Micro Finance in Krishnagiri District: A Tool for Poverty Alleviation

Microfinance initiatives in a small district in Tamil Nadu, India

This paper describes microfinance-based poverty reduction efforts in Krishnagiri District in Tamil Nadu, India.

Major microfinance players in the district include the Government of India, National Bank for Agriculture and Rural Development (NABARD), banks, MFIs and NGO Self-Help-Groups (SHGs). (SHGs) emerged as the most effective poverty alleviation tool. The paper recommends the following steps for microcredit expansion in Krishnagiri:

Credit link the remaining groups in SHG-bank linkage;
Focus on program sustainability by encouraging microenterprise promotion among matured SHGs;
Develop special training programs to equip SHGs to set up microenterprises;
Explore support services for marketing;
Focus on group quality through regular interactions and training;
Strengthen existing schemes by NABARD and other banks.

The rapid spread of microfinance has provided competition to rural moneylenders. SHGs, at the center of almost every poverty alleviation program, deliver gains in terms of community mobilization and women's empowerment in addition to financial advantages. Finally, the paper states that it is possible for MFIs to serve people in extreme poverty without having to sacrifice profitability.