1. Microfinance : An issue and future
PRESENTED BY :
SUDHIR KUMAR

2. What is Microfinance
CREDIT SAVING
INSURANCE
TRAINING

3. Evolution of microfinance in India
 Microfinance has been in practice for ages through informally
way.
 Legal framework fro establishing the co-operative movement
set up in 1904 .
 Reserve bank of India Act , 1934 provided the establishment
of the Agriculture Credit Department .
 Nationalization of banks in 1969 .
 Regional rural banks created in 1975.
 Set up of gamin bank in Bangladesh by Muhammad. Yunus in
1976.
 NABARD established as a apex body for rural finance in 1982
.

4. Scenario of Microfinance in India
 India population growth is more than 100 Crore , around 32
Crore are living below the poverty .
 only 20 % access loan from formal sources and 80 % from
informal sources .
 out of that 20% , only 14% have access to microfinance .
 During 2011-2012 ,the microfinance through MFI channel
has grown 16.25 % in 2012 in terms of client out reach and
13.75% in term of credit portfolio .
 Customers of microfinance are “ small and marginal
farmers”, “rural artisan and economically weaker sections” .

5. Salient feature of microfinance
 Borrowers are from the low income group.
 Loans are of small amount – micro loans.
 Short duration loans.
 Loans are offered without collaterals.
 High frequency of repayment.
 Loans are generally taken for income generation purpose.

6. Channels of Microfinance
1. SHG-Banking linkage programe (SBLP)
2. Microfinance institutions
SHG
BLP
Customer
MFIs

7. Issues of microfinance in India
 High rate of interest
 Lending for non productive purposes.
 Multiple borrowing and lending
 Ghost loans
 Coercive practices

8. Malegaon report on MFIs
 On the recommendation of Malegaon report , RBI put up a
regulation on MFIs , by put a cap on lending rate of MFIs at
26 % per annum and a margin cap of 12 % over cost of funds,
whichever is lower .
 In order to control overleveraging, RBI laid down rule that
only two MFIs lend to one borrower and both together cannot
provide loans beyond Rs50,000.
 For controlling coercive practices , RBI also set up a
grievance redressed machinery .

9. Problem face by MFI
 Financial illiteracy
 Managerial problems
 In ability to generate fund .
 Drop out and migration of Group members .

10. Future
 Legislation and regulation by RBI to a great extent addressed
the flaws in MFIs in India. It can play a big role in poverty
elevation , empowerment and sustainable development.

11. References :
file:///C:/Users/SCHOOL/Desktop/micro%20finance%20institution%20analysis%20in%20india.htm .
http://www.halfmantr.com/display-national-issues/955-microfinance-issues-and-future-in-india
http://www.thehindubusinessline.com/industry-and-economy/banking/the-future-of-microfinance-looks-pretty-
good-vijay-mahajan/article2430120.ece
file:///C:/Users/SCHOOL/Desktop/MicroFinance%20%E2%80%93%20Current%20Status%20and%20Growing%20
Concerns%20in%20India%C2%A0%20%C2%A0AvantGarde.htm
file:///C:/Users/SCHOOL/Desktop/micro%20finance%20institution%20analysis%20in%20india.htm