PRODUCT DEVELOPMENT IN MICROFINANCE

Dr. Prasun Kumar Das

Minimalist vis--vis Integrated Approach

Minimalist Approach Financial Intermediation
Working capital Term loan for fixed assets Savings Insurance

Integrated Approach

Social Intermediation
Group formation Leadership training Cooperatives

Enterprise Development Intermediation

Capacity building Marketing Technology adaption

Value added Intermediation

Education Health & hygiene Nutrition

Comparison of SHG & Grameen Model

SHG model Grameen model Group size of 10-20 members (not 5 member groups, such groups form a exceeding 20 members) Center, which is the operational unit for MFI Meetings generally monthly Meetings are weekly No specified term Loan term is 50 weeks Loan term is 50 weeks There are office bearers: President, There are Group Leaders and a Center Secretary and Treasurer. Leader. Collect internal savings and rotate Saving (if collected) are collected by MFI and not by Center. SHGs maintain their books of account Centers may have some records but do not maintain their books of account. Records are maintained by MFI. SHGs from their own rules and Center follow policies of the MFI. regulations

Comparison of SHG & Grameen Model

SHG model SHGs may borrow funds from different agencies and on-lend to their members, deciding their own interest rate Grameen model MFI is the only source of fund, Centers do not borrow on their own. Follow interest rates of the MFI, which is charged in flat basis SHGs get involved in social issues Formed specially for financial transactions and do not get involved in social activities. Meeting are generally long 1 hour or Short meetings 15-30 minuets. more SHGs can carry out meetings on their Meetings conducted by MFI staff own More autonomous and also form Restricted to centers and do not form any federations and larger community based other structure organisations.

Key Factors considered for Product Development

1.Mission of the Organization 2.Livelihood Context 3.Loan purpose & Cash flow streams 4.Opportunities 5.Competition 6.Organization systems

Phases in Product Development

Need identification: - Studying the potential clients, livelihoods, their financial needs and how those needs are covered presently and how it could be service by the proposed product: - identifying potential target clients.

Phases in Product Development

Designing products: Defining the service towards the target clients such that their need can be turned into demand.

Phases in Product Development

Pilot testing: - from designing a prototype is conceived. This prototype is offered to a selected group of clients and/or in a limited area; gaining experience with the new product, identifying strengths and weaknesses, testing the observations from need identification and the assumptions about need turning-demand made during design; based on the test, adjust the product.

Phases in Product Development

Launching product: - presenting the product to the target clients, following a strategy of volume and region wise rollout.

Phases in Product Development