CURRENT AFFAIRS REPORT ON

ROLE OF MICROFINANCE IN INDIA:

ROAD AHEAD

Towards Partial Fulfillment of Requirement

Of

Bachelor of Commerce

Batch 2021-23

SUBMITTED TO: SUBMITTED BY:

PIMRG KIRTI GAUR

MAITRI JAIN
MUSKAN YADAV
RITIKA VERMA

(B.COM HONS IV SEMESTER)

 DECLARATION
We, Kirti Gaur, Maitri Jain, Muskan Yadav and Ritika Verma are students of B. Com
(Honors) IV Semester of Prestige Institute of Management & Research, Gwalior,
hereby declare that the Current Affairs Report entitled “Role of Microfinance in India:
Road ahead” is submitted by us in the line of partial fulfillment of course objectives
for the Bachelor of Commerce.

We assure that this project report is the result of our own efforts and that any other
institute for the award of any degree or diploma has not submitted it.

Date:10/05/2022 Name: Kirti Gaur, Maitri Jain, Muskan

Yadav and Ritika Verma

Place: PIMRG
 CERTIFICATE
This is to certify that, Kirti Gaur, Maitri Jain, Muskan Yadav and Ritika Verma of B. Com
(Honors) IV Semester of Prestige Institute of Management & Research Gwalior, have
successfully completed their Current Affairs Report. They have prepared this report entitled
“Role of Microfinance in India: Road Ahead” under my direct supervision and guidance.

Date: 10/05/2022 Sr. Asst. Prof. Nandan Velankar

Place: PIMRG (Faculty Guide)

 TABLE OF CONTENTS

WHAT IS MICROFINANCE?...........................................................................................................................5
MICROFINANCE IN INDIA.............................................................................................................................8
What Has Been The Microfinance Story In India?....................................................................................9
MICROFINANCE INSTITUTIONS..................................................................................................................11
GOALS OF MICROFINANCE INSTITUTIONS.................................................................................................12
ROLE OF MICROFIANCE IN INDIA...............................................................................................................13
GROUPS ORGANIZED BY MICROFINANCE INSTITUTIONS IN INDIA............................................................15
What is NABARD?..................................................................................................................................18
MAIN GOAL OF FINANCIAL INCLUSION......................................................................................................21
CHALLENGES IN IMPLEMENTING MICROFINANCE IN INDIA......................................................................22
SCHEMES INITIATED BY GOVERNMENT OF INDIA TO IMPLEMENT MICROFINANCE IN THE COUNTRY:
ROAD AHEAD.............................................................................................................................................24
What should be the next steps in implementing microfinance in India?...............................................27
CONCLUSION.............................................................................................................................................28
REFERENCES..............................................................................................................................................29
“We got rid of colonialism, we got rid of slavery, and we got rid of apartheid – everyone thought
each one of them was impossible. Let’s take the next impossible, do it with joy and get it
finished with and create a world free from poverty. Let us create the world of our choice.”
Mohammad Yunus
 WHAT IS MICROFINANCE?
Microfinance, also called microcredit, is a type of banking service provided to
unemployed or low-income individuals or groups who otherwise would have no other
access to financial services.

While institutions participating in the area of microfinance most often provide lending.
many banks offer additional services such as checking and savings accounts as well as
micro-insurance products, and some even provide financial and business education.
The goal of microfinance is to ultimately give impoverished people an opportunity to
become self-sufficient.

Image Source: google

Key Features of Micro Finance

 The borrowers are either low capital businesses, entrepreneurs or individuals from
a low-income background.
 The lending amount is limited i.e., micro loans are granted to the borrowers.
 Microfinance loans do not require any collateral during lending.
 Microfinance lends to small groups of people who cross guarantee other members
of that lending group. Group Lending ensures high repayment levels.
 Microfinance encourages investment and income generation.
 PIONEER OF MICROFINANCE
Microfinance began as a radical experiment, the brainchild of Bangladeshi economist
Mohammed Yunus. In 1976, while teaching at Chittagong University, he surveyed
the nearby slum community of Jobra for opportunities to help the disadvantaged. Over
the course of his trips, Yunus drew unexpected insights that would compel him to
open up Grameen Bank, the first microfinance institution (MFI).

Before the Grameen Bank came into existence, low-income villagers in Jobra had no
opportunity to obtain credit. First of all, they had no means of physically reaching a
conventional bank. Even if they did have affordable transportation, banks would never
make loans to people without assets or a credit history. The only alternative available
to the Jobra villagers was to use local moneylenders, who would charge exorbitant
interest rates.

Image Source: google

Yunus was driven by the conviction that the poor were not fundamentally unworthy of
credit. The people he knew in Jobra managed their households responsibly. Yunus
reasoned that the poor were lacking in resources but not in trustworthiness or financial
sensibility. He believed they would be able and inclined to honor loans, if only given a
reasonable interest rate. This belief lay at the heart of the Grameen Bank’s business
model.

An important part of the Grameen Bank’s revolutionary model has become known as
“solidarity group lending.” Yunus pioneered this innovative concept. He recognized
that dividing a loan among several recipients could reduce transaction costs.
Additionally, collective lending served as a near guarantee that loans would be repaid
on time. Not only were group members enabled to cover, if need be, for each other’s
installments, they would all be penalized if any one of them defaulted. The resulting
social pressures acted as a check against free-riding and delinquency.

This joint distribution method was essentially limited to women, a stipulation created
by Yunus. He felt that women were more reliable, typically, at fulfilling their payment
obligations and cooperating with their peers. Besides sensing that women would
overwhelmingly invest in their families’ wellbeing, Yunus recognized that they faced
greater obstacles to improving their financial circumstances. He envisioned
microfinance as a vehicle for female empowerment, as well as material gains.

Grameen Bank has continued to help marginalized women as it expands throughout

Bangladesh and around the world. In 2006, Yunus won the Nobel Peace Prize for his
pioneering work in microfinance. Yunus has inspired legions of other MFIs with the
fundamental idea that self-ownership can be a route out of poverty. The lesson of
Grameen is that given the right tools, the poor have the capacity to help themselves.
 MICROFINANCE IN INDIA
‘Microfinancing’ was introduced in India in the 1980s as a solution to poverty and to
empower women. Despite its strong potential, the microfinance sector faces
challenges related to accessibility in rural India.

Microfinance is a type of banking service provided to those who have difficulty in

accessing formal financial services. It is targeted at the low-income and unemployed
fraction of the population. The institutions supporting microfinance offer services such
as lending, setting up bank accounts and providing micro-insurance products. In
developing countries such as India, financial services through formal channels do not
meet the demands of the rural poor, so microfinance can help small-scale businesses
flourish by providing greater financial stability.

Image Source: google

The leading cause of the failure of formal banking institutions in India while lending
to the rural poor is the absence of proof of recognized employment or collateral that
can be offered by the poor while applying for loans. The high risk and transaction
costs of small loan savings deposits create difficulty for the banks as well. This leaves
the poor with no alternative but to borrow money from local moneylenders at high-
interest rates.
What Has Been The Microfinance Story In India?

‘Microfinancing’ was introduced in India in the 1980s as a solution to poverty and to

empower women. Despite its strong potential, the microfinance sector faces
challenges related to accessibility in rural India.

The leading cause of the failure of formal banking institutions in India while lending
to the rural poor is the absence of proof of recognized employment or collateral that
can be offered by the poor while applying for loans. The high risk and transaction
costs of small loan savings deposits create difficulty for the banks as well. This leaves
the poor with no alternative but to borrow money from local moneylenders at high-
interest rates.

Image Source: google

In India, the first initiative to introduce microfinance was the Self-Employed

Women’s Association (SEWA) in Gujarat, which established SEWA Bank in 1974.
Since then, this bank has been providing financial services to individuals who wish to
grow their own businesses in rural areas. Self-Employed Women’s Association
(SEWA), trade union based in India that organized women for informal employment
(work outside a traditional employer-employee relationship).
The Self-Employed Women’s Association (SEWA) was founded in 1972 by Indian
lawyer and social activist Ela Bhatt and a small group of other women whose unique
needs as indigent female informal textile workers were not being met by conventional
labour unions. SEWA’s membership eventually grew to include hundreds of
thousands of women in a variety of occupations, castes, and ethnic groups across
India. The union itself became both an organization and a movement for social
change, inspired by Mahatma Gandhi’s principles and situating its efforts at the
intersection of the labour movement, the cooperative movement, and the women’s
movement.

SEWA’s primary goals included full employment and self-reliance of its members.
The union considered local-level organizing by its members to be the primary means
of achieving those goals, which helped alleviate poverty and facilitate development.
As a result, SEWA members were organized locally into workers’ cooperatives,
producers’ groups, rural savings and credit groups, and social security groups.
Although many of the groups were organized by occupation, they also addressed other
issues, including education, housing, health care, child care, and violence against
women.
 MICROFINANCE INSTITUTIONS

The different types of institutions that offer microfinance are:

1. Credit unions
2. Non-governmental organisations
3. Commercial banks

Some government banks also offer microfinance to the eligible categories of

borrowers. Although most microfinance institutions target the eradication of poverty
as their primary motive, some of the new entrants are focused on the sale of more
products to consumers.

Some of the microfinance companies that offer loans to the unbanked and under banked
population in India as are follows:

 Arohan financial banks

 BSS microfinance pvt ltd.
 Cashpor microcredit
 Equitas microfinance pvt ltd
 Aashirvad microfinance pvt ltd
 Bandhan financial services pvt ltd.
 Disha Microfin pvt ltd
 Annapurna microfinance pvt ltd
 Esaf microfinance and investments pvt ltd
 Fusion microfinance pvt ltd
 GOALS OF MICROFINANCE INSTITUTIONS

Microfinance institutions have been gaining popularity in the recent years and are now
considered as effective tools for alleviating poverty. Most MFIs are well-run with
great track records, while others are quite self-sufficient. The primary goals of
microfinance institutions are the following:

1. Transform into a financial institution that assists in the development of communities

that are sustainable.
2. Help in the provision of resources that offer support to the lower sections of the
society. There is special focus on women in this regard, as they have emerged
successful in setting up income generation enterprises.

Image Source: google

3. Evaluate the options available to help eradicate poverty at a faster rate.

4. Mobilise self-employment opportunities for the underprivileged.
5. Empowering rural people by training them in simple skills so that they are capable of
setting up income generation businesses
 ROLE OF MICROFIANCE IN INDIA
The part that microfinance plays in economic development is noteworthy. Some of the
key benefits of MFIs include the following:

 It enables people expand their present opportunities – The income accumulation of

poor households has improved due to the presence of microfinance institutions that
offer funds for their businesses.
 It provides easy access to credit – Microfinance opportunities provide people credit
when it is needed the most. Banks do not usually offer small loans to customers;
MFIs providing microloans bridge this gap.
 It makes future investments possible– Microfinance makes more money available to
the poor sections of the economy. So, apart from financing the basic needs of these
families, MFIs also provide them with credit for constructing better houses,
improving their healthcare facilities, and exploring better business opportunities.

Image Source: google

 It serves the under-financed section of the society – Majority of the microfinance

loans provided by MFIs are offered to women. Unemployed people and those with
 disabilities are also beneficiaries of microfinance. These financing options help
people take control of their lives through the betterment of their living conditions.
 It helps in the generation of employment opportunities – Microfinance institutions
help create jobs in the impoverished communities.
 It inculcates the discipline of saving – When the basic needs of people are met, they
are more inclined to start saving for the future. It is good for people living in
backward areas to inculcate the habit of saving.
 It brings about significant economic gains – When people participate in microfinance
activities, they are more likely to receive better levels of consumption and improved
nutrition. This eventually leads to the growth of the community in terms of economic
value.
 It results in better credit management practices – Microloans are mostly taken by
women borrowers. Statistics prove that female borrowers are less likely to default on
loans. Apart from providing empowerment, microloans also have better repayment
rates as women pose lesser risk to borrowers. This improves the credit management
practices of the community.
 It results in better education – It has been noted that families benefiting from
microloans are more likely to provide better and continued education for their
children. Improvement in the family finances imply that children may not be pulled
out of school for monetary reasons.
GROUPS ORGANIZED BY MICROFINANCE INSTITUTIONS IN
INDIA
There are several types of groups organised by microfinance institutions for offering
credit, insurance, and financial training to the rural population in India:

1. Joint Liability Group (JLG)

This is usually an informal group that consists of 4-10 individuals who seek loans
against mutual guarantee. The loans are usually taken for agricultural purposes or
associated activities. Farmers, rural workers, and tenants fall into this category of
borrowers. Each individual in a JLG is equally responsible for the loan repayment in a
timely manner. This institution does not need any financial administration, as it is
simple in nature.

Image Source: google

 IMPACT OF JOINT LIABILITY GROUP ON SUSTAINABLE LIVELIHOOD AND
SOCIAL CAPITAL PROMOTION: A STUDY IN THE CONTEXT OF BIHAR

Over a decade the initiative of Joint Liability Group (JLG) brought relief to rural poor
through collateral free credit to support and enhance sustainable livelihood practice.
JLGs, an informal group, comprising of 4-10 individual, generally from weaker
section of the society, formed for the purpose of availing loan through mutual
guarantee. Present study attempts to assess the impact of JLG intervention on
sustainable livelihood support and promotion of social capital in the context of East
Champaran district of Bihar, one of the poorest states in India. The study is based on
primary data collected through interview of the JLG members and other stakeholders.
The qualitative and quantitative techniques, used to assess the impact of credit
thorough JLG on livelihood enhancement practice, found that it has significant impact
on improvement in land holding under cultivation, improving livestock and inputs for
agricultural activities. Credit has also played role in empowering these poor people in
decision making process. World Bank’s social capital assessment tool had been used
to determine the extent of accumulation of social capital.

2. Self Help Group (SHG)

A Self-Help Group is a group of individuals with similar socio-economic

backgrounds. These small entrepreneurs come together for a short duration and create
a common fund for their business needs. These groups are classified as non-profit
organisations. The group takes care of the debt recovery. There is no requirement of a
collateral in this kind of group lending. The interest rates are generally low as well.
Several banks have had tie-ups with SHGs with a vision to improve financial inclusion
in the rural parts of the country.
 MICRO CREDIT INNOVATION

NABARD, through its’ Micro Credit Innovations Department has continued its role as
the facilitator and mentor of microfinance initiatives in the country. The overall vision
of the department is to facilitate sustained access to financial services for the
unreached poor in rural areas through various microfinance innovations in a cost
effective and sustainable manner.

What is NABARD?

National Bank for Agriculture and Rural Development or NABARD is the main
regulatory body in the country’s rural banking system and is considered as the peak
development finance institution which is established and owned by the government of
India. This bank aims to provide and regulate credit to the rural areas, which will be a
first step towards enhancing the rural development in the country

Image Source: google

 NABARD's establishment took place on 12 July 1982 as a central regulating body for
agriculture financing and rural section. The government of India established
NABARD under the outlines of the National Bank for Agriculture and Rural
Development Act 1981.

Based on the observations of various research studies and an action research project
carried out by NABARD, the model of ‘SHG-BLP’ has evolved as a cost-effective
mechanism for providing financial services to the unreached and underserved poor
households. What started as a pilot to link around 500 SHGs of poor to the formal
financial institutions during the year 1992-93 has now become the largest
microfinance programme in the world, in terms of the client base and outreach. The
SHGs which follow ‘Panchsutras’ viz.

1. conduct of regular group meetings

2. regular savings within the group
3. internal lending based on the demand of members
4. timely repayment of loan
5. maintenance of proper books of accounts
 Image Source: google

These are considered to be of good quality and over years have proved themselves to
be good customers of Banks.

The NABARD SHG linkage programme is noteworthy in this regard, as several Self-
Help Groups are able to borrow money from banks if they are able to present a track
record of diligent repayments.

3. Regional rural Bank

The Grameen Model was the brainchild of Nobel Laureate Prof. Muhammad Yunus in
Bangladesh in the 1970s. It has inspired the creation of Regional Rural Banks (RRBs)
in India. The primary motive of this system is the end-to-end development of the rural
economy. However, in India, SHGs have been more successful as MFIs when
compared to Grameen Banks.

RRB has set up branches in rural areas, providing loans for the development of
agricultural sector. This is generating employment opportunities in rural areas. It has
encouraged people to save and use the funds in productive manner. RRBs provide
loans to farmers at low cost, thus, protecting the farmers from moneylenders'
exploitation.

Image Source: google

 4. Rural Cooperatives

Rural Cooperatives were established in India at the time of Indian independence. The
resources of poor people were pooled in and financial services were provided from
this fund. However, this system had complex monitoring structures and were
beneficial only to the creditworthy borrowers in rural India. Hence, this system did not
find the success that it sought initially.

The formation of a co-operative society occurs when persons with common economic,
social, and cultural goals come together voluntarily to create an organisation. The
primary goal of this society is to meet the needs of the poor and those living in rural
areas of the country. It is critical to the advancement of settlements.

COOPERATIVE SOCIETIES BENEFITING THE RURAL AREAS: UNDERSTANDING THE

ROLE

The development of rural areas has always been the priority. Rural areas are now
developing at a massive speed and in almost every aspect. Cooperative societies are
playing a great role in the same. To support rural development, a co-operative society
in a rural area follows the idea of mutual aid and self-help. Every member joins a co-
operative society to help others rather than to make a profit. The function of
cooperative societies in rural development will be discussed in this article. Now, let’s
take a moment to know how a cooperative society actually functions.

In the microfinance sector, cooperatives reach significantly more individuals and

families than other financial institutions making them the actors who are truly
responsible for improving access to financial services for all, and thereby increasing
local economic growth and reducing poverty
 MAIN GOAL OF FINANCIAL INCLUSION

Each type of microfinance institution is different from the other in many ways but they
work towards the same goal- financial inclusion. Due to their operational frameworks,
some models have been less successful than others in attaining this objective. In
addition to the above, microfinance institutions can also be categorised into large,
medium and small scale. These institutions differ in terms of geographical reach,
infrastructure, manpower skills availability, funding and lending processes, revenues
and success in operations.

Image Source: google

The journey of financial inclusion in the past two decades has been one of intensive
efforts and incremental experimentation. However, the quantum jump came when
Pradhan Mantri Jan Dhan Yojana (PMJDY) was launched in 2014, which enabled
achievement of the objective of providing bank accounts to adult population in almost
every household. The reach of mobile phones and e-KYC (Know your customer) has
ensured these accounts are accessible to those who have been included in the financial
services milieu. The Reserve Bank of India has been making sustained efforts to
increase the penetration of formal financial services in unbanked areas, while
continuing with its policy of ensuring adequate flow of credit to productive sectors of
the economy and also ensuring the availability of banking services to all sections of
people in the country.
 CHALLENGES IN IMPLEMENTING MICROFINANCE IN
INDIA

There is a need to provide microfinance facilities to cater to India’s large rural

population. The main objectives of microfinance in India should be promoting socio-
economic development at the grassroots level through a community-based approach,
empowering women and increasing the household income. As with implementing any
transformative initiative, running a microfinance programme in rural India comes with
some challenges:

1. Does not reach the deserving poor

The microfinance delivery models fail to focus on people who are below the poverty
level as they are deemed to be risky. There is a bias whilst selecting beneficiaries for
the scheme. To run the programme successfully and to attain higher repayment rates,
the operators of the scheme select economically stable individuals as the programme
beneficiaries. The core poor are too risk-averse to borrow for investing in the future.
They will, therefore, benefit only to a limited extent from the microfinance schemes.

2. Limited spread in the poorer states

The coverage of microfinance programme is low in those states where a large

percentage of the population lives in poverty. States such as Orissa, Bihar,
Chhattisgarh, Jharkhand, Madhya Pradesh and Uttar Pradesh lag behind in
implementing microfinance schemes. The successful distribution of microfinance
programmes depends on the support extended by the respective state governments, the
local culture and practice, and concentration of MFIs in these states.

3. High interest rates

Borrowers are interest-sensitive, so the capacity of borrowing decreases with an

increase in interest rates. Thus, high-interest rates are counterproductive and weaken
the economic status of poor clients. It is also exploitative to charge very high interest
 rates from poor clients. The interest rates do not seem to be well-regulated in
microfinance sector. Some MFIs have regulated interest rates. However, they may
impose transaction costs which increases the burden that comes with borrowing and
makes it less attractive. Whereas the banking sector charge 9-10% annual interest rate,
MFIs may charge 11-24%. However, these rates of interest vary with the lending
conditions and policies of the MFI.

4. Low depth of outreach

The outreach of the programme is expanding but the number of loans taken remains
small. This amount isn’t sufficient to satisfy the financial needs of poor people. The
duration of the loans rarely extends over a year. The insufficient loan size and the
short period of lending available, restrict borrowers from using the loans for
productive purposes. They generally use these small loans to address liquidity issues,
rather than borrowing to invest.

Our concerns should lie on people’s accessibility to microfinance in rural and urban
areas, the regulations that come with it and the provision of basic training for the rural
and urban poor on how to use these loans for productive purposes.
 SCHEMES INITIATED BY GOVERNMENT OF INDIA TO
IMPLEMENT MICROFINANCE IN THE COUNTRY: ROAD
AHEAD

1. Pradhan Mantri Jan Dhan Yojana (PMJDY)

Hon’ble Prime Minister announced Pradhan Mantri Jan Dhan Yojana as the National
Mission on Financial Inclusion in his Independence Day address on 15th August 2014,
to ensure comprehensive financial inclusion of all the households in the country by
providing universal access to banking facilities. Under this, a person not having a
savings account can open an account without the requirement of any minimum
balance and, in case they self-certify that they do not have any of the officially valid
documents required for opening a savings account, they may open a small account.

2. Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY)

The PMJJBY is available to people in the age group of 18 to 50 years having a bank
account who give their consent to join / enable auto-debit. Aadhar is the primary KYC
for the bank account. The life cover of Rs. 2 lakh is for the one-year period stretching
from 1st June to 31st May and is renewable. Risk coverage under this scheme is for
Rs. 2 lakhs in case of death of the insured, due to any reason. The premium is Rs. 330
per annum which is to be auto-debited in one installment from the subscriber’s bank
account as per the option given by him on or before 31st May of each annual coverage
period under the scheme.

3. Pradhan Mantri Suraksha Bima Yojana (PMSBY)

The Scheme is available to people in the age group 18 to 70 years with a bank account
who give their consent to join / enable auto-debit on or before 31st May for the
coverage period 1st June to 31st May on an annual renewal basis. Aadhar would be
the primary KYC for the bank account. The risk coverage under the scheme is Rs. 2
lakhs for accidental death and full disability and Rs. 1 lakh for partial disability. The
 premium of Rs.12 per annum is to be deducted from the account holder’s bank
account through ‘auto-debit’ facility in one installment.

4. Atal Pension Yojana (APY)

APY was launched on 9th May, 2015 by the Prime Minister. APY is open to all saving
bank/post office saving bank account holders in the age group of 18 to 40 years and
the contributions differ, based on pension amount chosen. Subscribers would receive
the guaranteed minimum monthly pension of Rs. 1,000 or Rs. 2,000 or Rs. 3,000 or
Rs. 4,000 or Rs. 5,000 at the age of 60 years. Under APY, the monthly pension would
be available to the subscriber, and after him to his spouse and after their death, the
pension corpus, as accumulated at age 60 of the subscriber, would be returned to the
nominee of the subscriber.

5. Pradhan Mantri Mudra Yojana

The scheme was launched on 8th April 2015. Under the scheme a loan of up to Rs.
50,000 is given under sub-scheme ‘Shishu’; between Rs. 50,000 to 5.0 Lakhs under
sub-scheme ‘Kishore’; and between 5.0 Lakhs to 10.0 Lakhs under sub-scheme
‘Tarun’. Loans taken do not require collaterals. These measures are aimed at
increasing the confidence of young, educated or skilled workers who would now be
able to aspire to become first generation entrepreneurs; existing small businesses, too,
will be able to expand their activates.

6. Stand Up India Scheme

Government of India launched the Stand Up India scheme on 5th April, 2016. The
Scheme facilitates bank loans between Rs.10 lakh and Rs.1 crore to at least one
Scheduled Caste/ Scheduled Tribe borrower and at least one-Woman borrower per
bank branch for setting up greenfield enterprises. This enterprise may be in
manufacturing, services or the trading sector activities allied to agriculture. The
scheme which is being implemented through all Scheduled Commercial Banks is to
benefit at least 2.5 lakh borrowers. The scheme is operational and the loan is being
extended through Scheduled Commercial Banks across the country
7. Pradhan Mantri Vaya Vandana Yojana

The ‘Pradhan Mantri Vaya Vandana Yojana (PMVVY) has been launched by the
Government to protect elderly persons aged 60 years and above against a future fall in
their interest income due to uncertain market conditions, as also to provide social
security during old age. The scheme is implemented through the Life Insurance
Corporation of India (LIC) and open for subscription up to 31st March, 2023

8. Prime Minister’s Employment Generation Programme (PMEGP)

The scheme aims to provide financial assistance to set up self-employment ventures

and generate sustainable employment opportunities in rural as well as urban areas. •
To generate sustainable and continuous employment opportunities to rural and
unemployed youth as well as prospective traditional artisans and thereby halt
occupational migration. Scheme applicable for is any individual, above 18 years of
age can apply

9. Credit Guarantee Scheme for Micro & Small Enterprises (CGTMSE)

Its objective is to encourage first generation entrepreneurs to venture into self-

employment opportunities by facilitating credit guarantee support for collateral free /
third-party guarantee-free loans to the Micro and Small enterprises (MSEs), especially
in the absence of collateral. Scheme applicable for existing Entrepreneurs and
Aspiring Entrepreneur.

10. Scheme of Fund for Regeneration of Traditional Industries (SFURTI)

Its objective is to organize traditional industries and artisans into collectives by

increasing production and value addition to make products competitive. It is to
promote traditional sectors and increase income of artisans providing sustainable
employment. Scheme is applicable for Existing artisans from traditional industries,
Cluster of Artisans in sectors such as Handicraft, Textile, Argo-Processing, Bamboo,
Honey, Coir, Khadi etc.
What should be the next steps in implementing microfinance in
India?

The microfinance programme has witnessed phenomenal growth in India in the last
decade. However, the focus of most of the microfinance service providers has
remained on expanding the outreach of microfinance programme with little attention
to the depth, quality and viability of the financial services. In addition to removing
these problems, there needs to be a proper structure to let microfinance empower rural
India.
 CONCLUSION

Microfinance in India plays a major role in the development of India. It acts as an anti-
poverty vaccine for the people living in rural areas. It aims at assisting communities of
the economically excluded to achieve greater level of asset creation and income
security at the household and community level. The utmost significance of
microfinance in India is that it dispenses the access to the capital to small
entrepreneurs. As it has been discussed above that microfinance in India is providing
loans, insurance, access to savings accounts.

Credit is important to the poor people for maintaining the common imbalance in
between the income and their expenditure. It is also vital to the poor people for the
income generating activities like investing in marginal farms and other small scale
self-employment ventures. Their access to formal banking channels is low due to the
lack of resources a nature of formal credit institutions. Consequently, in India,
Microfinance institutions and self-help groups are leading to other traditional banking
channels as they are catering the need of credit to poor people. It has contributed a lot
in enhancing the quality of life of the poor people.
 REFERENCES

 https://www.researchgate.net
 https://www.findevgateway.org
 https://assets.kpmg
 https://www.rbi.org.in
 https://www.centerforfinancialinclusion.org
 https://www.bridgeindia.org.uk
 https://thelogicalindian.com
 https://financialservices.gov.in
 https://msme.gov.in

THANK YOU