Micro finance as an antidote to poverty in rural India

The problem of poverty can be seen substantially in many developed economies such as in Europe and America but this problem is severe in third world nations especially in Asia and Africa. However, most of the countries in the world are making an improvement in prosperity in varying degrees but still poverty exists. It is estimated that 2.5 billion people around the world live in poverty, struggling to survive on less than 2 US dollar a day. In recent years, most of the countries across the globe are in a sweeping mood to promote micro finance institutions not only as a positive rural development intervention but also as an antidote to poverty. Allured by the success of micro credit institutions in developed countries, Government, NGOs and other financial institutions have introduced various welfare schemes and activities to reduce poverty of rural India. Microfinance, by providing small loans and savings facilities to those who are excluded from commercial financial services has been developed as a key strategy for reducing poverty throughout the world. In India, a substantial microfinance system based on self-help groups (SHGs) was developed. It allows poor people to protect, diversify and increase their sources of income, the essential path out of poverty and hunger. As a developmental and economic tool it has caught the imagination of banks, financial institutions and NGOs in India. Keeping consistency with the title of the paper, it not only explores the importance and role of microfinance in poverty alleviation but also makes an attempt to bring to the focus the Success Factors and critical issues of Micro-Finance in Rural India.