Microfinance 1.pdf - Middle-East Journal of Scientific Research 15(2 191-199 2013 ISSN 1990-9233 IDOSI Publications 2013 DOI

Microfinance 1.pdf - Middle-East Journal of Scientific...

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Middle-East Journal of Scientific Research 15 (2): 191-199, 2013ISSN 1990-9233© IDOSI Publications, 2013DOI: 10.5829/idosi.mejsr.2013.15.2.2306Corresponding Author: Sibghatullah Nasir, Department of Commerce, AMU, Aligarh, India.191Microfinance in India: Contemporary Issues and ChallengesSibghatullah NasirDepartment of Commerce, AMU, Aligarh, IndiaAbstract:Microfinance refers to small savings, credit and insurance services extended to socially andeconomically disadvantaged segments of society. It is emerging as a powerful tool for poverty alleviation inIndia. This working paper tries to outline the prevailing condition of the Microfinance in India in the light ofits emergence till now. The prospect of Micro-Finance is dominated by SHGs (Self Help Groups) - Banks linkageProgram. Its main aim is to provide a cost effective mechanism for providing financial services to the poor.Recently Union Rural Development Minister Jairam Ramesh wanted the help of SHGs for the establishment ofDRDO designed bio-toilets in rural areas. This paper discovers the prevailing gap in functioning of MFIs suchas practices in credit delivery, lack of product diversification, customer overlapping and duplications,consumption and individual loan demand with lack of mitigation measures, less thrust on enterprise loans,collection of savings/loans and highest interest rate existing in micro finance sector. All these are clearsyndromes, which tell us that the situation is moving without any direction. Finally paper concludes withpracticable suggestions to overcome the issues and challenges associated with microfinance in India.Key words: MicrofinanceSHGs MFIs NABARDINTRODUCTIONnumber of the poor continued to remain outside the foldMicro Finance may be defined as "provision of thrift,the wide network of the organized banking system deepcredit and other financial services and products of veryinto rural areas. Market and the government both failed tosmall amounts to the poor in rural, semi urban or urbanprovide credit access to the poor. In fact the failure ofareas, for enabling them to raise their income levels andinstitutional initiatives of rural credit and to theimprove living standards" [1]. At present, a large part ofweaknesses of the exploitative informal system of creditmicro finance activity is confined to credit only. Womengave birth to Microfinance institutions. No doubt,constitute a vast majority of users of micro-credit andmicrofinance has been successful in providing creditsavings services.access to the poor. But in recent times the role ofAccordingto the United Nations, microfinancemicrofinance has become controversial, with variousinstitutions can be broadly defined as provider ofsections raising objections and criticisms in this regard.
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