Microfinance

Microfinance is a source of financial services for entrepreneurs and

small businesses lacking access to banking and related 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;
(2) group-based models, where several entrepreneurs come together to
apply for loans and other services as a group. In some regions, for
example Southern Africa, microfinance is used to describe the supply of
financial services to low-income employees, which is closer to the retail
finance model prevalent in mainstream banking.
For some, 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."[1] Many of those who promote microfinance generally believe
that such access will help poor people out of poverty, including
participants in the Microcredit Summit Campaign. For others,
microfinance is a way to promote economic development, employment
and growth through the support of micro-entrepreneurs and small
businesses.
Microfinance is a broad category of services, which includes microcredit.
Microcredit is provision of credit services to poor clients. Microcredit is
one of the aspects of microfinance and the two are often confused.
Critics may attack microcredit while referring to it indiscriminately as
either 'microcredit' or 'microfinance'. Due to the broad range of
microfinance services, it is difficult to assess impact, and very few
studies have tried to assess its full impact.[2] Proponents often claim that
microfinance lifts people out of poverty, but the evidence is mixed. What
it does do, however, is to enhance financial inclusion.

History of microfinance
Over the past centuries, practical visionaries, from the Franciscan monks
who founded the community-oriented pawnshops of the 15th century to
the founders of the European credit union movement in the 19th century
(such as Friedrich Wilhelm Raiffeisen) and the founders of
the microcredit movement in the 1970s (such as Muhammad
Yunus and Al Whittaker), have tested practices and built institutions
designed to bring the kinds of opportunities and risk-management tools
that financial services can provide to the doorsteps of poor people. While
the success of the Grameen Bank (which now serves over 7 million poor
Bangladeshi women) has inspired the world, it has proved difficult to
replicate this success. In nations with lower population densities,
meeting the operating costs of a retail branch by serving nearby
customers has proven considerably more challenging. Hans Dieter
Seibel, board member of the European Microfinance Platform, is in
favour of the group model. This particular model (used by many
Microfinance institutions) makes financial sense, he says, because it
reduces transaction costs. Microfinance programmes also need to be
based on local funds.
The history of microfinancing can be traced back as far as the middle of
the 1800s, when the theorist Lysander Spooner was writing about the
benefits of small credits to entrepreneurs and farmers as a way of
getting the people out of poverty. Independently of Spooner, Friedrich
Wilhelm Raiffeisen founded the first cooperative lending banks to
support farmers in rural Germany.
The modern use of the expression "microfinancing" has roots in the
1970s when organizations, such as Grameen Bank of Bangladesh with
the microfinance pioneer Muhammad Yunus, were starting and shaping
the modern industry of microfinancing. Another pioneer in this sector is
Akhtar Hameed Khan.

ACCION International:
This institution had been established by a law student of Latin
America to help the poor people residing in the rural and urban
areas of the Latin American countries. Today, in 2008, it is one
of the most important microfinance institutions of the world. Its
network of lending partner comprises not only Latin America but
also US and Africa.
SEWA Bank:
In 1973, the Self Employed Women's Association (SEWA) of
Gujarat (in India) formed a bank, named as Mahila SEWA
Cooperative Bank, to access certain financial services easily.
Almost 4thousand women contributed their share capital to
form the bank. Today the number of the SEWA Bank's active
client is more than 30,000.
GRAMEEN Bank:
Credit unions and lending cooperatives have been around
hundreds of years. However, the pioneering of modern
microfinance is often credited to Dr. Mohammad Yunus, who
began experimenting with lending to poor women in the village
of Jobra, Bangladesh during his tenure as professor of
economics at Chittagong University in the 1970s. He would go
on to found Grameen Bank in 1983 and win the Nobel Peace
Price in 2006.Since then, innovation in microfinance has
continued and providers of financial services to the
poor continue to evolve. Today, the World Bank estimates that
about 160 million people in developing countries are served by
microfinance. Grameen Bank (Bangladesh) was formed by the
Nobel Peace Prize (2006) winner Dr Muhammad Younus in
1983. This bank is now serving almost 400, 0000 poor people
of Bangladesh. Not only that, but also the success of Grameen
Bank has stimulated the formation of other several
microfinance institutions like, ASA, BRAC and PROSHIKA .

Background
Microfinance and poverty

Financial needs and financial services.

In developing economies and particularly in rural areas, many activities
that would be classified in the developed world as financial are
not monetized: that is, money is not used to carry them out. This is often
the case when people need the services money can provide but do not
have dispensable funds required for those services, forcing them to
revert to other means of acquiring them. In their book The Poor and
Their Money, Stuart Rutherford and Sukhwinder Arora cite several types
of needs:

Lifecycle Needs: such as weddings, funerals, childbirth, education,

home building, widowhood and old age.

Personal Emergencies: such as sickness, injury, unemployment,

theft, harassment or death.

Disasters: such as fires, floods, cyclones and man-made events

like war or bulldozing of dwellings.

Investment Opportunities: expanding a business, buying land or

equipment, improving housing, securing a job (which often requires
paying a large bribe), etc.

People find creative and often collaborative ways to meet these needs,
primarily through creating and exchanging different forms of non-cash
value. Common substitutes for cash vary from country to country but
typically include livestock, grains, jewelry and precious metals. As
Marguerite Robinson describes in The Micro Finance Revolution, the
1980s demonstrated that "micro finance could provide large-scale
outreach profitably," and in the 1990s, "micro finance began to develop
as an industry" (2001, p. 54). In the 2000s, the micro finance industry's

objective is to satisfy the unmet demand on a much larger scale, and to

play a role in reducing poverty. While much progress has been made in
developing a viable, commercial micro finance sector in the last few
decades, several issues remain that need to be addressed before the
industry will be able to satisfy massive worldwide demand. The
obstacles or challenges to building a sound commercial micro finance
industry include:

Inappropriate donor subsidies

Poor regulation and supervision of deposit-taking micro finance

institutions (MFIs)

Few MFIs that meet the needs for savings, remittances or

insurance

Limited management capacity in MFIs

Institutional inefficiencies

Need for more dissemination and adoption of rural, agricultural

micro finance methodologies

Ways In Which Poor People Manage Their Money

Saving up
Rutherford argues that the basic problem that poor people face as
money managers is to gather a 'usefully large' amount of money.
Building a new home may involve saving and protecting diverse building
materials for years until enough are available to proceed with
construction. Childrens schooling may be funded by buying chickens
and raising them for sale as needed for expenses, uniforms, bribes, etc.
Because all the value is accumulated before it is needed, this money
management strategy is referred to as 'saving up'.
Often, people don't have enough money when they face a need, so they
borrow. A poor family might borrow from relatives to buy land, from a
moneylender to buy rice, or from a microfinance institution to buy a
sewing machine. Since these loans must be repaid by saving after the
cost is incurred, Rutherford calls this 'saving down'. Rutherford's point is
that microcredit is addressing only half the problem, and arguably the
less important half: poor people borrow to help them save and
accumulate assets. Microcredit institutions should fund their loans
through savings accounts that help poor people manage their myriad
risks.

Saving down
Most needs are met through a mix of saving and credit. A benchmark
impact assessment of Grameen Bank and two other large microfinance
institutions in Bangladesh found that for every $1 they were lending to
clients to finance rural non-farm micro-enterprise, about $2.50 came
from other sources, mostly their clients'
savings. This parallels the experience in the West, in which family
businesses are funded mostly from savings, especially during start-up.
Recent studies have also shown that informal methods of saving are
unsafe. For example, a study by Wright and Mutesasira
in Uganda concluded that "those with no option but to save in the
informal sector are almost bound to lose some moneyprobably around
one quarter of what they save there.
The work of Rutherford, Wright and others has caused practitioners to
reconsider a key aspect of the microcredit paradigm: that poor people
get out of poverty by borrowing, building microenterprises and increasing
their income. The new paradigm places more attention on the efforts of
poor people to reduce their many vulnerabilities by keeping more of what
they earn and building up their assets. While they need loans, they may
find it as useful to borrow for consumption as for microenterprise. A safe,
flexible place to save money and withdraw it when needed is also
essential for managing household and family risk.
Examples
The microfinance project of "saving up" is exemplified in the slums of the
south-eastern city of Vijayawada, India. This microfinance project
functions as an unofficial banking system where Jyothi, a "deposit
collector", collects money from slum dwellers, mostly women, in order for
them to accumulate savings. Jyothi does her rounds throughout the city,
collecting Rs5 a day from people in the slums for 220 days, however not
always 220 days in a row since these women do not always have the
funds available to put them into savings. They ultimately end up with

Rs1000 at the end of the process. However, there are some issues with
this microfinance saving program. One of the issues is that while saving,
clients are actually losing part of their savings. Jyothi takes interest from
each clientabout 20 out of every 220 payments, or Rs100 out of 1,100
or 8%. When these slum dwellers find someone they trust, they are
willing to pay up to 30% to someone to safely collect and keep their
savings. There is also the risk of entrusting their savings to unlicensed,
informal, peripatetic collectors. However, the slum dwellers are willing to
accept this risk because they are unable to save at home, and unable to
use the remote and unfriendly banks in their country. This microfinance
project also has many benefits, such as empowering women and giving
parents the ability to save money for their childrens education. This
specific microfinance project is a great example of the benefits and
limitations of the "saving up" project (Rutherford, 2009).
The microfinance project of "saving through" is shown in Nairobi, Kenya
which includes a Rotating Savings and Credit Associations or ROSCAs
initiative. This is a small scale example, however Rutherford (2009)
describes a woman he met in Nairobi and studied her ROSCA. Everyday
15 women would save 100 shillings so there would be a lump sum of
1,500 shillings and every day 1 of the 15 women would receive that lump
sum. This would continue for 15 days and another woman within this
group would receive the lump sum. At the end of the 15 days a new
cycle would start. This ROSCA initiative is different from the "saving up"
example above because there are no interest rates affiliated with the
ROSCA, additionally everyone receives back what they put forth. This
initiative requires trust and social capital networks in order to work, so
often these ROSCAs include people who know each other and have
reciprocity. The ROSCA allows for marginalized groups to receive a lump
sum at one time in order to pay or save for specific needs they have.

HISTORY OF BANK
A bank is a institution, which deals in money. It accepts
deposits from the public and creates credit with a view to lend
or invest.
The word bank is derived from the words bancus
or banquet that is a bench. The early bankers, the Jews in Italy
transacted their business on benches in the market places,
when a banker failed, his bench was broken into pieces by the
people which indicated the bankruptcy of the individual banker.
but this explanation was turned out on the ground that the
Italian money changes as such were never called bankers in the
middle ages. some others say that the word banks originally
derived from the German WORD PACK meaning a joint stock
fund, which was Italianised into Banco when the Germans
were masters of a great part of Italy . According to professor
Rama Chandra Rao, whatever be the origin of the word bank,
it would trace the history of banking in Europe from the middle
ages.
A bank is a financial institution and a financial intermediatary
that accepts deposits and channels those deposits into lending
activities, either directly by loaning or indirectly through capital
markets. A bank is a connection between customers that have
capital deficits and customers with capital surpluses.
Due to their influence within a financial system and an
economy, banks are generally highly regulated in most
countries. Most banks operate under a system known as
fractional reserve banking where they hold only a small reserve
of the funds deposited and lend out the rest for profit. They are
generally subject to minimum capital requirements which are

based on an international set of capital standards, known as the

Basel accords.
According to ancient European history, the Babylonians were
the earliest people to develop a systematized banking system.
Its said that temples of Babylon were used as banks and as
such the temples of Ephesus and Delphi were famous great
banking institution. The anti-religious feelings which developed
afterwards led to the collapse of public confidence in depositing
money in temples and the priest ceased to perform the banking
business. Whenever peace and solidarity were threatened, the
spread of banking also was affected entirely. However, after the
revival of civilization and with the development of social and
economic institutions, money transactions also were revived.
It was in the 12th century that some banks were established in
Venice and Genoa. These banks were simply receiving deposit
and lending money to the people. In fact, they were not banks
of the modern type. The origin of modern banking may be
traced to money dealers in Florence who received money in the
form of deposits and lend it to business people. At this time,
Florence was the centre of money market in Europe.
In England, money changing became an important function of
bankers during the reign of Edward III. Money changing refers
to conversion foreign coins into British money this function was
performed by the royal exchanger on behalf of the Crown.
In another development gold smiths of England prepared the
ground for modern banking in England during the period of
queen Elizabeth. the gold smiths used to receive valuables and
funds of their customers and issue receipts acknowledging the
same. These receipts in course of time became promissory
notes. The seizure of a huge sum of money kept as safe
custody by the city merchants at royal mint by the government
resulted in the establishment of public banking in England. As a
result of this royal repudiation, the merchants began to entrust
their cashiers with large sums but later they misappropriated
their masters money for their own benefit. Finding that their

employees had not treated them better than their king, the city
merchants decided to keep their cash with the goldsmiths.

How banking started in India?

Banking in India has started in 18th century.
Bank of Hindustan (1770-1832) and General Bank of India
(1786-1791) were the very first banks, which failed later.
The oldest bank which still have its existence is the State
Bank of India, originated in June 1806 as the Bank of
Calcutta, renamed as the Bank of Bengal in year 1809. Other
two banks were the Bank of Madras and the Bank of
Bombay.

In the year 1921, these three banks got merged and

become the Imperial Bank of India and renamed as the
State Bank of India (SBI) in the year 1955.
Before the Reserve Bank of India emerged in the year 1935,
the SBI acted as the central bank.
In the year 1960, the SBI took control over 8 subordinate
banks, now called as associate banks.
14 major banks were nationalized in the year 1969 and 6
more banks were nationalized in the year 1980. These
nationalized banks have the control over the countrys
banking sector as they have large network.
NABARD (National Bank for Agriculture and Rural
Development) was established in July, 1982, which looks
after the development of the cottage industry, small
industry and village industry, and other rural industries.
At present we have 93 commercial banks, 15 private sector
banks, 44 foreign banks, 27 public sector banks, out of

which 21 are nationalized banks and six are SBI and its
associate banks.

The main players in the bank are:

1. Banker
2. Customer
1.Banker: According to sec5 {c} of the banking
regulation act 1949, a banker is a person who
undertakes business of banking. A banker is a dealer
in debt, his own and other peoples.
2.Customer: As regards the customers, there is no legal
definition but based on various judgements on
sec131/131A of NI act of 1881, a customer means a
person who seeks to open account which banker
accepts with proper introduction. The relationship is not
based on frequency of transactions, and duration. Also
a person who avails service like safe custody,
remittance, locker facility etc. is not considered as a
customer.

NATURE OF BANKING
BUSINESS
The nature of banking business can be understood from the
following:
1. Intermediaries or middlemen: banks act as middlemen
between those members of public who have sufficient
funds to be deposited in commercial banks for earning
interests and those who need funds, and so, are willing to
borrow funds from banks on interest for investment in
their business activities.
2. Dealers in debt or financial obligations: the varies types of
deposits accepted by commercial banks from varies
depositors are the debts or financial obligations incurred
by the banks, and are their financial obligations or
liabilities to the depositors, and the advances granted by
them to borrowers are the debts incurred by the borrowers
in favor of banks.
3. Creator of money: Banks are not only dealers in money but
also creators of money.
4. Service industry: All the services provided by banks fall
under service sector industry, they render a variety of
services to the depositors as well as the general public
5. Network of branches: banks are one of the orders form of
financial institution and they have wide network of
branches through which they provide their services across
the world.

CLASSIFICATION OF BANKS
The Banking System in India is categorized into scheduled and nonscheduled banks. They are further divided into cooperative and
commercial banks. The Reserve Bank of India (RBI) controls all these
banks. RBI is considered as the Central Bank of our country. It also
acts as the bankers bank.

The structure of Indian Banking System can be understood as

follows: -

A. Reserve Bank of India

(RBI): Reserve Bank of India (RBI) is also called as Central Bank of
India. RBI was established on April 1, 1935 under the Reserve Bank of
India Act, 1934. RBI maintains records of deposits from all the banks
and revenue and expenditures of Governments and provides loan to
other banks whenever needed. Thus acts as a banker to the
Government and other Banks.

B. Scheduled banks: banks which are included in the Second

Schedule to the Reserve Bank of India Act, 1934 are scheduled banks.

1. Commercial Banks: These banks help the entrepreneurs and

businessmen by giving them financial services like debit cards, banks
accounts, short term deposits, etc. with the money people deposit in
such banks. There are 93 commercial banks in India.

Public Sector Banks These banks are owned and managed by

Government. The major part share in these banks are of
Government. Examples State Bank of India, Punjab National Bank,
Bank of Baroda etc.
There are 27 public sector in our country: 21 nationalized and 6 SBI
and associates.
List of public sector banks: -

(1) State Bank of India State (2) Bank of

Hyderabad (3) State Bank of Patiala (4) State Bank of Mysore (5) State
Bank of Bikaner and Jaipur (6) State Bank of Travancore (7) Allahabad
Bank (8) Andhra Bank (9) Bank of Baroda (10) Bank of India (11) Bank
of Maharashtra (12) Bharatiya Mahila Bank (BMB) (13) Canara Bank
(14) Central Bank of India (15) Corporation Bank (16) Dena Bank (17)

Indian Bank (18) Indian Overseas Bank (19) Oriental Bank of

Commerce (20) Punjab and Sind Bank (21) Punjab National Bank (22)
Syndicate Bank (23) UCO Bank (24) United Bank of India (25) Union
Bank of India (26) Vijaya Bank (27) IDBI Bank

Private Sector Banks These banks are owned and managed by

Private undertakings, major share of which are kept with these

banks. Example ICICI Bank, Axis Ba

HDFC Bank etc. We have 15 private sector banks.

nk,

List of private sector banks: (1) Axis Bank (2) Bank of Punjab (3) Centurion Bank Ltd. (4)
Development Credit Bank (6) ICICI Bank (7) IndusInd Bank (8) Kotak
Mahindra Bank (9) Yes Bank (10) Times Bank (11) Global Trust Bank
(12) Balaji Corporation Bank Limited (13) HDFC bank (14) Bandhan
bank (15) IDFC Bank

Foreign Banks These banks are based in foreign country but have
numerous branches in India. Example HSBC, Standard Chartered
Bank. There are 44 foreign banks in India.
List of foreign banks: -

(1) Australia and New Zealand Banking Group (2) Commonwealth

Bank of Australia (3) National Australia Bank (4) Westpac Banking
Corporation (5) Bank of Bahrain and Kuwait (6) AB Bank (7) Sonali
Bank (8) Antwerp Diamond Bank (9) Bank of Nova Scotia (10)
Industrial & Commercial Bank of China (11) BNP Paribas (12) Credit
Agricole (13) Societe General (14) Deutsche Bank (15) HSBC (16) Bank
Internasional Indonesia (17) Mizuho Corporate Bank (18) Sumitomo
Mitsui Banking (19) Bank of Tokyo-Mitsubishi (20) State Bank of
Mauritius (21) Rabobank (22) Doha bank (23) Sberbank (24) VTB (25)
HSBC Bank Oman (26) Royal Bank of Scotland (27) DBS Bank (28)
United Overseas Bank (29) FirstRand Bank (30) Shinhan Bank (31)
Woori Bank (32) Bank of Ceylon (33) Credit Suisse (34) UBS AG (35)
Chinatrust Commercial Bank (36) Krung Thai Bank (37) Abu Dhabi
Commercial Bank (38) Mashreq Bank (39) Barclays Bank (40)
Standard Chartered Bank (41) American Express (42) Bank of
America (43) Citibank (44) J.P. Morgan Chase Bank

Regional Rural Banks (RRBs) These banks functions with the

objective of providing loan to rural and agricultural provinces.
Owned by State Government and a sponsor bank. Example
Allahabad UP Gramin Bank, Andhra Pradesh Grameena Vikas Bank,
Assam Gramin Vikash Bank, etc. At present there are 56 RRBs in
India.

List of RRBs: (1) Allahabad UP Gramin Bank (2) Andhra Pradesh GrameenaVikas
Bank (3) Andhra Pragathi Grameena Bank (4) Arunachal Pradesh
Rural Bank (5) Assam Gramin Vikash Bank (6)

Bangiya
Gramin Vikash Bank (7) Baroda
Gujarat Gramin Bank (8) Baroda Rajasthan Kshetriya Gramin Bank (9)
Baroda UP Gramin Bank (10) Bihar Gramin Bank (11) Central Madhya
Pradesh Gramin Bank (12) Chaitanya Godavari Grameena Bank (13)
Chhattisgarh Rajya Gramin Bank (14) Dena Gujarat Gramin Bank (15)
Ellaquai Dehati Bank (16) Gramin Bank of Aryavarti (17) Himachal
Pradesh Gramin Bank (18) J&K Grameen Bank (19) Jharkhand Gramin
Bank (20) Karnataka Vikas Grameen Bank (21) Kashi Gomti Samyut
Gramin Bank (22) Kaveri Grameena Bank (23) Kerala Gramin Bank
(24) Langpi Dehangi Rural Bank (25) Madhyanchal Gramin Bank (26)
Madhya Bihar Gramin Bank (27) Maharashtra Gramin Bank (28)
Malwa Gramin Bank State (29) Manipur Rural Bank (30) Meghalaya
Rural Bank (31) Mizoram Rural Bank (32) Nagaland Rural Bank (33)
Narmada Jhabua Gramin Bank (34) Odisha Gramya Bank (35)
Pallavan Grama Bank (36) Pandyan Grama Bank (37) Paschim Banga
Gramin Bank (38) Pragathi Krishna Gramin Bank (39) Prathama Bank
(40) Puduvai Bharthiar Grama Bank (41) Punjab Gramin Bank (42)
Purvanchal Bank (43) Rajasthan Marudhara Gramin Bank (44)
Saptagiri Grameena Bank (45) Sarva Haryana Gramin Bank (46) Sarva
UP Gramin Bank (47)Saurashtra Gramin Bank (48) Sutlej Gramin
Bank (49) Telangana Grameena Bank (50) Tripura Gramin Bank (51)
Utkal Grameen Bank (52) Uttar Banga Kshetriya Gramin Bank (53)

Uttar Bihar Gramin Bank (54) Uttarakhand Gramin Bank (55)

Vananchal Gramin Bank (56) Vidharbha Konkan Gramin Bank

2. Cooperative Banks: Co-operative banks are financial entities

which belong to their members, who are the owners and the
customers of their bank, at the same time.

Primary Credit Society These are

formed in small localities and their members usually know each
other.

Central Cooperative Banks These banks provide loans to their

members, who belong to the same district and act as a link between
the state cooperative banks and the primary credit societies.

State Cooperative Banks These banks operate at the top level in

every state.

3. Investment Bank: These are financial institutions, which provide

financial and advisory assistance to individuals, businesses, or
government organizations by raising funds when required.

4. Specialized Banks: These banks are foreign exchange banks,

industrial banks, development banks, export-import banks satisfying
the specific needs of these unique activities and provides financial
support to industries, heavy turnkey projects and foreign trade.

Microfinance debates and

challenges
There are several key debates at the boundaries of microfinance.

Interest rates

This shop in South Sudan was opened using money borrowed from the Finance Sudan Limited (FSL)
Program. This program was established in 2006 as one of the only microfinance lenders in the country.

One of the principal challenges of microfinance is providing small loans

at an affordable cost. The global average interest and fee rate is
estimated at 37%, with rates reaching as high as 70% in some
markets. The reason for the high interest rates is not primarily cost of
capital. Indeed, the local microfinance organizations that receive zerointerest loan capital from the online microlending platform Kiva charge
average interest and fee rates of 35.21%. Rather, the main reason for
the high cost of microfinance loans is the high transaction cost of
traditional microfinance operations relative to loan size.
Microfinance practitioners have long argued that such high interest rates
are simply unavoidable, because the cost of making each loan cannot
be reduced below a certain level while still allowing the lender to cover
costs such as offices and staff salaries. For example, in Sub-Saharan
Africa credit risk for microfinance institutes is very high, because
customers need years to improve their livelihood and face many
challenges during this time. Financial institutes often do not even have a
system to check the person's identity. Additionally they are unable to
design new products and enlarge their business to reduce the risk. The
result is that the traditional approach to microfinance has made only
limited progress in resolving the problem it purports to address: that the
world's poorest people pay the world's highest cost for small business
growth capital. The high costs of traditional microfinance loans limit their
effectiveness as a poverty-fighting tool. Offering loans at interest and fee
rates of 37% mean that borrowers who do not manage to earn at least a
37% rate of return may actually end up poorer as a result of accepting
the loans.

Example of a loan contract, using flat rate calculation, from rural

Cambodia. Loan is for 400,000 riels at 4% flat (16,000 riels) interest per
month.
According to a recent survey of microfinance borrowers in Ghana
published by the Center for Financial Inclusion, more than one-third of
borrowers surveyed reported struggling to repay their loans. Some
resorted to measures such as reducing their food intake or taking
children out of school in order to repay microfinance debts that had not
proven sufficiently profitable.
In recent years, the microfinance industry has shifted its focus from the
objective of increasing the volume of lending capital available, to
address the challenge of providing microfinance loans more affordably.
Microfinance analyst David Roodman contends that, in mature markets,
the average interest and fee rates charged by microfinance institutions
tend to fall over time. However, global average interest rates for
microfinance loans are still well above 30%.
The answer to providing microfinance services at an affordable cost may
lie in rethinking one of the fundamental assumptions underlying
microfinance: that microfinance borrowers need extensive monitoring
and interaction with loan officers in order to benefit from and repay their
loans. The P2P microlending service Zidisha is based on this premise,
facilitating direct interaction between individual lenders and borrowers
via an internet community rather than physical offices. Zidisha has
managed to bring the cost of microloans to below 10% for borrowers,
including interest which is paid out to lenders. However, it remains to be
seen whether such radical alternative models can reach the scale
necessary to compete with traditional microfinance programs.
Use of Loans

Practitioners and donors from the charitable side of microfinance

frequently argue for restricting microcredit to loans for productive
purposessuch as to start or expand a microenterprise. Those from the
private-sector side respond that, because money is fungible, such a
restriction is impossible to enforce, and that in any case it should not be
up to rich people to determine how poor people use their money.

Reach versus Depth of Impact

These goats are being raised by Rwandan women as part of a farm

cooperative funded by microfinance.
There has been a long-standing debate over the sharpness of the tradeoff between 'outreach' (the ability of a microfinance institution to reach
poorer and more remote people) and its 'sustainability' (its ability to
cover its operating costsand possibly also its costs of serving new
clientsfrom its operating revenues). Although it is generally agreed that
microfinance practitioners should seek to balance these goals to some
extent, there are a wide variety of strategies, ranging from the minimalist
profit-orientation of BancoSol in Bolivia to the highly integrated not-forprofit orientation of BRAC in Bangladesh. This is true not only for
individual institutions, but also for governments engaged in developing
national microfinance systems.
Gender
Microfinance generally agree that women should be the primary focus of
service delivery. Evidence shows that they are less likely to default on
their loans than men. Industry data from 2006 for 704 MFIs reaching 52
million borrowers includes MFIs using the solidarity lending methodology
(99.3% female clients) and MFIs using individual lending (51% female
clients). The delinquency rate for solidarity lending was 0.9% after 30

days (individual lending3.1%), while 0.3% of loans were written off

(individual lending0.9%).[14] Because operating margins become tighter
the smaller the loans delivered, many MFIs consider the risk of lending
to men to be too high. This focus on women is questioned sometimes,
however a recent study of microenterpreneurs from Sri Lanka published
by the World Bank found that the return on capital for male-owned
businesses (half of the sample) averaged 11%, whereas the return for
women-owned businesses was 0% or slightly negative.
Microfinance's emphasis on female-oriented lending is the subject of
controversy, as it is claimed that microfinance improves the status of
women through an alleviation of poverty. It is argued that by providing
women with initial capital, they will be able to support themselves
independent of men, in a manner which would encourage sustainable
growth of enterprise and eventual self-sufficiency. This claim has yet to
be proven in any substantial form. Moreover, the attraction of women as
a potential investment base is precisely because they are constrained by
socio-cultural norms regarding such concepts of obedience, familial duty,
household maintenance and passivity.[16] The result of these norms is
that while micro-lending may enable women to improve their daily
subsistence to a more steady pace, they will not be able to engage in
market-oriented business practice beyond a limited scope of low-skilled,
low-earning, informal work. Part of this is a lack of permissivity in the
society; part a reflection of the added burdens of household
maintenance that women shoulder alone as a result of microfinancial
empowerment; and part a lack of training and education surrounding
gendered conceptions of economics. In particular, the shift in norms
such that women continue to be responsible for all the domestic private
sphere labour as well as undertaking public economic support for their
families, independent of male aid increases rather than decreases
burdens on already limited persons.
If there were to be an exchange of labour, or if women's income were
supplemental rather than essential to household maintenance, there
might be some truth to claims of establishing long-term businesses;
however when so constrained it is impossible for women to do more than
pay off a current loan only to take on another in a cyclic pattern which is
beneficial to the financier but hardly to the borrower. This gender
essentializing crosses over from institutionalized lenders such as the
Grameen Bank into interpersonal direct lending through charitable
crowd-funding operations, such as Kiva. More recently, the popularity of
non-profit global online lending has grown, suggesting that a redress of
gender norms might be instituted through individual selection fomented
by the processes of such programs, but the reality is as yet uncertain.

Studies have noted that the likelihood of lending to women, individually

or in groups, is 38% higher than rates of lending to men.
This is also due to a general trend for interpersonal microfinance
relations to be conducted on grounds of similarity and internal/external
recognition: lenders want to see something familiar, something
supportable in potential borrowers, so an emphasis on family, goals of
education and health, and a commitment to community all achieve
positive results from prospective financiers.[19] Unfortunately, these labels
disproportionately align with women rather than men, particularly in the
developing world. The result is that microfinance continues to rely on
restrictive gender norms rather than seek to subvert them through
economic redress in terms of foundation change: training, business
management and financial education are all elements which might be
included in parameters of female-aimed loans and until they are the
fundamental reality of women as a disadvantaged section of societies in
developing states will go untested.
Benefits and Limitations
Microfinancing produces many benefits for poverty stricken, or lowincome households. One of the benefits is that it is very accessible.
Banks today simply wont extend loans to those with little to no assets,
and generally dont engage in small size loans typically associated with
microfinancing. Through microfinancing small loans are produced and
accessible. Microfinancing is based on the philosophy that even small
amounts of credit can help end the cycle of poverty. Another benefit
produced from the microfinancing initiative is that it presents
opportunities, such as extending education and jobs. Families receiving
microfinancing are less likely to pull their children out of school for
economic reasons. As well, in relation to employment, people are more
likely to open small businesses that will aid the creation of new jobs.
Overall, the benefits outline that the microfinancing initiative is set out to
improve the standard of living amongst impoverished communities
(Rutherford, 2009).

There are also many challenges within microfinance initiatives which

may be social or financial. Here, more articulate and better-off
community members may cheat poorer or less-educated neighbours.
This may occur intentionally or inadvertently through loosely run
organizations. As a result, many microfinance initiatives require a large
amount of social capital or trust in order to work effectively. The ability of
poorer people to save may also fluctuate over time as unexpected costs
may take priority which could result in them being able to save little or
nothing some weeks. Rates of inflation may cause funds to lose their
value, thus financially harming the saver and not benefiting collector.

Microfinance Standards and Principles

A group of Indian women have assembled to make bamboo products

that they intend to resell.
Poor people borrow from informal moneylenders and save with informal
collectors. They receive loans and grants from charities. They buy
insurance from state-owned companies. They receive funds transfers
through formal or informal remittance networks. It is not easy to
distinguish microfinance from similar activities. It could be claimed that a
government that orders state banks to open deposit accounts for poor
consumers, or a moneylender that engages in usury, or a charity that
runs a heifer pool are engaged in microfinance. Ensuring financial
services to poor people is best done by expanding the number of
financial institutions available to them, as well as by strengthening the
capacity of those institutions. In recent years there has also been
increasing emphasis on expanding the diversity of institutions, since
different institutions serve different needs.
Some principles that summarize a century and a half of development
practice were encapsulated in 2004 by CGAP and endorsed by
the Group of Eight leaders at the G8 Summit on June 10, 2004.
1. Poor people need not just loans but also
savings, insurance and money transfer services.
2. Microfinance must be useful to poor households: helping them
raise income, build up assets and/or cushion themselves against
external shocks.
3. "Microfinance can pay for itself. Subsidies from donors and
government are scarce and uncertain and so, to reach large
numbers of poor people, microfinance must pay for itself.
4. Microfinance means building permanent local institutions.
5. Microfinance also means integrating the financial needs of poor
people into a country's mainstream financial system.

6. "The job of government is to enable financial services, not to

provide them.
7. "Donor funds should complement private capital, not compete with
it.
8. "The key bottleneck is the shortage of strong institutions and
managers. Donors should focus on capacity building.
9. Interest rate ceilings hurt poor people by preventing microfinance
institutions from covering their costs, which chokes off the supply
of credit.
10.
Microfinance institutions should measure and disclose their
performanceboth financially and socially.
Microfinance is considered a tool for socio-economic development, and
can be clearly distinguished from charity. Families who are destitute, or
so poor they are unlikely to be able to generate the cash flow required to
repay a loan, should be recipients of charity. Others are best served by
financial institutions.

Micro Finance on the Indian Subcontinent

Loans to poor people by banks have many limitations including lack of
security and high operating costs. As a result, microfinance was
developed as an alternative to provide loans to poor people with the goal
of creating financial inclusion and equality.
Muhammad Yunus, a Nobel Prize winner, introduced the concept of
Microfinance in Bangladesh in the form of the "Grameen Bank".
The National Bank for Agriculture and Rural Development (NABARD)
took this idea and started the concept of microfinance in India. Under
this mechanism, there exists a link between SHGs (Self-help
groups), NGOs and banks. SHGs are formed and nurtured by NGOs
and only after accomplishing a certain level of maturity in terms of their
internal thrift and credit operations are they entitled to seek credit from
the banks. There is an involvement from the concerned NGO before and
even after the SHG-Bank linkage. The SHG-Bank linkage programme,
which has been in place since 1992 in India, has provided about 22.4
lakh for SHG finance by 2006.[needs update] It involves commercial banks,
regional rural banks (RRBs) and cooperative banks in its operations.
In 2013, Grameen Captial India was able to loan $144 million to
microfinance groups. In addition to Grameen Bank, Equitas has been
another microfinance organization in Tamil Nadu. The South and
Western states are the ones attracting the greatest number of
microfinance loans.[42]
Microfinance is defined as, financial services such as savings accounts,
insurance funds and credit provided to poor and low income clients so as
to help them increase their income, thereby improving their standard of
living.
In this context the main features of microfinance are:

Loan given without security

Loans to those people who live below the poverty line

Members of SHGs may benefit from micro finance

Maximum limit of loan under micro finance 25,000/-

Terms and conditions offered to poor people are decided by NGOs

Microfinance is different from Microcredit- under the latter, small
loans are given to the borrower but under microfinance alongside
many other financial services including savings accounts and
insurance. Therefore, microfinance has a wider concept than
microcredit.

In June 2014, CRISIL released its latest report on the Indian

Microfinance Sector titled "India's 25 Leading MFI's". [43] This list is the
most comprehensive and up to date overview of the microfinance sector
in India and the different microfinance institutions operating in the subcontinent.
Many loan officers in India create emotional connection with borrowers
before loan reaches maturity by mentioning details about borrowers
personal life and family and also demonstrating affection in many
different ways as a strategy to generate pressure during recovery.

Role of Microfinance:
The micro credit of microfinance prename 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 andendeavor of the poor people. Microfinance
impact studies have demonstrated that1. 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.
Difference between micro credit and microfinance:
Micro credit refers to very small loans for unsalaried borrowers
with little or no collateral, provided by legally registered
institutions. Currently, consumer credit provided to
salaried workers based on automated credit scoring is usually
not included in the definition of micro credit, although this may
change. Microfinance typically refers to micro credit, savings,
insurance, money transfers, and other financial products
targeted at poor and low-income people.
Borrowers:

Most micro credit borrowers have micro enterprises

unsalaried, informal income-generating activities. However,
micro loans may not predominantly be used to start or finance
micro enterprises. Scattered research suggests that only half or

less of loan proceeds are used for business purposes. The

remainder supports a wide range of household cash
management needs, including stabilizing consumption and
spreading out large, lumpy cash needs like education fees,
medical expenses, or lifecycle events such as weddings and
funerals. Some MFIs provide non-financial products, such
as business development or health services. Commercial and
government-owned banks that offer microfinance services are
frequently referred to as MFIs, even though only a portion of
their assets may be committed to financial services to the poor.
Activities in Microfinance:
Micro credit:
It is a small amount of money loaned to a client by a bank or
other institution. Micro credit 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.
Product Design:
The starting point is: how do MFIs decide what product s to
offer? The actual loan products need to be designed according
to the demand of the target market. Besides the important

question of what risks to cover, organizations also have to

decide whether they want to bundle many different benefits into
one basket policy, or whether it is more appropriate to keep the
product simple. For marketing purposes, MFIssometimes
prefer the basket cover, since it can make the policies sound
comprehensive, but is that the right approach for the lowincome market? After picking products, one must also
understand how they are priced. What assumptions do the
organizations make with regard to operating costs, risk
premiums, and reinsurance, and how did they come to those
conclusions? Would their clients be willing to pay more for
greater benefits? From price, the logical next set of questions
involves efficiency. Indeed, given the relative high costs
of delivering large volumes of small policies, maximizing
efficiency is a critical strategy to ensuring that the products are
affordable to the low-income market. One way is to make the
products mandatory, which increases volumes, reduces
transaction costs and minimizes adverse selection. What
does an organization lose by offering mandatory insurance, and
how does it overcome the disadvantages? MFIs can combine
amendatory product with some voluntary features to make the
service more us to mar-oriented while.
Techniques of Product Design:
To design a loan product to meet borrower needs it is important
to understand the cash pattern of the borrowers. Cash pattern
is important so far as they affect the debt capacity of the
borrowers. Lenders must ensure that borrowers have sufficient
cash inflow to cover loan payments when they are due
efficiency depends less on the delivery model than on the
simplicity of the product or product menu. Simple products work
best because they are easier to administer and easier for
clients to understand. Another efficiency strategy is to use
technology to reduce paperwork, manual processing and
errors. MFIs need to conduct a costing analysis to determine
how much they need to earn in commission to cover their
administrative expenses.

Governments role supporting microfinance Governments

most important role is not provision of retail credit services, for
reasons mentioned in Government can contribute most
effectively by:
Setting sound macroeconomic policy that provides stability
and low inflation.
Avoiding interest rate ceilings - when governments set interest
rate limits, political factors usually result in limits that are too
low to permit sustainable delivery of credit that involves high
administrative costssuch astiny loans for poor people. Such
ceilings often have the announced intention of protecting the
poor, but are more likely to choke off the supply of credit.
Adjusting bank regulation to facilitate deposit taking by solid
MFIs, once the country has experience with sustainable
microfinance delivery.
Creating government wholesale funds to support retail MFIs if
funds can be insulated from politics, and they can hire and
protect strong technical management and avoid disbursement
pressure that force fund to support unpromising MFIs.
Promote microfinance as a key vehicle in tackling poverty, and
as vital part of the financial system.
Create policies, regulations and legal structures that encourage
responsive, sustainable microfinance.Encourage a range of
regulated and unregulated institutions that meet performance
standards.

Encourage competition, capacity building and innovation to

lower costs and interest rates in microfinance.
Support autonomous, wholesale structures.
RBI
data shows that informal sources provide a significant part of
the total credit needs of the rural population. The magnitude of
the dependence of the rural poor on informal sources of credit
can be observed from the findings of the All India Debt and

Investment Survey, 1992, which shows that the share of

the Non-institutional agencies (informal sector) in the
outstanding cash dues of the rural households were 36 percent.
However, the dependence of rural households on such informal
sources had reduced of their total outstanding dues steadily
from 83.7 percent in 1961 to 36 percent in 1991.

The Indian Financial System

The term "finance" in our simple understanding it is
perceived as equivalent to 'Money'.Finance exactly is
not money, But it is the source of providing funds for a
particular activity.The word "system", in the term
"financial system", implies a set of complex and closely
connected or interlined institutions, agents, practices,
markets, transactions, claims, and liabilities in the
economy. The financial system is concerned about
money, credit and finance-the three terms are
intimately related yet are somewhat different from each
other.
Components/ Constituents of Indian Financial
system:

FINANCIAL INSTRUMENTS

Money Market Instruments

The money market can be defined as a market for
short-term money and financial assets that are near
substitutes for money.The term short-term means
generally a period upto one year and near substitutes
to money is used to denote any financial asset which
can be quickly converted into money with minimum
transaction cost.
Some of the important money market instruments are
briefly discussed below:
1. Call /Notice-Money Market
Call/Notice money is the money borrowed or lent on
demand for a very short period. When money is
borrowed or lent for a day, it is known as Call
(Overnight) Money. Intervening holidays and/or Sunday
are excluded for this purpose. Thus money, borrowed
on a day and repaid on the next working day,
(irrespective of the number of intervening holidays) is
"Call Money". When money
is borrowed or lent for more than a day and up to 14
days, it is "Notice Money". No collateral security is
required to cover these transactions.
2. Inter-Bank Term Money
Inter-bank market for deposits of maturity beyond 14
days is referred to as the term money market. The
entry restrictions are the same as those for Call/Notice
Money except that, as per existing regulations, the

specified entities are not allowed to lend beyond 14

days.
3. Treasury Bills.
Treasury Bills are short term (up to one year) borrowing
instruments of the union government. It is an IOU of the
Government. It is a promise by the Government to pay
a stated sum after expiry of the stated period from the
date of issue(91/182/364 days i.e. less than one year).
They are issued at a discount to the face value, and on
maturity the face value is paid to the holder. The rate of
discount and the corresponding issue price are
determined at each auction.
4. Certificate of Deposits
Certificates of Deposit (CDs) is a negotiable money
market instrument and issued in dematerialised form or
as a Usance Promissory Note, for funds deposited at a
bank or other eligible financial institution for a specified
time period.
5. Commercial Paper
CP is a note in evidence of the debt obligation of the
issuer. On issuing commercial paper the debt obligation
is transformed into an instrument. CP is thus an
unsecured promissory note privately placed with
investors at a discount rate to face value determined
by market forces.
Capital Market Instruments

The capital market generally consists of the following

long term period i.e., more than one year period,
financial instruments; In the equity segment Equity
shares, preference shares, convertible preference
shares, non-convertible preference shares etc and in
the debt segment debentures, zero coupon bonds, deep
discount bonds etc.
Hybrid Instruments
Hybrid instruments have both the features of equity
and debenture. This kind of instruments is called as
hybrid
instruments.Examples
are
convertible
debentures, warrants etc.
FINANCIAL MARKETS
Financial market is a market where financial instruments are
exchanged or traded and helps in determining the prices of the
assets that are traded in and is also called the price discovery
process.
TYPES OF FINANCIAL MARKETS
Forex Market - The Forex market deals with the multicurrency
requirements, which are met by the exchange of currencies.
Depending on the exchange rate that is applicable, the transfer
of funds takes place in this market. This is one of the most
developed and integrated market across the globe
MONEY MARKET:

The money market is a market for short-term funds, which

deals in financial assets whose
period of maturity is upto one year. It should be noted that
money market does not deal in
cash or money as such but simply provides a market for credit
instruments such as bills of
exchange, promissory notes, commercial paper, treasury bills,
etc.
CAPITAL MARKET
Capital Market may be defined as a market dealing in medium
and long-term funds. It is an institutional arrangement for
borrowing medium and long-term funds and which
provides facilities for marketing and trading of securities. So it
constitutes all long-term borrowings from banks and financial
institutions, borrowings from foreign markets and raising of
capital by issue various securities such as shares debentures,
bonds, etc.The market where securities are traded known as
Securities market. It consists of two different segments namely
primary and secondary market The primary market deals with
new or fresh issue of securities and is, therefore, also known as
new issue market;whereas the secondary market provides a
place for purchase and sale of existing securities and is often
termed as stock market or stock exchange.

Inclusive financial systems

The microcredit era that began in the 1970s has lost its momentum, to
be replaced by a 'financial systems' approach. While microcredit
achieved a great deal, especially in urban and near-urban areas and
with entrepreneurial families, its progress in delivering financial services
in less densely populated rural areas has been slow.

The new financial systems approach pragmatically acknowledges the

richness of centuries of microfinance history and the immense diversity
of institutions serving poor people in developing world today. It is also
rooted in an increasing awareness of diversity of the financial service
needs of the worlds poorest people, and the diverse settings in which
they live and work.
Brigit Helms in her book 'Access for All: Building Inclusive Financial
Systems', distinguishes between four general categories of microfinance
providers, and argues for a pro-active strategy of engagement with all of
them to help them achieve the goals of the microfinance movement.
Informal financial service providers
These include moneylenders, pawnbrokers, savings
collectors, money-guards, ROSCAs, ASCAs and input supply
shops. Because they know each other well and live in the same
community, they understand each others financial circumstances
and can offer very flexible, convenient and fast services. These
services can also be costly and the choice of financial products
limited and very short-term. Informal services that involve savings
are also risky; many people lose their money.
Member-owned organizations
These include self-help groups, credit unions, and a variety of
hybrid organizations like 'financial service associations'
and CVECAs. Like their informal cousins, they are generally small
and local, which means they have access to good knowledge
about each other's financial circumstances and can offer
convenience and flexibility. Grameen Bank is a member-owned
organization. Since they are managed by poor people, their costs
of operation are low. However, these providers may have little
financial skill and can run into trouble when the economy turns
down or their operations become too complex. Unless they are
effectively regulated and supervised, they can be 'captured' by one
or two influential leaders, and the members can lose their money.
NGOs
The Microcredit Summit Campaign counted 3,316 of these MFIs
and NGOs lending to about 133 million clients by the end of 2006.
[46]
Led by Grameen
Bank and BRAC in Bangladesh, Prodem in Bolivia, Opportunity
International, and FINCA International, headquartered in

Washington, DC, these NGOs have spread around the developing

world in the past three decades; others, like the Gamelan Council,
address larger regions. They have proven very innovative,
pioneering banking techniques like solidarity lending, village
banking and mobile banking that have overcome barriers to
serving poor populations. However, with boards that dont
necessarily represent either their capital or their customers, their
governance structures can be fragile, and they can become overly
dependent on external donors.
Formal financial institutions
In addition to commercial banks, these include state banks,
agricultural development banks, savings banks, rural banks and
non-bank financial institutions. They are regulated and supervised,
offer a wider range of financial services, and control a branch
network that can extend across the country and internationally.
However, they have proved reluctant to adopt social missions, and
due to their high costs of operation, often can't deliver services to
poor or remote populations. The increasing use of alternative
data in credit scoring, such as trade credit is increasing
commercial banks' interest in microfinance.
With appropriate regulation and supervision, each of these
institutional types can bring leverage to solving the microfinance
problem. For example, efforts are being made to link self-help
groups to commercial banks, to network member-owned
organizations together to achieve economies of scale and scope,
and to support efforts by commercial banks to 'down-scale' by
integrating mobile banking and e-payment technologies into their
extensive branch networks.

Microfinance Loan Terms

Like conventional banking operations, microfinance lenders must charge

interest on loans, and they institute specific repayment plans with
payments due at regular intervals. Not all applicants qualify, depending
on the amount of default risk the institution attributes to potential

borrowers and the terms of the loans for which the borrowers are
applying.

Concerns Regarding the Microfinance Industrys Practices

While these interest rates are generally lower than those offered by
normal banks, some opponents of this concept raise concern that
microfinance operations are making profits off of the poor. Not all funds
provided through microfinancing are used for productive activities; some
may be used for covering needs, such as food and shelter.

Microfinancing Operating Locations

The majority of microfinancing operations occur in developing nations,
such as Uganda, Indonesia, Serbia and Honduras. Even though the
borrowers often qualify as very poor, repayment rates are often seen to
be higher than the average repayment rate on more conventional forms
of financing. For example, the microfinancing institution Opportunity
International reported repayment rates of approximately 98.9% in 2016.

International Finance Corporation Estimates

The International Finance Corporation (IFC), part of the larger World
Bank Group, estimates that more than 130 million people have directly
benefited from microfinance-related operations as of 2014. However, it is
only available to approximately 20% of the 3 billion people who qualify as
part of the worlds poor.
In addition to providing microfinancing options, the IFC has assisted
developing nations in the creation or improvement of credit reporting
bureaus in 30 nations. It has also advocated for the addition of relevant
laws governing financial activities in 33 countries.

The Need in India of Microfinance

India is said to be the home of one third of the worlds poor;
official estimates range from 26 to 50 percent of the more than
one billion populations.
About 87 percent of the poorest households do not have
access to credit.
The demand for micro credit has been estimated at up to $30
billion; the supply is less than $2.2 billion combined by all
involved in the sector. 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 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.
While India is one of the fastest growing economies
in the world, poverty runs deep throughout country.
About two thirds of Indias more than
1billion people live in rural areas and almost
1 7 0 m i l l i o n o f t h e m a r e p o o r . For more than 21
percent of them, poverty is a chronic condition.
Three out of four of Indias poor live in rural areas of
the country. Poverty is deepest among scheduled
castes and tribes in the countrys rural a r e a s . T h e
micro-finance scene in India is dominated by
Self Help Groups (SHGs) - Banks linkage
p r o g r a m f o r o v e r a d e c a d e n o w. A s t h e f o r m a l
banking system already has a vast branch
n e t w o r k i n r u r a l a r e a s , i t was perhaps wi se to find
ways and means to improve the access of rural poor

to the existing banking network. This was tried by

routing financial.

Community Investing
Investments made directly into low-income or disadvantaged communities
through channels such as community development banks, credit unions, loan
fund and microfinance institutions. Community investing is closely tied to
socially responsible investing and focuses on economically improving rundown communities by offering banking services and small loans to fund
businesses, non-profit groups and affordable housing initiatives.

BREAKING DOWN 'Community Investing'

Community investing can have a real and immediate impact on the social
good of a nation or geographic region. As more people gain economic
freedoms and access to good jobs and homes, there is less of a strain on
federal social welfare programs, while at the same time increasing the gross
domestic product and other aggregate measures of wealth and production.
Investors can help to fund community investing efforts by purchasing
investments such as CDs from community development banks, or through
offerings from community development loan funds and venture funds.

Microfinance Social Aspects

Micro financing institutions significantly contributed to gender
equality and womens empowerment as well as poor
development and civil society strengthening. Contribution to
womens ability to earn an income led to their economic
empowerment, increased wellbeing of women and their families
and wider social and political empowerment. Microfinance

programs targeting women became a major plank of poverty

alleviation and gender strategies in the 1990s. Increasing
evidence of the centrality of gender equality to poverty
reduction and womens higher credit repayment rates led to a
general consensus on the desirability of targeting women.
Self Help Groups (SHGs):
Self- help groups (SHGs) play today a major role in poverty
alleviation in rural India. A growing number of poor people
(mostly women) in various parts of India are members of SHGs
and actively engage in savings and credit (S/C), as well as
in other activities (income generation, natural resources
management, literacy, child care and nutrition, etc.). The S/C
focus in the SHG is the most prominent element and offers a
chance to create some control over capital, albeit in very small
amounts. The SHG system has proven to be very relevant
and effective in offering women the possibility to break
gradually away from exploitation and isolation.
Savings services help poor people:
Savings has been called the forgotten half of microfinance.
Most poor people now use informal mechanisms to save
because they lack access to good formal deposit services, they
may tuck cash under the mattress; buy animals or jewellery that
can be sold off later, or stockpile inventory or building materials.
These savings methods tend to be riskycash can be stolen,
animals can get sick, and neighbours can run off. Often they
are illiquid as well one cannot sell just the cows leg when one
needs a small amount of cash. Poor people want secure,
convenient deposit services that allow for small balances and
easy access to funds. MFIs that offer good savings services
usually attract far more savers than borrowers.
Womens indicators of empowerment through
microfinance:
Ability to save and access loans. Opportunity to undertake an
economic activity Mobility-Opportunity to visit nearby towns.
Awareness- local issues, MFI procedures, banking
transactions. Skills for income generation

Decision making within the household. Group mobilization in

support of individual clients- action on.

Microsavings
A branch of microfinance, consisting of a small deposit account offered to
lower income families or individuals as an incentive to store funds for future
use. Microsavings accounts work similar to a normal savings account,
however, are designed around smaller amounts of money. The minimum
balance requirements are often waived, or very low, allowing users to save
small amounts of money and not be charged for the service.

BREAKING DOWN 'Microsavings'

Microsavings plans are usually offered in developing countries as a way to
encourage saving for education or other future investment. People who invest
in these plans are better prepared to cope with any unforeseen expenses,
which would usually harm lower income individuals.

The Roles Of Microfinance Banks

Microfinance Banks are financial institutions that grant access to credit

facilities to individuals, small businesses and organization. The loans
that micro-finance banks give to people and small businesses are known
as micro loans.
Using Nigeria as a case study, there are two major forms of Microfinance
Banks in Nigeria.
Microfinance Banks (MFB) licensed to operate as a unit: Formerly
known as community banks, Microfinance Banks operating as a unit are
financial institutions, licensed to operate as a unit or to own a branch
only if its paid-up capital is N20 million for each branch or unit and it can
only create branches gradually, starting within its
local council.
Microfinance Banks (MFB) licensed to operate in a state: This form
of Microfinance Bank is licensed to operate in any part of a state. it does
not have to be gradual in opening its branches, so long as its minimum
paid-up capital is N1 billion.

Here Are Some Of The Roles Of Microfinance Banks

Granting Of Loans
The primary role of micro-finance banks is to provide micro loans to
individuals or groups in need of it. People seeking to acquire a loan from
a micro-finance bank must have met all of the requirements for acquiring
such loan.
Acquiring loans from commercial banks could be very cumbersome
compared to micro-finance banks. Also, the chances of average people
and small scale business to get loans from commercial banks are very
slim, unlike micro-finance banks whose primary objective is to grant
loans to small scale businesses and individuals, irrespective of their
financial status, especially poor and low income earners.

Poverty Alleviation
Microfinance Banks play an important role in the poverty alleviation of a
particular country. This is because, the primary objective of a
government seeking to alleviate poverty is to provide as many job
opportunities as possible, as well as creating a means of generating
income for businesses. Micro-finance banks are key players in this
aspect because they specialize in the provision of credit facilities to
individuals as
well as businesses.
For example, the Lift Above Poverty Level (LAPO) is an NGO that runs a
micro-finance bank in Nigeria. LAPO is a pro-poor financial institution
committed to the empowerment of low income earners and petty traders.
It was established in 1987 and has been committed to improving the
quality of life of poor people by giving them access to credit facilities
without collateral. They grant loans on the basis of small installment
payments, making repayment of the loans less stressful. LAPO has
helped a lot of small scale business people in financing their businesses.

Creation Of Employment Opportunities

The individuals , groups and businesses that Microfinance Banks
provide with credit facilities, will in turn engage the services of other

people in their businesses, thereby providing employment opportunities

for those other people. Small scale businesses
usually create job opportunities for people. Secretaries, receptionists,
sales officers, cleaners and so on, these are some of the positions for
which people are employed in small enterprises.

Increasing Small And Micro Enterprises (SMEs)

Microfinance banks provide a platform for people with business ideas to
bring their dreams to reality. Gone are the days when people think
business is only for the rich and influential. Now, anyone can start a
small business and walk into any microfinance bank for a loan to start
the business.
Take for instance, FBN Microfinance Bank, a subsidiary of First Bank in
Nigeria. This Microfinance Banks has credit products that are meant for
small scale businesses, artisans, petty traders and individuals to meet
the day to day running of their businesses. They have varieties of credit
products for different categories of people.
Some of the products are, Level don Change a short term facility for
long term customers with satisfactory track record meant for acquisition
of business assets to improve income generation, Kia-Kia Loan a credit
facility created to assist existing customers with satisfactory record for
urgent needs, Easy Loan a short term loan for salary earners, to
enable them purchase household items, and so many other credit
products like that.
Promoting Agricultural Production
Most poor people live in rural areas, giving them the opportunity to do
Agriculture.
Microfinance banks also provide credit facilities to farmers. They can get
loans for buying modern day farming equipment such as, tractors,
ploughs, e.t.c.
Microfinance banks enable farmers to not just farm for their bellies alone,
but to commercialize their farming by providing loans for the farmers.

Microfinance banks have become like a machinery to governments. It is

a means of promoting economic development and growth, as well as
providing job opportunities and supporting small scale businesses. A
means to poverty alleviation in general.

THE ROLE OF MICROFINANCE IN SMALL SCALE ENTERPRISE

This research work was undertaken to roles of microfinance banks in

financing small and medium scale enterprise. The work was intended to
achieve the following objectives to ascertain the extent to which micro
finance bank has been assisting in providing credit facilities to small scale
industrialists, to determine the cost of variability in small scale industrial
financing by micro finance bank. The literature review also describe
objectives and functions of the microfinance bank, roles of microfinance
policy and importance of micro and small scale enterprises in Enugu state
and Nigeria as a whole. All the aspect of this work is relevant to both
management and those who may be interested in carrying out further
study on this topic. Relevant data were collected from both primary and
secondary sources. Questionnaire was the main primary data instruments
employed while data from various relevant publications such as
textbooks, journals and internet articles constituted the sources of
secondary data. The data collected were analysis using simple tables and
percentage analysis. The study observed that Microfinance Bank
performances were very impressive during the period under study
especially in making fund available for small and meduim scale enterprise
in Enugu state;
although it based on operation or services on savings
deposit account, loan and advances (credit facilities) to customers and
few small scale industrialists and also payment of salaries to workers of
different organizations. The study recommended that In order to reduce
the risk of doubtful credit or facilities, the government should increase the
percentage grants to micro finance banks for small and medium scale
enterprises and also put more emphasis on credit guarantee scheme by
introducing more of such scheme for the benefit of small and medium
scale enterprises.

Micro-Financing Regulation in India

Advantage of Regulation:
Following are the advantages and benefits of
regulation and supervision of /MFIs:
i.
P r o t e c t s t h e i n t er e s t o f t he d e p o s i t o r s ;
ii.
Put in place prudential norms, standards
and practices;
i i i . P r o v i d e s s u ff i c i e n t i nf o r m a t i o n a b ou t t h e t r u e
r i s k s f a ce d b y t h e b a n k s / MF I s ;
i v. P r o m o t e r s s ys t e m i c s t a b i l i t y a n d t h e r eb y
s u s t a i n s p u b l i c c o n f i d en c e i n t h e ba n k s / MF I s ;
v.
P r e v e n t s a b a n k s/ MF I s f a i l ur e / p o t e n t i a l
d a n g e r s t h r o u g h t i m e l y i n t er v e n t i o n s ;
v i. P e n a l i z e s t h e v i o la t i o n s , m i s c o n d u c t s , n on c o m p l i a n c e t o t h e n o r m s o f b e ha v i o r ;
v ii . P r o v i d e s i n v a lu a b l e a dv i s or y i n p u t s f o r
p r o b l e m - so l v in g a n d ov e r a l l i m p r ov e m e n t o f
t h e b a n k s / MF I s ;
v ii i . P r o m o t e r s s a f e, s t r o ng a n d s ou n d b an k i n g / MF
s ys t e m a n d e f fe c t iv e b an k i n g / MF p o l i c y a nd
ix. P r o m o t e s a n d e n h an c e s o r d e r l y e c on o m i c
.
g r o wt h a n d d ev e l o p m e n t
A. U n i f i e d Re g u l a t i o n S ys t e m :
8 . 1 8 a t p r e se n t , a l l t h e r e gu l a t o r y as p e c t s o f m i c r o f i n an c e
a r e n o t c e n t r a l i z e d . F o r e x a m p l e , wh i l e t h e R ur a l P l a n n i n g
a n d Cr e d i t D e p a r t m e n t ( R P C D ) i n R B I l o o k s a f t e r R ur a l
l e n d i n g , M F - N B F C s a r e u n d er t h e c on t r o l of t h e
D e p a r t m e n t o f N o n - B a n k i ng S u p e r v i s i o n ( D N B S ) a n d
External Commercial Borrowings are looked after by
t h e F o r e i g n E x c h a n g e D e p a r t m e n t . Th e C o m m i t t e e f e e l s
t h a t R B I m a y co n s i d e r b r i n g i ng a l l r eg u l a t o r y a s p e c t s o f
microfinance under a s i n g l e , m e c h a n i s m . F u r t h e r,
supervision Of MF-NBFCs could be delegated to
NABARD by RBI.
L e g a l f o r m s o f M F I s i n I n d i a : MFIs and Legal
Forms:
With the current phase of expansion of the SHG Bank linkage
programmed and other MF initiatives in the country, the informal micro
finance sector in India is now beginning to evolve. The MFIs in India can
be broadly sub-divided into three categories of organizational forms as
given in Table
1.While there is no published data on private MFIs operating in the
country, the number of MFIs is estimated to be around 800. However,

not more than 10 MFIs are reported to have an outreach of 100,000

micro finance clients. An overwhelming majority of MFIs are operating on
a smaller scale with clients ranging Between 500 to1500 per MFI. The
geographical distribution of MFIs is very much lopsided with
concentration in the southern India where the rural branch network of
formal banks is excellent. It is estimated that the share of MFIs in the
total micro credit portfolio of formal & informal institutions is about 8 per
cent.
Legal Forms of MFIs in India:

Types of MFI
Legal Acts under which Registered
1.
Not for Profit MFIs
a.) NGO - MFIs4 0 0 t o 5 0 0 S o c i e t i e s R e g i s t r a t i o n A c t , 1 86 0 o r
s i m i l a r Provincial Acts Indian Trust Act, 1882b . )
N o n -

profit Companies10Section 25 of the Companies Act, 19

562.
Mutual
Benefit MFIs
a.) Mutually Aided Cooperative Societies (MACS) and similarly setup
institutions2 0 0 t o 2 5 0 M u t u a l l y A i d e d C o o p er a t iv e
S o c i e t i e s A c t enacted by State Government3.
For Profit MFIs
a.) Non-Banking Financial Companies
(NBFCs)6Indian Companies Act, 1956Reserve Bank of
India Act, 1934Total700 800
b.) The estimated number includes only those MFIs, which are
actually undertaking lending activity.
C . R e c o m m e n d a t i o n b y R B I M i c r o C r e d i t I n st i t u t i o n s:
C o m p a n y L a w B o a r d t o a l l o w S H G s t o be m e m b e r s o f
S e c t i o n 2 5 o f t h e c o m p a n i e s a ct .

Th e r e wi l l b e n o ce i l i n g i n r es p e c t o f l oa n a m o u n t
extended by Section 25 companies to SHGs; h o w e v e r
SHGs, to provide credit not exceeding Rs. 50000/p e r m e m b e r o f t h e S H G . R B I m a y c o n s i d er i s s u i n g

r e v i s e d i n s t r u c t io n s . As r e g ar d s c a p i t a l , t o e n c ou r a g e
m o r e f l o w o f d o n a t i o n s / c o n t r i bu t i o n s , d on o r s t o b e
e x e m p t e d f r o m i n c o m e t a x un d e r S e c t i o n 11C of t h e I T
A c t . As r e g a r d s c a p i t a l a de q u a c y, s i n c e t he r e i s no
m a n d a t o r y ca p i t a l r e q u i r e m e n t , m i n i m u m s t an d a r d s n e e d
n o t b e c o n s i d e r e d . S a v i n g s o f S H G s pr o m o t e d b y S e c t i o n
2 5 c o m p a n i e s b e m a i n t a i ne d wi t h p er m i t t e d o r ga n i z a t i o n s .
C o m p l e t e i n c o m e t a x e x e m p t i o n f or S e c t i o n 2 5 co m p a n i e s
p u r v e yi n g m i c r o c r e d i t ( t o t h e d o no r a nd t o t h e
r e c e i v e r ) . G o v e r n m e n t t o c on s i d e r co m p l e t e ex e m p t i o n
f r o m I T f o r i n c o m e e a r n ed , a s t h e m a i n p ur p o s e of t h e
organization is to empo wer the poor.
Indian microfinance is poised for continued growth and high valuation
but faces pressing challenges and opportunities thatleft unaddressed
could negatively impact the long-term future of the industry. The
industry needs to move past a single-minded focus on scale, expand the
depth and breadth of products and services offered, and focus on the
double bottom line and over indebtedness to effectively address the risks
facing the industry.

STRENGTHS OF Microfinance
1 . E x p e r i e n c e d s e n i or m a n a g e m en t Tea m .
2.Robust IT system.
3 . C l e a r a n d we l l d e f i ne d H R p o l i c y.
4.Infusion of own equity - commitment from
promoters.
5.Process innovation.
6.Clarity and good understanding of vision.
7 . Tra n sp a r e n c y a t a l l l ev e l s .
8.Plans for value added and livelihood support
services (LDS).
9.Shared ownership.
WEAKNESSES
1.Limited resources.
2.Micro managing.

3.Start up organisation; therefore, yet to

institutionalise the standard processes.
4.Attracting/Holding on to the staff till the time we
become established players.
5 . R e f i n e t h e p r o c e s se s f o r g r o wt h .
OPPORTUNITIES
1.Huge Potential Market.
2.Scope of introducing livelihood related services.
3.Financial crunch is helping organisation to be cost
conscious and effective.
4.IT systems.
THREATS
1.Financial crisis.
2.Increasing competition.
3.Increasing competition.

Impact and Criticism

Most criticisms of microfinance have actually been criticisms of microcredit.
Criticism focuses on the impact on poverty, the level of interest rates, high
profits, overindebtedness and suicides. Other criticism include the role of foreign
donors and working conditions in companies affiliated to microfinance
institutions, particularly in Bangladesh.

Impact
For more details on this topic, see Impact of microcredit.

The impact of microcredit is a subject of much controversy.

Proponents state that it reduces poverty through higher employment
and higher incomes. This is expected to lead to improved nutrition and
improved education of the borrowers' children. Some argue that
microcredit empowers women. In the US and Canada, it is argued that
microcredit helps recipients to graduate from welfare programs.
Critics say that microcredit has not increased incomes, but has driven
poor households into a debt trap, in some cases even leading to
suicide. They add that the money from loans is often used for durable
consumer goods or consumption instead of being used for productive
investments, that it fails to empower women, and that it has not
improved health or education. Moreover, as the access to micro-loans
is widespread, borrowers tend to acquire several loans from different
companies, making it nearly impossible to pay the debt back. [55] As a
result of such tragic events, microfinance institutions in India have
agreed on setting an interest rate ceiling of 15 percent. [56] This is
important because microfinance loan recipients have a higher level of
security in repaying the loans and a lower level of risk in failing to
repay them.
The available evidence indicates that in many cases microcredit has
facilitated the creation and the growth of businesses. It has often
generated self-employment, but it has not necessarily increased
incomes after interest payments. In some cases it has driven
borrowers into debt traps.[citation needed] There is no evidence that
microcredit has empowered women. In short, microcredit has

achieved much less than what its proponents said it would achieve,
but its negative impacts have not been as drastic as some critics have
argued. Microcredit is just one factor influencing the success of small
businesses, whose success is influenced to a much larger extent by
how much an economy or a particular market grows. For example,
local competition in the area of lack of a domestic markets for certain
goods can influence how successful small businesses who receive
microcredit are.

Mission Drift in Microfinance

Mission drift refers to the phenomena through which the MFIs or the
micro finance institutions increasingly try to cater to customers who
are better off than their original customers, primarily the poor families.
Roy Mersland and R. ystein Strm in their research on Mission Drift
suggest that this selection bias can come not only through an increase
in the average loan size, which allows for financially stronger
individuals to get the loans, but also through MFI's particular lending
methodology, main market of operation, or even the gender bias as
further mission drift measures. And as it may follow, this selective
funding would lead to lower risks and lower costs for the firm.
However, economists Beatriz Armendriz and Ariane Szafarz
suggests that this phenomenon is not driven by cost minimization
alone. She suggests that it happens because of the interplay between
the companys mission, the cost differential between poor and
unbanked wealthier clients and region specific characteristics
pertaining the heterogeneity of their clientele. [58] But in either way, this
problem of selective funding leads to an ethical tradeoff where on one
hand there is an economic reason for the company to restrict its loans
to only the individuals who qualify the standards, and on the other
hand there is an ethical responsibility to help the poor people get out
of poverty through the provision of capital.

Role of foreign donors

The role of donors has also been questioned. CGAP recently
commented that "a large proportion of the money they spend is not
effective, either because it gets hung up in unsuccessful and often
complicated funding mechanisms (for example, a government apex
facility), or it goes to partners that are not held accountable for
performance. In some cases, poorly conceived programs have
retarded the development of inclusive financial systems by distorting
markets and displacing domestic commercial initiatives with cheap or
free money.

Working Conditions in Enterprises Affiliated to MFIs

There has also been criticism of microlenders for not taking more
responsibility for the working conditions of poor households,
particularly when borrowers become quasi-wage labourers, selling
crafts or agricultural produce through an organization controlled by the
MFI. The desire of MFIs to help their borrower diversify and increase
their incomes has sparked this type of relationship in several
countries, most notably Bangladesh, where hundreds of thousands of
borrowers effectively work as wage labourers for the marketing
subsidiaries of Grameen Bank or BRAC. Critics maintain that there
are few if any rules or standards in these cases governing working
hours, holidays, working conditions, safety or child labour, and few
inspection regimes to correct abuses.[60] Some of these concerns have
been taken up by unions and socially responsible
investment advocates.

Abuse
In Nigeria cases of fraud have been reported. Dubious banks
promised their clients outrageous interest rates. These banks were
closed shortly after clients had deposited money and their deposits
were lost. The officials of Nigeria Deposit Insurance Corporation
(NDIC) have warned customers about so-called "wonder banks".
[61]
One initiative to prevent people from depositing money to wonder
banks is the mini-series "e go better" that warns about the practices of
these wonder banks.

Top 50 Microfinance Institutions in India:

1. SKS Microfinance Ltd (SKSMPL).
2. Spandana Sphoorty Financial Ltd (SSFL).
3. Share Micro fin Limited (SML)
4. Asmitha Micro fin Ltd (AML).
5. Shri Kshetra Dharmasthala Rural Development
Project (SKDRDP).
6. Bhartiya Samruddhi Finance Limited (BSFL).
7. Bandhan Society.
8. Cashpor Micro Credit (CMC).
9. Grama Vidiyal Micro Finance Pvt Ltd (GVMFL).

10. Grameen FinancialServices Pvt Ltd (GFSPL).

11. Madura Micro Finance Ltd (MMFL).
12. BSS Microfinance Bangalore Pvt Ltd (BMPL).
13. Equitas Micro Finance India P Ltd (Equitas).

14. Bandhan Financial Services Pvt Ltd (BFSPL).

15. Sarvodaya Nano Finance Ltd (SNFL).
16. BWDA Finance Limited (BFL).
17. Ujjivan FinancialServices Pvt Ltd (UFSPL).
18. Future Financial Services Chittoor Ltd (FFSL).
19. ESAF Microfinance & Investments Pvt. Ltd (EMFIL).
20. S.M.I.L.E Microfinance Limited.
21. SWAWS Credit Corporation India Pvt Ltd (SCCI).
22. Sanghamithra Rural Financial Services (SRFS).
23. Saadhana Micro fin.
24. Gram Utthan Kendrapara.
25. Rashtriya Seva Samithi (RASS).
26. Sahara Utsarga Welfare Society (SUWS).
27. Sonata Finance Pvt Ltd (Sonata).
28. Rashtriya Gramin Vikas Nidhi.
29. Arohan Financial Services Ltd (AFSL).
30. Janalakshmi Financial Services Pvt Ltd (JFSPL).
31. Annapurna Financial Services Pvt Ltd.
32. Hand in Hand (HiH).
33 Payakaraopeta Womens Mutually Aided Co-operative Thrift
. and Credit Society (PWMACTS)
34 Aadarsha Welfare Society(AWS)
35 Adhikar
36 Village Financial Services Pvt Ltd (VFSPL)
37 Sahara Uttarayan
38 RORES Micro Entrepreneur Development Trust(RMEDT)
39 Centre for Rural Social Action (CReSA)
40 Indur Intideepam Federation Ltd (IIMF).
41
WelfareOrganizationfor MultipurposeMassAwareness Network
(WOMAN).

42 Pragathi Mutually Aided Cooperative Credit and Marketing

Federation Ltd(PMACS).
43 Indian Association for Savings and Credit(IASC).
44 Sewa Mutually Aided Cooperative Thrift Societies
Federation Ltd (Sewa).
45 Initiatives for Development Bangalore, Foundation (IDF).
46 Gandhi Smaraka Grama Seva Kendram (GSGSK).
47 Swayamshree Micro Credit Services (SMCS).
48 ASOMI.
49 Janodaya Trust.
50 Community Development Centre (CDC).