A Study on Microfinance in India

Abstract

In a country like India where 70 percent of its population lives in rural area and 60 percent depend on agriculture
(according to the World Bank reports), micro-finance can play a vital role in providing financial services to the poor and lowincome
individuals. Microfinance is a source of finance to the poor segments of society. It includes loans, savings, credit,
insurance services, money transfer and other basic financial services to the economically weaker section of society. Delivery
mechanism incorporates the systems that can be used to ensure that micro finance products reach remote area and poor. It is
considered as an effective tool for eliminating poverty in India. It provides credit and other financial services of small amount to
the economically disadvantaged segment of society in urban as well as rural areas. Micro finance institutions include N.G.Os,
Credit Unions, N.B.F.Cs. Cooperatives and banks. In India, the future of microfinance is largely depending upon the self-help
groups (S.H.G.). The emphasis of present paper is to study the performance and role of microfinance institutions in the
development of India.