Empirical testing of significant role of commercial banks in the growth of microfinance sector in India

Microfinance is a buzz word which aims at providing ambit of affordable financial services to the poor strata of the society to empower them economically and socially. RBI and NABARD, i.e. the pillars of our financial system, are basically pushing the concept forward by regulating the activities of various Commercial Banks, Regional Rural Banks (RRBs) and Cooperative Banks. The objective of this paper is to understand that how the banking sector of our economy, especially commercial banks, is playing a crucial role in developing this sector. In this paper, microfinance and two models viz., SHG - Bank Linkage model and MFI - Bank Linkage model for rendering microfinance services, has been discussed. The special emphasis put in and challenges faced by commercial banks have also been talked about. The six year data for the period 2006-2012 on the variables like savings of SHGs with banks, bank loan disbursed to SHGs, and bank loans provided to MFIs has been collected for all commercial banks, RRBs, and cooperative banks for testing the significant role played by commercial banks in comparison to others. Two sample T-test has been used for the purpose.All the six null hypotheses formulated have been rejected and thus the study shows that the commercial banks are the foundation for pushing the microfinance intensely into the economy.