Market Research India - Guide To Microfinance in India 2009

GuidetoMicrofinance Guide to Microfinance India
July2009
ExecutiveSummary
MicrofinanceinIndiaoperatesthroughtwochannels
Microfinanceinstitutions(MFIs) NABARDsSHGsbanklinkageprogramme(SBLP) apartnershipmodelbetweenSHGs,banksandNGOs
Market
Women account for 80% of the credit clientele Womenaccountfor80%ofthecreditclientele Microfinanceispredominantamongthesouthernstates,especiallyAndhraPradesh TheintroductionoftheMicroFinancialSectorDevelopmentandRegulationBill,2007
MajorAspects:Definitionofmicrofinanceorganizations,conditionsformobilizationofsavingsandcreationof aregulatorybody a regulatory body Limitations:Regulatorybody,differentialregulation,dualregulation,preferentialregulationandlaxprudential norms Recommendation:EncompassingawidespectrumofinstitutionsandmodifyingrulesfordepositoryMFIs
Government Government Initiative
Trends& Characteristics
Lowpenetrationlevelprovidinghighgrowthopportunity LargescalePE/VCactivity Highinterestrateandissuewithrepayments Lackofinterestfromformalfinancialinstitutions Opportunityintheurbansector ThemajormicrofinanceinstitutionsinIndiaare
MajorPlayers
SKSMicrofinancePvt.Ltd. Spandana Sphoorty Financial Limited SpandanaSphoortyFinancialLimited SHAREMicrofinLtd.
GUIDETOMICROFINANCE INDIA.PPT
Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix
Microfinancehasemergedasanimportantdeliverymechanism toreachouttothelowincomegroupofthesociety
Definition
Microfinanceisdefinedastheprovisionof thrift(savings),creditandotherfinancial servicesandproductsofverysmallamounts tothepoorforenablingthemtoraisetheir incomelevelsandimproveliving WorldBankestimatesthatthereareover 7,000microfinanceinstitutionsworldwide
ServicesProvided
Savings Insurance
Loans
Pensions Risk Mitigation Products
Remittance
Financial Counseling
MajorMilestonesinIndia
Majorcommercial banksnationalized 1975 NABARD establishedasan apexagencyfor ruralfinance Establishmentof SIDBIFoundation forMicrocredit
1992
2007
1969
RegionalRural Banksestablished in1975
1982
NABARDlaunches SHGbanklinkage program
2000
Proposedbillon microfinance regulation
Reformsinthefinancialsectorhavedirectlyimpactedthegrowthof microfinanceinIndia
Shiftinactivitiesintheruralfinancialsector
ThePast
Lackofoperational freedom
ChangeinOperations
ThePresent
Flexibility&freedom ofoperationwith reductionof government government ownership
Issue
Controlledby GovernmentandCentral Government and Central Bank
Deregulationof interestrates i t t t BankingSector Reformsin199192 Internationalbest p practicesin prudentialnorms
Ledto
Microregulationson creditflow Concernwasoutreach ratherthanviability y Largescalerural financialsectorlosses
Entryofnewprivate sectorbanks b k
TypesofMicrofinanceInstitutions(1/4)
ComprisesofApexDevelopmentFinancialInstitutions,Commercial Banks,RegionalRuralBanks,andCooperativeBanksproviding microfinanceservicesinadditiontotheirgeneralbankingactivities referredtoasmicrofinanceserviceproviders
Formal/Banks Typesof T f financial institutions Informal/ NonBanks
Informalinstitutionsthatundertakemicrofinanceservicesastheir mainactivityaregenerallyreferredtoasmicroFinanceInstitutions (mFIs)
Investor
PoolofFunds
Intermediary Intermediary Bank
Microfinance Microfinance Institution
Micro Micro entrepreneur
Nonprofit PublicTrusts Societies Section25companies
MutualBenefit
ForProfit
SelfHelpGroupsandFederation C CooperativeSocieties i S i i
NonBankingFinancial Corporation C i
PublictrustsareestablishedinaccordancewiththerespectiveStateregulations PrivatetrustsareestablishedundertheIndianTrustsAct1882 Exemptedfromtaxifregisteredunder12AoftheIncomeTaxAct InstitutionmustberegisteredundertheForeignContributionRegulationAct,1976(FCRA) Institution must be registered under the Foreign Contribution Regulation Act 1976 (FCRA) toacceptforeigngrants RegisteredunderSocietiesRegistrationAct,1860orundertherespectiveStateacts Itreferstoagroupof7individualswhoformanassociationforanyliterary,scientificor charitablepurpose Theseassociationscannotacceptpublicdeposits Exemptedfromtaxifregisteredunder12AoftheIncomeTaxAct InordertoacceptforeigngrantstheinstitutionneedstoberegisteredunderFCRA Itisnotinapositiontoraiselargefundsasbanksareunabletodetermineownership RBIhasexemptedNBFCslicensedundersection25oftheIndianCompaniesActfrom registration,maintenanceofliquidassetsandtransferofprofittoreservefundsonlyif Section25 Companies
Provide micro financing activities Providemicrofinancingactivities Donotmobilizepublicdeposits
Trusts
Societies
Theseinstitutionsareprohibitedtopaydividends Equitymobilizationisdifficultduetotherestrictionsposedonthepaymentofdividends Registration under FCRA allows them to mobilize foreign grants RegistrationunderFCRAallowsthemtomobilizeforeigngrants Exemptedfromtaxifregisteredunder12AoftheIncomeTaxAct
Itisanunregisteredentitycomprisingof1020individualswithautonomousrulesand regulations,officebearersandbooksofaccounts SHGsprovidecredittotheirmembersbyusingthesavingsoftheirmembersaswellas fundsacquiredfrombanksandmicrofinanceinstitutions funds acquired from banks and microfinance institutions AnetworkofSHGsformsaFederationwhicharegenerallyregisteredasSocietiesorCo operativeSocieties Memberscompriseofindividuals,othercooperativesandgovernment Variousmodalitiesofregistration
CooperativeSocietiesAct,1912,or StateCooperativeSocietiesacts,or StateMutuallyAidedCooperativeSocietiesAct,or MultistateCooperativeSocietiesAct,1995
SHGsand Federations
Cooperative Societies
Regulatedbytheregistrarofcooperativesocieties Legalframeworkallowsthemtoaccessequityanddepositsfromtheirmemberswhichis usedtodisperseloans used to disperse loans Mobilizationofequityisrestrictedascooperativesocietiescanraiseequityonlyfrom theirmembers Banksarelargelyunwillingtoprovidefundingduetothenonequitybasedownership structure
NBFCs
CompaniesregisteredunderIndianCompaniesAct1956canoperateasanNBFCby applyingtotheRBI RequiredtohavenetownedfundsofINR20mn Ownershipisdefinedandarethusinapositiontoraiseequity Mobilizationofpublicdepositsispossiblebutisextremelydifficultduetothestrict guidelinesoftheRBI BanksofferlendingservicestoNBFCswhichhavesubstantialcapitalandareperforming Itisaprofitmakingorganizationandaretaxed FDIthroughautomaticrouteisallowed

FDIupto51% USD0.5mntobebroughtupfront FDIbetween51%and75% USD5mntobebroughtupfront FDIbetween75%and100% USD50mnoutofwhich7.5milliontobebroughtupfront
AllnondeposittakingNBFCshavingassetsizeofINR1bnormoreasperlastaudited balancesheetareconsideredassystemicallyimportantNBFCs b l h t id d t i ll i t t NBFC

NondeposittakingandsystemicallyimportantNBFCswillbesubjecttocapitaladequacy regulations,single/groupexposurenormsanddisclosurepertainingtoderivativetransactions
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11
InIndia,microfinancesectoroperatesviatworoutes MicrofinanceInstitutionsandSelfHelpGroups
Overview
MicrofinanceinIndia
CreditDistribution(0708)
LargeMFIs 20% NABARDsSBLP a partnershipmodel betweenSHGs,banks between SHGs banks andNGOs SBLP Mediumand 5% SmallMFIs
Microfinance institutions(MFIs) institutions (MFIs)
75%
DemandformicrocreditispeggedatUSD30bnbut thesupplystandsatlessthanUSD2.2bn the supply stands at less than USD 2.2 bn Outstandingmicrocreditportfolioamountedto~INR 220bnin200708 MicrofinanceispredominantamongtheSouthern States,especiallyAndhraPradesh 75%oftheconsumersarefromtheruralsector Womenaccountfor80%ofthecreditclientele Highestgrowthobservedintheloansegment rangingfromINR5,000 INR10,000
ClientOutreach
mn
60 40
+23% 48.06 38.02
59.21 SHGs 45.20 14.01 200708 MFIs
20 0
10.04 200607
*SBLP:SHGsbanklinkageprogram * SBLP SHG b k li k NOTE:Assessmentoftheshareofthetotalmarketformicrocreditloansisdifficultasnolaworregulationrequiresorganizationswhichprovidemicrocredittoformally registerasmicrofinanceinstitutions
12
MFIshavebeenfocusingontheruralsectoranditoperatesvia substantialfundingfromfinancialinstitutions
MFI
Microfinance SBLP
Overview
MicrofinanceInstitutionsprimarilyrefersto organizationscreatedtoprovidecreditandother financialservicestolowincomeclients fi i l i l i li MFIloanoutstanding:59.54bn(Mar2008) Averageloanoutstanding,MFIclientINR4,220 (2008) L Loanportfoliosgrewby70%fromMar06toMar08 f li b 70% f M 06 M 08 Clientoutreachgrewby40%in200708
Clientele(Mar06 Mar08)
Urban 25%
75% Rural
MajorIssues
FinancialViability: SmallscaleMFIsfacefinancial problemsashighborrowingcostscoupledwithhigh operatingexpensesrangingbetween4to19% p y p impedesitsabilitytooffercompetitiverates Highcapitalrequirements: FewMFIscanraiseINR20 mncapitalrequiredtobecomeNBFCs
SourcesofFunding
Paid in Equity Grants Other Liabilities 6% 7% 3% Client Savings g 8%
75% Institutional Debt
13
MFIsprovidefundingtovariousclientsacrossthecountrywith southernstatesaccountingformaximumshare
MFI
Microfinance SBLP
DistributionofLoansandClientele
Southernstatesaccountforthemaximum shareoftheclientsaswellastheloans disbursed Microfinanceinstitutionslendto
SHG SingleloantotheSHGasawhole,which decideshowitshouldbeallocated Grameen/JointLiabilitiesGroup Loanrecorded inthenamesofIndividualborrowers
SegmentationofMFIPortfolio(Clients)
North West 4% 9% East 21%
66% South
DistributionofOperatingModel
IndividualLending 7% 65% SHG
SegmentationofMFIPortfolio(Loans)
North West 4% 6% East 15%
Grameen/ 28% JLG
75% South
14
SelfHelpGroupshaveseenmajorgrowthoverthelastdecade withtheSouthcontributingthelargestfraction
MFI
Microfinance SBLP
Overview
Beganintheearly80sasNGOs 3.48mnSHGsarelinkedwithbankcredit(asofMar 2008) SHGloansoutstanding:123.66bn(Mar07) Savingsmobilizedby4.2mnSHGsaccountforINR35 bn Shorttermlendingwiththeinterestchargedranging from23%permonth SupplyfigurespertainingtoSHGBanklinkage programmeis~INR123660mn(Mar2007) V i VariousTypesofGroups T fG
SavingsandCreditGroups SocialForestryGroups WaterUsers'Groups Watershed Development Groups WatershedDevelopmentGroups Farmers'InterestGroups Other
CumulativeNo.ofSHGs
000
3,000 3 000 2,924 ,
+49%
2,000 1,000 263 0 461 717 1,079 1,628
2,238
200001 0102
0203
0304
0405
0506
0607
SHGRegionaldistribution
Northern NorthEast East 7% 3% Central 18% 11% Western 9%
Annualgrowthrateofoutreachis18%(0607 07 08)
52% Southern
15
LoansprovidedbybankstoSHGshasseentremendousgrowth withthehighestcontributionfromcommercialbanks
MFI
Microfinance SBLP
SHGsLinkagewithBanks
Beganin1989withNABARDoverseeingoperations Averageloanoutstanding,SHGmemberINR3,250(08) Linkagesactasaasupplementarychannelforproviding financialservicesfromformalfinancialinstitutions OncetheSHGbecomesfunctional,banksassessthem forcreditworthinessafter6months;wellfunctioning SHGsaresanctioneduptofourtimestheirsavings SHG i d f i h i i Top five States in SHG linkage Maharashtra, Orissa, Tamil Nadu, West Bengal, Andhra Pradesh
BankLoans
INRbn
200 150 100 50 0 4 10 20 39 180
+89%
68
113
200001 0102
0203
0304
0405
0506
0607
IssuesattheGroundLevel
Strongoppositionfrommoneylendersandthe sociallydominantclassesinoftheruralpopulation Resistancefrommenagainstwomenformingsuch groups Lackofbasicinfrastructurefore.g.ameetingarea Largescalerelianceongovernmentprogrammes, subsidiesandgrantsfromNGOordevelopment agencies
Agenciesfinancingthegroups(0708)
Cooperativebanks RRBs 33% 25%
42% CommercialBanks
16
ThreebanklinkagemodelsareprevalentinIndiawhichallow SHGstofundtheiroperations
MFI
Microfinance SBLP
Model1 Bank NGO
Eachpartnerinstitutionsfunctionsindependently.Banks lend,NGOsorganizepoorintoSHGsandSHGsmanage smallgroupfinanceintheirowninterest Thewholesystemislocalized SHGs and local NGO learn to deal with banks and vice versa SHGsandlocalNGOlearntodealwithbanksandviceversa Majorityoffieldlevelbankersdonotviewitasabanking mandate Inmanyplaces,itisstilldifficulttoopenasavingsaccount AbsenceofNGOsinmanypartsofIndia Reducestransactionandriskcostofthebankastheylend largesumtoanNGO,whichguaranteesrepayment Easierforthepoortodealwithaninstitutionwhichthey knowandtrust. Easytobeadoptedbystakeholders. NGOsarenotequippedtoworkasfinancialintermediaries CallsforsubstantialinvestmentincapacitybuildingofNGO Widescaleadoptionnotpossible
SHG
Model2
Bank
NGO
SHG
Model3 Bank SHG
PossiblesolutionwhereNGOsarenotpresent Widescaleapplicationmaynotbefeasiblebecauseofother prioritiesofbankers
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18
Introductionofthebillisexpectedtocreateadefiniteregulatory frameworkformicrofinanceinstitutions
MicroFinancialSectorDevelopmentandRegulationBill,2007
Purpose Regulatingandsupervisingcooperativesocietiesandnonprofitinstitutions(including societiesandtrusts)thatareprovidingmicrofinance societies and trusts) that are providing microfinance Microfinance:Includesloans,savings,insuranceandpensionservices.Loanscannot exceedmorethanINR50,000(INR150,000forhousingpurposes) MFO:Anyorganisationthatprovidesmicrofinanceservicesincludingsocieties,trustsand cooperativesocieties DefinitionofMicrofinanceOrganizations: NBFCsandSection25companies,which accountfor~80%ofmicrofinanceloansoutstandingareexcludedfromitsscope MobilizationofSavings:Statesthat MFOsareauthorizedtocollectdepositsfromtheir Mobilization of Savings: States that MFOs are authorized to collect deposits from their members
Certainconditionsmustbesatisfied
HaveaminimumcapitalbaseofINR.0.5mn Beinoperationforaminimumof3years ReceiveapprovalfromtheMicrofinanceDevelopmentCouncil(MDC),anentitypromotedbyNABARD Receive approval from the Microfinance Development Council (MDC) an entity promoted by NABARD
Definitions
MajorAspects
NewRegulator: NABARDtobetheregulatorybodyforbothdepositoryandnon depositorymicroMFOs.Itsroleentails

Facilitatingthedevelopmentofcreditratingnormsandperformancebenchmarks Specifyingtheaccountingformandtheauditingstandards PromotingfinancialliteracyofMFOclientsandsectorrelatedresearch Disseminatinginformationrelatingtobestpractices
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Thebillhasbeenseentohavemanylimitationsinitsscopeand reach
MandatoryregistrationandperiodicreportsubmissionbyallMFOsseekingtoaccept deposits MFOswillalsobesubjecttoinspectionbytheregulatorincaseofanymalpractices Pl Plansonacorpusfund,MicroFinanceDevelopmentandEquityFund,forthe f d Mi Fi D l d E i F d f h developmentofthesector MFOsthatacceptsdepositstocreateareservefundbytransferringaminimumof15%of itsnetprofit/year
OtherAspects
NABARDasRegulator:NABARDbeingaserviceproviderandregulatorybodywillleadto conflictofinterests Limitationsof thebill

NABARD is responsible for the administration of the Microfinance Development and Equity Fund NABARDisresponsiblefortheadministrationoftheMicrofinanceDevelopmentandEquityFund, afundcreatedtoprovideequitycapital,debtfunds,orgrantstoMFOs NABARDalsolacksexpertisetoregulateanddevelopMFIsintheurbansectorasitsrolehasbeen confinedtoruralareasandtoagriculture
DifferentialRegulation:
Lackofrationalebehindclassification
NBFCshavebeenexcludedfromthebillastheyarealreadyregulatedbytheRBIwhilecooperatives,which arealsocurrentlyregulated,havebeenincluded
IntroductionofdualregulationofdepositsreceivedwhichiscurrentlyregulatedsolelybytheRBI
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21
TrendsandCharacteristics
Lowpenetrationlevelprovidestremendousgrowthopportunities
LargescalePE/VCactivity
Trendsand ` Characteristics
Highinterestrateandissuewithrepayments
Lackofinterestfromformalfinancialinstitutions
Opportunityintheurbansector
22
Strongopportunitiesforinvestmentswithlargeuntapped portfolioofproductsindemand
Lowpenetrationlevelprovidestremendousgrowthopportunities
Strongpotentialdemandformicrofinanceservicesexists
65%oftheIndianpopulationarewithoutabankaccount 27%or300mnpeopleinIndialivebelowpovertyline(earnlessthanUSD1perday) 87%ofthepooresthouseholdsdonothaveaccesstoeasycredit Approximately,56%ofthepoorstillborrowfrominformalsources 70%oftheruralpoordonothaveadepositaccount
New microfinance services have not been tapped which provides strong potential for players Newmicrofinanceserviceshavenotbeentappedwhichprovidesstrongpotentialforplayers
Service Educationloan Emergencyloan Life/medicalotherinsurance Nonfinancialservices No.ofMFIProviding 1 1 7 5 %ofClientsAccessing(08) 3% <0.1% <20% 630%
23
MicrofinanceemergingasnextassetclassforPEfunds
LargescalePE/VCactivity
PrivateequityandventurecapitalhavemadeinvestmentsworthUSD230mnduringJan2007Mar2009 Investorshavebeendiversifyingtheirportfolioastheurbanandmanufacturingrelatedsectorsarewitnessingaslump
Year 2009 2008 2008 2008 2008 2008 2007 2007 2007 2007 2007 MicrofinanceCompany BhartiyaSamruddhiFinanceLtd MaduraMicroFinanceLimited MASFinancialServicesLtd. SKSMirofinance SKSMirofinance SKS Mi fi UjjivanFinancialServices SKSMirofinance ShareMicrofin Share Microfin Spandana ShareMicrofin SKSMirofinance PEInvestor LokCapital,Aavishkar,SIDBI UnitusEquity ICICIVenture SandstoneCapital,SVBIndiaCapitaland KismetCapital SiliconValleyBank,ColumbiaPacific,Sequoia y , , q Capital,VinodKhosla,Odysseycaptial UnitusEquityFund SequoiaandUnitus LegatumCapital Legatum Capital JMFinancialFund Stake(%) n.a. n.a. n.a. n.a. n.a. n.a. n.a. 51 n.a. 4 n.a. DealSize(USDmn) 10 5 10 75 37 19.6 11.5 25 10 2 37
AavishkaarGoodwell
Sequoia,SiliconValleyBankandVinodKhosla,
24
Progressivelyhighinterestratesanddelayedrepayments limitingthegrowth
Highinterestrateandissueswithrepayments
Lendingtosmallborrowersfollowsanindirectroute.BankslendtoMFOswhothenlendtovariousSHGsandJLGs. IndividualborrowersgetfundsthroughSHGsandJLGs It has been speculated that MFOs do not incur lower transaction costs but transfer the cost to donors through IthasbeenspeculatedthatMFOsdonotincurlowertransactioncostsbuttransferthecosttodonorsthrough subsidizedborrowingsortoborrowersthroughhigherinterestrates Progressininterestratesfromlendertoborrower
7.5%p.a. NABARD 1015%p.a. MFOs 1224%p.a. SHGs 2436%p.a.
Commercial Banks
Individual Member
Debtorshavebeenfailingtorepaytheloans,thistrendhasbeengrowingwiththeriseinsizeoftheloanandthe frequencyofborrowing GrowthindefaultrateinGrameenbank

Second time 1.2% Fourth time 9.5%
Borrowers DefaultRate
Firsttime 0.4%
Thirdtime 6.6%
25
Highriskinprovidingloanstosmallconsumershasprevented formalfinancialinstitutionsfromparticipatingactively
Lackofinterestfromformalfinancialinstitutions
Commercialbanks,cooperativebanksandregionalruralbanksprefertoabstainfromlendingtothepoor
Theseloanswillbehighriskloans Delinquencyanddefaultratesarehighamongthepoor InterestrateregulationsbyRBI CommercialbankbeingadvisedbytheRBItolinktheirinterestrateswiththeirprimelendingrate(PLR)fortheirloanamounts lessthanINR200,000 Lackofcollateralsecurityamongborrowers y g Safetyissues
Borrowersthemselvesfinditproblematicdealingwithbanks
Creditfromthebankisnoteasilyavailable Transactioncostofborrowingfromthebankisveryhigh Thisincludesoutofpocketexpensesthatareincurredinpayingtravelcost,middleman,andpricedifferenceinassetsandthe opportunitycostoftheirtime Transactioncostofavailingsavingfacilitiesarealsohigh Primaryfactorsaredistanceandsmallsavings
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Limitedoutreachinurbansectorprovidesopportunityfor microfinanceinstitutions
Opportunityintheurbansector
MicrofinanceoutreachinIndiaislimitedtoruralareas Merely0.02%oftheurbanpoorhavebankingrelationships Inurbanareas,lackofaccesstotradingspaceforvendorsandlivelihoodtrainingisfurtherpushingthepoor belowthepovertyline InitiativestakenbytheMFIsinurbansectorwillhelpthemin
Quickerscaleup Quickerbreakeven Higherloansizes/enterpriseloans
Productsmustbecustomizedtosuitneedsoftheurbanpoor Servicesofferedshouldbeaccessibleandfarreachingallowingforlargeconsumerbase MicrofinanceproductsforUrbanSector

PaidEmployed SelfEmployed
Salaried
Dailywageearners Example:Vegetablevendors Dailyandweeklyloanstopurchase vegetablesfromwholesalemandisand g f dailysavingsfacilities
Microsavingstoaddressthe issueoflowincome f
Example:MunicipalWorkers Healthloans,healthinsurance ,
27
28
Players(1/8)
CompanySnapshot:BandhanFinancialServicesPvt.Ltd.
CorporateInformation
Established Headquarters ServicesOffered 2002 Kolkata Microloans MicroEnterpriseProgram HealthLoan
USDmn
100 80 60 40 20 0 1 8 0 29 82
FinancialPerformanceandOutreach
GrossLoanPortfolio Gross Loan Portfolio NumberofActiveBorrowers 000
1,500 1,000 1 000 500
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Itisanonprofitentity O Operatesin11Statesthrough765branches t i 11 St t th h 765 b h Primarilyfocusingon3programs
CharteringintoUnventuredFrontiersTargetingtheHardCore Poor BandhanHealth BandhanEducation
BusinessOutlook
ItisplanningtoraiseINR6bninFY0910byselling agriculturalloanstobanks agricultural loans to banks PlansonexpandingoperationstoDelhiandMumbai becauseoflargescaleruralurbanmigration ExpectedtoencompassUttarPradesh,Rajasthanand Gujarat Plansonopening200newbranches
29
Players(2/8)
CompanySnapshot:BhartiyaSamruddhiFinanceLimited
Established Headquarters 1996 Hyderabad Loans Insurance MoneyTransfers Agriculture/Business DevelopmentServices InstitutionalDevelopment Services
USDmn
60 40 22 20 0 13 31
GrossLoanPortfolio Gross Loan Portfolio NumberofActiveBorrowers
56
000
400 300 200 100 0
ServicesOffered
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Clientele,90%fromruralpoorhouseholdsandabout 10%areurbanslumdwellers 10% are urban slum dwellers Operatesin15States In200708,Nonfarmloansaccountedfor47%ofthe totalwhileAgrialliedaccountedfor36%
BusinessOutlook
Plansondiversifyingitsproductportfoliotoinclude pensionsandsystematicinvestmentplansofmutual pensions and systematic investment plans of mutual funds Largescaledisbursementofeducationloansbased onthecoursesbeingundertaken g g gy p Bankingonlargescaletechnologyadoptiontowards achievinghighoperationalefficiency
30
Players(3/8)
CompanySnapshot:EquitasMicroFinanceIndia
Established Headquarters 2007 Chennai MicroFinanceLoan AMCLoan EducationLoan GoldLoan
USDmn
60 40 20 4 0 56
400 300 200 100 0
ServicesOffered Services Offered
Mar08 M 08
Mar09 M 09
BusinessHighlights
Itlendstowomenborrowersorganizedintojointliability groups 90brancheswithfocusfallingonTailNadu EnteredintoapartnershipwithNewgenSoftwarein ordertochangeprocessflowsviadatamanagementso astoincreasescalabilityandimproveproductivity as to increase scalability and improve productivity LoansdisbursedinMay09:INR387.4mn
BusinessOutlook
Planonopening5morebranchesby2009 It i t Itistargeting1,80,000membersinTamilNadu ti 1 80 000 b i T il N d PlansonworkingonanOMRbasedsolutionfortheir riskmanagementteam UnderEquitasGyanKendra,theyplanonimparting traininginspokenEnglish,electricalwork,plumbing training in spoken English electrical work plumbing andpaintingtoSHGs
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Players(4/8)
CompanySnapshot:SHAREMicrofinLtd.
Established Headquarters 1999 Hyderabad Loans
General Special l Housing Microenterprise Personal USDmn
200 150 100 50 0 40 82 91 151
2,000 , 1,500 1,000 500 0
ServicesOffered
Insurance FundTransferServices
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Providingfinancialandsupportservicesmainlyto womenbelowthepovertyline women below the poverty line Carriesoutoperationsacross16Statescovering17,654 villages AsofMay09;totalbranches:771;cumulative disbursementINR56,895mn disbursement INR 56,895 mn
BusinessOutlook
By201213
Expected to grow its client base to 15 mn members Expectedtogrowitsclientbaseto15mnmembers Outstandingportfolioto~INR163.82bn
Plansonachievingdeeperverticalpenetrationinits currentareaofoperationandlargegeographic outreach
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Players(5/8)
CompanySnapshot:ShriKshetraDharmasthalaRuralDevelopmentProject
Established Headquarters 1982 BelthangadyTaluk,Karnataka Loans Insurance TrainingandConsulting BusinessDevelopmentServices Health Education
USDmn
100 80 60 40 20 0 11 24 52 85
800 600 400 200 0
ServicesOffered
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
In1996,initiatedamicrofinanceprogramme Pragatinidhifortheoveralldevelopmentofsmalland Pragatinidhi for the overall development of small and marginalfarmers UnderPragatinidhiloansaredisbursedforagriculture, infrastructuredevelopment,nonfarmsector developmentactivitiesandgroupenterprise. Microfinancecomprisesof4050%oftheiroperations
BusinessOutlook
Plansonexpandingtheirinsuranceservicewhichwas launchedincollaborationwithICICI Lombardto1.3 launched in collaboration with ICICI Lombard to 1 3 mncustomersby2009from960,000in0708 By2011,theyplanonforming60,000groupsunder theSHGmodel
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Players(6/8)
CompanySnapshot:SKSMicrofinancePvt.Ltd.
Established Headquarters 1998 Hyderabad Incomegeneratingloans MidTermLoans IndividualLoans EmergencyLoans LoanCoverInsurance HealthInsurance Retail Insurance RetailInsurance
USDmn
300 250 200 150 100 50 0 262
2,500 2,000 1,500 63 8 21 1,000 500 0
ServicesOffered
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Southisthelargestcontributor,withAndhraPradesh andKarnatakaaccountingfor30%and17%disbursals and Karnataka accounting for 30 % and 17%disbursals respectively ApproachedtheRBItolaunchmobilebankingservices
FormedanassociationwithNokiaandAirteltowardsproviding cheaphandsetstocustomers ProjectisexpectedtobegininAndhraPradesh
BusinessOutlook
Plansondoublingitstotalloandisbursalsin0910to INR87.7bn INR 87 7 bn Planstointroduce400newbranchesin0910 PlansonlaunchinganIPOtowardsraisingcapital StrongITinitiativestowardsenhancingefficiency
Creating a data warehouse where information will be Creatingadatawarehousewhereinformationwillbe capturedandconsolidated
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Players(7/8)
CompanySnapshot:SpandanaSphoortyFinancialLimited
Established Headquarters 1998 Hyderabad GeneralLoans SmallBusinessLoan MicroEnterpriseLoan AgriFamilyLoan DairyLoan FarmEquipmentLoan
USDmn
200 150 100 50 0 54 89 63 182
2,500 2,000 1,500 1,000 500 0
ServicesOffered
Mar05 M 05
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Operatesin9Statesacrossthecountrywith999 branches AndhraPradeshaccountsfor57%ofitsloanportfolio whileKarnatakaaccountsfor13% Otherthanfinancialintermediation,theyhavealsobeen focusingonsubsectorinterventionsuchasdiary focusing on sub sector intervention such as diary development
BusinessOutlook
Planstoexpanditsreachto16Statesbyend2009 includingUttarPradesh,Bihar,Gujarat,Uttarakhand, including Uttar Pradesh Bihar Gujarat Uttarakhand NewDelhi,KeralaandGoa By2011,thecompanyplansoncateringto6mn borrowerswithcumulativedisbursementsofINR200 bn
35
Players(8/8)
CompanySnapshot:UjjivanFinancialServicesPvt.Ltd.
Established Headquarters 2004 Bangalore FamilyNeedsLoan BusinessLoan ComboLoan(combinationof familyneedsandbusiness) HousingLoan FestivalLoan Emergency Loan EmergencyLoan
USD000
10,000 8,000 6,000 4,000 2,000 0 46 1,933 40,000 40 000 20,000 0 9,110 60,000
GrossLoanPortfolio NumberofActiveBorrowers
ServicesOffered
Mar06 M 06
Mar07 M 07
Mar08 M 08
BusinessHighlights
Providefinancialservicestopoorworkingwomenin urbanandsemiurbanareas urban and semiurban areas OnlyMFIinIndiatostartoperationswithoutanygrants ordonation 62%ofcustomersarefromtheSouthwhileNorthand Eastaccountfor6%and30%respectively East account for 6% and 30% respectively
BusinessOutlook
PlansonanIPOby2011,afterprofitableoperations Pl Plansonencompassing1mncustomersby2009with i 1 t b 2009 ith itspresenceacrossIndiawithregionalofficesin Bangalore,Kolkata,DelhiandPune Plansonbuildingastrongcapitalbaseby2011
Looking for alternative sources of capital namely portfolio Lookingforalternativesourcesofcapitalnamelyportfolio sale,securitization,subordinateddebt,nonconvertible debentures 36
37
KeyDevelopments
Date 22Jun09 Development ShareMicrofin planstoraiseINR21.5bnin200910tofunditsexpansion.Ofthis,INR19bnwouldbe debtandtheremainingequity.TheyhaveenteredintoanagreementwiththeSmallIndustries DevelopmentBankofIndiaandMatrixFinancialConsultantsformobilizingINR10bnandINR5bn Development Bank of India and Matrix Financial Consultants for mobilizing INR 10 bn and INR 5 bn respectively SKSMicrofinance,thelargestmicrofinanceplayerinthecountryintermsofassets,islookingbeyond purebankfundingfortheirbusiness.ItisplanningtoraiseINR5bnthroughavarietyofrateddebt productstofundloandemandsofitscustomers Microfinanceinstitutionsandcustomerservicecentrenetworkareemergingtobethelargestchannel forthedistributionofMaxNewYorkLifes(MNYL)smallkittyinsurancepolicy. ICICIBankistargetingthefarmsector,microfinanceinstitutionsandcompaniesintheagriculturespace andhavesetasideINR250bn.Thebankplansonissuingfarmerscardswhowillbegivenloansthrough SHGsunderMFIs SHG d MFI SpandanaSphoortyFinancialraisedINR800mnbyissuingoneyearnonconvertibledebentures(NCDs) redeemableatapremiumof10%.TheypreviouslyplannedonraisingINR3bnbydilutingapartoftheir staketoinvestors. UTIAssetManagementandInvestIndiaMicroPensionServices(IIMPS)tiedupwithBASIXforamicro UTI Asset Management and Invest India Micro Pension Services (IIMPS) tied up with BASIX for a micro pensionscheme ICICILombardGeneralInsuranceCompany,beganofferinginnovativeproductslikeweatherandcattle insuranceinruralareas. By2014,MFIsareexpectedtoextendcreditworthINR380bnto37mnbeneficiaries. By 2014 MFIs are expected to extend credit worth INR 380 bn to 37 mn beneficiaries
18Jun08
18Jun08 13Jun08
10Jun08
30Apr09 30 Apr 09 28Feb09 21Feb09 21 Feb 09
38
39
Appendix 1: OverallProgressUnderMicrofinance
Particulars SavingsaccountsforSHGbanksasof31March BankloansdisbursedtoSHGduringtheyear BankloansoutstandingwithSHGason21 March BankloansdisbursedtoMFIduringtheyear BankloansoutstandingwithMFIason31 March
NOTE:AmountinINRmn
Units NoofSHGs Amount NoofSHGs Amount NoofSHGs Amount NoofSHGs Amount NoofSHGs Amount
200607 4160584 35127.1 1105749 65703.9 2894505 123664.9 334 11515.6 550 15844.8
200708 5009794 27853.9 1227770 88492.6 3625941 169999.1 518 19701.5 1109 27488.4
%Growth 20.4 7.8 11 34.7 25.3 37.5 55.1 71.1 101.6 73.5
40
Appendix 2: SavingsofSHGswithBanks
TotalSHGssavingswiththebanksason31March2008 Agency Year 200607 2006 07 CommercialBanks(PrivateandPublic) 200708 %growth 200607 RegionalRuralBanks(RRBs) 200708 %growth 200607 Co operativeBanks Cooperative Banks 2007 08 200708 %growth 200607 Total 200708 %growth No.ofSHGs 2293771 2810750 22.5 1183065 1386838 17.2 683748 812206 18.8 4160584 5009794 20.4 100 100 16.4 16.2 16 2 28.4 27.7 %Share 55.2 55 2 56.1 Amount (INRmn) 18924.2 18924 2 20777.3 9.8 11582.9 11664.9 0.7 4620 5411.7 5411 7 17.1 35127.1 37853.9 7.8 100 100 13.2 14.3 14 3 33 30.8 %Share 53.8 53 8 54.9 PerSHG Saving(INRs) 8250 7392 10.4 9791 8411 14.1 6914 6663 1.4 8469 7556 10.5
41
Appendix 3: BankLoansDisbursedtoSHGs
TotalloansdisbursedbybankstoSHGs Agency Year 200607 2006 07 CommercialBanks(PrivateandPublic) 200708 %growth 200607 RegionalRuralBanks(RRBs) 200708 %growth 200607 Co operativeBanks Cooperative Banks 2007 08 200708 %growth 200607 Total 200708 %growth No.ofSHGs 571636 735119 28.6 381199 327650 14.0 152914 165001 7.9 1105749 1227770 11.0 100 100 13.8 13.4 13 4 34.5 26.7 %Share 51.7 51 7 59.9 Amount (INRmn) 39189.4 39189 4 54039 37.9 20527.3 26518.4 29.2 5987.2 7935.2 7935 2 32.5 65703.9 88492.6 34.7 100 100 9.1 9 31.2 30 % Share 59.7 59 7 61 PerSHGbankloan disbursed(INRs) 68557 73511 7.2 53849 80935 50.3 39153 48092 22.8 59420 72076 21.3
42
Appendix 4: BankLoanOutstandingAgainstSHGs
TotalloansoutstandingbybankstoSHGs Agency Year 200607 2006 07 CommercialBanks(PrivateandPublic) 200708 %growth 200607 RegionalRuralBanks(RRBs) 200708 %growth 200607 Co operativeBanks Cooperative Banks 2007 08 200708 %growth 200607 Total 200708 %growth No.ofSHGs 1893016 2378847 25.7 729255 875716 20.1 272234 371378 36.4 2894505 3625941 25.3 100 100 9.4 10.2 10 2 25.2 24.2 %Share 65.4 65 4 65.6 Amount (INRmn) 87603.8 87603 8 114754.7 31 28017.6 44210.4 57.8 8043.5 11033.9 11033 9 37.2 123664.9 169999 37.5 100 100 6.5 6.5 65 22.7 26 %Share 70.8 70 8 67.5 PerSHGbankloan outstanding(INRs) 46277 48240 4.2 38419 50485 31.4 29546 29711 6.6 42724 46884 9.7
43
Appendix 5: BankLoansProvidedtoMFIs
AmountofLoan Disbursed Agency Year No.ofMFIs 200607 CommercialBanks(PrivateandPublic) 200708 %growth 200607 RegionalRuralBanks(RRBs) 200708 %growth 200607 2006 07 CooperativeBanks 200708 %growth 200607 Total 200708 %growth 334 518 55.1 11515.6 19701.5 71.1 327 497 52 7 8 14.3 0 13 Amount (INR mn) 11513.4 19686 71 2.2 15.1 586.4 0 0.4 LoanOutstandingagainstas on31Mar No.ofMFIs 541 1072 98.2 8 24 200 1 13 1200 550 1109 101.6 Amount (INRmn) (INR mn) 15842.7 27452.4 73.3 2 35.8 1690 0.1 01 0.2 100 15844.8 27488.4 73.5 100 n.a. 90 95.5100 %Recoveryof Loans
92100 82100
44
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Market Research India - Guide To Microfinance in India 2009

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GuidetoMicrofinance Guide to Microfinance India

Government Government Initiative

Lowpenetrationlevelprovidinghighgrowthopportunity LargescalePE/VCactivity Highinterestrateandissuewithrepayments Lackofinterestfromformalfinancialinstitutions Opportunityintheurbansector ThemajormicrofinanceinstitutionsinIndiaare

SKSMicrofinancePvt.Ltd. Spandana Sphoorty Financial Limited SpandanaSphoortyFinancialLimited SHAREMicrofinLtd.

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

Pensions Risk Mitigation Products

RegionalRural Banksestablished in1975

NABARDlaunches SHGbanklinkage program

Proposedbillon microfinance regulation

Deregulationof interestrates i t t t BankingSector Reformsin199192 Internationalbest p practicesin prudentialnorms

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

Formal/Banks Typesof T f financial institutions Informal/ NonBanks

Informalinstitutionsthatundertakemicrofinanceservicesastheir mainactivityaregenerallyreferredtoasmicroFinanceInstitutions (mFIs)

Intermediary Intermediary Bank

Microfinance Microfinance Institution

Micro Micro entrepreneur

Nonprofit PublicTrusts Societies Section25companies

AllnondeposittakingNBFCshavingassetsizeofINR1bnormoreasperlastaudited balancesheetareconsideredassystemicallyimportantNBFCs b l h t id d t i ll i t t NBFC

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

Microfinance institutions(MFIs) institutions (MFIs)

+23% 48.06 38.02

59.21 SHGs 45.20 14.01 200708 MFIs

*SBLP:SHGsbanklinkageprogram * SBLP SHG b k li k NOTE:Assessmentoftheshareofthetotalmarketformicrocreditloansisdifficultasnolaworregulationrequiresorganizationswhichprovidemicrocredittoformally registerasmicrofinanceinstitutions

75% Institutional Debt

Grameen/ 28% JLG

Model1 Bank NGO

Model3 Bank SHG

PossiblesolutionwhereNGOsarenotpresent Widescaleapplicationmaynotbefeasiblebecauseofother prioritiesofbankers

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

NewRegulator: NABARDtobetheregulatorybodyforbothdepositoryandnon depositorymicroMFOs.Itsroleentails

NABARDasRegulator:NABARDbeingaserviceproviderandregulatorybodywillleadto conflictofinterests Limitationsof thebill

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

Debtorshavebeenfailingtorepaytheloans,thistrendhasbeengrowingwiththeriseinsizeoftheloanandthe frequencyofborrowing GrowthindefaultrateinGrameenbank

Productsmustbecustomizedtosuitneedsoftheurbanpoor Servicesofferedshouldbeaccessibleandfarreachingallowingforlargeconsumerbase MicrofinanceproductsforUrbanSector

Dailywageearners Example:Vegetablevendors Dailyandweeklyloanstopurchase vegetablesfromwholesalemandisand g f dailysavingsfacilities

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

ServicesOffered Services Offered

Plansonachievingdeeperverticalpenetrationinits currentareaofoperationandlargegeographic outreach

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

30Apr09 30 Apr 09 28Feb09 21Feb09 21 Feb 09

Introduction TypesofFinancialInstitutions MarketOverview GovernmentInitiatives TrendsandCharacteristics MajorPlayers KeyDevelopments Appendix

Das könnte Ihnen auch gefallen

SBLP:SHGsbanklinkageprogram SBLP SHG b k li k NOTE:Assessmentoftheshareofthetotalmarketformicrocreditloansisdifficultasnolaworregulationrequiresorganizationswhichprovidemicrocredittoformally registerasmicrofinanceinstitutions