Total views : 767

Beyond Micro Finance: Strategic Shift to Financial Inclusion to Stimulate the Growth of Rural India

Affiliations

  • Sinhgad Institute Business Management, Mumbai, India

Abstract


Poverty, malnutrition, poor standard of living and various other growth-related issues continue to plague India. This becomes even more shocking when seen in the context of the spectacular transformation of Indian economy over past decade. Despite the recent financial crisis, India has witnessed a growth rate of around 8-9% a year. But this impressive growth story hides within its fold the reality that vast majority of Indians continue to struggle for the daily bread and are deprived of even the most basic necessities.

It is universally recognized that poverty in India stems largely from lack of inclusive growth caused by exclusion of nearly 51 % people from basic financial services.

Over the years, a substantial microfinance system based on self-help groups has evolved in India to alleviate poverty. But, its success is marred by problems of high interest rates, exploitative profit making and regulatory issues. It is now being realized that microfinance, is a short-term solution to financial problems that can be resolved only through access to the entire gamut of finance solutions.

The author recommends that the regulators and policy makers should draw lessons from the international experience in order to ensure that financial reach goes beyond a meaningless number crunching. Increasing financial inclusion requires a multidimensional strategy that has empowerment, participation, private enterprise, policy thrust and local commitment as its corner stones.


Keywords

Financial Inclusion, Micro Finance, Poverty Alleviation, RBI, SHG

Full Text:

 |  (PDF views: 398)

References


  • Anderloni, L. and E.M. Carluccio (2007), Access to Bank Accounts and Payment Services, in L. Anderloni, M.D. Braga and E.M. Carluccio et al. (eds.), New Frontiers in Banking Services, Springer, Berlin pp. 5–105.
  • T. Beck, A. Demirguc-Kunt, M.S. Martinez Peria (2006), Reaching Out: Access and Use of Banking Services Across Countries, World Bank, Washington D.C., July 2006.
  • Claessens, S. (2006), “Access to Financial Services: A Review of the Issues and Public Policy Objectives”, The World Bank Research Observer 21 (2), 207–240.
  • Peachy, S. Roe, A. (2006) “Access to Finance— What Does it Mean and How do Savings Banks Foster Access, A Study for the World Savings Banks Institute”, Perspectives, No. 49, Oxford Policy Management.
  • Sharma, M. (2008), “Index of Financial Inclusion”, Working Paper no. 215, ICRIER.

Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution 3.0 License.