Microloan

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.