Market Research India - Guide to Microfinance in India 2009
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Transcript of Market Research India - Guide to Microfinance in India 2009
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July 2009
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Executive Summary
Market
Microfinance in India operates through two channels Microfinance institutions (MFIs)
NABARDs SHGs bank linkage programme (SBLP) a partnership model between SHGs, banks and NGOs
The introduction of the Micro Financial Sector Development and Regulation Bill, 2007 Major Aspects: Definition of microfinance organizations, conditions for mobilization of savings and creation of
Microfinance is predominant among the southern states, especially Andhra Pradesh
Initiative
Limitations: Regulatory body, differential regulation, dual regulation, preferential regulation and lax prudential norms
Recommendation: Encompassing
a wide
spectrum
of
institutions
and
modifying
rules
for
depository
MFIs
Trends & Characteristics
Low penetration level providing high growth opportunityLarge scale PE/VC activityHigh interest rate and issue with repayments
Lack of
interest
from
formal
financial
institutions
Major Players
Opportunity in the urban sector
The major microfinance institutions in India are SKS Microfinance Pvt. Ltd.
2GUIDE TO MICROFINANCE INDIA.PPT
SHARE Microfin Ltd.
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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix
3GUIDE TO MICROFINANCE INDIA.PPT
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Microfinance has emerged as an important delivery mechanism to reach out to the low income group of the society
Microfinance is defined as the provision of thrift (savings), credit and other financial
Definition Services Provided
Insurance
services and products of very small amounts
to the
poor
for
enabling
them
to
raise
their
income levels and improve living
World Bank estimates that there are over
Loans
PensionsRemittance
7,000 microfinance institutions worldwide
Major Milestones in India
Financial Counseling
Risk Mitigation Products
NABARD established as an apex agency for
rural finance
Major commercial banks nationalized
19921975 2007
Establishment of SIDBI Foundation for Micro credit
Regional Rural Banks established
in 1975
NABARD launches SHG bank linkage
program
1969 1982 2000 Proposed bill on microfinance
regulation
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Reforms in the financial sector have directly impacted the growth of microfinance in India
Shift in activities in the rural financial sector
The Past Change in Operations The Present
Lack of operational freedom
Flexibility & freedom of operation with
reduction of overnment
Controlled by
ownershipIssue
Deregulation of
Bank
Led to
Banking Sector Reforms in 1991 92
International best
ractices in
n eres ra es
Micro regulations on credit flow
Concern was outreach rather than viabilit Entry of new private
prudential norms
5GUIDE TO MICROFINANCE INDIA.PPT
Large scale rural financial sector losses
sector banks
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Introduction Types of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix
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Types of Microfinance Institutions (1/4)
Formal / Banks Comprises of Apex Development Financial Institutions, Commercial
Banks, Regional Rural Banks, and Cooperative Banks providing micro finance services in addition to their general banking activities referred to as micro finance service providers
ypes o financial
institutionsInformal / Non Banks
Informal institutions that undertake micro finance services as their main activity are generally referred to as micro Finance Institutions
Investor Pool of Funds
Bank
Institution entrepreneur
Non profit
Public Trusts Societies
Mutual Benefit
Self Help Groups and Federation
For Profit
Non Banking Financial
7GUIDE TO MICROFINANCE INDIA.PPT
Section 25 companies Co operative Societies Corporation
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Types of Microfinance Institutions (2/4)
Public trusts are established in accordance with the respective State regulations Private trusts are established under the Indian Trusts Act 1882 Exempted from tax if registered under 12A of the Income Tax Act
Trusts
Registered under Societies Registration Act, 1860 or under the respective State acts It refers to a group of 7 individuals who form an association for any literary, scientific or
, to accept foreign grants
charitable purpose These associations cannot accept public deposits
Exempted from
tax
if
registered
under
12A
of
the
Income
Tax
Act
In order to accept foreign grants the institution needs to be registered under FCRASocieties
It is not in a position to raise large funds as banks are unable to determine ownership
RBI has exempted NBFCs licensed under section 25 of the Indian Companies Act from registration, maintenance of liquid assets and transfer of profit to reserve funds only if
Do not mobilize public deposits
These institutions are prohibited to pay dividends
Equity mobilization is difficult due to the restrictions posed on the payment of dividends
Section 25 Companies
8GUIDE TO MICROFINANCE INDIA.PPT
Exempted from tax if registered under 12A of the Income Tax Act
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Types of Microfinance Institutions (3/4)
It is an unregistered entity comprising of 10 20 individuals with autonomous rules and regulations, office bearers and books of accounts
SHGs provide credit to their members by using the savings of their members as well as SHGs and
A network of SHGs forms a Federation which are generally registered as Societies or Co
operative Societies
Federations
Members comprise of individuals, other cooperatives and government Various modalities of registration
Cooperative
Societies
Act,
1912,
or
State Cooperative Societies acts, or
Cooperative Societies
State Mutually Aided Cooperative Societies Act, orMulti state Cooperative Societies Act, 1995
Regulated by the registrar of co operative societies Legal framework allows them to access equity and deposits from their members which is
use o sperse oans Mobilization of equity is restricted as co operative societies can raise equity only from
their members Banks are largely unwilling to provide funding due to the non equity based ownership
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Types of Microfinance Institutions (4/4)
Companies registered under Indian Companies Act 1956 can operate as an NBFC by applying to the RBI
Required to have net owned funds of INR 20 mn Ownership is defined and are thus in a position to raise equity Mobilization of public deposits is possible but is extremely difficult due to the strict
guidelines of the RBI Banks offer lending services to NBFCs which have substantial capital and are performing
It is
a profit
making
organization
and
are
taxed
FDI through automatic route is allowed
NBFCs
FDI up to 51% USD 0.5 mn to be brought upfrontFDI between 51% and 75% USD 5mn to be brought upfrontFDI between 75% and 100% USD 50mn out of which 7.5 million to be brought up front
All non deposit taking NBFCs having asset size of INR 1 bn or more as per last audited a ance s ee are cons ere as sys em ca y mpor an s
Non deposit taking and systemically important NBFCs will be subject to capital adequacy regulations, single/group exposure norms and disclosure pertaining to derivative transactions
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IntroductionTypes of Financial Institutions Market OverviewGovernment Initiatives
Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix
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In India, microfinance sector operates via two routes Microfinance Institutions and Self Help Groups
Overview Credit Distribution (07 08)
Large MFIsMicrofinance in India
20%
5%Medium andSmall MFIs
Microfinance NABARDs SBLP a partnership model
Demand for micro credit is pegged at USD 30 bn but Client Outreach
75%
SBLP
, and NGOs
Outstanding micro credit portfolio amounted to ~INR
220 bn in 2007 08 Microfinance is predominant among the Southern
States, especially Andhra Pradesh 40
60 48.06
45.20
59.21
SHGs
MFIs
+23%mn
75% of the consumers are from the rural sectorWomen account for 80% of the credit clientele
Highest growth observed in the loan segment ranging from INR 5,000 INR 10,000
0
2038.02
10.04
2006 07
14.01
2007 08
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: s an n age programNOTE: Assessment of the share of the total market for micro credit loans is difficult as no law or regulation requires organizations which provide micro credit to formally register as microfinance institutions
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MFIs have been focusing on the rural sector and it operates via substantial funding from financial institutions Microfinance
MFI SBLP
Microfinance Institutions primarily refers to organizations created to provide credit and other
Overview Clientele (Mar 06 Mar 08)
Urban
nanc a serv ces to ow ncome c entsMFI loan outstanding: 59.54 bn (Mar 2008) Average loan outstanding, MFI client INR 4,220
(2008)75%
oan port o os grew y rom ar to ar
Client outreach grew by 40% in 2007 08
Sources of Funding
Rural
Major Issues Financial Viability: Small scale MFIs face financial
problems as high borrowing costs coupled with high operating expenses ranging between 4 to 19%
impedes its ability to offer competitive rates Client Savings
Other Liabilities7%
Paid in Equity
6%
Grants
3%
High capital requirements: Few MFIs can raise INR 20 mn capital required to become NBFCs
75%
Institutional Debt
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MFIs provide funding to various clients across the country with southern states accounting for maximum share Microfinance
MFI SBLP
Distribution of Loans and Clientele Segmentation of MFI Portfolio (Clients)
WestNorth East Southern states account for the maximum
share of the clients as well as the loans 9%disbursed
Microfinance institutions lend to SHG Single loan to the SHG as a whole, which decides how it should be allocated
Segmentation of MFI Portfolio (Loans)South
66%
Distribution of Operating Model
Grameen/Joint Liabilities Group Loan recorded in the names of Individual borrowers
East
15%6%
North
4%West
7%
Individual Lending
75%
65% SHG28%Grameen/
JLG
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South
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Self Help Groups have seen major growth over the last decade with the South contributing the largest fraction Microfinance
MFI SBLP
Began in the early 80s as NGOs 3.48 mn SHGs are linked with bank credit (as of Mar
Overview Cumulative No. of SHGs
2,924000
2008)
SHG loans outstanding: 123.66 bn (Mar 07) Savings mobilized by 4.2 mn SHGs account for INR 35
bn
2,238
1,6281,079
717461
1,000
2,000
,+49%
Short term lending with the interest charged ranging from 23% per month
Supply figures pertaining to SHGBank linkage programme is ~ INR 123660 mn (Mar 2007) SHG Regional distribution
003 04 05 0602 03 04 05 06 072000 01 01 02
ar ous ypes o roupsSavings and Credit GroupsSocial Forestry GroupsWater Users' Groups
18%
East7%
North EastNorthern3%
Central11%
Farmers' Interest GroupsOther
Annual growth rate of out reach is 18% (06 07 07 08)
Western 9%
52%
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Southern
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Loans provided by banks to SHGs has seen tremendous growth with the highest contribution from commercial banks Microfinance
MFI SBLP
Began in 1989 with NABARD overseeing operations Average loan outstanding, SHG member INR 3,250 (08)
SHGs Linkage with Banks Bank Loans
180200
INR bn
Linkages act as a a supplementary channel for providing financial services from formal financial institutions
Once the SHG becomes functional, banks assess them for credit worthiness after 6 months; well functioning
113
6839
2050
100
150 +89%
s are sanct one up to our t mes t e r sav ngs Top five States in SHG linkage Maharashtra,
Orissa, Tamil Nadu, West Bengal, Andhra Pradesh
Issues at the Ground Level
40
2000 01 01 02 02 03 03 04 04 05 05 06 06 07
Agencies financing the groups (07 08) Strong opposition from money lenders and the
socially dominant classes in of the rural population Resistance from men against women forming such
groups
25%
Cooperative banks
33%RRBs
Lack of basic infrastructure for e.g. a meeting area Large scale reliance on government programmes,
subsidies and grants from NGO or development agencies 42%
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Commercial Banks
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Three bank linkage models are prevalent in India which allow SHGs to fund their operations Microfinance
MFI SBLP
Model 1Bank NGO
Each partner institutions functions independently. Banks lend, NGOs organize poor into SHGs and SHGs manage small group finance in their own interestThe whole system is localizedSHGs and local NGO learn to deal with banks and vice versa
SHG
Majority of field level bankers do not view it as a banking
mandateIn many places, it is still difficult to open a savings accountAbsence of NGOs in many parts of India
Model 2 Bank Reduces transaction and risk cost of the bank as they lend
large sum to an NGO, which guarantees repayment
Easier for the poor to deal with an institution which they know and trust.
NGO
SHG
Easy to be adopted by stakeholders.
NGOs are not equipped to work as financial intermediariesCalls for substantial investment in capacity building of NGO
Wide scale
adoption
not
possible
Model 3Bank SHG
Possible solution where NGOs are not present
Wide scale application may not be feasible because of other
17GUIDE TO MICROFINANCE INDIA.PPT
priorities of bankers
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IntroductionTypes of Financial InstitutionsMarket Overview Government Initiatives
Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix
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d f h b ll d d f l
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Introduction of the bill is expected to create a definite regulatory framework for microfinance institutions
Micro Financial Sector Development and Regulation Bill, 2007
PurposeRegulating and supervising cooperative societies and non profit institutions (including societies and trusts that are rovidin microfinance
Definitions
Microfinance: Includes
loans,
savings,
insurance
and
pension
services.
Loans
cannot
exceed more than INR 50,000 (INR 150,000 for housing purposes)
MFO: Any organisation that provides micro finance services including societies, trusts and cooperative societies
Definition of Microfinance Organizations: NBFCs and Section 25 companies, which
account for ~80% of microfinance loans outstanding are excluded from its scope Mobilization of Savin s: States that MFOs are authorized to collect de osits from their
Major Aspects
members
Certain conditions must be satisfied Have a minimum capital base of INR. 0.5mn
Be in operation for a minimum of 3 years ,
New Regulator: NABARD to be the regulatory body for both depository and non depository micro MFOs . Its role entails
Facilitating the development of credit rating norms and performance benchmarksSpecifying the accounting form and the auditing standards
19GUIDE TO MICROFINANCE INDIA.PPT
Promoting financial literacy of MFO clients and sector related researchDisseminating information relating to best practices
h bill h b h li i i i i d
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The bill has been seen to have many limitations in its scope and reach
Mandatory registration and periodic report submission by all MFOs seeking to accept deposits
MFOs will also be subject to inspection by the regulator in case of any malpracticesOther Aspects ans on a corpus un , cro nance eve opment an qu ty un , or t e
development of the sector
MFOs that accepts deposits to create a reserve fund by transferring a minimum of 15% of its net profit/year
NABARD as Regulator: NABARD being a service provider and regulatory body will lead to conflict of interests
Limitations of the bill
, a fund created to provide equity capital, debt funds, or grants to MFOs
NABARD also lacks expertise to regulate and develop MFIs in the urban sector as its role has been confined to rural areas and to agriculture
Differential Regulation: Lack of rationale behind classification
NBFCs have been excluded from the bill as they are already regulated by the RBI while cooperatives, which are also currently regulated, have been included
Introduction of dual regulation of deposits received which is currently regulated solely by the RBI
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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix
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Trends and Characteristics
Low penetration level provides tremendous growth opportunities
Large scale PE/VC activity
` High interest rate and issue with repaymentsTrends and
Characteristics
Lack of interest from formal financial institutions
22GUIDE TO MICROFINANCE INDIA.PPT
Opportunity
in the
urban
sector
S i i f i i h l d
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Strong opportunities for investments with large untapped portfolio of products in demand
Strong potential demand for microfinance services exists65% of the Indian population are without a bank account
Low penetration level provides tremendous growth opportunities
27% or 300 mn people in India live below poverty line (earn less than USD 1 per day)87% of the poorest households do not have access to easy credit
Approximately, 56 % of the poor still borrow from informal sources70 % of the rural poor do not have a deposit account
Service No. of MFI Providing % of Clients Accessing (08)
Education loan 1 3%
Emergency loan 1
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Microfinance emerging as next asset class for PE funds
Private equity and venture capital have made investments worth USD 230 mn during Jan 2007 Mar 2009 Investors have been diversifying their portfolio as the urban and manufacturing related sectors are witnessing a slump
Large scale PE/VC activity
Year Microfinance Company PE Investor Stake (%) Deal Size (USD mn)
2009 Bhartiya Samruddhi Finance Ltd Lok Capital, Aavishkar, SIDBI n.a. 10
2008 Madura Micro Finance Limited Unitus Equity n.a. 5
2008 MAS Financial Services Ltd. ICICI Venture n.a. 10
2008 SKS Mirofinance Sandstone Capital, SVB India Capital and
Kismet Capital
n.a. 75
Silicon Valle Bank Columbia Pacific Se uoia ro nance
Capital, Vinod Khosla, Odyssey captial n.a.
2008 Ujjivan Financial Services Unitus Equity Fund n.a. 19.6
20 07 SKS Mirofinance Sequoia and Unitus n.a. 11.5
2007 Spandana JM Financial Fund n.a. 10
2007 Share Microfin Aavishkaar Goodwell 4 2
2007 SKS Mirofinance Sequoia, Silicon Valley Bank and Vinod Khosla, n.a. 37
24GUIDE TO MICROFINANCE INDIA.PPT
P g i l high i t t t d d l d t
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Progressively high interest rates and delayed repayments limiting the growth
Lending to small borrowers follows an indirect route. Banks lend to MFOs who then lend to various SHGs and JLGs. Individual borrowers get funds through SHGs and JLGs
High interest rate and issues with repayments
subsidized borrowings or to borrowers through higher interest rates
Progress in interest rates from lender to borrower
Debtors have been failing to repay the loans, this trend has been growing with the rise in size of the loan and the
NABARDCommercial
BanksMFOs SHGs
Individual Member
7.5% p.a. 10 15% p.a. 12 24% p.a. 24 36% p.a.
frequency of borrowing
Growth in default rate in Grameen bank
Second time
Third time Fourth
timeFirst timeBorrowers
Default Rate 0.4% 1.2% 6.6% 9.5%
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High i k i idi g l t ll h t d
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High risk in providing loans to small consumers has prevented formal financial institutions from participating actively
Commercial banks, cooperative banks and regional rural banks prefer to abstain from lending to the poorThese loans will be high risk loans
Lack of interest from formal financial institutions
Delinquency and default rates are high among the poorInterest rate regulations by RBI
Commercial bank being advised by the RBI to link their interest rates with their prime lending rate (PLR) for their loan amountsless than INR 200,000
Lack of collateral security among borrowersSafety issues
Borrowers themselves find it problematic dealing with banksCredit from the bank is not easily availableTransaction cost of borrowing from the bank is very high
This includes out of pocket expenses that are incurred in paying travel cost, middleman, and price difference in assets and the opportunity cost of their time
Transaction cost of availing saving facilities are also high Primary factors are distance and small savings
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Limited outreach in urban sector provides opportunity for
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Limited outreach in urban sector provides opportunity for microfinance institutions
Microfinance outreach in India is limited to rural areas Merely 0.02% of the urban poor have banking relationships
Opportunity in the urban sector
In urban areas, lack of access to trading space for vendors and livelihood training is further pushing the poor below the poverty line
Initiatives taken by the MFIs in urban sector will help them in Quicker scale upQuicker breakevenHigher loan sizes / enterprise loans
Products must be customized to suit needs of the urban poor Services offered should be accessible and far reaching allowing for large consumer base
Microfinance products for Urban Sector
Paid Employed Self Employed
Salaried Daily wage earners
Example : Vegetable vendorsDaily and weekly loans to purchase ve etables rom wholesale mandis and
Example : Municipal WorkersHealth loans, health insurance
Micro savings to address the issue o low income
27GUIDE TO MICROFINANCE INDIA.PPT
daily savings
facilities
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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and Characteristics Major PlayersKey DevelopmentsAppendix
28GUIDE TO MICROFINANCE INDIA.PPT
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Players (1/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Bandhan Financial Services Pvt. Ltd.
Gross Loan Portfolios a s e
Headquarters Kolkata
Services Offered Micro loans Micro Enterprise Program
Number of Active Borrowers
8280
100 1,500
000USD mn
Health Loan29
810
20
40
60
0
500
,
Business Highlights
It is a non profit entity It is planning to raise INR 6 bn in FY 0910by selling
Business Outlook
ar ar ar ar
pera es n a es roug ranc es Primarily focusing on 3 programs
Chartering into Unventured Frontiers Targeting the Hard Core PoorBandhan Health
Plans on expanding operations to Delhi and Mumbai because of large scale rural urban migration
Expected to encompass Uttar Pradesh, Rajasthan and Gu arat
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Bandhan Education Plans on opening 200 new branches
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Players (2/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Bhartiya Samruddhi Finance Limited
Gross Loan Portfolios a s e
Headquarters Hyderabad
Loans Insurance
Number of Active Borrowers
5660
300
400
000USD mn
Services Offered Money Transfers Agriculture/Business
Development Services Institutional Development
3122
13
0
20
0
100
200
Business Highlights
Clientele, 90% from rural poor households and about Plans on diversifying its product portfolio to include
Business Outlook
ar ar ar ar
Operates in 15 States In 2007 08, Non farm loans accounted for 47% of the
total while Agriallied accounted for 36%
funds
Large scale disbursement of education loans based on the courses being undertaken
Bankin on lar e scale technolo ado tion towards
30GUIDE TO MICROFINANCE INDIA.PPT
achieving high operational efficiency
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Players (3/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Equitas Micro Finance India
Gross Loan Portfolios a s e
Headquarters Chennai
Micro Finance Loan AMC Loan
Number of Active Borrowers
5660
300
400
000USD mn
Education Loan Gold Loan
40
20
0
100
200
Business Highlights
It lends to women borrowers organized into joint liability Plan on opening 5 more branches by 2009
Business Outlook
ar ar
90 branches with focus falling on Tail Nadu Entered into a partnership with Newgen Software in
order to change process flows via data management so as to increase scalabilit and im rove roductivit
s arge ng , , mem ers n am a u Plans on working on an OMRbased solution for their
risk management team Under Equitas Gyan Kendra, they plan on imparting
31GUIDE TO MICROFINANCE INDIA.PPT
Loans disbursed in May 09: INR 387.4 mn
, ,
and painting to SHGs
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Players (4/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: SHARE Microfin Ltd.
Gross Loan Portfolios a s e
Headquarters Hyderabad
LoansGeneral
Number of Active Borrowers
151150
200
1,500
2,000
000USD mn
Services Offered
SpeciaHousingMicro enterprisePersonal
Insurance
9182
40
0
50
100
0
500
1,000
Business Highlights Fund Transfer Services
Providing financial and support services mainly to By 2012 13
Business Outlook
ar ar ar ar
Carries out operations across 16 States covering 17,654 villages
As of May 09; total branches: 771; cumulative disbursement INR 56 895 mn
Outstanding portfolio to ~ INR 163.82 bn
Plans on achieving deeper vertical penetration in its current area of operation and large geographic outreach
32GUIDE TO MICROFINANCE INDIA.PPT
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Players (5/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Shri Kshetra Dharmasthala Rural Development Project
Gross Loan Portfolios a s e
Headquarters Belthangady Taluk, Karnataka
Loans Insurance
Number of Active Borrowers
8580
100800
000USD mn
Services Offered Training and Consulting
Business Development Services Health Education
52
2411
0
20
40
60
0
200
400
Business Highlights
In 1996, initiated a microfinance programme
Plans on expanding their insurance service which was
Business Outlook
ar ar ar ar
marginal farmers Under Pragatinidhi loans are disbursed for agriculture,
infrastructure development, non farm sector development activities and group enterprise.
. mn customers by 2009 from 960,000 in 0708
By 2011, they plan on forming 60,000 groups under the SHG model
33GUIDE TO MICROFINANCE INDIA.PPT
Microfinance comprises of 40 50% of their operations
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Players (6/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: SKS Microfinance Pvt. Ltd.
Gross Loan Portfolios a s e
Headquarters Hyderabad
Income generating loans Mid Term Loans
Number of Active Borrowers
262250
300
2,000
2,500
000USD mn
Services Offered Individual Loans Emergency Loans Loan Cover Insurance Health Insurance
6321
80
50
100150
0
500
1,000
1,500
Business Highlights
South is the largest contributor, with Andhra Pradesh Plans on doubling its total loan disbursals in 09 10 to
Business Outlook
ar ar ar ar
respectively Approached the RBI to launch mobile banking services
Formed an association with Nokia and Airtel towards providing cheap handsets to customers
. Plans to introduce 400 new branches in 09 10 Plans on launching an IPO towards raising capital Strong IT initiatives towards enhancing efficiency
34GUIDE TO MICROFINANCE INDIA.PPT
Project is expected to begin in Andhra Pradesh
captured and consolidated
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Players (7/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Spandana Sphoorty Financial Limited
Gross Loan Portfolios a s e
Headquarters Hyderabad
General Loans Small Business Loan
Number of Active Borrowers
182
150
200
2,000
2,500
000USD mn
Services Offered Micro Enterprise Loan
Agri Family Loan Dairy Loan
Farm Equipment Loan
896354
0
50
100
0
500
1,000
1,500
Business Highlights
Operates in 9 States across the country with 999 Plans to expand its reach to 16 States by end 2009
Business Outlook
ar ar ar ar
Andhra Pradesh accounts for 57% of its loan portfolio while Karnataka accounts for 13%
Other than financial intermediation, they have also been focusin on sub sector intervention such as diar
, , , , New Delhi, Kerala and Goa
By 2011, the company plans on catering to 6 mn borrowers with cumulative disbursements of INR 200 bn
35GUIDE TO MICROFINANCE INDIA.PPT
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Players (8/8)
Corporate Information Financial Performance and OutreachCompany Snapshot: Ujjivan Financial Services Pvt. Ltd.
Gross Loan Portfolios a s e
Headquarters Bangalore
Family Needs Loan Business Loan
Number of Active Borrowers
9,110
8,000
10,000 60,000
USD 000
Services Offered Combo Loan (combination of
family needs and business) Housing Loan Festival Loan
1,933
460
2,000
4,000
6,000
0
20,000
,
Business Highlights
Provide financial services to poor working women in
Plans on an IPO by 2011, after profitable operations
Business Outlook
ar ar ar
Only MFI in India to start operations without any grants or donation
62% of customers are from the South while North and East account for 6% and 30% res ectivel
ans on encompass ng mn cus omers y w its presence across India with regional offices in Bangalore, Kolkata, Delhi and Pune
Plans on building a strong capital base by 2011
36GUIDE TO MICROFINANCE INDIA.PPT
sale, securitization, subordinated debt , non convertible debentures
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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and CharacteristicsMajor Players Key DevelopmentsAppendix
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Key Developments
Date Development 22 Jun 09 Share Microfin plans to raise INR 21.5 bn in 2009 10 to fund its expansion. Of this, INR 19 bn would be
debt and the remaining equity. They have entered into an agreement with the Small Industries
respectively
18 Jun 08 SKS Microfinance, the largest microfinance player in the country in terms of assets, is looking beyond pure bank funding for their business. It is planning to raise INR 5 bn through a variety of rated debt products to fund loan demands of its customers
18 Jun 08 Micro finance institutions and customer service centre network are emerging to be the largest channel for the distribution of Max New York Lifes (MNYL) small kitty insurance policy.
13 Jun
08 ICICI
Bank
is
targeting
the
farm
sector,
micro
finance
institutions
and
companies
in
the
agriculture
space
and have set aside INR 250 bn. The bank plans on issuing farmers cards who will be given loans through
s un er s
10 Jun 08 Spandana Sphoorty Financial raised INR 800 mn by issuing one year non convertible debentures (NCDs) redeemable at a premium of 10%. They previously planned on raising INR 3 bn by diluting a part of their stake to investors.
pr sse anagemen an nves n a cro ens on erv ces e up w or a m cro pension scheme
28 Feb 09 ICICI Lombard General Insurance Company, began offering innovative products like weather and cattle insurance in rural areas.
38GUIDE TO MICROFINANCE INDIA.PPT
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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives
Trends and CharacteristicsMajor PlayersKey Developments Appendix
39GUIDE TO MICROFINANCE INDIA.PPT
Appendix 1:
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Appendix 1:Overall Progress Under Microfinance
Particulars Units 2006 07 2007 08 % Growth
Savings accounts for SHG banks as of 31 March No of SHGs 4160584 5009794 20.4
Amount 35127.1 27853.9 7.8
Bank loans disbursed to SHG during the yearNo of SHGs 1105749 1227770 11
Amount 65703.9 88492.6 34.7
Bank loans outstanding with SHG as on 21 No of SHGs 2894505 3625941 25.3March Amount 123664.9 169999.1 37.5
Bank loans disbursed to MFI during the yearNo of SHGs 334 518 55.1
Amount 11515.6 19701.5 71.1
Bank loans outstanding with MFI as on 31 March
No of SHGs 550 1109 101.6
Amount 15844.8 27488.4 73.5
NOTE: Amount in INR mn
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Appendix 2:Savings of SHGs with Banks
Agency YearTotal SHGs savings with the banks as on 31 March 2008
No. of SHGs % Share Amount(INR mn) %
Share Per SHG
Saving (INRs)
Commercial Banks (Private and Public)
. . .
2007 08 2810750 56.1 20777.3 54.9 7392
% growth 22.5 9.8 10.4
2006 07 1183065 28.4 11582.9 33 9791
Regional Rural Banks (RRBs) 200708 1386838 27.7 11664.9 30.8 8411
% growth 17.2 0.7 14.1
2006
07 683748 16.4 4620 13.2 6914
. . .
% growth 18.8 17.1 1.4
Total
2006 07 4160584 100 35127.1 100 8469
2007 08 5009794 100 37853.9 100 7556
% growth 20.4 7.8 10.5
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Appendix 3:Bank Loans Disbursed to SHGs
Agency YearTotal loans disbursed by banks to SHGs
No. of SHGs % Share Amount(INR mn)
% Share
Per SHG bank loan disbursed (INRs)
Commercial Banks (Private and Public)
. . .
2007 08 735119 59.9 54039 61 73511
% growth 28.6 37.9 7.2
2006 07 381199 34.5 20527.3 31.2 53849
Regional Rural Banks (RRBs) 200708 327650 26.7 26518.4 30 80935
% growth 14.0 29.2 50.3
2006
07 152914 13.8 5987.2 9.1 39153
. .
% growth 7.9 32.5 22.8
Total
2006 07 1105749 100 65703.9 100 59420
2007 08 1227770 100 88492.6 100 72076
% growth 11.0 34.7 21.3
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ppBank Loan Outstanding Against SHGs
Agency YearTotal loans outstanding by banks to SHGs
No. of SHGs % Share Amount(INR mn) %
Share Per SHG bank loan
outstanding (INRs)
Commercial Banks (Private and Public)
. . .
2007 08 2378847 65.6 114754.7 67.5 48240
% growth 25.7 31 4.2
2006 07 729255 25.2 28017.6 22.7 38419
Regional Rural Banks (RRBs) 200708 875716 24.2 44210.4 26 50485
% growth 20.1 57.8 31.4
2006
07 272234 9.4 8043.5 6.5 29546
. . .
% growth 36.4 37.2 6.6
Total
2006 07 2894505 100 123664.9 100 42724
2007 08 3625941 100 169999 100 46884
% growth 25.3 37.5 9.7
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ppBank Loans Provided to MFIs
Agency Year
Amount of
Loan
Disbursed Loan
Outstanding
against
as
on 31 Mar
% Recovery of Loans
No. of MFIsAmount
(INR No. of MFIs Amount
mn)
Commercial Banks (Private and Public)
2006 07 327 11513.4 541 15842.7 92 100
2007 08 497 19686 1072 27452.4 82 100
% growth 52 71 98.2 73.3
Regional Rural Banks (RRBs)
2006 07 7 2.2 8 2 90
2007 08 8 15.1 24 35.8 95.5 100
% growth 14.3 586.4 200 1690
Cooperative Banks
.
2007 08 13 0.4 13 0.2 n.a.
% growth 1200 100
2006 07 334 11515.6 550 15844.8
Total 2007 08 518 19701.5 1109 27488.4
% growth 55.1 71.1 101.6 73.5
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