Report for Viva on 18th Dec2009
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Transcript of Report for Viva on 18th Dec2009
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A Report on the Prospects and Limitation of
Microfinance Institutions in Indian Farming Sector
Grameen Koota-Micro Finance Institution
Avalahali, JP Nagar, 9th Phase
Bangalore-560 062, India.
Submitted by:
Vinay Kumar Mishra
MBA-Rural Development
Govind Ballabh Pant Social Science Institute, Allahabad
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Contents
Page no.
Executive Summary 3
Acknowledgements 3
Introduction 4
Literature Review 4
Objective of the study 5
About the organization 5
Research methodology 5
Findings 6-8
Case Studies 8-9
Conclusion 10
Suggestions 10
Annexure 1 11-20
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Executive Summary
Three out of four poor people live in rural areas, and the majority of rural inhabitants depend on
agriculture. Access to appropriate financial services is a critical factor for agricultural
development in the India Yet, due to the specific constraints that come with financing agriculture(reaching isolated rural areas, working with highly seasonal activities, agro-climatic risks, price
variations, etc.) The financial sector seeks to increase impact on agricultural finance by adapting
microfinance models (cooperatives, village banks, self-help groups and solidarity guarantees)
to the specificities of agriculture, by developing innovative products and methodologies that help
reduce vulnerability of rural households improve the management of agricultural risks and
encourage agricultural investment.
Acknowledgements
This study is a humble effort to understand the concept of Joint liability Group in Microfinance
Institution. The study would not have been complete without the priceless support of those
involved in the study.
It was essentially programmed for finding prospects and limitations of microfinance institution in
Indian farming sector. First, we would like to express our deepest gratitude to Mr. Raghavan of
Grameen koota (Karnataka) for their continual involvement in our work. We extend our highest
indebtedness to Mr. Vikash Kumar, Project Manager Individual Loaning. We are also thankful to
other staff members of Grameen Koota for support whenever we needed it.
We would like to thank Professor Pradeep Bhargava, Director, Govind Ballabh Pant Social
Science Institute, Allahabad for his motivational and guiding support during the period of
summer internship. We would also like to thank Dr. Sunit Singh, Coordinator, MBA (Rural
Development), G.B.Pant Social Science Institute Allahabad, whose valuable academic guidance
and suggestions has always been of immense help to us during the internship period. We are
grateful to Mrs. Rewa Singh for scheduling our visit to Grameen Koota.
Our heartfelt thanks to all volunteers who gave their time and support in our endeavor to collect
information. Indeed, without their support tasks would not have been complete.
Vinay Kumar Mishra
Introduction
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Microcredit is the extension of very small loans to the unemployed, to poor entrepreneurs and to
others living in poverty that are not considered bankable. These individuals lack collateral,
steady employment and a verifiable credit history therefore cannot meet even the minimal
qualifications to gain access to traditional credit. Microcredit is a part of microfinance, which is
the provision of a wider range of financial services to the very poor.
Joint liability Groups (JLG`s) based on capitalization of honesty has been defined as small and
informal association of poor having preferably of similar socio-economic background and who
come together to realize some common goals based on principle of self- help and collective
responsibility. JLG`s becomes relevant because of following reasons:
A JLG`s working on the principle of solidarity helps the poor together to pool their
savings and access credit facilities.
A JLG`s is important tool for empowering the women members.
Literature Review
Microfinance: Microfinance services are financial services that poor people desire and arewilling to pay for, the term also refers to the practice of sustainably delivering those services.
More broadly, it refers to a movement that envisions a world in which many poor and near poor
house holds as possible has permanent access to an appropriate range of high quality financial
services, including not just credit but also savings, insurance, and fund transfers.
The profession of farming involves combining a variety of factors to produce one or more
outputs, and to add value to the resulting products. The economic result of this activity,
fundamental for the Farmer depends largely on his or her capacity to access simultaneously and
coherently these factors.
Agricultural activities present many particularities: considerable volumes of financing,
seasonality that leads to cash flow problems, high production risks (due to climate) and sales
risks (due to unstable Price & markets).
Microfinance institutions (MFIs) have tended to avoid less densely populated or diversified rural
areas, and financing of seasonal or long enter crop and livestock activities. However, a few
innovative MFIs have recently led the way in adapting their operations and products expand into
agricultural lending.
Objective of the study
Project Title: Launching Individual loans to the Indian farming sector by MicrofinanceInstitutions: Prospects and limitations
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About thestudy: The study explores the viability of individual loans in the farming sectoradvanced to member of a joint liability Group created by MFIs for non-farm Income Generation
activities. The study find that Individual loans in the farming sector could be viable if (a)
members of JLG complete at least 4 cycles of repayment, (b) the income generated from non-
farm activities is regular and increasing; and (c) there are other sources of Income Such asNREGA. The studies also find that a successful JLG could consider for joint loans in the farming
sector.
About the organization
About Grameen Koota:Grameen Koota was launch on 30 May 1999 as a part of the TMuniswamappa Trust. This was the culmination of a nearly two-year long deliberation and drew
on the concept propounded in the book Give us Credit authored by Alex Counts. Its seed
capital came from one of the pioneers of the micro-credit movement - Grameen Trust of
Bangladesh.
Research Methodology
The study was done through random sampling at selected locations. These locations had more
than 150 Kendra. We selected thirty Kendra based on random sampling and then five members
from each group again based on random sampling. The questionnaire was designed in English
language.
Tools for Primary Data collection:The tool for Data collection was the questionnaire.Questionnaires were prepared to capture socio-economic profile of the members, to find patterns
of loans taken from the group, asset created and their level of information about schools,
Knowledge about MFI, Banks etc. The Questionnaire had questions were close ended. The
schedules were conducted one-by-one in the sample area.
Semi structured interview
Transect walk with community and staff members of organization
Prepare a Questionnaire with the 6 helpers
Study based on birds and worms eye view
Use of PRA/PLA Tools Rapport Buildings
Findings
1. Average age: The average age among the sampled women member is 30 years.
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2. Marital status:The sampled respondents' represents 90 percent married, widows were 5
percent and unmarried were 5 percent.
3. Education,literacy, and Skills: Sampled results points literacy rate as merely 35
percent .Only 10 women out of sampled members had passed Post Graduation and 50 wereundergraduate and in which 3 of them are teacher in one private school.
4. Livelihood base:Agriculture is the mainstay of their livelihood for nearly seventy percentof our population so with the respondents. Livestock are poor in terms of milk capacity.
5. Annual income:Average annual income of the respondent is 24,000 approximately. Thisfigure may overstate, as we have put our assumption basedon their response.
6. Average size of family:With average, size of family approximately seven.
7. Land Size: The land size of the farmers having less than two hectares of land are notfinancially viable, if they depend wholly on income from the land. Thus 40 percent of farmers in
studied area are not financially viable.
8. Respondent heard about MFI: This is good that 81% respondents have heard about
MFIs. However, a majority of 62% thinks that it is meant for women only.
9. Present Need for Credit: Credit is also an essential need. The 35% respondents saidthey need credit to expand an existing Micro Enterprise, while the 65% need it to start a new one.
10.Occupation of members: On the basis of questioner it was found that 15% clientsinvolve in agriculture sector , 25% clients whose own micro enterprises, 30% clients belongs to
dairy activity, 5% clients belong to poultry farming, 15% clients work as daily labor and 10%
clients involve in other activities
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11. Occupation of Respondent and its monthly Income:Based on questioner itfound that more than 50 percent people from Daily Labor have their monthly income between
1500-2500. On the other hand the respondents have their own Micro Enterprise, have maximum
number of people with monthly income more than Rs.3500
Table showing occupation of Respondent and its monthly income
16 7 4 3 30
59.3% 43.8% 30.8% 25.0% 44.1%
1 1 1 0 3
3.7% 6.3% 7.7% .0% 4.4%
9 8 8 8 33
33.3% 50.0% 61.5% 66.7% 48.5%
1 0 0 1 2
3.7% .0% .0% 8.3% 2.9%
27 16 13 12 68
100% 100% 100% 100% 100%
Daily labour
Company worker
Small scale bussiness
Unemployed
Occupation
Total
1500-
2500
2500-
3500
3500-
5000
Above
5000
Calculated monthly income of the
family
Total
12. Membership terms: 30 percent had less than one-year term, 28 percent had membership
of more than one year and less than two years, 26 percent had membership of more two year and
less than three years while 16percent had membership of more than three years .
Case studies
Case study: 1
Usha her age is 21. One year ago She got married .She joined the group 6 months ago and taken
Rs5000 loan from Grameen Koota, and bought a cow. She repays her 20 installments at time and
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had some misunderstanding with her husband leading to her parents house. Usha husband went
to his father in laws house many times and asked her to return but she was not ready. Her
husband was very disappointed. One day at Meeting day, he came in meeting and told the whole
incident to business executive and group members. B.E. suggested that if all members of group
will go to meet Usha and try to convince her then definitely she will return. Finally, her Husband
arranged a vehicle and all the group members went together. With the help of communitypressure and peer pressure group, she was ready to return to her husbands house. Presently they
are living together and enjoy their married life.
Case study: 2
Sangita aged 32. She joined the group 2 years ago. In that period, she was a bidi maker. She uses
to get order and raw materials through intermediaries. She was working whole day but earning
only Rs 50 to 60. She decided to take contact her self for which she took a loan from Grameen
Koota and started taking order herself, made a team for completing the assigned task .Now, she
has completed her four-loan cycle and at present she earns Rs.150 to 200 daily. Presently she is
owner of her own enterprise with six women in her team with an average earning of 80-90 Rs.
Now she is eligible for Individual loan and she wants to go for a grocery store in the near by
market.
Case Study: 3
Vimala aged about 19. She and her husband were very lazy .They were very dependent on their
parents, 5 month ago, Vimala in laws died in an accident. She was surrounded by many
economical problems. 3 month later, she joined the group, took a loan Rs.4500 from Grameen
Koota, and bought a buffalo. Vimala started selling the milk to dairy man and earned money but
she was not able to repay the installments timely. The B.E of Grameen Koota provided told them
about NREGS work and wages. Vimala husband applied for job card and got the job within 15
days he fined job in his village and started doing work. Presently he is doing work under NREGS
and repaying their installment timely. Now, Vimala and her husband are very happy.
Conclusion
Public investments can help microfinance providers meet the challenges of financing for
agriculture. These require adaptations to conventional financial products and delivery
mechanisms, including the following:
1. Matching disbursements and repayment to agricultural production cycles
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2. Investments in rural finance for agriculture
3. Investments in rural finance for agriculture
Suggestions
It would be require a big meeting or seminar of star clients. This type of meeting would
hold three times in a year in which 20 clients would call from every Branch for
participate in seminar.
The success story of star clients would be mention in a published magazine it would
reflect the strength of the organization.
Testing a new rural market before investing in a branch office, this reduces the risks
involved in expanding rural finance outreach. Rural branches are set up only if the
portfolio size merits the investment in infrastructure and human capital.
It can also restrict access to financial services for farm households dependent on
agriculture. Nonfinancial interventions to improve market access and infrastructure may
make these clients more attractive in the longer term.
Annexure 1
Questionnaire used for survey
Impact assessment of Group (GRAMEEN KOOTA) in Bangalore districts of Karnataka
1. General details of respondent:
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Name of Client-
Fathers name /Husband name-
Village Name-
District Name-
State Name-
Age
Educational status-
(a) literate (b) Illiterate
If Educate then: (a) Primary
(b) Metric(c) High school
(d) Intermediate (e) Technical
(f) Graduate (g) Postgraduate
Sex : (a )Male (b)Female
2. Demographics:
Religion-
Caste : ST / SC / OBC / General /Other
Marital Status -Unmarried /Married /Widow
/Divorced
Physical Disability : Yes / No
3. Family Details of the Client:
Name of the family Head -
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Total member in family -
Type of Family - Joint / Nuclear / Single
Total members in a family -
No of earning member
4. Give details about assets position:
Assets position Pre(GRAMEENKOOTA) Post(GRAMEEN KOOTA)
No. of Cow
No. of buffaloes
No. of Goats
No. of sheep
No. of poultry
No. of work animals
No. of Consumer
durables like Stove
No. of Sewing machines
No. of Bicycle
No. of TV
No. of Transistor
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No. of Watch
5. Livelihood base:
Size of Land holdings :(Acres/Bisswa/ Hectare/ Square feet/Bigha)
Type of Land (i) Fertile (ii) Non fertile iii) Waste(iv) Dry (v) Some land fertile and some not fertile
Do you come under the BPL Family (a)Yes /(b) No
Annual income from all sources :
6. Give details about assets creation Post MFI:
(i) Domestic assets (House, pumps, televisions, cycles and radios)--Increase/Decrease/No change
(ii) Productive assets (Land, Shop, animal Rickshaw, Tractor etc)--Increase/Decrease/No change
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7. Occupation of Group members:
Sources of income :(i)Agriculture (ii) Micro Enterprise(small scale Business)(iii) Dairy (iv)Poultry(v)Others (vi) Daily labor
Have you received the training from MFI for the activitychosen? (Yes/No)
Has your yearly net income increased after taken loan under MFI?(Yes/No)
If yes then specify the pattern of increase in income(i) Between Rs.1500 to2500 (ii) Between Rs.2500 to 3500
(iii)Between Rs.3500 to 5000 (iv) More than Rs.5000
Do you think that the employment opportunities For your family has beenincreased Post Grameen Koota?(Yes/No)
If no then Reason:(a) Lack of financial assistance from their groups(b) Lack of proper awareness(c) If others (than please specify)
Are you involved in some kind of Micro Enterprise activities?(Yes/No)
If yes than please give the followingdetails :Name of your Micro Enterprise
Micro Enterprise Establishment year
Total Income from Your Micro Enterprise (Yearly)
Timing of Micro Enterprise
Name of product that you product Market Place
How many Person involve in your Micro Enterprise
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