3. Head Office
Kanaja Micro Banking Foundation
Tadas – 581212
Di: Haveri
Ph: 08378-257495
(Karnataka State
India) For a long time no one considered poor people to be credit worthy. Then came to the Grameen Bank in Bangladesh and with it, the revolution in the micro finance sector. Slowly but surely over the last 30 years, development experts began promoting viable new structure that guaranteed two things bank access for the poor and stable financial business for small banks. Our focus in the issue is on practical examples from the world of microfinance.

4. Contact Address Kanaja Micro Banking Foundation
Ho. 98 Kandakur Building,
Ph: 0836-23256184 / 2355223
Madhura Park , Santosh Nagar,
Hubli-580032 (India) Micro movement is bringing hope prosperity and progress to many of the poorest people in the world
Amartyasen (Economist)
Nobel award winner

5. Email Address kanajamicrofin@rediffmail.com
Villagebank@homail.com

6. Registration Number and Legal Status Kanaja Micro Finance is registered with Karnataka Societies Registration act 1950
Regd. No. 201 Dated 20/10/2001
7. FCRA No Regd No 094520026 dated 09-01-1992 (Chinyard NGO)
8. Income Tax Exemption Donations to Kanaja Micro Banking Foundation are exempted from income tax under section 80 G and 12 A of the IT Tax Ac (Chinyard)
9. Type of Organization Non Governmental Organization/Non profit NGO /Non political.
10. Geographical Area of Operation Karnataka State (India) Northern part of Karnataka state in semi-arid area and belt of the Western Ghats like Uttar Kannada, Haveri and Dharwad Dist covering 400 villages working with 2000 Community Based Organisations.

11. Name and Designation of key Functionary and its roles and responsibility Mr. C. Y. Bhardwad, Chairman
 Overall in-charge of the NGO activities.
 More specifically: Day to day management of the NGO-administration, personnel, & MIS.
 Monitoring and evaluation of on-going projects.
 Planning long & short-term perspective plans for the community.
 Establishing conversation between program interventions and among various liasion departments.
 Representing the organization in important meetings and seminars.
 Conducting project wise staff meeting and progress review.
 Field visits and problem solving camps.
12. Source of funds Our Donors are Corporate Agencies/Trusts/Donors Organization/Central Government and State Government and Foreign funding agencies etc.
13. Our Bankers in Foreign Currency Account State Bank of India,
Main Branch,
Keshwapur , Hubli-580020
SB A/c No: 1046698598-1 (Chinyard NGO)
14. Our Bankers in Indian Money Account The Senior Manager
Bank Of Baroda SB A/c No-11586
Manavi Complex
Neeligine Road Hubli-580029
15. Our Auditors M/s. Chenni Associates Mobile No: 9448116365
Durgadevi Complex PH No: 0836-2363654
Dajiban peth Hubli-580028
16. Our Legal Advisors Smt. Priya Kamat, (Advocate) Smt. Sudha Naik (Advocate)
Near Kshema Hospital Deshpande Nagar
Behind KSRTC Bus Depot Near Rotary School, Hubli
Gokul Road, Hubli Ph No: 0836-2354759
Mobile No: 9844165206
17.
Millennium Development Goals Micro Finance is much more than simply an Income generation tool by directly empowering poor people, particularly women, it has become one of the key driving mechanisms towards meeting the Millennium Development Goals, specifically the over reaching target of having extreme poverty and hunger by 2015.
Mark Malloch brown (Administrator of the United nations development programme) (UNDP)
18. Micro credit spokes person said Aishwarya Rai, Actress and Year of Micro credit spokesperson “Throughout my travels, I have learned that we can do much more to help women and children who are economically vulnerable. By giving low-income women access to credit and savings, they can increase their incomes, build assets and better the lives of their families.
19. Curriculum Vitae of chief functionary Mr. C. Y. Bhardwad is the Managing Trustee of “Chinyard” trust and also the Chief functionary of the organization. He is basically
A Social worker who has more than 17 years of grass root development experience. Over the years he has acquired organization skills in Enterprise development and Community Organization. He established “CHINYARD” in the year 1990. He is an instrumental in organization more than 17000 marginalized rural women who are today on the path of economic empowerment and 1200 women are running their own income generation activities. His experiences in Micro-credit, Micro Enterprise, Micro Finance, activities are well known in the northern part of Karnataka and he regularly training faculty to the bankers, MBA students, Government officers’ and other NGOs. Functionaries in this vital area of development. He is very good learner and continuously upgrading his skills. He is interested in disseminating appropriate rural technologies, bio diversity conservation, development of sustainable livelihood, sand packaging them into individual, group, community profitable business enterprises. The present project is also one such venture (rural mobile banking services) who is presently the Chairman of the organization. Mr. C. Y. Bhardwad is Social Worker Since 1984 involved in Social Work. In 1990 he has formed a NGO called Chaithanya Institute for Youth and Rural Development (CHINYARD), also involved in Social wok has a member of different NGO/Social networking Organization at district and State level and also member of National and International Organization.
Areas of Expertise:
On Micro- Finance, Micro-Enterprise, Community Based Organization for livelihood Interventions, Health, Natural Resource Management, and Capacity Building. On long-term commitment with socio-economic development of Karnataka people through integrated approach. One among assignments with various agencies providing technical assistance on different human development disciplines.
20. Micro credit Logo

Use the Year of Micro credit 2005 Logo
We believe that the logo best represents the spirit of what micro credit is all about — a growing and powerful movement that has been making giant leaps forward. The logo depicts power, movement, and speed, each emanating from a strong core — all descriptive elements of micro credit and where it stands in today’s world. We also believe the logo, as a standalone design, will live on to be a strong visual symbol of the Year, long after the year is history. If used properly, it will be memorable and people will see it and know that it is about micro credit and microfinance.
21. Global Micro credit Summit 2006

The Global Micro credit Summit 2006 will be held from November 12-15, 2006 in Halifax, Nova Scotia, Canada. More than 2,000 delegates from over 100 countries are expected to participate at the event, assessing progress made toward the Campaign’s goal of reaching 100 million of the world’s poorest people by the end of 2005, and launching the second phase of the Campaign. Submission of an Institutional Action Plan is a prerequisite for registering as a delegate for the Summit. To find the Action Plan relevant for your institution.

22. Micro to Macro Change Working to ensure that 100 million of the world’s poorest families, especially the women of those families, are receiving credit for self-employment and other financial and business services.
From micro finance to macro change integrating Health, Education, Livelihood and Microfinance to Empower women and reduce poverty
23. Introduction At the outset Kanaja Micro Finance Banking (KMFB) is a Micro Finance Institution that provides financial and support service to poor, skilled and unskilled rural women entrepreneurs, enabling them to undertake income-generating activities, such as becoming Hawkers/vendors, home-based producers, artisans and traders. Kanaja’s prime objective is to promote self-employment and to alleviate poverty and small supportive groups of women managing the organization through assuming the additional responsibility of approving, disbursing and establishing repayment of the loans.
Kanaja Micro Finance Banking (KMFB) provides financial and support services to the bottom 50% of women living below the poverty line. Kanaja’s main initiative is to provide operational and capacity building aspects. It’s other service include long term loans, term loans at market costs, inter-co-operate long-term loans guarantees to banks, equity participation and technical assistance.
24. VISION “To increase the availability of wider range of micro finance services for poor (predominantly rural) women and their use of those services through the process of expansion as well as consolidation of this micro finance programs and creation/facilitation of a sustainable community based Micro finance Institution within the year 2010.
Our vision is to work with the poor in their struggle to attain social justice and economic security with human dignity and self reliant and we will impact poverty by bringing all mainstream financial and capacity building service upon to poor households in a sustainable manner.
25. MISSION STATEMENT
• Bring recognition, legitimacy, respect and opportunity to the 100,000 of micro-entrepreneurs in the Karnataka region.
• Create a fair and level finance field for every micro-entrepreneur so that they do not need to be permanent dependent just because they do not qualify for the mainstream finance.
• Revive the root of banking, so that credit is once again based on trust and relationship and a person’s wealth or poverty has no bearing on his/her credit-worthiness.
Make a real and lasting psychological, social & financial impact on individuals; help build strong, cohesive communities; and generate substantial job opportunities and economic benefit for society as a whole Kanaja Micro Banking Foundation (KMBF) is to empower the poor to become economically Self reliant by providing financial services in a sustainable manner.
26. OUR GOAL / AIMS To provide financial assistance to the poor through a system that brings them under an organizational structure. This process also ensures the sustainability of the Organization in terms of operational self sufficiency.
 Our Aim is to provide the poor disadvantaged the opportunity to meet basic economic needs more effectively and experience restoration of their dignity and Self worth to increase the capacity of motivated.
 To reach out 10% of Karnataka poor households and to continuous provide timely and need based financial and capacity building services in a sustainable manner.
 To be a viable and sustainable microfinance institution with a high portfolio and enhanced institutional capacity to reach the above goals.
Enhance institutional capacity to reach the above goal.
27.

OBJECTIVES OF THE ORGANIZATION To form and promote self help groups of the poor, women, needy, depressed and to attain improvement in their socio-economic condition through economic activities.
To give priority to women and to involve them directly in production activities so that the opportunities are created for additional income.
To create employment opportunities for both males and females by involving them in income generating activities for increasing the income of the family and to continue gradual support for attaining self sufficiency.
To provide assistance to the poor to become self dependent by accumulating and creating their own capital through savings from increased income.
To provide assistance to the poor, can gradually decrease the dependence on the money lenders, borrowing at a high interest rate , advance sale of crops before it is produced, selling and mortgaging of lands and finally should be in a position to abandon all this kind of restrictive economic practices, which restricts him on his way to development.
In the process Kanaja will attain self sufficiency by decreasing its dependence on external grant and mobilizing resources by way of service charges from KANAJA MICRO BANKING FOUNDATION (KMBF) programmes.
• Taking the Micro finance services to the door step of rural poor in low cost manner.
• To build self sustainable micro finance institution.
• To provide training management, consulting and financial assistance to small and poor entrepreneurs with either the creation or the expansion of business.
• Providing institutional credit to the unorganized sector.
• Empowering women and addressing the issues of equality and social justice.
• To make poor women understand the concept and importance of financial planning.
• To bring out a change in the mindset of women by encouraging them to plan for the future.
28. Steps of implementa-
tion • Taking a decision by the management in identifying the working area.
• Identifying the Block area where to start the operation initially in the district.
• Opening of the branch office at the block area by occupying suitable premises, purchasing office furniture and other necessary materials.
• Identification of suitable staff to work as Organizers
• Promotion of Self Help Groups.
• Opening of a bank account in the name of the organization at the nearest local bank.
• Allocation of required fund by the Head Office for functioning of the branch.
• Imparting training to the branch staff and district staff by the trainers from the Head Office.
• Supervising the achievement of the targets and whether the principles KMFL Micro Finance Programme are strictly followed or not.
• To establish one branch in one block area. In case there is a necessity for opening of two branches in one block which can be considered basing on the number of groups in the block, the geographical area of the block, total loan portfolio, the MFI Coordinator has to submit specific proposal to that effect.
• There should be a minimum of 50 and maximum 100 groups under one branch. On Micro-Finance, Micro-Enterprise, Community Based Organization for livelihood Interventions, Health, Natural Resource Management, and Capacity Building.
29. Our Values Micro finance Institution is adopting some values:
Honesty, Transparency, Timeliness, Accountability, Sharing of Knowledge and Information and Promises are delivered.
30. Methodology • Group Identification, Group Meetings and Interactions.
• Conducting training of HRD.
• Group Recognition test.
• Apex Body Meeting.
• Group Auditing.
• Conducting Grading and Rating of the Group.
• Loan approvals and Disbursement.
• Repayments.
• End use of fund.
• Market Research and Linkages.
31. Member ship and Deposits
We are planning to take deposits from interested philanthropist, depositors and SHG members and Membership fees have taken of Rs. 500 form the Self-Help Groups.
32. Status of Rural Women in Karnataka and Other problems A few highlights of the Findings:
• Women literacy rate 37%.
• 16% of the House holds had access to toilets.
• An incredible one in five women reported having lost at least one child before it reached the age of 5.
• 76% women reported having suffered an illness.
• 34% reported been married before menarche.
• Only 2.9% house holds reported ongoing the fuel efficient stores. This adversely effected women Health.
 Farmers debit by purpose of loan:
More than quarters 26% are about 260 million are below poverty line in India. (193 million in rural area and 26 million in urban area). According to India first Social Development report.
According to the NSSO 48.6 % of farm house holds are in debt. The most important purpose of taking loans were started to be capital expenditure in farm business and current expenditure. In farm business at all India level out of every 1000 rupees taken has a loan 584 rupees were borrowed for capital intensive, Agriculture. In debt ness is driving farmers to suicide. A change is needed in Agriculture policy to end the vicious cycle of debt and the brutal epidemic of farmer’s suicides.
# Item Percentage
1 Capital Expenditure for farm business 30.6%
2 Current Expenditure for farm Business 27.8%
3 Expenditure for Non farm Business 8.8%
4 Marriage and Ceremonies 11.1%
5 Education 0.8%
6 Others 21%

33. Background of the MFI Chinyard is currently working with more than 1500 SHG members in promotion of enterprises. SHG members need money to set up and sustain micro finance activities. KMBF has planned to meet the micro finance needs of this growing body of mature SHG members with timely and effective micro finance.
The MFI services have been designed to provide additional value to the SHG members. These credit plus services include developing the capacities of the SHGs to generate additional income with increasing growth and social security nets.
KMBF has commenced MFI operations in Dharwad, Haveri and Uttar Kannada with disbursals of Rs. 40 Lakhs. The portfolio will be transferred to the separate MFI organizations. It is being setup as Society Act. KMBF will be promoting SHGs for linkages and provide credit plus services.
The MFI operations are initially proposed to cover Dharwad, Haveri and Uttar kannada with operational Head Quarters at Tadas.

More than 70% of India’s one billion population lives in villages of which about 40 million people live below poverty line. They earn less than $1 a day and still strive to meet their both ends meet. The major hindrance in the development of the poor is not lack of opportunities, but the availability of the credit and the related support services to promote sustainable livelihood activities. Till a decade ago, rural poor were not considered to be bankable and credit worthy. The local moneylenders had a field day by day charging exorbitant interest rates and taking un-due advantage of the underprivileged and un-educated rural poor. During later years, the concept of microfinance gained popularity and the organizations like Kanaja Micro Banking Foundation have provided innumerable services to the poor in promoting large number of sustainable livelihoods.
Kanaja is one of the Growing Micro finance institutions in Karnataka State India. Kanaja works with more than 1500 thrift and credit groups providing financial services including credit savings insurance and technical assistance and other social support services. Kanaja operates in three district of Karnataka state covering in 260 villages for providing Financial services in remote villages where the formal financial services are unavailable.

34. Governing Board S. No Name Position in the board
1. Sri C.Y. Bhardwad Chairman
2. Smt. Sandhya D.Patil Secretary
3. Smt. R. R. Baloji Director
4. Smt. B. C. Laxmi Director
5. Mr. B. M. Pattar Director
6. Mr. N. M. Patil Director
7. Mr. R. A. Patil Treasurer
Micro finance making money works for the poor

35. Advisory Board 1. Mr. Raghuram
B.E (Development Consultant Bangalore)
2. Mr. S. Sadananda (Director, Arambh Bangalore)
3. Prof. K.S. Jagadish
B.E (Prof. Dept of Civil Engg, Indian Institute of Science Bangalore)
4. Dr. Anil Abbi
M sc. Hydrology (Director TRDC Bangalore)
5. Mr. S. K. Chenni
M.Com (C.IIB) (Charatered Accountant, Chenni Associates, Hubli)
6. Mr. R. M. Bisaralli
B.E. & (KAS) Govt Officer
(Vidyanagar Hubli)
7. Mr. A. S. Kulkarni
(B.Com & C.A) State Bank of India
(Zonal Office Hubli)

36. Target Group In three District of Karnataka State India. Dharwad, Haveri and Uttar Kannada dist of North Karnataka. In 400 villages in 5 Taluks with women, Farmers, Widows, Rural Artisans, Tribal Artisans, Physically challenged and disadvantaged poor and needy people.
37. Partnership with Commercial banks/Regional Rural Banks
38. Our Partners and Clients • Savings and Credit Groups.
• Area Farmers Group/Farmer clinics.
• Artisans Groups.
• Micro Entrepreneurs.
39. Financial Products
(MFI introduced loan products based on clients need)  Agriculture Loans
 Non Farm Loans
 General Loans
 Group Insurance
 Self Help group Loan
 Individual loan for Income Generation/Personal Loan
 Housing Loan
Building Sustainable Financial system for the poor and become Partner with us in poverty alleviation.

40. Socio Economic Development Programmes for our Clients
Basic Needs Program has completed 3 years and has delivered satisfaction to its all stakeholders including the donors and end-users. In the remote parts of the Haveri, Uttara Kannada and Dharwad district, many of the villages lack the basic amenities such as elementary education, primary health care, safe drinking water and access to resources to pursue income generating activities. These four are targeted under the Basic Needs Program.
Our Micro finance programme is to integrate with Social Development programme. We also conduct periodic Socio-economic development projects from clients. In this project we cover: HIV/Aids Awareness, Health, Nutrition, Sanitation, Micro Enterprise skills, Marketing Linkages, Exposures, Ground Level Water Recharge, Rain Harvesting, Tree Plantation and others.
41. Our Team with Designation

Our Staff have been trained by Sadhan and other training Institute in various components of Micro finance/concept of SHG, finance management, HRD management etc. Our team energizes and inspires to other colleagues to scale up outreach and impact poverty.
Micro Finance Coordinator
Credit Manager
Credit Recovery Assistants
Group Auditors
Accountant Cum Computer Operator

42. Business growth projection for the next five years
Year No of SHGs No of Clients Loan Outstanding (In Crores)
1 100 1700 1.0
2 150 2550 1.50
3 225 3825 2.25
4 350 5950 3.50
5 525 8925 5.25

43. Future Projection KMBF has a future plan of covering entire 30 districts of Karnataka under its development activities. It also has planned to separate its micro finance activities and micro Enterprise activities from its social development program with separate 2 legal entities. The micro finance programme has a plan of covering at least ten thousand poor families in the entire state of Karnataka. The micro Enterprise programme will provide benefit to these poor families covered under the micro finance programme. As Karnataka is considered as a poor state, the Organization is determined to act as a catalyst of change in making the people really developed.
44. Approach  Promotion of Self-Help
 Economic & Educational Empowerment
 Focus on Women
 Vulnerability Reduction
 Asset Creation at Community Level
 Entrepreneurship Development Program
 Establishing Linkages

45. Present Credit Source for village clients
Money lenders and Chit Funds 52%
Friends and Relatives 15%
Co-op society and others 16%
Employee/Office 2%
Bank Source 10%
Private Finance 5%
Others Source 3%

46. Current status of the KMBF Present Clients: 27081
No of Community Groups: 1593
Credit Demand: 15,93,00,000
Resource Mobilization: 30,00,000
Loan Disbursed: 30,00,000
Loan Recovered: 2950000
Loan Awaiting Clients: 275 Groups (400 members)
Credit Demand and Supply: 15,63,00,000
47. Grading and External Evaluator Micro Credit Rating and Guarantees India Limited, M-Cril Haryana Credit Rating, has rated our Organization 1999-2000
48. We are planning to business projection Govt and Other Groups in Future Name of the Dist Govt General Clients Total Groups
Dharwad 2081 3508 111780 5589
Haveri 3021 5262 165660 8283
Uttara Kannada 3641 6139 195600 9780

49. Growth History for the last five years Year No of Groups No of Clients Loan disbursed
2000-2001 07 119 2,97,000
2001-2002 14 238 5,95,000
2002-2003 20 340 8,50,000
2003-2004 31 527 18,44,500
2004-2005 05 85 2,97,500

50. Our Past and present Donors The Bridge Foundation Bangalore
Global Stores Canada
Rashtriya Mahila Kosh Government of India New Delhi
51. Growth of Savings and Credit Group year wise Year Wise Dharwad Dist Haveri Dist Uttara Kannada Dist No of Groups Formed No of Clients
1992 09 04 - 13 260
1993 09 02 - 11 220
1994 16 04 04 24 480
1995 16 03 05 24 480
1996 16 06 07 28 560
1997 39 11 06 56 1120
1998 94 38 16 148 2960
1999 61 57 09 127 2540
2000 168 212 02 382 7640
2001 243 265 09 517 10340
2002 21 10 05 36 720
2003 35 90 69 194 3880
2004 03 - 17 20 400
2005 - - 13 13 260

52. Project Overviews

Self-Help Group (SHG) Promotion & Micro Finance (MFI): Kanaja as an organization strives to provide non-financial services to the groups/members & micro credit assistance through its MFI program by institutionalizing an MFI. The services at present provided by it are well accepted by the clients. Some of the services are:
• Mobilization of weekly savings. Although most of the clients belong to the poor and disadvantaged groups, due to the motivation of KMBF they save weekly.
• The monthly savings vary from Rs.20-40 per month.
• Striking Bank linkages/ credits for SHGs according to groups’ savings.
• Arrange and avail purposive credits for groups from its own mobilized/created funds.
• Organize periodical orientation programs for the SHG leaders and members.
• Collect MFI related information & then disseminate those among the clients.
• Compulsory functional literacy program for the members.
• Sensitizing members on various Govt. schemes for different category of clients.
• Vocational/ entrepreneurship training for the selected clients.
• Marketing linkages of SHG products.
53. Service level agreements with clients
• Providing Saving and Credit Kits.
• Regular meeting with Education and Awareness.
• Group Audit Services.
• HRD Training and Rural EDP.
• Finance and Loans.
• Assist Marketing, Sales and Marketing Channels.
• Participation of Exhibition all over India.
• Introduce New Technology, Quality Maintenance.
• Administration, Operation, Reporting and Evaluation.
54. Looking for • Loans in Local Currency.
• Capacity Building Grants.
• Donations.
• Guarantees.
• Marketing support
• Technical Assistance
Consultancy Promoting Livelihood through vision and Self Belief

55. Idea to implementation Kanaja Micro Banking Foundation is an initiative that focuses on addressing the development of the poor by offering financial and support services. This profile is brief presentation of our experiences and efforts in alleviating poverty through microfinance. Kanaja witnessed evidence of women creating their own means of support through collateral free small loans which has encouraged us to constantly take a step ahead the initial challenges of identifying potential arcas to launch operations educating the poor women to start small income generating activities and motivating them to organize.
56. Proposed lending Micro Enterprises/Business/Self Employment, income generation and other promoting livelihood activities:
# Name of Activities Name of the Activity
Part I Part II
1. Goat and Sheep rearing 26. Production of Vermicelli
2. Milch animals 27. Carving and Carpentry
3. Floriculture 28. Beauty parlor and Saloon shop
4. Vermi composting 29. Flour Mill
5. Karnataka Kasuti 30. Welding and Blacksmith
6. Quilt making 31. Pottery making
7. Leaf plate making 32. Small petty and Hawker business
8. Mushroom cultivation 33. T. V., Radio and Mobile Repairing
9. Poultry farm 34. Collection of Non timber forest products
10. Pickles making 35. Horticulture
11. Readymade garments 36. Irrigation and Land Development
12. Chilly powder production 37. House Repair
13. Bangles selling 38. Screen printing
14. Tailoring 39. Plastic rope making
15. Vegetable vending 40. Brick industries
16. Fruits selling 41. Lime stone industries
17. Retail selling of seeds 42. Wool spinning and weaving
18. Lambani Mirror craft 43. Video shooting and photography
19. Brooms making 44. Production of worship materials
20. Stationary business 45. Production of Incense sticks
21. Pappad making 46. Production Scented oils
22. Production of Handicrafts and sales 47. Mobile firewood depot.
23. Spice Business 48. Vegetables growing and wending
24. Taking of land lease and cultivating and growing food grains 49. Stone and Granite business
25. Production of food items and selling 50. Making a milk products and children sweets.

57. Financial service for the Rural poor in India
Despite several decades of State-directed intervention huge gaps remained in the supply of financial services for the poor in India. In 2003 some 59% of the entire rural population had no deposit account and 79% had no credit account with the formal financial sector (according to a Rural Finance Access Survey of the World Bank) for very small farmers the percentage were 70% and 87% for deposit and credit accounts respectively. Similarly there was a large gap in remittance services for the poor. Insurance penetration was relatively low.
Over the three decades ending in 1990, a huge banking network had been built in India. Commercial banks, cooperatives banks and Regional Rural Banks had between them over 100,000 branches. Directed lending built loan portfolio in the agricultural and other ‘priority’ sectors, but at the expenses of quality. The banking sector began cleaning up its act after the Indian economy; opened’ in the early nineties. In 1999 the non-performing assets of the so-called ‘priority’ sector advances (dominated by a agriculture) were about 10% higher than that of the non-priority sector (which itself was 15%) Agricultural growth in the nineties was less than half the annual overall GDP growth of over 6%. The share of rural credit (in overall credit) fell from a peak of 15% in 1991 to 10% by 2003.
However the inability of mainstream banks to reach the poor provided space for new organizations. The dominant form was the self-help group (SHG). Numerous SHGs were established by not-for-profit organizations and (less often) by banks. A typical SHG was a group of 15 to 20 members (usually women), Each SHG functioned as a micro bank, with savings and loans accounted for in the books of the SHG. An SHG could link to a mainstream bank and borrow. There were also a few new microfinance institutions (MFIs) that imitated the Grameen model (pioneered by Grameen Bank).
The regulatory framework made it difficult for MFIs to operate. A formal bank, that could provide a wide range of financial services, required a minimum equity capital of Rs 2 billion. A Non-Banking Finance Company (NBFC) required a minimum equity of Rs 20 million, such an NBFC could lend but not accept deposit until it had been operational for several years and obtained a credit rating. The Indian central bank, the Reserve Bank of India (RBI) and signaled that it intends to move to a regime in which no NBFC would be allowed to raise deposits. The Cooperative Societies Act (at the state level) was in general user unfriendly, vesting as it did significant control with the State. A version of the act (the Mutually Aided Cooperative Societies Act) was some what friendlier. In the few years ending 2004 there were some spectacular failure of relatively large cooperative banks. A very small bank could function as a ‘trust’. Such a bank operated in a grey area of legislation, as the difficult to operate at a large scale as a trust. There were a few larger MFIs that used a combination of organization forms. One example was to use Mutual Beneficial Trusts (MBTs) to raise deposits from clients these funds were then lent to an NBFC that, in turn lent to clients. An MBT was not a public charitable trust (the usual form of trusts) but a private trust with a settler (usually an employee of the (MFI).
58. Strength of Key Programmes We have Experience in this Lines:
 15 years experience in Micro Credit activity.
 5 Years experience in Micro finance activity.
 10 Years experience in Enterprise development activity.
 We have taken training for Enterprise Institute of India at Ahmedabad.
 We have good Degree holders in Governing Board.
 We have complete focus of Microfinance activities, good MIS and Accounting.
 We have excellent repayment rate in Credit Groups.
 We are conducting Training for Bank Managers, NGOs staff, Anganwadi workers and other Government officials for Micro credit and Micro Enterprise.
 We are conducting Enterprise Development Trainings for Self Help Groups, NGOs staff, Individuals and others.
 We have five years Experience in Micro Finance. Bad and good experience we are improving our experience on this base.
 We have given training to 20 trades, skill training and different types of trades. They have also set up micro enterprise and their income is also increased.
 Five years back M-cril had conducted rating and grading report. On that basic we are improving our weakness areas.
59. Promoting/
Developing the Kanaja Microfin Chinyard is an NGO working since from 20 years. This organization is promoting women Self Help Groups, Village Forest Committee, Micro Watershed Committees, Farmers Group and Formation of Tribal Artisans Group since 1989-90. The total community based organization is more than 2000. Chinyard is facing the problem of providing credit to CBOs for this purpose Chinyard is promoting the Kanaja Micro fin for the cause of providing financial products and alleviation of poverty and sustainable livelihood. Chinyard also got second award from the NABARD Bank Bangalore. Chinyard is conducting a lot of training programmes to Bank Managers, Government officers, NGO functionaries and block placement service to master of Social Welfare Students from Gulbarga and Karnataka University.
60. Summary of the MFI • Name of the MFI: Kanaja Micro Fin.
• MFI Location : Tadas-581212 Dt: Haveri Karnataka State India
• No of Active Clients: 1800 as of 1-3-2006
• Size of Outstanding Portfolio in $ 2 Lakhs as on 1-3-2006
• Target Client: Savings and Credit group member’s individuals, Artisans, farmer’s group members.
• Our Core Product is Loans.
• Insurance: We are under taken Group Insurance.
• Social Development Programmes are non financial services.
• Loan Methodology is group loans and individual loans.
• Credit local Market: No of people living in area we have serve 1275+8925.
• No of people living on less than $ 2/days in our area we serve organized sector and unorganized sector.
• Local market penetration is 70%.
• Proposed expansion market size: 10000.
• Competitive environment: Bankers 12%, Money lenders 37%, Kanaja Micro fin 15%.
• Regulatory Environment: 12 to 14 %.
• Minimum capital requirement for Kanaja Micro Fin is 1 Crore,
2.2 laks $.
• Legal Structure: Now we are making a NGO Model
• Financial Services: Lending and Insurance
• Growth projection for the next 5 years: Already mentioned in the profile.
• Excess to commercial debt funds: Nil
• Portfolio Report from most recent Quarter is mentioned in the profile.
• Average loan first size: 50 thousand to 1 lakh.
• Effective interest rate for primary loan product is 15% per annum.
• No of clients per loan officer: 1000 per credit officer.
• Board of Management Biographies: list is attached.
• What we learnt from our experience is that while the rich have financial capital for promoting their enterprise, the poor need to promote social solidarity, social capital and social justice so that they can raise their economic condition.

Projection of Kanaja Micro fin:
# Particulars Assumptions
1 Group and Members Kanaja Micro fin has over 1593 SHGs. 300 are now ready to absorb credit.
No of Members 17 Members Per Group Average
2 Average loan per SHG Since SHGs are more than 5 years old, credit absorption capacity begins at Rs 100000 per group
Total loan 13,50,00,000
3 Out standing 10% of total loan Loan Repayment period is usually 1 year to 3 years. Assuming some delayed payment, outstanding is pegged at 10%
Income
4 Kanaja Microfin has been lending to SHGs at 15% and is confident that SHGs would avail loan at that rate.
Expenditure
Cost of funds Assumed at 9%
Head office provision As Assumed under “Admin Expenses” 10% annual increase is assumed.
Loan loss provision Assumed at 2% in view of existing long term relationships with SHGs
Physical assets Assets as indicated under “Admin Expenses”
Depreciation Assumed at 10% annual.

Budget Summary:
S. No Particulars 2005-06 (Rs) 2006-07 (Rs) 2007-08 (Rs) 2008-09 (Rs) 2009-10 (Rs)
1 Non Recurring
Capital cost
Fixed Asset
Software
972000
100000
–
–
–
–
–
–
–
–
2 Recurring Cost
Administration cost
Personnel and admin Expenses
444000
488400
537240
590964
650060
3 Total Loan Amount 10000000 15000000 22500000 35000000 52500000
4 Programme Cost
Training and Exposure to SHGs, field staff and management staff

996500

946500

746500

746500

746500
12512500 16434900
23783740
36337464
53896560

Financial projections for the micro credit operational of MFI for the next 5 years
Accomplished with the Cash flow Statement Balance for the projected period. Assumption under laying the above statement should be separately furnished (Projection to indicate how and when will the organization break-even reach sustainable level of operations)
# Heads 2005-06 2006-07 2007-08 2008-09 2009-10
1 No of Savings and Credit Group 100 150 225 350 525
No of Members 1700 2550 3825 5950 8925
2 Average Loan per Savings and Credit Groups 100000 100000 100000 100000 100000
Total Loan Disbursement 10000000 15000000 22500000 35000000 52500000
3 Outstanding 10% Total loan 1000000 1500000 2250000 3500000 5250000
4 Income
Income 15% on total loan amount actually dispersed 1350000 2025000 3037500 4725000 7087500
Expenditure
Cost of funds (9% of Outstanding) 900000 1350000 2025000 3150000 4725000
Admin Expenses 444000 488400 537240 590964 650064
5 Total operational Expenses 1344000 1838400 2562240 3740964 5375064
Operational profit/loss 6000 186600 475260 984036 1712436
Depreciation (10% on fixed asset) 97200 97200 97200 97200 97200
Financial profit/loss -91200 89400 378060 886836 1615236
7 Operational self sufficiency 100 110 119 126 131
8 Financial self sufficiency 94 105 114 123 130

To Develop Kanaja Micro Banking Foundation following grants are required
Projections for Kanaja Micro Banking Foundation:
S. No Heads Quantity Rate
( Rs) 2005-06
(Rs) 2006-07 (Rs) 2007-08 (Rs) 2008-09 (Rs) 2009-10 (Rs)
1 Non Recurring Expenses Capital Cost
A Computer with Accessories 2 75000 150000 – – – –
B Four Wheeler Vehicle 1 600000 600000 – – – –
C Two Wheelers Vehicle 3 50000 150000 – – – –
D Almirah/Table/Chair 30000 30000 – – – –
E Computer table with chairs 2 6000 12000 – – – –
F File Cabinets 2 10000 20000 – – – –
G Other small items – – 10000 – – – –
Total fixed Assets – – 972000 – – – –
H Software – – 100000 – – – –
I Total Capital Expenses – – 1072000 – – – –
II Recurring Expenses
Training and Exposure
A To Management Members
Visit to other Micro finance Institutions 1 25000 25000 – – – –
Training programme in Micro finance and Banking 1 25000 25000 – – – –
B To Field Staff
Visit to other Micro finance Institutions 2 30000 30000 30000 – – –
Training programme in Micro finance and Banking 2 20000 20000 20000 – – –
Consulting Services for one year for building Banking systems and procedures

30daysX2year

5000

150000

150000

–

–

–
Total – – 250000 200000 – – –
C Trainings to saving and Credit Groups
Credit Management 100 SHGs 765/SHG 76500 76500 76500 76500 76500
Accounts and Book Keeping 200 members 100/members 20000 20000 20000 20000 20000
Entrepreneurship Awareness Generation Programme/ 100 SHGs
1500 /SHG
150000
150000
150000
150000
150000
Skill Training for Clients 100 SHGs 3000/SHG 300000 300000 300000 300000 300000
Marketing and Trial Production 100 SHGs 2000/SHG 200000 200000 200000 200000 200000
Sub Total – – 746500 746500 746500 746500 746500
Grant Total – – 996500 946500 746500 746500 746500
D Personnel and Administrative Expenses
1 Chief Executive 1 5000 60000 66000 72600 79860 87846
2 Computer Operator 1 4000 48000 52800 58080 63888 70277
3 Credit supervisor 1 6000 72000 79200 87120 95832 105415
4 Credit Recovery Assistant 2 3000 72000 76200 87120 95832 150415
Office Expenses
Telephone, Postage, Electricity, Auditing, Hospitality, Fuel,
–
16000
192000
211200
232320
255552
281107
Total Admin Expenses
Increase 10% per annum – 37000/month 444000 488400 537240 590964 650064

Your contribution for your community Yes! I want to help people live a life of dignity with HIV/Aids, Widow women, distress women, poor women, Physical disabled, Landless labourers, Homeless person, Rural Artisans, rural livelihood, small and marginal farmers, self help groups and street beggers.
I wish to contribute to Chinyard. (Please tick)
Rs. 10000 _________ Rs. 25000 ________ Rs. 50000 _______
Rs. 75000 _________ Rs. 100000 _______ Rs. 200000 _______
Any other Amount of your Choice Rs: ____________________________
Donations may be made in fovour of “
Cheque/DD No_______________ Date ______________Bank_________________________
All donations are eligible to Tax relief under Section 80 G of the Income Tax Act 1961.
Name (Mr/Ms/Mrs) _________________________________________
Address _________________________________________
City _________________________________________
State _________________________________________
Pin _________________________________________
Phone _________________________________________
Email _________________________________________
PS: All donors will receive a receipt of the contribution and regular up to dates of our work.
Thank you for your support
NEED
If you’re not interested in cash donations. Please provide us in kind of Computers, Furniture’s, Vehicles, Home Construction, Materials Library Books, Mobile Set for Mobile Banking, TV sets for Community Halls constructed by our Organization, Interest-free Loans. To carry out micro finance activities in the rural area.
Profile up dated on Place : Tadas (Hubli)
Date: December : 31/12/2005

Signature
Kanaja Micro Banking Foundation
Income and Expenditure Assumptions Statement for the next 5 years

2005-2006 Particulars Amount in Rs.
OPERATING INCOME
Interest from loans 1350000
Total operating Income 1350000
OPERATING EXPENSES
a) Interest and fee expenses 900000
b) Administration expenses (staff salary and Head Office Expenses) 444000
c) Loan loss provision 150000
d) 10% depreciation expenses 97200
Total Operating Expenses 1591200

TOTAL CONSOLIDATED LOSS -241200

2006-2007 Particulars Amount in Rs.
OPERATING INCOME
Interest from loans 2025000
Total operating Income 2025000
OPERATING EXPENSES
a) Interest and fee expenses 1350000
b) Administration expenses (staff salary and Head Office Expenses) 488400
c) Loan loss provision 225000
d) 10% depreciation expenses 97200
Total Operating Expenses 2160600
TOTAL CONSOLIDATED LOSS -135600

2007-2008 Particulars Amount in Rs.
OPERATING INCOME
Interest from loans 3037500
Total operating Income 3037500
OPERATING EXPENSES
a) Interest and fee expenses 2025000
b) Administration expenses (staff salary and Head Office Expenses) 537240
c) Loan loss provision 337500
d) 10% depreciation expenses 97200
Total Operating Expenses 2996940
TOTAL CONSOLIDATED PROFIT 40560

2008-2009 Particulars Amount in Rs.
OPERATING INCOME
Interest from loans 4725000
Total operating Income 4725000
OPERATING EXPENSES
a) Interest and fee expenses 3150000
b) Administration expenses (staff salary and Head Office Expenses) 590964
c) Loan loss provision 105000
d) 10% depreciation expenses 97200
Total Operating Expenses 3943164
TOTAL CONSOLIDATED PROFIT 781836

2009-2010 Particulars Amount in Rs.
OPERATING INCOME
Interest from loans 7087500
Total operating Income 7087500
OPERATING EXPENSES
a) Interest and fee expenses 4725000
b) Administration expenses (staff salary and Head Office Expenses) 650064
c) Loan loss provision 157500
d) 10% depreciation expenses 97200
Total Operating Expenses 5629764
TOTAL CONSOLIDATED LOSS 1457736

At most they may attempt to convince their banks to support and invest in microfinance.

I think convincing the banks to support mF will have an impact that wont be negligible. Its not an unprofitable proposition for the banks – they just need to be given the right push. If banks will lose competitive advantage by not supporting or investing in mF, I think that would be just the right incentive they need to enter the mF field in full force.

IMO, even if we have a lot of NGOs that support mF, the crucial factor for increasing the scale of operations will be the support of commercial banks. It is hard for an NGO to provide the infrastructure or the expertise for managing microfinance – at the most, they can work at regional levels. So, it is important that we have full-fledged participation from commercial banks, not the hesitant one that we see now (I must admit there is one Indian bank that is an exception).

And one of the ways for us to convince banks is to base our banking choices not just on the interest rates or customer service or ATM accessibility, but also the bank’s civic and social responsibilty – in this case, their support to mF. If the competitive advantage is obvious, banks can’t ignore it for too long.

Interestingly, I have been asked by an NGO (DHAN Foundation, a leader in microfinance in India) to conduct a feasibility study for them to start an international network of partner organisations (akin to Asha) that will raise capital for their activities in India. NRIs could play the role of volunteers (and donors) for such initiatives and support such examplary NGOs in scaling up their activities.

That sounds like an excellent initiative. If there will be an organisation for mF, as Asha is for education etc, that would a be a great step in the right direction. The only gripe I have about NGOs that target NRIs is that sometimes they forget that NRIs can (and would like to) do more than just donate money. I think Asha is an exception in this regard, but in my personal experience, whenever I have contacted organisations in India – the reply you get is that NRIs can donate and thats about it. Having been a non-resident and pauper student for a long time, thats not always a very viable option.
An organisation I particularly like is Habitat for Humanity – but sadly, the last time we organised a HfH activity, the infrastructure to support it in countries such as Indonesia and Thailand were much better than in India. Back to mF -I guess what I am trying to say is, when starting an international network that seeks the support of NRIs, it will be good to keep in mind and build the necessary infrastructure at home – to support non-monetary contributions from NRIs too.