Pradhan Mantri Jan Dhan Yojna

Mohit Chauhan 9802309547

Hon'ble Prime Minister, Sh. Narendra Modi on 15 August, 2014 announced "Pradhan Mantri Jan-Dhan Yojana (PMJDY)" which is a National Mission for Financial Inclusion.The task is gigantic and is a National Priority.

Cont…

Ensuring access to various financial services like availability of basic savings bank account

Access to need based credit.Remittances facility Insurance and pension to the excluded sections i.e.

weaker sections & low income groups.This deep penetration at affordable cost is possible

only with effective use of technology.

Cont…

Direct / special benefits attached to PMJDY?

i. Interest on deposit.ii. Accidental insurance cover of Rs.1.00 laciii. No minimum balance required. However, for withdrawal of

money from any ATM with Rupay Card, some balance is advised to be kept in account.

iv. Life insurance cover of Rs.30,000/-v. Easy Transfer of money across India.vi. Beneficiaries of Government Schemes will get Direct Benefit

Transfer in these accounts.vii. After satisfactory operation of the account for 6 months, an

overdraft facility will be permitted.viii. Access to Pension, insurance products.

MICRO- FINANCE

Microfinance is the provision of loans and other financial services to the poor

i) To promote self-employment

ii)Contribute to poverty alleviation

iii)Provision of social security.

iv) To create opportunities for economic growth

with the efforts of rural development, women empowerment and wealth generation by

providing:

i)Small scale savings

ii) Credit

iii) Insurance and

iv) Other financial services to low income households.

Microfinance also known as microcredit or micro lending means making provision for

smaller working capital loans to the self-employed or self-employment seeking poor.

Comparison of micro-finance & micro-credit

• In Microcredit, The mobilization of funds is restricted to

external sources such as banks & moneylenders and physical

collateral may be needed.

• In Microfinance, the small loan can be garnered not just from

the external sources but also through self-mobilization, by way of

saving and sale of assets.

• Lack of any physical collateral.

• The options available with microfinance, therefore, are much

broader and flexible than the ones available with microcredit

The Important Features of Microfinance are:• Tool for the empowerment of poor women. • Loans are very small. • Targets the poor rural and urban households.• Credit under microfinance follows thrift i.e. mobilize savings and lend the same. • Low transaction cost due to group lendings. • Transparencies in operation.• Short repayment period.• Simple procedure for reviewing, processing and approving loan applications and

delivery credit.• Chances of mis-utilization are rare and there is assured repayment.• Peer pressure act as the collateral security required for loans.• Need based loan disbursement.• Prompt repayment and • There is no ceiling from the RBI in respect of minimum and maximum amounts.

Microfinance in Africa• The United Nations (UN) has paid close attention to and recognised the

important role of microfinance in the socio- economic advancement of

communities.

• This has included the declaration of the year 2005 as the year of

microfinance, conducting studies and producing publications on the

subject, and strengthening activities of its specialized fund for small-

scale investment (UNCDF).

•More recently, the UN Secretary General has designated a Special

Advocate for Inclusive Finance, to champion the microfinance agenda.

• This UN’s intense interest is in recognition of the emerging importance

of microfinance as a tool for poverty reduction in African. Although the

recent financial and economic crises adversely affected many African

economies, microfinance grew on the continent at a remarkable pace

even at the height of the crisis in 2008.

• At the end of 2008, Microfinance Institutions (MFIs) in SSA reported

reaching 16.5 million depositors and 6.5 million borrowers.

• Moreover, even when the region witnessed a slowed growth in

borrowers in 2008, there was a continued and strengthened uptake for

depositors, as their growth rate increased by 10 per cent to reach 40 per

cent, which is more than for any other region.

Microfinance in Africa is developing at all the

three levels of the financial system

1. Micro (financial service providers)

2. Meso (support service providers) and

3. Macro (policy, regulatory framework and

supervision).

•At the micro level, there are many stakeholders and growing interest

from banks and private investors. Microfinance institutions (MFIs)

are having a predominant role, with a strong credit unions

membership, although the bulk of savings is still mobilized through

the banks.

• At the meso level, MFIs have scaled up provision of services such

as training or auditing, and indications are that some associations are

active in coordinating the activities of MFIs.

• At the macro level, countries are increasingly shifting to a

conducive paradigm of market based policies, while also putting in

place regulatory and supervisory frameworks.

Profile of Microfinance in India

• Microfinance translates to approx. 75 million households. • Annual credit demand ---- about Rs. 60,000 crores. • Cumulative Disbursement -- about Rs. 5000 crores. • Total outstanding -- Rs. 1600 crores. • Only about 5% of rural poor(access to microfinance) ---- cumulative of about 20

million families • The non poor --- 29% of the outreach. • While 10% lending to weaker sections in commercial banks; they does not have

(i) Network for lending and (ii) Lack of supervision on a larger scale. (iii) Confidence to offer term loan to big microfinance institutions.

Need for Microfinance

• Assisting poor communities economically to achieve greater levels of asset creation.

• Income security at the household and community level. • Major poverty alleviation strategy in India.• To make poor self-reliant economically.• Poor contribute directly to the well being of poor families.• To confront systematic gender inequalities.• For overcoming the inevitable and common imbalance between

income and expenditure among poor societies.

Evolution of Micro Finance

• The idea of microfinance strictly rolls around the philosophy of

Muhammad Yunus of Bangladesh (Nobel laureate) who initiated

organization ‘poorest of the poor’ into self-help groups namely

Bangladesh Grameen Bank (BGB) in the year 1976, and proving the basic

"theory of survival".

• The interest in Grameen Bank reached a new peak with a micro-credit

summit held in February 1997 in Washington which was considered the

first step of a decade-long campaign that seeks to ensure delivery of credit

for self-employment by 2005 to hundred million of the world's poorest

families especially women.

Participants in the Microfinance System :

• National Bank for Agricultural and Rural Development (NABARD)

• Reserve Bank of India (RBI) • Self Help Groups (SHGs) • Micro-finance Institutions (MFIs) • Non Government Organizations (NGOs)

SHGs

• The ideal size of an SHG is 10 to 12 members. • The group need not be registered. • From one family, only one member. • Mixed groups are generally not preferred. • Members have the same social and financial

background (interact more freely).• Compulsory attendance (Full attendance for

larger participation).

Functions of SHGs• Principle of thrifts(saving).

• 'Savings first - credit later' is the motto.

• The savings to be used as loans to members. The purpose,

amount, rate of interest etc. to be decided by the group itself.

• Enabling members to attain loans from banks, and repaying the

same.

• Discussion and to find solution of the problem faced by the

members of group.

Functions of NGOs

• Organising the poor people into groups.

• Training and helping them in the organizational, managerial and financial

matters.

• Helping them across micro credit and linkage with formal financial agencies.

• Channelizing the group effort for various developmental activities.

• Availing opportunities.

• Widening the options available for economic development.

• Sustaining the group efforts independently even after withdrawal of the

NGO.

Micro-finance Institutions:

Based on asset sizes, MFIs can be divided into following categories:-

• Converted into for-profit, regulated entities mostly Non-Banking

Finance Companies (NBFCs):-- SKS INDIA, SHARE and

Grameen style programs(2000).

• Institutions with high growth rate, including both news recently

form for-profit MFIs:- Grameen Koota, Bandhan and ESAF(10-

15).

• The bulk of India's MFIs are NGOs struggling to achieve

significant growth.

THANK YOU