MICROFINANCE - AN OVERVIEW

This industry report presents a detailed overview of the microfinance industry in India. The advent of new millennium witnessed significant developments in the Indian microfinance industry, which attracted the attention of several private sector and foreign banks.

The report analyzes the potential of Indian microfinance industry and examines the recent polices of Indian government to boost the growth of the industry. It describes various microfinance models popular in India and includes a note on the leading players in the Indian microfinance industry.

Microfinance in India is approaching a historic 'tipping point' that could lead to a massive poverty reduction in the next five to ten years.

- Grameen Foundation US in 2005.WHAT IS UNIQUE ABOUT RURAL FINANCE?

Most people in developing countries live in rural areas; like their countries, they are poor and unable to save; and they need to be helped. These plausible assumptions resulted in a well-intentioned type of development assistance: subsidized targeted credit provided through special programs, administered by agricultural (and other) development banks (ADBs). During the 1950s and 60s, directed agricultural credit was synonymous with rural development finance. The argument was subsequently extended to urban areas, where many of the rural poor had migrated, and they too became beneficiaries of subsidized targeted programs; these were mostly financed and administered by NGOs. In both cases, ADBs and NGOs, donors played a crucial role in providing funds and methodologies.

As directed credit failed to deliver the expected results in terms of poverty alleviation and development, a new type of development finance has emerged during the 1990s, both in theory and in practice, backed by an emerging international consensus

  • Agricultural credit has been replaced by rural finance, ie, credit by a range of financial services including savings; the emphasis on agriculture by finance for a broad range of loan purposes
  • Rural finance has been integrated into the financial system

INDIAN MICROFINANCE CONTEXT

Indian public policy for rural finance from 1950s to till date mirrors the patterns observed worldwide. Increasing access to credit for the poor has always remained at the core of Indian planning in fight against poverty. The assumption behind expanding outreach of financial services, mainly credit was that the welfare costs of exclusion from the banking sector, especially for rural poor are very high. Starting late 1960s, India was home to one of largest state intervention in rural credit market and has been euphemistically referred to as ‘Social banking' phase. It saw nationalization of existing private commercial banks, massive expansion of branch network in rural areas, mandatory directed credit to priority sectors of the economy, subsidized rates of interest and creation of a new set of rural banks at district level and an Apex bank for Agriculture and Rural Development (NABARD) at national level. These measures resulted in impressive gains in rural outreach and volume of credit. As a result, between 1961 and 2000 the average population per bank branch fell tenfold from about 140 thousand to 14000 (Burgess & Pande, 2005) and the share of institutional agencies in rural credit increased from 7.3% 1951 to 66% in 1991.

These impressive gains were not without a cost. Government interventions through directed credit, state owned Rural Financial Institutions (RFI) and subsidized interest rates increased the tolerance for loan defaults, loan waivers and lax appraisal and monitoring of loans. The problem at the start of 1990s looked twofold, the institutional structure was neither profitable in rural lending nor serving the needs of the poorest.

Successful microfinance interventions across the world especially in Asia and in parts of India by NGOs provided further impetus. In this backdrop, NABARD's search for alternative models of reaching the rural poor brought the existence of informal groups of poor to the fore. It was realised that the poor tended to come together in a variety of informal ways for pooling their savings and dispensing small and unsecured loans at varying costs to group members on the basis of need.

This concept of Self-help was discovered by social-development NGOs in 1980s. Realising that the only constraining factor in unleashing the potential of these groups was meagreness of their financial resources, NABARD designed the concept of linking these groups with banks to overcome the financial constraint. The programme has come a long way since 1992 passing through stages of pilot (1992-1995), mainstreaming (1995-1998) and expansion phase (1998 onwards) and emerged as the world's biggest microfinance programme in terms of outreach, covering 1.6 million groups as on March, 2005. It occupies a pre-eminent position in the sector accounting for nearly 80% market share in India.

MICROFINANCE - A JOURNEY OF PROGRESS

In the 1970s a paradigm shift started to take place. The failure of subsidized government or donor driven institutions to meet the demand for financial services in developing countries let to several new approaches. Some of the most prominent ones are presented below.

Bank Dagan Bali (BDB) was established in September 1970 to serve low income people in Indonesia without any subsidies and is now “well-known as the earliest bank to institute commercial microfinance”. While this is not true with regard to the achievements made in Europe during the 19th century, it still can be seen as a turning point with an ever increasing impact on the view of politicians and development aid practitioners throughout the world.

In 1973 ACCION International, a United States of America (USA) based nongovernmental organization (NGO) disbursed its first loan in Brazil and in 1974 Professor Muhammad Yunus started what later became known as the Grameen Bank by lending a total of $27 to 42 million to people in Bangladesh. One year later the Self-Employed Women's Association started to provide loans of about $1.5 million to poor women in India. Although the latter examples still were subsidized projects, they used a more business oriented approach and showed the world that poor people can be good credit risks with repayment rates exceeding 95%, even if the interest rate charged is higher than that of traditional banks. Another milestone was the transformation of BRI starting in 1984. Once a loss making institution channeling government subsidized credits to inhabitants of rural Indonesia it is now the largest MFI in the world, being profitable even during the Asian financial crisis of 1997 - 1998.

In February 1997 more than 2,900 policymakers, microfinance practitioners and representatives of various educational institutions and donor agencies from 137 different countries gathered in Washington D.C. for the first Micro Credit Summit. This was the start of a nine yearlong campaign to reach 100 million of the world poorest households with credit for self employment by 2005. According to the Microcredit Summit Campaign Report 67,606,080 clients have been reached through 2527 MFIs by the end of 2002, with 41,594,778 of them being amongst the poorest before they took their first loan. Since the campaign started the average annual growth rate in reaching clients has been almost 40 percent. If it has continued at that speed more than 100 million people will have access to microcredit by now and by the end of 2005 the goal of the microcredit summit campaign would be reached. As the president of the World Bank James Wolfensohn has pointed out, providing financial services to 100 million of the poorest households means helping as many as 500 - 600 million poor people.

PRESENT SCENARIO OF MICROFINANCE IN INDIA

Microfinance sector has covered a long journey from micro savings to micro credit and then to micro enterprises and now entered the field of micro insurance, micro remittance, micro pension and micro livelihood. This gradual and evolutionary growth process has given a great boost to the rural poor in India to reach reasonable economic, social and cultural empowerment, leading to better life of participating households. Financial institutions in the country have been playing a leading role in the microfinance programme for nearly two decades now. They have joined hands proactively with informal delivery channels to give microfinance sector the necessary momentum. During the current year too, microfinance has registered an impressive expansion at the grass root level.

The year 2008-09 is the third year that the data on progress in microfinance sector have been presented on the basis of returns furnished directly to NABARD by Commercial Banks (CBs), Regional Rural Banks (RRBs) and Cooperative Banks operating in the country. The data includes the information related to savings of Self Help Groups (SHGs) with banks as on 31 March 2009, loans disbursed by banks to SHGs during the year 2008-09 and outstanding loans of SHGs with the banking system and the details of Non-Performing Assets (NPAs) and recovery percentage in respect of bank loans provided to SHGs as on 31 March 2009. The data received from banks have been compiled on region-wise, State-wise and agency-wise basis in this booklet.

The banks operating, presently, in the formal financial system comprises of Public Sector Commercial Banks (27), Private Sector Commercial Banks (28), Regional Rural Banks (86), State Cooperative Banks (31) and District Central Cooperative Banks (371). It is observed that most of the banks participating in the process of microfinance have reported their progress under the programme.

NABARD has been instrumental in facilitating various activities under microfinance sector, involving all possible partners in the arena. It has been encouraging the voluntary agencies, bankers, and socially spirited individuals, other formal and informal entities and also government functionaries to promote and nurture SHGs. The focus in this direction has been on training and capacity building of partners, promotional grant assistance to Self Help Promoting Institutions (SHPIs), Revolving Fund Assistance (RFA) to MFIs, equity/ capital support to MFIs to supplement their financial resources and provision of 100% refinance against bank loans provided by various banks for microfinance activities.

LEGAL FORMS OF MFIS IN INDIA

Types of MFIs

Estimated Number*

Legal Acts under which Registered

1.

Not for Profit MFIs

a.) NGO - MFIs

400 to 500

Societies Registration Act, 1860 or similar Provincial Acts
Indian Trust Act, 1882

b.) Non-profit Companies

10

Section 25 of the Companies Act, 1956

2.

Mutual Benefit MFIs


a.) Mutually Aided Cooperative Societies (MACS) and similarly set up institutions

200 to 250

Mutually Aided Cooperative Societies Act enacted by State Government

3.

For Profit MFIs

a.) Non-Banking Financial Companies (NBFCs)

6

Indian Companies Act, 1956

Reserve Bank of India Act, 1934

Total

700 - 800

Source: NABARD website

SUCCESS FACTORS OF MICRO-FINANCE IN INDIA

Over the last ten years, successful experiences in providing finance to small entrepreneur and producers demonstrate that poor people, when given access to responsive and timely financial services at market rates, repay their loans and use the proceeds to increase their income and assets. This is not surprising since the only realistic alternative for them is to borrow from informal market at an interest much higher than market rates. Community banks, NGOs and grass root savings and credit groups around the world have shown that these microenterprise loans can be profitable for borrowers and for the lenders, making microfinance one of the most effective poverty reducing strategies.

LIST OF NATIONALIZED BANKS WHO PROVIDE MICRO FINANCE SERVICES IN PUNJAB REGIONPublic Sector Commercial Banks

  • Allahabad Bank
  • Bank Of Baroda
  • Bank of India
  • Bank of Maharashtra
  • Canara Bank
  • Central Bank of India
  • Punjab National Bank
  • Punjab & Sind BANK
  • Union Bank of India
  • Corporation Bank

Private Sector Commercial Banks

  • HDFC Bank
  • ICICI Bank
  • Kotak Mahindra Bank
  • Axis Bank
  • Yes Bank

NEED & SCOPE OF MICROFINANCE

Micro financing very much needed in India.

1. Microfinance connects the weakest links to Doaba region economy of punjab.

2. There is very less chances of loan defaulter cases in Micro financing ratherthan in other financing ways.

3. In Micro financing the finance is for the basic things of survival andeveryone want to survive and sustain.

There is huge scope of Micro finance for Rural India. Just see the way in which SKS Micro finance is expanding its operations at pan India level. Need of Micro-finance is there due to commercial banks not coming forward to lend money to rural poor.

(1) Regulation of microfinance institutions

  • Provision of saving services

  • Product innovation

  • Organizational issues in microfinance

  • Poverty impact of microfinance

OBJECTIVES

  • To study the role of nationalized (commercial) Banks for promoting microfinance services in Doaba Region of Punjab

  • To identify the opportunities and the threats of scheme provided by the Banks for microfinance services in Doaba Region of Punjab

  • To study some challenges faced by commercial banks for encouraging spread of Microfinance services among rural population in Doaba Region of Punjab.

  • To suggested the possible alternatives for positioning the scheme of banks to promoting microfinance services in doaba region of Punjab

    REVIEW OF LITERATUREDeveltere, P. and A. Huybrechts (2005).

    "The impact of microcredit on the poor in Bangladesh." Alternatives 30(2): 165-189.

    Abstract:

    This article presents a comparative overview of the most relevant findings from studies of the impact of microcredit institutions like the Grameen Bank and BRAC in Bangladesh. It first evaluates the evidence on economic impacts, which suggests that the vulnerability of bank members has been reduced even if there is no consensus about whether the two institutions also reduce poverty. It then considers the social impact, especially in relation to the situation of poor women and to various spill-over effects in different spheres of social and economic life.

    McIntosh, C.,A. de Janvry, et al. (2005).

    "How rising competition among microfinance institutions affects incumbent lenders." Economic Journal 115(506): 987-1004.

    Abstract:

    This article uses data from Uganda's largest incumbent microfinance institution to analyze the impact of entry by competing lenders on client behaviour. We observe that rising competition does not lead to an increase in client dropout rate, but induces a decline in repayment performance and savings deposited with the incumbent, suggesting rising multiple loan-taking by clients. This joint effect on dropout and repayment is consistent with some negative information about clients and is being shared across lenders. However, the observed decline in repayment rates in a context of rising multiple loan-taking shows that information sharing about clients is far from complete.

    Easton,T. (2005).

    “The hidden wealth of the poor.” Economist, 377 (8451): 3-6, 11/5/2005.

    Notes:

    This article recognises microfinance as a strategy towards poverty alleviation. Traditionally, the poor were not viewed as investment worthy and were excluded from financial services. Other barriers to developing financial services for the poor include high and volatile inflation in developing countries, incompetent governments, and a lack of necessary legal framework for financial services. Corruption is a major deterrent to sound financial services because it raises the cost of each financial transaction and it undermines customers' confidence in the financial system. A World Bank study in India found that borrowers paid bribes ranging from 8 to 24% of the price of their loans. Also, inadequate public services like electricity to power computers make it difficult for financial firms to expand their services.

    More recently (since 1970's), there is a rise in experimentation and provision of microfinance for the poor that uses a bottom-up approach, ranging from credit, savings, remittances, to insurance. Non-profit organizations such as Opportunity International in Colombia and Grameen Bank in Bangladesh offer small loans to the very poor with low interest rates. Loans are offered to group members who must monitor and keep each other accountable for repayments, and in so doing, members are allowed to borrow larger sums of money. Microfinance seems successful in poverty alleviation. A World Bank report shows that there is a strong correlation between financial access and higher incomes. Increasingly, local and international banking giants are tapping into the microfinance market.

    McIntosh, C.,A. de Janvry, et al. (2005).

    "How rising competition among microfinance institutions affects incumbent lenders." Economic Journal 115(506): 987-1004.

    Abstract:

    This article uses data from Uganda's largest incumbent microfinance institution to analyse the impact of entry by competing lenders on client behaviour. We observe that rising competition does not lead to an increase in client dropout rate, but induces a decline in repayment performance and savings deposited with the incumbent, suggesting rising multiple loan-taking by clients. This joint effect on dropout and repayment is consistent with some negative information about clients and is being shared across lenders. However, the observed decline in repayment rates in a context of rising multiple loan-taking shows that information sharing about clients is far from complete.

    McIntosh,C.andB.Wydick(2005).

    "Competition and microfinance." Journal of Development Economics 78(2): 271-298.

    Abstract:

    Competition between microfinance institutions (MFIs) in developing countries has increased dramatically in the last decade. We model the behavior of non-profit lenders, and show that their non-standard, client-maximizing objectives cause them to cross-subsidize within their pool of borrowers. Thus when competition eliminates rents on profitable borrowers, it is likely to yield a new equilibrium in which poor borrowers are worse off. As competition exacerbates asymmetric information problems over borrower indebtedness, the most impatient borrowers begin to obtain multiple loans, creating a negative externality that leads to less favorable equilibrium loan contracts for all borrowers.

    Benjamin,L.,J.S.Rubin,etal.(2004).

    "Community development financial institutions: Current issues and future prospects." Journal of Urban Affairs 26(2): 177-195.

    Abstract:

    Community development financial institutions (CDFIs) help to address the financial needs of under-served, predominantly low-income communities. CDFIs include community development banks, credit unions, business and microenterprise loan funds, and venture capital funds. Although CDFIs are a rapidly growing and an increasingly important area of community economic development, they have not received proportionate attention from academic researchers. This article begins to address the gap. It outlines the history of the CDFI industry and details how CDFIs are responding to three specific development needs: basic financial services; affordable credit for home purchase, rehabilitation, and maintenance; and loan and equity capital for business development. The article then considers the strengths and limitations of CDFIs, concentrating especially on the relationship between CDFIs and conventional financial institutions. It concludes by examining the impact that these alternative financial institutions realistically can hope to achieve.

    Mosley, P.andJ. Rock.(2004). "

    Microfinance, labour markets and poverty in Africa: astudy of six institutions." Journal of International Development 16(3): 467.

    Abstract:

    We examine a range of six African microfinance institutions with a view to assessing and if possible enhancing their poverty impact. The impact of microfinance loans is variable between institutions, with a tendency in particular for savings services to be taken up by people well below the poverty line, especially in South Africa and Kenya. However, many benefits to the poor from microfinance programmes, in Africa at least, are likely to come via an indirect route, via 'wider impacts' or 'spin-offs', rather than by through direct impacts on borrowers.

    Godquin,M.(2004).

    "Microfinance repayment performance in Bangladesh: How to improve the allocation of loans by MFIs." World Development 32(11): 1909-1926.

    Abstract:

    The aim of this article is to produce a comprehensive analysis of the performance of microfinance institutions (MFIs) in terms of repayment. We focus the analysis on the impact of group lending, nonfinancial services and dynamic incentives on repayment performance. We test for endogeneity of loan size and use instrumental variables to correct for it. In the second section of the paper, we use a comparative analysis of the determinants of the repayment performance and of loan size in order to make policy recommendations on the allocation of loans by MFIs.

    Tsai,K.S.(2004).

    "Imperfect substitutes: The local political economy of informal finance and microfinance in rural China and India." World Development 32(9): 1487-1507.

    Abstract:

    Banking authorities in both China and India have attempted to limit most forms of informal finance by regulating them, banning them, and allowing certain types of microfinance institutions. The latter policy aims to increase the availability of credit to low-income entrepreneurs and eliminate their reliance on usurious financing. Nonetheless, the intended clients of microfinance continue to draw on informal finance in both rural China and India. This article argues that the persistence of informal finance may be traced to four complementary reasons-the limited supply of formal credit, limits in state capacity to implement its policies, the political and economic segmentation of local markets, and the institutional weaknesses of many microfinance programs.

    Johnson,S.(2004).

    "The impact of microfinance institutions in local financial markets: a case study from Kenya." Journal of International Development 16(3): 501.

    Abstract:

    This paper looks beyond the direct impact of microcredit provision on users to examine whether microfinance institutions (MFIs) have had wider impacts within the local financial markets in which they are operating. It considers the potential for both competition and demonstration effects on other financial providers. In the context of local financial markets in and around the small town of Karatina in Central Kenya, supply side information is used to investigate the key changes in provision between 1999 and 2003. The paper concludes that changing macroeconomic conditions have been the main driver increasing competition for middle and lower income clients and that few competition or demonstration effects resulting from the MFIs are in evidence

    Weber,H.(2004).

    "The 'new economy' and social risk: banking on the poor?" Review of International Political Economy 11(2): 356-386.

    Abstract:

    The rise of the 'new economy' in many of the advanced capitalist states since the 1970s has entailed a re-organization of global social and political relations generally. These changes become apparent in analyses that focus on trends and shifts in the global political economy. In the context of these adjustments, discourses of 'poverty reduction' have come to prominence, with a particular financially steered strategy emerging as a key approach to 'poverty reduction' on a global scale, namely microcredit. I argue that the microcredit approach to poverty reduction is strategically embedded in the global political economy. It has been appropriated primarily to facilitate the implementation of financial sector liberalization on a global scale. Additionally, the contexts in which these programmes are implemented also reflect the motive of achieving a form of social disciplining aimed at commanding compliance for neo-liberal restructuring more generally. I develop this argument through an analysis of the way in which microcredit is located in - and implemented through - the institutional policy framework of the World Bank and the International Monetary Fund (IMF), and the consequent implications this has for the realization of the wider objectives of these institutions in global politics.

    Mosley, P.andJ. Rock.(2004). "

    Microfinance, labour markets and poverty in Africa: a study of six institutions." Journal of International Development 16(3): 467.

    Abstract:

    We examine a range of six African microfinance institutions with a view to assessing and if possible enhancing their poverty impact. The impact of microfinance loans is variable between institutions, with a tendency in particular for savings services to be taken up by people well below the poverty line, especially in South Africa and Kenya. However, many benefits to the poor from microfinance programmes, in Africa at least, are likely to come via an indirect route, via 'wider impacts' or 'spin-offs', rather than by through direct impacts on borrowers.

    Ssewamala,F.M.andM.Sherraden(2004).

    "Integrating saving into microenterprise programs for the poor: Do institutions matter?" Social Service Review 78(3): 404-428.

    Abstract:

    This study examines factors that affect saving performance among participants in a subsidized saving program who intend to use their savings to help capitalize a microenterprise. Using data from 14 community-based organizations promoting self-employment among the poor, and drawing on institutional theory, we find that individual-level theories do not fully explain the variance in savings and that institutional influences also are predictive. Policy makers may want to consider a range of institutional characteristics when designing policies and programs aimed at promoting self-employment among poor families.

    Cohen,M.andK.Wright(2003).

    "How do microfinance organisations become more client- led? - Lessons from Latin America." Ids Bulletin-Institute of Development Studies 34(4): 94-+.

    Abstract:

    The microfinance agenda is increasingly market-driven and, therefore, client-focused. The renewed interest in clients is driven by the industry's concern over competition and drop-outs. This increasing awareness that the customer matters has led MFOs to be more attentive to who their clients are, learning how they use financial services and identifying appropriate products and services that better match the customer's preferences. However, market-led microfinance is not limited to products. For institutions to better serve their clients, organisational restructuring may be required to ensure that their systems and modes of microfinance delivery are more client-responsive.

    McKernan,S.M.(2002).

    "Theimpactofmicrocreditprogramsonself-employmentprofits:Do noncredit programaspects matter?" Review of Economics and Statistics 84(1): 93-115.

    Abstract:

    Microcredit programs provide a two-tiered approach to poverty alleviation: credit for the purchase of capital inputs in order to promote self-employment and noncredit services and incentives. These noncredit aspects may be an important component of the success of microcredit programs. However, because they are costly to deliver and their contribution to the success of the programs is difficult to measure, they may not be properly valued. This paper uses primary data on household participants and nonparticipants in Grameen Bank and two similar microcredit programs to measure the total and noncredit effects of microcredit program participation on productivity. The total effect is measured by estimating a profit equation and the noncredit effect by estimating the profit equation conditional on productive capital. Productive capital and program participation are treated as endogenous variables in the analysis. I find large positive effects of participation and the noncredit aspects of participation on self-employment profits.

    MkNelly,B.andM.Kevane(2002).

    "Improving design and performance of grouplending: Suggestions from Burkina Faso." World Development 30(11): 2017-2032.

    Abstract:

    We summarize lessons learned by a credit program for women in Burkina Faso. Three observations are made regarding program design: (a) high membership turnover means mutual guarantee groups should be smaller and more central to non-repayment penalties; (b) high turnover in economic activities implies more training in best practices and more variety and experimentation in credit and savings mechanisms; and (c) high degrees of stocking activity suggests the need to develop instruments to mitigate commodity price risk at the individual and program level. Three observations are made regarding program implementation: be more consistent in the treatment of debts of deceased borrowers; become more sensitive to the complexity and variety of procedures followed in the event of non-repayment; and devote more attention to preventing and mitigating the effects of staff embezzlement.

    Pretes,M. (2002).

    "Microequity and microfinance." World Development 30(8): 1341-1353.

    Abstract:

    This paper examines the work of the Village Enterprise Fund, an US nongovernmental organization, in East Africa as a case study in "equity" based microfinance in low-income countries. Many small businesses established in high-income countries rely on some form of equity capital to fund the startup phase and much of the growth of the business. The success of startup grants and equity financing in high-income countries suggests that this method might also be applicable in low- income countries. Using the work of the Village Enterprise Fund as an example, the paper argues that startup grants and equity finance are useful and appropriate in addition to the more common loan- based approaches.

    Snow,D.R.andT.F.Buss(2001).

    "Development and the role of microcredit." Policy Studies Journal 29(2): 296-307.

    Abstract:

    Microcredit is a concept that has gained widespread acceptance by international development agencies and major donors. It is viewed as a may to correct both governmental and market failure in Sub-Saharan Africa. Many view microcredit as a method for linking the formal and informal sectors of African economies to increase the reach of the formal sector. Extending the reach of the formal economy through microcredit is possible, and desirable, depending on macroeconomic reforms, respect for traditional financing relationships, and local control of institutions. However, very little has been done to determine the extent to which microcredit programs actually increase economic well-being. The model program, Grameen Bank of Bangladesh, has been studied and evaluated, but replications may not be inherently successful. The literature accepts that microcredit will increase economic well-being, if programs are correctly designed. Program design issues cannot be resolved, however, until economic well-being is measured and associated with specific designs

    Patten,R.H.,J.K.Rosengard,etal.(2001).

    "Microfinancesuccessamidstmacroeconomic failure:TheexperienceofBankRakyatIndonesiaduringtheEastAsiancrisis." World Development 29(6): 1057 1069.

    Abstract:

    The Bank Rakyat Indonesia (BRI) unit system is recognized as one of the largest and most successful microfinance institutions in the world. Indonesia has been more drastically affected by the East Asian monetary crisis than other countries in the area. It is therefore worthwhile looking at the BRI experience during the crisis-not only the experience in microenterprise credit, but also in small, medium and corporate credit and in savings mobilization. The comparative performance of different parts of BRI during the East Asian crisis suggests essential Features in the future design of sustainable microfinance institutions, products, and delivery systems.

    Bhatt, N. and S. Y. Tang (2001).

    "Delivering microfinance in developing countries: Controversies and policy perspectives." Policy Studies Journal 29(2): 319-333.

    Abstract:

    The article reviews three major controversies in the microfinance field: vehicles, technologies, and performance assessments for financial service delivery. Then it proposes that these controversies be resolved by a perspective emphasizing institutional plurality and external and internal efficiencies for individual programs. Questions for further research are discussed in the conclusion.

    Johnson, S. (2004).

    "Gender norms in financial markets: Evidence from Kenya." World Development 32(8): 1355-1374.

    Abstract:

    The role of institutions-rules and norms-in markets is increasingly recognized in development discourse. This paper considers the role of gender relations for rules and norms in financial markets. Using evidence from Central Kenya it develops a framework for establishing the influence of gender on the demand for and access to financial services, so explaining the gender differentiated use of rotating savings and credit associations (ROSCAs). It, first, analyzes intrahousehold norms related to income and expenditure flows and their management, so identifying gendered patterns of demand. Second, by conceptualizing financial intermediaries as operating within rules and norms, it allows the influence of gender relations on access to financial services to be more systematically investigated. (C) 2004 Elsevier Ltd. All rights reserved.

    deAghion,B.A.andJ.Morduch(2000).

    "Microfinancebeyondgrouplending." Economics of Transition 8(2): 401-420.

    Abstract:

    Microlending is growing in Eastern Europe, Russia and China as a flexible means of widening access to financial services, both to help alleviate poverty and to encourage private-sector activity. We describe mechanisms that allow these programmes to successfully penetrate new segments of credit markets. These features include direct monitoring, regular repayment schedules, and the use of non-refinancing threats. These mechanisms allow the programmes to generate high repayment rates from low-income borrowers without requiring collateral and without using group lending contracts that feature joint liability. JEL classification: D82, L14, O12, O17.

    Evans,T.G.,A.M.Adams,etal.(1999).

    "Demystifying nonparticipation in microcredit: Apopulation-based analysis." World Development 27(2): 419-430.

    Abstract:

    Given the current popularity of microcredit schemes as a means of poverty alleviation, their accessibility to the poorest is of obvious concern. This paper examines a targeted microcredit program in Bangladesh to assess its coverage among the poor, and to identify program- and client- related barriers impeding participation. A population survey of over 24,000 households reveals that although three-quarters are eligible for microcredit, less than one-quarter participate. Rates of participation in microcredit are higher among poorer households. Multivariate analysis identifies lack of female education, small household size and landlessness as risk factors for nonparticipation, based on a 7% random sample of this population. The implications of these findings for poverty alleviation policies and programs are discussed.

    Buckley,G.(1997).

    "Microfinance in Africa: Is it either the problem or the solution?" World Development 25(7): 1081-1093.

    Abstract:

    This article is based on research undertaken on microenterprises in the informal sector in Kenya, Malawi and Ghana. It seeks to provoke critical reflection on the uncritical enthusiasm that lies behind much proselytizing of microfinance for informal sector microenterprise. It questions whether the extensive donor interest in microenterprise finance really addresses the problems of microentrepreneurs or whether it offers the illusion of a quick fix. It suggests that the real problems are more profound and cannot be tackled solely by capital injections but require fundamental structural changes of the socioeconomic conditions that define informal sector activity and a fuller understanding of the ''psyche'' of informal sector entrepreneurs

    Livermore,M.(1996).

    "Social work, social development and microenterprises: Techniques and issues for implementation." Journal of Applied Social Sciences 21(1): 37-44.

    Abstract:

    Examines the use of microenterprise development by social workers as a social development strategy. The origins of microenterprise development are reviewed, both as a social development strategy and as a social work intervention. By providing an implementation framework that addresses psychological, economic and social components, the author argues that social workers are ideally placed to design and participate in these programs. A number of issues that affect social work involvement in the field are discussed.

    Research MethodologyData Collection. Sources of Data

    1) Primary Data Source

    2) Secondary Data Source

    Both primary and secondary data sources have been used for data collection.

    Primary Data Source

    -The major source of data will be the “Primary source”

    Primary data was collected from:- ·Survey-Questionnaire

    The major source of data will be taken from the primary source. The primary data was collected from a sample of 150 respondents, by circulating the questionnaire to the respondents.

    Secondary source

    - Secondary data will be collected from different journal and reports on Micro Finance Activities.

    Sampling tool-

    Data will be collected by preparing a set of questionnaire.

    Sample Design

    I have taken the sample design of 150.

    Data Analyzed.

    Data will be analyzed through survey which is going to be held in some part of Punjab Region.

    Report Writing.

    Report is going to be prepared in case of descriptive and diagnostic research studies, where descriptive research studies are those studies which are concerned with describing the characteristics of particular individual, or of a group, whereas diagnostic research studies determine the frequency with which something occurs or its association with something else. The studies concerning whether certain variables are associated are of diagnostic research studies. As against this, studies concerned with specific predictions, with narration of facts and characteristics concerning individual, group or situation are all examples of descriptive research studies.

    Source: Essay UK - http://turkiyegoz.com/free-essays/economics/verview-of-the-microfinance-industry-in-india.php


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