Micro Finance Bank

Self GROUP (SHG) and microfinance institutions

INDIA-current trends

Today the situation India's economic profile reveals the following:

Gross Domestic Product of U.S. $ 445 billion

Fourth largest economy in terms of parity Purchasing Power (PPP), with a GDP of U.S. $ 1.8 million

Sixth fastest growing economy, projected to be 15.7% higher than that of Japan in 2010

Strong agricultural sector which represents almost 25% of national production and 15% of exports, with self-sufficiency in all major crops except oilseeds

Diverse industrial base with self-sufficiency in all basic industries and a wide range of engineering, but weak in the country in technology electronic hardware

Solid service sector accounting for 49% of national output, and a 7% annual growth

Mature sector, financial and capital with over 9,000 listed companies and a market capitalization equivalent to U.S. $ 2 billion, with the banking and finance sector growth at 7.5%

CONCEPTOF MICRO FINANCE:

Microfinance is the supply of loans, savings and other basic financial services the poor. People living in poverty, like everyone else, need a wide range of financial instruments to manage their businesses, creating assets, stabilize consumption and protect against risks. Financial services needed by poor capital loans, consumer credit and savings, pensions, insurance, and services money transfer.

The role of bank financing to socially and economically marginalized through self-help groups have the following advantages.

1. India is now suffering from mass poverty, which is a consequence of unemployment and the resulting income and the disparity of wealth. NAGAYYA (2000) reported that the Association for social progress in Bangladesh, society and help stimulate the rural poor through education (SHARE) in India, youth development center and social (CYSD) in South Asia and Bangladesh Rural Development advisory group to help the poorest, the action Professional development assistance to self-association of women and development forum credit are focusing their attention to the financial statements generation income and employment of the poor with the support of livelihoods.

2. Micro businesses require capital light, it is not necessary to know the correct technical equipment and technical services. The time interval between the flow of income and employment generation is relatively very short. Microenterprises require small investments ranging from Rs.2000 to Rs.10000. HILARY STANDING (1985) said that women are fairly proportional to the least skilled, poorly paid work and considered secondary labor market and wages are defined as additional salary.

3. Savings of people remain inactive due to lack of adequate financial services and awareness of savings mobilization among the population. Adequate mobilization of savings and use of bank financing may be possible if regional micro businesses are established. Mark. M. Pitt noted that 90% of clients women mobilized their own savings for the initial investment.

4. Micro increase the production of consumer goods and therefore inflation check. Inflation in India, arises mainly due to the shortage of consumer goods and the use of labor for scarce capital and scarce financial resources. If these companies are used to consumer goods, providing opportunities for fuller utilization of available labor and the mobilization of inflation Microfinance can check To a considerable extent.

5. Microfinance is best suited for better use of local resources and help poverty reduction with the result of self-sufficiency. N. NARAYANASAMY (2005) explained that the average savings per group is Rs.28000 which is above the state average of Rs. 25000. The average savings per member over a period Ts.28to Rs.45.

6. Socialist pattern of society requires better use income and wealth. Increased employment opportunities among the rural masses and urban areas through microfinance lead to an increase in their purchasing power and maximizing the utility. Decentralized economic structure may pave the way for a socialist society. Marquerite Robinson (2001) illustrate the point of "Credit subsidies to the economically active poor could make good use of commercial credit rationed present successful microfinance loans is also related to achieving the MDGs but the challenge with greed as Martin (2005) is the challenge for the industry is managing the expansion without losing sight their social objectives. "

7. Low capital cost and location advantages play an ongoing role and healthy economic development. Provision of financial assistance they provide greater stimulation to productive resources efficiency by reducing transaction costs through to institutional specialization and innovation in the delivery system, but will be able to operate profitability in markets characterized by very small volumes transaction and customers with fewer resources.

8. Microfinance helps to raise the living standards of the marginalized income groups in all communities. NALLAKABEER (2005) mentions that microfinance has a positive and significant effect on the educational situation of girls instead male children when compared to loans men 1% increase in loans to women increased the likelihood of school enrollment 1.9% for males and 2.4% for girls, while the same 1% increase in credit to the man increased enrollment of children only 3.1% but had no effect on girls. The overall enrollment rate is 6% and the enrollment of girls by 8%. Himachal Pradesh, Kerala, Assam, Rajasthan, West Bengal Maharashtra and formed an intermediate group with relationships within a standard deviation of the mean with 94, 85, 82, 65, 61, 56 and households participating in SHGs all households in 1000 achieving respectively.India 's is to reduce by half the population of poor people by 2015 and achieve a broad-based economic growth in a strategy to combat poverty successfully.

Conclusion:

From the above it is considered that poor people need a variety financial services, not just loans. It is a powerful tool in the fight poverty.further, interest rate ceilings making it harder for poor people for credit. The role of government is to enable financial services, which are not provided. Donor funds should complement private capital, not compete with him. The main obstacle is the lack of strong institutions and managers. Microfinance works best when it is measured and disclosed its results.

About the Author

Dr.R.SRINIVASAN is a Post graduate in commerce and Management. He received his doctoral degree from Alagappa University in 1997. He currently teaches financial management and Research Methodology Subjects in Post graduate and Research Department of Corporate Secretaryship at Bharathidasan Government College for Women (Autonomous), Pondicherry University, Puducherry. Before Joining BGCW, he was teaching in SNR College, Coimbatore, Sindhi college, Chennai& T.S.Narayanasamy College, Chennai for eight years. He was with the industry for a short term at Salzar Electronics Pvt. Ltd, Coimbatore. He has about 20 years of teaching experience and having research experience of 15 years. His interests are in Accounting and finance, Capital Market, Quantitative Methods. He underwent the Faculty Development Programme at Indian Institute of Management Ahmedabad during 2000-01. He has presented 20 papers in national and international conferences and has published twenty papers in the areas of Finance and Human resource Management in National Journals. Co-authored a book titled, ‘Investors Protection, published by Raj Publications, New Delhi He has delivered lectures in contemporary finance topics at Pondicherry University. He is involved in consultancy projects for Godrej Saralee, Chennai in the areas of Statistical Applications. He has supervised a number of research projects in the area of corporate finance and Human Resource Management. He is the Board of examiner in corporate Secretaryship and Management for the past two decades.
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