ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Pradeep SrivastavaSubscribe to Pradeep Srivastava

Microfinance in India: Odysseus or Interloper?

With the growing emergence of microfinance in India, increasingly jostling for institutional space, we need to ask ourselves if it will actually manage to finally get credit to the rural poor in a sustained manner. Or will microfinance turn out to be an interloper that will end up three decades later in the usual way: another wave of dud institutions that neither die nor heal?

Exploring Possibilities

Despite substantial efforts and a vast network of rural banks, the rural poor still have very little access to formal finance, and informal lending remains strong. Over the past decade new microfinance approaches designed to deliver finance to the poor have emerged and some have shown promise. However, empirical assessments of their reach or impact are still relatively few. Drawing on a recent rural access to finance survey of 6,000 households conducted by the authors, we empirically analyse the reach of the most dominant microfinance initiative, the SHG-bank linkage model. Based on this and international experience, the paper draws lessons for exploiting the potential of microfinance in India, outlines areas of concern for government policy towards this important sector, and suggests ways to scale up access to finance for the poor.

Are Formal and Informal Credit Markets in India Interlinked

Are Formal and Informal Credit Markets in India Interlinked? Pradeep Srivastava This article takes afresh look at whether or not the formal and informal credit markets in India are interlinked. Instead of using unreliable interest rate data, implications of informal credit for output behaviour are derived and tested. The results are consistent with no interlinkage between the markets.
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