Paper
Micro Finance in India
How can microfinance in India become vibrant, significant and sustainable?
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10 pages
This paper provides an overview of the microfinance scene in India. The paper:
- States that microfinance refers to "small savings, credit and insurance services extended to socially and economically disadvantaged segments of society";
- Examines the demand for microfinance services in India, looking separately at the demand for microcredit, savings and insurance services;
- Explores the supply of microfinance services, describing:
- Efforts by the Government of India (GOI) to provide microfinance services through the formal financial sector,
- The extensive expansion of the banking network and the emphasis on lending to small borrowers,
- Problems such as cumbersome procedures, high transaction costs, etc,
- The unmet demand for savings services,
- The lack of awareness about insurance services amongst the poor.
- Mainstream MFIs, such as borrower-unfriendly products and services, inflexibility and delays, etc;
- Alternative MFIs, such as inappropriate legal forms, lack of commercial orientation, lack of proper governance and accountability, etc.
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