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Microfinance and Financial Inclusion in India

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Financial Inclusion in Asia

Part of the book series: Palgrave Studies in Impact Finance ((SIF))

Abstract

Access to financial services such as credit, savings, insurance, and remittance facilities is a necessity for the poor at least as much as it is for the affluent and the middle class. Research has shown that even households with incomes of less than a dollar a day per person rarely consumed every penny as soon as it was earned. Instead, they sought to “manage” their money by saving when they could and borrowing when they needed to. Since financial institutions in the formal sector were reluctant to lend to people in the low-income group, the microcredit industry stepped into fill the gap (Collins et al. 2009; Morduch 1999).

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Notes

  1. 1.

    http://www.globalenvision.org/library/4/1051.

  2. 2.

    http://stateofthecampaign.org/2014-report-executive-summary.

  3. 3.

    IRDP covered small and marginal farmers, agricultural workers, landless labourers, rural craftsmen and artisans and virtually all the families of about five persons with an annual income level below Rs 3500. The main aim was to raise the levels of the BPL families in the rural areas above the poverty line on a lasting basis by giving them income generating assets and access to credit and other inputs. The implementation was to be done by the District Rural Development Agency with the assistance from block level machinery.

  4. 4.

    .Following bank nationalisation, the share of banks in rural household debt increased to about 29 % in 1981 while the share of formal or institutional sources in total debt reached 61.2 % until 1991.

  5. 5.

    .Since 1990, the need for co-operative reforms was articulated by many committees that were headed by Chaudhry BrahmPerkash, JagdishCapoor, VikhePatil, and V. S. Vyas. The basic problem identified by these committees was that most co-operative societies lacked autonomy due to direct intrusion of the state in the governance and management of co-operative societies. The reason was that the co-operative movement in India was initiated by the government. In 1954, the All India Rural Credit Survey Committee Report not only recommended state partnership in terms of equity, but also partnership in terms of governance and management.

  6. 6.

    See BRI website for more information (http://www.bri.co.id/articles/9).

  7. 7.

    For more information, see website of SEWA Bank: http://www.sewabank.com.

  8. 8.

    https://www.nabard.org/english/shgs.aspx.

  9. 9.

    Private bodies based on the Grameen model of Bangladesh.

  10. 10.

    Interviews with Matthew Titus (Sa-Dhan) and Alok Prasad (MFIN).

  11. 11.

    Set up in 2001 by Chandra Shekhar Ghosh, Kolkata-based Bandhan began with a focus on working with “socially disadvantaged and economically exploited women”. With 2016 branches across 22 states and Union territories, Bandhan had over 52.33 lakh borrowers as of February. It disbursed Rs 963 crore of loans in February and has total loans outstanding of Rs 5704 crore.

  12. 12.

    As of March 2014, there are 115,082 Scheduled Commercial Banks branches across the country. Of these, 43,962 branches (38 %) are in rural areas. The ATM network in the country stands at 160,055 as of March 2014. The number of rural ATMs increased from 5196 in March 2010 to 23,334 (15 %) in March 2014.

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Authors and Affiliations

  1. Los Angeles, USA

    Rajesh Chakrabarti

  2. Sunay Policy Advisory Pvt. Ltd., New Delhi, India

    Kaushiki Sanyal (Managing Director)

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  1. Rajesh Chakrabarti
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Correspondence to Rajesh Chakrabarti .

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Editors and Affiliations

  1. National University of Singapore, Singapore, Singapore

    Sasidaran Gopalan

  2. National University of Singapore, Singapore, Singapore

    Tomoo Kikuchi

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Chakrabarti, R., Sanyal, K. (2016). Microfinance and Financial Inclusion in India. In: Gopalan, S., Kikuchi, T. (eds) Financial Inclusion in Asia. Palgrave Studies in Impact Finance. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-137-58337-6_7

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  • DOI: https://doi.org/10.1057/978-1-137-58337-6_7

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