Financial Literacy of Microfinance Clients

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Financial Literacy of Microfinance Clients And HR
Challenges in MFI
Chandra Shekhar GhoshCMDBANDHAN
Financial Literacy of Microfinance Clients
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What is financial literacy ?

• Financial literacy is the ability of an
  individual to understand financial terms and
  concepts and to translate that knowledge
  skillfully into behavior

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For whom it is necessary ?
CLIENTS
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COMPONENTS

• The literacy program should include
• How to increase savings
• The role and responsibilities of clients
• The right amount and use of credit
• Consumer protection
• Micro insurance
• Information on available enterprise development
  services

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Financial literacy can lead to financial wisdom

• Ability to manage money not just deal with it.
• Ability to use skills to take wise decisions for
  the future
• A financially literate person can link her need
  for a product or service with those available
  within the existing financial system.
• A demand for financial inclusion is created
  through an appreciation for what is available.
• The formal banking system will find a financially
  literate person easier to approach.
• A financially literate person will seek
  information about available services to
  operationalise her financial decisions and hence
  access what is available

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Challenges to deliver financial literacy program

• Providing literacy program to the clients can be
  costly for the
• organization as it is constructed separately
  from credit operations
• Popularizing this among other sectors
• Habit of savings as a discipline is critical
• Literacy program requires clients to spend more
  time at regular
• group meetings, this could lead to a higher
  drop-out rate

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Minimalist and Integrated Approaches to
Microfinance
INTEGRATED APPROACH
MINIMALIST APPROACH

• Financial Intermediation
• Working Capital
• Credit
• Forced asset loans
• Savings
• Insurance

Financial nonfinancial services

• Social Intermediation
• Group formation
• Leadership training
• Cooperative learning

Enterprise Development Services Marketing Business
training Production training Subsector analysis
Social Services Education Health
Nutrition Literacy training
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• Introducing Bandhan

Hope for the poor
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Working towards the twin objective of
Women Empowerment and Poverty Alleviation

• Increase in family income through women
• Promote and Develop income generating
  activities
• Easy accessibility of credit

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Defining Bandhan

• Operating across 10 states - West Bengal,
  Tripura, Assam, Bihar, Jharkhand, Orissa,
  Meghalaya , Delhi, Maharashtra and Uttar Pradesh
• 6 years of operation in microfinance
• 674 branches
• 1.50 million beneficiaries
• Employment generation of 4,119 at the staff
  level
• Monthly disbursement Rs. 136 crores and
  realization Rs. 110 crores with on time
  repayment of 99.97.
• 1,28,000 poor women receive loans every month.
• 57,000 new borrowers join the program each month

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Growth over the years (portfolio)
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Model- Individual lending through group formation
A group of 10-20 members is formed
Members attend group meeting
Loan disbursed after 2 weeks to individual
borrowers
Weekly installment repayment
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The past and the present
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Explosive growth in Microfinance has resulted in
steep growth in HR requirements
Outstanding (Rs Crores)
HR Requirement
Projected
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Systematic approach to grow Human Capital
Success is not world-class talent, It is
world-class performance
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HR Planning needs a systematic approach
HR Planning
Identify functional requirements
Define characteristics of personnel
Identify source of personnel
Personnel development and retentions

• Operations
• Finance
• HR
• Legal
• Technology

• Education
• Experience
• Attitude

• Local graduates
• Other MFIs
• Other Industries
• B school Campus

• Compensation
• Training
• Job description
• Motivation

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Capacity Building Training as a Retention Tool

• Bandhan believes that capacity building of staff
  is one of the key components to enhance their
  proficiency and expertise. Hence, Bandhan has
  developed a practical module of training ,which
  is
• Participatory
• Learner-centric
• Problem-focused
• Need-oriented
• Promoting individual involvement and
• Group interaction

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Capacity Building Training as a Retention Tool

• Bandhans training courses-
• In Service Orientation (ISO)
• Credit Management and Development Course
• Operational Management Course
• Development Management Course
• Leadership Development Training
• Branch Manager Co-ordination Meeting
• Monthly Management Meeting
• Cluster Meeting
• Audit Operation Management etc.

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Key factors behind the success
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Challenges of HR
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Bandhan Group as a whole in the 3 yrs
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Bandhans development initiative
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Major Accomplishments
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There is still a long way to go

Thank You

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