Scaling-up Access to Finance for India's Rural Poor

This paper discusses ways to improve the financial scenario in rural India, and concludes that the "SHG (Self Help Group)- Bank Linkage", with certain improvements in infrastructure, is the best way.

The author argues that:

• The poor in India have very little access to formal finance;
• There is a strong need for innovative approaches to serve the financial needs of the rural poor.

The author concludes that:

• While microfinance can be a quick way to deliver finance, the strategy should be to "graduate" microfinance clients to formal finance institutions, where they can access standard "individual" loans, possibly on a fully commercial basis;
• Strong efforts should be made to reform the rural finance markets and institutions to improve the efficiency of the sector, and to design services and products appropriate for small clients.