transformation of BRI starting in 1984. Once a loss making institution channeling

government subsidized credits to inhabitants of rural Indonesia it is now the largest MFI in

the world, being profitable even during the Asian financial crisis of 1997 – 1998.

In February 1997 more than 2,900 policymakers, microfinance practitioners and

representatives of various educational institutions and donor agencies from 137 different


Countries gathered in Washington D.C. for the first Micro Credit Summit. This was the start

of a nine yearlong campaign to reach 100 million of the world poorest households with credit

for self employment by 2005. According to the Microcredit Summit Campaign Report

67,606,080 clients have been reached through 2527 MFIs by the end of 2002, with

41,594,778 of them being amongst the poorest before they took their first loan. Since the

campaign started the average annual growth rate in reaching clients has been almost 40

percent. If it has continued at that speed more than 100 million people will have access to

microcredit by now and by the end of 2005 the goal of the microcredit summit campaign

would be reached. As the president of the World Bank James wolfensohn has pointed out,

providing financial services to 100 million of the poorest households means helping as many

as 500 – 600 million poor people.

5.6.2 Strategic policy initiative:

Some of the most recent strategic policy initiatives in the area of Microfinance taken by the

government and regulatory bodies in India are:

Working group on credit to the poor through SHGs, NGOs, NABARD, 1995

The National Microfinance Taskforce, 1999

Working Group on Financial Flows to the Informal Sector (set up by PMO), 2002

Microfinance Development and Equity Fund, NABARD, 2005

Working group on Financing NBFCs by Banks- RBI.


5.7 INDIA TOP MICRO FINANCE INSTITUTIONS:

Sr.no. Name of MICRO FINANCE INSTITUTE

1. SKS Micro Finance Ltd (SKSMPL)

2. Spandana Sphoorty pvt Ltd (SSFL)

3. Share Microfin Ltd (SML)

4. Asmitha Microfin Ltd (AML)

5. Shri Kshetra Dharmashala Rural Development Project (SKDRDP)

6. Bharatiya Samruddhi Finance Ltd (BSFL)

7. Bandhan

8. Cashpor Micro Credit (CMC)

9. Grama Vidiyal Micro Finance Pvt Ltd (GVMFL)

10. Grammen Financial Service Pvt Ltd (GFSPL)

11. Madura Micro Finance Ltd (MMFL)

12. BSS Micro Finance Pvt Ltd (BMPL)

13. Equitas Micro Finance India Pvt Ltd (Equitas)

14. Bandhan Financial Service Pvt Ltd (BFSPL)

15. Sarvodaya Nano Finance Ltd (SNFL)

16. BWDA Finance Limited (BFL)

17. Ujjivan Financial Services Pvt Ltd (UFSPL)

18. Future financial Services Ltd (FFSL)

19. ESAF Microfinance Investments Pvt Ltd (EMFIL)

20. S.M.I.L.E Micro Finance Ltd

21. SWAWS Credit Corporation India Pvt Ltd (SCCI)

22. Sanghmithra Rural Financial Services (SRFS)

23. Saadhana Microfin Society (Saadhana)

24. Gram Utthan


25. Rashtriya Seva Samithi (RASS)

26. Sahara Utsarga Welfare Society (SUWS)

27. Sonata Finance Pvt Ltd (Sonata)

28 Rashtriya Gramin Vikas Nidhi (CSP)

29. Arohan Financial Services Ltd (AFSL)

30. Janlakshmi Financial Services Pvt Ltd (JFSPL)

31. Annapurana Financial Services Pvt Ltd (Annapurana)

32. Hand in Hand Tamil nadu (HiH)

33. Payakaraopeta Women‟s Mutually Aided Co-operative Thrift and

Credit Society (PWMACTS)

34. Aadarsh Welfare Society (AWS)

35. Adhikar

36. Village Financial Services Pvt Ltd (VFSPL)

37. Sahara Uttarayan

38. RORES Micro Entrepreneur Development Trust (RMEDT)

39. Centre For Rural Reconstruction through Social Action (CReSA)

40. Indur Intideepam Macs Federation Ltd (IIMF)

41. Welfare Organisation For Multipurpose Mass Awareness Network

(WOMAN)

42. Initiative For Development Foundation (IDF)

43. Swayamshree Micro Credit Services (SMCS)

44. Janodaya Trust

45. Community Development Centre (CDC)


5.8 MAJOR SCHEMES OFFERED BY MFIs:

1. GIDKA (Group Insurance Scheme for Khadi Artisan)

With a view to provide safe and secured life to Khadi Artisan a Group Insurance Scheme for

Khadi Artisans has been introduced. The Scheme covers all the spinners, weavers, pre

spinning artisans and post-weaving artisans engaged in Khadi activity, associated with Khadi

Institutions (NGO‟s) throughout the Country. Contribution: Under the scheme, a yearly

contribution of Rs. 200 is made per artisan out of which Rs. 25 is paid by the Artisan and rest

is borne by Khadi Institution (NGO), CKVI and Social Security Fund of Government of

India.

2. DRDA (The District Rural Development Agency)

The district Rural Development Agency is visualized as specialized and professional agency

capable of managing the anti-poverty programmes of the Ministry of Rural Development on

the one hand and to effectively relate these to the overall effort of poverty eradication in the

district.

3. NIRD (National Institute of Rural Development)

National Institute of Rural Development (NIRD) facilitates rural development through

government and non-governmental initiatives. NIRD is the country‟s apex body for

undertaking training, research, action and consultancy functions in the rural development

sector. It works as an autonomous organization supported by the Ministry of Rural

Development, Government of India.

4. NRRDA (National Rural Road Development)

Construction of rural roads brings multifaceted benefits to the hitherto deprived rural areas

and also an effective poverty reduction strategy. Pradhan Mantri Gram Sadak Yojana


(PMGSY) was taken up by the Government of India with an objective to provide connectivity

to the unconnected Habitations in the rural areas. In 2002 the National Rural Roads

Development Agency (NRRDA) was established to extend support to PMGRY through

advice on technical specifications, project appraisal and management of a system of National

Quality Monitors, Management of Monitoring Systems and submission of Periodic Reports to

the Ministry of Rural Development.

5. CAPART (Council for Advancement of People‟s Action and Rural Technology)

Council for Advancement of People‟s Action and Rural Technology (CAPART) is an

autonomous body registered under the Societies Registration Act, 1860 and is functioning

under the aegis of the Ministry of Rural Development. CAPART is involved in catalyzing

and co-coordinating the emerging partnership between Voluntary Organizations and the

Government of India for sustainable development of Rural Areas.

6. RIDF (Rural Infrastructure Development Fund)

Beneficiaries:

It provides by State Governments, Panchayat Raj Institutions (PRIs), Non- Governmental

Organizations‟ (NGOs) and Self-Help Groups (SHGs). Activities Covered: Primary Schools,

Primary Health Centres, Village Haats, Joint Forest Management, Terminal and Rural

Market, Rain Water Harvesting, Fish Jetties, Mini Hydel and System Improvement Projects

in Power Sector, Rural Drinking Water Supply Scheme, Citizen Information Centres,

Anganwadi Centres and Shishu Shiksha Kendras.

Methodology:

All new “project concepts” received are placed before the Projects Sanctioning Committee

(PSC) for the approval before accepting detailed projects.


Data Analysis of Questionnaire:

1. Which alternative do you prefer to get financial help?

Institutes no. of

respondent

% of Respondent

Government Subsidies 40 20

private institute 50 25

MFIs 20 10

Bank loan 90 45

Other 0 0

Total 200 100

Interpretation:

From above chart it is clear that Most of people are used to get financial help from Bank as Bank Loan

and it‟s about 22.5% and about 12.5%, 10% and 5% from private institute, government subsidies and

MFIs respectively.

40

50

20

90

0

Govrnment Subsidies private institute MFIs Bank loan Other

no.of respondent and %

no.of respondent


2. Do you know which agency provide MF?

Interpretation:

From above it is clear that 25% of people are aware about all agencies which Micro Finance and

rest are known about only few agencies as 40%, 20%, 15% of people aware about Bank, SHG-

federation and NGO respectively.

30

40

80

50

NGO SHG Federation Bank All of above


no.of respondent

Institutes no. of

respondent

% of

respondent

NGO 30 15

SHG Federation 40 20

Bank 80 40

All of above 50 25

Total 200 100


3. How do you come to know about MFIs?

Interpretation:

Most of people are come to know about Micro Finance institutes through reference and TV and

46%, 44% and 34% of people are from internet, radio and advertisement. So, TV and reference are

effective source of MFIs to spread awareness

120

68

9288

122

0

Through reference

Advertisement Internet Radio T.V Other


no of respondent

source no of

respondent

% of respondent

Through reference 120 60

Advertisement 68 34

Internet 92 46

Radio 88 44

T.V 122 61

Other 0 0

Total 200 100


4. Have you ever use micro finance from any MFIs?

Interpretation:

From the above chart it is clear that only 8% of population is using Micro Finance from

Micro Finance Institutes.

8%

92%

% of respondent

yes

no

yes no Total

no. of respondent 16 184 200

% of respondent 8 92 100


5. Are you aware about basic lending methodology that followed by the MFIs?

Interpretation:

Most of people (84% of people) are not aware about basic lending methodology used by Micro

Finance Institutes; however 16% of people are aware about basic lending methodology which is

more than uses of Micro finance.

16%

84%

% of respondent

yes

no

yes no total




6. Which basic lending methodology do you know for providing MF?

Interpretation:

From the above chart we can say that Individual Methodology is well known because its

awareness is 34% which is more than rest of. Also 28% of people are aware about Grameen

bank and village banking Methodology.

9

5

9

11

0

Grameen bank ASA methodology Village banking Individual lending Other


no.of respondent

no. of

respondent

% of respondent

Grameen bank 9 28.13

ASA methodology 5 15.63

Village banking 9 28.13

Individual lending 11 34.38

Other 0 0


7. Are you aware about different Schemes offered by MFIs?

Interpretation:

As usual, from the above chart we can conclude that only 15% of people are aware about different

Schemes which are offered by various Micro Finance Institutes.

15%

85%

% of respondent

yes

no

yes no Total




8. If yes which schemes do you aware about that MFIs provided for rural development

purpose?

no. of respondent % of respondent

GIDKA (Group Insurance Scheme for Khadi

Artisan)

18 60

DRDA (The District Rural Development

Agency)

8 26.67

NIRD (National Institute of Rural Development) 4 13.33

NRRDA (National Rural Road Development) 10 33.33

CAPART (Council for Advancement of People‟s

Action and Rural Technology)

8 26.67

RIDF (Rural Infrastructure Development Fund) 6 20

RIF (Rural Innovation Fund) 4 13.33

Other 0 0

Interpretation:

Here we can see that 60% of people are aware about GIDKA scheme and 33%, 26%, 26% of

people are aware about NRRDA, RIDF and DRDA schemes provided by MFIs. Other schemes are

not very much aware to the people as compare to above.

18

8

4

10

8

6

4

0

GIDKA (Group Insurance

Scheme for Khadi Artisan)

DRDA (The District Rural Development

Agency)

NIRD (National

Institute of Rural

Development)

NRRDA (National

Rural Road Development)

CAPART (Council for

Advancement of People’s Action and

Rural Technology)

RIDF (Rural Infrastructure Development

Fund)

RIF (Rural Innovation

Fund)

Other

no.of respondent and %no.of respondent


9. Are you aware about different product/services provided by MFIs?

Interpretation:

From above we can say that Most of people (78% of people) are not aware about product and

services offered by Micro Finance Institutes only 22% of population is aware about Product

and services.

22%

78%

yes

no

yes no Total




10. Which Product/Services do you aware about provided by MFIs?

Interpretation:

Insurance (Medical) and Housing Finance are most known product of Micro Finance. 27% of

people aware about product i.e. Insurance (property) credit consumption, saving plan. 32% of

people are aware about credit loan or business loan. Other services or product is not very much

familiar by people.

6

12

24

1412

24

12

6

2


no.of respondent

no. of

respondent

% of respondent

Insurance: Burial 6 13.64

Insurance: Property 12 27.27

Insurance: Medical 24 54.55

Credit loans/Business Loan 14 31.82

Credit Consumption 12 27.27

Housing Finance 24 54.55

Saving Plans 12 27.27

Training 6 13.64

Remittance 2 4.55


11. Which non-financial service do you know that provided by MFIs?

8

18

2

10

18

2

14

6

12

2

0


no.of respondent

no. of

respondent

% of respondent

Financial literacy training 8 18.18

Skill training 18 40.91

Business management training 2 4.55

Record keeping training 10 22.73

Marketing 18 40.91

Technology improvement 2 4.55

Technical assistance 14 31.82

Technology transfer 6 13.64

Market Referrals 12 27.27

Market Link-aging 2 4.55

Other 0 0


Interpretation:

As we can see that, most of people are aware about these three services skill training, marketing,

technical assistance. 18%, 22% and 13% of people are aware about financial literacy training;

record keeping training and technology transfer respectively and only 4% people are aware

about business mgt. training, technology improvement and market link-aging services.

12. Do you aware about different models of Micro Finance used by MFIs?

Yes No

No. of respondent 35 165

% of respondent 17.5 82.5

Interpretation:

From above chart it is clear that only17.5% people are aware about different model of micro

finance and rests are (82.5%) not aware about models of MF but this 17.5% higher than use of

micro finance.

17.5%

82.5%

% of respondent

Yes

No


13. Which Models of Micro-Finance are you aware about?

no. of

respondent

% of respondent

Bank-SHGs Linkage Programme 19 54.29

MFI Models 13 37.14

Micro Finance and PACS 3 8.57

Post Office Network and Banking Services 2 5.71

Business Facilitator & Correspondent

Models

1 2.86

Micro Credit Models in Other Countries 5 14.29

Interpretation:

From above chart we can say that most of people (54.3% and37% of people) are aware about Bank-

SHGs Linkage Programme and MFI Models respectively. Other models are not as much as attractive

than above three models.

19

13

32

1

5

Bank-SHGs Linkage

Programme

MFI Models Micro Finance and PACS

Post Office Network and

Banking Services

Business Facilitator &

Correspondent Models

Micro Credit Models in

Other Countries


no.of respondent


Age group of people who are using Micro Finance from MFIs:

Interpretation:

From the above chart 44% of the respondent who take micro finance from Micro finance

institutes are belonging to between >40 age group. People also belonging to other age group

but they are less than >40 age group.

6%

19%

31%

44%

% of repondent

21-30

31-35

36-40

>40

Age group no. of respondent

% of respondent

21-30 1 6.25

31-35 3 18.75

36-40 5 31.25

>40 7 43.75


Persons' Business Who uses Micro Finance from MFIs:

Interpretation:

From above chart it is clear that most of the people who take loans from Micro Finance

Institutes are Vegetable Broker. Other occupation also using Micro Finance but they are less

than that of vegetable broker. Only 25%, 13%, 6% of people‟s business is auto driver, pan

shop and other.

25%

56%

13%

6%

% of respondent

Auto Driver

Vegitable Broker/vendor

pan shop

Other

Occupation no. of respondent

% of respondent

Auto Driver 4 25

Vegetable Broker/vendor 9 56.25

pan shop 2 12.5

Other 1 6.25


Anova Test on following data table:

Age Group Source

Through reference


21-30 17 11 18 9 13 0

31-35 9 5 4 8 11 0

36-40 25 9 7 16 22 0

>40 9 0 1 2 4 0

Framing Hypothesis:

H0: There is no significant mean difference between Age group & Sources of Advertisement of

MFIs.

H1: There is significant mean difference between Age group & Sources of advertisement of MFIs.

SUMMARY

Groups Count Sum Average Variance

Through reference 4 60 15 58.67

Advertisement 4 25 6.25 23.58

Internet 4 30 7.5 55

Radio 4 35 8.75 32.92

T.V 4 50 12.5 55

Other 4 0 0 0

ANOVA

Source of Variation SS df MS F P-Value F crit

Between Groups 545.8 5 109 2.909 0.043 2.773

Within Groups 675.5 18 37.5

Total 1221 23

Interpretation:

Here we have to reject null hypothesis (H0) because p<0.05 (Means are different). So, it can

be said that there is significant mean difference between age group and sources of

advertisement of MFIs.

Anova: Single Factor 0.05


Chi-Square on following Table:

Age Group Source

Through reference


21-30 17 11 18 9 13 0

31-35 9 5 4 8 11 0

36-40 25 9 7 16 22 0

>40 9 0 1 2 4 0

Framing Hypothesis:

H0: There is no significant association between age group and sources of Advertisement of

MFIs

H1: There is significant association between age group and sources of Advertisement of

MFIs.

Age Group

Source

Through reference

Advertisement Internet Radio T.V Other Total

21-30 17 11 18 9 13 0 68

31-35 9 5 4 8 11 0 37

36-40 25 9 7 16 22 0 79

>40 9 0 1 2 4 0 16

Total 60 25 30 35 50 0 200

Chi-Sq 19.918

Through reference Expected

Advertisement Expected

Internet Expected

Radio Expected

T.V Expected

p 0.0687 20.4 8.5 10.2 11.9 17

0.05 11.1 4.625 5.55 6.48 9.25

23.7 9.875 11.85 13.8 19.75

4.8 2 2.4 2.8 4

Interpretation:

Variables are Independent because null hypothesis is accepted and also p value is greater than

level of significant (p>0.05) so, null hypothesis is accepted because there is no significant

relation between Age group and Sources of Advertisement of MFIs.


Chi-Square Test on following table:

Framing hypothesis:

H0: There is no significant relation between Age group and Awareness of schemes.

H1: There is significant relation between Age group and Awareness of schemes.

age group Awareness of schemes Total

yes no

21-30 2 66 68

31-35 5 32 37

36-40 10 69 79

>40 13 3 16

Total 30 170 200

Chi-Sq 72 yes Expected no Expected

p 1.1946E-13 10 58

0.05 5.6 31

12 67

2.4 14

Interpretation:

Variables are related because p value is less than level of significant (p<0.05) so, null

hypothesis is rejected because there is significant relation between Age group and Awareness

of schemes.

age group Awareness of schemes

yes no

21-30 2 66

31-35 5 32

36-40 10 69

>40 13 3


Chi-square Test on following data:

Framing of hypothesis:

H0: There is no significant relation between Age group and Awareness of services.

H1: There is significant relation between Age group and Awareness of services.

Age group Awareness of services Total

Yes No

21-30 2 66 68

31-35 9 28 37

36-40 20 59 79

>40 13 3 16

Total 44 156 200

Chi-Sq 72 Yes Expected No Expected

p 2.40763E-10 14.96 53.04

0.05 8.14 28.86

17.38 61.62

3.52 12.48

Interpretation:

Variables are related because p value is less than level of significant (p<0.05) so, null

hypothesis is rejected because there is significant relationship between Age group and

Awareness of services.

Age group Awareness of services

Yes No

21-30 2 66

31-35 9 28

36-40 20 59

>40 13 3


Chi-squared Test on following table :

Occupation Taking help of Micro Finance

yes no

Auto Driver 4 27

Vegetable Broker/vendor 9 54

pan shop 2 45

Other 1 58

Framing of hypothesis:

H0: There is no significant relation between occupation and taking help of Micro Finance.

H1: There is significant relation between occupation and taking help of Micro Finance.

Occupation Taking help of Micro Finance Total

yes no

Auto Driver 4 27 31

Vegetable Broker/vendor 9 54 63

pan shop 2 45 47

Other 1 58 59

Total 16 186 200

Interpretation:

From the above test we can say that both Variables are related because p value is less than

level of significant i.e. p <0.05. So, null hypothesis is rejected because there is significant

relationship between occupation and Taking help of Micro Finance.

Chi-Sq 8.47 yes Expected no Expected

p 0.037 2.48 28.52

0.05 5.04 57.96

3.76 43.24

4.72 54.28


After all above analysis some facts and figure comes out and this are very important aspects. All

the findings are as below:

Most of the people are not aware about Micro finance Institutes and their schemes as well as

their services. i.e. out of 200 respondent only 44 persons aware about MFIs.

There are 30 respondents who are aware about Micro Finance Institutes and their schemes and

services but only few of them i.e. only 16 respondents are using Micro Finance Schemes and

services.

There is lack of advertisements of Micro Finance Institutes. Only T.V is effective source for

the advertisement of MFIs i.e. out of 200 respondents 144 are come to know about MFIs

through T.V but still it‟s not that much enough.

Most of people i.e. 48 respondent are much aware about only Housing Finance and Insurance

product/service of Micro finance Institutes, other services and products still don‟t have that

much awareness.

There are 16 respondents who are using services and scheme of MFIs and they are mostly

Vegetable broker. i.e. 9 out of 16 are vegetable broker.

People who are belonging to age group more than 35 years are very much aware about Micro

Finance Institutes and their services and schemes. There are 95 respondent who are belongs

to the age group of >35 and out of them 35 are very much aware about MFIs and their

schemes and services.

People who are using Micro Finance Services and Product are belonging to age group of more

than 40 years. i.e. there are 16 respondents who are using MF schemes and services 7 of

them more than 40 years old.

Only few people are aware about different lending methodology and Models of Micro Finance

Institutes. i.e. out of 200 respondents only 34 persons aware about basic lending

methodology of MFIs.

There is significant relation between Age group and awareness of schemes of Micro Finance

Institutes.

There is significant relation between Age group and awareness of services of Micro Finance

Institutes.

There is significant mean difference between Age group and sources of advertisement of

Micro Finance Institutes.


There is significant relation between occupation of people and taking help or using Micro

Finance, schemes and services of MFIs.


Finally after getting all information about Micro Finance from the people it can be said that…

MFIs provide services of Insurance, Credit loans, Housing Finance, Saving Plans, Training,

Remittance, Credit Consumption etc and out of all the services only housing finance and Insurance

these both services is mostly used by people other services do not have that much awareness

because there is lack of advertisements of Micro Finance Institutes and their schemes and services.

Only T.V is effective source for the advertisement of MFIs other sources of advertisements do not

have that much awareness as much as T.V have.

Only some of the people in varachha region which is belonging to Surat city are aware about MFIs

and out of people who are aware about Micro Finance Institutes only few of the people are using

schemes and services of Micro Finance and people who are currently using Micro Finance are

associated with the work of Vegetable Broking and also People who are belonging to age group

more than 35 years are very much aware about Micro Finance Institutes and their services and

schemes. People who are using Micro Finance Services and Product are belonging to age group of

more than 40 years.

The people are having very less knowledge about different lending methodology which is followed

by different Micro finance Institutes. Models of Micro Finance Institutes also don‟t have that much

awareness among the people.

There is significant relation between Age group and awareness of schemes of Micro Finance

Institutes and between Age group and awareness of services of Micro Finance Institutes. There is

significant mean difference between Age group and sources of advertisement of Micro Finance

Institutes. There is significant relation between occupation of people and taking help or using

Micro Finance, schemes and services of MFIs.

Thereby we can conclude that MFIs is not that much known to the people and there is necessity of

increasing advertisement of MFIs and their services and schemes. Microfinance helps for growth

of rural and remote area and also for a lower class people to start a new business but they have to

spread their brand awareness to fulfill the same.


From above all analysis and findings Researcher suggests that…

MFIs have to increase their sources of advertisement to reach out masses of poor people and to

make their life prosperous.

Micro Finance Institutes have to organize some functions or seminars at rural area with view to

increasing awareness of Micro Finance its product, advantages, usefulness, services, schemes

etc.

MFIs are requiring to increasing their product line like adding product

a) Loan for home expenses

b) Child education etc.

MFIs can also print prospectus of their product, services and schemes and distribute them in

market area or posh area of village or city for giving focus on different business of people and

spreading awareness of MFIs

MFIs can also take initiative to open agencies of micro finance at every three village and one in

city so they can guide people about micro finance and their services and motivate to use MF and

thereby increasing brand awareness of MFIs.

MFIs can launch some attractive schemes and services for particular target group in order to

increase brand awareness of MFIs and to achieve primary Objective of MFIs.

MFIs give their best services in rural area but they have to focus on remote area as well.

As there are less awareness of MFIs in small age Group i.e. <30 so in order to increase

awareness that people MFIs have to launch some educational and Home based business related

Schemes.


Websites:

www.Microfinancegateway.org/microfinance/abstract.htm

www.Microfin.in.org/microfinance/Microinsurance_and_MFI_Case_Study_15

http://www.basixindia.com/micro_finance_in_india.htm

http://www.academicjournals.org/AJBM

www.nabard.org/microfinance/schemes_services.htm

www.Sewa.org/model of micro finance/shg linkage programme/banks.htm

www.sidbi.org/microfinance/rural area development schemes/girja.htm

www.microfinance.org/microfinance/benifits.htm

www.sidbi.com/ CRISIL-ratings_india-top-50-mfis.pdf

www.Microcredit.com/microfinance/schemes/reports/capitalsupportschemerevised .htm

www.CRFSPV.org/info_mf_reports/history_microfinance.htm

www.smcs.org/mf_india/ruralservices/korp.htm

Magazines:

The economics of Micro Finance

Edition: March 2003

Small short and unsecured: informal rural finance in India

Edition: January 2001

Reports:

Debt and investment survey, GoI, 1992- government of India

Micro Finance in India_2009 –government of India(every year)

Impact of Micro Finance on Women empowerment by Sewa-2000

Micro Finance and Poverty and Micro Finance Matters-October 2011Issue final

Impact assessment of MFI by IDBI- 2005.

http://www.microfinancegateway.org/microfinance/abstract.htm

http://www.basixindia.com/micro_finance_in_india.htm

http://www.nabard.org/

http://www.sewa.org/model

http://www.sidbi.org/microfinance/rural

http://www.microfinance.org/microfinance/benifits.htm

http://www.microcredit.com/micro


Questionnaire

I (Shailesh Chavada) student of business administration doing one research which is entitled

with “Awareness of Micro Finance Institutes”. This is one of the dominant parts of my study.

Your response is very necessary and precious for me. I assure you that the information

provided by you is remain confidential and not used by else one for other purpose. It‟s my

humble request to co-operate.

1. Which alternative do you prefer to get financial help?

o Government subsidies

o Private institute

o MFIs

o Bank loan

o Other_____________________________

2. Do you know which agency provide MF?

o NGO

o SHG Federation

o BANK

o All of above

3. How do you come to know about MFIs?

o Through reference

o Advertisement

o Internet

o Radio

o T.V

o Other ______________________________

4. Have you ever use micro finance from any MFIs?

o Yes

o No

5. Are aware about basic lending methodology that followed by the MFIs?

o Yes

o No

6. Which basic lending methodology do you know for providing MF?

o Grameen bank

o ASA methodology

o Village banking

o Individual lending

o Other__________


7. Are you aware about different Schemes offered by MFIs?

o Yes

o No

8. If yes which schemes do you aware about that MFIs provided for rural development

purpose?

o GIDKA (Group Insurance Scheme for Khadi Artisan)

o DRDA (The District Rural Development Agency)

o NIRD (National Institute of Rural Development)

o NRRDA (National Rural Road Development)

o CAPART (Council for Advancement of People‟s Action and Rural Technology)

o RIDF (Rural Infrastructure Development Fund)

o RIF (Rural Innovation Fund)

o Other __________________________________________________________

9. Are you aware about different product/services provided by MFIs?

o Yes

o No

10. If yes, Which Product/Services do you aware about provided by MFIs?

o Insurance: Burial/life scheme

o Insurance: Property/Short Term

o Insurance: Medical/Health

o Credit loans/Business Loan (< 6 Months)

o Credit Consumption (< 6 Months)

o Housing Finance

o Saving Plans

o Training

o Remittance

11. Which non-financial service do you know that provided by MFIs?

o Financial literacy training

o Skill training

o Business management training

o Record keeping training

o Marketing

o Technology improvement

o Technical assistance

o Technology transfer

o Market Referrals

o Market Link-aging

o Other (please specify)________________


12. Do you aware about different models of Micro Finance used by MFIs?

o Yes

o No

13. If yes, Which Models of Micro-Finance are you aware about?

o Bank-SHGs Linkage Programme

o MFI Models

o Micro Finance and PACS

o Post Office Network and Banking Services

o Business Facilitator & Correspondent Models

o Micro Credit Models in Other Countries

Personal information:

Name:

_____________________________________________________________________

Age _________________________________________________________________

Business: ________________________________________________

Contact no.: _______________________________________

Awareness of schemes and services of mf is

Economy & Finance

development aid practitioners

bank linkage program

basic lending methodology

india info line

improve living standards

rural labor households

micro finance institutes

age group