Abstract
This paper is based on the premise of microfinance for financial inclusion mechanism leading to the development of social systems and subsystems in Gujarat. The study also tries to examine microfinance model and implications in the context of various initiatives taken by the government and non-government agencies in Gujarat supported by field evidences. The present study relied on both theoretical and empirical methodologies. Field data comprised 225-sample size, collected through systematic sampling in Gujarat; secondary data has been compiled from relevant print and electronic sources. Findings suggest that microfinance interventions should not be limited to credit deployment; rather, they should focus on group formation, savings, livelihood promotion, enterprise development and marketing of produce. The paper concludes that microfinance plays an important role in socio-economic development.
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Notes
NABARD is an apex development bank in India. Its main focus was on upliftment of rural India by increasing the credit flow for the elevation of agriculture and rural non-farm sector. It has been entrusted with ‘matters concerning policy, planning and operations in the field of credit for agriculture and other economic activities in rural areas in India.’ It is active in developing financial inclusion policy and is a member of the Alliance for Financial Inclusion.
With a view to evolving supplementary credit strategies for reaching the unreached poor in rural areas like landless agricultural labourers, rural poor/women, etc., in a transparent and a cost-effective way, NABARD launched its pilot phase of the SHG-Bank Linkage Programme in February, NSSO (1992) data reveals that 45.9 million farm households in the country (51.4%), out of a total of 89.3 million households, do not have access to credit, either from institutional or non-institutional sources.
The Grameen Bank is a Nobel Peace Prize-winning microfinance organization and community development bank founded in Bangladesh. It makes small loans (known as microcredit) to the impoverished without requiring any collateral.
Dalits are ‘outcastes’ falling outside the traditional fourfold caste system consisting of the hereditary Brahmin, Kshatriya, Vaishya and Shudra classes; they are considered impure and are therefore socially excluded from the rest of society.
A commercial bank is a financial institution that provides various financial services, such as accepting deposits and issuing loans. Commercial bank customers can take advantage of a range of investment products that commercial banks offer like savings accounts and certificates of deposit.
Regional Rural Banks are local-level banking organizations operating across India. They have been created with a view to serving primarily the rural areas of India with basic banking and financial services.
Cooperative banking is retail and commercial banking organized on a cooperative basis. Cooperative banking institutions take deposits and lend money.
Commercial bank accounts for largest share of SHGs, due to higher accessibility from the large number of a branch in rural areas.
Ill practices in Andhra Pradesh, leading to indebtedness and followed by suicide in some cases, eventually led the state government to introduce microfinance legislation. RBI was forced to come with rules and guidelines. There was a negative impact nationwide for next few years.
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We are grateful to the reviewers of the journal for their extremely useful comments and suggestions. This paper has been prepared in good faith based on information available at the date of publication.
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Parwez, S., Patel, R. & Shekar, K.C. A Review of Microfinance-Led Development: Evidence from Gujarat. Glob Soc Welf 5, 199–210 (2018). https://doi.org/10.1007/s40609-017-0095-3
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DOI: https://doi.org/10.1007/s40609-017-0095-3