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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 sectors provide microfinance in India, using a range of microfinance delivery methods.
Since many banks 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.
The two main mechanisms for the delivery of financial services to such clients are: (1)
Relationship-based banking for individual entrepreneurs and small businesses and (2) Groupbased models, where several entrepreneurs come together to apply for loans and other services as
a group. Microfinance is a movement whose object is a world in which as many poor and near
poor households as possible have permanent access to an appropriate range of high quality
financial services, including not just credit but also savings, insurance and fund transfers. Many
of those who promote microfinance generally believe that such access will help poor people out
of poverty. Microfinance is a way to promote economic development, employment and growth
through the support of micro-entrepreneurs and small business.
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RESEARCH METHODOLOGY
Methodology is a way to systematically solve the problem and it is a game plan for
conducting research. And also it is a framework for the study and is used as a guide in collecting
and analyzing the data.
This is a Secondary data based study conducted at State Bank of Mysore, Pandavapura
branch. Pandavapura.
Method of Data Collection
Here only Secondary datas are used for collect the data.
(i)
(ii)
(iii)
Statistical Techniques
Pie charts and Bar charts are used to analyze the data and to arrive at conclusions.
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REVIEW OF LITERATURE
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INTRODUCTION
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 and using money. Microfinance is buzzing word, used when financing
for micro entrepreneurs. Concept of microfinance s 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 microfinance 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.
FEATURES OF MICRO-FINANCE
The term micro finance is of recent origin and is commonly used in addressing issues
related to poverty alleviation, financial support to micro entrepreneurs, gender development etc.
There is, however, no statutory definition of micro finance. The taskforce on supportitative
policy and Regulatory Framework for Microfinance has defined microfinance 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 term Micro literally means small. But the task force has not defined any
amount. However as per Micro Credit Special Cell of the Reserve Bank Of
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India , the
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1960 to 1980
1990
2012
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Approach
1.Nationalization of private 1.Peer-pressure
1.NGO-MFIs
commercial banks
2.Establishment of MFIs,
and
SHGs
3.Extension
of
subsidized
credit
4.Establishment of Rural
4.Increased policy regulation
Regional Banks
5.Establishment of apex
5.Increasing
commercialization
Phase 1: In the 1960s, the credit delivery system in rural India was largely dominated by the
cooperative segment. The period between 1960 and 1990, referred to as the social banking
phase. This phase includes nationalization of private commercial banks, expansion of rural
branch networks, extension of subsidized credit, establishment of Regional Rural Banks (RRBs)
and the establishment of apex institutions such as the National Bank for Agriculture and Rural
Development (NABARD) and the Small scale Industries Development Board of India (SIDBI).
Phase 2: After 1990, India witnessed the second phase financial system approach of credit
delivery. In this phase NABARD initiated the Self Help Group (SHG) - Bank Linkage Bank
Linkage program, which links informal women's groups to formal banks. This concept held great
appeal for non-government organizations (NGOs) working with the poor, prompting many of
them to collaborate with NABARD in the program. This period also witnessed the entry of
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Rural Advancement
Committee
(BRAC), Association
for
Social
Advancement (ASA) and PROSHIKA are the other principal Micro-Credit Finance Institutions
(MFIs) operating for over two decades and their activities are spread in all the districts of that
country. Initially set up in 1972 as a relief organization, it now addresses the issues of poverty
alleviation and empowerment of poor, especially women, in the rural areas of the country. This
institute also works in the field of literacy, legal education and human rights. BRAC has worker
significantly in the fields of education, health, nutrition and other support services. PROSHIKA
is also active in the areas of literacy, environment, health and organization building, while ASA
and Grameen Bank are pure MFIs.
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ROLE OF MICROFINANCE:
The micro credit of microfinance progamme 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
1. Microfinance helps poor households meet basic needs and protects them against risks.
2. The use of financial services by low-income households leads to improvements in
household economic welfare and enterprise stability and growth.
3. By supporting womens economic participation, microfinance empowers women, thereby
promoting gender-equity and improving household well-being.
4. The level of impact relates to the length of time clients have had access to financial
services.
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1.1
Working group on credit to the poor through SHGs, NGOs, NABARD, 1995
1.2
Activities in Microfinance
Microcredit: 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.
Remittances: 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.
1.3
Legal Regulations
Banks in India are regulated and supervised by the Reserve Bank of India (RBI) under
the RBI Act of 1934, Banking Regulation Act, Regional Rural Banks Act, and the Cooperative
Societies Acts of the respective state governments for cooperative banks.
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Lack of knowledge of the market and potential profitability, thus Making the choice of
business difficult.
Inadequate book-keeping.
Employment of too many relatives which increases social pressure to share benefits.
Lack of capital.
Credit policies that can gradually ruin their business (many customers cannot pay cash;
on the other hand, suppliers are very harsh towards women).
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At the very bottom in terms of income and assets, are those who are landless and 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 micro-enterprises. This segment mainly needs credit for working capital, a
small part of which also serves consumption needs. 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.
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.
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Microfinance approach is based on certain proven truths which are not always recognized.
These are:
1. That the poor are bankable; successful initiatives in micro finance demonstrate that there
need not be a tradeoff between reaching the poor and profitability - micro finance
constitutes a statement that the borrowers are not weaker sections in need of charity, but
can be treated as responsible people on business terms for mutual profit .
2. That almost all poor households need to save, have the inherent capacity to save small
amounts regularly and are willing to save provided they are motivated and facilitated to
do so.
3. That easy access to credit is more important than cheap subsidized credit which involves
lengthy bureaucratic procedures - (some institutions in India are already lending to
groups or SHGs at higher rates - this may prevent the groups from enjoying a sufficient
margin and rapidly accumulating their own funds, but members continue to borrow at
these high rates, even those who can borrow individually from banks).
4. 'Peer pressure' in groups helps in improving recoveries.
TYPES OF ORGANIZATION
These organizations are classified in the following categories to indicate the functional
aspects covered by them within the micro finance framework. The aim, however, is not to
"typecast" an organization, as these have many other activities within their scope:
Microfinance providers in India can be classified under three broad categories: formal,
semiformal, and informal.
Formal Sector
The formal sector comprises of the banks such as NABARD, SIDBI and other regional
rural banks (RRBs). They primarily provide credit for assistance in agriculture and microenterprise development and primarily target the poor. Their deposit at around Rs.350
billion and of that, around Rs.250 billion has been given as advances. They charge an
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Organizations which directly lend to specific target groups and are carrying out all
related activities like recovery, monitoring, follow-up etc.
II.
Organizations that only promote and provide linkages to SHGs and are not
III.
Informal Sector
In addition to friends and family, moneylenders, landlords, and traders constitute the
informal sector. While estimates of their importance vary significantly, it is undeniable
that they continue to play a significant role in the financial lives of the poor. These are the
organizations that provide support to implementing organizations. The support may be in
terms of resources or training for capacity building, counseling, networking, etc. They
operate at state/regional or national level. They may or may not be directly involved in
micro-finance activities adopted by the associations/collectives to support implementing
Organizations.
Micro-Finance
Implementing Organizations
Individual
Awareness/Promotional Work
Individual
Micro Enterprise
Consolidation of SHGs
Micro Enterprise
Savings
Consumption Needs
Credit Delivery
Production Needs
Recovery
Follow-up Monitoring
Non-Farm Related
Farm Related
Income Generation (Sustainable & Growth Oriented)
Self-Sustainability of SHGs
Economic Empowerment through use of Micro-Credit as an entry point for overall Empowerment
Figure No. 1
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Banks
Implementing Organizations
Resource/Support Organizations
Individuals
SHGs
Members
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India is said to be the home of one third of the worlds poor; official estimates range from
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 worlds 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
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 countrys
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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.
MICRO FINANCE MODELS
1. Micro Finance Institutions (MFIs):
MFIs are an extremely heterogeneous group comprising NBFCs, societies, trusts and
cooperatives. They are provided financial support from external donors and apex institutions
including the RashtriyaMahilaKosh (RMK), SIDBI Foundation for micro-credit and NABARD
and employ a variety of ways for credit delivery.
Since 2000, commercial banks including Regional Rural Banks have been providing funds to
MFIs for on lending to poor clients. Though initially, only a handful of NGOs were into
financial intermediation using a variety of delivery methods, their numbers have increased
considerably today. While there is no published data on private MFIs operating in the country,
the number of MFIs is estimated to be around 800.
Legal Forms of MFIs in India
Types of MFIs
Estimate
d
Number*
1. Not for Profit MFIs
Provincial
Acts
10
2. Mutual
Benefit
a.)
Mutually
Aided
Non-Banking
Financial
Companies (NBFCs)
Total
700 800
The MFI uses the branch network of the bank as its outlets to reach clients. This allows
the client to be reached at lower cost than in the case of a standalone MFI. In case of
banks which have large branch networks, it also allows rapid scale up. In the
partnership model, MFIs may contract with many banks in an arms length relationship.
In the service company model, the MFI works specifically for the bank and develops an
Operational Risks
Strategic Risks
Governance Risk
Credit Risk
Transaction Risk
Ineffective oversight
Transaction risk
Portfolio risk
Reputation Risk
Liquidity Risk
risk
External Business
Market Risk
Risks
Event risk
Risk
Investment
portfolio
risk
Financial Risks
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Liquidity risk
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Maintaining detailed estimates of projected cash inflows and outflows for the next few
make from savings in an effort to increase the MFIs ability to better manage its liquidity.
Maintaining investment accounts that can be easily liquidated into cash, or lines of credit
Liquidity management has a short-term focus (the section on investment portfolio risk below
discusses longer-term cash management issues). Often, liquidity projections are extended up to a
year with diminishing detail on the far end of the timeline.
Operational Risks
Operational risk arises from human or computer error within daily product delivery and
services. It transcends all divisions and products of a financial institution. This risk includes the
potential that inadequate technology and information systems, operational problems, insufficient
human resources, or breaches of integrity (i.e. fraud) will result in unexpected losses.
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Strategic Risks
Strategic risks include internal risks like those from adverse business decisions or improper
implementation of those decisions, poor leadership, or ineffective governance and oversight, as
well as external risks, such as changes in the business or competitive environment. This section
focuses on three critical strategic risks: Governance Risk, Business Environment Risk, and
Regulatory and Legal Compliance Risk.
Governance risk
One of the most understated and underestimated risks within any organization is the risk
associated with inadequate governance or a poor governance structure. The dangers of poor
governance that nearly resulted in the failure of that institution. Direction and accountability
come from the board of directors, who increasingly include representatives of various
stakeholders in the MFI (investors, borrowers, and institutional partners). The social mission of
MFIs attracts many high profile bankers and business people to serve on their boards.
Unfortunately, these directors are often reluctant to apply the same commercial tools that led to
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Policies and procedures at the branch level to minimize the frequency and scale of the
These are all examples of the internal controls MFIs use to maintain reasonable levels of risk
in their activities ex-ante, before operations. They are built into program design, procedures and
daily operations.
For example, an MFI that offers individual loans in addition to group loans, must adapt the
operational guidelines and procedures to mitigate the risks of individual lending. The borrower
screening and business assessment process will be different since the MFI is relying on the cash
flow from the business to repay the loan rather than group co-guarantees. While loan
disbursement procedures may remain the same as in traditional lending, loan monitoring may
require more frequent client visits, due to the lack of co-guarantors. Good management
information systems are critical to monitoring and mitigating risk. As Charles Waterfield noted in
his article on MIS systems, As microfinance institutions scale up their operations the needs for
timely and accurate information increases indeed the reliability of the management information
systems is often the difference between the success and failure of the institution.
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Mobility.
Economic security- enables poor women in making them economic agents of change by
Increasing women's income levels and control over income leading to greater levels of
economic independence
Access to networks and markets giving wider experience of the world outside the home,
access to information and possibilities for development of other social and political roles.
Enhancing perceptions of women's contribution to household income and family welfare,
increasing women's participation in household decisions about expenditure and other
issues and leading to greater expenditure on women's welfare.
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against widows
Visible changes in women's participation level attending meeting, participating and
demanding participation
Increase in bargaining and negotiating power at home, in community and the collective
Increase access to and ability to gather information
Formation of women collectives
Positive changes in social attitudes
Awareness and recognition of women's economic contribution within and outside the
household;
Womens decision-making over her work and income
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R.Prabhavathy (2012)
Has examined that collective strategies beyond micro-credit to increase the endowments
of the poor/women enhance their exchange outcomes the family, markets, state and community,
and socio-cultural and political spaces are required for both poverty reduction and women
empowerment. Even though there were many benefits due to micro-finance towards women
empowerment and poverty alleviation, there are some concerns. First, these are dependent on the
programmatic and institutional strategies adopted by the intermediaries, second, there are limits
to how far micro-credit interventions can alone reach the ultra-poor, third the extent of positive
results varies across household headship, caste and religion and fourth the regulation of both
public and private infrastructure in the context of LPG to sustain the benefits of social service
providers.
Crabb, P. (2008)
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Akula (2008)
Has examined Government tries to help poor people in rural area by providing subsidies
and other help but these initiatives hardly reduce their poverty levels and are not a long term
solution. But with the help of microfinance can easily reduce poverty level through providing
proper guidance, power of capital and productive assets services.
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NidhiyaMenon (2006)
Has examined that this paper studies the benefits of participation in micro-finance
programs, where benefits are measured in terms of the ability to smooth the effect of seasonal
shocks that cause consumption fluctuations. It is shown that although membership in these
programs is an effective instrument in combating inter-seasonal consumption differences, there is
a threshold levels of length of participation beyond which benefits begin to diminish.
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EoinWrenn (2005)
Has examined that microfinance creates access to productive capital for the poor, which
together with human capital, addressed through education and training, and social capital,
achieved through local organization building, enables people to move out of poverty (1999). By
providing material capital to a poor person, their sense of dignity is strengthened and this can
help to empower the person to participate in the economy and society. The impact of
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Yunus (2003)
Has examined that count 130 McMaster School for Advancing Humanity on women to
spread the word to their neighbors and friends about the success of these loans. The testimony is
expected to convince others to seek out Grameen for help. Yunus also encourages members to
save some of their money in case they fall on hard times, such as natural disasters, or to use this
money for other opportunities. In 1977, Yunus founded Grameen Bank after working for six
months to get a loan from the Janata Bank. Yunus realized that having groups of people take out
a loan was a better plan for success than giving loans to individuals. He describes the process by
which Grameen Bank lends money. Loan repayments are to be made in very small amounts, and
in the first project, Yunus chose a villager to be in charge of collecting the repayments.
SusyCheston (2002)
Has examined that Microfinance has the potential to have a powerful impact on womens
empowerment. Although microfinance is not always empowering for all women, most women do
experience some degree of empowerment as a result. Empowerment is a complex process of
change that is experienced by all individuals somewhat differently. Women need, want, and
profit from credit and other financial services. Strengthening womens financial base and
economic contribution to their families and communities plays a role in empowering them.
Product design and program planning should take womens needs and assets into account. By
building an awareness of the potential impacts of their programs, MFIs can design products,
services, and service delivery mechanisms that mitigate negative impacts and enhance positive
ones.
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COMPANY PROFILE
INTRODUCTION
Business is a part of society. In these days of complex system of production, variety of needs
and ever changing tastes, proper organization of business activities assume great significance or
importance. Business includes both individual and group activities aimed at creation of utility in
the form of goods and services. Thus, business is the combination of gainful human activities.
The principal purpose of business is to create exchange & process wealth to provide it in the
form of goods & useful services. Business in the literary sense means the state of being busy. An
economic activity with which a mean keeps him busy can be regarded as business.
TYPE OF INDUSTRY
Bank is a service industry, which provides financial services to customers.
Finance is the life blood of trade, commerce and industry. Now-a-days, banking sector
acts as the backbone of modern business. Development of any country mainly depends upon the
banking system.
A bank is a financial institution and a financial intermediary that accepts deposits and
channels those deposits into lending activities, either directly by loaning or indirectly through
capital markets. A bank links together customers that have capital deficits and customers with
capital surpluses.
DEFINITION OF BANK
Oxford Dictionary defines a bank as "an establishment for custody of money, which it
pays out on customer's order.
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MEANING OF BANK
A bank is a financial institution which deals with deposits and advances and other related
services. It receives money from those who want to save in the form of deposits and it lends
money to those who need it.
2. Andhra Bank
3. Bank of Baroda
4. Bank of India
5. Bank of Maharashtra
7. Canara Bank
9.Corporation Bank
21.Vijaya Bank
HISTORICAL BACKGROUND
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Branch Network
The Bank has widespread network of 902 Branches (as on 05.10.2013) and 14 Extension
Counters spread all over India including 6 Small and Medium Enterprise Branches, 4 Industrial
Finance Branches, 3 Corporate Accounts Branches, 7 Specialized Personal & Services Banking
Branches, 9 Agricultural Development Branches, 3 Government Business Branches, 1 Asset
Recovery Branch besides 5 Service Branches, offering wide range of services to the customers.
Human Resources
The Bank has a dedicated workforce of 10,479 employees consisting of 3,738
supervisory staff and 6,741 non-supervisory staff (as on 30.06.2013). The skill and competence
of the employees have been kept updated to meet the requirement of our customers keeping in
view the changes in the business environment.
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ORGANIZATIONAL SETUP
While the Chairman of State Bank of India is also the Chairman of the Bank, The
Managing Director is assisted by two Chief General Manager and 13 General Managers.
Designation
Name
Managing Director
Chief General Manager (Retail Banking)
Chief General Manager(Commercial Banking)
General Manager (Human Resource & General
Mr Sharad Sharma
Mr Kalyan Mukherjee
Mr Saswata Chaudhuri
Mr Bibhupada Nanda
Administration)
General Manager (SAMG)
General Manager (Priority Sector, Rural
Mr J Ramakrishnan
Mr K Lakshmisha
Mr Rajiv Mathur
Office)
General Manager (Risk Management and
Mr Parthasarathy N
Sri Viswanathan V
Officer
General Manager (Retail NW Bangalore)
General Manager(Vigilance)
General Manager(New Business,Govt
Mr Nageswara Rao
Mr Vijay Dube
Mr A Karunanithi
Vision
To be amongst most trusted power utility company of the country by providing
environment friendly power on most cost effective basis, ensuring prosperity for its stakeholders
and growth with human face.
1992 - The State Government has also taken up vigorously 'ASHRAYA', a new
housing scheme for the weaker sections and 'VISHWA', a new rural and cottage
industry schemes new programme called 'AKSHAYA' has also been launched to help
the children in primary education.
b) Awards
Best Rural Banking Initiative and Best IT Architecture.
National Awards for Excellence in MSE Lending.
National Awards for excellence in lending to Micro Enterprises.
Best Online Banking Award, Best Customer Initiative Award & Best Risk Management
Award (Runner Up) by IBA Banking Technology Awards the Bank of the year 2009.
India (won the second year in a row) by 2010 Best Bank Large and Most Socially
Responsible Bank
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Analysis of data is a process of inspecting, cleaning, transforming & modeling data with
the goal of discovering useful information, suggesting conclusions, and supporting decision
making. Data analysis has multiple facets and approaches, encompassing diverse techniques
under a variety of names, in different business, science, and social science domains.
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2010-11
40
2011-12
65
2012-13
80
2013-14
95
2014-15
110
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GRAPHICAL REPRESENTATION
50
40
30
20
10
0
2010-11
2011-12
2012-13
2013-14
INTERPRETATION
Table number 4.1 represents number of SHGs in the bank. The number of SHGs have
been increased from 40 to 110 from 2010-11 to 2014-15. In the year 2014-15 number of SHGs
was recorded to be 110. This was followed by 2013-14 and 2012-13 numbering 95 and 80
respectively. In the year 2010-11, number of SHGs was only 40. To conclude the number of
SHGs is increasing which indicates a good progress in the bank.
GRAPHICAL REPRESENTATION
2011-12
2012-13
6%
2013-14
2014-15
12%
37%
18%
27%
INTERPRETATION
Table number 4.2 represents total amount of savings of SHGs in the bank. The total
savings of SHGs have been increased from Rs. 4 lakhs to Rs. 25 lakhs from 2010-11 to 2014-15.
In the year 2014-15 total savings of SHGs was recorded to be Rs. 25 lakhs. This was followed by
2013-14 and 2012-13 numbering Rs. 18 lakhs and Rs. 12 lakhs respectively. In the year 2010-11
total savings of SHGs was only Rs. 4 lakhs. To conclude the total savings of SHGs is increasing
which indicates a good progress in the bank.
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2010-11
60
2011-12
2012-13
2013-14
2014-15
Source: Bank record
120
180
280
350
GRAPHICAL REPRESENTATION
2010-11; 6%
2011-12; 12%
2014-15; 35%
2012-13; 18%
2013-14; 28%
INTERPRETATION
Table number 4.3 represents total amount of loan disbursed to SHGs from the bank. The
total loan disbursed to SHGs have been increased from Rs. 60 lakhs to Rs. 350 lakhs from 201011 to 2014-15. In the year 2014-15 total loan disbursed to SHGs from the bank was recorded to
be Rs.350 lakhs. This was followed by 2013-14 and 2012-13 numbering Rs. 280 lakhs and Rs.
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Objective No.2 To know the risk is faced by the employees in the bank.
Table No.4.4
Major Risk Categories
Financial Risks
Operational Risks
Strategic Risks
Governance Risk
Credit Risk
Transaction Risk
Ineffective oversight
Transaction risk
Poor
Portfolio risk
Information
Liquidity Risk
technology
Reputation Risk
Market Risk
risk
External Business
Fraud
Foreign
governance
& structure
(Integrity) Risks
exchange Risk
Event risk
Risk
Investment
Risk
portfolio risk
Risks
Financial Risk
Operational Risk
Strategic Risk
TOTAL
1.
2.
3.
Proportion (%)
49
28
23
100
Proportion of risk
b) Reputation; 3% C) EBR; 3%
1) Financial; 25%
a) Govt; 5%
3) Strategic ; 12%
c) L & C; 4%
b) Fraud; 3%
a) credit; 11%
a) Transaction; 7%
2) Operatonal; 14%
b) liquidity; 7%
c) Market; 6%
INTERPRETATION
Table number 4.4 and 4.5 represents some of the major risks and proportion of risk faced
by the employees in the bank. In the above table we can see 3 types of major risk i.e., financial
risk, operational risk and strategic risk and also every 3 risk are sub-divided into 3 types. That is
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Proportion (%)
45
30
25
GRAPHICAL REPRESENTATION
INTERPRETATION
Table number 4.6 represents the proportion of financial risks faced by the bank
employees. Financial risk includes credit risk, liquidity risk and market risk. Financial risk
includes 45% of credit risk, 30% of liquidity risk and 25% of market risk. These risk lead loss of
principle and management fails to maintain sufficient cash reserves on hand. To conclude bank
should take effective steps to reduce the above risk faced by the bank employees.
Proportion (%)
50
20
30
GRAPHICAL REPRESENTATION
INTERPRETATION
Table number 4.7 represents the proportion of operational risks faced by the bank
employees. Operational risk includes transaction risk, fraud risk and legal & compliance risk.
The operational risk includes 50% of transaction risk, 20% of fraud risk and 30% of legal &
compliance risk. To conclude bank should take effective steps to reduce the above risk faced by
the bank employees.
Strategic Risk
1. Governance Risk
2. Reputation Risk
3. External Business Risk
Source: Bank record
Proportion (%)
40
30
30
GRAPHICAL REPRESENTATION
Governance risk
30%
40%
Reputation risk
External business risk
30%
INTERPRETATION
Table number 4.8 represents the proportion of strategic risks faced by the bank
employees. Strategic risk includes governance risk, reputation risk and external business risk. It
includes 40% of governance risk, 30% of reputation risk and 30% of external business risk. To
conclude bank should build good reputation among the customers and in society and it should
aware about the government structure, rules and regulation.
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Intense competition from similar products, limited knowledge, production and quality
training.
A risk adverse mindset.
Inadequate capital.
Networking problem (i.e. with raw supplier to buyer of products)
Insufficient management and marketing skills.
Low level of motivation and courage.
Lack of support from male members (of the families) as well as banks
Large magnitude of the target group of poor people.
Attitudinal rigidities.
Difficulty in creating awareness among people.
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Creating the Importance of Entrepreneurship program and skills training, and MF and
development activities.
Social recognition of women leading an enterprise.
Developing female mentors, trainers and advisors.
Establishing sources of credit.
INTERPRETATION
Table number 4.6 represents perceptions of areas of difficulties in business as a woman.
As a woman if she wants to become entrepreneur she will face many challenges, problems and
difficulties to run a enterprises. But now a days she was overcoming those challenges, problems
and difficulties just because of microfinance concept. To conclude microfinance concept helps
woman to overcome from many problems which indicates a good progress in women
empowerment as well as microfinance concept.
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FINDINGS
With the help of relationship data we can see that there is more percentage of women
SHGs out of total SHGs. So that is good indicator for women entrepreneur.
The loan distributed data show increase the % of loan amount to women as compare to
last year. This show the economic development of women entrepreneur.
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The savings of SHGs also increasing year by year. This shows that financially womens
easy terms.
There are many challenges face by women to doing the business as entrepreneur like lack
of capital, networking problems etc. But these challenges can be overcoming with the
help of Provide micro credit for livelihood support and to micro enterprises development,
business risk.
We can find the micofinance risk management process taken by the bank. By applying
those steps bank is try to reduce the risk.
SUGGESTIONS
Continue and time to time consultation and education programs should be conducted by
the bank for the beneficiaries in order to teach them on how to manage and utilize the
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operational risk.
Bank employees should maintain good relationship with customers to build good
reputation.
Making a proper follow up to the beneficiaries regarding the loan provided by the bank
CONCLUSION
Traditionally women have been marginalized. A high percentage of women are among the
poorest of the poor. Microfinance activities can give them a means to climb out of poverty.
Microfinance could be a solution to help them to extend their horizon and offer them social
recognition and empowerment. Numerous traditional and informal system of credit that was
already in existence before micro finance came into vogue. Viability of micro finance needs to be
understood from a dimension that is far broader- in looking at its long-term aspects too.
A conclusion that emerges from this account is that micro finance can contribute to
solving the problems of inadequate housing and urban services as an integral part of poverty
alleviation programmes. The challenge lies in finding the level of flexibility in the credit
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BIBLIOGRAPHY
Articles
July 2000.
Dan Norell, How To Reduce Arrears In Microfinance Institutions, Journal of
Microfinance, Vol.3
Prof. V. Narasimha Rao and Dr. M. Venkateshwara, Financial Inclusion: A study on
Websites
www.google.com
www.sbm.co.in
Bank records
Annual report
SHGs records
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