Microfinance in Assam:

An Overview

Presented by:
Dr. Debabrata Das
Associate Professor
Tezpur University
Tezpur: Assam.

10 August 2010
1
• The objectives of the study are:

– To know the current status of the MF in

Assam.

– To study the informal micro finance

practices existing in the State.

10 August 2010 2
Research questions
• What are the microfinance providers working in Assam?

• What are the different practices and business models of

MFIs working in Assam?

• What are the other informal microfinance providers and

practices existing in the state?

10 August 2010 3
Data collection
 Data collected from four districts of Assam
Type of Name of List of MFIs
institution district
Formal Dibrugarh • Community Health for Advanced Initiative
microfinance • North East Region Finservices Ltd
institutions Kamrup • ASOMI finance Pvt Ltd
(Metro) • RGVN-CSP
• Prochesta
• Nightingale Charitable Society
Informal Kamrup • Gyandeep Pvt Society
microfinance (Rural) • Ashirbad Fin Society
providers
Nalbari • Grayma Khudra Sanchay Aachani
• Ashadeep Saving
Baksha • Jivan Bikash Sanchay Aachani
• Jananshree Khudrra Sanchay Aachani
• Family Mission Saving
10 August 2010
4
Research Methodology
• Structured schedule

• Personal interview/discussion

• Data:
– Information about the location, branches, and total staff of the
MFIs.

– Financial data about the MFIs (in last 5 years) :

– Loan portfolio size
– Total disbursement
– Number of beneficiaries
– Interest rate and Tenure of loan
– Repayment period and Repayment percentage
10 August 2010 5
 Data
• Activities of the MFIs
• Data about the lending model of the MFIs.
• Various products and level of micro lending.
• Loan structure and process
• MF plus activities
• Business model of the MFIs.

10 August 2010 6
 Microfinance
Microfinance
Provirs
Providers of Assam
in Assam

Formal Informal

Village
Village
Societies/ Village Goot/
Private Societies/
Banks NFI MFIs SGSY Namghar Head/ Mutual
Societies Namghar/
Committee
Bathow
Landlord Group
Committee /
Bathow
Commercial
NABARD NGO
banks

Co-oprative
SIDBI NBFC
Bank

RRBs NEDFi

10 August 2010
7
 Banking network in Assam
Data about microfinance disbursed by financial
institutions in Assam
– 741 branches of Total loan disbursed Cumulative position
st
during the year 2009- as on 31 March 2010
Commercial Banks 10 in Assam

Name of the Bank Amount No. of Amount No. of

– 343 branches of AGVB, * SHGs * SHGs
RRBs
Assam Gramin Vikash
– 42 branches of LDRB and Bank 5797.01 12253 25811 83665
Langpi Dehangi Rural
Bank 801.22 1164 2725.05 5449

– 39 branches of Co-operative Banks

Cooperative Banks State Cooperative

(Source: State Level Bankers’ Committee, Bank 1531.38 1256 5094.25 9741
Assam, March 2010 )
Commercial Banks 10334.9 10,914 49971.03 65000

GR. TOTAL 18464.5 29583 83601.33 163855

* In lakhs
 List of Microfinance organizations in
Assam
Sl. no. Name Legal form Lending model
1 Assam Gandhi Smarak Nidhi, Kamrup Society Individual
Individual
2 Associated Gramya Unnayan Society, Sivasagar Society member
3 ASTHA, Sonitpur Society SHG
Centre for Development Action and Appropriate
4 Technology (CADAT), Sonitpur Society SHG member
5 Chaiduar Rural Development Centre, Sonitpur Society Individual
6 Dainijan Gaon Mahila Society Society Mixed
7 Deshabandhu Club Behara Bazar, Cachar Society SHGs

8 Gana Chetana Samaj Balipara, Sonitpur Society MFI-Federation

Society
9 GRAMIN, Biswanath Chariali, Sonitpur MFI

10 August 2010 9
Sl. no. Name Legal form Lending model
Jyoti Puthibharal and Yuvak Sangha,
10 Sonitpur Society MFI-SHG member
11 Manab Seba Sangh, Kamrup Society SHG
North East Regional Human
Resource Dev. Society
12 (NERHURDS), Kamrup Society Mixed
13 PROCESTS, Guwahati Society SHG
Society transforming
14 RGVN, Guwahati to NBFC others
15 Singkhap Mahila Samity ,Sivasagar Society SHG
Sipajhar Diamond Club Community
16 Centre, Darrang Society MFI-NGO-SHG
Social Action for Appropriate and
advancement in Rural Areas (
17 SATRA), Darrang Society Bank-NGO-SHG

10 August 2010 10
 Name Legal form Lending model
The North East Centre for All Round
18 Development (CARD), Darrang Society MFI-SHG member
Tinsukia Gaon Tribal Mahila
19 Samittee Society Mixed

20 CHAI, Dibrugarh Project MFI

21 North east Finservices ltd NBFC MFI

22 Nightangle Charitable Society NGO JLG

23 Asomi Fin PVT Ltd MFI SHG, JLG, Individual

10 August 2010 11
Comparative profile of the MFIs
MFIs Number of Total staff Total number
branches of
beneficiaries
RGVN-CSP 78 467 29,309 groups
NEDFi Offices in 8 79 83367 (10177
groups
states of NE

ASOMI Finance 50 196 37,439 (2897

Pvt ltd SHGs
PROCHESTA 6 48 2897 groups

NCS 4 13 9526
NERFS 72 500 49,475
CHAI 1 11 400

10 August 2010 12
Continued…
MFIs Fund providers
RGVN-CSP FWWB, Opportunity International, IDBI, NABARD, SIDBI,
NEDFI, HDFC and ICICI
ASOMI Loan from Nationalised banks and Iincofin of Belgium
Finance Pvt ltd
NEDFi IDBI, ICICI ,IFCI, Small Industries Development Bank of
India, Insurance Companies – LIC, GI, UTI bank and SBI
PROCHESTA Loans from Nationalised banks, NABARD, AGVN, SIDBI,
Gyan Vigyan Samiti Assam, State Resourse Centre
Assam, Jan hikshan Sansthan, FWWB, IIBM
NCS Nationalised banks, NEDFI, RGVN, SIDBI

NERFSPL Nationalised banks, NEDFI, RGVN, SIDBI

CHAI All India tea association, Tazo Tea, Mercy corps

*Informal institutions collect money from the depositors and disbursed the
same to the creditors
10 August 2010 13
 Financial portfolio of the MFIs
MFIs Loan Interest rate of Loan Tenure for Repayment
portfolio [In loan schedule
Rs] as on
June 2010
RGVN-CSP 56.42 crore 10% and 7 % 1 year Weekly and
monthly
ASOMI Finance 45.82 crore 15 % (per annum) 1 year Weekly
Pvt ltd
NEDFi 25.27 crore# PLR+0.5% 1-5 years Monthly
PROCHESTA 23.269 crore 18 % (per annum) 1-7 years Monthly
NCS 4.73 crore 13% (per annum) 1 year Monthly

NERFS 103 crore* 30 % (per annum) 1 year Flexible

CHAI 7.5 % (per annum) 1 year Fortnightly
3.010 crore
and
monthly

*As on 31st September 2009, # as on 31st December 2009

Repayment percentage: 97 – 99 %
10 August 2010
14
 Products of some of the MFIs
RGVN-CSP CHAI PROCHESTA NCS

•SHG preliminary-Rs 500 •Individual • SHG loan • JLG

– Rs 2,000 enterprise loan – Rs • Individual loan •Rs.3,000-
•SHG – Rs 4,000- Rs 20,000- Rs 50,000 •The three loan 25,000
20,000 •Joint liability loan – levels are:
•JLG- Rs 3,000-Rs Rs 5,000- Rs 50,000  Rs. 1,000 – Rs.
30,000 •SGH loan – Rs 10,000
•Microenterprise 1,000 – 10,000 Rs 5,000 –Rs.
Development- Rs 25,000 15,000
– Rs 50,000 Rs. 10,000 –
•EDP – Rs 16,000- Rs Rs. 20,000
14,000
•EPM – sponsored

10 August 2010 15
 Microfinance Plus activities
Asomi Accident policy from United India, and
Fin.(Pvt)Ltd health insurance with APOLLO MUNICH
Health Insurance Company.
PROCHESTA Housing Finance for rural women.

CHAI Emergency medical help, vocational training

and scholarships to school dropouts.
Business development service centre.
RGVN –CSP Employment Generation Mission and
Insurance Cover.
NEDFi 3 Workshop cum Training Programs

10 August 2010 16
 Informal microfinance providers
Saving society Amount Deposit limit Interest Loan Interest
require to on against on loan
open an a/c deposit deposit
Janashree Khudrrs Rs. 10 Rs. 5 (min) 12 % per 90 % 3 % per
Sanchay Aachani Rs. 200 (max) annum month
per day
Jivan Bikash Rs. 10 Rs. 100 (min) 12% p.a. 80 % 3 % per
Sanchay Aachani Rs. 200 (max) month
Per month
Gyandeep Pvt Rs.10 Rs. 50 (min) 12 % per 80 % 3 % per
Sociey Per week annum month
Ashirbad Fin Rs.10 Rs. 50 (min) 12 % per 80 % 4 % per
Society Per week annum month
Ashadeep Saving Rs. 10 Rs.50 (min) 12 % per 80 % 3 % per
Per month annum month
Family Mission Rs.10 Rs. 5 (min) 12 % per 100 % 3 % per
Saving Per day annum month
Grayma Khudra
10 August 2010 Rs.10 Rs. 50 (min) 24 % per 90 % 4 % per 17
Sanchay Aachani Per month annum month
Key findings
• Micro finance industry in the State is in initial growth
phase. Microfinance is witnessing a faster growth in the
state which is reflected in the increasing number of
microfinance providers and quantum of finance provided.

• There are different types of microfinance providers in

Assam. Many National level MFIs are emerging in the
scene recently (Bandhan, ASHA, etc).

• Major role is played by the banks. The role of RRBs is

very prominent in financing SHGs in relative terms.

• A few local MFIs have stepped strongly in the sector.

10 August 2010
18
Continued…
• Informal microfinance practices are very strong and
active in lower part of Assam.

• Most of the informal microfinance providers are not

having any legal status (except one which was
registered as NGO)

• The interest rate charged by informal microfinance

providers is very high. It ranges from 36 – 48 % per
annum whereas in case of formal MFIs it ranges 7.5 %
to 30 % per annum.

• Availability of credit is given preference over the cost of

credit by the borrowers.

10 August 2010 19
Continued…
• Demand for micro credit is very high and a wide gap of
demand-supply is observed specially in the rural areas.

• Most of the MFIs are deviated from the social mission to

commercial goal.

• Unethical competition led to multiple lending.

Concerns of MFIs
• Legal hassles specially in renewal of registration

• Problem in fundraising

• Market distortion by SGSY

Issues while carrying out research
• Weak MIS of the microfinance providers.
It is difficult to get data in proper format.

• MFIs are reluctant to share information.

10 August 2010 22
Future research questions
• Possibility of making credit available to
small borrowers at a lower cost.
• Issues to deal with the problem of multiple
lending.

10 August 2010 23
 THANK YOU

10 August 2010 24