Myths & realities of micro finance in rural India

In the developing country like India, where majority population resides in rural areas, rural development becomes imperative for the economic development of that nation. The root cause of the problem of poverty has been found to be the economic dependence and lack of access to the credit. Poor have been considered to be non bankable. They are depriving of the basic financial services specifically the banking financial services. Micro finance is one such intervention that aims at poverty reduction by providing basic financial services to the underserved section of the society at affordable cost. Microfinance can play a vital role to raise the living standard of people at a faster rate. In most cases, microfinance and MFIs are supported by grant funding. In order to achieve scale and viable business operations, we need capital infusion and funds/loans available in a larger and more organized manner. The purpose of this paper is to examine the role of micro finance in the empowerment of people & deals with the theme of microfinance and poverty reduction. It also examines the impact of micro finance on income inequality & study the role of public and private sector banks, foreign banks, regional rural banks and commercial banks in rural areas.