Things which we should know…….

• What is microfinance……..?
• Where has it originated……..?
• Who started…………?
• Micro finance in India…..
• What is the functioning process of MF’S…..?
• Who are the beneficial ……………………?
• Why suicides are taking place in AP from past one month………..?
• Govt.’s steps in controlling suicides…….
• MFIN’s responsibility…
• People’s responsibility………….
 What is Micro Finance
• “small-scale financial services—primarily
credit and savings—provided to people who
farm, fish or herd” also services provided to
low-income households and enterprises.”
•Microfinance serves as the last-mile bridge to the low-
income population excluded from the traditional financial
services system and seeks to fill this gap and alleviate
poverty.
Microfinance loans serve the low-
income population in multiple ways
by:
(1).Provide working capital to build
businesses.
(2).Infuses credit to smooth cash
flows and lessen irregularity in
accessing food, clothing, shelter, or
education.
(3).Moderate the economic impact
such as illness or natural disasters.
 SWOT Analysis of micro finance
Strength
• Helped in reducing the poverty.
• Huge networking available.
Weakness
• Not properly regulated.
• High number of people access to informal sources of finance.
• Concentrating on few people only and mainly in urban areas.
Opportunity
• Huge demand and supply gap.
• Employment Opportunity.
• Huge Untapped Market.
• Opportunity for Pvt. Banks, NBFCs, Foreign Banks to enter this
business segment
 Origination
• The concept of microfinance is not new. Savings and credit
groups have operated for centuries like the "susus" of Ghana,
"chit funds" in India, "tandas" in Mexico, "arisan" in
Indonesia, "cheetu" in Sri Lanka, "tontines" in West Africa,
and "pasanaku" in Bolivia, as well as numerous savings clubs
and burial societies found all over the world. 
• In the early 1900s, various adaptations of these models began
to appear in parts of rural Latin America. While the goals are
to modernize the agricultural sector, they usually had two
specific objectives: increase commercialization of the rural
sector, by mobilizing "idle" savings, and increase investment
through credit by reducing oppressive feudal relations.
Contd……
•The word ‘Microfinancing’ today
has its roots in 1970s when some
organizations started to engage
actively in giving microloans to
some pre-qualified people.

• One of the prominent

organizations that institutionalized
the word microfinance
 was Grameen Bank of
Bangladesh grounded by the man
we called ‘microfinance
pioneer’, Muhammad Yunus.
 In India
•Over the decades after India's independence in 1947, Government of India
(GOI) has made efforts to provide micro-finance to the rural poor through the
formal financial sector namely the co-operatives.

• However, the limited success of the co-operatives in the mid 50’s to 60’s
forged the need for nationalization of commercial banks (CB) in 1971 and the
establishment of a large network to reach every village, and every segment of
the population.

•In the mid-1970s, Regional Rural Banks (RRB) was established to continue
further the outreach of the banking sector in reaching the rural poor.

•Integrated Rural Development Program (IRDP), launched in 1980.has

supported low-income households.

•The IRDP was designed to provide a mix of subsidy from the government
and credit from the banking system to enable the asset acquisition of the poor.
 Contd…….
• Microfinance in India started in the early 1980s with small
efforts at forming informal self-help groups(SHG) to provide
access to much-needed savings and credit services. From this
small beginning, the microfinance sector has grown
significantly in the past decades. National bodies like the
Small Industries Development Bank of India (SIDBI) and the
National Bank for Agriculture and Rural Development
(NABARD) are devoting significant time and financial
resources to microfinance.
 Trends
• Loans for Microfinance in India range in size from $100 to
$500 with interest rates typically between 25% and 35%
annually.
• The microfinance model is designed to help the low income
population overcome typical challenges such as illiteracy, lack
of financial knowledge. At the same time, the model takes
advantage of existing community support systems and
networks to encourage financial discipline and ensure high
repayment rates.
• Despite the rapid expansion of microfinance, large areas of
India continue to be underserved.
Contd……
• the penetration potential of the
existing microfinance model is
between approximately 43
million and 52 million
households, out of which 22.6
million are existing customers.
This implies an unaddressed
demand of 20million to 29
million customers.
• Currently, as many as 54% of all
microfinance clients are
concentrated in the Southern
States: Andhra Pradesh,
Karnataka, Kerala and Tamil
Nadu.
Functioning Process.