Micro Finance Company India: A Comprehensive Guide to History and Operations

Micro finance company India has a rich history that dates back to the 1990s with the establishment of the Self-Employed Women's Association (SEWA) bank in 1994. This marked the beginning of microfinance in India.

The first microfinance company in India was Shakti Social Welfare Society, which was established in 1995. It provided small loans to women in rural areas, helping them to start or expand their own businesses.

The Indian government has been actively involved in promoting microfinance, with the Reserve Bank of India (RBI) granting licenses to microfinance institutions (MFIs) to operate in the country. This has led to the growth of the microfinance sector in India.

Microfinance companies in India have been instrumental in providing financial services to the underserved population, especially in rural areas.

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In India, there are several top microfinance companies that provide essential financial services to those who need it most. Fi is one such company, but there are many others that are also making a significant impact.

Arohan Financial Services, for instance, has been operating in Kolkata since 2006 and offers a range of credit products, including income-generating loans and household loans. Its loan amount ranges from Rs.1100 to Rs.50,000, and the interest rate is 25% per annum.

Suryoday Small Finance Bank, previously known as Suryoday Micro Finance, is another notable company that offers a variety of products and services, including MFI loans and shopkeeper loans. It has a unique mode of operation that is different from traditional banks and NBFCs.

Asirvad Microfinance is a company that offers microloans, income generation programs, and mid-term loans to people in rural and semi-urban areas across 22 Indian states. Its name, Asirvad, means "blessings from the almighty" in Sanskrit, reflecting its commitment to the well-being of society.

If you're looking for a company that offers microloans to women from low-income households, Asirvad Micro Finance Limited might be the right choice. It provides loans ranging from Rs.2498 to Rs.45000 with an interest rate of 21.70% per annum.

Here are some of the top microfinance companies in India:

These companies are making a significant difference in the lives of many people across India, providing them with access to credit and other essential financial services.

Microfinance institutions in India have several key objectives that drive their operations. Their primary goal is to provide access to financial services to individuals and small businesses, enabling them to participate in economic activities and improve their livelihoods.

One of the main objectives of MFIs is to alleviate poverty by providing financial resources and opportunities to individuals and communities. This is achieved through income generation, enterprise development, and asset accumulation.

Microfinance institutions often prioritize social empowerment, particularly for women, by providing them with access to financial resources and opportunities. This helps to promote women's financial liberation and support women entrepreneurs.

MFIs promote sustainable economic development by supporting small businesses through financial services, business training, and mentorship. This helps individuals start or expand their businesses, contributing to the overall economic growth of the community.

Financial education is also a crucial objective of many MFIs. They aim to improve the financial knowledge and skills of individuals by promoting responsible financial behavior, effective money management, and long-term financial planning.

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Here are the primary objectives of microfinance institutions in India:

The concept of microfinance has been around for centuries, with the earliest precedent in India dating back to money lending groups in Kerala.

The modern version of microfinance in India started taking shape in the 1970s, with the establishment of many microfinance institutions.

The Self-Employed Women's Organisation (SEWA) bank was founded in Gujarat in 1974, serving as a pioneering initiative in empowering poor women economically.

SEWA's success paved the way for other microfinance institutions to emerge, with the Government of India's efforts to alleviate poverty providing a significant boost to the sector.

By the 1990s, microfinance institutions had gained prominence, with SEWA becoming one of the most well-known organisations in the field.

Annapurna Finance, founded in 2005, has grown to become a significant player in the Indian microfinance sector, with nearly 3 million clients and 15,000 employees across the country.

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Annapurna Finance has a remarkable history of growth, starting as part of the non-profit Peoples Forum in 2005. It has since expanded into its own entity, registered as a microfinance institution in 2013.

Annapurna Finance has nearly 3 million clients and employs 15,000 people across India. This scale of operation is a testament to the company's success in providing financial services to those in need.

Annapurna Finance Private Limited was created in 2009, offering various financial products and services to the EWS category. It aims to empower women in rural areas by providing collateral-free loans.

The company offers loans ranging from Rs.1500 to Rs.25 lakh, with interest rates between 18% and 26% per annum. The loan tenure varies from 12 months to 24 months, and the processing fees range from 1% to 2% (GST applicable).

Annapurna Finance Pvt. Ltd. is now one of the top NBFC-MFIs in India, having registered itself as an NBFC-MFI with the RBI in 2013. It offers a range of products, including group loans, MSME Finance, and Housing Finance.

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The history of microfinance in India is a fascinating story that spans centuries. The concept of microfinance has been around since the 15th century in Europe.

The modern version of microfinance in India started taking shape in the 1970s, with the establishment of many microfinance institutions. The Self-Employed Women's Association (SEWA) set up the SEWA Bank in Gujarat in 1974.

The SEWA Bank was a pioneering effort to empower poor women economically, and it has since benefited many individuals who wish to grow their businesses in rural areas. SEWA Bank now serves as a model for other microfinance institutions.

The Government of India's efforts to alleviate poverty in the 1970s gave a significant boost to the microfinance sector. This led to the establishment of many more microfinance institutions in the country.

One such institution is Annapurna Finance, which began as a non-profit organization in 2005 and has since grown into a registered microfinance institution. It now has nearly 3 million clients and employs 15,000 people across India.

The Grameen Bank in Bangladesh, founded by Nobel Prize Winner Muhammad Yunus, is also a notable example of a microfinance institution that has made a significant impact. It serves over 7 million poor women in Bangladesh.

The objectives of microfinance institutions in India have been multifaceted, aiming not only to increase household income but also to empower women and promote socio-economic development.

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To register a microfinance company in India, you'll need to comply with specific regulatory requirements. The Reserve Bank of India (RBI) oversees the process, mandating that microfinance institutions meet certain financial and operational criteria to obtain and maintain a license.

The RBI has set a minimum net-owned fund requirement for microfinance companies, which varies depending on the type of company. For example, a non-banking financial company (NBFC) must have a minimum net-owned fund of ₹2 crores.

To ensure compliance, it's essential to draft a detailed business plan outlining the company's approach to managing microloans, risk, and client education. This plan should also outline fair lending practices.

When determining the business structure, you have options such as registering as an NBFC, a cooperative, or a trust. Each has its own set of regulations and requirements.

Here's a checklist to help you get started:

Remember to gather all necessary documentation, including identity and address proof for directors and shareholders, a business plan, and company documents such as the Memorandum and Articles of Association.

The performance of microfinance institutions in India has been impressive, especially in rural areas where a significant population depends on agriculture for survival.

The number of MFIs availing loans from banks increased significantly from 9.8 percent to 257.6 percent between 2015-16 and 2016-17.

Despite this growth, the total loans to MFIs by banks decreased by 7.2 percent in 2016-17 compared to the previous year.

However, the loan outstanding against MFIs increased by 13.7 percent and 14.3 percent in 2015-16 and 2016-17 respectively, showing a steady upward trend.

As the microfinance industry continues to grow, its business models are becoming increasingly urban-centric, with a decline in the share of rural clients in some states except for a few exceptions like Assam and Nagaland.

Fusion Microfinance operates over 1,300 branches in 22 Indian states.

The company was established in 2009 in New Delhi, and its client base consists of women living in rural and semi-urban areas across India.

Fusion Microfinance focuses on serving the "missing middle", or medium-sized businesses that bridge the gap between micro enterprises and very large companies.

It provides financial services to female entrepreneurs from economically deprived sections of society, and educates its customers on financial literacy as well.

Fusion Microfinance Pvt. Ltd. was set up in the year 2010, and operates in a Joint Liability Group lending model of Grameen.

This model allows the company to provide financial support to its customers.

To ensure your microfinance company is well-established, you need to focus on capital adequacy. This is a crucial step in the registration process, and it's essential to get it right.

The minimum capital requirement is typically around ₹5 crore for non-deposit taking microfinance institutions as stipulated by the RBI. This is a significant amount, so it's vital to have a solid financial plan in place.

To demonstrate the financial health and capital adequacy of your organization, you'll need to prepare and review financial audit reports. This will give you a clear picture of your company's financial standing.

Here are the key steps to ensure capital adequacy:

In India, a country where a majority of people live in rural areas, microfinance can be a game-changer.

A significant population in India depends on agriculture for their survival, making microfinance a vital tool for their economic well-being.

The growth of the Microfinance industry in India is a significant development, with the number of MFIs availing loans from banks increasing by 257.6 percent between 2015-16 and 2016-17.

The loan outstanding against MFIs increased by 13.7 percent and 14.3 percent in 2015-16 and 2016-17, respectively, indicating a steady growth in the industry.

The business models of MFIs in India are becoming increasingly urban-centric, as evidenced by the decline in the share of rural clients in 2017 compared to 2016, except in a few states like Assam and Arunachal Pradesh.

This shift towards urban-centric models can be attributed to the growing demand for financial services in urban areas, where the population is more concentrated and has a higher purchasing power.

The loan outstanding against MFIs increased all the subsequent years, indicating a steady growth in the industry, which is expected to continue despite the challenges posed by the pandemic.

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