India is a vast country with the total population touching 125 crores. The geographical and social diversity makes governance and developmental initiatives even more complicated. 77% of the population is earning less than Rs.20.00 per day. The Indian banking system is not so robust to support such a vast clientele of population. 3 0% of Indians do not even have bank accounts. Indian banks do not provide loans to start business or support agriculture work without basic bank accounts details and complicated paperwork. Credit facilities available to small farmers or marginalised people remain difficult to access and insufficient. In the last decade, one major financial trend which has cropped up in India is that of Micro-Finance Institutions (MFIs). MFIs are present in the remotest part of the country and are providing loans to farmers, cottage industry and small creditors. MFIs recorded a robust growth from 2007 to 2010, almost 100% increase year on year and profit surged to 5.5 times in 3 years. But now the scenario may change. A large number of suicides by farmers in Andhra Pradesh has been attributed to MFIs loan recovery and high interest borrowing. Andhra Pradesh Government has imposed some restrictions on the working of MFIs. This sector is in deep trouble. This paper analyses the situation of recent crisis that has come-up in MFI business.
Micro-finance, Rural Poverty, MFIs
