Micro Finance In India

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Micro Finance in India – A Key Driver for Inclusive and Sustainable Growth

Micro Finance in India – A Key Driver for Inclusive and Sustainable Growth

Solar Energy program was initiated in December 2009 with an aim to provide access to energy efficient devices for poor households, through our Partner MFIs. Over the years, FWWB- I has been working closely with various micro finance organizations across India. FWWB-I with its various interventions and support from partner organizations has been able to make a positive impact on the lives of the poor households. It was observed that there was a strong need for providing credit plus services to the poor. In a survey of households in the underserved regions, it was observed that there was limited electrification and where available, frequent power cuts. This led to increased household expenditure on usage of alternate sources like candles/kerosene for lighting. This greatly impacted their health and also reduced the productive time available to the women to work, children for studying, etc. The FWWB-I Solar Energy program, was initiated in the state of Manipur, which owing to its geographical location has less than 9 hours of sunlight available during summers. And even lesser during winters. The state also faces frequent power cuts which forces increased usage and spending towards alternate sources of lighting. Till date, FWWB-I have provided loan support towards 30,000 plus solar lamps to the poor through 5 micro finance organizations of Manipur. FWWB-I will be expanding this program across India and look to increasing its partners.hip with service provides and MFIs and to deepen Social impact by directly impacting the lives of poor households as well as promoting green technologies.
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Critical Analysis of Financial Crisis on Micro Finance in Reference with India

Critical Analysis of Financial Crisis on Micro Finance in Reference with India

Abstract: In a country like India where 70 percent of its population lives in rural area and 60 percent depend on agriculture (according to the World Bank reports), micro-finance can play a vital role in providing financial services to the poor and low income individuals. Microfinance is the form of a broad range of financial services such as deposits, loans, payment services, money transfers, insurance, savings, micro-credit etc. to the low and poor individual income. The importance of micro- finance in the developing economies like India cannot be undermined, microfinance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. It is emerging as a powerful tool for poverty alleviation in India. There are two broad approaches that characterize the microfinance sector in India is Self Help Groups (SHGs)-Bank linkage programme and Microfinance Institution (MFIs).This paper tries to outline the prevailing condition of the Microfinance in India in the light of its emergence till now.
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A Study Of Micro Finance And Its Outreach In India

A Study Of Micro Finance And Its Outreach In India

evidence, Kabeer (2005) reveals that focus on examining the social and economic impacts on the beneficiaries. Basu and Srivastav (2005) analyzes adequate determinations and a huge set-up of rural banks, the rural poor people still remain neglected by bank, and they depend on informal lending system. Microfinance approaches framed to reach each and every needy people. Dixon, Ritchie and Siwale (2006) analyze that creating of a framework to deal the problems in obligations and determine client needs and prepare the work-layout as per their needs. Roodman and Qureshi (2006) analyze microfinance institutions as businesses. The poor people need credits and savings greater than rich or medium class people. Brown, Guin and Kirschenmann (2012) in their article highlighted that commercialization of microfinance and mission of MFIs are far away from their actual target customers i.e., poor people, women, and rural customer to earn more revenue but less deprived customers still the topic of much debate among practitioners, policy makers and researcher. Dwivedi and Mishra (2013) are of the view that women are considered as better half of the country. Traditionally, the women limited to their house boundaries but now they come forward to contribute their efforts in each and every field. In India, entrepreneurship is also handle by women which is the good indicator of women empowerment, economic development and social evolution. Mukherjee (2014) analyzes the policies of the Government of India, which is enough to provide credit facilities to the poorest of the poor, there is no competition between microfinance institutions to provide loans to poor borrowers, subsidies Whether or not it plays a key role in micro finance. Tassel (2015) focused on a model which is emphasis on lender who gets funds from external sources. In this study, the researcher tries to find out lender types and ignore investors. Mishra and Haque (2016) highlight that economic period of economic evolution had major impact on economic development in the all major areas. Globalization has given many benefits to the banking sector in India. Sa-Dhan (2016) said that the presence of MFIs has become widespread in areas across the country, although they are still concentrated in some states. Ukanwa (2017) analyzes to find out reasons behind getting low benefits from microfinance generated by women of rural African region.
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Efficiency of Micro Finance Institutions in India: A Stochastic Distance Function Approach

Efficiency of Micro Finance Institutions in India: A Stochastic Distance Function Approach

It is in this context that the role of Micro Finance Institutions (MFIs) is important in rendering financial access to rural sections and near poor households. However, the literature on MFIs has pointed out that focus on financial sustainability may lead to dilution of outreach (Hermes and Lensink, 2011). The argument goes that the poor cannot be helped in the long run if the MFIs are not financially sustainable or efficient. However the quest for efficiency may lead to a focus on wealthier clients and compromise on the outreach goals of MFIs – lending to the poor and women – a phenomenon known as “mission drift” (Cull et al, 2007). Hermes et al. (2011) examined the tradeoff between efficiency and outreach by estimating efficiency of MFIs using stochastic frontier analysis (SFA). Using a cross-country sample of 435 MFIs, they found that there is a tradeoff between efficiency and outreach whereby those institutions that have lower average loan size and lend more to women are less efficient. Cull et al (2007) had reported similar findings. In this paper we analyze data from the world’s largest microfinance market, viz. India and study efficiency of Indian MFIs. Our main objectives are to estimate efficiency using the stochastic distance function approach (which has not been used before in this literature) and to analyze the determinants of efficiency. In doing so we try to ascertain whether there is a tradeoff between efficiency and outreach (measured by average loan size and number of women borrowers).
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THE IMPACT OF THE MICRO-FINANCE ON INDIAN ECONOMY: A CASE STUDY OF TATA, INDIA

THE IMPACT OF THE MICRO-FINANCE ON INDIAN ECONOMY: A CASE STUDY OF TATA, INDIA

Entitled ‘The impact of the micro-finance on Indian economy: a case study of Tata, India’ deals with the basic concept of the microfinance activity and its impact on the Indian economy. The researcher in this particular research has chosen a well established and very popular company of India and as well as world TATA India to complete the research procedure. The researcher suggest that the microfinance movement makes a very important impact on the rural development and as well as the Indian economy. The researcher uses various kinds of report chart, financial statement and economical survey report to complete the research procedure. The rural development was supposed to be an inevitable movement and therefore various self help groups started this micro finance movement. NABARD is the renowned name here and TATA has cooperated and accompanied in the evolution of the programme in order to undertake various improvement that helped rural India to go ahead with more enlightenment and adequacy.
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Rating Micro Finance institutions operating in India: an application of fuzzy analytical hierarchical process (FAHP)

Rating Micro Finance institutions operating in India: an application of fuzzy analytical hierarchical process (FAHP)

financial as well as other information mainly due to the non requirement of any statuary obligation and also due to small scale of operations. However, with the growth of the sectors from early 2000, has motivated several agencies to maintain database of the MFI. Mainly there are three sets of data on MFIs—the annual data that Sa-Dhan brings out based on the details furnished by its members, the data compiled by Microfinance Information Exchange (MIX) quarterly and annually and the member data that Micro Finance Institutions Network (MFIN) published quarterly. MIX is supported by SIDBI since April 2012 to maintain the Indian Micro Finance Platform (IMFP) that disseminates financial and operational information on MFIs. Other potential sources of information on MFI are Institute for Financial Management and Research (IFMR) Capital, Micro- Credit Ratings International Ltd (M-CRIL) and Credit Rating Information Services of India Limited (CRISIL), but in these data sources periodicity is a problem. The availability of the data set is one issue but due to lack of uniformity in referral periods, reporting formats and inconsistency with respect to the institutions covered have made the use of the data set for credible conclusion highly complicated. In order to broaden transparency, market insight, establish reporting standards, alleviate reporting burden, and promote responsible investment the MIX in collaboration with its partners have made an effort to publish information related to MFI in a uniform format in the MIX platform. MIX is a non- profit organization headquartered in Washington, DC with regional offices in Africa, Asia, Europe, and Latin America and is incorporated in the year 2002. This effort is appreciated by most of the MFI functioning across globe and the data sets are highly consistent in terms of its reporting and are used in numerous studies related to micro finance and Micro finance institution.
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Micro Finance: A Tool Towards Anti Poverty Alleviation for Rural India

Micro Finance: A Tool Towards Anti Poverty Alleviation for Rural India

In country like India, microfinance has been viewed as a tool of development which would alleviate poverty and enhance the growth of the country through financial inclusion. One of the greatest challenges before the Indian sub- continent which accommodates more than one-third of the population is poverty. Microfinance may be defined as an umbrella under which financial services including micro credit are provided to the low income group. India is the second largest country in the world from population point of view and around seventy percent of its population live in rural areas. Sixty percent of people depend on a single source of income i.e. agriculture. It is not enough to provide food to more than one individual. The present paper will focus on the conceptual framework of microfinance institutions in India, challenges and opportunities of micro finance activities in rural areas of our country,types of microfinance institutions, benefits extended by microfinance institutions, problems of microfinance institutions and future prospects of microfinance institutions in India..
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GLOBALISATION, GROWTH, IMPACT AND DEVELOPMENT OF MICRO FINANCE INSTITUTION IN INDIA

GLOBALISATION, GROWTH, IMPACT AND DEVELOPMENT OF MICRO FINANCE INSTITUTION IN INDIA

While financial services in India can be traced to the era of Kautilya in the fourth century BC the age of organized sector finance in India is generally acknowledged to have started with the Cooperative Credit Societies Act of 1904. The cooperative credit societies were based on the models of the German cooperative movement, in particular the Raiffeisen and the Schulze-Delitsch cooperatives. The objective of the Act was “to facilitate promotion of cooperative societies, for the promotion of thrift and self-help among agriculturists, artisans and persons of limited means.” To the extent that the wording of this objective could be applied tothe objects of many MFIs today, this Act is a true precursor to modern microfinance in the country.1The true expansion of financial services in India started with the nationalization of all banks in the country during the late 1960s. This was reinforced with the establishment of Regional Rural Banks (RRBs) in 1976,and directed credit became the mantra of the Indian financial sector. In the meantime, the cooperative sector infrastructure had developed through the creation of an apex banking structure at the district and state levels to ensure the smooth flow of capital in the cooperative system. Yet, the entire network of primary cooperativesin the country and the RRBs, established to meet the needs of the rural sector in general and the poor inparticular, has not proved to be successful. The cooperatives suffered from mismanagement, leadership by the privileged, and corruption, and were gradually smothered by state patronage and protection, in many cases including management by ill-motivated government-appointed persons. This article aims on the analysis of micro finance institutions in the development of Indian Economy in global perspective.
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The Changing dimensions of Micro Finance through SHGs in India: An Analysis

The Changing dimensions of Micro Finance through SHGs in India: An Analysis

In India the first initiative towards the micro credit was taken by NABARD during 1986-87. In the same year NABARD, in collaboration with Asia Pacific Rural and Agricultural Credit Association (APRACA) undertook a study of 43 NGOs in 11 states to study the functioning of micro finance- SHGs and their collaboration possibilities. It is important to note that the Microfinance in India is not just limited to provide credit facilities to the poor, but also to provide a wide range of financial services to poor such as credit, savings, insurance, business development services and money transfer etc to the poor or low income clients who lack access to traditional formal financial institutions.
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FINANCIAL AND TAXATION ISSUES OF MICRO FINANCE BILL 2012: A MOVE TOWARDS RESPONSIBLE MICROFINANCE IN INDIA

FINANCIAL AND TAXATION ISSUES OF MICRO FINANCE BILL 2012: A MOVE TOWARDS RESPONSIBLE MICROFINANCE IN INDIA

MFIs exist in various forms such as societies, trusts, co-operatives and non-banking financial companies (NBFCs). Most of the MFI’s operating in India functions as charitable institutions. Therefore such organizations are registered under the various trust laws in force in various states, Societies registration Act 1860, Co- operative Societies Acts, and Indian Trust Act 1882. Some of them are registered under section 25 of the Companies Act 1956 and quite few of them register their trust deeds under the Indian Registration Act 1908. The above organizations describe themselves as charitable organizations because they are involved in the yeomen service of poverty alleviation through the medium of micro finance. These are known as not –for- profit organizations. Yet another MFI’s are functioning purely as commercial organizations and they have no claim that they are involved in charities. Most of them are registered as Non-Banking Financial Companies (NBFC) which are strictly regulated by the Reserve Bank of India (RBI). There are Local Area Banks (LAB) also. These are known as For-profit micro finance organizations. In terms of market share, NBFCs dominate the industry, accounting for an estimated 90% of loan volume in 2010-11. 2 NBFC-MFIs are regulated by the Reserve Bank of India (RBI) Act, 1934. There is no statute regulating the rest of the microfinance industry consisting of societies, trusts and co-operatives.
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Micro Finance-In India worked as a great mantra for Rural Finance

Micro Finance-In India worked as a great mantra for Rural Finance

Microfinance develops saving habits among people. Now poor people with meagre income can also save and are bankable. The financial resources generated through savings and micro credit obtained from banks are utilised to provide loans and advances to its members. Thus microfinance helps in mobilisation of savings.

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Micro Finance and Development Finance in India

Micro Finance and Development Finance in India

The term microfinance is widely used to refer to institutions governing savings, credit, insurance and monetary payments by relatively poor people, including those regulated by both official laws and informal norms. Analysis of microfinance is widely framed as a purely micro issue, centered on the motivation and behavior of specific users and providers. However, such analysis is almost invariably located - whether explicitly or implicitly - in a wider view of how the state, markets and society institute poverty. In India as elsewhere, for example, private microfinance organizations is viewed positively as a force for promoting financial inclusion by “making markets work for the poor”; and at the same time viewed negatively as a smokescreen behind which the state can retreat from a ‘social banking’ strategy of mobilizing much larger resources to challenge pervasive and chronic indebtedness.
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Micro-Finance and Social Development Banking In India, With Special Reference To West Bengal: Alternative Or Complementary?

Micro-Finance and Social Development Banking In India, With Special Reference To West Bengal: Alternative Or Complementary?

Providing financial services to rural household especially credit has been apriority agenda for the state since independence. Credit can help farmers to move on to a higher production level, Narayanan 11 opined.The report of the All India Rural Credit survey ,1950s was a landmark because it suggested the state to take part actively in the cooperatives.Sriram 12 commented that, the decade of 1970s following bank nationalization in 1969 was marked by directed lending. The target of 40 per cent was set by RBI for priority sector lending of which 18 per cent for agriculture alone. The priority sector comprises agriculture and small and medium scale enterprises.
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Micro-Finance and Social Development Banking In India, With Special Reference To West Bengal: Alternative Or Complementary?

Micro-Finance and Social Development Banking In India, With Special Reference To West Bengal: Alternative Or Complementary?

Providing financial services to rural household especially credit has been apriority agenda for the state since independence. Credit can help farmers to move on to a higher production level, Narayanan 11 opined.The report of the All India Rural Credit survey ,1950s was a landmark because it suggested the state to take part actively in the cooperatives.Sriram 12 commented that, the decade of 1970s following bank nationalization in 1969 was marked by directed lending. The target of 40 per cent was set by RBI for priority sector lending of which 18 per cent for agriculture alone. The priority sector comprises agriculture and small and medium scale enterprises.
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Micro finance institutions in india  an effective risk management

Micro finance institutions in india an effective risk management

Risk is an integral part of financial services. When financial institutions issue loans, there is a risk of borrower default. When banks collect deposits and on-lend them to other clients (i.e. conduct financial intermediation), they put clients’ savings at risk. Any institution that conducts cash transactions or makes investments risks the loss of those funds. Development finance institutions should neither avoid risk. Like all financial institutions, microfinance institutions (MFIs) face risks that they must manage efficiently and effectively to be successful. If the MFI does not manage its risks well, it will likely fail to meet its social and financial objectives. When poorly managed risks begin to result in financial losses, donors, investors, lenders, borrowers and savers tend to lose confidence in the organization and funds begin to dry up.
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MICRO FINANCE: SUSTAINABLE DEVELOPMENT STRATEGY

MICRO FINANCE: SUSTAINABLE DEVELOPMENT STRATEGY

The financial base of the poor people is very weak in our country. The scale of their economic activity is limited because they did not have easy, timely, and sustainable finance facilities. As a result they have to rely on informal credit suppliers like landlords, traders, and money lenders at high rates of interest. For small financial needs many people depends on exploitative informal sources of credit such as money lenders and traders. These money lenders and traders are able to respond quickly and with great flexibility to pressing demands and exploit the poor. In India micro finance play very important role for the sustainable development of people. Below chart indicated that;
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Micro Finance for Women Empowerment- Role of Banking Sector in Karnataka

Micro Finance for Women Empowerment- Role of Banking Sector in Karnataka

With 64% growth in MFI clients during the financial year April 2008 to March 2009 (compared to the national average of 42%), Karnataka was the second fastest growing of the major microfinance states of India (second only to Maharashtra). The number of clients of the 27 MFIs operating in the state had reached 3.2 million by the end of the period. This was in addition to over 3 million members of some 232,000 self help groups (SHGs).2 As elsewhere, this growth has not been spread evenly but has been largely concentrated in the more accessible, more densely populated and better developed southern districts of the state. As the CGAP Focus Note explains, MFIs follow other MFIs into local markets so that they can lend to the same borrower groups and benefit from the client acquisition processes undertaken by the early entrants. The CGAP note argues that while competition enables greater efficiency by lowering operating expenses, it undermines credit discipline by providing borrowers with alternatives and opportunities for multiple borrowing that enable them to juggle payments and skip between MFIs to avoid the restraints of rigid payment schedules, defaulting with one while retaining their relationship with another.
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MICRO FINANCE AND FINANCIAL INCLUSION

MICRO FINANCE AND FINANCIAL INCLUSION

Women are essential part of the society. The role of women in economic activities and decision making is very low. Micro financial schemes plays vital role in increasing women‟s participation in economic activities and decision making. There has been huge growth of organizations, known as Microfinance Institutions (MFIs) in this field to deal with the micro financial activities. With increasing demand for rural finance, and the shortages of formal sources, the MFIs have tremendous challenges and opportunities in microfinance in India. In India self-help groups (SHGs) constitutes of 85-95 % women. The reasons for this is that women are familiar with finances responsibility; making them trustworthy, reliable and prompt savers. Empowerment of women also occupies central place to wide development goals. Women empowerment is critical factor in the eradication of poverty, as the women are the key contributors to the economic and to fighting with poverty through both remunerative and un-remunerative work at home, in the community and in the workplace. SHGs have been recognized as one efficient means of empowering women.
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Micro Finance- A Case Study

Micro Finance- A Case Study

The growth strategy followed in 1960's and 1970's had presumed that a higher rate of economic growth, through "Trickle Down" effect, would enhance the standard of living of the poor. But the "Trickle Down" concept has failed to precipitate. Therefore, during the 1970s the Government of India had initiated Anti-Poverty Programs. Since the Sixth Plan (1980-85), a more direct approach was adopted. "The 'direct' approach to poverty reduction emphasizes that it is essential to directly provide the poor with adequate purchasing power, other assets or access to food grains at subsidized prices to meet their minimum consumption requirement" (Nayyar, 2005). "Bypassing the traditional growth approach, special Poverty Alleviation Programmers’ (PAPs) were to be implemented in order to reduce poverty to 30 per cent by 1985. The schemes involved income generation for the poor, meeting their minimum basic needs (like rural drinking water supply, primary education, primary health care facilities, rural infrastructure electrification, low cost housing and other social services), and provide specific support for the backward areas" (Stuijevenberg, 1996). Program such as these were considered an acute necessity because there has been a gradual decline in the incidence of poverty, in absolute terms 277 million persons were still living below the poverty line, facing conditions of ill health and short life expectancy (Planning Commission, 1996-97). Lack of basic educational skills and access to the means of production, prevented the masses to participate in, and derive benefit from, economic growth. Besides, household in India often suffered from transient rather than chronic poverty. Their economic position also varied from year to year depending on a good or bad harvest, and within a year due to the seasonality of employment and wage earnings.
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Trust – An Essential Element & Pillar of Micro Finance

Trust – An Essential Element & Pillar of Micro Finance

Micro entrepreneurs who are the borrowers are center of micro finance. The typical client base of any micro finance is poor people who do not have access to formal financial institutions. They are typically self-employed, micro entrepreneurs. In rural areas, they are usually small farmers and others who are engaged in small income-generating activities such as cattle & poultry farming, food processing and petty trade. In urban areas, micro finance activities are more diverse and include shopkeepers, service providers, artisans, street vendors and hawkers. Micro finance clients are poor and vulnerable non-poor who have a relatively stable source of income. The group of peer members, if create an entity either informal (SHG) or formal (cooperative) are important stakeholder as a unit. Here the interest of the entity becomes substance rather than the individual interest. The executives and employees of such entity and banks and refinancers (NABARD in case of India) will be crucial stakeholders, who do not lend only money, but assist business to develop. Micro Finance is not money only. It is more than that. The government and their agencies, donors, MFIs and NGOs are stakeholders who plays vital role as supplier of fund with a social motive. Government plays tutelage role and hence critical in the whole system.
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