Micro-Finance in India Economicempowerment of Poor

Microfinance is the fastest growing sectors of India; microfinance is spearheading intense competition among the largest players. with 1.2 billion people and the world's fourth-largest economy, India's recent growth and development has been one of the most significant achievements of our times. Over the six and half decades since independence. A number of India's states are pioneering bold new initiatives to tackle many of India's long-standing challenges and are making great strides towards inclusivegrowth.their successes are leading the way forward for the rest of the country, indicating what can be achieved if the poorer states were to learn from their more prosperous counterparts. India now has that rare window of opportunity to improve the quality of life for its 1.2 billion citizens and lay the foundations for a truly prosperous future a future that will impact the country and its people for generations to come.(sources:: http://www.worldbank.org/en/country/india/overview accessed by 15 may 2014) Microfinance is being considered as a very powerful tool for uplifting the economic conditions of poor through group approach. (Juja. S.V, 2014) In the broader sense, the aim of microfinance is to develop habits and financial vision among the rural poor, such that they are able to save, seek credit and know several finance related aspects and thus improve their financial position and living standards. The focus of microfinance is to facilitate the shift from induced development from the above to initiated development from below. Banks are already doing their bit towards this end but a lot is yet to be done. The vast potential and opportunities of microfinance in India are yet to be fully tapped. (Raghavan. R.S) Microfinance has been an important component in poverty reduction scheme of the Government and development agencies in India. Microfinance has taken on a transnational trajectory (Ohanyan, 2007), and millions of people worldwide designated as the “poorest of the poor” have benefitted from microfinance products provided by MFIs locally and internationally. Nobel Peace Prize winner, Mohammad Yunus, is credited for the microfinance movement, which began in the villages of Bangladesh in the 1970s (Holcombe, 1995) through theGrameen Bank. Microfinance role goes beyond business investment, to include theimprovements in the economic wellbeing of householdssuch as, clients’ health, nutrition, children education andstandard of their life. India has a Savings to GDP ratio of 33% which is the highest in the world. Indian is the nation of savers and investors and above that more than 52% of the population is below 25 years of age, this creates a need for developing a population which is financially literate. Moreover 85% of the household savings is parked in fixed deposits. In India, house-hold savings in shares, including mutual funds is around 7%. In the US, 50% of household savings are in mutual funds and shares. This is one of the factors for low household net worth in India.