Nindaanis Cullen

In today’s financial world, microfinance has emerged as a significant tool to address rampant and pervasive poverty. It represents a revolutionary idea, aiming to serve the poorest of the poor, who are typically considered unviable candidates for business loans. Microfinance has been gaining greater importance globally, with India, being a demographically diverse country, witnessing its multifaceted impact, leading to the evolution of various microfinancing delivery models.

The increasing significance of microfinance has inspired economists and academicians to study its role and impact in poverty alleviation, financial inclusion, employment generation, women’s empowerment, and entrepreneurial development. However, most studies have focused on district or state levels, with national-level research primarily concentrating on the contribution of commercial banks in microfinancing. This has left a research gap regarding the various delivery channels of microfinance and their nationwide status.

The present study represents a modest attempt to comprehensively analyze the delivery models of microfinance in India, with special reference to the role of the National Credit Fund for Women, also known as Rastriya Mahila Kosh (RMK). RMK is a registered society operating under the Ministry of Women and Child Development, Government of India, established in 1993 with the initiation of the Self Help Group (SHG) movement in India. Despite its significance, there is limited literature available regarding the working, growth, and role of RMK in microfinancing.

The primary objective of this study is to analyze the geographical distribution patterns of microfinance under different delivery models and identify any disparities present within them. The study also aims to analyze the trends and status of microfinance extended by RMK.

This research study is divided into six chapters. The first chapter contains the introduction and research methodology. The second chapter provides insights into the main players in the delivery channels of microfinance, namely, Self Help Groups (SHGs) and Non-Governmental Organizations (NGOs). The third chapter analyzes the nationwide status of the microfinance delivery system in India. The fourth chapter offers an overview of the objectives, functions, and loan operations of RMK. The fifth chapter comprises the analysis of geographical dispersion and the performance of RMK’s loan operations. Finally, the sixth chapter summarizes the findings of the study.

This research work focuses on the prevailing delivery systems in India, namely, the SHG-Bank Linkage Model (SHG-BLP) and the Microfinance Institution Model (MFI Model). The total credit extended by both models amounted to 1 lakh crore as of March 31, 2018, covering more than 11 crores households, with 95% of beneficiaries being women.

The study of geographical distribution of both delivery models revealed disparities in credit distribution. Region-wise analysis of the SHG-BLP Model showed that the Southern Region of the country accounted for a significant share of 80% of total credit sanctioned in the year 2017-18. Total loans disbursed to the Southern Region amounted to Rs. 31023.32 crore, out of the total of Rs. 38781.15 crore for the entire country. The top five states with the highest number of SHGs credit-linked with banks were Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, and West Bengal, with the first four belonging to the Southern Region. Savings and outstanding loans in the regions exhibited a similar pattern.