market research india - guide to microfinance in india 2009

7/31/2019 Market Research India - Guide to Microfinance in India 2009

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July 2009
http://www.netscribes.com/


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Executive Summary

Market

Microfinance in India operates through two channels Microfinance institutions (MFIs)

NABARDs SHGs bank linkage programme (SBLP) a partnership model between SHGs, banks and NGOs

The introduction of the Micro Financial Sector Development and Regulation Bill, 2007 Major Aspects: Definition of microfinance organizations, conditions for mobilization of savings and creation of

Microfinance is predominant among the southern states, especially Andhra Pradesh

Initiative

Limitations: Regulatory body, differential regulation, dual regulation, preferential regulation and lax prudential norms

Recommendation: Encompassing

a wide

spectrum

of

institutions

and

modifying

rules

for

depository

MFIs

Trends & Characteristics

Low penetration level providing high growth opportunityLarge scale PE/VC activityHigh interest rate and issue with repayments

Lack of

interest

from

formal

financial

institutions

Major Players

Opportunity in the urban sector

The major microfinance institutions in India are SKS Microfinance Pvt. Ltd.

2GUIDE TO MICROFINANCE INDIA.PPT

SHARE Microfin Ltd.


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IntroductionTypes of Financial InstitutionsMarket OverviewGovernment Initiatives

Trends and CharacteristicsMajor PlayersKey DevelopmentsAppendix



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Microfinance has emerged as an important delivery mechanism to reach out to the low income group of the society

Microfinance is defined as the provision of thrift (savings), credit and other financial

Definition Services Provided

Insurance

services and products of very small amounts

to the

poor

for

enabling

them

to

raise

their

income levels and improve living

World Bank estimates that there are over

Loans

PensionsRemittance

7,000 microfinance institutions worldwide

Major Milestones in India

Financial Counseling

Risk Mitigation Products

NABARD established as an apex agency for

rural finance

Major commercial banks nationalized

19921975 2007

Establishment of SIDBI Foundation for Micro credit

Regional Rural Banks established

in 1975

NABARD launches SHG bank linkage

program

1969 1982 2000 Proposed bill on microfinance

regulation



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Reforms in the financial sector have directly impacted the growth of microfinance in India

Shift in activities in the rural financial sector

The Past Change in Operations The Present

Lack of operational freedom

Flexibility & freedom of operation with

reduction of overnment

Controlled by

ownershipIssue

Deregulation of

Bank

Led to

Banking Sector Reforms in 1991 92

International best

ractices in

n eres ra es

Micro regulations on credit flow

Concern was outreach rather than viabilit Entry of new private

prudential norms


Large scale rural financial sector losses

sector banks


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Introduction Types of Financial InstitutionsMarket OverviewGovernment Initiatives




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Types of Microfinance Institutions (1/4)

Formal / Banks Comprises of Apex Development Financial Institutions, Commercial

Banks, Regional Rural Banks, and Cooperative Banks providing micro finance services in addition to their general banking activities referred to as micro finance service providers

ypes o financial

institutionsInformal / Non Banks

Informal institutions that undertake micro finance services as their main activity are generally referred to as micro Finance Institutions

Investor Pool of Funds

Bank

Institution entrepreneur

Non profit

Public Trusts Societies

Mutual Benefit

Self Help Groups and Federation

For Profit

Non Banking Financial


Section 25 companies Co operative Societies Corporation


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Public trusts are established in accordance with the respective State regulations Private trusts are established under the Indian Trusts Act 1882 Exempted from tax if registered under 12A of the Income Tax Act

Trusts

Registered under Societies Registration Act, 1860 or under the respective State acts It refers to a group of 7 individuals who form an association for any literary, scientific or

, to accept foreign grants

charitable purpose These associations cannot accept public deposits

Exempted from

tax

if

registered

under

12A

of

the

Income

Tax

Act

In order to accept foreign grants the institution needs to be registered under FCRASocieties

It is not in a position to raise large funds as banks are unable to determine ownership

RBI has exempted NBFCs licensed under section 25 of the Indian Companies Act from registration, maintenance of liquid assets and transfer of profit to reserve funds only if

Do not mobilize public deposits

These institutions are prohibited to pay dividends

Equity mobilization is difficult due to the restrictions posed on the payment of dividends

Section 25 Companies


Exempted from tax if registered under 12A of the Income Tax Act


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It is an unregistered entity comprising of 10 20 individuals with autonomous rules and regulations, office bearers and books of accounts

SHGs provide credit to their members by using the savings of their members as well as SHGs and

A network of SHGs forms a Federation which are generally registered as Societies or Co

operative Societies

Federations

Members comprise of individuals, other cooperatives and government Various modalities of registration

Cooperative

Societies

Act,

1912,

or

State Cooperative Societies acts, or

Cooperative Societies

State Mutually Aided Cooperative Societies Act, orMulti state Cooperative Societies Act, 1995

Regulated by the registrar of co operative societies Legal framework allows them to access equity and deposits from their members which is

use o sperse oans Mobilization of equity is restricted as co operative societies can raise equity only from

their members Banks are largely unwilling to provide funding due to the non equity based ownership



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Companies registered under Indian Companies Act 1956 can operate as an NBFC by applying to the RBI

Required to have net owned funds of INR 20 mn Ownership is defined and are thus in a position to raise equity Mobilization of public deposits is possible but is extremely difficult due to the strict

guidelines of the RBI Banks offer lending services to NBFCs which have substantial capital and are performing

It is

a profit

making

organization

and

are

taxed

FDI through automatic route is allowed

NBFCs

FDI up to 51% USD 0.5 mn to be brought upfrontFDI between 51% and 75% USD 5mn to be brought upfrontFDI between 75% and 100% USD 50mn out of which 7.5 million to be brought up front

All non deposit taking NBFCs having asset size of INR 1 bn or more as per last audited a ance s ee are cons ere as sys em ca y mpor an s

Non deposit taking and systemically important NBFCs will be subject to capital adequacy regulations, single/group exposure norms and disclosure pertaining to derivative transactions



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IntroductionTypes of Financial Institutions Market OverviewGovernment Initiatives




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In India, microfinance sector operates via two routes Microfinance Institutions and Self Help Groups

Overview Credit Distribution (07 08)

Large MFIsMicrofinance in India

20%

5%Medium andSmall MFIs

Microfinance NABARDs SBLP a partnership model

Demand for micro credit is pegged at USD 30 bn but Client Outreach

75%

SBLP

, and NGOs

Outstanding micro credit portfolio amounted to ~INR

220 bn in 2007 08 Microfinance is predominant among the Southern

States, especially Andhra Pradesh 40

60 48.06

45.20

59.21

SHGs

MFIs

+23%mn

75% of the consumers are from the rural sectorWomen account for 80% of the credit clientele

Highest growth observed in the loan segment ranging from INR 5,000 INR 10,000

0

2038.02

10.04

2006 07

14.01

2007 08


: s an n age programNOTE: Assessment of the share of the total market for micro credit loans is difficult as no law or regulation requires organizations which provide micro credit to formally register as microfinance institutions


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MFIs have been focusing on the rural sector and it operates via substantial funding from financial institutions Microfinance

MFI SBLP

Microfinance Institutions primarily refers to organizations created to provide credit and other

Overview Clientele (Mar 06 Mar 08)

Urban

nanc a serv ces to ow ncome c entsMFI loan outstanding: 59.54 bn (Mar 2008) Average loan outstanding, MFI client INR 4,220

(2008)75%

oan port o os grew y rom ar to ar

Client outreach grew by 40% in 2007 08

Sources of Funding

Rural

Major Issues Financial Viability: Small scale MFIs face financial

problems as high borrowing costs coupled with high operating expenses ranging between 4 to 19%

impedes its ability to offer competitive rates Client Savings

Other Liabilities7%

Paid in Equity

6%

Grants

3%

High capital requirements: Few MFIs can raise INR 20 mn capital required to become NBFCs

75%

Institutional Debt



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MFIs provide funding to various clients across the country with southern states accounting for maximum share Microfinance

MFI SBLP

Distribution of Loans and Clientele Segmentation of MFI Portfolio (Clients)

WestNorth East Southern states account for the maximum

share of the clients as well as the loans 9%disbursed

Microfinance institutions lend to SHG Single loan to the SHG as a whole, which decides how it should be allocated

Segmentation of MFI Portfolio (Loans)South

66%

Distribution of Operating Model

Grameen/Joint Liabilities Group Loan recorded in the names of Individual borrowers

East

15%6%

North

4%West

7%

Individual Lending

75%

65% SHG28%Grameen/

JLG


South


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Self Help Groups have seen major growth over the last decade with the South contributing the largest fraction Microfinance

MFI SBLP

Began in the early 80s as NGOs 3.48 mn SHGs are linked with bank credit (as of Mar

Overview Cumulative No. of SHGs

2,924000

2008)

SHG loans outstanding: 123.66 bn (Mar 07) Savings mobilized by 4.2 mn SHGs account for INR 35

bn

2,238

1,6281,079

717461

1,000

2,000

,+49%

Short term lending with the interest charged ranging from 23% per month

Supply figures pertaining to SHGBank linkage programme is ~ INR 123660 mn (Mar 2007) SHG Regional distribution

003 04 05 0602 03 04 05 06 072000 01 01 02

ar ous ypes o roupsSavings and Credit GroupsSocial Forestry GroupsWater Users' Groups

18%

East7%

North EastNorthern3%

Central11%

Farmers' Interest GroupsOther

Annual growth rate of out reach is 18% (06 07 07 08)

Western 9%

52%


Southern


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Loans provided by banks to SHGs has seen tremendous growth with the highest contribution from commercial banks Microfinance

MFI SBLP

Began in 1989 with NABARD overseeing operations Average loan outstanding, SHG member INR 3,250 (08)

SHGs Linkage with Banks Bank Loans

180200

INR bn

Linkages act as a a supplementary channel for providing financial services from formal financial institutions

Once the SHG becomes functional, banks assess them for credit worthiness after 6 months; well functioning

113

6839

2050

100

150 +89%

s are sanct one up to our t mes t e r sav ngs Top five States in SHG linkage Maharashtra,

Orissa, Tamil Nadu, West Bengal, Andhra Pradesh

Issues at the Ground Level

40

2000 01 01 02 02 03 03 04 04 05 05 06 06 07

Agencies financing the groups (07 08) Strong opposition from money lenders and the

socially dominant classes in of the rural population Resistance from men against women forming such

groups

25%

Cooperative banks

33%RRBs

Lack of basic infrastructure for e.g. a meeting area Large scale reliance on government programmes,

subsidies and grants from NGO or development agencies 42%


Commercial Banks


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Three bank linkage models are prevalent in India which allow SHGs to fund their operations Microfinance

MFI SBLP

Model 1Bank NGO

Each partner institutions functions independently. Banks lend, NGOs organize poor into SHGs and SHGs manage small group finance in their own interestThe whole system is localizedSHGs and local NGO learn to deal with banks and vice versa

SHG

Majority of field level bankers do not view it as a banking

mandateIn many places, it is still difficult to open a savings accountAbsence of NGOs in many parts of India

Model 2 Bank Reduces transaction and risk cost of the bank as they lend

large sum to an NGO, which guarantees repayment

Easier for the poor to deal with an institution which they know and trust.

NGO

SHG

Easy to be adopted by stakeholders.

NGOs are not equipped to work as financial intermediariesCalls for substantial investment in capacity building of NGO

Wide scale

adoption

not

possible

Model 3Bank SHG

Possible solution where NGOs are not present

Wide scale application may not be feasible because of other


priorities of bankers


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IntroductionTypes of Financial InstitutionsMarket Overview Government Initiatives



d f h b ll d d f l


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Introduction of the bill is expected to create a definite regulatory framework for microfinance institutions

Micro Financial Sector Development and Regulation Bill, 2007

PurposeRegulating and supervising cooperative societies and non profit institutions (including societies and trusts that are rovidin microfinance

Definitions

Microfinance: Includes

loans,

savings,

insurance

and

pension

services.

Loans

cannot

exceed more than INR 50,000 (INR 150,000 for housing purposes)

MFO: Any organisation that provides micro finance services including societies, trusts and cooperative societies

Definition of Microfinance Organizations: NBFCs and Section 25 companies, which

account for ~80% of microfinance loans outstanding are excluded from its scope Mobilization of Savin s: States that MFOs are authorized to collect de osits from their

Major Aspects

members

Certain conditions must be satisfied Have a minimum capital base of INR. 0.5mn

Be in operation for a minimum of 3 years ,

New Regulator: NABARD to be the regulatory body for both depository and non depository micro MFOs . Its role entails

Facilitating the development of credit rating norms and performance benchmarksSpecifying the accounting form and the auditing standards


Promoting financial literacy of MFO clients and sector related researchDisseminating information relating to best practices

h bill h b h li i i i i d


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The bill has been seen to have many limitations in its scope and reach

Mandatory registration and periodic report submission by all MFOs seeking to accept deposits

MFOs will also be subject to inspection by the regulator in case of any malpracticesOther Aspects ans on a corpus un , cro nance eve opment an qu ty un , or t e

development of the sector

MFOs that accepts deposits to create a reserve fund by transferring a minimum of 15% of its net profit/year

NABARD as Regulator: NABARD being a service provider and regulatory body will lead to conflict of interests

Limitations of the bill

, a fund created to provide equity capital, debt funds, or grants to MFOs

NABARD also lacks expertise to regulate and develop MFIs in the urban sector as its role has been confined to rural areas and to agriculture

Differential Regulation: Lack of rationale behind classification

NBFCs have been excluded from the bill as they are already regulated by the RBI while cooperatives, which are also currently regulated, have been included

Introduction of dual regulation of deposits received which is currently regulated solely by the RBI



21/45





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Trends and Characteristics

Low penetration level provides tremendous growth opportunities

Large scale PE/VC activity

` High interest rate and issue with repaymentsTrends and

Characteristics

Lack of interest from formal financial institutions


Opportunity

in the

urban

sector

S i i f i i h l d


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Strong opportunities for investments with large untapped portfolio of products in demand

Strong potential demand for microfinance services exists65% of the Indian population are without a bank account

Low penetration level provides tremendous growth opportunities

27% or 300 mn people in India live below poverty line (earn less than USD 1 per day)87% of the poorest households do not have access to easy credit

Approximately, 56 % of the poor still borrow from informal sources70 % of the rural poor do not have a deposit account

Service No. of MFI Providing % of Clients Accessing (08)

Education loan 1 3%

Emergency loan 1


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Microfinance emerging as next asset class for PE funds

Private equity and venture capital have made investments worth USD 230 mn during Jan 2007 Mar 2009 Investors have been diversifying their portfolio as the urban and manufacturing related sectors are witnessing a slump

Large scale PE/VC activity

Year Microfinance Company PE Investor Stake (%) Deal Size (USD mn)

2009 Bhartiya Samruddhi Finance Ltd Lok Capital, Aavishkar, SIDBI n.a. 10

2008 Madura Micro Finance Limited Unitus Equity n.a. 5

2008 MAS Financial Services Ltd. ICICI Venture n.a. 10

2008 SKS Mirofinance Sandstone Capital, SVB India Capital and

Kismet Capital

n.a. 75

Silicon Valle Bank Columbia Pacific Se uoia ro nance

Capital, Vinod Khosla, Odyssey captial n.a.

2008 Ujjivan Financial Services Unitus Equity Fund n.a. 19.6

20 07 SKS Mirofinance Sequoia and Unitus n.a. 11.5

2007 Spandana JM Financial Fund n.a. 10

2007 Share Microfin Aavishkaar Goodwell 4 2

2007 SKS Mirofinance Sequoia, Silicon Valley Bank and Vinod Khosla, n.a. 37


P g i l high i t t t d d l d t


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Progressively high interest rates and delayed repayments limiting the growth

Lending to small borrowers follows an indirect route. Banks lend to MFOs who then lend to various SHGs and JLGs. Individual borrowers get funds through SHGs and JLGs

High interest rate and issues with repayments

subsidized borrowings or to borrowers through higher interest rates

Progress in interest rates from lender to borrower

Debtors have been failing to repay the loans, this trend has been growing with the rise in size of the loan and the

NABARDCommercial

BanksMFOs SHGs

Individual Member

7.5% p.a. 10 15% p.a. 12 24% p.a. 24 36% p.a.

frequency of borrowing

Growth in default rate in Grameen bank

Second time

Third time Fourth

timeFirst timeBorrowers

Default Rate 0.4% 1.2% 6.6% 9.5%


High i k i idi g l t ll h t d


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High risk in providing loans to small consumers has prevented formal financial institutions from participating actively

Commercial banks, cooperative banks and regional rural banks prefer to abstain from lending to the poorThese loans will be high risk loans

Lack of interest from formal financial institutions

Delinquency and default rates are high among the poorInterest rate regulations by RBI

Commercial bank being advised by the RBI to link their interest rates with their prime lending rate (PLR) for their loan amountsless than INR 200,000

Lack of collateral security among borrowersSafety issues

Borrowers themselves find it problematic dealing with banksCredit from the bank is not easily availableTransaction cost of borrowing from the bank is very high

This includes out of pocket expenses that are incurred in paying travel cost, middleman, and price difference in assets and the opportunity cost of their time

Transaction cost of availing saving facilities are also high Primary factors are distance and small savings


Limited outreach in urban sector provides opportunity for


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Limited outreach in urban sector provides opportunity for microfinance institutions

Microfinance outreach in India is limited to rural areas Merely 0.02% of the urban poor have banking relationships

Opportunity in the urban sector

In urban areas, lack of access to trading space for vendors and livelihood training is further pushing the poor below the poverty line

Initiatives taken by the MFIs in urban sector will help them in Quicker scale upQuicker breakevenHigher loan sizes / enterprise loans

Products must be customized to suit needs of the urban poor Services offered should be accessible and far reaching allowing for large consumer base

Microfinance products for Urban Sector

Paid Employed Self Employed

Salaried Daily wage earners

Example : Vegetable vendorsDaily and weekly loans to purchase ve etables rom wholesale mandis and

Example : Municipal WorkersHealth loans, health insurance

Micro savings to address the issue o low income


daily savings

facilities


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Trends and Characteristics Major PlayersKey DevelopmentsAppendix



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Players (1/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Bandhan Financial Services Pvt. Ltd.

Gross Loan Portfolios a s e

Headquarters Kolkata

Services Offered Micro loans Micro Enterprise Program

Number of Active Borrowers

8280

100 1,500

000USD mn

Health Loan29

810

20

40

60

0

500

,

Business Highlights

It is a non profit entity It is planning to raise INR 6 bn in FY 0910by selling

Business Outlook

ar ar ar ar

pera es n a es roug ranc es Primarily focusing on 3 programs

Chartering into Unventured Frontiers Targeting the Hard Core PoorBandhan Health

Plans on expanding operations to Delhi and Mumbai because of large scale rural urban migration

Expected to encompass Uttar Pradesh, Rajasthan and Gu arat


Bandhan Education Plans on opening 200 new branches


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Players (2/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Bhartiya Samruddhi Finance Limited


Headquarters Hyderabad

Loans Insurance


5660

300

400

000USD mn

Services Offered Money Transfers Agriculture/Business

Development Services Institutional Development

3122

13

0

20

0

100

200

Business Highlights

Clientele, 90% from rural poor households and about Plans on diversifying its product portfolio to include

Business Outlook

ar ar ar ar

Operates in 15 States In 2007 08, Non farm loans accounted for 47% of the

total while Agriallied accounted for 36%

funds

Large scale disbursement of education loans based on the courses being undertaken

Bankin on lar e scale technolo ado tion towards


achieving high operational efficiency


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Players (3/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Equitas Micro Finance India


Headquarters Chennai

Micro Finance Loan AMC Loan


5660

300

400

000USD mn

Education Loan Gold Loan

40

20

0

100

200

Business Highlights

It lends to women borrowers organized into joint liability Plan on opening 5 more branches by 2009

Business Outlook

ar ar

90 branches with focus falling on Tail Nadu Entered into a partnership with Newgen Software in

order to change process flows via data management so as to increase scalabilit and im rove roductivit

s arge ng , , mem ers n am a u Plans on working on an OMRbased solution for their

risk management team Under Equitas Gyan Kendra, they plan on imparting


Loans disbursed in May 09: INR 387.4 mn

, ,

and painting to SHGs


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Players (4/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: SHARE Microfin Ltd.



LoansGeneral


151150

200

1,500

2,000

000USD mn

Services Offered

SpeciaHousingMicro enterprisePersonal

Insurance

9182

40

0

50

100

0

500

1,000

Business Highlights Fund Transfer Services

Providing financial and support services mainly to By 2012 13

Business Outlook

ar ar ar ar

Carries out operations across 16 States covering 17,654 villages

As of May 09; total branches: 771; cumulative disbursement INR 56 895 mn

Outstanding portfolio to ~ INR 163.82 bn

Plans on achieving deeper vertical penetration in its current area of operation and large geographic outreach



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Players (5/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Shri Kshetra Dharmasthala Rural Development Project


Headquarters Belthangady Taluk, Karnataka

Loans Insurance


8580

100800

000USD mn

Services Offered Training and Consulting

Business Development Services Health Education

52

2411

0

20

40

60

0

200

400

Business Highlights

In 1996, initiated a microfinance programme

Plans on expanding their insurance service which was

Business Outlook

ar ar ar ar

marginal farmers Under Pragatinidhi loans are disbursed for agriculture,

infrastructure development, non farm sector development activities and group enterprise.

. mn customers by 2009 from 960,000 in 0708

By 2011, they plan on forming 60,000 groups under the SHG model


Microfinance comprises of 40 50% of their operations


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Players (6/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: SKS Microfinance Pvt. Ltd.



Income generating loans Mid Term Loans


262250

300

2,000

2,500

000USD mn

Services Offered Individual Loans Emergency Loans Loan Cover Insurance Health Insurance

6321

80

50

100150

0

500

1,000

1,500

Business Highlights

South is the largest contributor, with Andhra Pradesh Plans on doubling its total loan disbursals in 09 10 to

Business Outlook

ar ar ar ar

respectively Approached the RBI to launch mobile banking services

Formed an association with Nokia and Airtel towards providing cheap handsets to customers

. Plans to introduce 400 new branches in 09 10 Plans on launching an IPO towards raising capital Strong IT initiatives towards enhancing efficiency


Project is expected to begin in Andhra Pradesh

captured and consolidated


35/45

Players (7/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Spandana Sphoorty Financial Limited



General Loans Small Business Loan


182

150

200

2,000

2,500

000USD mn

Services Offered Micro Enterprise Loan

Agri Family Loan Dairy Loan

Farm Equipment Loan

896354

0

50

100

0

500

1,000

1,500

Business Highlights

Operates in 9 States across the country with 999 Plans to expand its reach to 16 States by end 2009

Business Outlook

ar ar ar ar

Andhra Pradesh accounts for 57% of its loan portfolio while Karnataka accounts for 13%

Other than financial intermediation, they have also been focusin on sub sector intervention such as diar

, , , , New Delhi, Kerala and Goa

By 2011, the company plans on catering to 6 mn borrowers with cumulative disbursements of INR 200 bn


development


36/45

Players (8/8)

Corporate Information Financial Performance and OutreachCompany Snapshot: Ujjivan Financial Services Pvt. Ltd.


Headquarters Bangalore

Family Needs Loan Business Loan


9,110

8,000

10,000 60,000

USD 000

Services Offered Combo Loan (combination of

family needs and business) Housing Loan Festival Loan

1,933

460

2,000

4,000

6,000

0

20,000

,

Business Highlights

Provide financial services to poor working women in

Plans on an IPO by 2011, after profitable operations

Business Outlook

ar ar ar

Only MFI in India to start operations without any grants or donation

62% of customers are from the South while North and East account for 6% and 30% res ectivel

ans on encompass ng mn cus omers y w its presence across India with regional offices in Bangalore, Kolkata, Delhi and Pune

Plans on building a strong capital base by 2011


sale, securitization, subordinated debt , non convertible debentures


37/45


Trends and CharacteristicsMajor Players Key DevelopmentsAppendix



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Key Developments

Date Development 22 Jun 09 Share Microfin plans to raise INR 21.5 bn in 2009 10 to fund its expansion. Of this, INR 19 bn would be

debt and the remaining equity. They have entered into an agreement with the Small Industries

respectively

18 Jun 08 SKS Microfinance, the largest microfinance player in the country in terms of assets, is looking beyond pure bank funding for their business. It is planning to raise INR 5 bn through a variety of rated debt products to fund loan demands of its customers

18 Jun 08 Micro finance institutions and customer service centre network are emerging to be the largest channel for the distribution of Max New York Lifes (MNYL) small kitty insurance policy.

13 Jun

08 ICICI

Bank

is

targeting

the

farm

sector,

micro

finance

institutions

and

companies

in

the

agriculture

space

and have set aside INR 250 bn. The bank plans on issuing farmers cards who will be given loans through

s un er s

10 Jun 08 Spandana Sphoorty Financial raised INR 800 mn by issuing one year non convertible debentures (NCDs) redeemable at a premium of 10%. They previously planned on raising INR 3 bn by diluting a part of their stake to investors.

pr sse anagemen an nves n a cro ens on erv ces e up w or a m cro pension scheme

28 Feb 09 ICICI Lombard General Insurance Company, began offering innovative products like weather and cattle insurance in rural areas.


, .


39/45


Trends and CharacteristicsMajor PlayersKey Developments Appendix


Appendix 1:


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Appendix 1:Overall Progress Under Microfinance

Particulars Units 2006 07 2007 08 % Growth

Savings accounts for SHG banks as of 31 March No of SHGs 4160584 5009794 20.4

Amount 35127.1 27853.9 7.8

Bank loans disbursed to SHG during the yearNo of SHGs 1105749 1227770 11

Amount 65703.9 88492.6 34.7

Bank loans outstanding with SHG as on 21 No of SHGs 2894505 3625941 25.3March Amount 123664.9 169999.1 37.5

Bank loans disbursed to MFI during the yearNo of SHGs 334 518 55.1

Amount 11515.6 19701.5 71.1

Bank loans outstanding with MFI as on 31 March

No of SHGs 550 1109 101.6

Amount 15844.8 27488.4 73.5

NOTE: Amount in INR mn


Appendix 2:


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Appendix 2:Savings of SHGs with Banks

Agency YearTotal SHGs savings with the banks as on 31 March 2008

No. of SHGs % Share Amount(INR mn) %

Share Per SHG

Saving (INRs)

Commercial Banks (Private and Public)

. . .

2007 08 2810750 56.1 20777.3 54.9 7392

% growth 22.5 9.8 10.4

2006 07 1183065 28.4 11582.9 33 9791

Regional Rural Banks (RRBs) 200708 1386838 27.7 11664.9 30.8 8411

% growth 17.2 0.7 14.1

2006

07 683748 16.4 4620 13.2 6914

. . .

% growth 18.8 17.1 1.4

Total

2006 07 4160584 100 35127.1 100 8469

2007 08 5009794 100 37853.9 100 7556

% growth 20.4 7.8 10.5


Appendix 3:


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Appendix 3:Bank Loans Disbursed to SHGs

Agency YearTotal loans disbursed by banks to SHGs

No. of SHGs % Share Amount(INR mn)

% Share

Per SHG bank loan disbursed (INRs)


. . .

2007 08 735119 59.9 54039 61 73511

% growth 28.6 37.9 7.2

2006 07 381199 34.5 20527.3 31.2 53849

Regional Rural Banks (RRBs) 200708 327650 26.7 26518.4 30 80935

% growth 14.0 29.2 50.3

2006

07 152914 13.8 5987.2 9.1 39153

. .

% growth 7.9 32.5 22.8

Total

2006 07 1105749 100 65703.9 100 59420

2007 08 1227770 100 88492.6 100 72076

% growth 11.0 34.7 21.3


Appendix 4:


43/45

ppBank Loan Outstanding Against SHGs

Agency YearTotal loans outstanding by banks to SHGs

No. of SHGs % Share Amount(INR mn) %

Share Per SHG bank loan

outstanding (INRs)


. . .

2007 08 2378847 65.6 114754.7 67.5 48240

% growth 25.7 31 4.2

2006 07 729255 25.2 28017.6 22.7 38419

Regional Rural Banks (RRBs) 200708 875716 24.2 44210.4 26 50485

% growth 20.1 57.8 31.4

2006

07 272234 9.4 8043.5 6.5 29546

. . .

% growth 36.4 37.2 6.6

Total

2006 07 2894505 100 123664.9 100 42724

2007 08 3625941 100 169999 100 46884

% growth 25.3 37.5 9.7


Appendix 5:


44/45

ppBank Loans Provided to MFIs

Agency Year

Amount of

Loan

Disbursed Loan

Outstanding

against

as

on 31 Mar

% Recovery of Loans

No. of MFIsAmount

(INR No. of MFIs Amount

mn)


2006 07 327 11513.4 541 15842.7 92 100

2007 08 497 19686 1072 27452.4 82 100

% growth 52 71 98.2 73.3

Regional Rural Banks (RRBs)

2006 07 7 2.2 8 2 90

2007 08 8 15.1 24 35.8 95.5 100

% growth 14.3 586.4 200 1690

Cooperative Banks

.

2007 08 13 0.4 13 0.2 n.a.

% growth 1200 100

2006 07 334 11515.6 550 15844.8

Total 2007 08 518 19701.5 1109 27488.4

% growth 55.1 71.1 101.6 73.5


Th k f i


45/45

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