Micro Finance in India- An Analysis

The major concern of Indian economy is to spread the benefits attained through economic growth to all sections of the society. Despite encouraging policies and having a wide network of rural branches in India, a very large number of the poorest of the poor continue to remain outside the field of formal banking system. Microfinance is still an evolving sector in India as compared to many developed countries. Microfinance helps in the socio-economic development of poor and low-income countries of women and men throughout the world. The present paper highlights the origin and growth of microfinance in India. It examines progress and coverage of SHG- Bank Linkage Model and Microfinance Institution Model in India. The study also identifies challenges in the way of microfinance and give recommendations to overcome them. The present study is descriptive and analytical in nature. The study is based on secondary data. The study traces the progress of SHG-Bank Linkage Model and Microfinance Institution Model from 2009-10 to 2011-12. The Indian microfinance sector has made tremendous strides during the last decade. The greatest barrier is that of regional imbalances in client outreach, loan portfolios and distribution of branches among various regions in India. The various challenges need to be addressed and would go a long way in making the Indian microfinance sector more inclusive, vibrant and sustainable. It can be concluded that microfinance has effectively graduated from an experiment to a widely-accepted paradigm of financial inclusion in India.