Microfinance in India: Sectoral issues and challenges

Poverty is one of the common obstacles in achieving higher growth and enhancing the standard of living of the people in most of the low income countries. About 1.4 billion population in developing countries is living less then US $ 1.25 a day according World Bank report. Over the years, most of the countries have been pursuing various policies and programmes to eradiate poverty. Among these measures and policies most effective policy is microfinance which, in last couple of years. Among these measures and policies most effective policy is microfinance which, in last couple of years, has been adopted by below income countries in a bid to obliterate poverty.

Microfinance is not a new topic. Its history can be traced to early 1700s, but the actual credit goes to Dr. Mohammad Yunus who gave a new shape to microfinance in Bangladesh in 1972. He was also awarded with Nobel Prize in 2006 for this pioneer work. Like other low income countries, Government of India has been implementing various schemes and programs to alleviate poverty since independence. In the line of Bangladesh microfinance model developed by Dr. Yunus government of India has been consistently implementing this scheme to eradicate poverty since 1999. The study covers the micro financing achievements, challenges faced by the Microfinance in India, critical issues and suggestions to resolve them.