BUSINESS POTENTIAL ASSESSMENT IN MADHYA PRADESH

Vaibhav Pandey (33057) Ashutosh Garg (33070)

ABOUT NABFINS

NABARD Financial Services Limited, [NABFINS] is a subsidiary of NABARD.

Equity from Banks and State Govts.   It is a non-deposit taking NBFC

registered with the  RBI. For profit without Profit maximization Bringing services and Business

together

Low Burden on the client – Low interest rate Transparency in Operation - No hidden

charges Cash Flow based loans, Terms and Repayment

schedules e.g. Groups have been given gestation for

repayment No upfront deductions from principal No weekly repayments, only monthly,

quarterly and half yearly repayments

NABFINS – “ TRYING TO BE DIFFERENT”

NABFINS VALUE SYSTEM

Standards of governance in

MFI

Exemplary levels of

transparency

Reasonable / moderate rates of interest and lower burden to client

Financial services at door step / near doorstep

NABFINS Model

NABARD

NGO

NGO providing multi-services

Watershed Implementing Agency

Identification of NGOs

Partnering As BC and flow of credit to SHGs from NABFINSDevelopment of CBOs by NGO

On Withdrawal

of NGOCBO as our

BC

NABFINS

Credit flow

CBOsProducer

Org

Partnership

CHAIN AND INTEGRATION

NABFINS

BC(NGO)

SHGs, JLGs, CBOs

CLIENTS

BC (other service

s)

NABFINS (Credit

& Fin Service)

A Tight Knit unitMitigating each others’ risk.

Flow of input and services

BC Facilitates the credit from NABFINS

OBJECTIVE

“Assessment of business potential in Madhya Pradesh”.

Identify strategic area of operation in MP. Identify NGOs which can partner NABFINS. Study of potential competition and risks in

MP. Credit demand and repayment capacity of

potential customer (SHGs/JLGs).

WHAT WE STUDIEDPartners

Clients

Government Regulations

Competition

NABFINS

METHODOLOGY

Stage I •Understanding of NABFINS business model and operations.

Stage II •Visit to NABARD Regional office, Bhopal.

Stage III •Visit to Districts/NGOs.•Visit to Banks and existing MFIs.

Stage IV •Assessment of SHG/SLIs/JLGs

Stage V •Final analysis and Recommendations.

SOURCE OF DATA

PRIMARY SOURCES:

Structured and

unstructured interviews

Informal discussions

Observation

SECONDARY SOURCES:

NABARD Reports

Microfinance Studies

DISTRICT SELECTION INDICATORS

Presence of NGOs

Penetration levels of SHG

Industry and Agriculture

Per Capita Income

Law & order situation

REGION WE VISITED

Western

RegionCentral Region

Eastern

Region

REGION COVERED – MALWA REGION

Districts Covered : Indore, Ujjain, Ratlam, Dewas

District No. of SHGs / JLGs

Prominent NGOs

Ratlam 1800 GVT, Dhan, Arunodaya

Ujjain 1500 KWSS, DSS, Arunodaya, Priyasakhi

Indore 2150 BGMS, Priyasakhi, Aparajita, Arunodaya

Dewas 3000 SPS, SNS, Hand-in-Hand, Aparajita, ASRA

MALWA REGION CONT….

District Economy

Ratlam •Rich in the field of agriculture •Good sources of irrigation and fertile soil

Ujjain Predominantly an agricultural economy

Indore •Major industrial and commercial hubs of MP•Agri commodity trading centre

Dewas Agriculture and industry driven economy.

MALWA REGION CONT…. 24 hour availability of Electricity so

opportunity of SSIs in villages. Good transportation & banking infrastructure. Law and order situation is good. Population is highly dense in compare to

other parts of MP. Popular as Wheat and Soya belt of India. High penetration of MFIs in the region. Well established credit culture Districts are situated in close proximity so

expansion will be easy.

SWOT ANALYSIS OF MALWA REGION

Strengths• Presence of Good NGOs and some mature SHGs (> 3 years).• Very good agriculture & industrial conditions.•Well established credit culture•Good Infrastructure and local condition•Low interest rate compare to existing MFIs.

Weakness•High NPAs under SGSY scheme•SHGs could not nurture because banks are reluctant in credit linkages•Good NGOs turned into MFIs

Opportunities

•Partnership with NGO cum small MFIs•Partnership in DPIP & SRLM programme•Proximity to Rajasthan and Gujrat state.•Same NGOs are active in Rajasthan & Gujarat so potential of expansion.

Threats

•ICICI Bank & HDFC Bank’s are

expanding BC model.

•Many MFIs are active in Malwa

region

•Multiple financing by MFIs @

high rate.

REGION COVERED – CENTRAL MP

Districts Covered are: Hoshangabad and Vidisha

Completely Agriculture based area. N.M.S. into poultry and Mushroom cultivation, coop

& fed. Mature groups but poor credit linkages, ghost of

SGSY. Dependent on inter loaning. Small scale MFI work by YSSS & SM, insufficient in

meeting needs of SHGs.

District (SHG/JLG)

NGOs

Hoshangabad (1264)

Sahara Manch

Y.S.S.S N.C.H.S.E.

N.M.S(Pradan)

Vidisha (200/500)

V.S.W.O

REGION COVERED – SOUTH EAST MP Districts covered are : Mandla, Dindori and Balaghat.

Credit culture is good in Balaghat than Mandla, Dindori.

SHGs are very active in not only savings but socially too.

Good ground level staff in Balaghat NGOs. Anupama E.S. working as small MFI for JLGs. Bank Credit linkage is poor.

District (SHG/JLG)

NGOs

Mandla (1024) PRADAN CARD Sahara Manch

Udyogini

Dindori (1100) PRADAN NIWCYD BYPASS DSS

Balaghat (>2100/100)

Anupama E.S.

Baihar N.U.

S.A.R.D G.V.M

SWOT ANALYSISStrengths

• Good NGOs and SHGs.• Members Involved / want to involve in alternate livelihoods.• Mature SHGs (> 3 years).• Low MFI penetration in SHG space.

Weakness• Huge distances among blocks and districts.• Poor public transport.• SGSY effects on people mindset.• Simple lifestyle in Tribal areas.•High interest rate than Banks.

Opportunities• Big un served market for credit.• Big opportunity (70% of SHGs) if we can provide first credit linkage to SHGs.• Lending to cooperatives, farmers clubs, Federations etc.• To serve poorest of poor tribal SHGs.

Threats• SHGs to get bank loans @7% under SRLM.• ICICI Bank & HDFC Bank’s BC model.• Dependence on agriculture and NTFP for repayment.

CONCLUSION

Parameter/ Region Eastern MP Central MP Western MP

Districts Visited Balaghat , Mandala, Dindori,

Bhopal, Vidisha, Hoshangabad

Indore, Ujjain, Ratlam, Dewas

Presence of NGOs ***** *** *****

Penetration of SHGs ***** *** *****

Agriculture or Industry

Agriculture Both Both

Competition Very Low Average Very High

Remarks Near to Nagpur Office of NABFINS

- High potential & High competition

RECOMMENDATIONS

Since NABFINS started operations in Gondia, we

recommend to start operations in Balaghat as soon as

possible.

Possibility of partnering PRADAN’s SLI’s.

Potential of partnership with NGO cum MFIs, DPIP and

SRLM program.

Ujjain is ideal place to start business in Malwa region.

Partnership with Samaj Pragati Sahyog .

• 750 SHGs• Indore,Dewas,Ujjain

Priyasakhi Mahila Sangh

• 600 SHGs• Indore, DewasAparajita Mahila

• 1000 SHGs• Bhopal

Mahila Chetna Manch

• 700 SHGs• Ratlam

Dhan Foundation

• 2000 SHGs• Dewas

Hand in Hand

• 200 SHGs • Hoshangabad

Yukti Samjaj Sewa Society

• 900 SHGs & 100 JLGs• Balaghat

Anupma Education society

• 700 SHGs• Mandala & HoshangabadSahara Manch

Ujjain

Ratlam(108 kms)

Dewas(38 kms)Indore

(55 Kms)

Thank You