Chapter 3 Status of Microfinancein IndiaIn this chapter we discussed progress ofmicrofinance in India.
To analyze the status and progress of microfinance in India,it is necessary to know its present situation. “Microfinance in India isapproaching a historic tipping that could lead to a massive poverty reductionin the next five to ten year”. – Grameen Foundation US in 2005.Infrastructure of rural finance in India: There wasa time when people say to India that “Sone Ki Chiriya”. But after Britishdependency India financial and infrastructural situation had poor.
Thefinancial services are providing to underprivileged and poor sections of thesociety have been the top most priority on the agenda of various anti-poverty programmesinitiated by the government of India. It is also well know fact that thegovernment of India has initiated various number of subsidy programme (ruraldevelopment programme) and involves formal financial institutions in theimplementation of these programmes. Despite of the best efforts of thesefinancial institutions is reaching the deprived section of the society livingin the rural underprivileged poor section failed to get their due share fromthe institutional finance. India has a long history of native banking and moneylanding. In the literature of the Vedic time (2000 to 1400B.
C.) is found evidence of the existence of moneylending operation in India. Afterindependence India feel need to enhance their infrastructure and financialsector. India is a developing country so that in our country financial systemperforms a vital role in economic development through saving and investmentprocess and its also know capital formation. It a basic reason of financial systemis some time called financial market and the main objective financial market isto mobilize saving effectively its allocate the equal competently among theultimate users of funds, viz., investors. For rapid economic development, highrate of capital formation is an essential condition and its depends uponcapital formation.
So that saving of public should be mobilized by financialand banking institution which will be made available to investors to makecapital goods. It is not necessary that those who save and those who invest in Indiaboth are same person or institutions. The Indian financial system that isrefers to the lending and borrowing of funds which is consists to parts, viz. Indiancapital market and Indian money market. Generally we classified the Indianmoney market into two parts, viz., unorganized sector and organized sector.
Inorganized sector of the money market we include commercial bank, private sectorbank, public sector bank and foreign Banks. Other side the unorganized sectorconsists of indigenous banker and non banking financial companies.In the history of Indian economy, 1991s year noticeablea watershed because at the time economy faced with a Balance of Payment (BOP)crisis. The Indian economy operating an extensive reform The financialsector is a vast network in India and commercial banks, private banks, as wellas some other financial institution such as state-level financial cooperation,development finance institution, non banking financial companies, NABARD,SIDBI, insurance companies, mutual funds, provident funds. In our countryNABARD is engage as an apex development bank for promoting and sporting torural and agriculture development in an integrated manner. As such the RBI andthe Ministries of finance and rural development are suggesting banking and theflow of credit for microfinance and rural development. In beginning 20th century the BritishGovernment of India was taken initiative for cooperative thrift and creditmoment, which was considered a historic landmark development in rural creditmarket in India. The government of India enacted the cooperative societies actin the year 1904, which followed by a more compensative cooperative societiesact in 1972.
For promote financial self- help among artisans and farmers, theseacts provided a framework. (Das Kalyan 2011) As per RBI’s report 151 commercial banks wereoperating in India on March 31, 2015. Out of these 5 were non-scheduledcommercial Banks, 146 were scheduled commercial banks in which 56 Regionalrural Banks includes. This included——– public sector banks, ——–private, —–foreign banks.
As at the end of June 2014 there were 121535commercial Banks Branches operating in India. Out of these 22043 were statebank of India and associates 61164 were nationalized bank Branches, 19082 wereRRBs, 18859 were private sector banks branches, 321 were foreign banksbranches, 66 were local area bank branches.Other side Bhartiya Mahila Bank established inMumbai on Nov. 19, 2013 on the former Prime Minister Indira Gandhi birthanniversary. The prime objective of the bank is to focus on the banking need ofwomen and to promote their economic empowerment. This bank is also a publicsector bank of India. The aims of Bhartiya Mahila Bank are to support women’sSHGs promote further financial inclusion and livelihoods for services women andwomen run business.
Bhartiya Mahila Bank has 60 Branches network as on may 1,2015. This bank is an only for women and to be fully operated by women.Governmentintervention in rural credit market in India:”In the village itself no form of credit organizationwill be suitable except the co-operative society, co-operation has failed, butco-operation must succeed”. – All India rural credit survey (1954) (DATT &MAHAJAN, 2014 INDIAN ECONOMY)In the history of government, interventions in ruralcredit the cooperative thrift and credit progress were initiated by the Britishgovernment of India, which could be considered as the landmark development inthe beginning of the 20th century. The government of India enactedthe cooperative credit society act in year 1904. That was beneficial forcomprehensive cooperative society Act.