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Project Report OnNBFC-MFI

Submitted by:Makarand Ashok RaneRoll: 25. Finance - PGDM

Batch 2010-12, VESIMSR

Submitted To:Prof. Vaishali PadakeMicrofinance,

VESIMSR

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Background of the CompanyHARE Microfin Limited (SHARE) is a regulated Non-Banking Financial Company

(NBFC) founded by Mr. M. Udaia Kumar is the Managing Director of SHARE, in1989providing financial and support services to the marginalized sections in society,

particularly to poor rural and urban women across India. Through its income generating

loans and business development services, SHARE reaches out to help these women build

productive microenterprises, thereby contributing to the development of sustainable

communities. It was the first microfinance institution (MFI) in India to obtain a Non

Banking Financial Company (Non Deposit) license.

SHARE has adopted a for-profit approach to create social returns by channeling funds

from development institutions and commercial banks as collateral-free loans to Joint

Liability Groups (JLGs). JLGs are central to the Grameen lending methodology that

SHARE has replicated.SHARE currently serves more than 3.53 million members across 19 Indian states - Andhra

Pradesh, Chhattisgarh, Delhi, Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh,

Rajasthan, Bihar, Uttarakhand, Gujarat, Haryana, Himachal Pradesh, Tamil Nadu, West

Bengal, Jharkhand, Orissa ,Kerala and Assam. SHARE caters to the needs of poor rural

women through its 5,640 staff members spread across 1076 branches (as on 31 March

2011). The total outstanding portfolio is about Rs 2,066 crore (USD 459.12 million).

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SHARE Microfin Limiteds Vision, Mission, and

Objective

VisionTo improve the quality of life of the poor by providing access to financial and support

services and to be a viable financial institution developing sustainable communities.

MissionTo mobilise resources in order to provide financial and support services to the poor,

particularly women, for viable productive income-generating enterprises enabling them to

reduce their poverty.

Objectiveso To provide financial services predominantly for poor women.o To create self employment opportunities for the underprivileged.o To train the rural poor in simple skills and enable them to utilize all available

resources and contribute to employment and income generation.

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Methodology SHAREs business model generates greater economic benefits by way of supporting the

development of micro-entrepreneurs and their communities in a complex economicsituation, while at the same time fostering a responsible financial culture.

Client Focus and Client Understanding are the key words that define SHAREs approach

towards microfinance. SHAREs continued efforts to improve organizational efficiency

have yielded rich dividends raising its efficiency level and promoting transparent systems

and processes, ultimately helping SHARE emerge as a premier microfinance institution in

the country.

SHARE has stood by its commitment to working towards poverty alleviation withresponsive systems. The approach has paid off and today SHARE has a platform that

would allow it to launch a more ambitious campaign to reach out and serve many more

poor women in the country and outside. The top ratings provided by rating agencies reflect

SHAREs strong performance.

For-profit Approach for Social ReturnsSHARE has adopted a for-profit approach to create social returns by channeling funds

from development institutions and commercial banks as collateral-free loans to Joint

Liability Groups (JLGs).

SHARE's ModelJLGs are central to the lending methodology that SHARE has replicated. In this

methodology the group lending technique is used to extend loans to women members whohave formed themselves into groups of five each, with the general criteria that they have to

be of the same age group, of the same area, and known to one another. Family members

or relatives cannot be part of the same group. Members of each group receive seven days

of training on various aspects of the operating model, during which they learn their own

signature to have an identity for themselves. Eight groups come together at a centre for

weekly meetings. The members assume the responsibility of approving loans and

disbursement, and ensuring repayment.

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The loans have to be repaid in 50 weekly instalments. There is no collateral to back these

loans and repayment is ensured using social/peer pressure, as the group is responsible for

collecting the loans. To ensure that the loan is utilised only for the intended purpose, the

money is given in a staggered manner to the group members and subject to satisfactoryassessment by the field credit officers.

Transparent OperationsThe loans have to be repaid in 50 weekly installments. There is no collateral to back these

loans and repayment is ensured using social/peer pressure, as the group is responsible for

collecting the loans. SHAREs members learn about the companys loan delivery method

through a public orientation meeting that briefs them on loan disbursements and related

procedures. After forming groups of their choice and agreeing on the income generating

activity they would like to pursue, SHARE assists its members by equipping them with

basic business development skills such as pricing, marketing and quality management. Field

staff members facilitate weekly group meetings, in which members undertake the

responsibility of approving loans and repayments. Members go through additional social

development programmes that cover topics ranging from childrens education to health,

nutrition and sanitation.

Effectively Reaching the PoorestA study by the International Food Policy Research Institute (IFPRI) has revealed that

SHARE targets the bottom most segment of the poor. About 85 per cent of its members

belong to this segment, indicating SHAREs effectiveness in identifying the poorest of the

poor.

Further studies conducted show that 76 per cent of SHAREs members have experiencedsignificant poverty reduction, leading to greater control over income, assets and

expenditure.

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Webliography

http://www.sharemicrofin.com/index.html

http://www.sharemicrofin.com/approach.html

http://www.sharemicrofin.com/about.html

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