Browsing by Author "Vaish, Arun Kumar"

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Development of a Credit Scoring Methodology for Assessment of Microfinance Borrowers
(2013) Vaish, Arun Kumar
Since the early national plans policy planners have emphasized on strengthening the newlinelink between improving accesses to financial markets and reducing poverty a stance newlinethat has had influence globally Newer approaches include the partial dereg newlineulating of interest rates new institutional forms for cooperatives that put the emphasis back on newlineintermediating the savings of their members and a nationwide attempt pioneered by newlinenon governmental organizations and now supported by the state to create l newlineinks between commercial banks non governmental organisations NGOs and informal newlinelocal groups Surveys show that informal sector lenders remain a strong presence in newlinerural India and are still able to derive competitive advantage over the formal and semi formal sectors newlineIndia has the largest number of poor in the world Reducing poverty is a key element newlinein our inclusive growth strategy N umerous Schemes for poverty alleviation have not newlinebeen able to deliver benefits commensurate with the investment mad e over years newlineIndebtedness and low employment opportunities are one of the major plausible reasons newlinefor poverty Credit intervention is considered to be an effective tool to eliminate the newlinecurse of poverty and directed lending has taken a centre stage of social lending since nationalisation of banks and creation of regional rural banks NABARD experimented newlinegroup lending methodology in order to improve efficacy of credit which proliferated newlineexponentially Delivering small size of credit to poor in a cost effect newlineive manner is still a challeng Traditionally micro finance institutions MFIs have used subjective scoring the use of defined parameters such as experience in the business net margin of the business newlineprofitability and disposable income to analyze business and credit risk Effectiveness newlineand accuracy of subjective scoring is dependent on experience and skills of credit newlineofficer which limits the growth of lending business newlineIn contrast statistical credit scoring forecasts risk based on quantified characteristics newlinerecorded in a database of loan app.
Perspective of Service Attributes: An empirical study about money lending in rural India
(2011) Kumar, Arya; Bhat, Anil Kumar; Vaish, Arun Kumar
Microfinance has emerged as an important mechanism to reach out financial services, mainly micro credit to the poor. Though there are several players in this domain still the sector is predominantly occupied by public sector banks. Presently most of the directed lending to the poor is being disbursed through group lending method. Since 1969, expansion in bank branches and adoption of technology has improved the delivery mechanism of credit products by the banks; there still exists a wide gap between demand and supply of financial products. Priority sector lending still faces challenge of sustainable recovery performance. Under priority sector lending, field functionaries often cite poor recovery and high cost associated with recovery for their underperformance. At the same time indigenous money lenders have continued their presence in the market. In order to facilitate the process of appraisal, sanction & disbursal of credit by formal financial institutions it is imperative to understand the factors which attract the borrowers to indigenous money lenders. What makes money lender thrive? Is it convenience in getting the loan or any other product or process attribute? Why repayment to indigenous money lenders better? All these questions & more need to be answered so as to enable policy makers & bankers to develop products with the same attributes. In the present paper an attempt has been made to understand the perception of different stake- holders about the repayment performance of indigenous money lenders in India. The different categories of stakeholders have been used in the study are viz. functionaries from Block Development Offices, Public & Private Sector Banks, Cooperative banks, Regional Rural Banks, Microfinance Institutions, and NABARD & Indian Administrative Services. They are either involved in the policy framing, or in implementation of microfinance schemes. Analysis found that product specific attributes play viz. ease of getting loan, promptness in getting loan, availability of repeated loans play most important role in repayment than any other factor. The results provide an insight how these attributes will lead to lesser frequent involuntary recovery measures.
Stakeholders' Perspective of Service Attributes: An Empirical Study about Money Lending in Rural India,
(Indian Journal, 2012-01) Vaish, Arun Kumar; Kumar, Arya; Bhat, Anil Kumar
Microfinance has emerged as an important mechanism to reach out financial services, mainly micro credit to the poor. Though there are several players in this domain still the sector is predominantly occupied by public sector banks. Presently most of the directed lending to the poor is being disbursed through group lending method. Since 1969, expansion in bank branches and adoption of technology has improved the delivery mechanism of credit products by the banks; there still exists a wide gap between demand and supply of financial products. Priority sector lending still faces challenge of sustainable recovery performance. Under priority sector lending, field functionaries often cite poor recovery and high cost associated with recovery for their underperformance. At the same time indigenous money lenders have continued their presence in the market. In order to facilitate the process of appraisal, sanction & disbursal of credit by formal financial institutions it is imperative to understand the factors which attract the borrowers to indigenous money lenders. What makes money lender thrive? Is it convenience in getting the loan or any other product or process attribute? Why repayment to indigenous money lenders better? All these questions & more need to be answered so as to enable policy makers & bankers to develop products with the same attributes. In the present paper an attempt has been made to understand the perception of different stake- holders about the repayment performance of indigenous money lenders in India. The different categories of stakeholders have been used in the study are viz. functionaries from Block Development Offices, Public & Private Sector Banks, Cooperative banks, Regional Rural Banks, Microfinance Institutions, and NABARD & Indian Administrative Services. They are either involved in the policy framing, or in implementation of microfinance schemes. Analysis found that product specific attributes play viz. ease of getting loan, promptness in getting loan, availability of repeated loans play most important role in repayment than any other factor. The results provide an insight how these attributes will lead to lesser frequent involuntary recovery measures.