Chapter - 2 Genesis and Concept of Microfinance

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1 2.1. Introduction Chapter - 2 Genesis and Concept of Microfinance The word microcredit came into existence and get importance through the revolutionary of Grameen Bank founded by Professor Muhammad Yunus in Bangladesh in In 2006, Yunus and the Grameen Bank were jointly awarded the Nobel Peace Prize "for their efforts through microcredit to create economic and social development from below". Now a day, the word microfinance is used instead of microcredit as it includes saving, insurance, remittances, pension services etc. along with the formal credit services. This programme was initiated in India through the Self Help Group Bank Linkage Programme (SBLP) led by NABARD and achieved huge success in terms of women empowerment, poverty reduction and socio-economic development of the poor. At the same time, Microfinance Institutions (MFIs) also emerged as an alternate source of microfinance and made an outstanding growth in the last decade. The MFIs have proven itself as a viable business proposition through social development. The objectives of this chapter are: (a) to understand the concept of microfinance; (b) to find out the need of microfinance; (c) to examine the role of microfinance in poverty alleviation & women empowerment; (d) to study the evolution and growth of microfinance movement in India; (e) to study the International Scenario of Microfinance. Section 2.2 of this chapter defines the concept of microcredit and microfinance. Section 2.3 describes the need of microfinance. Section 2.4 & Section 2.5 examine the role of microfinance in poverty alleviation and women empowerment. Section 2.6 highlights on the evaluation and growth of microfinance in India with special reference to National Bank for Agricultural and Rural Development (NABARD) led Self Help Group (SHG) Bank Linkage Programme (SBLP), Swarnajayanti Gram Swarozgar Yojana (SGSY) and 32 P a g e

2 Microfinance Institutions. Section 2.7 discussed the international scenario of microfinance. Section 2.8 sums up the chapter with concluding observations Defining Microcredit & Microfinance Microcredit is a small loan given to poor people to encourage self-employment projects that can generate income and raise their standard of living. Microcredit has been defined by the Microcredit Summit held in 1997 as, programme that provides credit for self-employment and other financial business service (including saving and technical assistance) to very poor persons. 1 Microcredit is based on the premise that the poor have skills which remain unutilized or underutilized. It is definitely not the lack of skills which make poor people poor. Unleashing of energy and creativity in each human being is the answer to poverty. 2 As per the definition of Robinson, Microfinance refers to small-scale financial services primarily credit and savings - provided to people who farm or fish or herd; who operate small enterprises or microenterprises where goods are produced, recycled, repaired, or sold; who provide services; who work for wages or commissions; who gain income from renting out small amounts of land, vehicles, draft animals, or machinery and tools; and to other individuals and groups at the local levels of developing countries, both rural and urban. Many such households have multiple sources of income. 3 Microfinance is the extension of small loans to the very poor, in combination with other financial services, such as microinsurance, micro-pension, savings facilities, remittance services, training, health services, networking, and peer support. This allows them to pursue entrepreneurial projects that generate extra income, thus helping them to better provide for themselves and their families. In this way, microfinance allows families to work to end their own poverty - with dignity. Microfinance programmmes around the world, using a variety of models, have shown that poor people achieve strong repayment records - often higher than those of conventional borrowers. Repayment rates are high because, through a 33 P a g e

3 system of peer support used in many microcredit models, borrowers are responsible for each other's success and ensure that every member of the group is able to pay back their loans. In 1974, Prof. Muhammad Yunus, the pioneer of microfinance observed that the village women, who made basket from bamboo, borrowed their small capital from local moneylender but as a return the moneylender take maximum portion of the selling price of that basket and the women got only little wages for that. So he thought that if the women may get a small loan in a systematic way then she will be able to get the full selling price of the basket and will be able to improve her standard of living. 4 Inspiring from this concept Muhammad Yunus, the Professor of Chittagong University, started his work of micro lending from the village Zobra in seventies of the last century. The Grameen Bank project was launched in Bangladesh by Muhammad Yunus in 1976 with a few villages around Chittagong. The project was a big success and soon spread first to Tangail and then to other districts of Bangladesh with a support from the Central Bank and National Commercial Bank of Bangladesh. In 1983, the project was transformed into an independent bank by a national legislation. Today 90 percent of its share is held by borrower themselves i.e. the poor people and the remaining by the Government Need for Microfinance According to the World Bank Report 2010, 31% population of South Asia & 48.5% population of Sub-Saharan Africa are living on less than $1.25 a day. Again the percentage may increase to 66.7% for South Asia & 69.9% if we consider the population living on less than $2.00 a day. 5 As on 2012, 21.9% of the Indian lives in poverty considering poverty headcount ratio at $1.25 a day according to the database of the World Bank. 6 These huge numbers of poor people globally, need financial support to break out the barrier of poverty. Contrarily, the commercial banks generally give loan to 34 P a g e

4 people after taking some security or collateral i.e. gold, land or any other property and it also maintain paper and documentation for granting loans. But in maximum cases the poor people are not in a position to offer collateral for taking loans. Lenders prefer dealing with large loans in small numbers to minimize administration costs. In addition bankers tend to consider low income households, a bad risk imposing exceedingly high information monitoring costs on operation. On the other hand, the local moneylender charges extraordinary interest rate of 2 to 30 percent per month. 7 In this situation, the microcredit comes as blessing to the poor because micro-lender lends them money without collateral at lower interest than local money lender and with easy repayment. So, the relative advantages of microcredit are a) No collateral, b) Reasonable interest rate, c) Easy repayment, d) Doorstep service, e) No or minimum papers or documentation, f) Relationship beyond lending Microfinance and Poverty Alleviation Microcredit is used as a weapon to fight against the poverty. Over the last thirty years, however, successful experiences in providing finance to small entrepreneur and producers demonstrate that poor people, when given access to responsive and timely financial services at market rates, repay their loans and use the proceeds to increase their income and assets. This is not surprising since the only realistic alternative for them is to borrow from informal market at an interest much higher than market rates. Community banks, NGOs and grassroot savings and credit groups around the world have shown that these micro-enterprise loans can be profitable for borrowers and for the lenders, making microfinance one of the most effective poverty reducing strategies. It was estimated that there were 2,420 microfinance institutions (MFIs) operating globally, representing 99 million borrowers in 117 countries in Many of these programmes did not require collateral, reported loan repayment rates above 95 percent, and reached poor individuals who had formerly been difficult to reach. In India, MFIs like Bandhan, Swayam Krishi Sangam (SKS), Ujjivan are 35 P a g e

5 conducting special microfinance programme to reach to the poorest of the poor of the society with their services Microfinance and Women Empowerment Women's empowerment and the promotion of gender equality are key to achieving sustainable development. Greater gender equality can enhance economic efficiency and improve other development outcomes by removing barriers that prevent women from having the same access as men to human resource endowments, rights, and economic opportunities. Giving women access to equal opportunities allows them to emerge as social and economic actors, influencing and shaping more inclusive policies. Improving women s status also leads to more investment in their children s education, health, and overall wellbeing. In India and other Asian countries the majority of SHGs consist of women because, in these countries, self employment through microfinance was perceived as a powerful tool for emancipation of women. It has been observed that gender equality is a necessary condition for economic development. The World Bank reports stated that, a society that discriminate on the basis of gender are in greater poverty, have slower economic growth, weaker governance, and lower living standards. So, given any opportunity to all, poor women want to build her society, her financial security, mainly the women in poor families gain the most from it. 9 Microcredit offers the credit to them who does not get the loan from other sources. So, the women get the scope of generating wealth and entrepreneurship. Since it is women who run the household, the higher standard of living of women ensure better lifestyle and a healthier and prosperous future of children and a better future for the nation. Women s indicators of empowerment through microfinance are: 10 Ability to save and access loans Opportunity to undertake an economic activity 36 P a g e

6 Mobility-Opportunity to visit nearby towns Awareness- local issues, banking transactions Skills for income generation Decision making within the household Group mobilization in support of individual clients- action on social issues Role in community development activities 2.6. Microfinance India s Scenario The concept of social banking has been prevailing in India since long. Institutional credit was perceived as a strategy of rural development and poverty alleviation by enhancing rural production and productivity in independent India. In 1960, India had made one of the largest interventions in rural credit market and it was referred as social banking phase which was characterised by broadening the access to credit for poor and marginalised and to section of people with no access to formal banking in India. In 1969, the Government of India accepted that the rural credit could not only be met from cooperative alone and the commercial bank have to play a vital role in meeting rural credit demand. The Lead Bank Scheme 11 had started district credit plans which brought about a strong reform in the rural financial sector. Another important development in Indian financial sector came out by nationalization of 14 commercial banks in the year In 1975, the Regional Rural Banks (RRB) were incorporated and Agricultural Refinance and Development Corporation (ARDC) was set up. Integrated Rural Development Programme (IRDP) was launched in 1979 in 2300 select community development blocks and from October 2, 1980 it was extended to all the blocks in the country to supplement the credit need of the rural people. For many years, bankers and senior government officers were fond of describing the Government of India s main poverty alleviation programme, the IRDP, as the world s largest microfinance programme. It involved the commercial banks in giving loans of 37 P a g e

7 less than Rs. 15,000 to poor people and, in nearly 20 years, resulted in financial assistance of Rs. 250 billion to 55 million families. The problem with the IRDP was that its design incorporated a substantial element of subsidy (25 50% of each family s project cost) and this resulted in extensive malpractices and misutilisation of funds. This situation led bankers too to see the IRDP loan as a politically motivated handout and they largely failed to follow up with borrowers. The net result was repayment rates estimated at 25 33% and the programme fails. 12 The National Bank for Agricultural and Rural Development (NABARD) was set up in In the year 1992, the major microfinance programme was initiated by NBARD by initiating Self Help Group (SHG) Bank Linkage Programme (SBLP). National Credit Fund for Women (Rashtriya Mahila Kosh) was formed to provide credit (through NGO intermediaries) to self-employed women in the year Another important microfinance programme was initiated in Andhra Pradesh in 1995 when State Government granted autonomy to cooperative by passing Mutually-aided Cooperative Societies Act. The Local Area Banks were introduced in 1996 by the Reserve Bank of India (RBI). The Small Industries Development Bank of India (SIDBI) made an important step in 1998 by setting up SIDBI Foundation for Microcredit with an initial capital of Rs. 100 crore. The Government of India came up with a new holistic self-employment programme called Swarnajayanti Gram Swarozgar Yojana (SGSY), which was launched in April 1, Microfinance Institutions (MFIs) became an integral part of microfinance from the year 2000 when RBI declared that the bank lending to MFIs is a part of priority sector lending. The following Table 2.1 shows the different phases of microfinance in India. 38 P a g e

8 Table 2.1: Different phases of Microfinance in India 13 Phases Year Features First phase: Nationalisation of commercial banks. 14 Social Banking commercial banks were nationalised in 1969 and 8 were nationalised in Expansion of the network of rural banking, RRBs were set up in 1976, NABARD was formed in Extensive disbursement of subsidized credits. Second Phase: Financial System Approach NGO-based MFIs were developed to provide microfinance products and services on not for profit basis. SBLP was initiated and rapidly replicated. Innovative credit lending mechanism based on peer pressure and moral collateral were developed. Third Phase: Financial Inclusion 2000 onwards Microfinance is seen as a business proposition and has been commercialised. Development of for profit MFIs like Non- Banking-Finance-Companies (NBFC). NGO-MFIs are being legitimized. Customer s centric microfinance products and services are given importance. (Source: Panda (2009), Understanding Microfinance, Wiley-India, New Delhi, p-5) Hence, the players in the Microfinance sector can be classified into three main groups: 14 a) The SHG-Bank linkage Model accounting for about 58% of the outstanding loan portfolio. 39 P a g e

9 b) Non-Banking Finance Companies (NBFC) accounting for about 34% of the outstanding loan portfolio. c) Others including trusts, societies, etc, accounting for the balance 8% of the outstanding loan portfolio. Primary Agricultural Co-operative Societies numbering 95,663, covering every village in the country, with a combined membership of over 13 crore and loans outstanding of over Rs. 64,044 crore as on 31 st March 2009 have a much longer history and are under a different regulatory framework. Thrift and credit co-operatives are scattered across the country and there is no centralized information available about them. The features and performance of three major channels of delivering microfinance in India namely, SHG Bank Linkage programme of NABARD, SGSY and MFIs channels have been discussed below NABARD led SHG and Bank Linkage Programme (SBLP) NABARD is working as the apex financial institution in cooperative banking system in India and 90% of its fund is channelized for agricultural and rural development. NABARD has introduced a pilot project for linking up of SHG with Banks in 1992 to develop a supplementary credit delivery system to reach the poor in a cost effective and sustainable manner. SHG is a group formed by the community women, which has specific number of members like 15 or 20. In such a group, the poorest women would come together for emergency, disaster, social reasons, economic support to each other have ease of conversation, social interaction and economic interactions. The financial scheme under this programme was followed by the following principle:- Saving first and no credit without saving. Saving as partial collateral. Bank loan to the SHG for on lending to members. Credit decision or on-lending to SHG members. 40 P a g e

10 Interest rates and other terms and conditions for loans to members to be decided by the SHG. Joint liability as a substitute of physical collateral. Small loans to begin with and difficult credit cycles clearly defined. Progress of SHG Bank Linkage Programme in India NABARD has been playing a leading role in promoting the microfinance programme for the last two decades. It has been instrumental in facilitating the formation and nurturing of SHG s involving all possible partners in this arena. For this group formation, NABARD has been encouraging involved voluntary agencies, bankers, socially spirited individuals, other formal and informal entities and also Government functionaries to promote and nurture such groups. The focus was on building capacities of the partners and providing assistance in meeting the incremental costs of nurturing of SHG s. NABARD had developed a special fund named Microfinance Development Fund for microfinance of Rs. 100 crore which was basically meant for capacity building of MFIs. In February 2005, the fund was increased to Rs. 200 crore and the name of the fund was remained as Microfinance Development and Equity Fund. The following Exhibit-2.1 is showing the numbers of SHG provided with bank loan from 2006 to Exhibit 2.1: Graph showing the No. of SHGs provided with Bank Loans Over the Years 15 (Source: Microfinance India State of the Sector Report 2012, p-13) 41 P a g e

11 Swarnajayanti Gram Swarozgar Yojana (SGSY) The Government of India has introduced an effective self-employment programme named Swarnajayanti Gram Swarozgar Yojana, or SGSY from 1 st April Under the SGSY, assistance is given to the poor families living below the poverty line in rural areas for taking up self employment. The persons taking up self-employment are called Swarozgaris. They may take up the activity either individually or in group, called the Self-Help Groups. For successful selfemployment, it is necessary to take up the right activity. For this purpose, 4 to 5 activities are selected in each Block with the help of officials, non-officials and the bankers. These are called Key Activities, and should be such that they give the Swarozgaris an income of Rs per month, net of bank loan repayment. If any Below Poverty Level (BPL) person feel that he/she can gainfully take up any activity he/she should immediately approach the Sarpanch or the BDO or the Branch Manager of the nearest bank for assistance under SGSY. The Government of India has restructured the Swarnajayanti Gram Swarozgar Yojana (SGSY) as National Rural Livelihoods Mission (NRLM) from June, 2011 to provide greater focus and momentum for poverty reduction. National Rural Livelihoods Mission (NRLM) the new form of SGSY The Ministry of Rural Development (MoRD), Government of India (GoI) constituted a Committee on Credit Related Issues under SGSY (under the Chairmanship of Prof. Radhakrishna) to look into various aspects of scheme implementation. The Government has accepted the recommendations of the Committee and accordingly, SGSY is being restructured as National Rural Livelihoods Mission (NRLM) from June, 2011 to provide greater focus and momentum for poverty reduction and to achieve the Millennium Development Goals (MDG) by An ambitious target of mobilizing and building the skills and capacities of nearly 28 lakh SHGs has been set towards this end. The Table 2.2 in below is showing the comparative key features of SGSY and NRLM. 42 P a g e

12 Table 2.2: Key features of SGSY and NRLM Sl. Key Features SGSY NRLM No. 1 Fund allocation District-wise allocation based on BPL list/rural poverty estimate Overall state allocation based on estimated poverty population based on State Perspective Plan 2 Fund Flow To the districts To the state 3 Delivery mechanism and programme management Through DRDAs Through state Mission structure, a special purpose organisation established for NRLM 4 Programme priority Capital subsidy Mobilization of poor into 5 Capital subsidy flow Through bank as subsidy for economic activities 6 Role of banks As disburse of capital subsidy (Source: groups Direct to groups as demand based seed capital As providers of credit The Table 2.3 in below is showing the year-wise financial and physical progress under the SGSY from the year to It has been found that there is an increasing trend in the programme in terms of Funds Utilised, Credit Disbursed to SHGs and Total Credit Mobilised over the years. A total fund of Rs crore have been utilised in the programme. At the same time, a total of Rs crore has been disbursed as credit to the SHGs. Regarding physical progress of the programme a total of 41,00,831 SHGs have been formed up to among which 68.24% i.e groups are women SHGs. A total numbers of Swarozgaris have been assisted throughout the programme upto , among which on an average 47.29% are Scheduled Caste/Scheduled Tribes Swarozgaris, 6.00% are Minorities and 1.60% are Disabled persons. Out of the total assisted Swarozgaris, 60.06% are women. 43 P a g e

13 Table 2.3: Year-wise Financial Progress and Physical Progress under SGSY from to Sl.No. Head Total/ Average A. Financial Progress (crore) 1 Funds Utilised Credit Disbursed to SHGs 3 Credit Disbursed to Individual Swarozgaris 4 Total Credit Mobilised (2+3) B. Physical Progress (in number) 1 Self Help Groups formed 2 Women SHGs formed P a g e

14 3 %age of Women SHGs 4 Total Swarozgaris Assisted 5 Total SC/ST Swarozgaris Assisted 6 %age of SC/STs Assisted 7 %age of Minorities assisted 8 %age of Women Assisted 9 %age of Disabled Assisted (Source: Ministry of Rural Development, Retrieved from 45 P a g e

15 Microfinance Institutions in India Over the past years, the resultant vacuum in the financial system has started to be filled, initially with the pioneering efforts of development organisations such as the SEWA Bank (Ahmedabad), Annapurna Mahila Mandal (Mumbai) and Working Women s Forum (Chennai) but, more vigorously during the 1990s, by the entry of significant numbers of non-government organisations (NGOs) into microfinance. Current estimates of the number of NGOs engaged in providing microfinance services to the poor exceed 1,000 organisations. 17 Initially, many NGO microfinance institutions (MFIs) were funded by donor support in the form of revolving funds and operating grants. In recent years, development finance institutions such as NABARD, SIDBI and microfinance promotion organisations such as the Rashtriya Mahila Kosh (RMK - the National Women s Fund) have provided bulk loans to MFIs. This has resulted in the MFIs becoming intermediaries between the largely public sector development financial institutions and retail borrowers consisting of groups of poor people or individual borrowers living in rural areas or urban slums. The range of products commonly provided by the Indian MFIs includes: Credit, Saving, Insurance, Pension, Payment services etc. The goal of MFIs as development organizations is to serve the financial needs of un-served or under-served markets as a means of meeting development objectives. These development objectives generally include one or more of the following: 18 To reduce poverty To empower women or other disadvantaged population groups To create employment To help existing businesses grow or diversify their activities To encourage the development of new businesses. An elaborate study has been made regarding the Microfinance Institutions in India in Chapter -3 and Chapter P a g e

16 2.7. International Scenario of Microfinance Microfinance has grown enormously over the last 40 years and is now firmly established as a major supplier of a wide range of financial services to millions of people in the developing world. As Prof. Yunus and the Grameen Bank began to prove that microfinance is viable method to alleviate poverty, their methodology and programme began to spread around the world. The Grameen Bank has been duplicated in Bolivia, Chile, China, Ethiopia, Honduras, India, Malaysia, Mali, the Philippines, Sri Lanka, Tanzania, Thailand, the United States, and Vietnam. As MFIs have become more efficient and increased their client base, they have begun to expand their services through different product offerings such as micro-savings, flexible loan repayment, and insurance. As MFIs have become better versed in the microfinance market, they have applied their innovations in lending to the collection of deposits. Not surprisingly, microfinance deposits (like microfinance loans) break from traditional commercial banking experiences Client Outreach and Loan Portfolio the Global Scenario As of December 31, 2010, worldwide 3,652 microfinance institutions reported reaching 205,314,502 clients, 137,547,441 of whom were among the poorest when they took their first loan. Of these poorest clients, 82.3 percent, or 113,138,652, are women. 19 MFIs have expanded their operations into five different continents and penetrated both rural and urban markets. They have achieved success with a variety of credit products and collection mechanisms. Some MFIs have also begun to seek out public and international financing, further increasing their amount of working capital and expanding the scope of their operations. Total assets of these MFIs amounted to $72 billion. However, in the last three years, microfinance has found this impressive record coming under attack, for a number of reasons. The perception has arisen in some regions that the industry has allowed growth to go to its head that it has lost sight of its social 47 P a g e

17 purpose, and given priority to more commercial objectives such as profit and volume instead. MIX has divided the global microfinance in six regions i.e. (i) Africa region, (ii) East Asia and the Pacific region, (iii) Eastern Europe and Central Asia region, (iv) Latin America and the Caribbean region, (v) Middle East and North Africa region and (vi) South Asia region. MIX use to summarise financial, social and outreach data for MFIs from different region of world Global Funding Scenario in Microfinance Despite the global economic downturn, funding for microfinance has continued to increase over the past three years. Cross-border funding that is, funding from donors and investors based in high-income countries to support microfinance in developing and emerging markets reached $21.3 billion of December 2009 and is expected to continue growing. 20 Tighter budgets in developed countries and lower demand for foreign funding from microfinance institutions (MFIs) during the economic slowdown, which also affected the businesses of MFIs clients, are possible reasons for such slow growth. The microfinance funding landscape has changed dramatically over the past five years. Today, there is a broad range of cross-border funders, each bringing different visions, funding instruments, know-how, and return expectations. Public funders (multilateral and bilateral donors, United Nations agencies, development finance institutions, etc.) regard microfinance as a tool to achieve development goals, such as poverty reduction, economic and social development, or financial inclusion. In contrast, for private investors (retail and institutional investors), microfinance presents an opportunity to diversify their investment portfolios, while also doing well. Also, there are more than 400 private foundations and international NGOs that support microfinance, some of which have reached significant scale. All of these funders share a philosophy of the so-called doublebottom line a mix of social and financial return expectations. 48 P a g e

18 Although the number of private funders has increased over the past 20 years, the bulk of cross-border funding today still comes from public donors and investors. However, private funding has increased at a higher rate than public commitments. Public funders commitments totalled $14.6 billion as of December 2009, representing almost 70% of total cross-border funding to microfinance. As of December 2009, private funders had $6.7 billion committed to microfinance, representing around 30% of total commitments to microfinance. 21 Institutional investors, such as commercial banks, pension funds, insurance companies, private equity firms, and other corporate investors, have become a major source of funding. Demand from individual investors both high-net-worth individuals and retail investors to invest in microfinance has also increased significantly over the past few years, following a general trend towards socially responsible investment (SRI). Sustainable and responsible investments, which combine investors financial objectives with their concerns about environmental, social, and governance issues, are gaining popularity in the United States and in Europe Summary and Conclusion In 1970 s, Prof. Yunus and the Grameen Bank began journey of microfinance as a viable method to alleviate poverty and to establish women empowerment in Bangladesh. Over the last 40 years, microfinance has grown enormously and is now firmly established as a major supplier of a wide range of financial services to millions of people in the developing world. The relative advantages of microfinance are: no collateral, reasonable interest rate, easy repayment, doorstep service etc. In India, mainly two types of initiatives have been found in promoting microfinance, one is Government initiative and another is private initiative. NABARD has started the SHG-Bank linkage programme in 1992 to make a linkage between the rural poor people with the formal banking system. Now this is the largest microfinance programme in India in terms of client base. SGSY was started in 1999 and has achieved a lot in panchayat level. It has renamed as NRLM from The SBLP and SGSY microfinance programme are based on the concept of Self Help Group. Registered in 1974, SEWA Bank is the first 49 P a g e

19 registered MFI in India and now approximately 1000 MFIs are operating in different parts of India. At the same time, the MFIs are facing problems range from availability of funds, increasing resource costs, higher risks, limitations on skilled man power etc. The Grameen Bank has been duplicated all over the world as a viable method to alleviate poverty and as of December 31, 2010, worldwide 3,652 microfinance institutions reported reaching 205,314,502 poor clients. Notes & References 1 Microcredit Summit 1997, Washington DC, UNESCO 2 Yunus, Muhammad (January, 2003), Expanding Microcredit Outreach to Reach the Millennium Development Goals, Presented at the International Seminar on Attacking Poverty with Microcredit, Dhaka 3 Robinson, Marguerite S. (2001), The Microfinance Revolution: Sustainable Finance for the Poor, The World Bank, Washington, D.C., p-9 4 Yunus, Muhammad & Jolis, Alan (2007), Banker to the Poor, Penguin Books, New Delhi, pp The World Bank Report, 2010: Retrieved from poverty, accessed on accessed on Karmakar (1999), Rural Credit and SHG Microfinance Needs & Concept in India, SAGE Publication, New Delhi, p Gonzalez, A. (2008), How many borrowers and microfinance institutions (MFIs) exist? Retrieved March 2012 from publications/microbanking-bulletin/2008/12/how-many-mfis-and-borrowers-existupdated-dec Yunus et al, op. Cit, p Eda Rural System Pvt. Ltd. (2003), Impact Assessment of Microfinance - Interim Findings from a National Study of MFIs in India, pp P a g e

20 11 The basic objective of the Lead Bank Scheme is that one of the commercial bank of Government of India will act as a lead bank in one district. 12 Indian Institute of Banking and Finance (2009), Micro-finance: Perspective and Operations, Macmillan, Mumbai, p Panda, Debadutta, K. (2009), Understanding Microfinance, Wiley-India, New Delhi, p-5 14 Report of the Sub-Committee of the Central Board of Directors of Reserve Bank of India to Study Issues and Concerns in the MFI Sector, RBI, January, Puhazhendhi, Venugopalan (2013), Microfinance India State of the Sector Report 2012, SAGE Publication, New Delhi, p Retrieved from on Micro Credit Rating International Limited (M-CRIL) s estimate, based on the experience through research in the field of rural finance and ratings of microfinance institutions in different parts of India. 18 Ledgerwood, Joanna (1998), Microfinance Handbook An Institutional and Financial Perspective, The World Bank, Washington D.C. pp Maes, Jan P. & Reed, Larry R. (2012), State of the Microcredit Summit Campaign Report 2012, Microcredit Summit Campaign (MCS) Washington, DC, p-3 20 Kanayi, Anish (2009), Emerging Trends in the Microfinance Industry, Infosys, pp MicroRate (2012), The State of Microfinance Investment MicroRate s 7th Annual Survey and Analysis of MIVs, MicroRate Incorporated, pp P a g e

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