Disadvantages Of Grameen Bank Model

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In terms of Models, MFIs can be classified as lenders to groups or as lenders to individuals. In India, MFIs usually adopt the group based lending models, which are of two types:
(i) The self-help group (SHG) model and
(ii) (ii) The joint liability group (JLG) model.
Under the SHG model, MFI lends the loans to a group of 10 - 20 women as a whole. Under the SHG - bank linkage model, an NGO promotes a group and gets banks to extend loans to the group. Under the joint liability models, loans are extended to, and recovered from, each member of the group. The most popular JLG models are Grameen Bank model and the Activist for Social Alternatives (ASA) model. Most of the leading MFIs in India follow a hybrid of the group models.

Exhibit 3 MFIs …show more content…

When I analyzed data from multiple reports of MFIN on consideration of data which covers three quarters before demonetization and two after demonetization.
My examination uncovers serious negative effects of demonetisation. The year-on-year development of number of customers connected enrolled an abatement of 2% over the past quarter (pre-demonetisation period). The credit sum dispensed the three months finished 30 December 2016 diminished by 16% from a year sooner. The aggregate number of credits dispensed fell by 26% in the quarter finished 30 December 2016 from the first three months. The normal advance sum dispensed per account amid the quarter remained at Rs20,981, lower than that in the former quarter (Rs21,469). In FY16-17, the normal advance sum dispensed per account additionally decreased to Rs17,779 from Rs17,812 in the earlier year. These patterns recommend that the MFIs enlisted a decrease in the quantity of customers, add up to credits dispensed, and normal advance dispensed per account in the post-demonetisation period contrasted with seventy five percent in the pre-demonetisation

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