BUSINESS POTENTIAL ASSESSMENT IN MADHYA PRADESH

Vaibhav Pandey (33057) Ashutosh Garg (33070)

ABOUT NABFINS
NABARD Financial Services Limited, [NABFINS] is a subsidiary of NABARD. Equity from Banks and State Govts. It is a non-deposit taking NBFC registered with the RBI. For profit without Profit maximization Bringing services and Business together

NABFINS TRYING TO BE DIFFERENT

Low Burden on the client Low interest rate Transparency in Operation - No hidden charges Cash Flow based loans, Terms and Repayment schedules e.g. Groups have been given gestation for repayment No upfront deductions from principal No weekly repayments, only monthly, quarterly and half yearly repayments

NABFINS VALUE SYSTEM

Standards of governance in MFI

Financial services at door step / near doorstep

Exemplary levels of transparency

Reasonable / moderate rates of interest and lower burden to client

NABFINS Model
Identification of NGOs
Partnering As BC and flow of credit to SHGs from NABFINS Development of CBOs by NGO On Withdrawal of NGO CBO as our BC NGO providing multi-services
NGO NABAR D

Partnership Watershed Implementing NABFINS Agency

Credit flow

CBOs

Producer Org

CHAIN AND INTEGRATION

BC Facilitate s the credit from NABFINS

NABFINS

NABFINS (Credit & Fin Service)

BC(NGO)

BC (other services) CLIENTS

SHGs, JLGs, CBOs

Flow of input and services

A Tight Knit unit Mitigating each others

OBJECTIVE
Assessment of business potential in Madhya Pradesh.

Identify strategic area of operation in MP. Identify NGOs which can partner NABFINS. Study of potential competition and risks in MP. Credit demand and repayment capacity of potential customer (SHGs/JLGs).

WHAT WE STUDIED

Partners

Clients

NABFINS
Government Regulations Competition

METHODOLOGY
Understanding of NABFINS business model and Stage operations.
I

Stage Visit to NABARD Regional office, Bhopal. II

Visit to Districts/NGOs. Stage Visit to Banks and existing MFIs.

III Stage Assessment of SHG/SLIs/JLGs IV Stage Final analysis and Recommendations. V

SOURCE OF DATA

DISTRICT SELECTION INDICATORS Presence of NGOs Penetration levels of SHG

PRIMARY SOURCES: Structured and unstructured interviews

Informal discussions Observation SECONDARY SOURCES:

Industry and Agriculture

Per Capita Income Law & order situation

NABARD Reports

REGION WE VISITED
Wester n Region Central Region

Eastern Region

REGION COVERED MALWA REGION

Districts Covered : Indore, Ujjain, Ratlam, Dewas

No. of SHGs / JLGs Prominent NGOs

District

Ratlam Ujjain Indore Dewas

1800 1500 2150 3000

GVT, Dhan, Arunodaya KWSS, DSS, Arunodaya, Priyasakhi BGMS, Priyasakhi, Aparajita, Arunodaya SPS, SNS, Hand-in-Hand, Aparajita, ASRA

MALWA REGION CONT.

District
Ratlam

Economy
Rich in the field of agriculture Good sources of irrigation and fertile soil Predominantly an agricultural economy

Ujjain

Indore

Major industrial and commercial hubs of MP Agri commodity trading centre Agriculture and industry driven economy.

Dewas

MALWA REGION CONT.

24 hour availability of Electricity so opportunity of SSIs in villages. Good transportation & banking infrastructure. Law and order situation is good. Population is highly dense in compare to other parts of MP. Popular as Wheat and Soya belt of India. High penetration of MFIs in the region. Well established credit culture Districts are situated in close proximity so expansion will be easy.

SWOT ANALYSIS OF MALWA REGION

Strengths Presence of Good NGOs and some mature SHGs (> 3 years). Very good agriculture & industrial conditions. Well established credit culture Good Infrastructure and local condition Low interest rate compare to existing MFIs. Opportunities Weakness

High NPAs under SGSY scheme SHGs could not nurture because banks are reluctant in credit linkages Good NGOs turned into MFIs

Threats

Partnership with NGO cum small MFIs Partnership in DPIP & SRLM programme Proximity to Rajasthan and Gujrat state.

ICICI Bank & HDFC Banks are

expanding BC model. Many MFIs are active in Malwa region

REGION COVERED CENTRAL MP

Districts Covered are: Hoshangabad and Vidisha

District (SHG/JLG) Hoshangabad (1264) Sahara Manch Y.S.S.S NGOs N.C.H.S.E. N.M.S(Prada n)

Vidisha (200/500) V.S.W.O

Completely Agriculture based area. N.M.S. into poultry and Mushroom cultivation, coop & fed. Mature groups but poor credit linkages, ghost of SGSY. Dependent on inter loaning. Small scale MFI work by YSSS & SM, insufficient in meeting needs of SHGs.

REGION COVERED SOUTH EAST MP

Districts covered are : Mandla, Dindori and Balaghat.

District (SHG/JLG) Mandla (1024) Dindori (1100) Balaghat (>2100/100) PRADAN PRADAN Anupama E.S. CARD NIWCYD Baihar N.U. NGOs Sahara Manch BYPASS S.A.R.D Udyogini DSS G.V.M

Credit culture is good in Balaghat than Mandla, Dindori. SHGs are very active in not only savings but socially too. Good ground level staff in Balaghat NGOs. Anupama E.S. working as small MFI for JLGs.

SWOT ANALYSIS
Strengths Good NGOs and SHGs.
Members Involved / want to involve in alternate livelihoods. Mature SHGs (> 3 years). Low MFI penetration in SHG space.

Weakness Huge distances among blocks

and districts. Poor public transport. SGSY effects on people mindset. Simple lifestyle in Tribal areas. High interest rate than Banks.

Opportunities
Big un served market for credit. Big opportunity (70% of SHGs) if we can provide first credit linkage to SHGs. Lending to cooperatives, farmers clubs, Federations etc. To serve poorest of poor tribal SHGs.

Threats
SHGs to get bank loans @7% under SRLM. ICICI Bank & HDFC Banks BC model. Dependence on agriculture and NTFP for repayment.

CONCLUSION
Parameter/ Region Eastern MP Central MP Western MP

Districts Visited

Balaghat , Mandala, Dindori,

*****

Bhopal, Vidisha, Hoshangabad

*** *** Both

Indore, Ujjain, Ratlam, Dewas

***** ***** Both

Presence of NGOs

Penetration of SHGs ***** Agriculture or Industry Competition Remarks Agriculture

Very Low Near to Nagpur Office of NABFINS

Average -

Very High High potential & High competition

RECOMMENDATIONS

Since NABFINS started operations in Gondia, we

recommend to start operations in Balaghat as soon as

possible.

Possibility of partnering PRADANs SLIs. Potential of partnership with NGO cum MFIs, DPIP and SRLM program.

Ujjain is ideal place to start business in Malwa region. Partnership with Samaj Pragati Sahyog .

Priyasakhi Mahila Sangh Aparajita Mahila Mahila Chetna Manch Dhan Foundation Hand in Hand Yukti Samjaj Sewa Society Anupma Education society Sahara Manch

750 SHGs Indore,Dewas,Ujjain

600 SHGs Indore, Dewas 1000 SHGs Bhopal

700 SHGs Ratlam 2000 SHGs Dewas 200 SHGs Hoshangabad 900 SHGs & 100 JLGs Balaghat 700 SHGs Mandala & Hoshangabad

Dewas (38 kms)

Ratlam (108 kms)

Indore (55 Kms)

Ujjain

Thank You