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Micro-finance in the India: the changing face of micro-credit Schemes

Rajat Wanchoo

MPRA Paper from University Library of Munich, Germany

Abstract: Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro-Finance scene is dominated by Self Help Groups (SHGs) - Banks linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the 'unreached poor'. In the Indian context terms like "small and marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly define micro-finance customers. Research across the globe has shown that, over time, microfinance clients increase their income and assets, increase the number of years of schooling their children receive, and improve the health and nutrition of their families A more refined model of micro-credit delivery has evolved lately, which emphasizes the combined delivery of financial services along with technical assistance, and agricultural business development services. When compared to the wider SHG bank linkage movement in India, private MFIs have had limited outreach. However, we have seen a recent trend of larger microfinance institutions transforming into Non-Bank Financial Institutions (NBFCs). This changing face of microfinance in India appears to be positive in terms of the ability of microfinance to attract more funds and therefore increase outreach. In overall terms an organizational structure will help them achieve more transparence and efficiency

Keywords: Microfinance; Microcredit; India (search for similar items in EconPapers)
JEL-codes: D02 (search for similar items in EconPapers)
Date: 2007-06-10
New Economics Papers: this item is included in nep-cwa, nep-dev and nep-mfd
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