Top PDF The challenges of microfinance: In India and Bangladesh

The challenges of microfinance: In India and Bangladesh

The challenges of microfinance: In India and Bangladesh

Microfinance brings its importance to the poor like everyone else; most poor people who need and use financial services to take advantage of business opportunities, i[r]

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Determinants of Financial Self Sufficiency in Microfinance Institutions: A study of Pakistan, India and Bangladesh

Determinants of Financial Self Sufficiency in Microfinance Institutions: A study of Pakistan, India and Bangladesh

Openly accessible at http://www.european-science.com 297 Microfinance sector is Pakistan witnessed the growth of 29.2% in aggregate loan portfolio reaching to 73.7 billion in 2015-2016. The state bank of Pakistan is promoting MFBs to enhance their outreach so that maximum numbers of under privileged people can avail financial services. According to report of UNDP, approximately 39% of Pakistani people lives under poverty line (Multidimensional poverty in Pakistan, 2016). Currently 11 MFBs and 37 MFIs are operating in Pakistan. The number of clients served by MF also increased to 1,249,857 (Ministry of Finance, 2015-2016). In India, Microfinance was started in late 1980s. Majority of NBFC-MFI are following institutional approach and do not relay on government loans or grants to provide MF to poor people. According to World Bank, 23.6% of Indian population lived below the poverty line (US $1.25 per day. As on March 2016, gross loan portfolio exceeds 53,000 crores and total number of clients exceeds 325 million (Microfinance Institute Network , 2016). Bangladesh, also known as land of microcredit, is among the leading countries in microfinance. In Bangladesh, approximately 25% of population of Bangladesh lived under poverty line (US $2 per day). Currently 506 MFIs are operating in Bangladesh serving more than 36 million people and total loan disbursement 827.7 billion in year 2015 (World Bank Group, 2016).
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Regulated Microfinance in Bangladesh- Prosper and Challenges

Regulated Microfinance in Bangladesh- Prosper and Challenges

Bangladesh is the pioneer of microfinance which helps the community moving to a poverty free world. Since inception, the tools become very useful to diminish poverty through asset buildup around the community. As the expansion of the program, it has been require a regulation from the different level of stake holder. This is condemnable that, in the year 2011 was a transitional period for microfinance in Bangladesh. Microfinance has been facing challenges, criticized and debate as founder and Novel laureate Dr. Mohammed Yunus has been departed from Grameen Bank. Micro Credit Regulatory Authority (MRA of Bangladesh has been started it’s almost complete regulation in this year. Regulation was essential to keeping everyone’s rights. According to Peck Christen, R.Lyman and Rosenberg (2003) regulation refers to a set of enforceable bindings rules that govern the conduct of legal entities or individuals, whether they are adopted by legislative body or an executive body. Purpose of the prudential regulation is to ensure the financial soundness of financial intermediaries and try to prevent if not reduce financial system instability and loss of depositors money. In Bangladesh there are about five thousand MFI has been working which are small, medium and big. Besides the MFIs, thousands of other financial institution including cooperative, multipurpose and self help group (SHG) etc has been working in the same field. In fact, market failure of the formal financial institute has created MFIs and became praiseworthy. Credit unions and lending cooperatives have been around hundreds of years. However, the original of modern microfinance is often credited to Dr. Mohammad Yunus, who began experimenting with lending o poor women in the village of Jobra, Bangladesh during his tenure as a professor of economics at Chittagong University in the year 1970s. He would go on to found Grameen Bank in 1983 and win the
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Microfinance Institutions In India – A Comparative Study of Developments and Challenges Faced by Mfi’s

Microfinance Institutions In India – A Comparative Study of Developments and Challenges Faced by Mfi’s

The planning process in India is centered on the premises of the tricledown theory which emphasizes that benefits of development shall filter down to all sectors generating equality and empowerment . Microfinance refers to small savings ,credit an insurance services extended to economically disadvantaged segments of society. It is emerging as a powerful tool for poverty allivation in India. This working paper tries to outline the prevailing condition of the microfinance in India in the light of its emergence till now. The prospect of microfinance is dominated by SHGS (self help groups) banks linkage programmes .Its main aim is to provide a cost effective mechanism for providing financial services to the poor. This paper discovers the prevailing gap in functioning of MFI’S such as practice in credit delivery ,lack of product diversification ,customer overlapping and duplications, consumption and indivisual loan demand with lack of mitigation measures, less thrust on enterprise loans ,collection of savings, loans and highest interest rates existing in microfinance sector. All this clear syndromes which tell us that the situation is moving without any direction. This paper finally concludes with practicable suggestions to overcome the issues and challenges associated with microfinance in india.
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Microfinance in India: Contemporary Issues and Challenges

Microfinance in India: Contemporary Issues and Challenges

Abstract: 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. This working paper tries to outline the prevailing condition of the Microfinance in India in the light of its emergence till now. The prospect of Micro-Finance is dominated by SHGs (Self Help Groups) - Banks linkage Program. Its main aim is to provide a cost effective mechanism for providing financial services to the poor. Recently Union Rural Development Minister Jairam Ramesh wanted the help of SHGs for the establishment of DRDO designed bio-toilets in rural areas. This paper discovers the prevailing gap in functioning of MFIs such as practices in credit delivery, lack of product diversification, customer overlapping and duplications, consumption and individual loan demand with lack of mitigation measures, less thrust on enterprise loans, collection of savings/loans and highest interest rate existing in micro finance sector. All these are clear syndromes, which tell us that the situation is moving without any direction. Finally paper concludes with practicable suggestions to overcome the issues and challenges associated with microfinance in India.
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Security Challenges to India-Bangladesh Relations: Some Visible Issues

Security Challenges to India-Bangladesh Relations: Some Visible Issues

gone through several ups and downs over the past 40 years. The relationship has often been marked by occasional setbacks, thereby making the bilateral ties rather lukewarm and uneven. It will not be an exaggeration to say that they plummeted to a low of mutual mistrust and suspicion from the heights of very close friendship that lasted a brief period in the aftermath of Bangladesh’s independence in 1971. Neither the warmth or nor the trust in the relationship could be sustained for very long. This uneven relationship appears to be caused by the misperceptions regarding each other in both countries. Recently, there has been a tectonic shift in bilateral relations between the two countries following a series of high level visits that produced some significant outcomes for both Bangladesh and India in the security arena. Against this background, the main objectives of this topic are to understand the common security challenges and their implications for India-Bangladesh relations by analysing the security dynamics and how can these be dealt with by the two countries. This is a defining period in India- Bangladesh relations, there is an opportunity for transforming the overall relationship into one that can address each other’s
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Challenges & Issues of Microfinance in India

Challenges & Issues of Microfinance in India

From the time of independence unemployment and poverty has been two major characteristics and challenges of India. The major cause for the above two has been the unavailability of sufficient credit facilities for the poor and unemployed. These two factors have become the most challenging roadblock in the path of sustainable development of the country. The rapidly opening economy is widening the gap between the rich and poor. To have a sustainable life style along with saving and investment, microfinance allows the poor to get the loan that leads to financial independence and growth. The poor use these loans in a productive manner to create their businesses, assets of their own and get rid of poverty once and for all. Microfinance is becoming a significant buzzword in India. Remarkable progress has been made during the last two decades in innovating techniques to deliver financial services to the poor on a sustainable basis. These loans are aimed at empowering the impoverished people to start their own businesses and to grow their money so that they can achieve long-term financial independence and develop sustainably. Economic growth, sustainable development and poverty alleviation can be achieved effectively with the help of an instrument like Microfinance. This paper will focus the challenges and suggestive measures for growth of microfinance in Indian context for a sustainable development.
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Remittances and microfinance in India: Opportunities and challenges for development finance

Remittances and microfinance in India: Opportunities and challenges for development finance

However, be it internal or international, monies sent back home by migrants play a crucial role in the lives of the families. The rise in remittances has led to several options for money transfer as well as increased competition amongst transfer agents with technological advances playing a major role. But despite all these positive aspects, a systematic delivery mechanism of remittances to a majority of rural pockets in India, which form major migrant sending and remittance receiving regions, is either non existent or is at a very nascent stage. In rural areas along with the informal agents, new generation of financial institutions like Micro Finance Institutions (MFIs) and Business Correspondence (BCs) of Banking Institutions have expressed their interests in the business of transferring remittances. However, the outreach is insignificant. Moreover, most of the MFIs in India have been involved in savings, credit and insurance practices rather than remittance transfer. Fernando (2003) cites certain assumptions behind this, for instance, remittances, received by households, are assumed to be mainly spent on consumption for basic needs by them rather than being ‘income - generating’. Hence, those remi ttance receivers do not belong to the target group of MFIs.
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Challenges of Rural Microfinance in China - What Can China Learn from Bangladesh and Indonesia?

Challenges of Rural Microfinance in China - What Can China Learn from Bangladesh and Indonesia?

machinery. Moreover, rural population highly depends on agriculture, which is influenced by natural conditions, making their incomes unpredictable and unstable (Zhou and Takeuchi, 2010). Due to the fact that personal relationships are easily developed in small rural communities, which makes the problem of asymmetrical information less severe, informal lenders such as pawn brokers and moneylenders can provide credit to rural population, but with rather high interest rates. Such high interest rates hinder poor rural households to obtain any loans. As a matter of fact, informal lenders do not have the government’s approval and most of them operate illegally. Hence, we can see that there is a great demand for reliable and cheaper microfinance, which consequently leads to the great potential for the rural MF market. Conducted in 2005, a survey of 502 rural households in four counties/cities in Guizhou Province, located in the southwest of China, show that 89% of the interviewed households expressed their interests in obtaining credit (He, 2008). Another survey conducted in Zhejiang Province and Ningxia Autonomous Region in 2003 implies that with appropriate technical training provided, more households were willing to receive loans (He, 2008). As in China poverty is a rural phenomenon, caused by the limited rural-urban migration (Wang et al., 2004), microfinance provided to rural households in China is the emphasis of the thesis. The following paragraph will briefly discuss the other three groups that demand microfinance.
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Role of Microfinance in Micro Entrepreneurship Development in Bangladesh: Prospects and Challenges

Role of Microfinance in Micro Entrepreneurship Development in Bangladesh: Prospects and Challenges

participation by both family and hired labour would be considered also as micro enterprises (InM 2013). However, the size of these enterprises, in terms of employment, is higher than that of the former group. The former group has a little over than one percent of average employee size compared to 2.34 for the micro enterprises run by family and hired labour while for small enterprises it is estimated at 5.86, and for medium and large enterprises is 75.27 (Khalily and Khaleque 2013). Bangladesh Bank has defined enterprises types based on fixed assets and employment size whereas, Bangladesh Bureau of Statistics (BBS) has classified enterprises in terms of number of employees on full-time and regular basis (Khalily, et al. n.d.). According to BBS (i) enterprises with employees between 1 and 9 are called micro-enterprises, (ii) enterprises with employees between 10 and 49 are called small enterprises, (iii) enterprises with employees between 50 and 99 are medium enterprises, and (iv) enterprises with more than 100 employees are called large enterprises. However, MFIs consider micro-enterprise based on the loan size. Different MFIs disburse different amounts as ME loan according to their policy and most of the MFIs termed a loan as ME when loan amount is more than BDT 30,000 (Khalily and Khaleque 2013).
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Smoke and Mirrors:

Evidence from Microfinance Impact

Evaluations in India and Bangladesh

Smoke and Mirrors: Evidence from Microfinance Impact Evaluations in India and Bangladesh

As  discussed  in  previous  chapters,  identifying  and  quantifying  the  counterfactual  represents  a  challenge,  which  is  exacerbated  in  the  particular  context  of  microfina[r]

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Indian microfinance: lessons from Bangladesh

Indian microfinance: lessons from Bangladesh

(Abstract: That more than three-fourths of old SHGs in every year remain outside credit linked further with mainstream banks in India makes the doubt whether old SHGs are becoming non-existent within a very short period of their formation. The re-survey to some previously productive SHGs makes the doubt stronger. But to set up a successful enterprise by poor SHG members’ households to earn a

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EXPERIENCE WITH MICROFINANCE IN INDIA

EXPERIENCE WITH MICROFINANCE IN INDIA

MFIs issue small loans and credits to borrowers from low-income group who have been suffering from financial exclusion because they are either denied or don’t have access to formal institutional system of finance and banking. The concept of microcredit and microfinance was the brain child of Dr. Mhod. Yunus (noble laureate) who recognised that small credits can bring some permanent but positive changes in economic conditions of poor. He started with rural women and provided small credits to enable them start some new trade or business. For this, He founded Grameen Bank in 1976, a non-profit organisation and source of microfinance to rural people, mostly women, in Bangladesh. Grameen bank believed that with respect to men, women from poor households are more intelligent to spend and save money for future of their families.
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Challenges of Microfinance Sector in IndiaDr. Harpreet Singh, Ramneet Kaur

Challenges of Microfinance Sector in IndiaDr. Harpreet Singh, Ramneet Kaur

Access to finance for India’s rural poor, to meet their diverse financial needs (savings, credit,insurance against unexpected events, etc.) presents a formidable challenge in a country. But theopportunities, too, are plentiful. Government should come forward in a manner to provide quickdelivery of microfinance to the poorer and needed people. A legal and regulatory environment isneeded as per the requirements of the stakeholder of microfinance. In Microfinance theappropriate products and services to be launched, to cater the needs of small entrepreneurs,. Astrong focus on the quality of SHGs by their NGO promoters is a key factor in the success of theSHG Bank Linkage model in its pilot phase. Government should check the group quality and offinancial sustainability of MFIs.
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MICROFINANCE IN INDIA

MICROFINANCE IN INDIA

Microfinance, also called microcredit, is a type of banking service that is provided to unemployed or low-income individuals or groups who otherwise have no other access to financial services. While institutions participating in the area of microfinance are most often associated with lending (microloans can be anywhere from $100 to $25,000), many offer additional services, including bank accounts and micro-insurance products, and provide financial and business education. Ultimately, the goal of microfinance is to give impoverished people an opportunity to become self-sufficient. Microfinance is a general term to describe financial services, such as loans, savings, insurance and fund transfers to entrepreneurs, small businesses and individuals who lack access to traditional banking services.The pioneer of modern microfinance is often credited to Dr. Mohammad Yunus, who experimented with making small loans, which he funded himself, to women in Bangladesh making bamboo furniture who had previously relied on usurious loans to purchase raw materials. He discovered these very tiny loans, which traditional banks did not want to make due to the perceived risks and costs, could make a disproportionate difference to a poor person and given the chance they would pay them back creating a viable business model. He would go on to found Grameen Bank in 1983 and win the Nobel Peace Prize in 2006.
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ABSTRACT

ABSTRACT

India and Bangladesh are interrelated in geopolitical relations but their core objectives are different. While geopolitical compulsions introduce the never-ending challenges of proximity to the two parties, including crucial issues of security, migration and resource sharing, Bangladesh is yet to form its own identity in which the perceived image of India figures predominantly, and the attitudes and expectations they develop towards each other shape the pattern of bilateral interactions between the two countries. Solutions to a number of vexed problems remain elusive and irritants in relations out- number gestures of goodwill. While the warmth in relations has frequently fluctuated with the change of regimes, a sustained pattern of uneasiness and mistrust persists. Analysed at three levels of geopolitics, attitudinal effects and functional exchanges, IndiaBangladesh relations appear as a reflection of normal big country–small country power relations where policies are formulated on the basis of the primary principle of self-help but are further shaded by the quest for transforming itself into a nation-state by Bangladesh.
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The Credibility of Microfinance Institutions -

Clients´ Perception and Empowerment in Andhra Pradesh

The Credibility of Microfinance Institutions - Clients´ Perception and Empowerment in Andhra Pradesh

Microfinance! is! a! contested! field! in! development! and! politics.! When! I! was! working! at! InWent—Capacity! Building! International! (today! part! of! the! Gesellschaft! für! Internatio: nale! Zusammenarbeit! GIZ),! a! German! development! organization! contracted! by! the! Federal! German! Government,! I! was! puzzled! by! the! diverse,! not! to! say! diametrically! opposing! perceptions! of! what! had! by! the! mid! 2000s! become! a! ubiquitous! trend! in! development,!the!sponsoring!and!promoting!of!microfinance.!!On!the!one!hand,!there! was! much! praise! and! hope! within! the! development! community,! spread! not! least! through!the!Western!media!with!celebrated!success!stories!of!clients!being!lifted!out!of! poverty.!This!was!in!line!with!the!United!Nations!International!Year!of!Microcredit!2005! and!the!Nobel!Peace!Prize!2006!given!to!Professor!Muhammad!Yunus!for!his!work!and! creation! of! the! microfinance! Grameen! Bank! in! Bangladesh.! On! the! other! hand,! at! international!development! conferences!—! in!private!conversations,!during!the!breaks! and! in! the! corridors! —! doubts! and! scepticism! about! microfinance! were! constantly! raised! by! those! who! ought! to! have! known! what! was! happening! “on! the! ground”,! development!practitioners!from!Bangladesh!or!India!alike,!spoke!about!their!concerns! and! reported! cautionary! stories.! Hence,! the! original! puzzle! that! motivated! this! thesis! and!the!desire!to!understand,!does!microcredit!“work”?!!
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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

home turf Andhra Pradesh halting the industry in its tracks. In the line of challenges Dr. Sidhatha and their co authors found that the Microfinance delivery involves macro and micro challenges. The macro challenges faced by MFIs include the inaccessibility of the micro finance services to the rural poor, the capital inadequacy of the MFIs, the demand supply gap in provision of microcredit and micro savings and the lack of women orientation in marketing, evaluation and delivery of microfinance. The micro challenges include the inability to reduce the high transaction cost involved in delivering microfinance, the non- availability of documentary evidence and collateral among majority of rural poor, difficulty in reducing the dependency of the rural poor on money lenders and lastly the problem of repayment tracking where lending is not based on documentary evidence. K. Muralidhara Rao found in his paper that Private MFIs in India, barring a few exceptions, are still fledgling efforts and are therefore unregulated. Jonathan Morduch and Stuart Rutherford in his study “Microfinance: analytical issues for India” states that the microfinance movement is thus striving to match the convenience and flexibility of the informal sector, while adding reliability and the promise of continuity and in some countries it is already doing this on a significant scale.
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Factors Affecting Financial Sustainability of Microfinance Institutions

Factors Affecting Financial Sustainability of Microfinance Institutions

Millions of people in developing countries have been given access to formal financial services through microfinance programs. Nevertheless, millions of potential clients still remain un-served and the demand for financial services far exceeds the currently available supply. Given significant capital constraints, expansion of microfinance programs remains a formidable challenge facing the microfinance industry. Moreover, it is observed that microfinance organizations have had various degrees of sustainability. One such sustainability is the financial sustainability. Financial sustainability has been defined by various researchers differently. As such there is no clear cut definition of the word financial sustainability. The MIX Market and various other agencies like ACCION, Women’s World Banking etc. have attempted to define the term financial sustainability in their own limited way. Therefore this paper attempts to find out the factors which affect the financial sustainability and thereafter propose a more comprehensive and representative model for financial sustainability and create an index to observe the financial performance of microfinance sector. The financial data of microfinance institutions from India and Bangladesh suggests that the capital/ asset ratio, operating expenses/loan portfolio and portfolio at risk> 30 days are the main factors which affect the sustainability of microfinance institutions.
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Microfinance   evolution, and microfinance growth, of India

Microfinance evolution, and microfinance growth, of India

several data sources shed some light on the industry. The growth of microfinance is visible in many aspects. There are more than 2000 NGOs involved in the NABARD SHG-Bank linkage program. Out of these, approximately 800 NGOs are involved in some form of financial intermediation. Further, there are 350 new generation co-operatives providing thrift and credit services. According to our estimate, the present total outstanding, including Sa-Dhan members and bank linkages is approximately Rs.700 crores (Rs. 150 crores of Sa-Dhan members and another Rs. 550 crores from the Banking system). The total client base is estimated at 6-8 million as opposed to the Government of India (GOI) intention to reach 25 million clients. The growth of community institutions has taken place with the role to take social and financial intermediation. A numbers of community banks have come into existence at village and block levels call ' Federation of Self Help Groups'. The inadequacies of the formal financial system to cater to the needs of the poor and the realization of the fact that the key to success lies in the evolution and participation of community based organizations at the grassroots level led to the emergence of new generation of MFIs. One kind of MFI is an NGO engaged in promoting Self Help Groups (SHGs) and their federations at a cluster level and linking SHGs with Banks under the Scheme. Examples are Myrada in Karnataka, which has promoted Sanghmitra, a company of its village saving and credit sanghas, PRADAN which has established a large number of SHGs and federated them under Damodar in Bihar, Sakhi Samiti in Rajasthan. Another kind is NGO-MFI directly lending to the poor borrowers, who are either organized into SHGs or into Grameen Bank type of groups after borrowing bulk funds from SIDBI, RMK and FWWB. Examples in this category are Rashtriya Gramin Vikas Nidhi (RGVN) which runs credit and savings programme in Assam and Orissa on the lines of Grameen Bank, Bangladesh. Also we have SHARE in AP, ASA in Tamil Nadu under this category. There are MFIs which are specifically organized as cooperatives, such as over 500 Mutually Aided Cooperative Thrift and Credit Socities (MACTS) in AP, promoted among others by Cooperative Development Foundation (CDF) and the SEWA Bank in Gujarat which also runs federations of SHGs in nine districts. Then we have MFIs, which are organized as Non-Banking Finance Companies (NBFC) such as BASIX, CFTS Mirzapur, SHARE Microfin. Ltd. and Sarvodaya Nanofinance Ltd. Growth of Microfinance in India
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