Wholesale Microfinance Support Facility: Myanmar

2005

2003

The Consultative Group to Assist the Poorest (CGAP) was set up at the World Bank as a three-year initiative (1995)(1996)(1997)(1998) to increase the quality and quantity of sustainable microfinance institutions (MFIs) serving the poor. 1 As a consortium of donor agencies and microfinance practitioners working together to bring microfinance into the mainstream, CGAP acts as a service provider to the microfinance industry by catering to the needs of three stakeholders, namely the MFIs, donor agencies, and the microfinance industry. 2 CGAP serves these stakeholders through learning and dissemination of best practices, by helping to set up supportive policies for microfinance activities, by coordinating donor initiatives, and by channeling funds to broaden and deepen the outreach of MFIs serving the poor.

India falls under low income class according to World Bank. It is secondPopulated country in the world and around 70 % of its population lives in rural Area. 60% of people depend on agriculture, as a result there is chronicUnderemployment and per capita income is very low. This is not enough to provide food to more than one individual. The obvious result is abject poverty, low rate of education, low sex ratio, and exploitation. The major factor account for high incidence of rural poverty is the low asset base. According to Reserve Bank of India, about 51 % of people house possess only 10% of the total asset of India .This has resulted low production capacity both in agriculture (which contribute around 15-20% of GDP) and Manufacturing sector. Rural people have very low access to institutionalized credit (from commercial bank).

The present paper highlights the microfinance and role of microfinance in achieving financial inclusion in Indian Economy. The concept of Micro Finance is not new in India. Traditionally people have saved with and taken small loans from individuals and groups within the context of self help to start businesses or farming ventures. Majority of poor are excluded from financial services. Microfinance is a programme to support the poor rural people to pay its debts and maintain social and economic status in the villages. Microfinance is an important tool for improving the standard of living of poor. In spite of many organizations of microfinance, microfinance is not sufficient in india.The potential of growing microfinance institution in India is very high., as it is supported by government of India to achieve greater financial inclusion and growth in the country?s priority sector. The study explores problems in microfinance sector and suggestions to make microfinance more effective in Indian economy to benefit major section of society and to achieve greater Financial Inclusion with the help of Microfinance Institutions.

In a country like India where 70 percent of its population lives in rural area and 60 percent depend on agriculture (according to the World Bank reports), micro-finance can play a vital role in providing financial services to the poor and low income individuals. Micro-finance is regarded as a useful tool for socioeconomic up-liftment in a developing country like India. It is expected to play a significant role in poverty alleviation and development. The emphasis of present paper is to study the performance and role of microfinance institutions in the development of India. The study revealed that the number of MFIs availing loans from banks during the year 2015-16 and 2016-17 increased from 9.8 per cent to 257.6 per cent. The total loans to MFIs by banks decreased during 2016-17 by 7.2 per cent over the previous year. The loan outstanding against MFIs increased all the subsequent years. It increased by 13.7 per cent and 14.3 per cent in 2015-16 and 2016-17. It is further found that the business models of MFIs in India are becoming urban centric as is indicated by the fact that the share of rural client's base of different states/UTs in 2017 with 2016 has declined, except Assam, Arunachal Pradesh, Nagaland, Jammu & Kashmir and Andaman. The highest increase was in Andaman (267%) followed by Jammu & Kashmir (17 %),. The proportion of income generation loan remained same during year 2015 and it increased up to 94 per cent in the year 2017. The indicators relating to overall financial structure such as Return on assets and Return on equity, capital adequacy ratio have increased over this period and found sharp decline in total assets of MFI's.

The main goal of every microfinance institution (MFI) is to operate profitably in order to maintain its stability and improve growth and sustainability. However, existence of high levels of loan delinquency problem in microfinance industry negatively affect the level of private investment and constrain the scope of microfinance institution credit to borrowers as MFIs have to compensate for loan delinquency losses. The success of individual MFIs in credit risk management is largely reflected in the proportion of delinquency's loans to gross lending. External and internal economic environments are viewed as critical drivers of loan delinquency occurrence. In this regard, this empirical analysis investigates on external factors, MFIs and self help groups' (SHGs) specific factors, to establish which of these factors significantly affects loan delinquency performance in MFIs in Kenya. The study used primary data. The study target population comprised 49 MFIs registered by Association of Microfinance Institutions of Kenya (AMFIK). A survey research design was used and a census of the 49 MFIs was taken. The data was collected through a self developed structured questionnaire and administered to MFIs loan officers for response. Multiple regression analysis was used to establish relationship between loan delinquency and microfinance institutions, self help groups and external factors in MFIs in Kenya. The estimated regression coefficients and t-values were interpreted. The study found evidence that there exist a positive and significant (β = 9.937, t-value 5.016) relationship between loan delinquency and microfinance institutions specific factor. In addition self help groups specific factor was found positive and significantly (β = 6.090, t-value 3.097) related to loan delinquency. Further external factor was found positive and significantly (β = 2.549, t-value 2.069) related to loan delinquency performance in microfinance institutions in Kenya. These results support Dinos & Ashta (2010) and Saloner (2007) findings. The study concludes that microfinance institutions and self help groups' specific factors and external factors significantly affect loan delinquency performance among microfinance institutions in Kenya. The study recommends that MFIs portfolios management strategies focus more on the internal causes of delinquency which they have more control over and seek practical and achievable solutions to redress delinquency problems.

2005