Finance Project Report on Issue and Success Factors in Micro Financing

ABSTRACT: Microfinance means providing very poor families with very small loans (micro credit) to help them engage in productive activities /small businesses. Over time, microfinance has come to include a broader range of services (credit, savings, insurance, etc.) as we have come to realize that the poor and the very poor who lack access to traditional formal financial institutions require a variety of financial products.

The Eleventh Five Year Plan aims at inclusive growth and faster reduction of poverty. Micro Finance can contribute immensely to the financial inclusion of the poor without which it will be difficult for them to come out of the vicious cycle of poverty. There is a need to strengthen all the available channels of providing credit to the poor such as SHG- Bank Linkage programmes, Micro Finance Institutions, Cooperative Banks, State financial corporations, Regional Rural Banks and Primary Agricultural Credit Societies. The strength of the micro finance industry lies in its informality and flexibility which should be protected and encouraged.

Landlords, local shopkeepers, traders, suppliers and professional money lenders, and relatives are the informal sources of micro-credit for the poor, both in rural and urban areas.

The sector which is still in its infancy faces shortage of experienced consultants/manpower/experts. There is a need to have good quality professionals, trained in best practices in governance for effective corporate governance. A need-based capacity building programme to meet the requirements of all categories of Micro Finance Organisations (MFOs) is essential to bring about sustainability in the sector. Some of the important areas where capacity building is needed are transformation, best practices, interest rate management, delivery management, managing growth, risk mitigation, product designing, market research etc.


Research Objectives

  • Find out the issue of the micro finance
  • Comparative Analysis of Micro-finance Services offered to the poor.
  • How does the client of two main models of microfinance, the SHG and the MFI model, differ?
  • Does the level of indebtedness to moneylenders depend on the type of micro finance model one is client of?

Type of Research- Exploratory Research

Data sources: The research is based on secondary data and the data is collected from various websites, Journals, Magazines, Articles and Research Paper.



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