Report for Viva on 18th Dec2009

8/14/2019 Report for Viva on 18th Dec2009

1/15

A Report on the Prospects and Limitation of

Microfinance Institutions in Indian Farming Sector

Grameen Koota-Micro Finance Institution

Avalahali, JP Nagar, 9th Phase

Bangalore-560 062, India.

Submitted by:

Vinay Kumar Mishra

MBA-Rural Development

Govind Ballabh Pant Social Science Institute, Allahabad

1


2/15

Contents

Page no.

Executive Summary 3

Acknowledgements 3

Introduction 4

Literature Review 4

Objective of the study 5

About the organization 5

Research methodology 5

Findings 6-8

Case Studies 8-9

Conclusion 10

Suggestions 10

Annexure 1 11-20

2


3/15

Executive Summary

Three out of four poor people live in rural areas, and the majority of rural inhabitants depend on

agriculture. Access to appropriate financial services is a critical factor for agricultural

development in the India Yet, due to the specific constraints that come with financing agriculture(reaching isolated rural areas, working with highly seasonal activities, agro-climatic risks, price

variations, etc.) The financial sector seeks to increase impact on agricultural finance by adapting

microfinance models (cooperatives, village banks, self-help groups and solidarity guarantees)

to the specificities of agriculture, by developing innovative products and methodologies that help

reduce vulnerability of rural households improve the management of agricultural risks and

encourage agricultural investment.

Acknowledgements

This study is a humble effort to understand the concept of Joint liability Group in Microfinance

Institution. The study would not have been complete without the priceless support of those

involved in the study.

It was essentially programmed for finding prospects and limitations of microfinance institution in

Indian farming sector. First, we would like to express our deepest gratitude to Mr. Raghavan of

Grameen koota (Karnataka) for their continual involvement in our work. We extend our highest

indebtedness to Mr. Vikash Kumar, Project Manager Individual Loaning. We are also thankful to

other staff members of Grameen Koota for support whenever we needed it.

We would like to thank Professor Pradeep Bhargava, Director, Govind Ballabh Pant Social

Science Institute, Allahabad for his motivational and guiding support during the period of

summer internship. We would also like to thank Dr. Sunit Singh, Coordinator, MBA (Rural

Development), G.B.Pant Social Science Institute Allahabad, whose valuable academic guidance

and suggestions has always been of immense help to us during the internship period. We are

grateful to Mrs. Rewa Singh for scheduling our visit to Grameen Koota.

Our heartfelt thanks to all volunteers who gave their time and support in our endeavor to collect

information. Indeed, without their support tasks would not have been complete.

Vinay Kumar Mishra

Introduction

3


4/15

Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to

others living in poverty that are not considered bankable. These individuals lack collateral,

steady employment and a verifiable credit history therefore cannot meet even the minimal

qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is

the provision of a wider range of financial services to the very poor.

Joint liability Groups (JLG`s) based on capitalization of honesty has been defined as small and

informal association of poor having preferably of similar socio-economic background and who

come together to realize some common goals based on principle of self- help and collective

responsibility. JLG`s becomes relevant because of following reasons:

A JLG`s working on the principle of solidarity helps the poor together to pool their

savings and access credit facilities.

A JLG`s is important tool for empowering the women members.

Literature Review

Microfinance: Microfinance services are financial services that poor people desire and arewilling to pay for, the term also refers to the practice of sustainably delivering those services.

More broadly, it refers to a movement that envisions a world in which many poor and near poor

house holds as possible has permanent access to an appropriate range of high quality financial

services, including not just credit but also savings, insurance, and fund transfers.

The profession of farming involves combining a variety of factors to produce one or more

outputs, and to add value to the resulting products. The economic result of this activity,

fundamental for the Farmer depends largely on his or her capacity to access simultaneously and

coherently these factors.

Agricultural activities present many particularities: considerable volumes of financing,

seasonality that leads to cash flow problems, high production risks (due to climate) and sales

risks (due to unstable Price & markets).

Microfinance institutions (MFIs) have tended to avoid less densely populated or diversified rural

areas, and financing of seasonal or long enter crop and livestock activities. However, a few

innovative MFIs have recently led the way in adapting their operations and products expand into

agricultural lending.

Objective of the study

Project Title: Launching Individual loans to the Indian farming sector by MicrofinanceInstitutions: Prospects and limitations

4


5/15

About thestudy: The study explores the viability of individual loans in the farming sectoradvanced to member of a joint liability Group created by MFIs for non-farm Income Generation

activities. The study find that Individual loans in the farming sector could be viable if (a)

members of JLG complete at least 4 cycles of repayment, (b) the income generated from non-

farm activities is regular and increasing; and (c) there are other sources of Income Such asNREGA. The studies also find that a successful JLG could consider for joint loans in the farming

sector.

About the organization

About Grameen Koota:Grameen Koota was launch on 30 May 1999 as a part of the TMuniswamappa Trust. This was the culmination of a nearly two-year long deliberation and drew

on the concept propounded in the book Give us Credit authored by Alex Counts. Its seed

capital came from one of the pioneers of the micro-credit movement - Grameen Trust of

Bangladesh.

Research Methodology

The study was done through random sampling at selected locations. These locations had more

than 150 Kendra. We selected thirty Kendra based on random sampling and then five members

from each group again based on random sampling. The questionnaire was designed in English

language.

Tools for Primary Data collection:The tool for Data collection was the questionnaire.Questionnaires were prepared to capture socio-economic profile of the members, to find patterns

of loans taken from the group, asset created and their level of information about schools,

Knowledge about MFI, Banks etc. The Questionnaire had questions were close ended. The

schedules were conducted one-by-one in the sample area.

Semi structured interview

Transect walk with community and staff members of organization

Prepare a Questionnaire with the 6 helpers

Study based on birds and worms eye view

Use of PRA/PLA Tools Rapport Buildings

Findings

1. Average age: The average age among the sampled women member is 30 years.

5


6/15

2. Marital status:The sampled respondents' represents 90 percent married, widows were 5

percent and unmarried were 5 percent.

3. Education,literacy, and Skills: Sampled results points literacy rate as merely 35

percent .Only 10 women out of sampled members had passed Post Graduation and 50 wereundergraduate and in which 3 of them are teacher in one private school.

4. Livelihood base:Agriculture is the mainstay of their livelihood for nearly seventy percentof our population so with the respondents. Livestock are poor in terms of milk capacity.

5. Annual income:Average annual income of the respondent is 24,000 approximately. Thisfigure may overstate, as we have put our assumption basedon their response.

6. Average size of family:With average, size of family approximately seven.

7. Land Size: The land size of the farmers having less than two hectares of land are notfinancially viable, if they depend wholly on income from the land. Thus 40 percent of farmers in

studied area are not financially viable.

8. Respondent heard about MFI: This is good that 81% respondents have heard about

MFIs. However, a majority of 62% thinks that it is meant for women only.

9. Present Need for Credit: Credit is also an essential need. The 35% respondents saidthey need credit to expand an existing Micro Enterprise, while the 65% need it to start a new one.

10.Occupation of members: On the basis of questioner it was found that 15% clientsinvolve in agriculture sector , 25% clients whose own micro enterprises, 30% clients belongs to

dairy activity, 5% clients belong to poultry farming, 15% clients work as daily labor and 10%

clients involve in other activities

6


7/15

11. Occupation of Respondent and its monthly Income:Based on questioner itfound that more than 50 percent people from Daily Labor have their monthly income between

1500-2500. On the other hand the respondents have their own Micro Enterprise, have maximum

number of people with monthly income more than Rs.3500

Table showing occupation of Respondent and its monthly income

16 7 4 3 30

59.3% 43.8% 30.8% 25.0% 44.1%

1 1 1 0 3

3.7% 6.3% 7.7% .0% 4.4%

9 8 8 8 33

33.3% 50.0% 61.5% 66.7% 48.5%

1 0 0 1 2

3.7% .0% .0% 8.3% 2.9%

27 16 13 12 68

100% 100% 100% 100% 100%

Daily labour

Company worker

Small scale bussiness

Unemployed

Occupation

Total

1500-

2500

2500-

3500

3500-

5000

Above

5000

Calculated monthly income of the

family

Total

12. Membership terms: 30 percent had less than one-year term, 28 percent had membership

of more than one year and less than two years, 26 percent had membership of more two year and

less than three years while 16percent had membership of more than three years .

Case studies

Case study: 1

Usha her age is 21. One year ago She got married .She joined the group 6 months ago and taken

Rs5000 loan from Grameen Koota, and bought a cow. She repays her 20 installments at time and

7


8/15

had some misunderstanding with her husband leading to her parents house. Usha husband went

to his father in laws house many times and asked her to return but she was not ready. Her

husband was very disappointed. One day at Meeting day, he came in meeting and told the whole

incident to business executive and group members. B.E. suggested that if all members of group

will go to meet Usha and try to convince her then definitely she will return. Finally, her Husband

arranged a vehicle and all the group members went together. With the help of communitypressure and peer pressure group, she was ready to return to her husbands house. Presently they

are living together and enjoy their married life.

Case study: 2

Sangita aged 32. She joined the group 2 years ago. In that period, she was a bidi maker. She uses

to get order and raw materials through intermediaries. She was working whole day but earning

only Rs 50 to 60. She decided to take contact her self for which she took a loan from Grameen

Koota and started taking order herself, made a team for completing the assigned task .Now, she

has completed her four-loan cycle and at present she earns Rs.150 to 200 daily. Presently she is

owner of her own enterprise with six women in her team with an average earning of 80-90 Rs.

Now she is eligible for Individual loan and she wants to go for a grocery store in the near by

market.

Case Study: 3

Vimala aged about 19. She and her husband were very lazy .They were very dependent on their

parents, 5 month ago, Vimala in laws died in an accident. She was surrounded by many

economical problems. 3 month later, she joined the group, took a loan Rs.4500 from Grameen

Koota, and bought a buffalo. Vimala started selling the milk to dairy man and earned money but

she was not able to repay the installments timely. The B.E of Grameen Koota provided told them

about NREGS work and wages. Vimala husband applied for job card and got the job within 15

days he fined job in his village and started doing work. Presently he is doing work under NREGS

and repaying their installment timely. Now, Vimala and her husband are very happy.

Conclusion

Public investments can help microfinance providers meet the challenges of financing for

agriculture. These require adaptations to conventional financial products and delivery

mechanisms, including the following:

1. Matching disbursements and repayment to agricultural production cycles

8


9/15

2. Investments in rural finance for agriculture

3. Investments in rural finance for agriculture

Suggestions

It would be require a big meeting or seminar of star clients. This type of meeting would

hold three times in a year in which 20 clients would call from every Branch for

participate in seminar.

The success story of star clients would be mention in a published magazine it would

reflect the strength of the organization.

Testing a new rural market before investing in a branch office, this reduces the risks

involved in expanding rural finance outreach. Rural branches are set up only if the

portfolio size merits the investment in infrastructure and human capital.

It can also restrict access to financial services for farm households dependent on

agriculture. Nonfinancial interventions to improve market access and infrastructure may

make these clients more attractive in the longer term.

Annexure 1

Questionnaire used for survey

Impact assessment of Group (GRAMEEN KOOTA) in Bangalore districts of Karnataka

1. General details of respondent:

9


10/15

Name of Client-

Fathers name /Husband name-

Village Name-

District Name-

State Name-

Age

Educational status-

(a) literate (b) Illiterate

If Educate then: (a) Primary

(b) Metric(c) High school

(d) Intermediate (e) Technical

(f) Graduate (g) Postgraduate

Sex : (a )Male (b)Female

2. Demographics:

Religion-

Caste : ST / SC / OBC / General /Other

Marital Status -Unmarried /Married /Widow

/Divorced

Physical Disability : Yes / No

3. Family Details of the Client:

Name of the family Head -

10


11/15

Total member in family -

Type of Family - Joint / Nuclear / Single

Total members in a family -

No of earning member

4. Give details about assets position:

Assets position Pre(GRAMEENKOOTA) Post(GRAMEEN KOOTA)

No. of Cow

No. of buffaloes

No. of Goats

No. of sheep

No. of poultry

No. of work animals

No. of Consumer

durables like Stove

No. of Sewing machines

No. of Bicycle

No. of TV

No. of Transistor

11


12/15

No. of Watch

5. Livelihood base:

Size of Land holdings :(Acres/Bisswa/ Hectare/ Square feet/Bigha)

Type of Land (i) Fertile (ii) Non fertile iii) Waste(iv) Dry (v) Some land fertile and some not fertile

Do you come under the BPL Family (a)Yes /(b) No

Annual income from all sources :

6. Give details about assets creation Post MFI:

(i) Domestic assets (House, pumps, televisions, cycles and radios)--Increase/Decrease/No change

(ii) Productive assets (Land, Shop, animal Rickshaw, Tractor etc)--Increase/Decrease/No change

12


13/15

7. Occupation of Group members:

Sources of income :(i)Agriculture (ii) Micro Enterprise(small scale Business)(iii) Dairy (iv)Poultry(v)Others (vi) Daily labor

Have you received the training from MFI for the activitychosen? (Yes/No)

Has your yearly net income increased after taken loan under MFI?(Yes/No)

If yes then specify the pattern of increase in income(i) Between Rs.1500 to2500 (ii) Between Rs.2500 to 3500

(iii)Between Rs.3500 to 5000 (iv) More than Rs.5000

Do you think that the employment opportunities For your family has beenincreased Post Grameen Koota?(Yes/No)

If no then Reason:(a) Lack of financial assistance from their groups(b) Lack of proper awareness(c) If others (than please specify)

Are you involved in some kind of Micro Enterprise activities?(Yes/No)

If yes than please give the followingdetails :Name of your Micro Enterprise

Micro Enterprise Establishment year

Total Income from Your Micro Enterprise (Yearly)

Timing of Micro Enterprise

Name of product that you product Market Place

How many Person involve in your Micro Enterprise

13


14/15


15/15

Ti3kfe

15

Report for Viva on 18th Dec2009

Documents

Transcript of Report for Viva on 18th Dec2009