The Microfinance Review

D. V. Deshpande ¹, K. C. Sharma ¹, Gyanendra Rout ¹

Affiliations
1 Bankers Institute of Rural Development, Lucknow, IN

Abstract

There are mainly two models of microfinance delivery in India - SHG Bank Linkage Programme (SBLP) and Micro Finance Institutions (MFIs). Broadly speaking, SBLP covers about 72% of all microfinance loans in the country and remaining 28% are covered by MFIs. However, the issue of Non- Performing Assets (NPAs) remains vital in both the models. This study examined various aspects of recovery performance of microfinance clients and other relevant aspects. The study is based on a comparison of SBLP supported by Rajiv Gandhi Mahila Vikas Pariyojana (RGMVP) and Sonata Finance Private Limited, a MFI operating in Raibareli district of Uttar Pradesh. The findings show that recovery from members of both RGMVP SHGs and Sonata Groups is high. The cases of multiple financing are very few in the study area. The findings support the view that if an initiative like RGMVP is present, problem of NPAs in SBLP can be addressed properly.

Keywords

Microfinance, Loan Repayment Problems.

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Bhawani Singh Rathore ¹, Gyanendra Rout ², D. V. Deshpande ²

Affiliations
1 CRFIM, BIRD, Lucknow, IN
2 BIRD, Lucknow, IN

Abstract

Microfinance Institutions (MFIs) have seen incredible growth in the past few years in India. However, there is a concern that the growth in the number of clients lags behind the growth in loan portfolio. In this context, this study intends to analyse the outreach of different categories of MFIs in terms of breadth, scope and depth. The study uses both, MFI-level and clientlevel data. The client-level data is drawn from 600 clients of 10 MFIs in five states. The MFIs were chosen from categories based on legal status and scale of operation. Larger Non Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) were found to be having better geographical spread. However, in terms of other breadth of outreach variables, the performance depends upon the delivery models rather than the legal status and the scale of operation. In terms of scope of outreach, non-NBFC MFIs (like Annapurna Co-operative) were found to be better performing. The poverty outreach of the sample MFIs is much lower than the National Poverty Line. The study suggests developing an ecosystem of 'Not-for-Profit' companies in India for creating an alternate model of microfinance based on overall development of the clients. Additionally it also recommends introducing well-designed saving products and low-cost health and education services for the poor so as to ensure poverty reduction on a sustainable basis.

Keywords

Microfinance Institutions, NBFC-MFIs, Poverty.

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Raj Kumar ¹, M. R. Gopal ², Gyanendra Rout ²

Affiliations
1 Bankers Institute of Rural Development (BIRD), Lucknow, IN
2 BIRD, Lucknow, IN

Abstract

This paper aims to examine various issues being faced by the cooperative banks in adopting new technology and also the impact of computerisation on their operation and business. For the purpose of analysis, a survey was conducted among 41 branches of 13 banks (9 District Central Cooperative Banks and 4 State Cooperative Banks) operating in six states such as Assam, Gujarat, Himachal Pradesh, Odisha, Telangana and Uttar Pradesh. The study reveals that a majority of customers (95%) find that number and quality of banking services have increased due to the implementation of core banking solutions (CBS). There has been a varying trend across banks in so far as the impact of CBS on their financial performance is concerned. Notably, the cooperative banks could retain their customers and business subsequent to the CBS implementation.

Keywords

Technology, Computerisation, Cooperative Banks.

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Gyanendra Rout ¹

Affiliations
1 DGM & FM NABARD, BIRD Lucknow, IN

Abstract

The self-help group - bank linkage programme (SBLP) and microfinance institutions (MFIs) are the two models of microfinance delivery in India. The SBLP covers about 56% of all microfinance space, and the remaining 44% are enveloped by MFIs. This study examined various relevant aspects of SBLP with respect to Dhenkanal district of Odisha, as a case study. All of the sample SHG members had opened savings bank accounts in their respective banks and believed that SHGs were useful for promoting savings and availing bank loans. More than 80% of them availed repeat loans. Above 90% of the loan amount were largely utilised for productive purposes in existing household economic activities. At the branch level, SHG’s saving balance was more than 30% of SHG outstanding loans. More than 40% of savings-linked SHGs had not availed credit from their respective branches because of their unwillingness to avail loan. Non availability of regular and timely interest subvention was one of the reasons for their unwillingness to avail bank loans.

Keywords

Financial Services, Microfinance, Mission Shakti.

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