Microfinance In Rural India

Abstract-The People of rural India are mainly depending upon agriculture and small business units like fishing, earning through domestic animals, small business units etc. They are not making the agriculture and business profitable because due to the lack of monetary resources. Only few people of rural India are using capital intensive method to cultivate their lands. The most of the rural people are not sustaining in their small business for a long period of time due to insufficient fund available with them. Microfinance in one of the important tool which plays a significant role in poverty elimination and economic development of rural poor. The need therefore, is to share experiences and materials, which will help not only in understanding

The pioneering efforts at this has been made by National Bank for Agriculture and Rural Development (NABARD) which is vested with the task of framing appropriate policy for rural credit, provision of technical assistance banked liquidity support to banks, supervision of rural credit institutions and other economic development initiatives.

INTRODUCTION

Microfinance is defined as, “a type of banking service that is provided to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services”(refer to bibliography). In other words it is provision of financial services such as savings, credit and insurance to individuals that fall below the poverty line. Microfinance therefore is also stated as creation of social value for these individuals by elevating their circumstances and helping them to envision the livelihood opportunities. Through the provision of capital for micro enterprise, savings for risk mitigation and insurance the purpose or the goal for the sustainability of rural developers is achieved. The microfinance programme through SHG (Self Help

Micro-credit is offered without collateral to a group or an individual.

Micro-Savings: These are specific deposit and saving services to allow the individual to save money for the future. This is one of the effective ways in meeting unexpected future expenses.

Micro-Insurance: There is risk involved in this type of microfinance. Access to this type of insurance enables entrepreneurs to concentrate on developing their businesses while mitigating other risks affecting health, property or the ability to work.

Remittances: This is transfer of funds to the people from one place to the other. This service often may involve transferring of funds across borders. It is said depending on the sources of capital, political and economic structure, remittances are relatively steady source of