Microfinance Impact On Borrowers and Challenges of Karnataka Cooperative Apex Bank LTD

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL INTRODUCTION INDIAN FINANCIAL SYSTEM The economic development of a nation is reflected
by the progress of the various economic units, broadly classified into corporate sector, government and household sector. While performing their activities these units will be placed in a surplus/deficit/balanced budgetary situations. There are areas or people with surplus funds and there are those with a deficit. A financial system or financial sector functions as an intermediary and facilitates the flow of funds from the areas of surplus to the areas of deficit. A Financial System is a composition of various institutions, markets, regulations and laws, practices, money manager, analysts, transactions and claims and liabilities. Financial System;
The word "system", in the term "financial system", implies a set of complex and closely connected or interlined institutions, agents, practices, markets, transactions, claims, and liabilities in the economy. The financial system is concerned about money, credit and finance-the three terms are intimately related yet are somewhat different from each other. Indian financial system consists of
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL financial market, financial instruments and financial intermediation. These are briefly discussed below; FINANCIAL MARKETS A Financial Market can be defined as the market in which financial assets are created or transferred. As against a real transaction that involves exchange of money for real goods or services, a financial transaction involves creation or transfer of a financial asset. Financial Assets or Financial Instruments represents a claim to the payment of a sum of money sometime in the future and /or periodic payment in the form of interest or dividend. Money Market- The money market ifs a wholesale debt market for low-risk, highly-liquid, short-term instrument. Funds are available in this market for periods ranging from a single day up to a year. This market is dominated mostly by government, banks and financial institutions. Capital Market- The capital market is designed to finance the long-term investments. The transactions taking place in this market will be for periods over a year. Forex Market - The Forex market deals with the multicurrency requirements, which are met by the exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes place in this market. This is one of the most developed and integrated market across the globe. Credit Market- Credit market is a place where banks, FIs and NBFCs purvey short, medium and long-term loans to corporate and individuals.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The functions performed by these Banks are 1. Commercial Banks Commercial Banks perform all the business transactions of typical Bank. Commercial Banks accept three types of deposits, like Saving Bank Deposits, Fixed Deposit and Current Deposits. They provide funds of short-term needs of trade of commerce. 2. Investment or Industrial Banks Investment Banks are those Banks, which provide fund for long-term industries. These Banks have specialized in providing long term loans to industries with a view to buy plant and machinery. The investment Banks obtain funds through share capital plus, debentures and long term deposits from public. 3. Exchange Banks These Banks are known as foreign exchange Banks. They provide exchange for import trade. Their main function is to make international payment through purchased Bank of exchanges Bills. 4. Co-operative Banks They are promoted to meet the Banking requirements of consumers. They established not only in the urban areas but also in the rural areas. In the rural areas these Banks supply finance to agriculture while in these urban areas they provide finance to consumer goods.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL 5. Land Mortgage Banks Whenever agriculturist requires investment loans, they have to approach land development Banks, where loans are given on long term basis. They provide loans on the security of the land. 6. Central Banks Central bank is an apex bank in the country, which keeps the entire Banking system unified, controlled and regulated. It regulates the note issue. RBI is the Central Bank of India. FINANCIAL INSTRUMENTS IN INDIA We took a look at the players in the financial markets earlier. Let us now look at the Financial Instruments these players have. They van be braodly classified into Government securities and Industrial securities. Government Securities( G-Sec ) : In India G- Sec are issued by the Central Government , State Governments and Semi Government Authorities such as municipalities, port trusts, state electricity boards and public sector corporations. The Central and State
Governments raise money through these securities to finance the creation of new infrastructure as well as to meet their current cash needs. Since these are issued by the government, the risk of default is minimal. Therefore, interest rates on these securities often serve as a benchmark for the level of interest rates in the economy. Other issues may price their offerings by `marking up this benchmark rate to reflect the credit risk specific to them.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL These securities may have maturities ranging from five to twenty years. These are fixed income securities, which pay interest every six months. The Reserve Bank of India manages the issues of the securities. These securities are sold in the primary market mainly through the auction mechanism. The RBI notifies issue of a new tranche of securities. Prospective buyers submit their bids. The RBI decides to accept bids based on a cut off price. The G -sec are primarily bought by the institutional investors. The biggest investors are commercial banks who invest in G-secs to meet the regulatory requirement to maintain a certain percentage of Statutory Liquidity Ratio (SLR) as well as an investment vehicle. Insurance companies, provident funds, and mutual funds are the other large investors. The Primary Dealers perform the function of market makers through buying and selling activities. The Government of India also borrows short term funds for up to one year. This is through the issue of Treasury Bills which are sold at a discount to the face value and redeemed at the full face value. Industrial Securities: These are securities issued by the corporate sector to finance their long term and working capital requirements. The Major Instruments that fall under Industrial Securities are Debentures, Preference Shares And Equity Shares.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL
Debentures Debentures have a fixed maturity and pay a fixed or a floating rate of interest during their lifetime. The company has an obligation to pay interest and the principal amount on the due dates regardless of its profitability position. The debenture holders are not members of the company and do not have any say in the management of the company. Since these carry a predefined rate of return, there is no scope for any major capital appreciation. However, in case of fixed rate debentures, their market price moves inversely with the direction of interest rates. The debenture issues are rated by the professional credit rating agencies regarding the payment of interest and the repayment of the capital amount. Apart from the `plain vanilla variety of debentures (periodic payment of interest during their currency and repayment of capital on maturity), a number of variations have been devised. For example, zero coupon bonds are issued at a discount to their face value and redeemed at the full face value. The difference constitutes return for the investor. Preference Shares Preference Shares carry a fixed rate of dividends. These carry a
preferential right to dividends over the equity shareholders. This means that equity share holders cannot be paid any dividends unless the preference dividend has been paid in full. Similarly on the winding up of the company, the preference share holders get back their capital before the equity share holders. In case of
cumulative preference shares, any dividend unpaid in past years accumulates and is paid later when the company has sufficient profits. Now all preference shares in
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL India are `redeemable, i.e. they have a fixed maturity period. Thus, preference shares are sometimes called a `hybrid variety incorporating features of debt as well as equity. Equity Shares Equity Shares are regarded as high return high risk instruments. These do not carry any fixed rate of return and there is no maturity period. The company may or may not declare dividend on equity shares. Equity shares of major companies are traded on the stock exchanges. The major component of return to equity holders usually consists of market appreciation. Call Money Market: The loans made in this market are of a short term nature overnight to a fortnight . This is mostly inter-bank market. Those banks which are facing a short term cash deficit, borrow funds from the cash surplus banks. The rate of interest is market driven and depends on the liquidity position in the banking system. Commercial Paper (CP) and Certificate of Deposits (CD) : CPs are issued by the corporates to finance their working capital needs. These are issued for short term maturities. These are issued at a discount and redeemed at face value. These are unsecured and therefore only those companies who have a good credit standing are able to access funds through this instrument. The rate of interest is market driven and depends on the current liquidity position and the creditworthiness of the issuing company.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The characteristics of CDs are similar to those of CPs except that CDs are issued by the commercial banks.
RESERVE BANK OF INDIA
The central bank of the country is the Reserve Bank of India (RBI). It was established in April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully paid which was entirely owned by private shareholders in the begining. The Government held shares of nominal value of Rs. 2,20,000.
Reserve Bank of India was nationalised in the year 1949. The general superintendence and direction of the Bank is entrusted to Central Board of Directors of 20 members, the Governor and four Deputy Governors, one Government official from the Ministry of Finance, ten nominated Directors by the Government to give representation to important elements in the economic life of the country, and four nominated Directors by the Central Government to represent the four local Boards with the headquarters at Mumbai, Kolkata, Chennai and New Delhi
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of 1934) provides the statutory basis of the functioning of the Bank.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The Bank was constituted for the need of following:

To regulate the issue of banknotes To maintain reserves with a view to securing monetary stability and To operate the credit and currency system of the country to its advantage.
Functions of Reserve Bank of India The Reserve Bank of India Act of 1934 entrust all the important functions of a central bank the Reserve Bank of India. Bank of Issue
Under Section 22 of the Reserve Bank of India Act, the Bank has the sole right to issue bank notes of all denominations. The distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as agent of the Government. The Reserve Bank has a separate Issue Department which is entrusted with the issue of currency notes. The assets and liabilities of the Issue Department are kept separate from those of the Banking Department. Originally, the assets of the Issue Department were to consist of not less than twofifths of gold coin, gold bullion or sterling securities provided the amount of gold was not less than Rs. 40 crores in value. The remaining three-fifths of the assets might be held in rupee coins, Government of India rupee securities, eligible bills of exchange and promissory notes payable in India. Due to the exigencies of the Second World War and the post-was period, these provisions were considerably modified. Since 1957, the Reserve Bank of India is required to maintain gold and foreign exchange reserves of Ra. 200 crores, of which at least Rs. 115 crores should be in gold. The system as it exists today is known as the minimum reserve system.
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Banker to Government
The second important function of the Reserve Bank of India is to act as Government banker, agent and adviser. The Reserve Bank is agent of Central Government and of all State Governments in India excepting that of Jammu and Kashmir. The Reserve Bank has the obligation to transact Government business, via. to keep the cash balances as deposits free of interest, to receive and to make payments on behalf of the Government and to carry out their exchange remittances and other banking operations. The Reserve Bank of India helps the Government both the Union and the States to float new loans and to manage public debt. The Bank makes ways and means advances to the Governments for 90 days. Bankers' Bank and Lender of the Last Resort
The Reserve Bank of India acts as the bankers' bank. According to the provisions of the Banking Companies Act of 1949, every scheduled bank was required to maintain with the Reserve Bank a cash balance equivalent to 5% of its demand liabilites and 2 per cent of its time liabilities in India. By an amendment of 1962, the distinction between demand and time liabilities was abolished and banks have been asked to keep cash reserves equal to 3 per cent of their aggregate deposit liabilities. The scheduled banks can borrow from the Reserve Bank of India on the basis of eligible securities or get financial accommodation in times of need or stringency by rediscounting bills of exchange. Since commercial banks can always expect the
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Reserve Bank of India to come to their help in times of banking crisis the Reserve Bank becomes not only the banker's bank but also the lender of the last resort.
Controller of Credit
The Reserve Bank of India is the controller of credit i.e. it has the power to influence the volume of credit created by banks in India. It can do so through changing the Bank rate or through open market operations. According to the Banking Regulation Act of 1949, the Reserve Bank of India can ask any particular bank or the whole banking system not to lend to particular groups or persons on the basis of certain types of securities. Since 1956, selective controls of credit are increasingly being used by the Reserve Bank.The Reserve Bank of India is armed with many more powers to control the Indian money market. Every bank has to get a licence from the Reserve Bank of India to do banking business within India, the licence can be cancelled by the Reserve Bank of certain stipulated conditions are not fulfilled. Every bank will have to get the permission of the Reserve Bank before it can open a new branch. Each scheduled bank must send a weekly return to the Reserve Bank showing, in detail, its assets and liabilities. This power of the Bank to call for information is also intended to give it effective control of the credit system.
As supreme banking authority in the country, the Reserve Bank of India, therefore, has the following powers: (a) It holds the cash reserves of all the scheduled banks. (b) It controls the credit operations of banks through quantitative and qualitative
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL controls. (c) It controls the banking system through the system of licensing, inspection and calling for information. (d) It acts as the lender of the last resort by providing rediscount facilities to scheduled banks.
Custodian of Foreign Reserves
The Reserve Bank of India has the responsibility to maintain the official rate of exchange. According to the Reserve Bank of India Act of 1934, the Bank was required to buy and sell at fixed rates any amount of sterling in lots of not less than Rs. 10,000. The rate of exchange fixed was Re. 1 = sh. 6d. Since 1935 the Bank was able to maintain the exchange rate fixed at lsh.6d. though there were periods of extreme pressure in favour of or against the rupee. After India became a member of the International Monetary Fund in 1946, the Reserve Bank has the responsibility of maintaining fixed exchange rates with all other member countries of the I.M.F. Besides maintaining the rate of exchange of the rupee, the Reserve Bank has to act as the custodian of India's reserve of international currencies. The vast sterling balances were acquired and managed by the Bank. Further, the RBI has the responsibility of administering the exchange controls of the country.
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Supervisory functions
In addition to its traditional central banking functions, the Reserve bank has certain non-monetary functions of the nature of supervision of banks and promotion of sound banking in India. The Reserve Bank Act, 1934, and the Banking Regulation Act, 1949 have given the RBI wide powers of supervision and control over commercial and co-operative banks, relating to licensing and establishments, branch expansion, liquidity of their assets, management and methods of working, amalgamation, reconstruction, and liquidation. The RBI is authorised to carry out periodical inspections of the banks and to call for returns and necessary information from them. The nationalisation of 14 major Indian scheduled banks in July 1969 has imposed new responsibilities on the RBI for directing the growth of banking and credit policies towards more rapid development of the economy and realisation of certain desired social objectives. The supervisory functions of the RBI have helped a great deal in improving the standard of banking in India to develop on sound lines and to improve the methods of their operation.
Promotional functions
With economic growth assuming a new urgency since Independence, the range of the Reserve Bank's functions has steadily widened. The Bank now performs a varietyof developmental and promotional functions, which, at one time, were regarded as outside the normal scope of central banking. The Reserve Bank was asked to promote banking habit, extend banking facilities to rural and semi-urban
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL areas, and establish and promote new specialised financing agencies. Accordingly, the Reserve Bank has helped in the setting up of the IFCI and the SFC; it set up the Deposit Insurance Corporation in 1962, the Unit Trust of India in 1964, the Industrial Development Bank of India also in 1964, the Agricultural Refinance Corporation of India in 1963 and the Industrial Reconstruction Corporation of India in 1972. These institutions were set up directly or indirectly by the Reserve Bank to promote saving habit and to mobilise savings, and to provide industrial finance as well as agricultural finance. As far back as 1935, the Reserve Bank of India set up the Agricultural Credit Department to provide agricultural credit. But only since 1951 the Bank's role in this field has become extremely important. The Bank has developed the co-operative credit movement to encourage saving, to eliminate moneylenders from the villages and to route its short term credit to agriculture. Classification of RBIs functions
The monetary functions also known as the central banking functions of the RBI are related to control and regulation of money and credit, i.e., issue of currency, control of bank credit, control of foreign exchange operations, banker to the Government and to the money market. Monetary functions of the RBI are significant as they control and regulate the volume of money and credit in the country.
Equally important, however, are the non-monetary functions of the RBI in the context of India's economic backwardness. The supervisory function of the RBI may be regarded as a non-monetary function (though many consider this a monetary function). The promotion of sound banking in India is an important goal
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL of the RBI, the RBI has been given wide and drastic powers, under the Banking Regulation Act of 1949 - these powers relate to licencing of banks, branch expansion, liquidity of their assets, management and methods of working, inspection, amalgamation, reconstruction and liquidation. Under the RBI's supervision and inspection, the working of banks has greatly improved. Commercial banks have developed into financially and operationally sound and viable units. INTRODUCTION TO CO-OPERATIVE BANK The Co-operative Banks in India started functioning almost 100 years ago. The Co-operative Bank is an important constituent of the Indian financial system, judging by the role assigned to Co-operative, the expectations the Co-operative is supposed to fulfill, their number, and the number of offices the Co-operative Bank operate. India plays an important role even today in rural financing. The business of Co-operative Bank in the urban areas also has increased phenomenally in
recent years due to the sharp increase in the number of primary Co-operative Banks. Co-operative Banks in India are registered under the Co-operative societies act. The Co-operative Bank is also regulated by the RBI. They are governed by the banking regulations Act 1949 and Banking laws. At the end of March, 2000 in the states in there were 28,708 Co-operatives of different types with the membership of 1.51 crores. Their working capital was Rs. 16,868.45 crores and total deposits were Rs.9356.50 crores.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL HISTORY OF THE CO-OPERATIVE MOVEMENT Co-operation dates back as far as human beings have been organizing for mutual benefit. Tribes were organized as Co-operative structures, allocating jobs and resources among each other, only trading with the external communities. Postindustrial European is home to the first Co-operatives from an Industrial context. In 1761, the Fenwick weavers society was formed in Fenwick, East Ayrshire, and Scotland to sell discounted oatmeal to local workers. Its services expanded to include assistance with savings and loans, emigration and education. In 1810, Welsh social reformer Robert Owen, from Newtown in mid-Wales, and his partners purchased New Lanark mill from Owens father-in law and proceeded to introduce better labour standards including discounted retail shops where profits were passed on to his employees. The Rockdale Society of Equitable Pioneers, founded in 1844, is usually considered the first successful Co-operative enterprise used as a model for modern co-opx, following the Rochdale principles. A group of 28 weavers and other artisans in Rochdale, England set up the society to open their own store selling food items they could not otherwise afford. Within ten years there were over 1,000 co-operative societies in the United Kingdom. Other events such as the founding of a friendly society by the Tolpuddle Martyrs in 1832 were key occasions in the creation of organized labour and consumer movements.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL FEATURES OF CO-OPERATIVE BANK Some distinguishing characteristics of the Co-operative Bank are as follows: i. ii. They function on no profit, no loss basis. They are organized and managed on the principles Co-operation, self-help and mutual help. They function with the rule of 1 member, 1 vote. iii. Co-operative Bank performs all the main banking function on deposits, mobilization of funds. iv. Co-operative Bank perhaps the 1st government sponsored financial agency in India. v. vi. Co-operative Bank belongs to the money market as well as to capital market. Co-operative Bank do banking business mainly in the agriculture and rural sector. vii. Co-operative Bank are subject to CRR and liquidity requirements as other scheduled and non-scheduled banks.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL STRUCTURE OF BANKING SYSTEM INDIA
RBI
SCHEDULE BANK
CO-OPERATIVE COMMERCIAL
NON-SCHEDULE BANK COOPERATIVE BANK COMMERCIAL BANK
BANK
BANK
INDIAN BANK
FOREIGN BANK
PUBLIC SECTOR BANKS
PRIVATE SECTOR BANKS
STATE BANK OF MYSORE AND its ASSOCIATE
OTHER NATIONALIZED BANK
REGIONAL RURAL BANKS
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL INTRODUCTION TO MICROFINANCE: Today, Microfinance is playing a vital role in development of the economy in any Country. Moreover, microfinance has moved all beyond its roots in developing countries. Micro Finance is emerging as a powerful instrument for poverty alleviation in the new economy. Micro Finance for the poor and women has received extensive recognition as a strategy for poverty reduction and for economic and women empowerment. Micro finance means helping people in providing small financial assistance to poor families to strengthen their financial position and social status.
Meaning of Microfinance:Microfinance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. Micro finance, a concept that is helping the poor to avail of and create economic growth opportunities. Microfinance is the provision of financial services to low-income clients, including consumers and the self-employed, who traditionally lack access to banking and related services. Definition:The important definitions of microfinance are as follows:According to International Labor Organization (ILO), Microfinance is an economic development approach that involves providing financial services through institutions to low income clients.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL In India, Microfinance has been defined by The National Microfinance Taskforce, 1999 as provision of thrift, credit and other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards. "The poor stay poor, not because they are lazy but because they have no access to capital." History of the Microfinance Movement
In 1974, famine struck Bangladesh. At the time, Dr. Muhammad Yunus was a professor of economics at the University of Chittagong. Disillusioned by the elegant theories of economics that could not explain the thousands of poor people dying of starvation on the streets; he was determined to find a practical way to help the poor. During a visit to the nearby village of Jorba, he was astounded to find that a sum of $27 could radically change the lives of 42 people in the village. This was the sum of money they collectively needed to buy bamboo to make the stools they sold to make a living. He took $27 from his pocket and made 42 loans to the stool makers in this tiny village. They were able to pay him back with interest and take a step towards lifting themselves out of poverty.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL This simple idea that the poor could use credit to lift themselves out of poverty, led Dr. Yunus to create The Grameen Rural Bank in 1983. Since its inception, it has made over $8.96 billion in loans to over eight million borrowers. Its methodologies have become the cornerstone of the microfinance industry. In 2006, The Grameen Bank and Dr. Yunus were awarded the Nobel Peace Prize.
Explosive Growth In the 1970s and 80s, inspired by Grameens success, social innovators and organizations around the world began to experiment with different programs to bring financial services to the poor. Microfinance institutions proved that it was actually possible to build viable businesses through lending to the poor. The number of microfinance institutions increased rapidly. The 2006 Microfinance Summit Campaign Report estimates that there are now more than 3,000 microfinance institutions, serving more than 100 million poor people in developing countries. The total cash turnover of these institutions worldwide is estimated at $2.5 billion and the potential for new growth is outstanding. Indian scenario in Micro Finance Traditionally, banks in India have not provided financial services, such as loans, to clients with little or no cash income. Banks incur substantial cost to manage a client account, regardless of how small the sums of money involved. The fixed cost of processing loans of any size is considerable as assessment of potential borrowers, their repayment prospects and security, administration of outstanding loans, collecting from delinquent borrowers, etc., has to be done in all cases. There is a breakeven point in providing loans or deposits below which banks lose money
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL on each transaction they make. Poor people usually fall below that breakeven point. A similar equation resists efforts to deliver other financial services to poor people. It is then, the concept of micro finance institutions came into the picture. This has gained considerable importance in Indian Scenario. Approximately 665 million client accounts are maintained with over 3,000 institutions that are serving people who are poorer than those served by the commercial banks. Of these accounts, 120 million were with institutions normally understood to practice microfinance like the postal saving banks, development banks, cooperatives and credit unions and specialized rural banks. In India, Micro finance has fueled the efforts at rural development, woman empowerment and wealth generation by providing small scale savings, credit, insurance and any other financial services to poor and low-income households. Microfinance sector has traversed a long journey from micro savings to micro credit and then to micro enterprises and now entered the field of micro insurance, micro remittance and micro pension. This gradual and evolutionary growth process has given a great opportunity to the rural poor in India to attain reasonable economic, social and cultural empowerment, leading to better living standard and quality of life for participating households. Financial institutions in the country continued to play 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.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL 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 per cent refinance against bank loans provided by various banks for microfinance activities.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Table : 1.1 Participating Banks in providing Micro finance Participating Banks Public sector commercial Banks Private sector commercial Banks Regional Rural Banks Co-Operative Banks Number 27 19 81 318
Small Industries Development Bank of 1 India
DIFFERENT MODEL OF MICRO FINANCE:1. SHG- Bank linkage model:- This model involes the SHGs financed directly by the banks viz., Commercial Banks (Public sector and private sector), Regional Rural Banks and and Co-operative Banks. 2. Micro Finance Institutions Bank linkage model:- This model covers financing of MFIs by banking agencies for onlending to SHGs.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL SHGs- Meaning SHG is a small, homogenous affinity group of rural poor agriculture labourers, marginal and small farmers and micro-enterprises which is voluntarily formed. It can be formal or informal. SHGs are formed by the members, of the members and for the members. They are encouraged to practice voluntary thrift on a regular basis. The SHG generally a minimum of 5 members and not exceeding 20 members. Members save and contribute to common fund from which small loans are met to needy member as per the decisions of the group. There are four stages in SHG formation: Forming Storming Norming = 0-2 months = 2-3 months = 4-6 months
Functioning = 6-12 months Objective of SHGs To evolve a supplementary credit strategy for reaching the rural poor. To build mutual trust and confidence between banks and rural poor To encourage banking activities both thrift as well as credit in way to SELF HELP.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Methodology adopted Direct or Indirect finance Maximum 4 times of Deposit Minimum 6 months of functioning 100% NABARD Refinance on outstanding To open a SB account with Bank
Notable figures of Micro finance in India Table 1.2
SHGs Savings linked with banks Total No.of SHGs Savings linked with banks Rs.69.53 lakh
Out of Total (of which) exclusive Women SHGs Rs.53.10 lakh Total savings amount of SHGs with banks as on Rs.6198.71 31-3-10 Out of total savings of exclusive women SHGs crore Rs.4498.66 crore Estimated number of families covered upto 313-2010 Rs.97 million
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Table 1.3 SHGs Credit linked with banks in the year 2009- 10 Total No.of SHGs credit 2009-10 linked during the year Rs.15.87 lakh
Out of Total (of which) exclusive Women SHGs Rs.12.94 credit linked lakh
Table 1.4 Loan amount 2009- 10 Total amount of loan disbursed to SHGs Rs.14453.30 crore Out of Total loan disbursed Women SHGs Total amount of loans outstanding SHGs exclusive to Rs.12429.37 crore against Rs.28038.28 crore disbursed and loan outstanding in the year
Out of total loans outstanding against women Rs.23030.36 SHGs crore
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Average loan amount outstanding per SHG as on March 2010 Average loan amount outstanding per member as on 31-3-10 Rs. 4,128 Rs. 57,795
Microfinance Institutions (MFIs) :Microfinance Institutions are seen as key players in delivering financial services to the poor people. They are increasingly seen as a solution to the ever increasing problem of poverty and an indispensable toot to provide poor but entrepreneurial people with necessary finances to start their own businesses. These institutions play a key role in providing a whole range of financial services to the poor rural households that have been ignored till now by the mainstream financial institutions because of their inability to provide collateral. This article discusses the unique characteristics of the microfinance institutions and the challenges they have to face in order to survive and thrive in the future. A microfinance institution is generally defined as as an institution that provides financial services to the poor. These institutions play a crucial role in the economic empowerment of the poor people especially in the rural areas. These institutions generally include credit unions, co-operatives and financial NGOs. MFIs provide microfinance services to those people who are inability to produce guarantees that are required to gain credit from formal financial institutions.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Microfinance Institutions in India. Microfinance institutions (MFIs) have emerged over the past three decades to address this market failure and provide financial services to low-income clients. Most of the early pioneer organizations in the modern microfinance movement operated as non-profit, socially motivated non-governmental organizations (NGOs). They developed new credit techniques: instead of requiring collateral, they reduced risk through group guarantees, appraisal of household cash flow, and small initial loans to test clients. Experience since then has shown that the poor repay uncollateralized loans reliably and are willing to pay the full cost of providing them: access is more important to them than cost. More than 10,000 micro-lending organizations are today providing loans to 25 million poor people throughout the world, most of them women. The number of these organizations grew dramatically during the 1990s, spurred by the notion of Self help and a faith in the creditworthiness and entrepreneurial potential of the poor. Microfinance for the poor has emerged as an idea that appeals to several sections of people. In principle, even the worlds poorest people can acquire savings and investment if they have access to capital. The size and types of implementing NGOs range from very small to moderately big organizations involved in savings and/or credit activities for individuals and group. These NGOs adopt a variety of approaches, and tend to operate within a limited geographical range. A few like PRADAN, ICECD, MYRADA, SEWA operate on a larger scale and have been successful in replicating their experiences in other parts of the country, they also act as
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL resource organizations. While a few lending most organizations do lend directly to borrowers, rely on SHGs to provide the linkage the borrowers
Table 1.5 Support from NABARD Capacity building of partner institutions in the year 2009- 10 Number of programme conducted during 2009-10 No, of Participants covered during 2009-10 6804 Rs.2.54 lakh
Cumulative no. of participants trained upto March Rs.24.55 2010 Grant support during the year 2009-10 lakh Rs.9.92 crore Cumulative fund support upto March 2010 Rs.45.02 crore Table 1.6 Refinance Support from NABARD Refinance to banks during 2009-10 Cumulative refinance released upto 31-3-10 Rs.3173.56 crore Rs.12861.65 crore
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Microfinance: Strategy adopted by NABARD The National Bank for Agriculture and Rural Development (NABARD) have played a significant role in promoting micro finance. NABARD has been instrumental in facilitating various activities under microfinance sector, involving all possible partners at the ground level in the field. NABARD has been encouraging voluntary agencies, bankers, 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
With a view to developing a supplementary credit delivery mechanism to reach the poor in cost- effective and sustainable manner, the NABARD
introduced in 1992 a pilot project for linking 500 SHGs. NABARD is adopted the following strategies to spread the outreach of SHG- Bank Linkage programme: Widening spatial distribution and intensity district oriented planning and strategy. Evolving district- wise plan of action/ strategy in consultation with existing stakeholders aiming at promotion and linkage of a minimum of 500 SHGs per district every year. Training and exposure programmes for the staff of the stakeholders. of the Programme with
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Providing promotional assistance to partners for promoting and nurturing the SHGs generally on a add-on basis. Widening the range of SHG promoting agencies. Involving banks at their corporate level, organizing training programmes for the regional/ zonal managers of commercial banks in association with their central offices. Establishing the financing of SHGs as a business proposition for banks. Increasing the participation of the co-operative banks by encouraging them to finance SHGs as Financing cooperatives within the cooperative. Associating village communities, peoples institutions, rural volunteers and individuals to participate in the programme as SHG promoters. Increasing the quality of the exisiting SHGs by propagating Self- rating tools. Large- scale dissemination of the concept and approach among the rural masses. Encouraging NGOs to play an important role in correcting the regional imbalance in spread of SHG-Bank linkage programme. Supportive policies of RBI for linkage programmes The SHG Bank linkage was further extended to Regional Rural Banks (RRBs) and cooperative banks in 1993 and is now permitted by the RBI as a component of priority sector lending. RBI extends full support to NABARDs
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL initiatives in introducing and implementing the linkage programme. The supportive policies of RBI are : Interest rates of banks to the micro-credit institutions or by the microcredit institution to SHGs or their members deregulated. Complete freedom to banks to choose their models. Freedom in designing, lending and savings products. Maximum flexibility provided in lending norms. Making micro finance an integral part of banks corporate credit plans. Micro finance has been hailed as the best method of creating additional employment and for removing poverty. NABARD has been playing a catalytic role in terms of promotional support to NGOs and also in nurturing quality SHGs. Credit sanctioned by the Micro financial institutions have vast market in the rural as well as in the urban areas. Successful marketing of microfinance to SHGs will further strengthen the movement. The NGOs therefore needs to be given priority for standardizing the quality of service. Indian micro finance has recorded substantial achievements over the past few years. Indias leading MFIs are now highly regarded all over the world. Linking of SHGs with banks play a vital role for women development.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL RESEARCH DESIGN
TITLE OF THE PROJECT A STUDY ON MICROFINANCE IMPACT ON BORROWERS AND CHALLENGE OF KARNATAKA STATE CO-OPERATIVE APEX BANK LIMITED.
STATEMENT OF THE PROBLEM. Microfinance has proven to be a very effective development tool because it provides empowerment instead of charity. Typically, microfinance clients are self employed house hold entrepreneurs who lack the resources to invest in their business their future and thus cannot escape the grips of extreme poverty. So the study will determine the impact of micro finance on barrowers of three different programmes of Karnataka state co-operative Apex bank ltd.(KSCABL) OBJECTIVES OF THE STUDY To know the evolution of microfinance as bought up by KSCABL. To understand the role played by KSCABL and its achievements in microfinance. To understand the impact of microfinance on the borrowers of selected programs. To explore the challenges faced by KSCABL for microfinance. To give some study based suggestions to KSCABL.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL RESEARCH METHODOLOGY OF THE STUDY . There are many microfinance programs that work through solidarity groups, the primary focuses of most implementing agencies remains on the progress of the individual rather than community, they pronounce the success of each woman, each borrower. Rather than seeing the individual with in the context of community. With all good intent, this study shall eye on SHG bank linkage programme, the most successful microfinance programme, backed by cooperatives with reference KSCABL. And the facts, figures and other relevant materials, past and present, serving has bases for the study and analysis will be determined from the primary data and secondary data. Primary data The primary data for the study shall be triggered by the following available sources. Banks Representatives. Personal interviews Observations etc Secondary data The secondary data shall be pulled out from the following available sources. Newspapers and magazines Company reports/records Monodrama year book 2010 Standard reference text books Various websites etc
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The facts, figures collected from the respondents are classified and tabulated and analyzed by using some available statistical tools.
ANALYSIS AND INTERPRETATION.
Analysis of the study shall be purely based on classifiable and tabulate data analysis in the form theory that can be interpreted in accordance with the help of comparative and percentile analysis and other simple method of statistics to make the readers understand the analysis. Bar charts, pie diagrams, multiple bar diagrams etc.
LIMITATIONS OF THE STUDY. The study has major limitations of the time and resources. The study is limited to know the benefits of SHG BLP since its inception, in brief. The study is limited to only KSCABL. Analysis of the data will be done by assuming that the information provided by the representatives is genuine.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL PROFILE OF KARNATAKA STATE CO-OPERATIVE APEX BANK LTD.
Our bank Co-operative sector has a long history of more than a century. In the Cooperative movement agriculture credit sector has acquired a special importance in order to avoid the exploitation of poor farmers from the middlemen and moneylenders and to provide suitable assistance to the eligible farmers. As our nation is basically an agriculture country, agriculture credit system plays an important role in the development of this sector. Through this system, the credit sector is extending helping hand to the farmers in its own way to boost the agriculture production in the state in particular and in the country at large. Karnataka State Co-operative Apex Bank over the 95 years, since its inception has always come forward to extend its assuring hand to the farmers of the state through District Central Co-operative Banks, Primary Agriculture Cooperative Societies working under three tier Agriculture Co-operative Credit System . Besides the bank is providing the needed financial assistance for development of human resources, training, computerisation and all other encouragement from time to time to the DCC Banks and PACS. The Government of Karnataka has accepted Prof. Vaidyanathan's Committee recommendations for revival of Co-operative Credit Institutions and Apex Bank is committed to its successful implementations in the state.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL PREAMBLE:
The Karnataka State Co-operative Apex Bank Limited.., established in the year 1915 with deposits of Rs 1.26 lakh, owned funds of Rs.0.54 lakh and working capital of Rs.1.80 lakh is extending its continued service for the past 95 years to its members and customers. The Bank which had a humble beginning in the year 1915 grew over the years and achieved a significant development in the Co-operative Banking sector and became a Pioneer State Co-operative Bank, among the State Co-operative Banks in the Nation. Apex bank rendering its service in the Cooperative Sector, very particularly in the Agriculture Credit Sector known for its commitment for the development of farmers in the state and credit Co-operative institutions. The primary objective of the Bank is to provide Short term and Medium term loans to farmers through DCC Banks and PACS, to the farmers so as to help them in managing their agricultural activities. The Bank is also extending loans to sugar sector, marketing and schematic activities, which are linked with agriculture.
NATURE OF BUSINESS:
The business carried by the bank is generally related with providing short term and long term agricultural loans. It also accepts deposits from the public. Apex bank also provides loans to processing, marketing and consumer cooperatives as well as sugar factories in Karnataka and working capital loans to state level and national level institutions.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Board of Directors: The management of the affairs of the bank shall vest in a committee called the board of directors consisting of 23 members including the president of the bank. a) Nineteen directors to be elected by the board of directors of each District Credit Co-operative Bank affiliated to the Apex bank from among themselves at the rate of one person for each District Credit Co-operative Bank. b) Nominees of State Government shall not exceed three of whom one shall be a banking expert who shall also be the managing director of the bank. The president of the Karnataka State Credit Agriculture and Rural development Bank Limited Bangalore, shall be an exofficio member of the board, He need not be a member of the bank. Term of office of the Board The term of office of the elected members of the board shall be deemed to empire on the date of the annual general meeting of the bank but they will continue in office until their successors are elected. Powers and Duties of Board of Directors. Without prejudice to the general powers conferred by these bye laws the following powers are conferred on the duties entrusted to the Board of directors. Admission of members. To purchase, take on lease or otherwise acquire any building or land whether
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL freehold, leasehold, or otherwise from any person for the Bank's purpose in Bangalore or elsewhere and build or to sell or alter any building or buildings, house or houses, shops or godowns, office or offices or a residence for the president, Member of the Parliament, Secretary or General Manager or any other person in the employ of the bank and to pay for such land and/or buildings whether purchased, leased, acquired, built or constructed by the bank either in cash or otherwise and to purchase all furniture and other things necessary or convenient for carrying on the business of the bank. To raise, borrow such sums of money as may be required from time to time for the purpose of the bank in accordance with and subject to the provisions of these bye-laws and the act or rules framed these under. To draw, accept, endorse, negotiate and sell bills of exchange and other negotiable instruments with or without security. To make laws and advances to members at such rates of interest as the board may deem fit either without taking any security for the repayment thereof or upon security of property whether movable or immovable or of document of title or otherwise, subject, however to the condition that the rates of interest charged to Co-operative Societies on loans for agriculture and nonagriculture which are refinanced by the Reserve Bank of India/ National Board of Agriculture Rural Development of India at a concessional rate of interest shall not exceed the ultimate lending rates prescribes in that respect by the said lending institutions. To make advances to members of this bank and to allow them overdrafts in
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL their current accounts with this bank either without security or upon the security of money which may have at the time when such advances are made or overdrafts allowed, been deposited by them with this bank on fixed deposit or upon the deposit of securities, specified in clauses(a), (b), (c)and (d) of section 20 of the Indian Trusts Act of 1882 or upon the pledge of agricultural produce, requisites and finished products of small scale and village industries or gold and silver ornaments belonging to them. To give guarantee to Co-operative Societies which are members of this bank in respect of advances to their own members or the loans granted by the Government or any other agencies subject to such conditions as are laid down in this regard and charge commission thereon. To establish and to support or aid in the establishment of funds calculated to benefit of employees at ex-employers of the bank. To execute all deeds, agreements, extracts receipts and other documents that may be necessary or expedient for the purpose of the bank. To call for periodical reports and returns from District Central Co-operative Banks and affiliated societies and to prescribe forms for such returns. To undertake liquidation work of affiliated societies indebted to the bank on conditions laid down by the registrar with a view to facilitate recoveries from the affiliated societies.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The Executive Committee. a) There shall be an Executive Committee consisting of Seven members as follows: The President. The Vice-President. The Managing Director. One nominee of the State Government other than the Managing Director. Three members to be elected by the board. b) The members of the Executive Committee shall hold office only so long as they continue to be the members of the board. A members of the Executive Committee shall cease to hold office if he absents himself committee but he may be reinstated in office by the committee for sufficient reasons to be recorded in writing. Any interim vacancy by resignation or otherwise occuring among elected members of the committee shall be filled up by election by the board. c) Four members of the Executive Committee shall form the quorum. Management. Annual General Meeting. a) Subject to the provisions of the Karnataka Co-operative Societies Act of 1959, the Karnataka Co-operative Societies Rules 1960 and the bye-laws of the bank, the final authority of the bank shall vest in the General Body of Members;
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL provided that nothing contained in this bye-law shall affect the exercise by the Board or the Executive Committee or such officers by the act or the rules or the bye-laws. b) The Annual General Meeting of the bank shall be held at the Registered office of the bank and shall be held once in a year within a period of three months after the co-operative year for the purpose of: Approval of the program of the activities of the bank including the budget estimate prepared by the board for the ensuring year. Elections if any, in the prescribed manner of the members of the board other than the nominated members. Considerations of the latest audited Profit and Loss account and Balance Sheet and consideration of the Annual Report, the latest available Audit Report and disposal of the net profits. Consideration of the amendment or repeal of any existing bye-laws or to adopt new bye-laws. Consideration of any other matter which may be brought forward in accordance with the bye-laws. Provided that with the general or special order of the Registrar the period for holding such meeting may be extended by a period not exceeding six months.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Study on functional departments of the Karnataka State Co-operative Apex Bank Limited. I. Administration and Development Department: This department is headed by Chief General Manager which is sub divided into two main department namely: a) Planning, development, administration and establishment department: This department is concerned with formulating and implementing various plans and strategies for development of Apex bank, District Central Co-operative Banks and Primary Agriculture Co-operatives. It formulates development action plans for District Co-operatives and Business Development Plans for Primary Agriculture Co-operatives. This department comprises of planning and development, statistics and development action plan. b) Human Resource Department: The service conditions of the employee of the bank are governed by subsidiary rules of the Bank. As per subsidiary rules, all appointments will be made direct recruitment after notifying vacancies in daily news papers. The recruitment committee is headed by the president of the bank and the managing director of the bank will be the member secretary, the recruitment will be made as per the recruitment rules issued by Government of Karnataka from time to time. The Apex bank has established Agricultural Co-operative Staff Training Institute (ACSTI) for imparting training to staff of the Apex bank, District Central Co-operative Banks and Primary Agriculture Co-operative Societies and urban banks in the state in order to enhance the skills of the managerial staff in the light
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL of diversification of business in the competitive environment. The programs mainly focus on systems and procedures including improvement in management information system. Apart from providing training to the staff of the staff of the bank at ACSTI, the officers will be deputed for the training programs conducted by training college of NABARD, regional training centre, Mangalore. Vykunta Mehta National Institute of Co-operative Management, Pune.
II. Finance and Audit Department: This department is headed by Chief General Manager which is sub divided into two namely: a) Inspection and Audit Department: The bank has a separate audit and inspection department to conduct concurrent audit of the branches. In addition to this, conducting annual inspection of the bank's branches and complaints is obtained from them. The complaints will be reviewed with reference to the observations made in the report and a list of important observations will be placed before of inspection and monitoring committee meeting for review. The concerned branch manager is also invited to be present in the said meeting and branch manager concerned is suitably advised.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL b) Banking Department: This department functions in general banking business of accepting deposits, giving loans and advances, providing credit facilities to farmers, processing working capital requirements of various institutions, managing day to day general banking activities.
VISION, MISSION AND QUALITY POICY: VISION: As a state co-operative bank, Apex bank shall be a dominant financial institution in the state, leading the state to economic prosperity. They shall be the model of an effective, protective, dynamic and financial sound organization, respectively to state goals and aspiration. They shall maintain highly trained and motivated professionals committed to the highest standards of ethics and excellence. They shall contribute to building progressive and standard of co-operative societies in the service of farmers and rural mass.
MISSION: Ensuring the best quality of life and success of their farmers, agricultural cooperative societies, district central co-operative banks, clients and employees who are the reasons for their being.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL For their Farmers: They shall continue to improve their socio-economic status through timely financial and technical support.
For their Clients: They shall deliver innovative and advanced products and services in productive and effective manner to meet their local demands.
For their PACS and DCC banks: They shall ensure mutual co-operation and compliment action to achieve optimum gains in an environment of confidence and trust.
For their Employees: They shall ensure a work atmosphere of mutual respect and team work team work within a system of recognition and regards. They shall continue to provide appropriate training and value enhancement to ensure the highest degree of professionalism and integrity. They shall hold their organization composed of highly competent people driven by superior technology.
For the People of Karnataka: They commit their unvarying loyalty and dedicated service in the pursuit of state farmers interest.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Quality Objectives: To serve as a state co-operative bank and as a balancing center in the state of Karnataka for registered co-operative societies. To raise funds by way of deposits, loans, grants donations, subscription, subsidies etc for financing the members by way of loans, cash credits, overdrafts and advances. To develop, assist and co-ordinate the member DCCBs and other cooperative societies and secure financial assistance for them. To arrange/hold periodical co-operative conferences of the DCCBs and other members of the bank and to take action for the growth and development of the co-operative credit movement. To serve as a State Co-operative Bank and as a Balancing center in the State of Karnataka for registered co-operative societies. To participate in financing Co-operative and other institutions who are members of the bank directly or through consortium of Bankers. To participate in the schematic lending and to provide loans for which refinance facility is available with term lending institutions. Ta arrange for the inspection and supervision of the affiliated District Central Co-operative Banks and other Co-operative Societies and guide them in their working. To buy and sell securities for the legitimate investment of surplus funds and act as a agents for buyers and sellers of securities of Central/State. To carry on general business of banking and other banking activities to the members and customers.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL To purchase, acquire or raise or otherwise obtain moveable or immovable property for the own use of the bank and also to dispose them of when not required To promote and undertake Co-operative Research and Co-operative Developement. To manage, sell or release any property which may come into the possesion of the bank in satisfaction of or part satisfaction of any of its claims. To promote economic interest of the members of the bank in accordance with the principles of cooperation. To do such other things as are incidental or conductive to the promotion and advancement of the business of the bank.
Functions of Apex Bank Ltd: Financing of short-term loans to seasonal agricultural operation and marketing of crops repayable within one year. Advancing cash credit loans to meet working capital for processing, marketing and consumer co-operative including co-operative sugar factories in Karnataka. Sanctioning advances to the non-farm sector to develop cottage industries, small scale industries and rural artisans. Participating in financing processing co-operatives for block capital under consortium arrangement. Providing loan facilities like consumer durable loans, installment loans, vehicle
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL loans, housing loans and safe deposit locker facilities to the consumer of the bank. Supporting the primary agriculture credit societies under the business development programs and District Central Co-opertive Bank under the development plan. Advancing medium term loans for development of agriculture infrastructure such as life irrigation, dairy, poultry, plantations, gobar gas etc., under the schematic lending. It also gives advances to oil seeds, weavers and staff of Apex bank.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL The Banks core processes
Credit Lending
andInvestments Deposits
andTransactions and Payments
Business banking Loans Overdrafts Asset based finance
Commercial instruments Accounts Purchase of Savings Personal Account management Certificate of depositor
commercial paper for bank portfolio Purchase of
commercial paper forBank customers assurance Bank acceptances Corporate and Time deposits Loans/Syndicate d Loans Overdrafts StructuredGovernment securities finance Line of S&L fixed deposits Short term deposits and call
Institutional Finance -
Cash operations
Money transfers Cash and cheques receipts Draft payments Direct debit payments
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL credits Structured Finance Guarantees Term Loan Working Capital Project Finance Refinance Retail banking loans management Mortgage Lending Mortgage financing House development bonds Debt Personal - Money market Post paid Prepaid Inter-bank operations Treasury bills and bonds Card products
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL SERVICE PROFILE OF THE BANK: The Karnataka State Co-Operative Apex Bank Limited provides following services to the societies: Financing of short term loans Financing of medium term loans Financing of Kisan credit card scheme/loan Credit facilities to self help groups. Advancing medium term loans economic development and providing cash loans Advancing workshop capital loans Collection of cheques and drafts Loans through various schemes Personal banking
Services provided by the bank in detail: Financing of short term loans: Financing of short term loans for seasonal agricultural operations and for marketing of crops. These loans are repayable within one year.
Financing of medium term loans: These loans are sanctioned for agricultural purpose and non-agricultural purpose . Financing of Kisan credit card schemes/loan: Kisan credit card aims at providing timely and adequate credit support to farmers for their cultivation including investment credit needs in a flexible and cost effective manner. All DCC banks in the state have implemented the kisan credit scheme.
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Credit facilities to self help groups: All the DCCBs have taken keen interest in the formation of self help groups in co-ordination with PACS. Self help groups mobilize their savings and avail credit facilities from DCCBs and PACS.
Advancing medium term loans with economic development: These loans are advanced for the agricultural infrastructures such as lift irrigation, diary, poultry, plantation, gobar gas etc that constitutes schematic lending.
Providing cash credit loans: Providing cash credit loans to processing marketing and consumer cooperatives as well as sugar factories in Karnataka and also term loans to sugar factories under consortium agreement.
Advancing working capital loans: Advancing working capital loans to state level co-operatives like MARKFRED, KCCF and to the national level co-operatives like IFFCO and KRIBHCO. The bank provide similar facilities to public sector undertakings like Karnataka Silk Marketing Board, Karnataka Handloom Development Corporation, Karnataka Small Scale Industries Development Corporations, Food Corporations of India directly and also through consortium arrangements through commercial banks.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Collection of Cheques and Drafts: The bank extends finance to the non-farm sector and to the development of cottage industries, small scale industries and rural artisan weavers. It is a scheduled bank in all aspects including remittance of funds, demand drafts, mail transfers, collection of cheques and drafts.
Loans through various schemes: Such as: Vehicle loans Housing loans Mortgage loans Installment loans Jewel loans Other loans Personal Banking: Apex bank provides the following deposit schemes to the customers: Fixed Deposits: In this account, the customer deposits money period up to 10 years. Current deposits: In this type, the individuals or businessmen operate. This account is kept open for the entire day. The customer can make any number of deposits and withdrawals in a day during business hours. Saving Bank Deposits: In this deposit, the low income class groups and marginal customer deposits the money.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL AREA OF OPERATION Apex bank works in the regional level only. It does not work in national level. The area of operation covers the entire Bangalore. It has 31 branches in Bangalore and head quarter is situated in Chamarajpet. The branch offices of bank are adequately delegated with power of sanction of disbursements. If the loans are to be provided upto 10 lakhs it is handled by concerned branch offices but if it is more than 10 lakhs then it is handled by concerned branch offices but if it is more than 10 lakhs then it is handled by main branch.
BRANCHES AT BANGALORE: Head office Branch- Chamarajpet. Ashoka Pillar. Banashankari. Basaveshwara nagar. Girinagar. Gokula. Gandhinagar. Agra- HSR Layout. Indiranagar. Jayanagar Market Complex. Jayanagar 9th Block. J.P nagar. Kalpatharu Super Bazaar. Koramangala. Kengeri Satellite Town. Lakkasandra. Magadi Road.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Ganganagar. Padmanabha nagar. Public Utility Building. Rajajinagar. R.P.C Layout. Vijayanagar. Vidhana Soudha. Legislators Home. M.S Building. Mahalakshmipuram. Vyalikaval. Chandra Layout. Vivekananda College (Ext. counter). R.T Nagar.
OWNERSHIP PATTERN Apex bank is state co-operative bank established by the state government in the year 1915 under the organization of Primary Agricultural Co-Operative Credit Societies (PACS) in villages and Urban Co-Operative Banks in towns and cities offer passing the co-operative credit societies at 1904 to meet mainly short and medium term financial needs of farmers.
COMPETITORS INFORMATION The major competitors are: Land bank (Agricultural based finance). Amanath Scheduled Co-operative Bank. Sham Rao Vittal Co-operative Bank.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Commercial Banks. Small Industrial Service Institution. Small Industrial Development Bank of India. Corporate Banks. Some local Co-operative Banks. ACHIEVEMENTS/AWARDS: 1) Bank is able to lend 75% of the farmers in the state and it covers all sugar factories in Karnataka. 2) Apex bank is habituated to get awards at National levels year after year. Similarly NABARD has been giving best performance award and even PACS have not have logged behind in getting National recognition. All DCC banks and merely 80% of PACS have proved themselves to be financially viable.
INFRACTRUCTURAL FACILITIES The new administrative building at a cost of around Rs. 800 lakhs completed in 2002 provides additional impetus to a new work culture and new mindset of all. The gigantic building with granite cladded faade having circular and rectangular columns suggesting strengths and stability reflects the character of the organization. This four storied block caters mainly to the administrative requirement of the bank along with the hi-tech banking hall on the ground floor. The architects M/s.Zechariah consultant effectively conceptualize the vision of the corporate head office floated by the Directors of the Board. The built up area of UTHUNGA has been 67,820 Sq. ft. the civil cost has come to Rs. 888 per sq. ft. and interiors all inclusive worked out at Rs. 357 per sq. ft. They believe that their members are always behind them not only to encourage but also to guide them in case they go wrong. They are grateful to them. Similarly they are grateful to the
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL Government of Karnataka, RBI, NABARD and all other sister Co-Operative in the state for what they are today.
WORK FLOW MODEL
APEX BANK
DCC BANKS
PRIMARY COOPERATIVE BANKS
FARMERS
FUTURE GROWTH AND PROSPECTUS:
The Honorable Union Minister for finance has already announced and introduced and instructed all the banks in the country for building the agriculture credit in 3 years. The Co-operatives too, in the state have to increase the agriculture credit to farmers by 30% during the years 2006-07. The state government in its budget proposals also announces to issue agricultural loans at 4% interest. The Apex bank will endeavor to further increase in the agriculture
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL loans from 1258.20 crores of total agricultural loans portfolio in the year 2005-06 to 1450.00 crores to the end of 31st march 2007. Accordingly a target has been set to mobilize additional resources to the extent of Rs.166.05 crores through the bank branches. NABARD also inform apex bank and District Central Co-operative banks to take appropriate action to mobilize additional resources to utilize such funds to increase the seasonal agricultural operations.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL ANALYSIS AND INTERPRETATION OF DATA
TABLE-1
OPINION REGARDING AWARENESS OF MICROFINANCE
SL.NO
OPINION
NO OF RESPONDENT
PERCENTAGE
YES
38
76%
NO
12
24%
TOTAL
50
100
ANALYSIS From the following information it is clear that 76% are aware of microfinance and 24% of not aware of microfinance.
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NO OF RESPONDENT
24%
1 YES 2 NO
76%
INFERENCE: From the above graph it can be inferred that 76% of the respondents are positive opinion and rest of 24% respondents shows negative attitude towards the awareness of microfinance.
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TABLE-2
OPINION REGARDING MICROFINANCE SERVING THE RURAL AND POOR PEOPLE.
SL.NO 1 2 3 4 5 TOTAL
OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STRONGLY DISAGREE
NO OF RESPONDENT 10 10 20 7 3 50
PERCENTAGE 20% 20% 40% 14% 6% 100
ANALYSIS:
From the above table we can analyse that microfinance serves the poor and rural people it is therefore clear that 40% of the respondents are neutral (cannot say) and 20% of the respondents strongly agree, 20% of the respondents are agree, 14% of the respondents disagree and 6% of the respondents strongly disagree.
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NO OF RESPONDENT
6% 14%
20%
1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 20% 4 DISAGREE 5 STROGNLY DISAGREE
40%
INFERENCE:
The respondents were asked whether the microfinance serves the poor and the rural population as 40% of the people were not sure about it we can analyse that the microfinance is not helping them effectively.
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TABLE-3
OPINION REGARDING MICROFINANCE CONTRIBUTION TO ENTERPRISES GROWTH.
OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE
PERCENTAGE 16% 20% 50% 10% 4% 100
ANALYSIS: From the above table we can analyze that the 50% of the people were not sure whether microfinance contributes the enterprise growth. 20% of the respondents agree, 16% of the respondents strongly agree, 10% of them disagreed and 4% of the strongly disagreed.
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NO OF RESPONDENT
10%
4%
16%
1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 20% 4 DISAGREE
50%
5 STROGNLY DISAGREE
INFERENCE:
The respondents were not sure that microfinance will help for the growth and development of the enterprise were as 36% of the respondents agreed that they helps in growth and very few respondents disagreed.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL TABLE-4
OPINION REGARDING MICROFINANCE HELPS RURAL WOMEN TO TAKE EMPOWERMENT. SL.NO 1 2 3 4 5 TOTAL OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE NO OF RESPONDENT 4 10 30 4 2 50 PERCENTAGE 8% 20% 60% 8% 4% 100
ANALYSIS:
From the above table we observe that 60% of respondents are not sure that microfinance help rural women to take a empowerment. 20% of respondent agree, 8% of the respondents strongly agree, 8% of the respondents disagree, 4% of the respondents strongly disagree.
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NO OF RESPONDENT
1 STRONGLY AGREE 8% 4% 8% 20% 3 CANNOT SAY 4 DISAGREE 5 STROGNLY DISAGREE 2 AGREE
60%
INFERENCE:
As majority of the people are not sure about we can analyze that microfinance is not very much helpful for the financial development of rural population.
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OPINION REGARDING MICROFINANCE LEAD TO POOR ALLEVIATION.
PERCENTAGE 6% 16% 54% 14% 10% 100
ANALYSIS:
From the above data it is analyze that the microfinance lead to poor alleviation 54% cannot say, 16% agree and 6% strongly agree.
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NO OF RESPONDENT
10% 14%
6% 16%
1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 4 DISAGREE 5 STROGNLY DISAGREE
54%
INFERENCE:
Microfinance does not help much for the financial development of the poor population because majority of the respondents were not sure it at all microfinance helped them in alliving the poverty.
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TABLE-6
OPINION REGARDING EDUCATIONAL OPPORTUNITY FOR THE POOR CHILDREN BY THE MICROFINANCE.
PERCENTAGE 4% 20% 60% 12% 4% 100
ANALYSIS:
From the above data it is analyze that the microfinance take advantage of educational opportunity for the poor children 60% cannot say, 20% agree and 4% strongly agree.
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NO OF RESPONDENT
1 STRONGLY AGREE 12% 4% 4% 2 AGREE 20% 3 CANNOT SAY 4 DISAGREE 5 STROGNLY DISAGREE
60%
INFERENCE:
Microfinance should provide educational benefits to the poor children as it helps in the development privileged children.
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OPINION REGARDING LEVEL OF INCOME IN THE SOCIETY THROUGH MICROFINANCE.
SL.NO 1 2 3 4 5
OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE TOTAL
PERCENTAGE 20% 30% 40% 8% 2%
ANALYSIS:
From the above data it is analyzed that the microfinance helps in improving level of income in the society 30% agree, 20% strongly agree and 40% cannot say.
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NO OF RESPONDENT
8%
2% 20%
1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY
40% 30%
4 DISAGREE 5 STROGNLY DISAGREE
INFERENCE:
Many of the respondents were not sure hence we can inferred that microfinance does not help in improving the economic status of the society.
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OPINION REGARDING INCREASE IN CONTROL OF WOMEN OVER RUNNING FAMILY ENTERPRISES.
SL.NO 1 2 3 4 5
OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE TOTAL
PERCENTAGE 12% 50% 20% 12% 6%
ANALYSIS:
From the above data it is analyzed that the microfinance enable increase in control of women over running family enterprise 50% agree, 12% strongly agree and 20% cannot say.
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NO OF RESPONDENT
6% 12%
12%
1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY
20% 4 DISAGREE 50% 5 STROGNLY DISAGREE
INFERENCE:
Microfinance help the women to start up their own business and get selfemployed which will help them to run there family.
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TABLE-9 OPINION REGARDING AWARENESS OF KISAN CREDIT SCHEME LOANS
SL.NO 1 2
OPINION YES NO TOTAL
NO OF RESPONDENT 40 10 50
PERCENTAGE 80% 20%
ANALYSIS: From the above table it is clear that 80% of the respondents are aware of kisan credit scheme loan and 20% of the respondents are not aware of this scheme.
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NO OF RESPONDENT
20%
1 YES 2 NO
80%
INFERENCE:
Kisan credit loans are provided to the farmers as the majority of the respondents agreed that they are satisfied with the availability of kisan credit loans.
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OPINION REGARDING SATISFACTION WITH MICROFINANCE FACILITIES.
SL.NO 1 2
PERCENTAGE 54% 46%
ANALYSIS:
From the above table it is clear that 54% of the respondents are satisfied with the micro financing facilities provided by the bank and 46% of the respondents not satisfied.
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NO OF RESPONDENT
46% 1 YES 2 NO 54%
INFERENCE:
Facilities provided by the bank are been satisfied by the majority of customer. So it is observed that bank provide good facilities to the customers.
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OPINION REGARDING MICROFINANCE HEOP TO DEVELOP ENTERPRISES
SL.NO 1 2
PERCENTAGE 34% 66%
ANALYSIS: From the above table it is clear that 66% of the respondents does not help to develop the enterprise and 34% of the respondents help to develop the enterprise.
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NO OF RESPONDENT
34% 1 YES 2 NO 66%
INFERENCE:
Microfinance is for the people who are in need which helps the women and farmers for the economic development.
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OPINION REGARDING SECTOR THAT BENEFITS THE MOST
SL.NO 1 2 3 4
OPINION AGRICULTURE ENTERPRISES SELF EMPLOYED OTHERS TOTAL
NO OF RESPONDENT 23 3 17 7 50
PERCENTAGE 46% 6% 34% 14%
ANALYSIS:
From the above table it is clear that 46% of the respondents share their view that agricultural sector will be more beneficial and 34% of the respondents share their view that self employment will be more beneficial, 6% of the respondents agree that enterprise will be more beneficial and 14% of the respondents share their view agreed that the other sector will be beneficial for microfinance.
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NO OF RESPONDENT
14% 1 AGRICULTURE 46% 2 ENTERPRISES 3 SELF EMPLOYED 34% 6% 4 OTHERS
INFERENCE:
Microfinance is beneficial for the agricultural and self employed sector as the people get employed and credit facilities are provided to the farmers.
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OPINION REGARDING AWARENESS OF THE NEWLY EMERGING FACILITIES.
SL.NO 1 2
PERCENTAGE 26% 74%
ANALYSIS: From the above table it is clear that 74% of the respondents are not aware of equity investment and 26%of the respondents are aware of equity investment.
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NO OF RESPONDENT
26%
1 YES 2 NO
74%
INFERENCE: Karnataka apex bank has come up with the new emerging microfinance which is still not popular among the customers of the bank as they are not educated.
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OPINION REGARDING THE POWERFUL INSTRUMENT FOR SELF EMPOWERMENT OF RURAL WOMEN.
SL.NO 1 2
PERCENTAGE 60% 40%
ANALYSIS: From the above table it is clear that 60%of the respondents are accepted it is a powerful instrument and 40% of the respondents does not accept it is a powerful instrument.
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NO OF RESPONDENT
40% 1 YES 2 NO 60%
INFERENCE: Micro financing is helpful for the rural women as it provides self employment opportunity for the women which will help them to improve there per capita income.
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TABLE-15
OPINION REGARDING NABARD SIGNIFICANTE ROLE IN PROMOTING MICROFINANCE.
SL.NO 1 2
PERCENTAGE 38% 62%
ANALYSIS: From the above table it is clear that 62% of the respondents does not agree that NABARD play a significant role in promoting microfinance and 38%of the respondents agree that NABARD play a significant role in promoting microfinance.
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NO OF RESPONDENT
38% 1 YES 2 NO 62%
INFERENCE:
NABARD play a significant role because it provides loans to the formers and other facilities.
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TABLE-16
OPINION REGARDING AWARNESS OF THE PROCEDURE FOR LOAN.
SL.NO 1 2
PERCENTAGE 68% 32%
ANALYSIS: From the above table it is clear that 68% of the respondents are aware of procedure for applying micro finance loans and 32% of the respondents are not aware of their procedure.
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NO OF RESPONDENT
32% 1 YES 2 NO 68%
INFERENCE: It is therefore inferred that majority of the people are aware of the procedure for applying for loan for microfinance.
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OPINION REGARDING SATISFACTION WITH SERVICES.
SL.NO 1 2 TOTAL
OPINION YES NO
PERCENTAGE 56% 44% 100
ANALYSIS: From the above table it is clear that 56% of the respondents are satisfied with services provided by the bank and 44% of the respondents are not satisfied with services provided by the bank.
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NO OF RESPONDENT
44% 56%
1 YES 2 NO
INFERENCE: When enquired the respondents majority of the customers were extremely satisfied with services that is provided by the bank.
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TABLE-18
OPINION REGARDING EARLIER BORROWED OF LOAN FROM THUS BANK.
SL.NO 1 2 TOTAL
OPINION YES NO
PERCENTAGE 62% 38% 100
ANALYSIS: From the above table it is clear that 62% of the respondents had borrowed micro financing loan from the bank and 38% of the respondents had never borrowed a micro financing loan from the apex bank.
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NO OF RESPONDENT
38% 1 YES 2 NO 62%
INFERENCE: Microfinance helps a lot of people because of the many of the rural folk are satisfied with microfinance as well the women as self employed.
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OPINION REGARDING OF PROCEDURE TO REPAY THE LOAN.
SL.NO 1
OPINION YES
NO OF RESPONDENT 39
PERCENTAGE 78%
NO
11
22%
TOTAL
50
100
ANALYSIS:
From the above table it is clear that 78% of the respondents are aware of the procedure of paying back the loan after borrowing and 22% of the people not aware of this procedure.
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NO OF RESPONDENT
22%
1 YES 2 NO
78%
INFERENCE: It is therefore inferred that 78% of the people are aware of the procedure of paying back the loan.
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TABLE-20
OPINION REGARDING MEDIUM OF AWARENESS OF MFIs
SL.NO 1 2 3 4
OPINION THROUGH AGENCIES RRBS CO-OPERATIVE BANKS ANY OTHERS TOTAL
NO OF RESPONDENT 4 26 17 3 50
PERCENTAGE 8% 52% 34% 6%
ANALYSIS: From the above table it is clear that 52% of the respondents are aware of MFIs through regional rural banks, 34% of the respondents are aware of MFIs through co-operative banks, and 8% of the people are aware of this bank through agencies and 6% of the respondents are aware of this bank from other sources.
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NO OF RESPONDENT
6% 34%
8%
1 THROUGH AGENCIES 2 REGIONAL RURAL BANK 3 CO-OPERATIVE BANK 4 ANY OTHER
52%
INFERENCE: When asked majority of the awareness is from rural bank and co-operative societies.
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BANK FROM WHICH BORROWED LOAN RESPONDENTS.
SL.NO 1 2
OPINION APEX BANK NABARD
NO OF RESPONDENT 4 17
PERCENTAGE 8% 34%
3 4 5 TOTAL
COMMERCIAL BANK CO-OPERATIVE BANK RRBS
9 13 7 50
18% 26% 14% 100
ANALYSIS: From the above table it is clear that 34% of the respondents have borrowed microfinance loan from NABARD, 26% of the respondents borrowed from cooperative bank, 18% of the respondents have borrowed microfinance loan from the commercial bank, and 14% of the respondent have borrowed microfinance loan from RRBS, and 8% of the respondents have borrowed microfinance loan from the apex bank.
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NO OF RESPONDENT 1 APEX BANK 2 NABARD 14% 8% 34% 18% 0% 2 3 COMMERCIAL BANK 4 CO-OPERATIVE BANK 5 RRBS
26%
INFERENCE: As microfinance is helpful for the rural and poor population but still majority of the people opt NABARD because change less interest compared to NGOs.
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OPINION REGARDING MICROFINANCE IS A TOOL TO A ERADICATE POVERTY.
SL.NO 1
OPINION YES
NO OF RESPONDENT 34
PERCENTAGE 68%
NO
16
32%
TOTAL
50
100
ANALYSIS: From the above table it is clear that 68% of the respondents agree that microfinance is a tool to eradicate poverty and 32% of the respondents do not agree that microfinance is a tool for eradicate the poverty.
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NO OF RESPONDENT
32% 1 YES 2 NO 68%
INFERENCE:
Microfinance is a part of eradicate of poverty as it does not reach some of the needy because they are not aware of the facilities given by the bank as only 3/4 of the people enjoy the facility and1/4 of them are unaware of the benefits.
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TABLE-23
OPINION REGARDING IMPROVED STANDARD OF LIVING AMONG THE RURAL POPULATION.
SL.NO
OPINION
NO RESPONDENT 33 17 50
OF PERCENTAGE
1 2 TOTAL
YES NO
66% 34% 100
ANALYSIS: From the above table it is clear that 66% of the respondents has shared their view that MFIs will increase the standard of living of the rural population and 34% of the respondents has share their view that MFIs will does not help in increase in the standard of living of the rural people.
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NO OF RESPONDENT
34% 1 YES 2 NO 66%
INFERENCE: Standard of living has been improved as the customers do have the facilities which will help them to get employed and finance to raise better crops.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL SUMMARY OF FINDINGS:
Majority of the people opinioned say that they are aware of microfinance. Majority of the people are not sure that microfinance serves the rural population. 50% of the respondents are not sure that microfinance will contribute in growth and development of enterprise. Majority of the women are not sure that microfinance helps rural women to take a self employment. Microfinance does not lead to evaluation of the poor people as majority of the people are unaware microfinance. Majority of the people disagree that microfinance provides educational benefits to the poor children. Microfinance does not help in the economic development of many unprivileged population. 50% of the respondents are aware of kisan credit loans schemes. Majority of the respondents are the satisfied with the microfinance facilities provided by the bank. Decrease in the repayment of microfinance loans causes in losses. Banks has to provide microfinance to agriculture and non-agricultural sector. Majority of microfinance is a powerful instrument for self empowerment for rural peoples. Procedure for applying for micro financing loan is easier than compare to long term loans. Sanctioning of microfinance loans is easier compare to long term loan.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL CONCLUSION The main idea behind Microfinance is that poor people, who can provide no collateral, should have access to some sort of financial services. Microfinance began with microcredit: the provision of small loans to very poor families to help them engage in productive and self-sustaining activities. Microfinance has proven to be a very effective development tool because it provides empowerment instead of charity. Typically, microfinance clients are selfemployed household entrepreneurs who lack the resources to invest in their business and their future and thus cannot escape the grip of extreme poverty. From the research we can conclude that majority of the respondents agree that microfinance is a powerful instrument for rural people for self-empowerment, help in the economic development of many unprevilised population etc., Majority of the people are aware about the microfinance but, however few of the people not sure that microfinance serves the rural population, does not lead to evaluations of the poor people & partially sanctioning of microfinance takes times but not much time as compared to long term loan. Majority of the respondents are satisfied with microfinance facilities provided by the bank & most of the respondents are aware about the kisan credit loans schemes.
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL SUGGESSTIONS Campaign through media on the advantage of microfinance through Cooperative Banks viz., Radio, TV, Local News Paper, Pamphlets, Posters, etc., can increase the awareness among SHGs. Village wise door-to-door surveys can be conducted through PACS to identify those families which are not yet involved in any SHGs and motivate them to form new SHGs. Efforts may be made to promote SHGs in the Districts like Koppal, Bellary, Chamarajnagar, Bagalkot, Kolar and Dharwad where the development of SHGs-BLP is less Few of the rural population are not aware of the microfinance such people should be educated about the benefits provided to them The interest rate should be subsidized to the people who come under below poverty line It is suggested that bank should develop a standiszed recovery system Microfinance is misused a lot so their should be a proper procedure while allotting the finance. It should help the needy and not the enterprises. It should help the people below the poverty line
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL ANNEXURE
QUESTIONNAIRE FOR MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KARNATAKA COOPERATIVE APEX BANK LTD. Dear sir/madam.
MEMBER INFORMATION: (Please tick whichever is applicable) NAME: AGE: a) 22-31 years ( b) 32-41 years ( c) 42-51 years ( ) ) ) )
d) More than 51 years ( GENDER: a) Male ( b) Female ( ) )
1) Are you aware of microfinance? a) Yes ( ) b) No ( )
2) Does microfinance serve poor and rural people?

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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
e) strongly disagree (
3) Does microfinance contribute to enterprise growth and income? a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
4) Does microfinance helped rural women to take an empowerment. a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
5) Does microfinance lead to poor alleviation? a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
6) Does microfinance take advantage of educational opportunity for the poor children? a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
7) Microfinance helps in improving levels of income in the society. a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
8) Microfinance enables increase in control of women over running family enterprises.

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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL a) Strongly agree ( d) Disagree ( ) ) b) Agree ( ) c) cannot say ( ) )
9) Are you aware of kisan credit scheme loans provided by KSCABL? a) Yes ( ) b) No ( )
10) Are you satisfied with the micro financing facilities provided by the bank? a) Yes ( ) b) No ( )
11) Does microfinance help only to develop enterprises? a) yes ( ) b) No ( )
12)which sector does microfinancing benefits the most. a)Agriculture( employed( ) ) ) b)Enterprises( ) c)Self
d)others(
13)Are you aware of the newly emerging microfinance facilities (equity investment). a)yes( ) b)No( )
14)Is microfinancing powerful instrument for self empowerment for rural women. a)yes( ) b)No( )
15)Does NABARD play a significant role in promoting microfinance. a)yes( ) b)No( )
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL 16)Are you a ware of the procedure for receiving the microfinance loans from the bank. a)yes( ) b)No( )
17)Are you satisfied services provided by the bank. a)yes( ) b)No( )
18)Have you ever borrowed microfinancing loan from thus bank. a)yes( ) b)No( )
19)Are you aware of the procedure involved for paying back the loan after borrowing. a)yes( ) b)No( )
20)medium of awareness of MFIs. a)Through agencies( c) Co-operative bank ( ) ) b) Regional Rural Bank ( d)Any other( ) )
21)From which institutions you taken from microfinance. a)Apex bank( ) b)NABARD( ) )c)Commercial Bank( ) )
d)Co-operative bank(
e)Regional Rural Bank(
22)Do you think microfinance is a tool to eradicate poverty. a)yes( ) b)No( )
23)Has the standard of living improved among the rural population because of MFIs
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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL a)yes( ) b)No( )
BIBILIOGRAPHY REFERENCES: To obtain more information regarding this project report and to substantiate it with theoretical proof, the following references were made:
Page 114
BOOKS REFERRED: Review of SHG-Bank linkage in Karnataka Apex Bank Limited 2009-2010 Publications by KSCABL Journals & Magazines of KSCABL
WEBSITES VISITED: WWW.nabard.org WWW.karnatakaapex.com WWW.microfinancegateway.com WWW.grameenfoundation.org WWW.google.com
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Microfinance Impact On Borrowers and Challenges of Karnataka Cooperative Apex Bank LTD

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Microfinance Impact On Borrowers and Challenges of Karnataka Cooperative Apex Bank LTD

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MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL INTRODUCTION INDIAN FINANCIAL SYSTEM The economic development of a nation is reflected

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

RESERVE BANK OF INDIA

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

Custodian of Foreign Reserves

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

NON-SCHEDULE BANK COOPERATIVE BANK COMMERCIAL BANK

PUBLIC SECTOR BANKS

PRIVATE SECTOR BANKS

STATE BANK OF MYSORE AND its ASSOCIATE

OTHER NATIONALIZED BANK

REGIONAL RURAL BANKS

Small Industries Development Bank of 1 India

Notable figures of Micro finance in India Table 1.2

Out of total loans outstanding against women Rs.23030.36 SHGs crore

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL RESEARCH DESIGN

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL PREAMBLE:

andTransactions and Payments

Business banking Loans Overdrafts Asset based finance

commercial paper for bank portfolio Purchase of

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

WORK FLOW MODEL

PRIMARY COOPERATIVE BANKS

FUTURE GROWTH AND PROSPECTUS:

OPINION REGARDING AWARENESS OF MICROFINANCE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

OPINION REGARDING MICROFINANCE SERVING THE RURAL AND POOR PEOPLE.

OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STRONGLY DISAGREE

PERCENTAGE 20% 20% 40% 14% 6% 100

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 20% 4 DISAGREE 5 STROGNLY DISAGREE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

OPINION REGARDING MICROFINANCE CONTRIBUTION TO ENTERPRISES GROWTH.

OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE

PERCENTAGE 16% 20% 50% 10% 4% 100

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 20% 4 DISAGREE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL TABLE-4

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 8% 4% 8% 20% 3 CANNOT SAY 4 DISAGREE 5 STROGNLY DISAGREE 2 AGREE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL TABLE-5

OPINION REGARDING MICROFINANCE LEAD TO POOR ALLEVIATION.

OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE

PERCENTAGE 6% 16% 54% 14% 10% 100

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY 4 DISAGREE 5 STROGNLY DISAGREE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

OPINION STRONGLY AGREE AGREE CANNOT SAY DISAGREE STROGNLY DISAGREE

PERCENTAGE 4% 20% 60% 12% 4% 100

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL TABLE-7

OPINION REGARDING LEVEL OF INCOME IN THE SOCIETY THROUGH MICROFINANCE.

PERCENTAGE 20% 30% 40% 8% 2%

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY

4 DISAGREE 5 STROGNLY DISAGREE

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL TABLE-8

OPINION REGARDING INCREASE IN CONTROL OF WOMEN OVER RUNNING FAMILY ENTERPRISES.

PERCENTAGE 12% 50% 20% 12% 6%

MICROFINANCE IMPACT ON BORROWERS AND CHALLENGES OF KSCABL

1 STRONGLY AGREE 2 AGREE 3 CANNOT SAY

20% 4 DISAGREE 50% 5 STROGNLY DISAGREE