Details of Mirco Finance in India

Microfinance is the provision of financial services, including loans, savings, and insurance, to low-income individuals or micro-entrepreneurs who lack access to traditional banking services. The development of microfinance in India can be traced back to the 1970s and 1980s, when a number of NGOs and community-based organizations began experimenting with microcredit programs.

In the 1990s, the Reserve Bank of India (RBI) began to regulate microfinance institutions (MFIs) and provide them with support in the form of refinancing facilities. This led to the growth of MFIs and the establishment of new ones, including several large-scale MFIs such as SKS Microfinance and Bandhan Bank.

One of the key turning points in the development of microfinance in India was the establishment of Self-Help Groups (SHGs) in the 1990s. These groups, which consist of around 10-20 women, were initially created to provide a platform for women to come together and discuss issues related to their lives. However, many SHGs also began to provide microcredit to their members, often with the support of NGOs or MFIs.

The success of SHGs led to the creation of government-sponsored programs such as the Swarnajayanti Gram Swarozgar Yojana (SGSY) and the National Rural Livelihood Mission (NRLM), which aimed to promote SHGs and provide them with access to credit and other financial services.

The microfinance industry in India has faced some challenges, particularly with regards to issues of over-indebtedness and high interest rates. However, overall, the development of microfinance has been a positive force in India, helping to promote financial inclusion and support the livelihoods of millions of low-income individuals and micro-entrepreneurs.