Product Mix and Product Innovation of Microfinance in India
This study examines the connection between supply of customized financial products and behavior of formal lending institutions.
Microfinance sector innovations have made a dramatic change in the supply of credit by formal financial institutions to needy and neglected segments of the population. The study explains client behavior that is based on the assumption that the formal sector is superior. It also highlights misunderstandings of the nature, magnitude and role of the formal microfinance sector. The study discusses:
- Product design and product customization of microfinance products and impact of microfinance product penetration in inaccessible rural areas of India;
- Effectiveness of credit customization;
- Concepts behind credit customization;
- Microfinance product structures and innovations;
- Role played by product innovation in the success of the SHG revolution in rural India.
The study critically examines factors which created speculation in the microfinance sector in rural India, analyzing their causes and effects. It identifies regional and location specific factors, which govern the actual success or failure of microfinance, and discusses methods to tackle critical problems.
