Importance Of Micro Finance

INTRODUCTION

The two fundamental goals of any developing nation are rural development and poverty eradication. The major concern of any government today is to cut the ever expanding poverty rate, empowering women and enabling the most estranged sections of the society through a systematic and organized support to all poverty alleviation programmes. Poverty does not fit into a single sector and hence is a multi-sectoral problem. Hence, keeping in view the paucity of funds and lack of subsidies with the poor people, the need of the hour is to find an overall innovative approach to help the needy people to enable them to embrace entrepreneurial activities, small or large.

Hence, Micro finance has emerged as a major ray of hope for the millions

In India micro finance has been an impetus to rural development, women empowerment and generation of wealth by providing small-scale savings, credit, insurance and other financial aids to the low-income and poor households. Micro finance has proved to be very useful in increasing the standard of living of these people.

Over the last two decades the concept of micro financing and self-employment activities in rustic areas has increased considerably. It relies neither on donation/charity nor on subsidy. It is fundamentally a rotational financing which is done to boost the poor to ‘save for the future and utilize those assets during the time of need.’ Theoretically, micro finance which also called as micro credit or micro lending means making procurements for smaller working capital loans to the self-employed or self-employment seeking

It can be referred to as a small scale financial service (including savings, credit, insurance, business services and technical assistance) provided to poor people (rural or urban) who operate small or micro enterprises, provide services, work for wages or commissions and other individuals and groups working at local levels.

Robinson defined micro finance as, “small scale financial services provided to the people who work in agriculture, fishing and herding; who work for wages or commission; and other individuals and groups at the local levels of developing countries both rural and urban”

NABARD has defined micro finance as “provision of thrift, credit and other financial services and products of very small amount to the poor in rural, semi-urban and urban areas for enabling them to raise their income levels, and to improve living