Pillar Of Financial Inclusion Microfinance
BANKING FINANCE|July 2021
Access to conventional banking by all is the agenda of government and financial watchdogs and controller.
Joy Ghosh

If the financial network is considered with spider web, the ultimate concern is to connect the web strings to the services of small business entity and poor individuals. Microfinance includes microcredit which facilitates small loans to basic elementary clients; savings of the surplus money; micro insurance and payment network and coverage. The target group is usually poor population segments, socially marginalized , isolated and uplift them for making them sufficient enough to proceed with their procedural workings and rotate the cycle to earn enough to recycle ,service the interest of loan, pay out the installments and to scoop out the surplus as savings or investments.

In initial stages microfinance has limited coverage like providing loans to poor entrepreneurs and small business lacking access to credit. The relationship based banking for individual entrepreneurs and small businesses was one of the roadways for defining the ambit of microfinance. The other path was aggregate based where several entrepreneurs come together to apply for loans and other financial services as a group entity.

Evolution is the mechanism for a modification with time variable. Microfinance emerged as a spurt and came out with a movement having objective to reach poor and deprived people and households with an array of quality products and services in financial sector without limitation to just credit but also savings, insurance, payment services, fund transfers. The narratives derived from the microfinance were different from one to another. It was described as a catalyst to economic development, creating opportunity for the employment creation and enhancing the growth of the economy. Some of them were of the opine that microfinance is to optimally managing the finances of the poor. Certain sets of activities classified to be financial in developed countries are not monetized in developing countries. The cause behind the same is due to scarcity of dispensable income. Last two decades have witnessed microfinance as sector to satisfy the unmet demands of the poor, isolated group at a large scale.

Specifically emphasizing about the women entrepreneurs, microfinance has created platform for them to start and explore the potential of their skills and talents. It is not only creating jobs for women but also opens the door for investment, savings, educating wards and also setting example for others. According to a joint report by Bain & Company and Google, Women in entrepreneurship can generate 150-170 million jobs in India, which is more than 25 percent of the new jobs required for the entire working age population by 2030.

The report titled Women Entrepreneurship in IndiaPowering the economy with her has found that of the 432 million women in working age, about 343 million are not paid formal workers. An estimated 324 million of these women are not in labour force, and another 19 million are in the labour force but are not employed. The report suggests that in addition to job creation by private and government sectors, entrepreneurship is an untapped opportunity for working age women in India.

There has been growth of about 6 percent from existing 14 percent to 20 percent in context of women-owned enterprises. The structure of women owned enterprises in India are largely single person type which results to lower returns and employment. The report also states that women enterprises are often over represented in numbers as survey across parts of India suggest that 10-30 percent women-owned enterprises are often not run by women.

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