Micro Finance in Sustainable Development: A Descriptive Study on Indian Experience

Abstract

Micro-Finance in India is emerging as an effective instrument for poverty allevi- ation, women empowerment and sustainable development. In India, Non- Governmental Organization (NGO) led micro credit is proved as an effective and financially viable alternative to address rural poverty through the provision of cred- it without collateral, unleashing human creativity and endeavor of the poor people. Micro finance institutions are operating through banks linkage program aimed at providing a cost effective mechanism for providing financial services to the ‘unreached poor’. Banks lend micro-credit through Self-Help Groups (SHGs) and to local Micro-Finance Institutions (MFIs) based on the philosophy of peer pressure and group savings as collateral substitute. In India, the micro-Finance concept has been successful in not only designing financial products meeting needs of the rural poor, but also in strengthening collective self-help capacities of the poor at the local level, leading to their empowerment. At macro level, the self help group is a useful instrument for savings mobilization and enhancing access to credit for the rural, unreached poor for their productive investment. In this paper an attempt has been made to describe how micro credit is effective and financial viable method of addressing sustainable rural development through provision of micro credit to rural poor for productive activities.