“Gaining an insight about the functionality of micro finance in Indian context, whether the beneficiaries are able to generate wealth & whether the introduction as well as involvement of financial inclusion for Indian population have been efficacious.”
A Report On – “Analysis of Microfinance in India.”
A Report submitted in partial Fulfillment of the requirements of M.B.A. Program of ICFAI University, Dehradun.
"Microfinance stands as one of the most promising and cost-effective tools in the fight against global poverty." -- Jonathan Morduch, Chair, UN Expert Group on Poverty Statistic On 12th July 2002, Prime Minister Atal Behari Vajpayee outlined an eight point agenda to push the economy on a growth path of eight percent during the 10th plan. Mr. Vajpayee assured that it would be government’s endeavour to ensure that “the poor and the unorganized sector have access to savings, credit and insurance services”. This statement itself is a great boost to the microfinance sector, as one can see the changing perception of the people influencing the policies, toward it. However, it is still a beginning and to make the sector vibrant, the efforts have to be still on. Microfinance is being practiced as a tool to attack poverty the world over. The term “Microfinance” could be defined as “provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi urban or urban areas, for enabling them to raise their income levels and improve living standards” (NABARD 99). Microfinance Institutions (MFIs) are those, which provide thrift, credit and other financial services and products of very small amounts mainly to the poor in rural, semi-urban or urban areas for enabling them to raise their income level and improve living standards. Lately, the potential of MFIs as promising institutions to meet the consumption and micro-enterprise demands of the poor has been realized. Microfinance began in the 1970s when social entrepreneurs began lending money on a large scale to the working poor. One individual who gained worldwide recognition for his work in microfinance is professor Muhammad Yunus who, with Grameen Bank, won the 2006 Nobel Peace Prize. Yunus and Grameen Bank demonstrated that the poor have the ability to pull themselves out of poverty. Yunus also demonstrated that loans made to the working poor, if properly structured, had very high repayment rates. His work caught the attention of both social engineers and profit-seeking investors. Later in 2007, the microfinance market served more than 33 million borrowers and 48 million savers. Statistics provided by “Unitus”, an organization devoted toward fighting global poverty show that 80% of the potential market has not yet been reached. Then by 2010 till date Microfinance globally has served around more than 50 million borrowers and 60 million savers. Now, the question is how will the worldwide growth of this market impact each and every one of us? Microfinance sector witnessed robust growth rate in the past three years, with microfinance firms witnessing 75 per cent to 125 per cent growth. Some firms achieved more than that. The average growth hovered around 80 per cent to 90 per cent in terms of customer acquisition and 100% in the lending amount. There is huge potential for growth in the industry as 160 million Indians are in need of microfinance while we could extend services to just 25 million people in the country till date.
Micro finance products and services
A rough sketch of the products and services are currently being offered by MFIs: * Microloans: Microloans (also known as microcredit) are loans that have a small value; most loans are less than US$100 in size. These loans are generally...