Microfinance: A Good Strategy for Small Scale Entrepreneurship

India falls under low income class according to World Bank. It is secondPopulated country in the world and around 70 % of its population lives in rural Area. 60% of people depend on agriculture, as a result there is chronicUnderemployment and per capita income is very low. This is not enough to provide food to more than one individual. The obvious result is abject poverty, low rate of education, low sex ratio, and exploitation. The major factor account for high incidence of rural poverty is the low asset base. According to Reserve Bank of India, about 51 % of people house possess only 10% of the total asset of India .This has resulted low production capacity both in agriculture (which contribute around 15-20% of GDP) and Manufacturing sector. Rural people have very low access to institutionalized credit (from commercial bank).

2018

Now a days the formal banks are dominated due to financial institutions as they provide the services which are widely accepted by the poor due to easy procedures. These institutions can be governmental, non governmental based. There is common problem with these finances that is interest rate being so high which is faced by all the poor people as they approach the Microfinance institutions (MFIs )for the easy process of taking micro loan but they end having more money for repayment due to high interest rates. The purpose of this study is to analyse the performance of microfinance provided service to people, organizations. This study reveal The performance of micro finance in previous years and at present. Microfinance is an individual focused financial services provided to the poor and small scale businesses who lack access to the mainstream finances.

Journal of Entrepreneurial Finance, JEF, 2004

SSRN Electronic Journal, 2000

Microfinance" is often defined as financial services for poor and low-income clients. In practice, the term is often used more narrowly, referring to services delivered by selfdescribed "microfinance institutions" (MFIs) who usually use techniques developed over the last three decades to make and manage tiny uncollateralized loans. These techniques include group lending and liability, pre-loan savings requirements that test clients' willingness and ability to make regular payments, graduated loan sizes, and most importantly an implicit guarantee of quick access to future loans if present loans are repaid promptly.

WORLD SCIENTIFIC eBooks, 2018

AN INTRODUCTION TO MICROFINANCE "Where once the poor were commonly seen as passive victims, microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge. And while the lack of financial services is a sign of poverty, today it is also understood as an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves."

Executive Overview Microfinance is an emerging phenomenon that opens access to capital for individuals previously shut out from financial services. In its direct engagement with the poor, microfinance represents a new way for financial capital to potentially stimulate economic growth in developing countries. However, microfinance is poorly understood, and it remains unclear whether it delivers on its promises. The goal of this paper is to introduce the topic of microfinancing to a wider audience of management researchers and to identify opportunities for future research in this new and growing area.

Adhyayan, 2019

As it leads to greater respect, independence, and involvement for women both, inside and outside their homes and in the workplace, microfinance plays a significant role in empowering society and the country at large. More in-depth definitions of microfinance may be found on this page. A microfinance institution provides financial services (loans, savings, and insurance) to individuals and small businesses on a small scale to people and small businesses, particularly those with low or moderate incomes, as defined by the World Bank. In developing countries, providing small business owners with low-interest loans with a low monetary value is one of the most widely used strategies for assisting them in their efforts to lift themselves out of poverty. Micro-loans are loans with a low economic value that are given to small business owners. Microfinance Institutions (MFIs) provide loans and savings services to small and medium-sized enterprises (SMEs) are made possible through a range of funding techniques. Microfinance institutions (MFIs) provide services to small and medium-sized businesses (SMEs) leading to economic development and social development. As a result of having access to these services, the idea holds that the poor’s financial position will become more stable, predictable, and secure over time. Through education, healthcare, and self-determination, individuals will be able to better plan for their futures and enhance their livelihoods in the process. Microfinance may also be utilized to assist individuals in achieving their financial independence. The high capital cost in microfinance is highlighted as one of the reasons leading to high-interest rates in the industry. Apart from traditional lending sources, microfinance providers may also get loans from commercial banks, which lend to Microfinance Institutions at market rates. Keywords: Economic Development, Microfinance, Social Development. Adhyayan: A Journal of Management Sciences (2021); DOI: 10.21567/adhyayan.v11i2.

SSRN Electronic Journal, 2000

What is most challenging regarding economically weaker sections of the society is financial inclusion. Microfinance refers to the extension of small loans to the poor for self employment and sustenance. Microfinance includes a broad range of services like credit, savings, payment and remittance services, transfer services, and others. However, its growth is hindered by various regulatory and operational hurdles are jeopardizing the smooth functioning of Microfinance Institutions (MFIs). The main hindrance faced by MFIs (including banks) in financing the poor was the high transaction cost and low profitability while reaching out to the needy in terms of small credit at frequent intervals. This paper looks into strategies that take on the challenges indicated and the effective implementation of modes of microfinance delivery. Attempt is made to understand the operational difficulties faced by MFIs in providing microfinance. The paper also highlights the means of extending necessary credit funds to maximum number of people in rural areas.