Microfinance Horizon

Author: Satyajit Roy

Abstract:

These days, microfinance has become an important institution and mechanism of credit delivery, particularly for the poor and the deprived. There have been a number of studies undertaken in India and other developing countries that have brought out the success of various micro finance programmes in alleviating rural poverty, promoting holistic development of individuals, communities and developing small enterprises. The ultimate recognition of the viability, suitability and efficiency of microfinance as an agent and institution of development has recently come about, because of the pioneering work undertaken by Prof. Yunus of Bangaladesh.

Microfinance and more specifically the credit element in it, is basically undertaken and promoted by various Microfinance Promoting Institutions (MFPIs). These institutions can be Non Govt organizations (NGOs), Self Help Group (SHGs) and other social groups. The importance of the microfinance programmes and the success of the MFPIs in various developing countries, get prominence, because of persistent market and government failures in the sphere of rural development in general and rural credit in particular. This very success also negates the age-old perception and belief of most of the formal sector financial institutions that the “poor are not bankable.”

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