Micro Finance in India
1. INTRODUCTION.
Microfinance sector has traversed a long journey from micro savings to micro credit and then to micro enterprises and now entered the field of micro insurance, micro remittance and micro pension. This gradual and evolutionary growth process has given a great opportunity to the rural poor in India to reach reasonable economic, social and cultural empowerment, leading to better living standard and quality of life for participating households. Financial institutions in the country continued to play a leading role in the microfinance programme for nearly two decades now. They have joined hands proactively with informal delivery channels to give microfinance sector the necessary momentum. During the current year too, microfinance has registered an impressive expansion at the grass root level.
Since 2006-07, NABARD is compiling and analysing the data on progress made in microfinance sector, based on the returns furnished by Commercial Banks (CBs), Regional Rural Banks (RRBs) and Cooperative Banks operating in the country. The banks operating presently in the formal financial system comprise public sectors CBs (27), private sector CBs (22), RRBs (82), State Coop. Banks (31) and District Central Cooperative Banks (370).
NABARD has been instrumental in facilitating various activities under microfinance sector, involving all possible partners at the ground level in the field. NABARD has been encouraging voluntary agencies, bankers, socially spirited individuals, other formal and informal entities and also government functionaries to promote and nurture SHGs. The focus in this direction has been on training and capacity building of partners, promotional grant assistance to Self Help Promoting Institutions (SHPIs), Revolving Fund Assistance (RFA) to MFIs, equity/ capital support to MFIs to supplement their financial resources and provision of 100 per cent refinance against bank loans provided by various banks for microfinance activities.
2. Progress under Microfinance - Highlights
2.1 Different Models of Microfinance
The data for the 2009-10 have been presented under two models of microfinance involving credit linkage with banks :
(i) SHG - Bank Linkage Model : This model involves the SHGs financed directly by the banks viz., CBs (Public Sector and Private Sector), RRBs and Cooperative Banks.
(ii) MFI - Bank Linkage Model : This model covers financing of Micro Finance Institutions (MFIs) by banking agencies for on-lending to SHGs and other small borrowers covered under microfinance sector.
2.2 Status of Micro-finance
The overall progress under these two models is given in Table -1:
Table : 1- Overall Progress under Micro-finance during the last three years |
6198.71 crore as on 31 March 2010 