Microfinance Institutions In India – A Comparative Study of Developments and Challenges Faced by Mfi’s

Abstract

The planning process in India is centered on the premises of the tricledown theory which emphasizes that benefits of development shall filter down to all sectors generating equality and empowerment . Microfinance  refers to small savings ,credit  an insurance services extended to economically disadvantaged segments of society. It is emerging as a powerful tool for poverty allivation in India. This working paper tries to outline the prevailing condition of the microfinance in India in the light of its emergence till now. The prospect of microfinance is dominated by SHGS (self help groups) banks linkage programmes .Its main aim is to provide a cost effective mechanism for providing financial services to the poor. This paper discovers the prevailing gap in functioning of MFI’S such as practice in credit delivery  ,lack of product  diversification ,customer overlapping and duplications, consumption and indivisual loan demand with lack of mitigation measures, less thrust on enterprise loans ,collection of savings, loans and highest interest rates existing in microfinance sector. All this clear syndromes  which tell us that the situation is moving without any direction. This paper finally concludes with practicable suggestions to overcome the issues and challenges associated with microfinance in india.

KEY-WORDS -  Microfinance; SHGS; MFI’S; NABARD; SIDBI