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Microcredit In India
- 1. MICROCREDIT IN INDIA
- 2. Area To Be Covered1) How to reach poor people2) History of Microcredit3) What is microcredit4) Target Group5) Grameen Bank and Its Objective6) Mechanism of Microcredit7) Microcredit and Inclusive Growth8) Present scenario 9) Conclusion
- 3. Let’s sayyou are a verypoorcitizen. You have the project to developyourtexile plant withyourcolleagues. How canyouachieveit?
- 4. MUHAMMAD YUNUS- Founder and Chairperson of GARMEEN BANK, a bank for poor. - He received Noble Peace Prize for his achievements and actions undertaken to improve the life of the deprived people in world.- It was particularly thanks to the creation of the Grameen Bank and the Microcredit.
- 5. Contd.- He granted his first loan of 27 USD from its own savings to 42 people.- A majority of them were women eager to create a small business.
- 6. What Is Microcredit ?- Small loansaimingatimproving the lives of poor people and theirfamilies.- Sustainingsmall-scaleeconomicsactivities, granted to people not considered as creditworthy.- Microcreditisonly a kind of service providedwithin the global concept of microfinance
- 7. The Target Groups* Little or no chance of getting a Bank Loan. * Good operating skills in the area in which the potential clients are willing to work, but: « Usually no financialresources » * WorkingWithWomen (90%) * The poorest segments of society, living with less than one Dollar per Day.
- 8. Grameen Bank :Objective# It is first model of microcredit. Founded as a project in 1976.# To extend the banking facilities to the poor men and women.# To create opportunities for self employment.# To bring the disadvantaged people within the framework of some organizational format. Creation of Microcredit.
- 9. How Does Microcredit Work ?1) Individual Lending Model2) Group Lending Model
- 10. Microcredit and Inclusive GrowthThe Eleventh Five Year Plan visualizes “faster and more inclusive growth”.This implies that we need to/ for – Shift the plan priorities towards the social sectorsPut appropriate institutions and linkages in place to bring good to the common manThe States to play a facilitating role in encouraging individual-institutional linkages
- 11. Government of India Policy Actor Role PlayedCooperative Credit Societies - Nationalization of Commercial banks -integrated and sustainable rural income generating activity - Social and Development banking - Establishment of RashtriyaMahilaKosh - “Portfolio Risk Fund” Government of India
- 12. Policy Actor Role Played- Formulation and coordination - Priority sector lending target for NCBs. - Issuing licenses - Micro Finance Development and Equity fund (MFDEF). Reserve Bank of India
- 13. Role Played Policy Actor Contribution to MFDEF- SHG – Bank linkage National Bank for Agriculture and Rural Development Need based assistance Small Industries Development Bank of India
- 15. Local area banks- Kisan Credit CardsFormal / Banking Sector - Financial access - promoting and fostering SHGs. MFI
- 19. Contd.
- 20. Issues of Micro Finance in IndiaLegal Issues - Seventh schedule declares money lending as State subject - Doesn’t mention private money lending - No model money lending act prepared by center.Gender IssuesRate of InterestChoice of productive assets.
- 21. Impact1) 76.8% of the clients experienced significant reduction in their poverty over the last four years of which; a) 38.4% moved from Very Poor to Moderate Poor b) 17.6% moved from Very Poor to Not Poor c) 20.8% moved from Moderate Poor to Not Poor2) 38.4% are in the Non Poor category.3) 80% witnessed increase in income levels.4) Women actively participate in family decisions.5) Most of the members’ children are being sent to schools.6) 17 different combinations were used as paths out of poverty.
- 22. Conclusion: Future Challenges to MicrocreditIf wish to succeed in providingmicrofinance services to the poor on a large scale, further contributions are needed. Not only an issue of financing:Regulators and governmentsneed to develop:legal and regulatoryframeworks for microcreditconsumer protectionfinancial infrastructure.
- 23. ReferenceIMF: Microfinance: A View from the Fund.Grameen Bank: http://www.grameen-info.org/.Economics Times of India (Date- 13/1/2011)www.indianngos.com/issue/microcredit/operationalissues.htm.www.google.com