ABOUT MICROFINANCE

Microfinance, is banking the unbankables, bringing credit, savings and other

essential financial services within the reach of .millions of people who are too
poor to be served by regular banks, in most cases because they are unable to
offer sufficient collateral. Microfinance is based on the premise that the poor
have skills which remain unutilized or underutilized.

Microfinance is an innovation for the developing countries. Microfinance is a

service for poor people that are unemployed, entrepreneurs or farmers who are
not bankable. The reason why they are not bankable is the lack of collateral,
steady employment, income and a verifiable credit history, because of this
reasons they cant even meet the minimal qualifications for an ordinary credit.

MICROFINANCE AS INDUSTRY
The Indian microfinance (MFI) industry expanded more than 60% to
Rs54,329 crore in 2015-16 compared to the previous year, according to a
report prepared by Sa-Dhan, the self-regulatory organisation of MFIs
The MFI sector experienced a crisis after Andhra Pradesh, the biggest
market for small loans made to the unbanked poor and self-employed, in
2010 clamped down on micro lenders.
The growth in this sector is also due to Reserve Bank of India allowing
many NBFC-MFIs to act as banking correspondents (BCS) connecting
commercial banks with customers in small towns and rural areas.
In 2010, Indian MFIs had to face a backlash from loan borrowers and
politicians. There was large scale default on loans because of non-
repayment by clients which caused the top 5 MFIs to incur heavy losses.
Since then MFIs have reigned in their growth and have adopted practices
that ensure there is no multiple lending. They have also constituted a self-
regulatory organization called MFIN (Microfinance Institutions
Network) which addresses grievances of microfinance clients and ensures
the MFIs are sticking to their code of conduct
 During the FY 2015-16, the credit ratings outlook for more than 12
microfinance institutions was upgraded. This shows the sector has fully
recovered from the setbacks it had faced.
Many microfinance companies have taken loans from MUDRA. The launch of
MUDRA has helped MFIs to refinance their loans easily.

ABOUT FINCARE
Fincare was formed in Sep-2014, to consolidate the base of pyramid
financial services and distribution (BOP-FSD) platform under one
umbrella. The journey of the platform began with equity investment by
IVFA in the year 2010 with acquisition of stake in two NBFC-MFIs viz.
Disha Microfin Pvt Ltd (Disha) based in West India and Future Financial
Servicess Private Limited (FFSPL) (Formerly Known as Future
Financial Servicess Limited) operating in South India. The company has
equity investment from India Value Fund (IVFA), a premier private
equity fund in India along with the Indian promoters. Fincare was formed
in Sep-2014, to consolidate the base of pyramid financial services and
distribution (BOP-FSD) platform under one umbrella. IVFA also created
a central management company, India Finserve Advisors Pvt Ltd (IFAPL)
as an advisory and management services arm for its investee companies.
Along the way, a fourth entity came into existence viz. Lok Management
Service Pvt Ltd (Lok) in 2012, established as a Business Correspondent
to Banks, helping in furthering their financial inclusion agenda through
microfinance products & services. The business interests of IVFA in the
platform got merged under the holding company Fincare Business
Services Pvt Ltd in Sep-2014 with Corporate Office at Bangalore,
Karnataka.

BUSINESS STRATEGY OF FINCARE

1. Integrated base of pyramid business
Strong market value

Equity maximization
 Efficiency in operations

Strong value proposition to all stakeholders

2. Leveraging leadership capital

Capitalizing on the industry best leadership within the company for

business excellence

Leveraging the deep foundation of the stakeholders in Base of pyramid

business and the global leadership skills of the management team to build
a high growth platform

3. Stakeholder engagement

Customer delight with relevant products addressing the lifecycle needs

along with fair and transparent business policies.

Win-win partnerships with lenders and investors by maximizing value at

the base of pyramid.

Active association with industry networks contributing efficiently to the

industry thought capital

Active engagement with employees nurturing and developing talent

Community engagement through welfare initiatives

4. Excellence in Business practices

Efficient liquidity management & financial planning

Operational excellence by analytical data based field operations with

proactive audit controls and centralized automated credit appraisal

Fully integrated technology network with end-to-end process automation

and sales force automation for fantastic time and cost efficiencies
 Meritocracy driven HR policies attracting and retaining high quality
talent.

ABOUT FINCARE GROUP

Fincare group has Fincare Business Services, Disha Microfin, Future
Financial Servicess, Lok Management Services & India Finserve
Advisors as group companies.

The platform has significant equity investment from India Value Fund , a
premier India-focused Private Equity fund.

The Vision of the platform is to become the most admired financial

services & Distribution Company serving clients at the base of pyramid.

The platform provides financial inclusion to low-income households in

rural and semi-urban markets, primarily in Central, West and South India.

The platform has a product portfolio which includes Microfinance loans,

Business Correspondent Loans and Micro-enterprise Loans.

The platform also distributes products non-credit products such as Solar

Lamps, Mobile phones etc. which are aligned to client-segment needs.

The platform has an overall Asset under Management (AUM) of over Rs

1955 Cr as on Oct16.

The platform operates across 7 States & 1UT viz. Gujarat, Madhya
Pradesh, Rajasthan & Maharashtra, Andhra Pradesh, Karnataka, Tamil
Nadu and Pondicherry with over 12 Lac client base.

The platform has over 3600 employees spread across 200 + locations.
 The platform partners with over 35 funders.

The platform has Business Correspondent arrangement with 4 leading

banks viz. Axis Bank, DCB Bank, Indus Ind Bank and Yes Bank and 1
NBFC viz. MAS Financial.

The platform companies have received the following ratings from ICRA;
Disha Microfin has received BBB- rating and Future Financial Services
has BBB rating.

Working method for microfinance institutions

When choosing a village the MFI conduct a comprehensive survey to
brief the potential for operations and the local conditions in a village. The
MFI are evaluating some key factors like village population, degree of
poverty, road accessibility, political stability and safety. When a village
has been selected, the MFI introduces its mission, methodology and the
services they are offering. Has been selected, the MFI introduces its
mission, methodology and the services they are offering.

After the informational presentation interested women are gathered in

group formations. They have to be in the age between 18 and 59. The
women put them self together in groups of five to serve as guarantors for
each other.

If a borrower defaults on her loan, the entire group typically is penalized

and sometimes barred altogether from taking further loans. This peer
pressure encourages borrowers to be very selective about their peer group
members and to repay loans in full and on time.

Then the group training begins, usually as a five day program. The
purpose is to educate the members in the procedures of the financial
products, delivery methods, calculation of interest rates, business
development skills and how to sign their names.
 MANAGEMENT TEAM

Rajeev
Yadav

(CEO)

Chandar Rao Imtiyaz D Keyur

Doshi
(CTO) (COO)
(CFO)
Kishor M Mahender Pankaj
Chawla Gulati
(COO)

Prakash Praveen Sharad

Sundaram Arora Kumar

Vivek Venkata Rakesh

Kothari Jayaraman Das

Subhash V Raghvendra
Rao T S
(COO)

PRODUCTS OFFERED
Fincare offers the following loans and services:
Short-term loans
Microfinance loans
Emergency loans (In the event of death, sudden illness etc)
Life insurance and loan cover insurance services
Retirement solutions

Porters Five Forces Model

 Industry Rivalry:-
In Micro Finance Industry, industry rivalry increases when an establish
organization tries to acquire the weak firm and make the strategies to capture
the whole market. ICICI is proved to be a good example in this context because
recently it has acquired the bank of Madura and looks after the microfinance
operations, maduras chairman shree thiyagarajan started the Madura
microfinance with the former help of other commercial bank. The other factors
like life insurance in rural india is only 10% which invites others also for the
same

Threat of substitutes
There is a threat for the substitute to this industry as we know that the villagers
have many options like moneylender and other private and nationalized bank
although its costly for the banks as well as villagers to take loans from the same,
but other factors like housing finance and life insurance products cannot be
ignored which are already served by the banks. Even the private banks in order
to get support from the Government and the society are redesigning its strategy
to serve the villagers ICICI is one of them.
 Threat of entry
Today we know that CSR activity plays an important role in every organization,
so as a social responsibility most of the organizations are helping the other
NGOS and institute not to lend money but support them in various activities
which includes ORACLE, IBM, INFOSYS etc.

Currently in India the suppliers of micro finance may be classified into three
categories as follows.
Formal sector which includes banks
Semi formal group which comprises of MFIs and SHGs
Informal providers who are not legal entities and includes money lenders, chit
funds, pawn brokers, employers, relatives, Sanga and friends

Bargaining power of customers

Today they are being served by the different choices like various
MFIs, banks, Moneylenders etc. so, they have strong bargaining
power
Micro Finance companies gives loans to the self help groups and
the joint liability groups they are 97-8 in numbers so they easily
convince and influence the MFIs in their favour
Today also they feel the local moneylenders as easy reachable so
they need to be educated that they are cheated by them with high
interest rates
Arivoli Lyakan must be undertaken by the MFIs so that they can
educate them well

Bargaining power of suppliers

As the rural area is untapped area to expand for the financial
services. So, the donors have to design their services relatively
unique keeping in mind their cost structure
They can provide some educational awareness or money transfer
facilities like services which can benefit the poors or they may go
for the various campaigns like HIV, Hygiene etc

SWOT ANALYSIS
STRENGTH
 Banking is as old as Human race
Source of employment & GDP growth
Hedge from risk
Diversified services
Connecting People

WEAKNESS
Vulnerable to risk
Cant reach to Under-penetrated market
High NPAs

THREATS
Recession
Stability of the system
Competition

OPPORTUNITIES
Expansion
Changing Socio-cultural & demographic factors
Rise in private sector banking