David Lemuel E. Garcia

10564721      BS-IM

ICICI Bank: Innovations in Finance

1. What is ICICI Bank's innovation?

            - They provide insights on how forms banking can convert the poor into customers, at the same time empowering the poor.

2. What is special about RBI's pilot project with NABARD in 1991?

            - They purveyed micro credit to the rural poor by linking selfhelp groups with banks.

3. According to Mahajan, why are the transaction costs of savings in formal institutions as high as 10% for the rural poor?

            - Because the small average size of transactions and distance of the branches from the villages.

4. What are some of the problems of MFIs in India?

            - Their primary focus which is the access to credit became the root of most of MFIs problems.

5. What are the two innovative BOP models of the ICICI?

            - Direct access, bank-led model and indirect channels partnership model.S

6. What is the connection between Grameen Bank and Bank of Madura?

            - The bank of Madura felt that what the Grameen Bank did in Bangladesh would probably be replicated in India.

7. Describe ICICI's three-tier system. Discuss why it is three-tiered.

            - A hierarchy of people was part of this system wherein there is a project manager, coordinator, and the promoter. The work of the project manager was the work on the banking field while the coordinators are the SGH people that coordinate with the other tiers and lastly, the promoters are the ones on the field.

8. What are the 3 essential steps in the SHG process? Comment on why each step is necessary.

            -Learn to save. Learn to lend what you have. Learn to borrow responsibly.

Because the SHG is oriented toward building new disciplines and capabilities. Collective responsibility and group pressure act as social collateral.

9. Discuss the NABARD checklist for SHG's. Comment on why each item on the checklist is necessary.

“Is the group size between 15 and 20 members?” 

            - Because the more the merrier meaning a debt can be easily paid by a group of people rather than a single entity.

“Are all members considered very poor?”

            - The status should be in a fair level for discrimination to be reduced.

            “Was there a fixed amount of savings collected each month?”

                        - A fixed amount was needed to ensure a value of payment to be received at the end of the month.

 “Is there more than 20% literacy?”

                        - there should be atleast someone who is literate and knows how to read and write.

“Have they used their savings for internal lending purposes?”

            - ICICI is the one who’s responsible for the lending purposes.

“Have the members kept a high level of attendance?”

            - Attendance is a must.

10. What is the impact of microlending in a household according to a NABARD study?

            - The NABARD research concluded that SHG participation had significant impact on various aspects of confidence, communication, and decision making. One of the most important objectives for the SHG program is to improve the assertiveness of the SHG members, which NABARD measured in a survey published in their series on microfinance.”

11. Discuss the possible implementation of a smart-card based payment system? Would it work? Why?

- Smart-card would be an easier way to transact money and innovation has its own way of going to our environment so it isn’t impossible to be implemented. Would it work? Well, for me, I really don’t know, but basing it on India and their background, I don’t think it’ll be easy for them to adapt to such kind of technology.

12. Discuss the quote: "Banking with the poorer has undergone a paradigm shift. It is no longer viewed as a mere social obligation. It is financially viable as well". Do you think this quote can be applied in the Philppines? Discuss.

- Yes I think so. Why? Banking here in the Philippines for the poor would work if there would be no racial discrimination. The problem arises when people think that a poor person could never be into a bank because he/she doesn’t have a money to place in a bank either.