Problems faced in Micro Finanace

PROFILE
Group members:
1) Nachiket Kale (70)
2) Garima Rajpurohit (78)
3) Pooja Sakpal (84)
4) Michael D’souza (89)
5) Karishma Ghuge (97)
Std / Div : Ty.Bms (B).
Subject : Financial management.
Project topic : Problems faced in micro fianace.
College : Joshi Bedekar College, Thane (w).
Academic year : 2011 – 2012.
 Contents
 What is Micro Finance

 Problems faced in Micro finance

 Indian Association for Savings & Credit (IASC)

 Objectives

 New initiatives

 Conclusion
 What is Micro Finance ???
 Provision of financial services to low income people.
 It is a movement whose object is "a world in which as many poor and near-poor households as
possible have permanent access to an appropriate range of high quality financial services, including
not just credit but also savings, insurance, and fund transfers."
 Microfinance is a broad category of services, which includes microcredit.
 The provision of financial services such as loans, savings, insurance, and training to people living in
poverty.
 Microfinance organizations make it a priority to serve the particular needs of women, since a
staggering 70 percent of all those living in extreme poverty are female.
 Sustainable solution in alleviating global poverty.
 As the microfinance industry continues to mature, there is a danger that it will drift toward a more
secure client base.
 Micro finance can help create a world in which the underserved have fair access to economic
opportunities and the hope to move beyond poverty.
The history of • The concept of microfinance is not new.
• Formal credit and savings institutions for
micro finance the poor have also been around for
decades.
• One of the earlier and longer-lived micro
credit organizations providing small loans
to rural poor with no collateral was the
Irish Loan Fund system, initiated in the
early 1700s .
• The concept of the credit union was
developed by Friedrich Wilhelm Raiffeisen
and his supporters.
• microenterprise credit was based on
solidarity group lending in which every
member of a group guaranteed the
repayment of all members.
• These "microenterprise lending" programs
had an almost exclusive focus on credit for
income generating activities.
Sources of funds for micro finance

The regulatory issues have been classified under four tiers.

• Those pertaining to SHGs

• Those pertaining to NGOs

• Those pertaining to Micro Credit Institutions( MCIs)

• Those pertaining to Micro Finance Institutions( MFIs).

 Funding Sources for Microfinance Institutions
(Financing Options)

• Saving Deposits in Microfinance .

• Commercial Debt Capital in Microfinance .

• Soft Loans and Grants in Microfinance .

• Individual Philanthropic Sources in Microfinance.

• Equity Capital in Microfinance .

 Financial needs for poor

• Lifecycle Needs: such as weddings, funerals, childbirth,

education, homebuilding, widowhood, old age.

• Personal Emergencies: such as sickness, injury,

unemployment, theft, harassment or death.

• Disasters: such as fires, floods, cyclones and man-made

events like war or bulldozing of dwellings.

• Investment Opportunities: expanding a business, buying

land or equipment, improving housing, securing a job
(which often requires paying a large bribe), etc.
Ways in which poor people manage
their money
 MICRO FINANCE PROBLEMS
• Perceived High Risk of Micro Entrepreneurship and Small Businesses.

• High Costs Involved in Small Transactions/ Micro lending.

• Lack of Debt and Equity Funds for MFIs to Pass on to the Poor.

• Difficulty in Measuring the Social Performance of MFIs.

• Mixing Charity with Business.

• Lack of Customized Solutions for the Poor.

• Lack of microfinance training for Human Resource in Microfinance Institutions.

• Poor Distribution System of Microfinance Institutions and lack of information about

microfinance investment opportunities.

• Dual mission of Microfinance Institutions to be financially Sustainable as well as

Development Oriented.
INDIAN ASSOCIATION FOR SAVINGS AND
CREDIT (iasc)
 • Indian Association for Savings and Credit (IASC) is a company registered

IASC Microfinance on February 13, 1998 (N0: 11-113558) under Section 25 of the Companies
Act, 1956 (No. 1 of 1958) and the Company is limited.
Institution • We are engaged in the business of Microfinance in compliance with the
Notification N0.DNBS.138/CGM (VSNM)-2000 dated January 13, 2000
issued by the Reserve Bank of India.

• Our Registered Office is at the HDFC corporate headquarters in Mumbai,

Maharashtra and the Corporate Office is located in Coimbatore, Tamil
Nadu, India.

• The Corporate Office was in Marthandam from 1998. In May 2004 it was
shifted to a convenient location at Coimbatore.

• IASC has six members as Board of Directors who take statutory and policy
decisions and provide overall guidance.

• A highly motivated team is led by a Chief Executive Officer (CEO) who

coordinates the overall operations.

• The operations in a district are decentralized by way of Branch Offices.

• BOARD OF DIRECTORS :
• OUR PROMOTERS:
• RATING: MFR 3 FROM CRISIL :
• AREA OF OPERATION :
• PARTNERS :
• PRODUCTS / SERVICES :
 PHILOSOPHY:
• Our Vision

“To provide viable and scalable institutional responses for universalizing access to Quality micro
finance services.”

• Our Mission

“To enable at least 500,000 households to access microfinance services including Credit of Rs.1,000 crore
(loans o/s) by year 2015.”

• Core Values

“Team Work, Integrity, Professionalism, Transparency, Equity & Empathy and

Accountability.”
Objectives
New initiatives
Conclusion