Impact Assessment Of Micro Finance

Impact Assessment of Micro Finance Presented By:Nisith 08bs0002047

About Organisation Lupin Human Welfare and Research Foundation (LHWRF) Lupin Human Welfare & Research Foundation was set up on October 2, 1998 with the objective of providing an alternative model of rural development in the country, which is sustainable, replicable and ever evolving. LHWRF is registered as trust & approved u/s 80 G of IT act 1961 Registered u/s 12A(a) of the IT act,1961 & holds FCRA a/c . Mission

Micro Finance Provision of thrift, credit and

other financial services and products of very small amounts to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards

Cont’d micro Finance Involves Financial

Services to Poor People, provided in: Efficient, Responsive and Financially Sustainable Manner

microFinance Models Banks / mFIs

Individuals Groups

Grameen groups/JLGs Self Help Groups

Concept and features of Micro finance Micro-finance could be defined as a set of

services comprising the following activities: Micro-credit: Small loans; primarily for income generation activities, but also for consumption and contingency needs. Micro-savings: Thrift or small savings from borrowers’ own resources.

Micro Finance (mF) Micro credit : Only credit Micro finance: mF is bundle of services ,

micro finance includes credit , insurance & marketing and technical assistance.

Why Micro Finance ?  Exorbitant rates of interest charged by

money lenders.  Apathy of bankers towards rural

borrowers.  Rampant corruption in subsidy linked

programmes  Time consuming mechanism for credit

delivery.  Collateral and security is a must.

About Project  

The project i.e. Impact assessment study of microfinance includes:Impact assessment study of microfinance in block Kumher. Impact assessment study of microfinance in block Roopwas. Study of SHG(Self Help Group) in village Birampura.

Objective • To identify characteristics of loan recipients

such as gender, relative poverty, and age of business, to estimate the program depth of outreach.  • To identify and estimate direct impact of loans on borrowers, their business and household.  • To identify indirect effects of the program (change in social behavior). Distinction between borrower and non borrower, and borrower over non borrower in the same business.

Proposed Methodology

• Primary data collection by two ways• Questionnaires, and • Open ended questions.  • Data collection from secondary sources

such as websites, financial journals, magazines, newspaper, books, etc. • The use of secondary data has a number of benefits: – Time conservation. – Better quality of material due to expert

people involvement. – Easy to compare.

Comparative Study of Kumher and Roopwas Block Kumher

Roopwas

Total

(No. of Loan Recipients) 72

(No. of Loan Recipients) 83

155

86

90

176

Training to improve the skills

38

55

93

Knowledge about interest rate

65

82

147

Knowledge about Micro Insurance Earn sufficient money to repay the loan

83

86

169

83

86

169

Loan receipt at the time of repaying the installments

87

88

175

Knowledge about other Micro Finance Agency

3

2

5

Want to extend the business

70

74

144

Loan acquisition from LHWRF only Improvement in socio-economic condition

Case Study of Self Help Group “Socio-Economic Empowerment” “Who will believe that by saving Rs.300

into the account, anybody can get Rs. 1000 per month.”  This case study is going to change the myth that women self help group are more significant than male self help group. About Self Help Group  A SHG is a small economically homogeneous affinity group of the

rural poor voluntarily coming together to save small amount regularly, which are deposited in a common fund to meet members emergency needs and to provide collateral free loans decided by the group.  The origin of SHGs is from the brainchild of Grameen Bank of Bangladesh, which was founded by Mohammed Yunus. SHGs were started and formed in 1975. In India NABARD initiated it in 1986-87.

Cont’d  The basic principles of the SHGs are group approach, mutual

trust, organization of small and manageable groups, group cohesiveness, sprit of thrift, demand based lending, collateral free, women friendly loan, peer group pressure in repayment, skill training capacity building and empowerment.  Working of SHGs  SHGs are working in democratic manner. The upper limit of members in a group is restricted to 20. The group members meet every week. They discuss about the group savings, rotation of sangha funds, bank loan, repayment of loan, social and community action programmes.

Cont,d Functions of  SHGs  Create a common fund by the members through their

regular savings.  Flexible working system and pool the resources in a democratic way.  Periodical meeting - The decision making through group meeting.  The loan amount is small and reasonable, So that easy to repay in time.  The rate of interest is affordable, varying group to group and loan to loan. However it is little higher than the banks but lower than the money lenders.

Cont,d  Birumpura Self Help Group, started on 10th may 2002 with

19 members (all male) by Rs.100 saving per member per month.  At present the total amount of this Self Help Group is Rs. 9,10,766 which means Rs. 47,935 per member (Rs.20200 is the principle and Rs.27735 is the interest). So now, each member save Rs. 300 per month and increases Rs. 1000 as interest in the total amount in his account.

Survey findings and analysis • The primary data from filled questionnaire

analyzed to find out percentages, averages and frequencies for various indicators, which revealed the impact of microfinance i.e. change in the social economic condition of the loan recipients before and after acquisition of the loan.   • Based on the survey of 12 villages, six in each blocks i.e. Kumher and Roopwas block, the primary data is collected by surveying 15 loan recipients (both male and female) from Lupin Human Welfare And Research Foundation in Bharatpur

Main Findings  In Kumher Block the loan recipients from

LHWRF only is less than the Roopwas Block as other Microfinance Agencies are also there and the loan recipients in Kumher Block also trust on banks.  There is improvement in socio-economic condition of both the block because of the effective and proper utilization of the fund.

Cont’d

 In Roopwas Block more loan recipients has

used the training program in comparison to Kumher Block.   Due to high agricultural land produce in Kumher Block, loan recipients in Kumher Block are busy in comparison to Roopwas block.   Negative mind set up of the loan recipient of Kumher Block that they do not need any training to improve their business.   Loan recipients earn sufficient amount of money to repay the loan installments in both the blocks.   The number of loan recipients wants to extend their business in both the block is same.

Cont’d

Birampura Self Help Group, started on 10th

may 2002 with 19 members (all male) by Rs.100 saving per member per month, has set the example that male SHGs are more active than female SHGs and now going to change the myth that “Women SHGs are more significant than Male SHGs.” The saving grew up over years from 100 to 200 and now 300 per member per month, so the present amount of this Self Help Group reaches to Rs. 9,10,766 which means Rs. 47,935 per member (Rs.20200 is the principle and Rs.27735 is the interest).

Recommendations Beneficiaries selection depends upon

the objectives of the microfinance institution and demand of the micro financial products.   These are unserved and underserved clients in all the section of the society. Financial system approach need to supply these people with suitable services depending upon their needs. 

Cont’d

  Diversified products which can be operated in different product lines General Loan  Emergency Loan  This is most distinguished product and is provided in the financially volatile periods. Clients can use this loan to pay school fees of children, utility bills and other unplanned expenditures.  Home Improvement Loan  Business Surmaya Loan (working capital loan)  Insurance

Cont’d

 Beneficiaries should be more encouraged for

training.  Quantum of Loan  Transparency in Loaning

 

 Repayments

Monthly repayments are inconvenient for clients with seasonal or periodic income streams.  Insurance

Insurance premium is often considered as an avoidable burden by the resource-crunched poor. LHWRF need to take extra efforts to explain the need of life and asset insurance to clients and be transparent about their handling of insurance products.

Cont’d Other Services

Vulnerable illiterate poor need guidance for identification of viable/suitable income generation activities, skill development, market linkages, etc. However, they do not have resources to pay for these services. This is possible if LHWRF have access to grants from Government/Donor agencies. Otherwise recovering these costs would be an additional burden.

For Self Help Group  After studying the success of this SHG from past nine years, a

suggestion was proposed to the members of this SHG to register this group as agency, which has certain benefits: It can work as a mini bank/MFI and can solve the fund problems for small entrepreneurs in the village and later on extension of this business to other villages will help the other entrepreneurs.  These small entrepreneurs can be saved from the complexity in the work of the banks (collateral and other paper work) for providing funds and also from the high rate of interest from money lenders.  Members of the SHG will be benefitted if the fund is available in large amounts to them.

Thank You