Performance of Micro Finance In India – An Analytical Review

Abstract

The term micro finance refers to the supply of loans, savings and other basic financial services to the poor. As the financial services of micro finance usually involve small amounts of money, small loans, small savings etc., the term micro finance helps to differentiate these services from those which formal banks provide. The concept of micro finance was coined for over-coming the existing constraints and providing adequate credit to the poor by following a single procedure. The system of micro finance has been viewed as a powerful tool for uplifting the economic conditions of the asset-less poor through group approach with special emphasis on empowering women. Objectives To review the historical back ground of Micro Finance in the country To examine the progress of SHGs through bank linkage programme To assess progress of SHGs through bank agency wise. To evolve a package of measures for making Micro Finance effective in the country Micro finance through SHGs benefits the poorest and has sustained impact on poverty reduction. It can smooth consumption levels and significantly reduce the need to sell assets to meet basic needs. Credit allows the poor to increase their income and diversity earning opportunities. Micro finance no doubt, has positive impact on chronic poverty. However, there is a need to improve the process of empowerment. It is also felt necessary to improve the strength of social capital formation of the SHGs so as to make them sustainable in the long run and significant contributors to the growing economy.