EXECUTIVE SUMMARY

Microfinance is the term which refers to providing financial services such as loans, savings, insurance and training to people living in poverty. Microfinance in general can be described as financial services to low-income individuals or to those who do not have access to typical banking services. The main aim of micro finance is to lift up the people from the poverty life, and to get there live hood. There is a diversity of approaches to micro finance in India, involving banks, government agencies and NGOs. In most of these approaches, groups are used as intermediaries for financial transaction. This project mainly crams of micro finance and the models which are broadly access in India that is as SELF HELP GROUP model (SHGs) and GRAMEEN Bank model. Further aim is to find out the operational features of these two micro finance models in India and compare the operational features with individual banking. The project mainly, emphasis to understand the several models access and contributing in Maharashtra. With the help of questioner tool, I will make an attempt to understand how Banks and other institutes or company access the micro finance. I will also make an attempt to create a new model as a entrepreneur, which should be designed in a socio-Economic and under a legal frame work addressing the need of the under privileged individuals and under the developed regions.

Introduction to Microfinance
Microfinance is the term which refers to providing financial services such as loans, savings, insurance and training to people living in poverty. Microfinance in general can be described as a financial services to low-income individuals or to those who do not have access to typical banking services. Microfinance is also the idea that low-income individuals are capable of lifting themselves out of poverty if given access to financial services. While some studies indicate that microfinance can play a role in the battle against poverty, it is also recognized that is not always the appropriate method, and that it should never be seen as the only tool for ending poverty. Microfinance organizations make it a priority to serve the particular needs of women, since a staggering 70 percent of all those living in extreme poverty are female. Women are often excluded from education, the workplace, owning property and equal participation in politics. They produce one half of the worlds food, but own just one percent of its farmland. Nearly 85 percent of Opportunitys loan clients are women. While Opportunity gladly extends loans to men, the organization believes the greatest opportunity for interrupting cycles of extreme poverty come from microfinance programs that target female entrepreneurs. When women improve their circumstances, they also improve the lives of their children. By investing in nutrition and education, they help to create a better future for their children and their communities.

LITERATURE REVIEW

Paradigms and Reality in Micro-Finance: The Indian Case Peter Edward and Wendy Olsen

In India micro finance has grown rapidly. We examine qualitative local data on micro finance in south Andhra Pradesh. We compare and contrast Mayouxs three paradigms of micro finance has being differentiated by their assumptions, their claims, and the mode of operation of those who adhere to them. Each paradigm offers grounding for practice as well as a mode of discourse for micro finance practitioners. In Andhra Pradesh, the empowerment paradigm is fading away compared with the financial sustainability paradigm of micro finance. The anti poverty paradigm is also muted. The financial sustainability school is presently dominated in this complex micro enterprise scene. Page no. 32 53.

Role of Self Help Group- BANK LINKAGE MODEL IN WOMEN EMPOWERMENT: MOON & URMILA

Microfinance as a tool has been a gradual and evolutionary growth opportunity to people from rural India resulting into better living standard and quality of life for women. In India, micro finance scene is dominated by Self Help Groups (SHGs) - Bank Linkage Programmed. Its purpose is to provide a cost effective mechanism for providing financial services to the "unreached poor". The Government of India made linking the Self Help Groups (SHGs) with banks a national priority from 1999 and Nabard continues to nurture the expansion of the outreach of the programme by providing umbrella support to various stakeholders. Women in India are seriously constrained by gender inequalities in respect of education, financial resources, lack of time due to domestic responsibilities and low chances of mobility. Some studies related to impact of microfinance reveals that women's access to and control over their savings, credit and income have improved. Also, women have improved freedom to move and interact with the officials and other women. It is crucial for the success of SHGs to have strong support of a fully mature group that achieves competence to independently handle issues of its internal practices both financial and non-financial. Groups formed without professional inputs and without the requisite handholding cannot sustain the financial content model and can lead to an increase in defaults and consequent abuses in the system. Record keeping in the groups is another challenge. The paper studies the status, progress and trends of Self-help Groups (SHGs) linkage with banks in India. The objective is to study the role of micro credit and its performance as a tool for women empowerment. The study is

based on secondary data and the sources include reports and studies of various agencies, organizations, newspaper articles, journals and books.

Rural credit and self-help groups: micro finance needs and concepts in India Book Author: KARMAKAR K. G

The book reviews the existing rural credit system in India, analyses its strengths and weaknesses, and prescribes various strategies and innovations which will enable the existing credit delivery system to emerge stronger and more viable. In the first section the book reviews the problems and prospects for rural credit in the context of its ascribed role in rural development; traces the evolution and growth of the rural credit delivery system; analyses the problems associated with credit recycling and overdue; and discusses the recommendations of various committees. In part II, the book discusses the microfinance needs of various groups including tribals, the rural non-farm sector, rural women and micro-finance entrepreneurs. Part III focuses on the concept and functions of self-help groups with special reference to the BAAC system in Thailand and the Grameen Bank in Bangladesh. It is argued that these initiatives need to be replicated far and wide in order to ensure that the rural poor do not remain marginalized forever. The concluding section outlines strategies for developing a sustainable rural credit delivery system in developing countries.

Profit for the poor: cases in micro-finance Book Author Harper. M

It is noted that micro-credit, whilst it is the latest topic in development, it is not appreciated that there is a wide variety of quite different approaches to the profitable delivery of financial services to the poor. Such services have for many years been provided by different types of institution, including traditional commercial banks, NGOs, and the much publicized 'new generation' institutions. The book contains a selection of case studies from India, Bangladesh, East and Southern Africa, Indonesia, and Latin America. Two points are made: first, that there is no universally applicable methodology in the field, and second, that well-managed micro-finance can be profitable both for its customers and its providers; it is a business opportunity itself for bankers, and need not depend on donor assistance.

BANKER TO THE POOR Dr. Mohammad Yunus

This autobiography of the world-renowned, visionary economist who came up with a simple but revolutionary solution to end world poverty - micro-credit In 1983 Muhammad Yunus established Grameen, a bank devoted to providing the poorest of Bangladesh with miniscule loans. He aimed to help the poor by supporting the spark of personal initiative and enterprise by which they could lift themselves out of poverty forever. It was an idea born on a day in 1976 when he loaned $27 from his own pocket to forty-two people living in a tiny village. They were stool makers who only needed enough credit to purchase the raw materials for their trade. Yunus's loan helped them break the cycle of poverty and changed their lives forever. His solution to world poverty, founded on the belief that credit is a fundamental human right, is brilliantly simple: loan poor people money on terms that are suitable to them, teach them a few sound financial principles, and they will help themselves. Yunus's theories work. Grameen Bank has provided 3.8 billion dollars to 2.4 million families in rural Bangladesh. Today, more than 250 institutions in nearly 100 countries operate microcredit programs based on the Grameen methodology, placing Grameen at the forefront of a burgeoning world movement toward eradicating poverty through micro-lending.

Regulation versus Outreach and Sustainability: A Study of the Performance of Microfinance Institutions in India.
Authors:

Pati, Ambika Prasad

Though research studies around the world provide some evidences of performance of Microfinance Institutions (MFIs) operating under different regulatory frameworks, a comprehensive study on the performance of Indian MFIs is lacking. In this paper, an attempt has been made to assess their performance in terms of outreach and sustainability by identifying the impact variables through regression models. For this purpose, data pertaining to 40 MFIs was sourced from the mixmarket.org for the years 2005-06 and 2009-10 to see if there is any shift in their performance and to identify the predictors. Though a perceptible change is noticed across many indicators of MFIs over the five years of the study period, regulation has not emerged as a statistically significant determinant variable of performance. Rather, the operating expenditure is found to be the predictor of sustainability and

profitability of MFIs. This suggests that though regulation is required for proper functioning of this sector, a balanced and cautious approach is highly desirable from the regulators.

'Freedom from Poverty is not for Free': Rural Development and the Microfinance Crisis in Andhra Pradesh, India.
- Author:

TAYLOR, MARCUS

Within neoliberal development discourse, the poor are represented as entrepreneurial subjects for whom integration into formalized financial systems can facilitate their escape from poverty. This paper examines how the 2010 microfinance crisis in Andhra Pradesh reveals significant fault lines that underlie this narrative. It argues that the crisis of microfinance in Andhra Pradesh needs to be placed within the context of severe agrarian dislocations stemming from the impact of trade liberalization, drought cycles and a transformation of rural social relations. The contradictions are most strikingly represented in increasing rural differentiation and a generalized crisis of social reproduction among landpoor farmers and landless labourers. A massive influx of microfinance - driven by both stateoperated programmes and private-sector institutions leveraged with cross-border financial flows - found a ready clientele among various agrarian classes seeking to bolster consumption and roll over debt in conditions of significant uncertainty and distress. Yet in banking on this vulnerability, microfinance institutions socialized the contradictions of rural Andhra Pradesh and have ultimately been thrown into limbo through the unleashing of political and social forces unforeseen in neoliberal narratives of agrarian change.

PERFORMANCE ANALYSIS FOR A SAMPLE OF MICROFINANCE INSTITUTIONS IN INDIA.

Author: de Cro,

brugghe, Alain

We use regression analysis to study the determinants of self-sustainability of a sample of microfinance institutions in India. These institutions stand out by their ability and willingness to report financial and operational data to Sa Dhan, a know-how sharing organization. We investigate particularly three aspects of sustainability: cost coverage by revenue, repayment of loans and cost-control. Our results suggest that the challenge of covering costs on small and partly unsecured loans can indeed be met, without necessarily increasing the size of the loans or raising the monitoring cost. The analysis suggests other ways to improve the financial results, like a better targeting of the interest rate policy or increasing the number of borrowers per field officer especially in collective delivery models.

REPAYMENT FREQUENCY AND DEFAULT IN MICROFINANCE: EVIDENCE FROM INDIA.

- Author: Field, Erica In stark contrast to bank debt contracts, most micro-finance contracts require that repayments start nearly immediately after loan disbursement and occur weekly thereafter. Even though economic theory suggests that a more flexible repayment schedule would benefit clients and potentially improve their repayment capacity, micro-finance practitioners argue that the fiscal discipline imposed by frequent repayment is critical to preventing loan default. In this paper we use data from a field experiment which randomized client assignment to a weekly or monthly repayment schedule and find no significant effect of type of repayment schedule on client delinquency or default. Our findings suggest that. Among micro-finance clients who are willing to borrow at either weekly or monthly repayment schedules, a more flexible schedule can significantly lower transaction costs without increasing client default.

The Impact of Microfinance on Decision-Making Agency: Evidence from South India.

Author: Holvoet, Nathalie

Evaluations of the effects of microfinance programmes on women's empowerment generate mixed results. While some are supportive of microfinance's ability to induce a process of economic, social and political empowerment, others are more sceptical and even point to a deterioration of women's overall well-being. Against this background, development scholars and practitioners have sought to distil some of the ingredients that might increase the likelihood of empowerment or at least reduce

adverse effects. This article formally tests the impact of some of the suggested changes in programme features on one particular dimension of empowerment: decision-making agency. Using household survey data from South India, the author explores the importance of the borrower's gender and the lending technology for intrahousehold decision-making processes. It is shown that direct bankborrower credit delivery does not challenge the existing decision-making patterns, regardless of whether men or women receive the credit. These findings change when credit is combined with financial and social group intermediation. Women's group membership seriously shifts overall decision-making patterns from norm-guided behaviour and male decision-making to more joint and female decision-making. Longer-term group membership and more intensive training and group meetings strengthen these patterns.

OBJECTIVES
To study about micro finance To study about the models which are broadly access in India? Operational features of different micro finance models in India Compare of operational features of models with individual Bank Which are the models uses in Maharashtra State? Creating a new model as a social entrepreneur

SELF-HELP GROUP

A self-help group (SHG) is a village-based financial intermediary usually composed of 10 20 local women per group. Most self-help groups are located in India. it is also access in other countries like in Asia. Women members make this group. They do small regular saving contribution over a few months until there is a enough capital in the group to begin lending. Mainly, this SHG started by NON-NGO and the agenda for this is anti-poverty. SHGs are seen as instruments for variety of goals including improving women, developing leadership ability among poor people, increasing school enrollments and improving nutritions and use of birth control. Financial intermediaries focus on these goals rather than their primary objective i.e. earning profit. A SHG may be registered or unregistered .it typically comprises a group of micro entrepreneurs having social and economic backgrounds. All members coming together voluntarily to save regular small sum of money, mutually agree to contribute to a common fund and to meet their emergency needs on the basis of mutual help. This help them to get financial stability by lending money to the people of the group help them to make themselves self employed. The group members use collective wisdom and peer pressure to ensure proper end use of credit and timely repayment because of this system, colletral system gets eliminated. Members since, SHG concept was developed in late NGOs in India have created atleast one million self help groups with 17000000 members. Since, SHG concept was developed in late 80s .India is unique in that banks are permitted to lend directly to unregistered SHG and by may 2001,banks and corporative had financial 461478 of these groups with almost 2 lacks new SHG. Finance between May 2000 and 2001. This indicates expansion in MF The NABAD trains banks and refinances their loans. The key to NABADs success is decentralization. It started sharing the responsibility with the banks and corporate. NABARD groups are women are which were categorized as a poorest.

GRAMEEN BANK

Grameen bank was initiated by Prof. Mohammed Yunus. He establishes first in Bangladesh for the people those who were under poverty line. Prof.Yunus preferred give loans to womens as he found it to be development tool and tool to bring changes in society. His main goal was to ensure that only a real poor and the needy join the bank and also take advantages from the financial services. He started making group of womens (5-6 womens in per group) and give them loans without collateral and at lower interest rate so that they can survive there lively hood, they also accept the savings and deposit from that womens and also other financial services. Grameen Foundation helps the worlds poorest, especially women, improve their lives and escape poverty by helping to provide access to appropriate financial services such as small loans and savings accounts by removing the need of collateral and created a banking system based on mutual trust, accountability, participation and creativity. Credit is a cost effective weapon to fight poverty and it serves as catalyst in the development of poor. And Grameen bank also initiated new ways to generate income to poor and bank also provides important information about their health, crops and finances for example Mobile based solutions, where they help millions pull themselves out of poverty. Grameen bank also identifies the need and shares the best practices and also expanding best programs which help people for their self sufficiency. Grameen bank In addition, as a global organization, bank is able to spot global trends and problems, and develop solutions that are easily transferable to others who share our povertyfocused goals. Working with international and local partners, as well as the poor themselves, we solve problems in a way that is sustainable and scalable, so that local solutions in one region can be customized and applied to another.

OPERATIONAL COMPARISION

Operational features Clients Groups

SHG Primarily women 15-20 clients per group

GRAMMEN Primarily women Usually 5 clients per group Credit regular cycle Weekly 6-9% 2000-5000 Rs. 5-25/week 32-38% A few small social project

Individual banking Primarily men Individual client

Service focus Meetings Interest on savings Initial loan size Saving deposit Effective interest rate Development services

Saving and credit Monthly 4.25%+ profit share 5000-10000 Rs. 20-100/month 24-28% Some associated programs

Credit organize Individual transaction often daily 6% 5000-15000 Flexible 23-38% Enterprise project

Research methodology

Company name: IDBI Bank

IDBI Bank Ltd. is a Universal Bank with its operations driven by a cutting edge core Banking IT platform. IDBI Bank constantly emphasizes on lending to Agricultural sector. Bank has several Agri products viz. Warehouse receipt, Contract farming etc. to uplift the socio economic status of rural population. Respondent name: Manish Lahrani 1. Who are you Micro Finance customers? customers? Do you have some specific target

Low Income Groups, small manufacturers, etc 2. Is there any specific location which you target? a) 3. Rural b) Urban c) Both

Majority of your Micro Finance Customers fall in which Income group? a) b) c) d) 5000 and more per household 4000-5000 per household 3000-4000 per household Below 2000 per household

4.

Which products/services do you offer to Micro Finance Customers? Working capital Loan Term Loans Bank Guarantee Letter of Credit Dealer Finance Programs Laghu Udyami Credit Cards

5.

Do you monitor the impact of your microfinance activities on your clients? Yes

6. If YES, which of the following measures of impact do you use? (Tick more than one if applicable) a) Savings by clients

b) Growth of their business c) Employment generation d) Number of micro-enterprises in our portfolio e) Other measures please specify....... 7. What is the education qualification of your Micro finance customers? Preferably Graduates 8. Since how many years have you been into Micro finance Services? 7 years 9. How do you deal with the customers who do not repay their loans?

There is dedicated recovery team in the bank, who takes care of recovery of the loan in structured manner? 10. Do you have any particular committees set for loan assessment?

Loan is assessed by the concerned branch with proper due diligence along with ratings provided by external rating agency as well as Risk department.

Kotak Mahindra Bank has extended its initial purpose of venturing into agricultural finance to meet the requirements of finance for individuals/entities involved in agriculture or its allied activities. The agri group aims at retaining a minimum of 20% of the total advances made by the bank. With its performance in past where Agri Business of the bank averaging a growth of over 75% in its initial first year itself, is now geared to grow at more than 25% annually Respondent Name: Yogesh Ajwani 1. Who are your Micro Finance customers? Do you have some specific target customers? Any individuals/entities involved in agriculture or its allied activities which help the bank in meeting the priority sector lending requirements prescribed by RBI. It is primarily started to serve the banking needs of customers directly or indirectly involved in agricultural sector or its allied activities which includes farmers, aggregators, processors, traders & exporters located in non-metro locations across the country. 2. Is there any specific location which you target? a) Rural b) Urban c) Both.

As Mumbai is not the place for agriculture we target rural area for providing tractor loan and agriculture loan. Agri Business Group identified suitable products to meet the needs of niche activities in the sector as a whole. 3. Majority of your Micro Finance Customers fall in which Income group? a) b) c) d) 5000 and more per household 4000-5000 per household 3000-4000 per household Below 2000 per household

Majority of our micro customers fall in 4000-5000 per household 4. Which products/services do you offer to Micro Finance Customers? We offer a wide range of products/services like retail loans (Tractor loan portfolio), Agri SME(Project loans, working capital facilities & Funding against warehouse receipts) & Agri Corporate Funding to suit their business needs. Our products/services can be divided into 3 major segments: Retail Agri finance It is for financing products like tractor, vehicles, crop loans & farm equipment loans. Small & Medium size Agri finance It offers loans for large scale farming, term loans for agri projects like floriculture, horticulture, dairy, fishery units, working capital funding for the agri traders & processors Agri Corporate- It facilitates finances for large corporate agro processors, exporters/importers, NBFCs & Micro finance-institutions

5. Do you monitor the impact of your microfinance activities on your clients? Yes, the bank does monitor the activities of clients to some extent. 6. If YES, which of the following measures of impact do you use? (Tick more than one if applicable) a) b) c) d) e) Savings by clients Growth of their business Employment generation Number of micro-enterprises in our portfolio Other measures please specify.......

The following measures of impact are used: a) Growth of their business b) Number of micro-enterprises in our portfolio c) Other measures please specify...mentioned in above question....

7. What is the education qualification of your Micro finance customers? The person should be a minimum of SSC passed out in urban area and in case of rural area should be at least 8th pass out. 8. Since how many years have you been into Micro finance Services? Since 2003, kotaks Agri Business Group provides core solutions to the Indian agriculture sector. 9. How do you deal with the customers who do not repay their loans? In case of loan against collateral, the property is being auctioned and money is recovered and case of personal loan after sending notices bank marks lean on personal property like vehicles or house to the extent of amount to be recovered. This is done with the help of tie up of private recovery agency 10. Do you have any particular committees set for loan assessment? Yes a separate agency is outsourced to collect the data of the person who has applied for loan. Once the data is collected a credit team which is part of retail assets evaluates the deal if the minimum requirement is meet, like income, business model and percentage returns area of operation etc. The loan is being approved and after documentation loan is being disbursed along with all terms and conditions and repayment schedule by one particular relationship manager who will assist throughout.

Company name: Lijjat Papad Shri Mahila Griha Udyog Lijjat Papad

Today, Lijjat is more than just a household name for 'papad' (India's most popular crispy bread). Started with a modest loan of Rs 80, the cooperative now has annual sales exceeding Rs 301 crore (Rs 3.1 billion). What's more stunning than its stupendous success is its striking simplicity.

1. What are the criterias of becoming a member? Any woman who pledges to adopt the institution's values and who has respect for quality can become a member and co-owner of the organization irrespective of caste, religion; literate or illiterate. 2. Any other Criteria that the member needs to fulfill?

In addition to that, those involved in the rolling of the papads also need to have a clean house and space to dry the papads they roll every day. Those who do not have this facility can take up any other responsibilities, like kneading dough or packaging or testing for quality. 3. What is the membership formality? The lady who wants to become a member has to fill in a form which includes personal details like name, number, address, age, etc 4. Is there any training provided? Yes a training of 2-3 days is provided as soon as she becomes a member. 5. What is the process that is followed every day? Every morning a group of women goes to the Lijjat branch to knead dough, which is then collected by other women who roll it into papads. When these women come in to collect the dough, they also give in the previous day's production, which is tested for quality. Yet another team packs the tested papads. 6. What do these women get in return? Every member gets her share of vanai (rolling charge) every day for the work she does and this is possible only because the rest of the system is geared to support it. 7. Do you finance these ladies liking giving some loans? No, as they are the owners of the organization as its a sanstha; there is profit sharing twice in a year 8. How are these profits distributed? We have a committee of 21 that decides how the profits are to be distributed. We generally buy gold coins -- 5gm or 10 gm, depending on the profit. Everyone gets an equal share of profit, irrespective of who does what work, irrespective of seniority or responsibility. Even a ben who has recently joined gets the same share as others who have been with us longer. Each branch calculates its profit and divides it equally among all its members 9. What is the total number of branches? The organization is wide-spread, with its central office at Mumbai & its 77 branches and 27 divisions in different states all oner India. 10. How many branches are there in Mumbai? Mumbai has 16 branches and 6 depots 11. How are so many branches managed?

Our solution is simple. Let the branch be responsible for all activities from production to packaging to collection and distribution of vanai and profit for its particular geographical region. In following this simple system, we don't solve management problems, but avoid them. 12. What is the total membership? Membership has expanded from initial stage of 7 sisters from 1 Building to over 43000 sisters throughout India.

Microfinance Model for Social Entrepreneur

Social entrepreneurship means identifying or recognizing a social problem and using entrepreneurial principles to organize, create, and manage a social venture to achieve a desired social change. Business entrepreneurs typically measure performance in profit and return, but social entrepreneurs also take into account a positive return to society. Social entrepreneurship typically furthers broad social, cultural, and environmental goals and is commonly associated with the voluntary and not-for-profit sectors. Profit can at times also be a consideration for certain companies or other enterprises. Social entrepreneurship practiced in a world or international context is called international social entrepreneurship.

Kudos to Kidos

Kudos to Kidos

Kudos to Kidos
The need for social entrepreneurship aroused when we saw the need of clothing for children in our society. Kudos to kidos aims to help the needy children who arent fortunate enough for a decent dressing. The model of Kudos to Kidos of social entrepreneurship works as follows Kudos to kidos is a business model which manufactures clothing for kids. It is a social entrepreneurship model as it aims to help the needy children. For every two sets of clothes sold we will donate one set of clothing to the poor

ANNEXURE
1. Who are your Micro Finance customers? Do you have some specific target customers? 2. Is there any specific location which you target? a) Rural b) Urban c) Both 3. Majority of your Micro Finance Customers fall in which Income group? a. b. c. d. 5000 and more per household 4000-5000 per household 3000-4000 per household Below 2000 per household

4. Which products/services do you offer to Micro Finance Customers? 5. Do you monitor the impact of your microfinance activities on your clients?

6. If YES, which of the following measures of impact do you use? (Tick more than one if applicable) a. Savings by clients b. Growth of their business c. Employment generation d. Number of micro-enterprises in our portfolio e. Other measures please specify....... 7. What is the education qualification of your Micro finance customers? 8. Since how many years have you been into Micro finance Services? 9. How do you deal with the customers who do not repay their loans? 10. Do you have any particular committees set for loan assessment?