ROLE OF MICRO FINANCE AS AN ANTI POVERTY VACCINE FOR RURAL INDIA

Dr. Debasish Biswas Assistant Professor in MBA, Vidyasagar University E-mail: debasish762010@yahoo.com & Sajijul Islam MBA (final year student), Vidyasagar University E-mail: sajijul.vu@gmail.com

Introduction Microfinance is the provision of financial services to low-income clients, including consumers and the selfemployed, who traditionally lack access to banking and related services. More broadly, it is a movement whose object is a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers. Those who promote microfinance generally believe that such access will help poor people out of poverty.

Objectives of the Study

The focal objectives of our study are as follows: To analyze the growth of microfinance sector developed in India and potential for the microfinance institutions, NGOs, SHGs in the market. To analyze bank loan disbursed to SHGs in rural market. To analyze the savings of Self-Help Groups with Banks. To analyze bank loan outstanding against SHGs in rural market.

Methodology
Data Collection: This is a descriptive research paper based on secondary data. Data have been collected through books and various websites and publications of recent research papers available in different websites and magazines.

Table - I showing Savings of Self Help Groups with Banks (Rs in Lakhs)
AGENCY Commercial Banks Amount (2011) 423006.42 Amount (2012) 415298.04 % of Growth -1.82

Regional Rural Banks

Co-operative Banks Total

135084.19
143539.67 701630.28

130013.93
109829.49 655141.46

-3.75
-23.48 -6.62

From the above table it may be observed that the savings of SHGs with all the banks had decreased by 6.62% as on 31st March 2012. It varies from as (-) 1.82% with commercial banks to as low as (-) 23.48% with Co-operative banks.

Savings of Self Help Groups with Banks

450000 400000 350000 300000 250000 200000 150000 100000 50000 0 Commercial Banks Regional Rural Banks Co-operative Banks 2011 2012

Table - II showing Bank loan disbursed to SHG (Rs in lakhs)

AGENCY Commercial Banks Amount (2011) 972455.27 Amount (2012) 994204.49 % of Growth 2.24

Regional Rural Banks

Co-operative Banks Total

162556.33
319761.59 1454773.19

502605.15
156667.23 1653476

209.19
-51 13.66

From the above table it may be observed that Regional Rural banks had lead in disbursement of loans to SHGs during 2011-2012 with 209.19%. Also Commercial Banks had increased by 2.24 %, which is so little comparing to the Regional Rural banks. But this is also observed that Co-operative Banks had decreased by 51 %. In total, i.e., in the case of all banks it is observed that the savings of SHGs with all the banks had increased by 13.66% as on 31st March 2012.

Bank loan disbursed to SHG

1000000 900000 800000 700000 600000 500000 400000 300000 200000 100000 0 Commercial Banks Regional Rural Banks Co-operative Banks 2011 2012

Table - III showing Bank Loan outstanding against SHGs (Rs in Lakhs)
AGENCY Commercial Banks Regional Rural Banks Co-operative Banks Total Amount (2011) 2188325.67 190785.65 743005.23 3122116.55 Amount (2012) 2581028 861357.81 191613.51 3634000.18 % of Growth 17.95 351.48 -74.21 16.4

In the case of 2012, increase & decrease of Loan disbursed and loan outstanding is same way, i.e., Regional Rural banks had lead in disbursement of loans to SHGs during 2011-2012 with 351.48 %. Also Commercial Banks had increased by 17.95 %, which is so little comparing to the Regional Rural banks. But this is also observed that Co-operative Banks had decreased by 74.21% . In total, i.e., in the case of all banks it is observed that the savings of SHGs with all the banks had increased by 16.4 % as on 31st March 2012.

Bank Loan outstanding against

3000000

2500000

2000000

1500000

2011 2012

1000000

500000

0 Commercial Banks Regional Rural Banks Co-operative Banks

Success Factors of Micro-Finance in India

Over the last ten years, successful experiences in providing finance to small entrepreneur and producers demonstrate that poor people, when given access to responsive and timely financial services at market rates, repay their loans and use the proceeds to increase their income and assets. This is not surprising since the only realistic alternative for them is to borrow from informal market at an interest much higher than market rates. Community banks, NGOs and grass root savings and credit groups around the world have shown that these microenterprise loans can be profitable for borrowers and for the lenders, making microfinance one of the most effective poverty reducing strategies.

Findings
1. Considerable gap between demand and supply for all financial services and majority of poor are excluded from financial services [Source: Status of Micro Finance in India 2010-11 (NABARD)]. 2. Savings of SHGs has decreased by 6.62 % in the year 2011-2012. The decreased deposits in banks indicate non - changing trends in rural savings, where the farmers are not able to retain liquidity in his assets in this year. 3. Regional Rural Bankshad lead in disbursement of loans to SHGs during 2011-2012 with 209.19 %followed by Commercial banks with a share of 2.24% butCo-operative Banks with a share of (-) 51 %. 4. Bankers feel that it is risky to finance poor peoples because of their creditworthiness. 5. Regional Rural Banks had the maximum share of outstanding bank loan to SHGs with a share of 351.48 % followed by Commercial banks with a share of 17.95% 6. Outstanding bank loan to SHGs are due to high transaction costs

Conclusion

From above discussion, it is clear that micro financing programme of NABARD through SHG is working very effectively. The potential for growing microfinance institutions in India is very high. In 2012, the performance of Regional Rural Banks was strongly high but the performance of commercial bank is not very sound. On the contrary, the performance of cooperative bank has been reduced over the years. There is an urgent and crying need for decentralization of the programmes by strengthening the Panchayat raj institutions as poverty is not merely economic deprivation but also social marginalization that affects the poor community in the country very most.

The goal of poverty alleviation programme should aim merely increasing the income level of individual, household or group but mainstreaming marginalized in the development process of the country. The country cannot claim economic growth when a section of the people are marginalized to the periphery of the society. The rapid economic growth process should accelerate the access to services like education and health services for all, especially the marginalized citizens.

REFERENCE

Chakrabarti, Rajesh (2005), The Indian Microfinance Experience Accomplishments and Challenges, http://ssrn.com/abstract=649854 Gupta, M.S. 2008. Micro Finance through Self Help Groups: An emerging Horizon for Rural Development, Indian Journal of Commerce, 61(3): 36-47. http://www.nabard.org http://www.indiamicrofinance.com. www.ifmr.ac.in www.google.com www.microfinanceinsight.com www.investopedia.com www.books.google.com www.seepnetwork.org www.forbes.com

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