Challenges and future trends in Micro finance case in India Its the chance the poor never had,

, micro finance provides credit and savings to the selfemployed, to enable them to start-up or expand small income generating activities.Although micro finance offers a promising institutional structure to provide access to credit to the poor, the scale and problems need to be resolved so that it can reach the vast majority of potential customers. Models of Micro Finance. Micro finance has emerged as a viable alternative to reach the unreached for their social and economic empowerment through financial intermediation. elf !elp "romoting Institution# !"Is$ %gos&'ovt !' Microfinance services are generally routed through conduit of self help groups# !'s$ as they have made a rapid strides in India . Problems ( )eluctance on the part of professionals to join the micro-credit industry owing to its being non-lucrative. !igher cost of credit because of which most of the micro-credit programs fail or cause the same burden to the loan receiver. *his is because of the inability of the !'s to become a profitable organi+ation. If they are able to generate profits by getting involved in other ancillary activities the cost of the credit at the individual end can be significantly brought down. *his will also encourage M,Is and ban-s to approve higher loan amounts. *endency of private and public sector ban-s to see- safety of credit hence new and un-nown M,Is are unable to come up without the blessing of the ban-. *his actually discourages a M,I to see- loan from any ban- ready to give at the lowest rate. Challenges ( .egal acts are a spanner in wor-s and new legislation will ta-e a long time to become an act. *he micro-credit industry is still in a nascent stage and rapid growth is re/uired for it to become sustainable. 0hallenges involved in use of cost effective technology in managing, the supply chain of micro-credit, effective dissemination of information and supplying tools for vocation education. 0hallenge of overcoming the initial stigma attached to availing loans and brea-ing the long established lin- with the local money lender and chit funds.

Road Ahead Linkages of SHG ith !anks *o develop the lin-ages for reducing the transaction cost for both ban-s and their rural clients and to, 1volve supplementary credit strategies for meeting the credit needs of the poor. *o build mutual trust and confidence between the ban-ers and the rural poor. *o encourage the ban-ing activity in a segment of the population that formal institutions find it difficult to reach Pros"ects ( %ew "olicy framewor- or a separate regulatory authority would show the serious intent of the government in developing, regulating and promoting M,Is and the !'s. *his will help in giving ris- rating, audit facilities and research services for transparency and single window fast paced entry into the sector. *here is a big opportunity for !'s to promote and develop women groups who can focus more on empowerment of women and also form ban-s so that the high cost of credit can be serviced from other sources while benefits directly reach the women . !'s, funding organi+ations and committees have a huge prospect if those people can be included who really need the credit but remain unaware and thus bound by the local money lender. *herefore a nation-wide investment in awareness campaign would create the demand re/uired for more learned and interested professional to join servicing end of micro-credit. 2pportunity to reach largely untapped urban poor and rural farmers by joining hands with corporations. 2pportunity to diversify or partner with %'2s to train the poor who avail of microfinance from the M,I. *hus an M,I can empower its partner !'s to train the credit see-ing poor on vocational jobs so that the poor finds an alternative or better means of servicing the availed credit. *here is a great prospect for a !' to promote smaller !'s within itself. *hus the cost of credit will decrease when the umbrella !' is huge enough. *his way the !' can wor- li-e a corporate entity and also involve information systems to further reduce cost of credit *hus India has a long way to go-however it must ban- on the experiences of the people around the world and devise a uni/ue mode that would suit the country with specific issues so as to achieve success in Micro-credit ,inancing.