International Journal of Science , Engineering and Management (IJSEM)

Monthly Journal for Science , Engineering and Management

Volume3,February 2018,

Topic : Indian Microcredit Industry: Challenges and Future Prospects

Authors:Pratik Srivastava || Ankita Sharma

Abstract:Microcredit is not just the ground idea of eradicating poverty and rural development but chiefly an important idea of financial inclusion of the most discounting proportion of an economy. The unique impression of lending very small amount of loan without any collateral, to make people self-employed in every manner, marks its achievement. However, its outreach is not expedient as compared to the population and requirement in India. More than a billion people faces dearth of financial services around the globe while some 200 million of these people belongs to India. This paper edifies micro credit delivery system in India, embracing stupendous role of NABARD, MFIs and SHGs, recent trends and unleashed potential of industry by pondering over its institutional structural design, viability and trade-off between inclusion and self-sustainability. Our paper subsumes aspects of both an empirical work and a literature review. Primary data in the form of a survey adopting questionnaire form is collected, targeting very low-income group and secondary data includes journals, PIB and Government reports. Graphical, percentage and ranking methods have been used to anatomize the data. The analysis shows that there is a prodigious market for Microcredit in India, backed by government’s initiatives and growth in the country’s low income but priority sector. The paper also focuses on the cardinal challenges confronted by Microcredit institutions like MFI’s financial non- viability, improper targeting, huge compliance cost, high interest rates, inappropriate infrastructural resources and absurd repayment pattern on micro-loans. Concluding shortcomings and trends, we propose state-of- the -art reforms for future focusing mainly upon improving delivery structure, adopting less complicated process framework, tailored products and incorporating innovation in microcredit industry through technology.

Keywords: Microcredit, MFI-SHG, self-sustainability, outreach, Cost. JEL Codes: R51, G21, D61, L31

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DOI: 01.1617/vol5/iss2/pid64385

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Dr.Muhammad Ishtiaq,
Mirpur University of
Science & Technology,
Mirpur, Azad Kasmir.

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ISSN(Online): 2456-1304

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Thomson Reuters ID : q-6288-2016.
ORCiD Research ID : 0000-0001-9540-6799

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Journal Code : IJSEM
Electronic ISSN : 2456-1304
Impact Factor : 2.7
Frequency : Monthly
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