Microfinance: Importance in India
Microfinance is a common loan scheme that has been gaining importance in the Indian economy. It refers to microloans or microcredit that is provided by banks and non-banking financial corporations to the underprivileged, low-income group so that they can stand on their feet. It is a financial scheme that aims to help them make means of livelihood. Microfinance in India has been on the rise owing to its beneficial results,and it is more important than ever in the Indian economic scenario.
The Significance of Microfinance in India
The last decade has seen a shift in the Indian economy with the government laying more importance on self-employment and business. The idea is to uplift the Economically Weaker and Low-Income Groups by offering them opportunities to start their small businesses, and this is where microfinance becomes very important. The funds provided to such people through microfinance schemes can be utilized by them to grow financially independent.
Using the funds, borrowers can start their own small business and explore other employment options in the field of agriculture and related activities. A substantial section of the poor people comprises unskilled laborers,and these people stand to gain from microcredit as they can use it to upgrade their living status by starting their own business.
Features of Microfinance
Affordable — Micro loan schemes provide credit at very low interest rates which makes repayment easier. Also, the lenders do not stress on the purpose of the loan. Thus, the borrowers can utilise the finance to meet any need.
Easy To Apply — Applicants who wish to apply for Micro financing need to fill the microfinance loan application form,and the loan is sanctioned within no time.
Unsecured — Microfinance is usually an unsecured loan that does not require the applicant to submit any collateral. In case there is any collateral requirement, it is very minimal and in keeping with the financial capacity of the loan seeker.
No Need for Strong Credit History — There are many banks and non-banking financial corporations that offer microloans to the needy. It is made available to those who are unemployed or involved in part-time labour. These loans are easily given, and even those who do not have a proper credit history can avail it without any problem.
Microfinance has genuinely been impactful in making the underprivileged self-reliant by creation of jobs and instilling a habit of saving in the low-income groups. Owing to the many features of microfinance,a high number of economically deprived people are looking get micro loans and in the coming times, it is only going to increase exponentially.