SHRIYA MOHAN traces the Indian microfinance story and what stops it from making a dent in poverty
WHEN MUHAMMAD Yunus, winner of the Nobel Peace Prize in 2006, showed the world what a small loan could do to a group of poor villagers in Bangladesh, people wondered why such a simple idea had never been thought of before.
According to N Srinivasan’s State of the Sector Report on Microfinance, published by Sage, over 800 microfinance institutions (MFIs) now operate in India, reaching out to over 140 lakh clients, with an outstanding cumulative loan of Rs 5,900 crores in small loans. Over 54 million clients from the Self Help Group (SHG) — Bank linkage programme and MFIs, today access microfinance services. The Indian microfinance sector has seen phenomenal growth in the last few years. In 2007-08 alone, MFIs have had a growth rate of 40 percent.
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