Microfinance in Rural Credit

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This is a project I had made for my school project at Don Bosco School Lilauh.
Feel free to use data provided in it.

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Microfinance in Rural Credit

  1. 1. Micro-finance in rural credit
  2. 2. What isMicrofinance?
  3. 3. Microfinance is the provision offinancial services to low-incomeclients or lending groups includingconsumers and the self-employedwho traditionally lack access tobanking and related services.
  4. 4. Best example of microfinance: Nobel prize winner, Mohammad Yunus who founded the Grameen Bank
  5. 5. Need forMicrofinance
  6. 6. What happens inIndia? Without banking facilities, the poor farmers go tomoney-lenders who give them loans and exploit them with high interestrates by taking advantage of their situation and also their lack ofeducation.
  7. 7. What happens inIndia? The earning of the farmers is so meager that they don’thaveany savings and are highly prone to the sudden need ofcredit.
  8. 8. How microfinance helps: Microfinance come useful to poor households as theycushion them against external shocks like crop failure etc,and prevent unwantedincidents of farmer suicides and other activities, byproviding them with micro-credit at low interest rates.
  9. 9. Can you believe it?
  10. 10. How microfinance helps: Subsidies from donors and government can besuccessfullychannelized by micro-finance institutions to the correctpeople who actually need them.
  11. 11. How microfinance helps: It also helps the poor to develop saving habits by lettingthem savethe smallest of amounts that are feasible for them to save.In thisway, they can use the savings in times of need and wouldnot needoutside financial assistance.
  12. 12. Problems with the present system
  13. 13. Less Penetration
  14. 14. • Unfortunately, microfinance for some is just a source of easy money and they mismanage their financial affairs and increase over- indebtedness.•When the government buys produce fromthefarmers, the corrupt officials charge theircommissiontoo, thus exploiting the farmers.
  15. 15. •Often, the loans are spent in marriage, dowry and other activities as there is no forced use of the money.•Once again, due to corruption, half themoneydoesn’t reach the right people and is eatenup in the various stages of the process.
  16. 16. Unproductive use of rural credit:
  17. 17. •Since women get loans at low ratespeople obtain credit from MFIs for unproductivepurposes through their medium.
  18. 18. Can it eradicatepoverty?
  19. 19. No, because:O Credit may be a trigger for eradicating poverty, but eradicating poverty requires all round development.O It wont trigger growth in a country like India where there is poor governance and insecurity of exploitation.
  20. 20. No, because:O Despite major structural changes in credit institutions, the exploitation of the rural masses in the credit market is one of the most pervasive and persistent features.O Thus, NO……it cannot solve the problem of mass poverty in
  21. 21. Our suggestionsfor betterment
  22. 22. Our suggestions for bettermentO Effective steps should be taken to remove corruption and stop exploitation of the poor people by the credit institutions.O Forced use of credit for only productive purposes should be implemented.
  23. 23. Our suggestions for bettermentO Microfinance institutions can patch up with other institutions which guides farmers on how to use their land properly. This will ensure more repayment of loans and greater productivity.
  24. 24. Data provided by: Akash Gain (1) Ankit Duggar (12) Gurkirat Singh Matharoo (23) Pratik Rai (34) Vishal Saraf (56)Powerpoint Presentation by: Soham Hazra (45)
  25. 25. Your Questions please!

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