Microfinance in India : A Performance Evaluation

In recent years, microfinance in India has emerged as the most suitable and practical alternative to conventional banking in reaching the hitherto unreached poor population. Microfinance enables the poor people to be thrifty and helps them in availing the credit and other financial services for improving their income and living standards. The Self-help Group (SHG)-Bank Linkage Programme was formally launched in 1992 as a flagship programme by National Bank for Agriculture and Rural Development (NABARD) and aptly supported by the Reserve Bank of India (RBI) through its policy support. The programme envisages organisation of the rural poor into SHGs for building their capacities to manage their own finances and then negotiate bank credit on commercial terms. The poor are encouraged to voluntarily come together to save small amounts regularly and extend micro loans among themselves. Once the group attains required maturity of handling larger resources, the bank credit follows. This book explains the concepts associated with microfinance, traces its progress and performance and examines the role of government agencies in its promotion. It also highlights the role of microfinance in the economic empowerment of women and as a tool of financial inclusion. A case study of microfinance in Haryana (a relatively developed state of North India) also forms part of the book.