IDEAS home Printed from https://ideas.repec.org/a/icf/icfjag/v08y2011i3p38-58.html
   My bibliography  Save this article

A Study of Microfinance as an Innovative Credit Delivery Mechanism in Rural India

Author

Listed:
  • K K Tripathy
  • Sudhir K Jain

Abstract

The key problem of Indian agriculture is finance. Several weaknesses of the rural financial delivery system, have not been corrected even after almost 40 years of bank nationalization of 1969 which focused on enhancing the outreach and access to rural credit in India. In addition to reviewing agricultural credit policies followed in India and assessing the trends and progress in the credit flow and access, this paper aims at examining the suitability of government-directed microfinance activities as an alternate tool to the formal credit delivery mechanism in rural areas. Drawing upon the field surveys conducted in four districts of two federal states in India, the paper not only indicates the wide recognition the program has gained within the rural community but also reflects the inequitable impact of microfinance initiative, and highlights a few prominent flaws in program implementation and administrative mismanagement which reduce the effectiveness of the program. While the survey findings reveal the main problem areas like unfriendly attitude of bank officials, inaccessible bank branches, non-availability of timely and adequate credit, sub-optimal selection of key economic activities and market-related problems, the regression result points out that land-based activities are not remunerative for the microfinance beneficiaries. This analysis also indicates that literacy, interest rate on loanable funds, ownership of productive assets and savings are the major determinants of the income function. The paper concludes with some policy implications for improving the design for implementing the program. The paper adds to the extant knowledge about microfinance programs by comparing the performance of formal banking with the informal banking through microfinance initiatives in a developing country like India.

Suggested Citation

  • K K Tripathy & Sudhir K Jain, 2011. "A Study of Microfinance as an Innovative Credit Delivery Mechanism in Rural India," The IUP Journal of Agricultural Economics, IUP Publications, vol. 0(3), pages 38-58, July.
  • Handle: RePEc:icf:icfjag:v:08:y:2011:i:3:p:38-58
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:icf:icfjag:v:08:y:2011:i:3:p:38-58. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (G R K Murty). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.