Microfinance in India

Microfinance sector has traversed a long journey from micro savings to micro credit and then to micro enterprises and now entered the field of micro insurance, micro remittance and micro pension. This gradual and evolutionary growth process has given a great opportunity to the rural poor in India to attain reasonable

Economic, social and cultural empowerment, leading to better living standard and quality of life for participating households. Financial institutions in the country continued to play a leading role in the microfinance programme for nearly two decades now. They have joined hands proactively with informal delivery channels to give microfinance sector the necessary momentum. During the current year too, microfinance has registered an impressive expansion at the grass root level.

The banks’ operating, presently, in the formal financial system comprises Public Sector CBs (27), Private Sector CBs (22), RRBs (82), State Cooperative Banks (31) and District Central Cooperative Banks (370). Most of the banks participating in the process of microfinance have reported the progress made under the programme.

Many SHGs come under Swarnjayanti Gram Swarojgar Yojna (SGSY) and exclusive women groups. In addition, bulk lending is provided by Banks and Financial Institutions to Micro Finance Institutions (MFIs) for on lending to groups and individuals have also been provided. Organizations such as NABARD have been instrumental in facilitating various activities under microfinance sector, involving all possible partners at the ground level in the field. NABARD has been encouraging voluntary agencies, bankers, socially spirited individuals, other formal and informal entities and also government functionaries to promote and nurture SHGs. The focus in this direction has been on training and capacity building of partners, promotional grant assistance to Self Help Promoting MFIs to supplement their financial resources and provision of 100 per cent refinance against bank loans provided by various banks for microfinance activities. Financial support and promotional efforts also play vital role towards development of the microfinance sector.