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Financial Literacy of Microfinance Clients

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Title: Financial Literacy of Microfinance Clients


1
Financial Literacy of Microfinance Clients And HR
Challenges in MFI
Chandra Shekhar GhoshCMDBANDHAN
Financial Literacy of Microfinance Clients
2
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

3
For whom it is necessary ?
CLIENTS
4
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

5
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

6
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

7
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
8
  • Introducing Bandhan

Hope for the poor
9
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

10
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

11
(No Transcript)
12
Growth over the years (portfolio)
13
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
14
The past and the present
15
Explosive growth in Microfinance has resulted in
steep growth in HR requirements
Outstanding (Rs Crores)
HR Requirement
Projected
16
Systematic approach to grow Human Capital
Success is not world-class talent, It is
world-class performance
17
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

18
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

19
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.

20
Key factors behind the success
21
Challenges of HR
22
Bandhan Group as a whole in the 3 yrs
23
Bandhans development initiative
24
Major Accomplishments
25
There is still a long way to go

Thank You

Log on to www.bandhanmf.com
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