This focus note journeys through the emergence, history and present status of microfinance in India. It discusses the various stages of evolution while highlighting key challenges of each stage. It pinpoints the issues related to transaction costs of delivering microfinance services in Andhra Pradesh and their impacts. It gives lessons relating to resource constraints, transparency, efficiency in operations, and internal and external dynamics to the investors, promoters and to the practitioners in microfinance as well. The note makes a strong case of immense potential the MFIs have in terms of meeting the financial needs of the poor and also maintaining high organisational standards.
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Electronic Banking: The next revolution in financial access
This paper highlights the role of e-banking in improving financial access to the poor. It brings forth three major reasons viz. inadequate customer value proposition for the end users, a poorly developed business case for the companies collaborating, and a debilitating environment, responsible (one or all) for successful implementation of e-banking solution. This note concludes with highlighting opportunities for financial institutions and telecommunications companies, regulators’ willingness and understanding the present market demands for enhancing financial inclusion.
Lessons from MicroSave’s Action Research Programme (2006)
This note documents the progress made under the Action Research programme of MicroSave during 2006. It gives lessons which are derived from the applications of MicroSave’s toolkits on strategic planning, branding, risk management, process mapping, credit control and administration, customer service and pilot testing within ARPs. It stresses that market led growth is client responsive and highlights importance of good governance, strong communications, sound growth management, managing mission drift and regular inputs for building capacities.
Electronic Banking: The Next Revolution in Financial Access
This focus note highlights the role of e-banking in improving financial access to the poor. It brings forth three major reasons viz. inadequate customer value proposition for the end users, a poorly developed business case for the companies collaborating, and a debilitating environment, responsible (one or all) for successful implementation of e-banking solution. This note concludes with highlighting opportunities for financial institutions and telecommunications companies, regulators’ willingness and understanding the present market demands for enhancing financial inclusion.
Institutionalising Risk Management for MFIs – Framework and Challenges
This note is based on MicroSave’s experience in developing risk management policies within its Action Research Partners (ARPs). It underlines a number of aspects that institutions seeking to adopt effective, proactive and integrated risk management must address—oversight shifts, formalising policies of risk management, enhancing scope of risks, proactive anticipation, monitoring and prevention of risks. Strategy, structures, processes and infrastructure are the essential components of risk management process of an MFI, mentions the note. It also suggests integrating process mapping and risk analysis and highlights the role of internal audit in management of risks.
The Credit-Deposit Ratio – Time for a Re-Think?
The Reserve Bank of India (RBI) issued an advisory note to Pubic Sector Banks (PSBs) for maintaining a Credit to Deposit ratio (CDR) of 60% in rural and semi urban branches continuously to reduce inter-regional imbalances in credit delivery. This note provides a critique of CDR as a yardstick of measuring bank commitments for serving the poor, instead it suggests to develop an alternative measure that calculates credit as per utilisation, which gives a far better picture of credit usage. It also proposes to build enabling environment for utilising the vast banking network in India, which provide unique opportunity to achieve the MDGs.