Introduction To Microfinance
In India a large segment of the society, particularly low-income people, have very little access to formal financial services.
The Indian government and RBI have been proactive in promoting ‘Financial Inclusion’ and among the various initiatives, reaching out to the un-banked and under-banked populace in partnership with MFIs and/or Pvt. Ltd. Cos. has been seen as an innovative and sustainable method. People from this secluded part of the society too have aspirations to grow and are industrious enough to fulfill all their dreams.
We at PANCHYAJANYA too strongly believe in these dreams and have been providing financial services in the remotest parts of India by partnering with Microfinance Institutions (MFIs). We offer innovative microfinance solutions at competitive interest rates and minimal documentation at their doorstep. We do wholesale funding to MFIs for on-lending and provide guarantees to help MFIs avail funding from other sources.
Our customer-centric processes ensure that we honour the commitment of every micro-borrower by perfectly complementing their aspirations and empower them, to help achieve their dream. After all, self-reliance at the grass root level is the first step towards a self-reliant India.
Access to financial services is a key element in the process of socio-economic empowerment of the financially under-served sections of the society. At PANCHYAJANYA, we support initiatives to enhance access to financial services by bridging gaps wherever there are missing markets, to improve livelihood opportunities and productivity in the country and bring more people into the socio-economic mainstream, thus contributing to the full realisation of India’s vast untapped market.
We believe that existing financial intermediaries like Micro Finance Institutions (MFIs) can play a significant role in enhancing the levels of financial inclusion in the country by reaching out to the ‘last mile’ and thereby sharing the responsibilities of the government and the mainstream financial sector.
The Bank has been engaging with MFIs over the past decade and is one of the key lenders to such institutions. Our engagement with the members has evolved over time, and we now focus on:
Establishing a healthy relationships with select members and Investing in building deeper and concurrent monitoring and control mechanisms to enable healthy growth of the microfinance sector.
Micro Financing Institutions (MFI are registered as Societies as per Societies Registration Act 1860 or state legislation and as Trusts as per Public Trust Act 1920 or Indian Trust Act 1882.Section 25 companies are registered as per the Companies Act (1956) with permission from central Government.)
NBFC (Other legal forms including NBFCs registered as Section 25 companies, for profit NBFCs, Cooperative Banks and Local Area Banks are regulated by the Reserve Bank of India (RBI). Cooperatives are registered as per the State, National and MACS Acts and governed by the State Registrar of Cooperatives.)
PANCHYAJANYA is a microfinance Institute that currently acts as a ‘Business Correspondent’ of ICICI Bank & YES Bank but initially was carrying out operations as a Society which was set up in 2004 ( Under West Bengal Society Registration Act 1961 ). In April 2009, the company took over the microfinance activities and since then it has been extending microloans to the members from the economically challenged sections of the society. These loans will aid poor members in carrying out income generating activities resulting in the improvement of their social conditions. At present, PANCHYAJANYA is operational in four states, namely, West Bengal, Assam, Bihar, and Jharkhand.
PANCHYAJANYA has a mission of alleviating poverty by offering micro-finance services to women, which consequently will be passed on to their families. The organization also aims to facilitate improved earnings, enhanced quality of life, and better management of finances.
PANCHYAJANYA Individual Loan Products
PANCHYAJANYA SHG Loan Products
Panchyajanya Micro-Credit Branch(PMB)/ CSP Eligibility Criteria for Applying Micro-Loans
Currently PANCHYAJANYA also lends through it’s Panchyajanya Micro-Credit Branch (PMB) / CSP. Under this, PMB / CSP with the below-given characteristics are eligible to apply for the microloans on behalf of their members:
- Must have sound knowledge of our system & micro-credit.
- Must have minimum active & regular Customer / Member base of 80.
- Must have minimum monthly transaction of Rs. 2,00,000.
- Must have minimum 22 days System logins in every month.
- Must have a good credit history.
- Should have the ability to take the responsibility of loan disbursment and repayment.
- Location of the PMB / CSP must be in rural or semi-urban areas.
- Must have a legal aggrement with PANCHYAJANYA
- Should not have any defaulter member of previous cycle.
Member Eligibility Criteria for Availing Micro-Loans from PANCHYAJANYA
Currently, PANCHYAJANYA lends only to its members through Individual and Group Lending Program. Under this, member with the below-given characteristics are eligible to avail the microloans:
- Must be aged between 18 years and 53 years
- Should have the ability to work
- Must be married and the husband or guardian should agree to let her join the program
- Should be able to produce at least two Know Your Customer (KYC) documents
- Must be a permanent resident of that area/village
- Should be poor
- Must not be a defaulter of any organisation
- Must have at least 10 transactions in his or her ICICI (I-Sure Pay) account for the last 30 Days.
- Has to be compliant with the eligibility criteria prescribed by the Reserve Bank of India (RBI) and Microfinance Institutions Network (MFIN) such as total indebtedness, household annual income, etc.
Please note that only one member of the family can avail the microloans from PANCHYAJANYA. and CSP & His Family members are not eligible for microloans.
Quantum of Loan
Members can avail microloans of a minimum of Rs.2,000 and a maximum of Rs.20,000 individualy And Rs. 2,000 to 60,000 in SHG Model. The loan amount will be disbursed in Rs.1,000 multiples, depending on the eligibility of the borrower.
General features of PANCHYAJANYA Income Generating Loans
- In the first cycle, a newly joined member receives Rs 2,000
- In the second cycle, a member receives Rs 2,000 – Rs 5,000
- In the third cycle, a member receives Rs 2,000 – Rs 7,000
- In the fourth cycle, a member receives Rs 2,000 – Rs 10,000
- Loan tenure is 24 weeks
- In the fifth cycle, a member receives Rs 2,000 – Rs 15,000
- In the sixth cycle, a member receives Rs 2,000 – Rs 20,000
- Loan tenure is 48 weeks
- After the sixth cycle loan will be disbursed in SHG model with a minimum member of 5.
Loan tenure will is 24 – 96 weeks ( Depends on the loan amount)
Approval of Loans from PANCHYAJANYA
Members can apply for a micro loan from PANCHYAJANYA through Panchyajanya Micro-Credit Branch (PMB ) / CSP when at least 10 transaction has been completed in last 30 days in his or her ICICI (I-Sure) Account. Borrowers who wish to avail PANCHYAJANYA Microfinance loans should not have the total indebtedness exceeding Rs.1 lakh. This excludes any outstanding loans that were taken to meet education and medical expenses of the member’s family. Only borrowers in rural areas whose yearly household income is below Rs.1 lakh and Rs.1.6 lakh in urban and semi-urban areas can avail loans from PANCHYAJANYA. Borrowers who are members of more than one Joint Liability Group (JLG) or Self-Help Group (SHG) cannot avail a micro loan from PANCHYAJANYA. They are also not allowed to borrow from more than two NBFC-MFIs. Panchyajanya Micro-Credit Branch (PMB )/ CSP will initially approve the loan applications after which the credit bureau will verify the details. The loan application will be processed only after at least two KYC documents have been submitted. The loan approval process will involve at least two staff of PANCHYAJANYA and the credit committee of the organization should approve it. PANCHYAJANYA will approve micro loans for almost all types of income generating activities except tobacco business, alcohol business, and other socially prohibited activities.
The loan availed from PANCHYAJANYA will be disbursed through Panchyajanya Micro-Credit Branch (PMB )/ CSP in the member’s ICICI (I-Sure Pay) Account and the disbursement will be completed within 14 working days for the eligible members. The disbursal & repayment of loan is the responsibility of the Panchyajanya Micro-Credit Branch (PMB )/ CSP who should have a good credit history. Post the disbursal of loan, member must be given a copy of the loan agreement which includes the promissory note and loan repayment. Members will be given the loan statement after the loan has been disbursed and entries must be made in the System (MIS) in the vernacular language.
Features of Loans from PANCHYAJANYA
The following features of micro loans from PANCHYAJANYA make it an attractive option for borrowers who wish to use these loans for income generating activities:
- No collateral/security deposit/margin needs to be provided by borrowers of micro loans from PANCHYAJANYA.
- The loan availed can be used by members only for purposes approved by the organization.
- Borrowers have the option to make the repayment on weekly or fortnightly basis.
- After the loan is disbursed, the utilisation of all the loans will be checked in the group meeting in case of SHG Loans.