Mfi Product

8/4/2019 Mfi Product

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Microfinance Product for

Uttarakhand

Submitted by:vAnjali SativOm PrakashvShilpa DhawanvSumit SharmavVibhanshu Kumar


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MICROFINANCE SITUATION IN NORTH INDIA

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Microfinance is underdeveloped in North compared toSouth and Western States of India.

l Microfinance in the north is difficult for the reasons thatany development work is difficult: the nature of the work ofthis kind is that those who most need it are the most

difficult to get it to (Malcolm Harper).l Microfinance serves about one fifth of poor households in

India and has helped to widen the reach of financialservices to the population of 1.1bn, 80 per cent of whom

have no access to banks, says the 2006 report onMicrofinance in India.


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MICROFINANCE IN UTTARAKHAND

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The State of Uttarakhand, which came into being as the27th State of the Union of India on 9 November 2000 hasa population of 8.489 million.

l The density of population is less than 51 persons per sq.km in Upper Himalayas and 51 to 200 persons in Middle

Himalayas, and more than 200 persons per sq km. inShivalik & Terai regions of the State.

l Overall population density is less than 159 per sq. km.

l 58% of the work force in the State depend on agriculture

dominated by small and fragmented land holdings.l Per capita income of the State is Rs. 15,186 (US$337


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Financial Sector In Uttarakhandl The formal banking structure in Uttarakhand is made up of a mix of

nationalized banks (1097 branches), regional rural banks (176branches), 9 private banks (38 branches), 10 district cooperativebanks (184 branches), and cooperative agriculture and ruraldevelopment banks (20 branches).

l Of the total network of branches, 56 percent are located in ruralareas, 25 percent are in semi urban areas and 19 percent are in

urban areas.l Uttarakhand has one of the lowest credit-deposit ratios in India

only 20% of the total deposit of Rs. 155,210 million (US$ 345million) was lent in the region.

l The loan disbursement to weaker sections was only Rs. 4799

million in 2002-03.l The Agricultural Credit availability on per ha basis is similarly

estimated at Rs. 9455 in the State as against the all India average ofRs 7438 during 2004-05.


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MICROFINANCE IN UTTARAKHAND

l After the formation of Uttarakhand, vigorous efforts have been

made to promote self-help groups with a view to tackle amyriad of Uttarakhands problems.

l NABARD estimates that about 26,000 SHGs have been formedin the State (2005) and 5,550 about SHGs have been credit

linked with banks as on 31 March 2006.

l 79% of these SHGs were formed under the Swarna JayantiGram Swarojgar Yojana (Village Self Employment Plan) by

District Rural Development Agency.

l Though SHG movement has taken roots in all districts of theState, the spread, however, is uneven.


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l

Dehradun, Nainital, Tehri Garhwal, and U.S. Nagar has70% of the SHGs formed and linked with the banks.

l The average loan disbursement size is highest with thelead banks (SBI, Punjab National Bank, and Bank ofBaroda), and lowest among Cooperative Banks.


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Microfinance Product for Uttarakhand

l Product : Microcredit for Earthquake Affected Districts ofUttarakhand

l Aim: to provide micro credit in earthquake affected districts(Uttarkashi, Chamoli, Rudraprayag, Bageshwer, Tehri Garwhaletc.).

l Process: It is proposed to work the rehabilitation activities witha cluster model approach.

l During the participatory needs assessment survey, clusters willbe identified spread over the above districts.

l Under this component groups of women affected by

earthquake will be formed and provided with small collateralfree loans for working capital. The loans are disbursed towomen organised in groups of 20 members.


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Contd..

l The loan size will be of ranging from INR 12000 to INR 30000depending upon the need of the affected people.

l The loans will be provided mainly for income generation andlivelihood promotion activities.

l The groups will be trained in managing the financial affairs.

l Individual loans can be provided to the members of the groupsunder group guarantee method.

l The decisions on loans will be on the basis of peer pressureand the decision will be taken by women members of therespective groups.

l The process will be facilitated by the field staff during theweekly centre (SHG) meetings.


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l

Target Clients: The members will be from landlesslabourers, marginal farmers, poorest among the farmerscommunity, SC/ST and other weaker sections of thesociety.

l The project will be entirely of women, who will be theprimary participants of the project.


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Earthquake Relief Microcredit

1 year 2 year 3 year 4 year 5 year

Loan Amount 12000 16000 20000 25000 30000

Loan Cycle 1st Cycle 2nd Cycle 3rd Cycle 4th Cycle 5th Cycle

Loan Tenure 1 year 5 months 2 years 2 Years 2 years 2 Years

Repayment Frequency Fortnightly Fortnightly Fortnightly Fortnightly Fortnightly

No of Installments 36 52 52 52 52

Insurance Fees (per INR 1000) 11.29 14.82 14.82 14.82 14.82

Insurance Fees (Amount) 136 237 296 371 445

Processing Fees (1%) + Servicetax (10.3%) 132 176 221 276 331

TOTAL Fees 268 414 517 646 776

Insurance Tenure 1.5 Years 2 Years 2 Years 2 Years 2 Years

Interest Earned 2338 4537 5671 7089 8507

Instalment Amount 400 400 500 625 750

Declining Interest Rate 26.00% 26.00% 26.00% 26.00% 26.00%


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