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Saturday, October 2, 2010

Micro Finance Institutions

While functioning for the growth and development of the nation and while thinking about the empowerment of the people, First we had to think about the growth and development of the people of rural areas, because 60 % population resides in rural India. Now the other major challenge is to sort out the best suitable methods for the development of the people of rural areas.

No doubt, Govt. had initiated many provisions in the form of welfare and development Schemes, and Projects. In addition, Govt. provides subsidized loans for the same. NGOs are working with the same objective of social development, Parallely, the microfinance Institutions are serving as a medium in the growth and development of the people.

I think Micro finance is a better option, which, if implemented in the appropriate manner, can contribute alotz in the growth and development of the people.

In the present days many MFI companies are formed which provide loans on various conditions and criteria, Their work objectives are different from one another, for example, some MFI work for ecology and emphasize on plantation and provide free loans for conservation of trees, some provide loans for education of children, while the rest of the MFIs provides loans directly for establishing some sort of Income Generating activities of the clients.

The major concept in which maximum MFIs work is, to establish some sort of Income Generating activities for the client, So that the client can repay the loans with the help of such IG activity and in parallel the IG activities will help the client in the survival of the client and his/her family. Actually it is a concept, on which most of the MFIs are incorporated.

Though the trend of MFI is not very old, but still the MFIs had covered almost every blocks or even village, the reason being that the MFIs are not social development’s organization,( i.e. non profit making), but they are profit making Institutions and most of them are registered as corporation. So to earn profit, they insure their existence in each and every underdeveloped village/ block or district.

No doubt MFIs are growing at a very fast speed.Parallely with the increase in their profit, but the thing they still lack is the implementation of the objectives of the MFIs.

Actually the objectives, i.e. to establish IG activities of the client from the loan amount, is hardly being implemented. The reason being the client those who take loans from the MFIs being illiterate or are not in a condition to approach the appropriate authority. So it becomes very difficult for them to think in the direction of establishing IG activities.

On the other side, the MFIs also hardly pays attention towards such establishment because for them, IG activities of the client is not very important in comparison to the interest over such loans. So In the whole process of (training of clients) CGT GRT, distribution of loans and recoveries, the issue of livelihood promotion or Income generation of the client disappears somewhere.

In other words the growth and development of the people is sacrificed on the name of growth of the Micro Finance Institutions. I did not criticize or I am not against the work of MFI, but I think if the MFI work with an objective of social development and more importantly if the implement it in their working, then the MFIs can better serve for the development of the nation.