nitinpahuja
Nitin Pahuja
Revolutionary changes are taking place in the microfinance sector at both the national and international level have been tracked. A thorough insight into the future prospects for microfinance as an industry in India tells us providing access to microfinance is considered a precondition for poverty alleviation- financial inclusion. In many developing countries, the vast scale and rate of growth of the informal sector presents a dilemma and a challenge for governments, social partners and the civil society alike.
Financial services for the poor can be a powerful tool for poverty reduction by enhancing the ability of poor people to increase incomes, build assets, and reduce vulnerability in times of economic stress. Microfinance fits into the Indian rights-based approach to poverty reduction and private sector development. The vision of building permanent pro-poor financial systems through donor coordination and harmonisation is clear with the principles behind the development cooperation practices.
Executive Summary
Microfinance as a concept
The microfinance sector is still in its infancy for the simple reason that it has not yet been able to attract large institutional players such as commercial banks from the formal financial system. Microfinance helps to cover the needs of poor households and microenterprises. It is a term used to denote the practice of providing financial services, such as microcredit, microsavings or microinsurance to poor people by helping them to accumulate sufficiently large sums of money; this gives them a wider variety of choices and reduces the risks they face.
As suggested by the name, most transactions in microfinance involve small amounts of money, (usually less than US$100) lent to those people who can manage to make a living out of the small sum of money. These small loans prove to be of great importance especially in a country like India where the number of people below the poverty line is a mind boggling 30 crore.
Indian perspective
Microfinance as a concept has been in existence globally since 1970. In India over the past decade, NABARD’s “SHG-Bank Linkage Program” (the largest microfinance network in the world), the Grameen Bank II and the Consultative Group to Assist the Poor (CGAP) [set up in 1995] have created awareness extensively on microfinancing. These institutes will be able to support their clients' efforts from basic family sustenance to create and evolve business opportunities. Additionally, they offer savings, insurance, remittance services, and personal and business loans, to help clients grow their assets while increasing their incomes.
Find attached the detailed project writeup.
Financial services for the poor can be a powerful tool for poverty reduction by enhancing the ability of poor people to increase incomes, build assets, and reduce vulnerability in times of economic stress. Microfinance fits into the Indian rights-based approach to poverty reduction and private sector development. The vision of building permanent pro-poor financial systems through donor coordination and harmonisation is clear with the principles behind the development cooperation practices.
Executive Summary
Microfinance as a concept
The microfinance sector is still in its infancy for the simple reason that it has not yet been able to attract large institutional players such as commercial banks from the formal financial system. Microfinance helps to cover the needs of poor households and microenterprises. It is a term used to denote the practice of providing financial services, such as microcredit, microsavings or microinsurance to poor people by helping them to accumulate sufficiently large sums of money; this gives them a wider variety of choices and reduces the risks they face.
As suggested by the name, most transactions in microfinance involve small amounts of money, (usually less than US$100) lent to those people who can manage to make a living out of the small sum of money. These small loans prove to be of great importance especially in a country like India where the number of people below the poverty line is a mind boggling 30 crore.
Indian perspective
Microfinance as a concept has been in existence globally since 1970. In India over the past decade, NABARD’s “SHG-Bank Linkage Program” (the largest microfinance network in the world), the Grameen Bank II and the Consultative Group to Assist the Poor (CGAP) [set up in 1995] have created awareness extensively on microfinancing. These institutes will be able to support their clients' efforts from basic family sustenance to create and evolve business opportunities. Additionally, they offer savings, insurance, remittance services, and personal and business loans, to help clients grow their assets while increasing their incomes.
Find attached the detailed project writeup.