Microfinance Intervention: An Insight into Related Literature with Special Reference to India

This paper reviews literature about issues related to formal and informal finance, outreach and performance of microfinance programs, microfinance impact assessment, financial awareness, customers’ perception, women’s empowerment and effect of gender in microfinance.

The paper observes that the spread of microfinance services would lead to poverty reduction. It concludes, however, that government efforts alone cannot solve the problem of financial inclusion without banking sector cooperation, particularly in developing countries like India, where most poor people do not have access to banking services.

The paper makes recommendations to make microfinance a success. They include:

• Commercial banks should add microfinance to their existing services and realize that poor people are bankable;
• Formal and semi-formal financial sectors should collaborate to meet financial inclusion targets;
• People should be educated about availability and use of microfinance services;
• Microfinance providers should tailor innovative financial products to customers’ requirements;
• Microfinance beneficiaries should try to build a relationship of trust with finance providers;
• Microfinance customers should understand the benefits of forming self-help groups and develop a culture of mutual trust and cooperation within the group.