Annexure-I- Cover Page

Title of the Project

A Study on Microfinance and its role in poverty alleviation across the world

Submitted by

Name: MANUEL ROHAN ROZARIO

Roll: 0313
Room: 12
DEPARTMENT OF COMMERCE(MORNING)
Supervised by

Name of the supervisor: Prof. AYAN BANERJEE

Month & Year of Submission: April 2022
Annexure – II

St. Xavier’s College (Autonomous)

Department of Commerce

PROJECT COMPLETION AND PLAGIARISM VERIFICATION CERTIFICATE

Student Name: MANUEL ROHAN ROZARIO

Room no: 12 Roll no: 0313

Title of Dissertation: A STUDY ON MICROFINANCE AND IT’S ROLE IN POVERTY

ALLEVIATION ACROSS THE WORLD

The above dissertation was scanned using iThenticate for similarity detection and the similarity index is as
follows:

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The Dissertation may be considered for submission.

Name of the supervisor: AYAN BANERJEE

Signature: ………………………………………………….

Date: ……………………………
Annexure- III

Student’s Declaration
I hereby declare that the Project Work with the Title
A STUDY ON MICROFINANCE AND IT’S ROLE IN POVERTY ALLEVIATION

Submitted by me for the partial fulfilment of the degree of B.Com. (Honours) at St. Xavier’s
College(Autonomous), Kolkata is my original work and has not been submitted earlier to any other
Institution for the fulfilment of the requirement for any other course of study.

I also declare that no chapter of the manuscript in whole or in part has been incorporated in this report from
any earlier work done by others or by me. However, extracts of any literature which has been used for this
report has been duly acknowledged providing details of such literature in the references.

Signature: ……………………………
Name: MANUEL ROHAN ROZARIO

Address: 75 DR. JIBAN RATAN DHAR ROAD, ARABINDA SARANI, KOL: 700028

Room no: 12
Roll no: 0313
Place: Kolkata, India

Date:
 Acknowledgement

Successful completion of any type of Research requires help from a number of persons. I really wish to
express my gratitude towards all those people enabling me to complete this project on
” A Study on Microfinance and it’s role in Poverty Alleviation across the world.”

I convey my sincere gratitude to Father Rev. Joseph Kulandai, Vice Principal; Dr Amitava Roy, Dean
and
my Research Project Supervisor Prof. Ayan Banerjee, Assistant Professor, St Xavier’s College, Kolkata.
Without their kind direction and proper guidance this project would not have been successful. I would like to
extend my thanks and gratitude to my parents who always encourage me in pursuit of excellence.
Chapter Topics Page No

1 INTRODUCTION 6-7
1.1 Background 7-8
1.2 Literature Review 8
1.3 Methodology 9
1.4 Objectives 9

2 CONCEPTUAL 9
2.1 FRAMEWORK 9
2.2 Rationale of Study 10
To understand Microfinance,
we need to understand Poverty.

3 ANALYSIS AND FINDINGS 11

3.1 Evidence of Microfinance 11-12
3.2 Microfinance is an important 12-13
tool in Poverty Alleviation
3.3 Microfinance Delivery models 14-17
in India
3.4 Research Findings 17-18

4 Conclusion 18-19

5 References 19

INDEX
Chapter 1- INTRODUCTION

Poverty has been defined as a crisis of the considerable percentage of society earning little or no money,
with limited consumption to maintain a satisfactory level of habitation and having too few investments and
properties to safeguard themselves from unforeseeable difficulties. Employment creation along with skill
development, and the occasional redistribution of financial assets from the wealthy to the poor were among
the tactics used to alleviate poverty. Many of these development finance organizations were unable to
sustain their lending programs due to their reliance on the whims of the government and donors, as well as
bad investment decisions and low repayment rates.

Microfinance - the provision of financial services dealing with very small deposits and loans – and, in
particular, microcredit – became highly praised as an efficient means of poverty alleviation during the
1990s. Microfinance refers to very small loans and deposits. This study looks at microfinance and financial
institutions, as well as their relevance to development initiatives.

Despite a decade of strong economic expansion, poverty remains a serious issue in many countries in Asia-
Pacific. According to the World Bank and other reliable sources, there are still roughly 800 million people
who are "completely impoverished." Recent reversals in important ASEAN and other Asian economies'
growth records may foreshadow an increase in both the headcount index and the absolute number of poor
households. Poverty is not a static state. If nothing is done to contain and destroy it, it will expand even
more.

Continuing efforts to reduce population growth in poor and populous countries such as China, India,
Indonesia, Bangladesh, and Pakistan will help to slow the rate of increase in the absolute number of poor,
but without the creation of sustainable livelihoods that allow poor households to rise above and stay above
the poverty line, the world's poor households will continue to multiply inexorably. Microfinance is a critical
component in developing sustainable livelihoods that are productive enough to provide disadvantaged
households with a path out of poverty based on self-help and mutual support for self-sufficiency.

Features of Microfinance

 It is an important aspect of rural finance because it deals with small loans and mostly serves
disadvantaged people.
 It is considered as one of the most profitable and justified strategies for alleviating poverty.
 It motivates women to engage in digital activities.
 It encourages people to take advantage of self-employment opportunities.
 It is more customer-focused than profit-driven.
 It's designed to help small business owners and producers.
 Because they are simple and God-fearing, poor borrowers rarely default on their loans.
Microcredit is the providing of credit to low-income people. Microcredit and microfinance are not the same
thing. Micro-credit refers to a small sum of money borrowed through a bank or other officially recognized
organisation, whereas micro-finance refers to a broad variety of services for the poor, including loans,
savings, insurance, transfer services, and micro-credit loans.

Microcredit is the act of making a loan, while microfinance is the act of providing financial services to the
same borrowers, such as savings accounts and insurance policies. Evidence suggests that microfinance has a
beneficial influence on poverty reduction in relation to the first six of the seven Millennium Development
goals.

Microfinance in general, and microfinance for the poor in particular, is a new field with little established
theory to guide us. Only fifty microfinance institutions operate in the Pacific area, accounting for more than
three-quarters of all microfinance activity, and none of them existed prior to 1970. The vast majority of
microfinance firms have been in operation for less than ten years. In such a short time, the main
microfinance providers have challenged traditional banking theory, particularly in terms of the requirement
for collateralized loans, the ability of the poor to repay their loans in full and on time, and the usefulness of
focusing on female clients.

Keywords: Microfinance, Microcredit, Poverty Alleviation, Microfinance Institution.

1.1– BACKGROUND

The goal of this study project is to determine how and in what ways Microfinance has aided in reaching the
poorest members of society and assisting them in their upward mobility. Many of the microfinance
discoveries can be observed through modern economic breakthroughs, including the economics of
information, contract theory, and the mechanism design method. Other findings indicate areas where more
research is needed, particularly concerning the opportunities and constraints for impoverished people to save
and measure societal consequences. For their efforts to alleviate poverty in Bangladesh, the Grameen Bank
and its founder Muhammed Yunus were awarded the Noble Peace Prize in 2006. The Grameen Bank gives
small loans to the poorest of the poor, giving them the opportunity to break free from poverty and make a
decent living. Funding to poor villagers carries a significant credit risk since the poor are considered
uncreditworthy, meaning they have neither the skills nor competence needed to put borrowed funds to the
greatest possible use. As a result, major banks have mostly denied impoverished people a way toward loans.
The Grameen Bank has defied conventional knowledge on lending to the impoverished for decades. It has
done so in two ways: first, it has demonstrated that disadvantaged households can benefit from expanded
credit access, and that credit provision can be an effective poverty reduction method. Second, lending to the
poor does not always result in huge losses for financial institutions, as has been proved. However, it's
understandable to wonder how the Grameen Bank thrived where so many others had failed. Most
economists believe the solution rests in the Grameen Bank's unique group loan contracts, which allowed the
bank to secure repayment without requiring security from the impoverished.

1.2- LITERATURE REVIEW

Following are the findings and conclusions stated from the literature review of great
scholars

 Micro-Finance and Poverty: An Introduction, Shahidur R. Khandker,2003: Khandker uses rural

household’s data over the period from Bangladesh to answer questions about microfinance. The data
show that microfinance helps the poorest people and has a long-term influence on poverty reduction
among individuals. It also has a positive knock-on effect, alleviating poverty in rural areas. However,
the effect is stronger in lowering extreme poverty rather than severe poverty.
 Micro-finance and Poverty Alleviation: Kamal Vata, 2003: Small quantities of loan, combined
with financial discipline, guarantee that loans be issued more frequently in microfinance, allowing
credit needs to be met for a range of objectives and at fewer time intervals. As a result, microfinance
can play an important role in expanding credit access in rural India.
 Kumar Vipin el at. 2015: According to the findings, SHGs and MFIs play a critical role in the
delivery of microfinance services, which drives the development of India's poor and low-income
people. However, numerous study findings in various regions of the country have revealed slow
development of SHG members graduating, poor quality of team effectiveness, dropout of members
from groups, and other issues that must be considered while building the route map for the next part
of the SHG programme.
 Mahanta el at. 2012: According to the findings, microcredit financing to the poor is not the solution
to the problem, but rather the start of a new age. It has the potential to generate miracles in the
domain of poverty alleviation if handled correctly. It must, however, be combined with capacity-
building programmes. The government cannot shirk its responsibilities for the social and economic
growth of the poor and oppressed. Due to a lack of unique expertise with microcredit clients, the
capital is being used for non-productive asset spending and acquisition.
 Robinson, Marguirite. 2001. Microfinance Revolution: Low-cost, long-term financing for the
poor. According to the report, there is a high demand for financial services, including credit and
savings, among the developing world's economically poor. These financial services assist low-
income people in increasing productivity, smoothing revenue flow, and lowering consumption costs
in order to expand and diversify their microbusinesses and boost their incomes.
1.3- METHODOLOGY

The research is both exploratory and descriptive in nature. The information for this study was gathered from
a variety of sources. In order to evaluate the performance of microfinance organizations across the world,
relevant data on loans given, loans outstanding, customer outreach, assets, and other factors were gathered
from the NABARD report, The Bharat Microfinance Report, The Global Microfinance Market Reports and
other related sources. The study's inferences were derived using simple statistical tools such as averages,
percentages, and so on.

1.4- OBJECTIVES

 Evidence of Microfinance.
 Is Microfinance an important tool for Poverty Alleviation.
 To understand the concepts and delivery models of microfinance in India.

Chapter 2- CONCEPTUAL FRAMEWORK

The Case Studies and the analysis of the data presented are solid foundations for the belief that Microfinance
for the Poor offers a proven alternate strategy to the paternalism of government welfare or private charity in
India. Microfinance gives poor people access to resources in ways that enable them to identify their own
livelihood projects, create sustainable sources of income and provide self-employment for themselves and
their children and mobilize underemployed local resources for the sustained benefit of even the poorest
microfinance participants and local residents.

2.1- RATIONALE OF THE STUDY

At least in India, no functional methodology for analyzing financial success and thus maintaining
microfinance institutions appears to exist. The lack of specific legislation governing the operation and
management of microfinance institutions exacerbates the problem. The lack of a regulatory framework for
microfinance institutions' financial disclosures exacerbates the problem. The purpose of this research is to
investigate the importance of microfinance and to evaluate the performance of microfinance organizations
around the world. It becomes significant because it is important that these institutions function effectively,
given that they utilise marginal and scarce capital and the intended beneficiaries are society's most
marginalised citizens. MFIs must be able to financially support themselves in order to continue pursuing
their lofty goals, which requires strong financial performance.
2.2 – TO UNDERSTAND MICROFINANCE, WE NEED TO UNDERSTAND WHAT
IS POVERTY
Poverty is a state of economic deprivation in which people lack access to vital commodities for human
subsistence, such as money and material items. Poverty is thus a multifaceted concept with social and
economic, and political dimensions. There are several approaches to identify the type of poverty based on
the above factors:

 Absolute Poverty: Extreme poverty, often known as abject poverty, is defined by a lack of fundamental
necessities such as food, clean water, health, housing, education, and knowledge. People who live in
absolute poverty struggle to survive and see a huge number of children die from preventable diseases
such as malaria, cholera, and infections caused by contaminated water. In industrialized countries,
absolute poverty is uncommon.
 Relative Poverty: It is described from a social standpoint as a living level in comparison to the
economic standards of the surrounding population. It's a metric for measuring income inequality. For
example, if a family cannot afford vacations, and Christmas presents for children, or sending their
children to college, they are considered poor.
 Situational Poverty: It is a sort of poverty that occurs as a result of a traumatic event such as a natural
disaster, job loss, or significant health problems. As poverty is the result of an unhappy situation, people
can help themselves even with tiny amounts of assistance.
 Generational Poverty: It is passed down through the generations to individuals and communities. This
concept is difficult since those who are stuck in its cause and unable to employ the tools required to
escape have no way out.
 Rural Poverty: It occurs in rural areas with populations of less than 50,000 people. It is a location with
less job opportunities, less access to services, less support for people with disabilities, and less access to
high-quality education. People prefer to rely on farming and other menial labour accessible in the area to
make ends meet.
Chapter 3- ANALYSIS AND FINDINGS

3.1- EVIDENCE OF MICROFINANCE

Microfinance has extended across five continents and countless nations since the founding of the Grameen
Bank. The Grameen Bank has been duplicated in countries such as Bolivia, China, Ethiopia, India,
Malaysia, the Philippines, Sri Lanka, Tanzania, Thailand, the United States, and Vietnam. The microfinance
information exchange market (MIX) releases financial data for 973 MFIs in 105 countries. Some
Microfinance Institutions have started to look for general and foreign funding, allowing them to increase
their operating capital and extend their operations. The figure below delivers a look at the dispersion of
Microfinance Institutions by region. MFIs have used their innovations and improvements in lending and
deposit collection since they are more knowledgeable about the microfinance sector. SafeSave, based in
Dhaka, Bangladesh; is one of the most well-known instances, which works on the principle that making
frequent little deposits will keep you from overspending. To keep transaction costs low, SafeSave engages
low-wage personnel from the collection regions which are typically urban neighbourhoods to meet with
customers on a daily basis. SafeSave makes it easy for families to save by coming to them; by hiring people
from the local region, cost of training and wages are kept low. SafeSave has acquired over 7,000 customers
in six years because of this effective methodology both for bank and the individual.

The development of international investment in MFIs is a relatively new occurrence in microfinance. Many
professional investors are seeing microfinance as a worthwhile investment possibility as more MFIs achieve
good returns. The publication of Standard & Poor's (S&P) study on MFI rating methodology in June 2007
was one of the most significant events for MFIs. S&P will be able to provide a better signal to prospective
buyers about the integrity of MFI investments by using a standard methodology.
3.2- MICROFINANCE IS AN IMPORTANT TOOL IN POVERTY ALLEVIATION

Microfinance began as a means of combating poverty, and while it continues to do so, numerous institutions
have worked to distinguish between the "marginally poor" and the "extremely poor." According to the
World Bank, 1.1 billion people lived on less than $1 per day in 2001, and another 2.7 billion lived on less
than $2 per day. Morduch (1999) examines two representative microfinance users, one of each of the
previous section poverty groups, to try to address this question. The first client is a participant in a
subsidised microfinance programme who earns only half of the poverty line on a monthly basis. The second
client is a participant in a fiscally sustainable programme that, as a result, charges higher interest rates. To
ensure repayment at the higher rate, the second debtor is chosen to be relatively impoverished, with earnings
of 90% of the poverty threshold.  Using the widely acknowledged "squared poverty gap" (Foster, Greer, and
Thorbecke, 1984) measurement, Morduch says that a $1 increase in income for the very poor borrower has a
five-fold greater impact than the same dollar for the moderately poor borrower. This basic example would
suggest that MFIs should prioritize the lowest borrowers when it comes to poverty alleviation, thought this
situation is not the case all the time. MFIs are progressively serving only the lowest of the poor as they
aspire to become financially self-sufficient. This is a fundamental difference between Grameen and Bolivia's
Banco Sol: the latter's primary purpose is to make a profit, with poverty reduction coming in second. Banco
Sol, predictably, costs a higher rate of interest, doesn't quite depend on state subsidies, and ended 2006 with
a rate of return of 22.8 percent. This seeming contradiction between financial independence and poverty
reduction also points to a different issue. When does a successful MFI start to resemble a traditional bank? If
the MFI is effective in serving low-income clients, such clients should be able to use their loans to get out of
debt. The Grameen Bank has worked out how to make this contradiction work in their favour, and they're
now employing economies of scale to develop an economically self-sufficient bank without raising interest
rates. The Grameen Bank decided in 1995 to cease asking donors for cash and instead depend on
accumulated assets to keep the bank solvent. Thanks to more than two decades of profitable borrowers,
Grameen has been able to gradually build up savings deposits to the point where it is now self-sustaining,
dependent on the quantity of monies provided by members. In a nutshell, the prosperous people who were
below poverty level are now financing new customers. This is a significant step, especially since
Armendáriz de Aghion and Morduch (2005) approximate that Grameen received $175 million in incentives
between 1985 and 1996, including both direct and "soft" donations like soft loans and implicit incentives
through equity holdings, and delayed loan loss provisions.
3.3- MICROFINANCE DELIVERY MODELS IN INDIA

Discussions about the whole world would be a waste if we don’t ponder on the resources and facilities of the
Microfinance Institutions in our nation. In India, the lack of banking and credit facilities for impoverished
part of the society has long been a major source of concern. The ministry and the Reserve Bank of
India have taken a series of efforts in the past, including nationalizing banks, prescribing priority sector
lending criteria, and offering concessional interest rates to the poor. However, it was apparent that more
direct measures were needed to handle impoverished people's credit requirements. In answer to this crisis,
the Microfinance movement began in India in the early 1990s with the creation of the SHG bank linkage
programme. In India, there are primarily two models for delivering microfinance:

SHG – Bank Linkage Programme (SBLP): An SHG is a small group of 10-20 persons from the same
rural or urban poor community that urge individuals to save and utilize their earnings to satisfy their credit
needs. The group is democratically organized, with members electing their own leaders. SHGs are defined
as groups of people who belong to the same community or society and share a shared economic purpose.
The informal SHGs are credit-linked with formal financial institutions in this paradigm. In terms of the
number of borrowers and outstanding loans, the SHG-Bank Linkage Model has emerged as the most
popular. This concept is adaptable, provides independence, and allows members of the group to save and
borrow according to their needs. The SHG-BLM is well suited to the Indian setting due to its extensive rural
bank branch network. In India, the microfinance movement began with the establishment of the SHG Bank
Linkage Programme (SHG BLP). The programme allows SHGs to function as a go-between for banks as
well as the rural poor, decreasing transaction fees both for banks and rural customers. Bank personnel,
NGOs, and governmental organizations provide the funding, and the impoverished are organized into SHGs
by bank staff, NGOs, and government agencies. SHGs are given loans under this scheme using three
different methodologies:

 Model I: Banks Form and Finance SHGs: Banks form and nurture the organizations, open their
savings accounts to provide them with loans.
 Model II: Agencies Form SHGs apart from banks, although with direct bank financing: In this
model, NGOs and other official microfinance agencies assist in the formation, formation, and nurturing
of SHGs, as well as training members in thrift and credit management. SHGs receive loans straight from
banks.
 Model III: Bank-Financed SHGs with other Agencies that act as Financial Intermediaries: In
regard to group formation, NGOs are responsible for financial intermediation. In regions where the legal
banking system is constricted, NGOs are encouraged to form groups and contact a suitable bank for bulk
financing assistance. This is the method used by a large number of NGOs with limited funding.

Microfinance Institutions (MFI): The Microfinance model has received popularity in India in recent years.
The MFI model is used throughout the world, however, the SHG-BLM model is only used in India. In the
MFI model, MFIs borrow funds from financial companies, donors, and banks in order to lend to groups or
individuals. Individuals and groups, such as SHGs, can get financial help from these MFIs. These companies
employ the Joint Liability Group (JLG) model to make loans. A JLG is an informal organisation of five to
10 persons who gather together with the goal of securing bank loans in consideration for a mutual guarantee,
either individually or in a group setting. MFIs in India include trusts established under the Indian Trust Act
of 1882/Public Trust Act of 1920, societies established under the Societies Registration Act of 1860,
cooperatives established under the Mutually Aided Cooperative Societies Acts of the States, and nonbanking
financial companies (NBFCs) established under Section 25 of the Companies Act of 1956 or NBFCs
registered with the Reserve Bank. These MFIs are distributed across the country due to the different
registered authorities.

The table shows how far the MFI-Bank Linkages programme has progressed. During the 2012-13 fiscal
year, the percentage of MFIs seeking bank loans fell compared to the previous year. During the 2013-14
fiscal year, the percentage of MFIs seeking bank loans climbed by 28% over the previous year. However,
the number of MFIs seeking bank loans increased significantly between 2015-16 and 2016-17 compared to
the previous year. It went up from 9.8 percent to 257.6 percent.
This figure shows the overall market growth of the SHG Bank-linkages and MFI models in India across the
Financial Years in India.

Figure 1 depicts the rural-urban dispersion of MFI borrowers. Microfinance in India was formerly thought to
be primarily a rural phenomena. In 2013, 67 percent of clients were from rural areas, which fell to 56
percent in 2014 and finally to 33 percent in 2015. The proportion of rural clientele climbed slightly to 38
percent the following year, in 2016. For the first time, the number of urban clients outnumbers the number
of rural clients. However, in the following year, 2017, there was a notable improvement in the proportion of
rural clients, which grew to 61%. Because of the absence of six SFBs, the trend from rural to urban in 2017
is the inverse of the trend in 2016. A key finding from this research shows that small-scale microfinance
institutions are rural centric.
The success of microfinance institutions in 2016 and 2017 was summarised in this table. The table illustrates
that client outreach decreased by 26% in 2017 compared to 2016. The proportion of women's outreach, on
the other hand, fell from 97 percent to 96 percent. The overall outstanding portfolio has fallen by around
27% from Rs. 63,853 crore to Rs. 46,842 crore in 2017 over 2016, however the aggregate loan per client has
increased by 11.60%. In 2016, income-generating loans accounted for 94% of total loans, however this
figure dropped to 85% in 2017. Over this time, measures linked to overall financial structure, such as return
on equity and return on assets, as well as the capital adequacy ratio, have risen. Indian MFIs' average OSS
increased from 113 percent in 2016 to 114 percent in 2017. Operational self-sufficiency refers to an MFI's
ability to cover all of its operating and economic costs from its operating income. In addition, the
profitability has decreased from being10% in 2016 down to being 8.08 percent in 2017. Non-performing
assets climbed from 0.15 percent to 0.69 percent over this time.

3.4 - RESEARCH FINDINGS

• The number of Micro-finance Institutions has been gradually increasing, with the top 100 MFIs adding 26
percent to their client base per year. MFIs are actively expanding into the worldwide market and face
problems such as adopting common rating procedures, avoiding foreign currency and country risk, and
achieving the high volume required for an international offering.

• Overall financial structure metrics such as Return on Assets and Return on Equity, as well as the capital
adequacy ratio, have improved over time. Indian MFIs' average OSS increased from 113 percent in 2016 to
114 percent in 2017. The ability of an MFI to pay all of its operating and economic costs from its operating
profit is referred to as operational self-sufficiency. Furthermore, the profit margin dropped from being 10%
in 2016 down to 8.08 percent in 2017. During this time, non-performing assets increased from 0.15
percentage to 0.69 percentage.
• SafeSave, based in Dhaka, Bangladesh, is one of the most well-known instances, which works on the
principle that making frequent little deposits will keep you from overspending. SafeSave makes it simple for
households to save money by employing people from the surrounding area, which keeps training expenses
and wages low. Thanks to this effective methodology both for bank and the person, SafeSave has amassed
over 7,000 members in just six years.

• In the year 1995, Mr Yunus' orchestrated Grameen Bank, made the decision to stop asking for funds from
contributors and instead depend on accumulated contributions to maintain the bank viable. Owing to more
than twenty years of successful borrowers, Grameen has been able to gradually build up deposit accounts to
the point where it is now self-sustaining, dependent on the quantity of monies provided by members. In a
nutshell, the prosperous people who were below poverty line are now financing new customers. This is a
huge step, particularly since Armendáriz de Aghion and Morduch (2005) approximate that Grameen
received $175 million in incentives between 1985 and 1996, including both direct and "soft" donations like
soft loans and implicit incentives through shareholdings, and delayed loan loss provisions.

• Banks' overall loans to MFIs grew in 2012-13, 2013-14, 2014-15, and 2015-16, compared to the preceding
year. It climbed by 50.6, 31.2, 47.7, and 36.9%, respectively. Banks' total loans to MFIs fell by 7.2 percent
in 2016-17 compared to the previous year.

• The amount of money owed to MFIs increased every year after that, compared to the preceding year. In
2015-16 and 2016-17, it climbed by 13.7 and 14.3%, respectively, over the previous year. The fresh loan as
a percentage of total loans outstanding has climbed every year since the preceding year.

Chapter 4 – CONCLUSION

Muhammad Yunus' goal of offering credit to the needy has reached a worldwide level since he was awarded
the Nobel Peace Prize in 2006. Microfinance is not a panacea for poverty alleviation, but it is a tool that has
proven to be both effective and adaptive as a result of determined practitioners, a wealth of theoretical study,
and a spike in demand for both international and individual investment. MFIs have been able to successfully
lend to persons who have been previously neglected by commercial banks due to a lack of collateral and
credit scores, thanks to advances in group lending and dynamic incentives. The impoverished have retaliated
in kind, repaying their loans at high rates. MFIs have continued to innovate as they have grown and
expanded their client base, offering personal loans, savings alternatives, and life insurance, as well as
exploring new kinds of finance in national and international markets. Microfinance has spread across five
continents and thousands of nations, but its performance in the United States has just been hazy, as lenders
battle with the higher transaction costs of issuing loans and starting microbusinesses. As more Microfinance
institutions get self-sufficient and their customer base expands, all people concerned in poverty relief will be
forced to look for new ways to innovate. Microfinance remains a viable strategy for socioeconomic
development and poverty eradication in India and around the world for the time being. The influx of
investment funds from global markets will keep driving microfinance toward Yunus's objective of a
poverty-free world, with more accountability from institutions and stronger grading criteria.

Chapter 5 – REFERENCES

NABARD, status of Microfinance Report in India 2020-2021

https://www.nabard.org/auth/writereaddata/tender/SoMFI-2020-21.pdf

Jonathan Morduch; Analysis of the Effects of Microfinance on Poverty Reduction

https://pdf.wri.org/ref/morduch_02_analysis_effects.pdf

Microfinance and Poverty Alleviation; Kamal Vatta

https://www.researchgate.net/profile/Kamal-Vatta-2/publication/
236867424_Microfinance_and_Poverty_Alleviation/links/02e7e519b73984b96a000000/Microfinance-and-
Poverty-Alleviation.pdf

Swope, Tessie (2010) "Microfinance and Poverty Alleviation," Rollins Undergraduate Research

https://scholarship.rollins.edu/rurj/vol2/iss1/9

Microfinance and the business of poverty reduction: Critical perspectives from rural
Bangladesh; Subhabrata Banerjee, Laurel Jackson.

https://journals.sagepub.com/doi/full/10.1177/0018726716640865

IFI Report 2021.

https://www.indiaspend.com/uploads/2021/12/19/IFI_Report_2021.pdf

http://www.indiamicrofinance.com

http://www.rbi.org.in