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Microfinance

Cygnus Business Consulting and Research
September 1, 2008
100 Pages - SKU: CYG1913007

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Countries covered: India

Introduction

Indian microfinance sector is expected to grow nearly ten times by 2011 to a size of about Rs250 billion from the current market size of Rs27 billion, at a compounded annual growth rate of 76%. Microfinance in India started evolving in the early 1980s with the formation of informal Self Help Group (SHG) for providing access to financial services to the needy people who are deprived of credit facilities. The Report on microfinance is prepared emphasizing more

Key Findings & Highlights

One of the fastest growing sectors of India, microfinance is spearheading intense competition among the largest players.
Microfinance institutions at present serve an estimated 120 million clients in the world.
By the end of March 2007, microfinance institutions expanded their outreach to 50 million households and about 36.8 million borrowers.
The microfinance institutions are organised under three models: SHG, Grameen model/Joint liability groups and Individual banking groups as in cooperatives.
Indian microfinance market is dominated by SHG bank linkage and MFI model.

Reasons to buy

Get a thorough understanding about the demand for rural credit
Spot the growth drivers of the sector
Asssess the key challenges such as transaction cost,risk management etc
Be aware of the competition in the microfinance market

EXECUTIVE SUMMARY
HIGHLIGHTS
1. MICROFINANCE - AN OVERVIEW: 1.1 Microfinance - A Short Background; 1.2 Global Developments in Microfinance; 1.3 Micro-Finance in India; 1.4 Urban Microfinance; 1.5 Rating of Microfinance Institutions
2 MARKET SCENARIO: 2.1 Market Size and Growth; 2.2 MF Institutions; 2.3 Role of NGOs in microfinance; 2.4 Private Banks; 2.3 Role of NGOs in microfinance; 2.4 Private Banks; 2.5 Commercial Banks
3. GROWTH DRIVERS: 3.1 Need for Bank Credit by Unprivileged Class; 3.2 Availability of Finance; 3.3 Government Policy and Support; 3.4 Consolidation in the Industry; 3.5 Growing Migration and Urbanisation; 3. 6 Human Resource Capacities
4. ISSUES & CHALLENGES: 4.1 Literacy & Skill Levels of Clientele; 4.2 High Transaction and Service Cost; 4.3 Credit Risk; 4.4 Skewed Regional Distribution of Microfinance; 4.5 Diversion of Funds to Unproductive Activities; 4.6 Regulatory Issues; 4.7 Irregular Flow of Income due to Seasonality; 4.8 Uncertainty of Market Conditions; 4.9 Lack of Tangible Proof for Assessment of Income; 4.10 Need for Information Sharing & Better Technology
5. OUTLOOK: 5.1 Size and Growth; 5.2 Penetration of Microfinance in Future and Role of Private Sector Investment; 5.3 Sustainability of Microfinance; 5.4 Scalability of Microfinance in Future
ANNEXURE - BIBILOGRAPHY
LIST OF FIGURES: Fig.1.1 Savings by Region; Fig.1.2 Savings by Region 953 MFIs Reporting, July 2007 61 Million Savers; Fig.1.3 MFI's by region, Based on a sample of 2,207 MFIs in 2007; Fig 1.4 Direct Financing Model; Fig 1.5 SHG Bank linkage Model; Fig 1.6 Growth in borrowers under MFI channel (2003-2007); Fig 1.7 Growth in outstanding loan portfolio under MFI channel (2003-2007); Fig 1.8 Estimated loan outstanding under SHG bank linkage channel ( 2003-2007); Fig 1.9 Share of bank linkage SHG and MFIs in microfinance disbursement (2003); Fig 1.10 Share of bank linkage SHG and MFIs in microfinance disbursement (2007); Fig 1.11 Growth in cumulative disbursements by SHGs and MFIs channels (2003-2007); Fig 1.12 Instituitional flow of microfinance; Fig 2.1 Major market players in rural credit; Fig 2.2 Growth in client outreach by MFI’s; Fig 2.3 Classification of activities - Micro credit loan being taken
LIST OF TABLES: Table 2.1 Growth of SHG Linked in 13 Priority sectors; Table 2.2 Growth of SHG’s in Regions; Table 2.3 MFI Outreach State-wise; Table 2.4 Top 40 MFI Institutions and their Active Borrowers (2007); Table 2.5 Top Microfinance Institution Performance in the year 2007; Table 2.6 Top 20 Districts by MFI Penetration (2007); Table 2.7 Earnings of the poor in the developing countries from the micro-enterprises may vary from 29% - 236% (2008)

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