CONTENTS

Sr. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Particulars Introduction Of Microfinance Review Of Literature Rationale Of The Study Objective Of The Study Methodology Poverty In Indore & Their Needs Remittance Requirement Microfinance Terminology Data Analysis & Interpretation Service Volume Challenge For Microfinance Suggestion Conclusion Bibliography & Webliography Questionnaire Page Nos. 27 89 10 10 11 12-14 15 16-18 19-28 29-42 43-44 45 46 47-48 49-50

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INTRODUCTION

Microfinance is the provision of financial services to those who are excluded from conventional commercial financial services since most are too poor to offer much - or anything - in the way of collateral. It presents a series of exciting possibilities for extending markets, reducing poverty and forecasting social change. The concept of microfinance originated in the mid-1970s in Bangladesh through a pioneering experiment by Dr. Muhammad Yunus, then a Professor of Economics. His aim was to offer poor people:

financial services entrepreneurship opportunities an end to mistreatment by money lenders a system where they could produce, manage and maintain their own finances

CONCEPT AND FEATURES OF MICRO-FINANCE a) Microcredit: Small loans; primarily for income generation activities, but also for consumption and contingency needs. b) MicroThrift or small savings from borrowers own

savings: resources. The main features of the micro-finance services

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1.

It is a tool for empowerment of the poorest; the higher the income and better the asset position of the borrower, the lower the incremental benefit from further equal doses of micro-credit is likely to be. Delivery is normally through Self Help Groups (SHGs). It is essentially for promoting self-employment; the opportunities of wage employment are limited in developing countries - micro finance increases the productivity of self-employment in the informal sector of the economy - generally used for (a) direct income generation (b) rearrangement of assets and liabilities for the household to participate in future opportunities and (c) consumption smoothing. It is not just a financing system, but a tool for social change, specially for women - it does not spring from market forces alone - it is potentially welfare enhancing there is a public interest in promoting the growth of micro finance - this is what makes it acceptable as a valid goal for public policy. Because micro credit is aimed at the poorest, microfinance lending technology needs to mimic the informal lenders rather than the formal sector lending. It has to (a) Provide for seasonality (b) Allow repayment flexibility

2. 3.

4.

5.

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(c) Eschew bureaucratic and legal formalities (d) Fix a ceiling on loan sizes. "Microfinance institutions (MFIs) are those which provide thrift, credit and other financial services and products of very small amounts mainly to the poor in rural, semi-urban or urban areas for enabling them to raise their income levels and improve living standards". MFIs have emerged broadly under three categories: i). Not-for-Profit MFIs Societies registered under Societies Registration Act, 1860 or similar State Acts Public Trusts registered under the Indoren Trust Act, 1882 Non-profit Companies registered under Section 25 of the Companies Act, 1956 ii). Mutual Benefit MFIs State credit cooperatives National credit cooperatives Mutually Aided Cooperative Societies (MACS) iii). For-Profit MFIs Non Banking Financial Companies (NBFCs) registered under the Companies Act, 1956Banks which provide MF along with their other usual banking services could be termed as mF service providers.

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INDORE OVERVIEW
An official Census 2011 detail of Indore, a district of Madhya Pradesh has been released by Directorate of Census Operations in Madhya Pradesh. Enumeration of key persons was also done by census officials in Indore District of Madhya Pradesh. In 2011, Indore had population of 3,272,335 of which male and female were 1,700,483 and 1,571,852 respectively. There was change of 32.71 percent in the population compared to population as per 2001. In the previous census of Indore 2001, Indore District recorded increase of 34.30 percent to its population compared to 1991. The initial provisional data suggest a density of 839 in 2011 compared to 633 of 2001. Total area under Indore district is of about 3898 s.q. k.m. Average literacy rate of Indore in 2011 were 82.32 compared to 75.15 of 2001. If things are looked out at gender wise, male and female literacy were 89.22 and 74.89 respectively. For 2001 census, same figures stood at 84.60 and 64.81 in Indore District. Total literate in Indore District were 2,358,338 of which male and female were 1,324,967 and 1,033,371 respectively. In 2001, Indore District had 1,575,436 in its total region. With regards to Sex Ratio in Indore, it stood at 924 per 1000 male compared to 2001 census figure of 912. The average national sex ratio in Indore is 940 as per latest reports of Census 2011.
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In census enumeration, data regarding child under 0-6 age were also collected for all districts including Indore. There were total 407,536 children under age of 0-6 against 369,546 of 2001 census. Of total 407,536 male and female were 215,446 and 192,090 respectively. Child Sex Ratio as per census 2011 was 892 compared to 908 of census 2001. In 2011, Children under 06 formed 12.45 percent of Indore District compared to 14.99 percent of 2001. There was net change of -2.54 percent in this compared to previous census of Indore. Indore District population constituted 4.51 percent of total Madhya Pradesh population. In 2001 census, this figure for Indore District was at 4.51 percent of Madhya Pradesh population. Indore district major population is also live in villages. But only five villages has been considered for the research work. Talking about the Rau, which is a first village where the research program is conducting. Rau is a developing industrial area of Indore. Where live around three - four thousand people. Main income of source of people is farming, laboring and business. Chitawad is second village villages where the research program is conducting with circulate questionnaire. Its also rural and developing area of Indore district. People of this village are working on his farm and some people also working in factory as

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a labour. Its a small village where live around two thousand people. Devguradiya is third village villages where the research program is conducting. Its a religious and rural backward area, where people totally devoting to God. Where live around one thousand people. Mangalaya is our next village where conducting all research program. Its a well developing area and also part of Indore city. In this village petroleum companies are establishing his refinery and its also source of people of village. Mangalaya is also part of Indore city than people are going to city for income. Its a develop village where live around four five thousand people. Lasudiya mori is our last place villages where the research program is conducting. Its also a big and developing village where people well known about microfinance. This is famous for showroom of automobile companies. The main source of income of people is farming & business. Where live around five thousand people.

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REVIEW LITERATURE
These literatures include books written on the subject by experts and also journals, manuals etc. In fact, there are very few literatures available, regarding socio-economic, political and entrepreneurial development of women. Dr.C.Rangarajan (2006) in his topic Microfinance and its future directions in the introductory part of the book, outline the evolution of SHG through microfinance evolve through in three stages. First, to meet survival requirement need, in the second stage is to meet the subsistence level through investing in tradition activities and in the final stage by setting up of enterprises for sustainable income generation. Robert Peck Christen (2006) in his paper Microfinance and Sustainable International Experience and lesson for Indore, he articulates the changing general perception of bankers, that SHGs are profitable clients or bank. Lanmdau Mayouxs study (1998) on Participatory Learning for Womens Empowerment in Micro Finance Programs proposes a participatory approach for integrating womens empowerment concerns into ongoing programs learning, which itself would be a contribution to empowerment. Micro finance programs for women are currently promoted not only as a strategy for poverty alleviation but also for womens empowerment.

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Article of G.Buckley (1997) microenterprises in the informal sector in Kenya, Malawi Ghana. It seeks to provoke critical reflection on the uncritical enthusiasm that lies behind much proselytizing of microfinance for informal sector microenterprise. It questions whether the extensive donor interest in microenterprise finance really addresses the problems of micro entrepreneurs. Vinay K Srivatava and Arvind Singh (2010) in their article stated that the micro finance has contributed to its success is its credit-plus approach where the focus has not only been on providing adequate and timely credit to low income groups, but to integrate it with other developmental activities. He says it is important to understand that the concept of microfinance is not new. The precedence for microfinance lies in the numerous traditional and informal systems of credit. Robert peck christen 2006 in his paper microfinance and sustainable international experience and lesson for India he articulate the changing general perception of bankers that SHGs are profitable clients are banks. In the above context, various are the view points given by researchers in the field of Microfinance. Here, in the present Study the focus is on villages of Indore, to know the awareness of microfinance among poor peoples and how the people of Indore get the benefit of Microfinance.
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RATIONALE OF THE STUDY

Indores rural poor are overwhelmingly dependent on

agriculture as their primary source of income; the majority is marginal or small farmers, and the poorest households are landless. The financial needs of Indores rural poor reflect the volatile, uncertain and irregular income streams and expenditure patterns of these households. Many Banks providing Micro financing aimed at empowering women so that they can be able to create their own business. Microfinance industry not only helps them pull themselves out of poverty, but it also promotes gender equity throughout out the world. Microfinance loans helps to create sustain impact by educating recipients on how to create their own business and how to properly manage and grow their money. Microfinance allows the poor to gate the loans they need to save invest and create a sustainable life style of financial independence and growth these loans are used productively by the poor to create there owns business.

OBJECTIVES OF THE STUDY

1.

To measure effectiveness of microfinance on village People of Indore

2. To study how micro financing empower women.

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3. To analyze how microfinance reduce poverty in Indore.

RESEARCH METHODOLOGY
The Study: The present study an impact of microfinance on poverty in related to villages of Indore is exploratory in nature. Data Collection: Research is based on primary data. Secondary data is also used. Primary data has been collected by interacting with various people, through structured Questionnaire. The secondary data has been collected through various journals, magazines, website.etc. Analysis of the Data: The analysis of data has been done on percentage basis. Graphic representation of the data has been done through Pie Charts. Sample size: The sample size is of 100 People of village in Indore district. Sampling Method: The method used for sample technique was stratified random sampling method. Selection of Study Area: The research has been conducted on People of village. The sample size used here was 100 people of villages in Indore district, who belongs to different Villages of Indore. The study has been conducted by considering 5 villages of Indore namely Rau, Chitawad, devguradiya, Mangalaya and Lasudiya mori etc. regarding Microfinance services used in villages of Indore.
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Poverty in Indore
Poverty in Indore and Indore is still rampant despite an impressive economic growth. An estimated 0.65 million people are below the poverty line and approximately 63 per cent of them are in the rural areas. In general, poverty can be defined as a situation when people are unable to satisfy the basic needs of life. The definition and methods of measuring poverty differs from country to country. According to the definition by Planning Commission of Indore, poverty line is drawn with an intake of 2400 calories in rural areas and 2100 calories in urban areas. If a person is unable to get that much minimum level of calories, then he/she is considered as being below poverty line. Causes of Poverty in Indore

High level of dependence on primitive methods of agriculture High population growth rate High Illiteracy (about 27% of adult population) Regional inequalities Protectionist policies pursued till 1991 that prevented high foreign investment.

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Problems Faced by village people of Indore

One of the major problems with poverty alleviation programs is their implementation. Rajiv Gandhi once said that out of 100 paisa allocated for poor only 14 paisa reaches them. But in spite of their weaknesses, poverty alleviated program can be credited for their success in alleviating poverty to an extent. Greater public-private partnership and committed and efficient bureaucratic machinery is required to tackle poverty. Since its independence, the issue of poverty within Indore has remained a prevalent concern. According to the common definition of poverty, when a person finds it difficult to meet the minimum requirement of acceptable living standards, he or she is considered poor. Many people in Indore are unable to meet these basic standards, and according to government estimates, in 2008 there were nearly 0.22 million people living below the poverty line. Nearly 18.9% of the entire rural population and 21% of the urban population of Indore exists in this difficult physical and financial predicament. The poverty ratios illustrated here are divided in two types: urban and rural. Specific reasons for poverty vary in the urban & rural setting; A number of factors are responsible for poverty in the rural areas of Indore. Rural populations primarily depend on agriculture, which is highly dependent on rain patterns and the
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monsoon season. Inadequate rain and improper irrigation facilities can obviously cause low, or in some cases, no production of crops. Additionally, the Indoren family unit is often very large, which can amplify the effects of poverty. The government has planned and implemented poverty eradication programs, but the benefits of all these programs have yet to reach the core of the country.

Poors and their needs

With the rapid growth of big cities, slums, the breeding grounds of urban squalor and Poverty, swell primarily due to increased migration of the poor from the villages in search of better employment opportunities and improved standard of living. All poor, however, do not live in slums. In fact, the urban poor population in the country is estimated to be nearly eight crore whereas the slum population hovers around four crore. Most of the working population in urban areas work under utterly deplorable conditions in unorganized sector with a very few livelihood options. The deprivation of urban poor is further accentuated as more than 40 percent of adult Indoren urban population has no access to a bank account (this figure would be more if multiple accounts held by individuals are factored), and, thereby depriving them of savings, credit, remittance and other financial service facilities from the formal financial system.
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Against this background, this paper tries to study the issues and options involving financial inclusion of the urban poor. Managing savings well by the urban poor is critically important but often neglected leading to absence of a secured source of finance to meet life cycle as well as Investment needs.

REMITTANCE REQUIREMENT
In Indore, huge flow of migrants, poor and the not-so-poor, crises-cross the country in search of a better life for themselves and their families who mostly stay behind in their villages. They take up non-contractual and nonpermanent jobs, such as, house help, security guards, daily wage laborers, hawkers, beggars staying on the streets and petty workers working in and around the industrial areas in cities. These migrants need a fast, low cost, convenient, safe and widely accessible remittance service to send money to their families and dependents to meet their consumption needs and other life cycle needs in particular, medical emergencies. Safe, speedy and affordable means of remittance, however, remains a major problem for the migrant domestic lab our in urban, many of whom unlike overseas migrants do not even have accounts either at their native places or their work places. bank

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MICROFINANCE TERMINOLOGY
Micro credit: This is a small amount of money loaned to a client by a bank or other institution. Micro credit can be offered, often without collateral, to an individual or through group lending. Microfinance: This refers to loans, savings, insurance, transfer services and other financial products targeted at low-income clients Micro insurance: This is a system by which people, businesses and other organizations make payments to share risk. Access to insurance enables entrepreneurs to concentrate more on growing their businesses while mitigating other risks affecting property, health or the ability to work. Remittances: These are transfer of funds from people in one place to people in another, usually across borders to family and friends. Compared with other sources of money that can fluctuate depending on the political or economic climate, remittances are a relatively steady source of funds. Micro savings: These are deposit services that allow people to store small amounts of money for future use, often without minimum balance requirements. Savings accounts allow households to save small amounts of money to meet unexpected expenses and plan for future investments such as education and old age. Inclusive financial sectors: It allows poor and low
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income people to access credit, insurance, remittances and savings products. In many countries, the financial sectors do not provide these services to the lower income people. An inclusive financial sector will support the full participation of the lower income levels of the population. Micro entrepreneurs: These are people who own small scale businesses that are known as micro enterprises. These businesses usually employ less than 5 people and can be based out of the home. They can provide the sole source of family income or supplement other forms of income. Typical micro entrepreneur activities include retail kiosks sewing workshops, carpentry shops and market stalls. Bankable: These people are those deemed eligible to obtain financial services that can lead to income generation, repayment of loans, savings, and the building of assets. Unbanked: This describes people who have no access to financial services through any type of financial sector organization such as banks, non-bank financial institutions, financial cooperatives and credit unions, finance companies, and NGOs. Implicit in this definition is that financial services are usually available only to those individuals termed "Economically active" or bankable.

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MICROFINANCE DELIVERY METHODOLOGIES

The sheer geographical size of the country, a wide range of social and cultural groups, the large spectrum of economic classes and a variety of NGOs movement has contributed towards the diversity of microfinance models in Indore. Some of the common models used in Indore are 1) Self help group model 2) Grameen model 3) Cooperative/mutually aided cooperative model 4) Non banking company finance model 5) Bank using other agencies for distribution of microfinance

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DATA ANALYSIS & INTERPRETATION

(i)

Number of people Microfinance: People Yes No

having

knowledge

about

Response (in %) 36 64 Chart: - 1

%Of Respondents

YES NO

InterpretationThe above chart shows that 36% of the respondents were having knowledge about Microfinance and 64% of the respondents were not having any knowledge about Microfinance. Thus the research work includes people knowledge about Microfinance.

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(ii) Facilities of Microfinance schemes using by people: People %) Yes No Chart:-2

%Of Respondents

Respondents (in 34 66

70 60 50 40 30 20 10 0 YES NO

InterpretationThis reveal that 34% of the respondents were using Microfinance schemes & services and 66% of the respondents were not using Microfinance schemes & services. Thus the research work includes use of Microfinance schemes by people.

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(iii)Microfinance schemes reduce the poverty: People Yes No Dont know Chart:-3
%Of Respondents
60 50 40 30 20 10 0 YES NO DON't KNOW

Respondents (in %) 48 28 24

InterpretationAccording to Bar chart, 48% of the respondents were says that Microfinance schemes are helps to reduce poverty, 28% of the respondents were not says that Microfinance schemes are helps to reduce poverty and 24% respondents were dont know about this. Thus the research work includes help of Microfinance schemes for reduce poverty.

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(iv) Source of income of people:

Farming 54% Self Generated Laboring Business Others

09%

27% Chart:-4

03%

07%

%Of Respondents

Farm ing Self Generated Labors Business Others

InterpretationThis chart exhibits that 54% of the respondents engaged in farming for income, 09% of the respondents are self employed, 27% of the respondents do laboring for his income, 03% of respondents engaged in their business for his income and 24% respondents are doing other work for his income. Thus the research work includes source of income of the people.

(v) The Source of Microfinance:

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Informal Source SHG Banks Others Chart:-5

%Of Respondents
45 40 35 30 25 20 15 10 5 0 Inform Source al SHG Banks Others

10% 45% 36% 09%

Interpretation: The above chart represent that 10% of the respondents says that informal source is a microfinance source, 45% of the respondents says that SHG is source of microfinance, 36% of the respondents says that Banks are source of microfinance and 09% respondents says that others groups are source of microfinance. Thus the research work includes source of microfinance. (vi) How do you know about microfinance:
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Family member & Friends & Peers Magazines Relatives Generals

& Others

15%

22%

36% Chart:-6

27%

%Of Respondents

Fam m ber & Relatives ily em Friends& Peers Magazines & Generals Others

InterpretationAbout 15% of the respondents say that family member & relatives are give knowledge about microfinance, 22% of the respondents says that Friends & Peers are give knowledge about microfinance, 36% of the respondents says that Magazines & Generals are give knowledge about microfinance and 27% of the respondents says that others are give knowledge about microfinance. Thus the research work includes knowledge of microfinance.

(vii) How long the people availing Microfinance Schemes:

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None 0 years to 2 years 2 years to 3 years More than 3 years Chart:-7

%Of Respondants

36% 27% 18% 19%

NONE 0 Years to 2 Years 2 Years to 3 Years More than 3 years

Interpretation36% of the respondents says they arent use microfinance schemes, 27% of the respondents says they are use microfinance during 0-2 years, 18% of the respondents says they are use microfinance during 2-3 years and 19% of the respondents says they are use microfinance more than 3 years. Thus the research work includes use of microfinance with time duration by people. (viii) Main & basic objective of microfinance:

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Reduce Poverty Increasing Income Empowering of women Self Employment

54% 09% 27% 10%

Chart:-8
%Of Respondants

InterpretationThe above chart shows around 54% of the respondents reveal that reduce poverty is basic object of microfinance schemes, 09% of the respondents says that Increasing Income is basic object of microfinance, 27% of the respondents says that Empowering of women is basic object of microfinance and 10% of the respondents says that Self Employment is basic object of microfinance. Thus the research work includes Basic object of microfinance. (ix) Factors which is influencing the growth of microfinance:
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Availability of loan 47%

Flexibility

Low interest rate

Installment Availability 18%

11%

24%

Chart:-9
%Of Respondents

Availability Of Loan Flexibility LowIntrest rate Installm Availability ent

InterpretationThis shows that 47% of the respondents says that Availability of loan is a factor which influencing microfinance, 11% of the respondents says that Flexibility is a factor which influence microfinance, 24% of the respondents says that Low interest rate is a factor of microfinance and 18% of the respondents says that Installment Availability is a factor of microfinance. Thus the research work includes about factors whose is influencing growth of microfinance. (x)Microfinance is also doing changes in standard of living:
Strongly
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Agree

Neutral

Disagree

Strongly

Agree

Disagree

18%

39%

11% Chart:-10

23%

09%

%Of Respondents
40 35 30 25 20 15 10 5 0 Strongly Agree Agree Neutral Disagree Strongly Disagree

InterpretationThis chart represent tha18% of the respondents are strongly agree about changes in standard of living by microfinance, 39% of the respondents agree about changes in standard of living by microfinance, 11% of the respondents are Neutral about changes in standard of living by microfinance, 23% of the respondents disagree about changes in standard of living by microfinance and 09% of the respondents are strongly disagree about changes in standard of living by microfinance. Thus the research work includes about changes in standard of living by microfinance schemes.

SERVICE VOLUMES
In the financial year 2008/09, Microfinance in Indore through its two major channels SBLP and MFIs served over 3.5
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million Indoren, up by 0.9 million over the previous financial year. 4 out of 5 microfinance clients in Indore are women. Per 31st March 2011, the outstanding micro-credit portfolio of Indore Microfinance was about Rs. 2,200 crore. 75% are accounted for by SBLP, 20% by large MFIs and 5% by medium and small MFIs. SBLP reports over Rs. 350 crore savings of SHG-members (2006/07). MFIs are prohibited from accepting savings; however, one third of their clients are served under the SHGmodel and thus encouraged to save among themselves and/or open savings accounts with banks. The MFI KBS Local Area Bank reports about Rs. 40 crore savings portfolio for its 1 lack clients (2007/08). From The Bharat Microfinance Report 2010: Outstanding Portfolio (in Rs. Crore) SBLP* 1,064 1,690 Sa-Dhan, 223 MFIs 356 554 Total** 1,420 2,244 Client Outreach (in million persons) SBLP* 16.01 21.57 Sa-Dhan, 223 MFIs 10.04 14.1 Total** 24.55 33.55 * SHG-Bank Linkage Programme is spearheaded and implemented By NABARD. Figures in italics are estimates; see Sa-Dhan (2008) for details. ** The total has been reduced by 15% of MFI-figure, assumed to be the overlap with SBLP.

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Highlights of the Bharat Microfinance Report - Quick-Data 2008-09 Sa-Dhan Quick-data set is the most timely the quickest of any segment of the financial sector. Indore Microfinance is proud to take once again the lead in disclosing performance over the last financial year which ended on 31st March 2008. Highlights recorded are Growth of MFI- loan portfolios passed 70% annually between March2008 and March 2011. The strongest impulse came from medium often urban MFIs in 2008/09 and from large MFIs in 2008/09. Indoren MFIs are true to their mission of serving the poor strata of society. A stable 8 out of 10 clients have been provided loans sized less than Rs. 10,000. The loan segment between Rs. 5,000 and Rs 10,000 has been growing strongest. This can be explained by two impulses: On one hand, microfinance customers mature to bigger loans over the loan cycles. On the other hand, urban microfinance starts with comparatively bigger loans than rural finance.

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From The Bharat Microfinance Report 2008-09:

Indorian MFIs serves 0.41 million clients from the SC/ST background. The reported number of SC/ST has been growing alongside the rate of total outreach, thus the SC/ST-share is stable at 3 out of 10 clients.

From The Bharat Microfinance Report 2009:

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Large MFIs are particularly active in expanding their operations to the poorest districts; many of them serving poorest than other districts. Urban Microfinance is emerging as a strong growth driver; between March 2006 and March 2008, 1 out of 3 new clients was from the urban background. One Quarter of all MFI clients is from the urban background.

THE MICROFINANCE INSTITUTIONS (MFIS)

For its 2011-Quick-Report SA-Dhan collected and validated data from 231 MFIs. Ultimately, between 216 and 223 were validated for analysis, up from 129 in the previous QuickReport. Most MFIs are societies and trusts. Among the large MFIs, most are NBFCs, but not-for-profit organizations are also counted in this category. Most of the cooperative banks in the sample are urban-based. Out of 4 Local Area Banks licensed by RBI, AP-based KBS is included in the sample.

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From The Bharat Microfinance Report 2011: MFIs Portfolio crore 87.7 24.0 8.3 5.2 25 11.6 MFIs with MFIs with Loan Portfolio 50 over crore 478.3 225.4 543.6 3,312.1 134.7 4,694.1 22 50 1,109.7 399.3 8.3 16.2 682.6 3,520.0 1,62.0 5,898.2 216 Total to No of MFIs 104 31 8 10 22 25 16 Portfolio crore 543.8 149.8 11.0 127.4 197.3 13.7 1,043.0 57 with Loan Loan up to 5 >5 Society Trust Cooperative Bank MACS Section

Company NBFC 10.6 LAB or any 13.6 other Total 161.0 No of MFIs 137

MFI PERFORMANCE IN INDORE: 2008 2011

A 2008 - 2011 survey of Indores leading 15 MFIs shows the industrys strength in both size and growth. While MFIs
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globally and within the region average less than 20,000 clients per institution, well managed Indoren micro finance institutions already rank top in outreach, despite their relative young age; with nearly a decade more experience, only Bangladeshi institutions reach more borrowers.

TOP MICRIFINANCE INSTITUTES IN INDORE

Not to be left behind, Indoren institutions top the charts of all 78 countries surveyed in 2008 for their phenomenal growth rates, the median leading MFI doubling coverage in a single year. In fact, five of the top 20 fastest growing MFIs in 2005 were

Indoren, from a survey of nearly 450 institutions worldwide. While global microfinance talks about increasing commercial capital available to MFIs and of integrating with local financial markets, Indoren microfinance defines the forward lines of this movement. Within Asia and around the globe, Indoren MFIs are more leveraged than institutions in any other sector. Compared to other markets in South Asia, the Importance of local financial
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institutions is readily apparent. Bangladeshi and Pakistani MFIs have built large institutions on the backs of soft money. Indoren MFIs, on the other hand, deprived of shareholder capital or legal access to public deposits, have funded growth through Commercial loans from local banks and development finance institutions. Tapping local financial markets leaves the sector well poised to continue its rapid growth. Loans to Indoren MFIs fulfill more than priority sector lending requirements; they also fulfill the need for returns. Leading MFIs offer slim, but positive margins. Hardly the high returns presented in recent media coverage, leading institutions averaged just less than 1% return on assets

BANKS INITIATIVES
Banks need to take up the financial inclusion efforts not only as a part of their corporate social responsibility but as a vibrant business model. A few banks like the Union Bank of India, Indian Bank and Citi Bank have now launched pilots using such
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ICT tools to financially include disadvantaged groups in cities/towns. Union Bank of India is covering the hawkers in Mumbai (Box 6) and Indian Bank has launched the programme to open no-frills accounts at the door step of the migrants staying in Dharavi slums in Mumbai with the assistance of the local community leaders, NGOs (Nirman) and provide ATM facility and smart cards to them in association with technology provider like FINO. With rapid growth of urbanisation, social engineers have been compelled to give attention to providing financial services to meet the savings, credit, remittance and other financial requirements of the urban poor and not so poor engaged in the informal/unorganized sectors. Financial inclusion should not begin and end with opening of bank accounts. In fact, product innovation in financial services keeping in view their life cycle needs is the need of the hour. Rolling out of an innovative financial product, however, should not be undertaken without adopting a systematic approach that involves conducting market research on the financial needs, developing a proto type, analysing the associated risks, pilot testing of the product, etc..

MICROFINANCE-A TOOL TO IMPROVE SOCIOECONOMIC STATUS OF INDORE PEOPLE

Indore has the one of the fast developing country in the world. Indores first world economy is oriented to the very highest standards of globalize consumption, and formal sector incomes
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and lifestyles reflect this. By contrast, the real incomes and lifestyles of the very poor, particularly in rural areas, are comparable very low. Micro-finance is often advocated as a solution to multiple social problems in Indore. Poor Persons with access to credit can make investments in enterprises that bring them out of poverty. Over the last few years, savings and credit groups have also helped to manage some important social programs of the Indoren government, such as the distribution of food grains and school meals in state primary schools. Income in Indore is closely linked to social and economic status: whilst the upper and middle classes inhabit the formal income from their formal ventures and employment, in other hand the poorest and low income status are largely informally employed. Low income households are not usually involved in regular income and therefore waiting for job creation strategies to absorb them; they permanently inhabit a dependent segment of the so called developing Indoren economy, in which opportunities for jobs, or for independent and self sustaining entrepreneurial capital accumulation, are minimal. Though poverty reduction has long been a high priority for the Government of Indore, microfinance is a still experimental tool in its overall strategies. Indores microfinance experiments are much differ from the more substantial microfinance institutions and programmes of its neighbors
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countries. The United Nations system was perhaps the first international partner to Indores new experiment with small scale credit schemes. Most of poor people manage to optimize resources over a time to develop their enterprises. Financial services could enable the poor to leverage their initiative, accelerating the process of generating incomes, assets and economic security. However, conventional finance institutions seldom lend down-market to serve the needs of low-income families and women-headed households. They are very often denied access to credit for any purpose, making the discussion of the level of interest rate and other terms of finance irrelevant. Therefore the fundamental problem is not so much of unaffordable terms of loan as the lack of access to credit itself. The impact of microfinance on poverty reduction has been measured in terms of several dimensions, such as improved income, employment and household expenditure, and reduced vulnerability to economic and social crises. These measurements have tended to focus on a specific geographic area, an institution or a small client group and are difficult to generalize or draw conclusions that reach across borders, income levels, gender or socio-economic status. Even though many of these anecdotal studies clearly support a role for microfinance in achieving the Millennium Development Goals,
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a key challenge in measuring the impact of microfinance is obtaining reliable data. Sometimes clients are recipients of more than one product, which are provided by more than one microfinance institution (MFIs). MFIs, it becomes hard to obtain measures on the exact impact of their services and products on their clients' lives. We also do not have the answer to the question of what proportion of the population even has access to credit and savings

FEW SCHEME OF MICROFANANCE

There are so many schemes for the upliftment of poor In Indore. One of them Micro-credit programmes is run primarily by NABARD in the field of agriculture and SIDBI in the field of Industry, Service and Business (ISB). The success of Microcredit programme lies in diversification of services. Micro
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Finance Scheme of SIDBI is under operation since January, 1999 with a corpus of Rs. 100 crore and a network of about 190 capacity assessed rated MFIs/NGOs. Under the programme, total amount of Rs. 191 crore have been sanctioned upto 31st December, 2003, benefiting over 9 lakh beneficiaries. Under the programme, NGOs/MFIs are supposed to provide equity support in order to avail SIDBI finance. But they find it difficult to manage the needed equity support because of their poor financial condition. The problem has got aggravated due to declining interest rate on deposits. The office of the development commissioner (Small Scale Industries) under Ministry of SSI is launching a new scheme of Micro Finance Programme to overcome the constraints in the existing scheme of SIDBI, whose reach is currently very low. It is felt that Governments role can be critical in expanding reach of the scheme, ensuring long term sustainability of NGOs / MFIs and development of Intermediaries for identification of viable projects.

IMPORTANCE OF MICROFINANCE
In Indore, economic reforms with a human face have been accepted as the guiding principle of sustainable development. Keeping the poor at center stage, the policies need to be reoriented so as to develop and optimize the potential of such a large segment of the population and enable them to contribute in
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the growth process significantly in terms of output, income, employment and consumption. Viewed from this angle, our survey results show that 1. Micro-Finance can be a powerful instrument initiating a cyclical process of growth and development. 2. Micro-Finance activity improved access of rural poor to financial services, both savings and credit. 3. Increased access signifies overcoming isolation of rural women in terms of their access to financial services and denial of credit due to absence of collateral. 4. The pool of savings generated out of very small but regular contributions improved access of the poor women to bank loans. 5. It could also help in strengthening poor families resistance to external shocks and reducing dependence on moneylenders. 6. The observed support for consumption smoothening would not have been possible, but for the SHGs internal support. Possibilities could be of explored for using SHGs as a strong conduit for purveying crop cultivation loans to very small and marginal farmers to step up crop loan finance.

IMPACT ON THE BANKS

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The participatory approach to micro-finance has improved the cost-effectiveness of poverty alleviation strategy by substantially lowering transaction costs. While commenting on the performance and impact of the project, the UNOPS Supervision Mission observed: 'there is a transformation in the attitude and approach of the participating banks to rural financial services and especially rural clients. The innovative methodology of MRCP has taken root and is now being perceived by bankers to be a cost effective, efficient and viable alternative for rural banking. Participating banks have become more confident and skilled in extending credit to the rural poor through groups and to individual clients'. A study of branch level operations conducted by NABARD revealed that the SHGs turned out to be a channel for social mobilization and women empowerment, as also new business with quality clients and significantly increased goodwill. Externalization of operating costs in deposit mobilization, credit management and recovery through Village development Councils and SHGs were other benefits which had a positive impact on the working results of the branch.

CHALLENGES FOR MICROFINANCE

Microfinance has no doubt improved the lives of the poor in Indore but sometimes it leads people to borrow too much, to the extent that over indebtness can lead to suicides in extreme cases,
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The main challenge facing the sector is identified as the need to enhance borrower, public and regulatory support and understanding, by increasing transparency in dealings with borrowers and by educating the poor. The sector is growing rapidly, both in the scale and in the diversity of actors, and is sitting on the cusp of regulation. It is, therefore, in the midst of rapid flux," For some time now, there has been a growing demand by practitioners, financial institutions, policy makers, regulators, the research community, the media and the development community generally for a periodic, comprehensive and up-todate account of the sector. Saying bankers and social venture capitalists are vitally dependent on the success of the efforts of the training and capacity-building service providers in easing human resource constraints facing the sector, and would like to know more about their activities. Insurance companies are interested in opportunities offered by self help group (SHG) bank linkage programme, just as bankers are curious about the opportunities that might lie in money transfers. "Additionally, not enough is known about the unfolding priorities of the donors. Everyone is affected by what the
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regulators in turn need to know more about the sector they are charged with regulating," Indorian microfinance has continued growing rapidly towards the main objective of financial inclusion, extending outreach to a growing share of poor households and to the approximately 80 per cent of the population, which has yet to be reached directly by the banks the self help group bank linkage programme covered about 14 million poor households in March 2006 and provided indirect access to the banking system to another 14 million, including the borderline poor.

SUGGESTION There should be a favorable scheme of microfinance, where there is no or less rate of interest on credit and people can take loan easily which is convenient for the poor people.
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 Develop small businesses that produce saleable goods, such as traditional handicrafts. Consult start-up microfinance programs that struggle with operational, financial, or institutional sustainability. Provide entrepreneurial skills training to conduct

feasibility studies, perform cost/benefit analyses, write business plans, acquire financing, and initiate start-ups. Research and analyze numerous topics that include local economic conditions, migration patterns, obstructions to economic growth, and efficacy of microfinance programs.

CONCLUSION In order to ensure that the poorest benefit from this growth, and also contribute to it, the expansion and improvement of the microfinance sector should be a national priority. The impact of microfinance on the poorest is greater than on the poor, and yet another that non-participating members of
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communities where microfinance operates experience socioeconomic gains suggesting strong spillover effects. Moreover, well-managed microfinance institutions (MFIs) have shown a capacity to wean themselves off of subsidies and become sustainable within a few years. Microfinance is powerful, but it is clearly no panacea. Our experience in the business world has taught us that solutions marketed as cure-alls to complex societal problems rarely if ever pan out as promised. Microfinance does not directly address some structural problems facing Indoren society and the economy, and it is not yet as efficient as it will be when economies of scale are realized and a more supportive policy environment is created. The rest of Indore is catching on and catching up. According to Sa-Dhan, the overall outreach is 6.5 million families and the sector-wide loan portfolio is Rs 2,500 crore. Indore district is the most developing district in all over Madhya Pradesh, but people of Indore is doing have any knowledge about Microfinance. Than main cause behind lack of knowledge about Microfinance is unawareness.

Bibliography
Researches
Dr.C.Rangarajan (2006) in his topic Microfinance and its future directions.
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Robert Peck Christen (2006) in his paper Microfinance and Sustainable International Experience and lesson for Indore,

Lanmdau Mayouxs study (1998) on Participatory Learning for Womens Empowerment in Micro Finance Programs (IDS Bulletin, Vol. 29 No.4, 1998)

Elahi, K.Q. and C.P. Danopoulos (2004). "Microfinance and third world development: A critical analysis." Journal of Political & Military Sociology 32(1): 61-77. Archana, S (2002) Types of SHGs and Their Work. Social Welfare Issue, February: 16. In Jerinabi, U. (2006) Micro Credit Management by Womens Self Help Groups. Discovery Publishing House: New Delhi Edelsonbos, J. and Van Burren, A. (2005) the Learning Evaluation: a Theoretical and Empirical Exploration. Evaluation review Fisher, T and Shiram, M.S (2002) Micro-Credit: Putting Development Back into Micro-Finance. New Delhi, Vistaar Publications.
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Harper, M. (2002) Grameen Bank Groups and Self-Help Groups; what are the

Books
CGAP, September, Financial Access 2010: The State of Financial Inclusion through the Crisis

Economist Intelligence Unit October 2010; Global Microscope on the Microfinance Business Environment

Kumar Ranjit (2008),Research Methodology; A Step By Step Guide for Beginners, Pearson publication. Microfinance perspectives and operation (2003), Indian institute of banking and finance,Macmillan publication.

Websites
www.microfinance.org , www.gdrc.org www.sa-dhan.org www.microfinancegateway.org

QUESTIONNAIRE
Dear Respondent,
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I am student of Maharaja Ranjit Singh College of Professional Science (MRSC) and pursuing MBA. This survey is designed for the village People of Indore to determine the benefits provided by Microfinance services. Kindly spare your precious time to make my study complete. SECTION A:
Name of Respondent:
City Gender Age : : : Male 25

Female 25-35

35-50 50

INCOME ABOVE: upto1-LAKH THAN 5LAKH

upto2-LAKH

4-5-LAKH

MORE

SECTION B:
Q.1) Do you have any knowledge about microfinance? (a) Yes (b) No If No then why. Q.2) Do you avail the facilities of microfinance schemes? (a) Yes (b) No Q.3) Do you think Microfinance help to reduce poverty? (a) Yes (b) No

(c) Dont Know Q.4) what are the Source of income? (a) Farming (b) Self Generated (c) Labouring (d) Business (e) Others

Q.5) what is the source of Microfinance? 49 | P a g e

(a) Informal Source (b) SHG Groups (c) Banks

(d) Others Q.6) from where you come to know about Microfinance? (a) Family member & Relatives (b) Friends & Peers (c) Magazines & Generals

(d) Others Q.7) how long have you been using Microfinance? (a) None (b) 0 year to 2 years (c) 2 years to 3 years

(d) More than 3 years Q.8) what is your basic objective at the use of microfinance? (a) Reduce Poverty (b) Increasing Income (c) Empowering of women

(d) Self Employment Q.9) Which Factors influencing the growth of microfinance?

(b) Flexibility (c) Low interest rate (d) Installment availability

(a) Availability of loan Q.10) Do you find any change in standard of living after using microfinance scheme? (a) Strongly Agree (b) Agree (c) Neutral (d) Disagree (e) Strongly Disagree

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