Microfinance Microfinanceis the provision

offinancial servicestolowincomeclients orsolidarity lendinggroups including consumers and theself-employed, who traditionally lack access tobankingand related services These services are not limited to credit, but include savings, insurance, and money transfers People who are having the ration cards

Working of MFIs
Microfinance must be useful to poor households: helping them raise income, build up assets and/or cushion themselves against external shocks. "Microfinance can pay for itself." Subsidies from donors and government are scarce and uncertain, and so to reach large numbers of poor people, microfinance must pay for itself. Microfinance means building permanent local institutions.

Problems faced by MFIs

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

Problems faced by MFI customers

The poors inability to offer marketable collateral for loans Poor institutional viability of micro enterprises Lack of knowledge about microfinance services Shortage of Financial Capital OrMisallocation? Inability to exploit growth opportunities

MFIs in the World

2009 Rank Overall Percentile Microfinance Institution Country 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 85.1% 84.8% 83.6% 82.2% 81.5% 81.4% 81.2% 80.9% 80.8% 80.3% 80.3% 80.3% 80.3% 79.9% 79.8% 79.8% 79.7% 79.6% 79.6% 79.4% MBK Ventura SDBL Shakti GFSPL CARD Bank BURO Bangladesh SKS Spandana Grameen Bank Lead Foundation BASIX SHARE Bandhan Life Bank VFS AMK Ameen AML ASA Philippines GV Indonesia Sri Lanka Bangladesh India Philippines Bangladesh India India Bangladesh Egypt India India India Philippines India Cambodia Lebanon India Philippines India

MFIs in India
1. SKS Microfinance Ltd (SKSMPL) 2. Spandana Sphoorty Financial Ltd (SSFL) 3. Share Microfin Limited (SML) 4. Asmitha Microfin Ltd (AML) 5. Shri Kshetra Dharmasthala Rural Development Project. 6. Bhartiya Samruddhi Finance Limited (BSFL) 7. Bandhan Society 8. Cashpor Micro Credit (CMC) 9. Grama Vidiyal Micro Finance Pvt Ltd (GVMFL) 10. Grameen FinancialServices Pvt Ltd (GFSPL)

Objective
Objective is to find where defaulters of MFI clients are spending money and reasons due to which they are unable to pay back money and the other problems faced by the customers

Approach Towards Problem

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Questionnaire
From Q1-Q5- age and gender: to know that majority of defaulters of MFI are of which gender and from which age group they belong From Q6-Q8-earning details: whether MFI clients are in a position to pay back money From Q9-Q13- lending information: people facing problems due to loans from multiple sources

Research design
Preliminary Investigation: preliminary investigation of the various factors which could possibly affect the peoples decision to take loans from different MFIs Collection of data:

Measurement and Scaling Procedures Questionnaire design Survey

Contd...
Sampling size and technique:

Type of Population: Finite Sampling Frame: Ujjivan, Share, Sks and Ashmita Size Of The Sample: 100

Sampling Technique: A mixture of simple random sampling and rating scale Field work: customers of Ujjivan(U.P), Share(A.P), Sks(A.P) and Ashmita(A.P)

Analysis

Basic Analysis

Sources Of Money
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Interest Rates
Average Interest Rates
SKS Share Ujjivan Asmitha Local Zamindars Spandhana 29.05 29.67 29.35 30.98 22 29.6

Money Spending
Spending the Money

Opinion on Payments
Paying money in right time

Reasons
Reasons for not paying the money

Opinion on Reasons
Inflation
12 10 8 6 4 2 0

High Interest Rates

12 10 8 6 4 2 0

Losses Due to Wrong spending

12 10 8 6 4 2 0

Contd
Losses
12 10 8 6 4 2 0

Borrowing from Multiple Sources

12 10 8 6 4 2 0

Analysis from SPSS

Contd

Opinions
Which is Better?
12 10 8 6 4 2 0

Reasons for preferring MFIs over Zamidandars

Because local zamindars make them as slaves if they dont pay back the money in right time. They collect money through compound interests. The Local zamindars some are unscrupulous persons they collect money in a rude way. When government provides any exemption from paying to the MFIs

Analysis through Rating Scale

Rating on MFI Multiplication 0 8 30 256 95 1 2 3 4 5 0 4 10 64 19

MFIs are providing knowledge regarding spending

1 2 3 4 5 Frequency 29 37 19 10 4 Multiplication 29 74 57 40 20

Suggestions
Interest rates have to be reduced Have to make them understand that how to use that money. For new customers they have to give less money and have to check that weather they pay in regular intervals or not. Proper training should be given.

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Bharat Sai Kiran Eswar Surya Prasad Sumit Sukant Lipi Rathore