Microfinance Services: A Boon for Poor in Southern India

Abstract

Despite the phenomenal increase in the physical outreach of formal credit institutions in the past several decades, the rural poor continue to face difficulty in availing credit according to their needs. Credit Institutions have also faced difficulties in dealing effectively with a large number of small borrowers, whose credit needs are small and frequent and their ability to offer collaterals is limited. This led to the development of an alternative credit delivery model that would fulfill the requirements of the poor. It is in this context that micro credit has emerged as the most convenient due to its easy to adapt and understand its rules and regulations. Micro credit encourages poor people to be united and solve their problems through their own collective resources. Self Help Group (SHG) Bank linkage program has shown the fruits of this remarkable concept and now a number of Microfinance Institutions are in the fray to provide credit and other financial services for improving income and living standards of the economically underprivileged. This study has showcased a good range of credit products, suitable to credit needs of the economically underprivileged, provided by various Microfinance Institutions. These institutions are also providing a broad range of financial services such as deposits, loans, payments, money transfers, and insurance to the low-income households and their micro enterprises.