India today is a powerful emerging nation after China. India's developments and achievements have bagged worldwide recognition and support. While the country is in this phase of transition, a much bigger picture seems to have been evaded from the limelight - the poor and the vulnerable.

When the elite and the powerful in our country are in the ratrace to overtake each other in terms of wealth and power a huge section of the society struggles to survive in the harsh reality of the social sector which prevails in India even today.. Just like the basic necessities, finance also plays a pertinent role for these underprivileged section. Because without adequate finance to back their dreams, it would have been almost impossible for them to step into the India of the future..

Hence came the idea of MICRO FINANCE. Taking note of the fact that our social sector do not have the access to organised sources of finance, like the banks in addition to the extensive paperwork they have to deal with, the securities and documents to be submitted, micro finance today can be seen as a solution to the issue of poverty!

The idea of micro financial institutions came from Bangladesh, pioneered by Mohammed Yunus, for which he was awarded the nobel prize because this led to the success of the institutuion for reaching out to the last unit of any economy not possible through banks and has directly contributed to the uplift of the poor, especially rural women.

IN India, micro finance institutions have been seen as partnering with self help groups in micro finance in india and a major way through which the country could provide financial inclusion. In recent times these institutions have caught the attention of the govt because at the rate at which they have penetrated into the economy, extending credit to numerous people.

 But even micro finance institutions are not without its drawbacks. They provide credit to the poor but at a high rate of interest, just a little lower than those charged by the money lenders. Hence their main target is to earn maximum profit in an a way the banks have'nt been able to.

These developments have forged the government to rethink about this model of finance and putting certain regulations for them. Social sector is one of the most important sectors of the economy and the most vulnerable, so reaching out to them to take them into the mainstream of development must be the primary motive of the government, because only then will alround transformation happen leading to overall prosperity.

Therefore micro finance institutions would require to undergo a makeover, and their complementary and compatibility role with the banks should be explored to make them an effective and suitable institution which caters to the need of the people of india!


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