| INDIA-PRESENT TRENDS | | | | goods and under utilization of labour with scarce |
| India’s present economic status reveals the | | | | capital and poor financial resources. If these |
| following profile: | | | | enterprises are used to produce consumer goods by |
| Gross Domestic Product of $ 445 Billion | | | | giving opportunities for the fuller utilization of available |
| 4th largest economy in terms of Purchasing Power | | | | labour and mobilization of microfinance inflation can be |
| Parity (PPP), with a GNP of US$ 1.8 Billion | | | | checked to a considerate extent. |
| Sixth fastest growing economy, projected to be | | | | 5. Microfinance would be the best suited for better |
| 7-15% larger than Japan’s by 2010 | | | | utilization of local resources and help to reduce |
| Strong agriculture sector accounting for nearly 25% | | | | poverty with result of achieving self sufficiency. |
| of national output and 15% of exports, with self | | | | N.NARAYANASAMY (2005) explained that the |
| sufficiency in all important crops except oilseeds | | | | average saving per group is Rs.28000 which is higher |
| Diverse industrial base with self reliance in all core | | | | than state average of Rs. 25000. The average |
| industries and a wide range of engineering products, | | | | savings per member increased from Ts.28to Rs.45 |
| but domestically weak in electronic hardware | | | | over a period. |
| technology | | | | 6. Socialistic pattern of society requires a better |
| Robust services sector accounting for 49% of | | | | utilization of income and wealth. Increase in |
| national product, and growing by 7% annually | | | | employment opportunity among the rural and urban |
| Mature financial sector and capital market with over | | | | masses through micro finance lead to an increase in |
| 9000 listed companies and market capitalization | | | | their purchasing power and maximization of utility. |
| equivalent to US $ 2 trillion, with the Banking and | | | | The decentralized economic structure can pave the |
| finance sector growing by 7.5% | | | | way for a socialistic pattern of society. Marquerite |
| CONCEPTOF MICRO FINANCE: | | | | Robinson (2001) illustrate the point “Credit |
| Microfinance is the supply of loans, savings, and other | | | | subsidies to economically active poor could make |
| basic financial services to the poor. People living in | | | | good use of commercial credit present them from |
| poverty, like everyone else, need a diverse range of | | | | rationed loan successful micro finance is also being |
| financial instruments to run their businesses, build | | | | related to achievement of millennium development |
| assets, stabilize consumption, and shield themselves | | | | goals but the challenge as per Martin Greedily (2005) |
| against risks. Financial services needed by the poor | | | | is the challenge for the industry is to manage scaling |
| include working capital loans, consumer credit, and | | | | up without losing sight of its social purposes”. |
| savings, pensions, insurance, and money transfer | | | | 7. Low capital cost and location advantages would |
| services. | | | | play a continuing and healthy role in economic |
| Role of bank finance to socially and economically | | | | development. Provision of financial assistance would |
| marginalized people through SHGs has the following | | | | provide further stimulation to productive efficiency by |
| advantages. | | | | lowering the transaction costs through institutional |
| 1. India is today suffering from mass poverty which | | | | specialization and innovation in delivery system; they |
| is a consequence of unemployment and the result of | | | | will be able to operate profitability in markets |
| income and wealth disparity. NAGAYYA (2000) | | | | characterized by very small transaction sizes and less |
| reported that the Association for social | | | | affluent clients. |
| advancements in Bangladesh, society for helping and | | | | 8. Micro finance helps to raise the standard of |
| Awakening Rural poor through Education (SHARE) in | | | | living of the marginalized income groups of all |
| India, centre for youth and social Development | | | | communities. NALLAKABEER (2005) mentioned that |
| (CYSD) in South Asia and Bangladesh, Rural | | | | microfinance has positive and significant effect on |
| Development committee consultative group to assist | | | | educational status of female children rather than male |
| the poorest, professional assistance development | | | | children when compared loans to men 1% increase in |
| action for self employed women association and | | | | loans to women increased the probability of school |
| credit development forum are focusing their financial | | | | enrolment by 1.9% for boys and 2.4% for girls while |
| attention to the income and employment generation | | | | the same 1% increase in credit to male increased the |
| of the poor with livelihood support. | | | | boys enrolment only by 3.1%, but had no effect on |
| 2 . Micro enterprises required light capital as they | | | | girls. The overall enrolment rate is 6% and girls |
| do not need correctly machinery technical knowledge | | | | schooling by 8%. Himachal Pradesh, Kerala, Assam, |
| and the services of the technicians. The time gap | | | | Rajasthan, West Bengal and Maharastra formed an |
| between the flow of income and employment | | | | intermediate group with ratios within one standard |
| generation is relatively very short. Micro enterprises | | | | deviation of the mean with 94, 85, 82, 65, 61, and 56 |
| required small investment ranging between Rs.2000 | | | | household participating in SHGs in every 1000 |
| to Rs.10000. HILARY STANDING (1985), stated that | | | | household respectively.India’s achievement is |
| women are quite proportionately found in the least | | | | halving the population of poor by 2015 as well as |
| skilled, lowest paid job and they considered | | | | achieving a broad based economic growth on a |
| secondary labour market and their wage is defined | | | | successful poverty alleviation strategy. |
| as secondary wage. | | | | Conclusion: |
| 3. Savings of people remain idle because of | | | | From the above it is felt that, Poor people need a |
| lack of proper financial services and awareness about | | | | variety of financial services, not just loans. It is a |
| saving mobilization among the people. Proper | | | | powerful tool to fight poverty.further, Interest rate |
| mobilization of saving and utilization of bank finance | | | | ceilings making it harder for poor people to get credit. |
| can be possible if micro enterprises are regionally | | | | The role of government is to enable financial |
| established. Mark. M. Pitt noticed that 90% of | | | | services, not to provide them. Donor funds should |
| women clients mobilized their own saving for | | | | complement private capital, not compete with it. The |
| investment initially. | | | | key bottleneck is the shortage of strong institutions |
| 4. Micro enterprises augment production of consumer | | | | and managers. Microfinance works best when it |
| goods and hence check the inflations. Inflation in | | | | measures and discloses its performance. |
| India primarily arises due to shortage of consumer | | | | |