Microfinance provides financial services to low-income individuals who lack access to formal institutions. Muhammad Yunus pioneered microfinance through the Grameen Bank in Bangladesh in 1976. Microfinance has helped reduce poverty and empower women. It works through group lending which utilizes joint liability and cross-reporting, allowing lower interest rates and high repayment rates. In India, microfinance has been linked to increased household income, consumption, education, and health expenditures as well as reduced poverty levels.

1. MICROFINANCE:A RAY OF HOPE Dr.BISHNU CHARAN NAG MOTILALNEHRU COLLEGE(E) UNIVERSITY OF DELHI

2. Microfinance is an approach of economic development that involves providing financial services, through institutions, where the market fails to provide appropriate services, to low-income clients including consumers and the self- employed The Canadian International Development Agency (CIDA) defines microfinance as, “the provision of a broad range of financial services to poor, low income households and Micro-enterprises usually lacking access to formal financial institutions”. MEANING

3. Microcredit and Microfinance Microcredit - A small amount of money loaned to a client by a bank or other institution Microfinance-Loans savings, insurance, transfer services, microcredit loans and other financial products targeted at low-income clients

4. MuhammadYunnus- Department of Economics, Chittagong University NOBLE PEACE PRIZE-2006 Grameen Bank-Established on the outskirts of the village of Jobrain Bangladesh in 1976. Credit is a fundamental human right. Objective: To help poor people escape from poverty by providing loans on terms suitable to them and by teaching them a few sound financial principles so they could help themselves BACKGROUND

5. About three billion people, half of the world’s population, living on the income of less than two dollars a day Among the poor communities, one child in five does not live to see his or her fifth birthday The ratio of the income between the 5% richest and 5% poorest of the population 74 to 1 in 2006 30 to 1in 1960, REALTY-WORLD

6. Growth not sustainable, as benefits of growth are not widespread While Indian economy has shown an average growth of around 7 to 8 per cent in last eight years, the benefits have not equitably percolated to the different segments of the society Rural agricultural sector has not gained the desired momentum of growth and development In spite of so many developmental strategies undertaken by the government of India, poverty ratio is 28 per cent which subsists on less than US$ 1 a day, 74.9 per cent live on US$ 2 a day 214 million people are chronically food insecure About 50 per cent people are undernourished 68 out of 1000 die before the age of one year REALITY-INDIA

7. Formal financial services are not available to poor people because of High interest rate, Collateral requirements, Complicated application, Long admission procedures Lack of awareness Inaccessibility of Credit

8. POVERTY RATIO OF INDIA

9. VICIOUS CIRCLE

10. SOLUTION

11. Joint Liability Mechanism charging lower interest rates and generating high repayment rates Cross-Reporting Mechanism truthful-telling about the state of the project and subsequently can minimize the deadweight loss MECHANISM

12. PERFORMANCE In 2009 more than 8.6 crore poor households were associated with banking agencies under SHG-Bank Linkage Programme

13. Net household income between pre-SHG and post-SHG registered a significant growth per year at 6.1 per cent. The annual growth rate per household consumption expenditure on food and non-food items recorded 5.1 per cent and 5.4 percent, respectively. Per household annual expenditure on education and health recorded 5.6 per cent and 5.5 per cent growth, respectively. The average loan amount per household grew at an annual rate of 20.5 per cent between the pre-SHG and the post-SHG periods. About 93 per cent of households reported that loans had been taken in the post-SHG situation as compared to that of 46.5 per cent during pre-SHG On the issue of repayment of loan by SHG members, the findings showed that 96.4 per cent of households had reported regularity in repayments of loans. The share of households living below the poverty line reduced from 58.3 per cent in the pre-SHG period to 33 per cent in the post-SHG situation. The average annual poverty reduction rate was 10 per cent. About 92 per cent of households reported that the social empowerment of women had increased after joining membership in SHGs over a period of time. Impact Assessment Study –National Council of Applied Economic Research (NCAER)-2008-09

15. Increase in standard of living

16. Increase in level of awareness

17. Gradual removal caste system

18. Increase in self-dignity and confidence

19. Peace and harmony in family and society3.Realization of democratic values

21. Gradual increase in loan amount

22. Supervision RECOMMENDATIONS

23. THANK YOU