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Microfinance Institutions - Coggle Diagram
Microfinance Institutions
to serve the unserved
unemployed
low income individuals
AIM
upliftment of underprivileged
short term loans- set up venture, get trained
operate in forms & shape
joint liability group
SHGs
Grameen Bank Model
rural cooperatives
operation
official appointed - financial institution -touch with the group to discuss loan application and disbursal procedure.
understands the skill & requirement
on the basis finalizes amount
• officer understands business that the borrower is currently conducting or interested to start in future, analyses risk factor associated with it
Role
role
Women Empowerment
financial servicers poor unprivileged
no access formal lending institution
Rural develop.
poor
no formal employment
no bankable
force - borrow local money lenders - exorbitant rates
credit in absence of morgage
financing the unfinanced
devising best way to deliver services to poor
in line with their requirement
devel. most efficient & effective mechanism - finance
impact
world bank - 500 M directly or indirectly benefited
benefits beyond - capital
successful entrepreneurs
create jobs, trade, economic improvement of the community
issues
higher interest
12-30% as compared commercial banks 8-12%
RBI removed upper limit 26% interest MFI loans
farm suicides - Andhra & MH
Over-dependence on banking sector
80% funds - banks mostly private
high rate of interest & terms of loans shorter
incompetent or less reactive to default
Lack of awareness of financial service
low financial literacy-76% not understand basic financial concepts
MFI struggle - financially viable
Regulatory Issues
RBI
needs and anatomy different from banks
impact
failure - devel. new financial products & services
Appropriate Model
MFI follow SHG or JLB model
affects
sustainability - longer run
increase risk beyond poor can bear
sugggestion
supervision
ground realities
operational efficiency
incentivize
open branches - unbanked villages
encourage complete range products. transparent pricing & technological implementation - efficiency & uniformity
inability of MFI sufficient funds
hindrance to growth
alternative sources of funds
equity investment, portfolio buyouts and securitization of loans few large MFI availing
separate regulatory authority-
discourage malpractice and political influence
:muscle: Strengthening the credit check and debt collection processes and educating the villagers about products and consequences is