Microloans In India
Micro Loan Role In India
April 6, 2011 | 
Author The role of Micro loans in India: A boon
Most people have heard of Micro finance and micro loans in India, but very few actually give serious thought to it. The truth is that micro loans have changed the way the rural community lives. Once upon a time, someone from a low- income background without any verifiable credit history couldn’t dream of getting a loan fro a bank, but due to government initiative the person can have access to a micro loan without any collateral. Poor disadvantaged people can now set up small cottage industries and earn a decent living for themselves and their families. That is the case in Krishnakari in Tamil Nadu.
With the help of the Mahalir Sangam, a Self Help Group initiative by the state and central government, the economic condition of the people of Krishnakari is changing. Many SHG’s have been formed with the help of the money got from micro loans and poor women and men are earning a livelihood as employees. One such success story is of an SHG which sells ‘Chapatis’. With a micro loan of Rs 22,000 from a Micro Financing Institution (MFI), this SHG started a smart Chapati- making service. They even bagged an order for making 3000 Chapatis for TVS employees everyday. The SHG has not only repaid the micro loan fully, but are making a decent profit as well.
The role that micro loans in India have played is truly commendable. As awareness about micro loans grow, so does the rural economy.
Posted in Microloans In India | 
Tags: bank, credit, loan, Loans, Mahalir Sangam, Micro Finance, micro loan, Micro Loan In India, micro loan india, micro loans, Self Help Group, SHG | 
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About Micro Loans In India
The truth about Micro Loans in India
When the government introduced various initiatives for starting Self Help Groups (SHG’s) in the 1990’s, a lot of people were skeptical as to how it would be possible for poor women to find the money to start such businesses. Micro loans came to the rescue. The government started allowing Micro Financing Institutions (MFI’s) to make micro loans available to poor rural women who had no verifiable credit history. Though the amount available through a micro loan was not big, it was enough to start SHG’s dealing with home- based, small- scale businesses.
In Punjab, using the Swarnajayanti Gram Swarozagar Yojana (SGSY), one of the programs brought out by the government, rural women were given assistance with how they could start their own SHGs’. They were given vocational training in how to make stuffed toys, do embroidery, stitching and knitting tasks, etc. The Mukstar district in the state of Punjab has presently 330 SHGs’ who have been helped by this program. What’s more, the women are also made to understand how they could avail of a micro loan from an MFI.
The success of Kuldeep Kaur, one of the women who have taken part in the government initiative and now runs her own SHG shows clearly on her face. She is a differently- abled woman who learnt the tricks of the trade and finally started her own SHG employing other women. She availed of a micro loan which gave her the initial capital investment she required.
Micro loans in India truly deserve the accolades it gets.
The Importance Of Micro Loans In India
How important are Micro loans in India?
A micro loan is a loan that has been specially designed to meet the needs of people who are not bankable in the eyes of the average bank or financial institution. Micro loans are usually small amounts of money loaned out to home based or small- scale businesses that have the potential of meeting the financial needs of the entrepreneur and workers. Such type of loans can be repaid when the small business makes profits.
The reason why micro loans in India started out way back in the early part of the 1990’s by NABARD was because of the large number of unemployed people who were poverty stricken. Though it was done basically keeping the requirements of women entrepreneurs in mind, it frequently offered the working poor men a helping hand for starting a small business. The truth about the Indian financial system is that a poor person from a rural community will not have a credit rating that will allow him to get a standard loan from a traditional bank or financial institution. For them, a micro loan is a boon to propel them to start a business to meet their financial requirements.
Micro loans in India have come a long way. Now many MFI’s operate in this sector specifically to help the poor community. Grammeen Foundation, Asmitha, Myrada Bnadhan, Grameen Financial Services and Micro Credit India are a few of the financial institutions which are specializing in providing micro loans to the people who need them the most.
Microloans In India
Microloans in India: How important they are
Microloans are very small loans extended to those who are in poverty for spurring entrepreneurship. Microloans in India are usually given to people who lack steady employment, a credit history that is verifiable and collateral and hence suffer from non- accessibility to traditional means of credit. Microloans for Self-Help Groups (SHG’s) as a program was started by NABARD (National Bank for Agriculture and Rural Development) in the early 90’s of the previous century.
At present, SHG’s model in India helps link informal groups of women who want to start or maintain a small- scale business by connecting them to the mainstream banks and financial system. The SHG model in the country is also the highest when it comes to reaching microfinance clients in the whole world. According to statistics available, since the SHG program was started by NABARD, over 3 million of the groups have been linked to almost 500 mainstream banks. 11 million households across the country has been touched and helped by the scheme, which remains till date one of most successful wealth- inducing programs for the vast rural community.
The truth is that a microloan can effectively change the lives of several people belonging to the rural community or those who are poverty stricken. Microloan in India has created an important link between poor women and mainstream banking, allowing the former to access an array of financial services. They have also provided the government with a way of distributing financial benefits to people who need them.
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