Entrepreneurship and Micro Loans in India

Poverty, unemployment and social unrest are the leading evils of Indian society. If these evils are studied in depth, they are found to be inter-related as unemployment creates poverty which enforces social unrest such as theft, murder and many more. To eradicate these evils one obvious solution is generation of income. India being a developing country with less of capital, cannot provide employment to all its huge population practically. In this situation, the concept of entrepreneurship can be implemented. [1]Entrepreneurship has been traditionally defined as a process of designing, launching and running a new business which typically begins with a small business such as a startup company, offering a product, process or service. It has been defined as the capacity and willingness to develop, organize and manage a business venture along with risk in order to reap profits. The definition has now been expanded as to explain how and why some individuals or teams identify opportunities, evaluate them as viable and then decide to exploit them whereby others do not. An entrepreneur is usually seen as a business leader, an innovator of new ideas and a business processor. These are mainly seen as small, medium and large in size[1]. For starting an enterprise by poor section of Indian society raising of funds is not an easy task. Banks give loans by identifying the financial soundness of the respective borrower. But what about a major segment of India which do not have any financial identity? Their financial soundness cannot be judged due to absence of collateral. Hence, they cannot access any financial or credit facility through which they can improve their lives. Indigenous lenders provide them financial grant without any paper work and collateral but in return, they charge huge interest amount. Here, the notable point is that these small entrepreneurs are overburdened with huge interest payments and a major part of their earnings is transferred in the hands of indigenous money lenders. To curb this, the concept of micro loans has been evolved.