MICRO FINANCING

&
MICRO BORROWERS

By Group 1
Core of case…………
 Rural development and inclusive growth
 Reducing BPL by 50% by 2014
 Job opportunities for poorer sections
 Improving housing facilities
 Better infrastructure
 Objective: Greater opportunity to put money
into hands of have not's…
 why should this be done…..
 who are all involved in doing
this…….



Why……
Second fastest developing
nation …..
 HDI rank at 134 in 2009
 BPL rank at 89 in 2009

 25% of population below BPL

 75% of population survives on less

than 1 $ / day

Who……
Businesses involved in
removing poverty
 Microfinance Institutions (MFI’s)
 Self Help Groups (SHG)
 SME
 GOV of INDIA


 is there still any gap……

 …..What happens to poorest of poor


Shankar Datta, “it is not enough to give the poor

money”
 then what else should have to be
done…….

EQUIP MICRO BORROWERS
WITH KNOWLEDGE….

Is this really being

Gov of India initiatives……
 CAPART
 NREGA
 PMGSY
 Bharat Nirman
 - these scheme’s objective is to have a
rural development…..
 ……..not only in monetary terms,
 but something beyond
it……

CAPART- Council for Advancement
of People’s Action and Rural
Technology
 It was established in1986
 12,000 voluntary organizations and 9 regional committees
across country
 Up to Rs 25 lakhs can be sanctioned to each organization
 Up to 1998, has sanctioned 18126 projects of Rs. "2"95.20
crore. Against this, an amount of Rs. 363.8"2" crore has
been released
SCHEMES
Public cooperation Organization of beneficiaries

Information Technology Watershed development

Division
Disability Action Division Rural Technology Division
Young Professional Scheme Marketing Division
 CAPART

Regional Centre
Ahmedabad No of Projects
31 Amount Sanctioned
146
Bhubaneswar 77 in
351Rs Lakhs
Chandigarh 82 439
Dharwad 86 570
Guwahati 101 375
Hyderabad 229 484
Jaipur 44 118
Lucknow 80 539
Patna 92 282
NREGA- National Rural
Employment Guarantee Act
 Established in 2005
 Wages of Rs.100/ day and employment not less than 100
days per year
 Rs.30,000 crore is the budgeted expenditure for 2009
 Proportion of money from Disinvestment of PSU has been
planned to spent on NREGA
 Employment provided to 3.57 crore
households
Person days in crores
Total 154.04
Women 78.01
Total no of works taken up 28.44 lakhs
Works completed 9.09 lakhs
Work in progress 19.35 lakhs
PMGSY- Pratan Mantri Gram
Sadak Yojana
 The primary objective is to provide Connectivity
 368,000 km of new road construction
 370,000 km of up gradation/renewal
 At a cost of about $26 billion

PHASES POPULATI
ON No of Road Works 95124
CRITERIA Cleared
New connectivity 63466
1 1000
Up gradation 31655
2 500 Completed 62942
3 250 Progress 31831
Bharat Nirman

 Rural infrastructure 2005 -2009 with total investment of
Rs.1,74,000 crore
ELECTRICITY: for remaining 1,25,000 villages

 A.P, Gujarat, Goa, Haryana , Maharastra, Kerala,

Nagaland, Punjab,
 Tamil nadu are 100% electrified

ROADS : 1,46,185 Kmsroad length is proposed to be

constructed by 2009 benefitting 66,802 unconnected

eligible habitations in the country
DRINKING WATER : 55,067 uncovered habitations to be

covered by 2009.
TELEPHONE :Every village to be connected by telephone:

 Achieve 40% rural teledensity by 2014

HOUSES : 

 60 lakh houses to be constructed for the rural poor by

2009
 New target of 1.2 cr houses by 2014 adopted
Some aspects of MFI’s:
 SHG-Bank linkage programme of NABARD - emerged as the
primary model for microfinance services
 Rashtriya Mahila Kosh-rewarded with a corpus of Rs 500
crore from the present Rs 100 crore
 Geographically unevenly distribution
 Lack of systems to check the loan-utilization
 Primary objective diluted by targeting richer clients to
increase profits
 Cannot mobilize large amount of lending funds due to the
inappropriate legal and financial structure
 Present IRDA guidelines do not permit the convergence of
life and nonlife insurance policies by the same insurance
provider
 Most of the large MFIs are not allowed to accept savings
 Venture firms and private equity funds are waiting to enter
the industry
SHGs

1.Out reach
 SHG members
 Who does not join?
 Drop outs

2.The social role

 Politics
 Social harmony
 Social justice
 Community action



Sustainability & financial
aspects
1.Record keeping
2.Equity
3.Default & recoveries
4.Sustainability
5.
6.
Implications
 SHGs for what?
 SHGs for whom?
 Improve transparency & record keeping
 Realising the social potential
 How much external credit?
 Group enterprises
 Dealing with defaults & drop-outs
 Promotion – what, how much & for how
long?
 Bank & national reporting
SME Scenario
 Total no.of SMEs nearly 10.52 million as on
3rd All India Census of SSI
 Accounts for almost 50% of total output
and 42% of India’s total exports
 Clusters nearly 636 (industrial)
 Total employment is 24.93 million, with per
unit employment being 2.37 persons

 growth rate(%)
19
92

0
1
2
3
4
5
6
-1
19 99
93 3
-1
19 99

3.3
94 4
-1
4
19 99
95 5
-1
19 99
5.2

96 6
-1
19 99
4.1

97 7
-1
19 99
4.8

98 8
-1
19 99
4.5

99 9
-2
20 00
2.6

00 0
-2
4

20 00
01 1
-2
4

20 00
02 2
-2
00
3
3.6
growth rate of employment in SSI sector

3.9
Series1

Source: Ministry of commerce& industries,GoI

 SME in poverty reduction


 High contribution to domestic production

 Significant export earnings
 Low investment requirements
 Operational flexibility
 Low intensive imports
 Capacity to develop appropriate indigenous
technology
 Import substitution



 SME Development
 Interest rate cut by SBI
 SIDBI awarded as “Outstanding
Development Project Award” for setting
up SMERA
 Partnership with HP to establish colour
printing solution



Information Initiatives
1.MYSMEnews: blend of the power of
technology with existing realities and
social networks.
Launched in slums of Kolkata with 3,00,000

micro entrepreneurs
 Delivery models

 Personally customized information

 Closing info gap

 Potentially broad reach


2.Airtel rural service
 combination of distribution and service.

 Identification and training of

entrepreneurs
 Consumer queries

3.Spoken web
4.Micro finance Management Institution
5.SME Chamber of India
CONCLUSION
 Positive growth in the last two quarters
 Limitations like:-

qRegulatory Restricitons
qProblem of Human Resource
qLack of Information
 "Doing Good and Doing Well: The

need for balance“ – Bright Future

