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Remittances and microfinance in India: Opportunities and challenges for development finance

Author

Listed:
  • Sil, Milly
  • Guha, Samapti

Abstract

With remittances to the developing countries reaching USD 251 billion in 2007, there has been a recent surge of interest to understand the effective channelization of this flow of remittances for providing a variety of financial services desirable to the poor households in the receiving regions, especially in rural pockets. An effective solution, by way of suggestion, especially by policymakers, has been a partnership between the formal money transfer agents and Micro Finance Institutions (MFIs). The remittances and MFI nexus is seen as an important tool for development finance for the poor remittance receiving households. This paper makes an attempt to explore the various opportunities as well as challenges facing MFIs in India in this regard and recommends certain necessary steps in order to consolidate the process of linking MFIs with other conventional formal institutions. Additionally, the paper proposes two models of remittance transfer and mobilisation that could be applicable to India as well as other developing countries facing similar situation.

Suggested Citation

  • Sil, Milly & Guha, Samapti, 2010. "Remittances and microfinance in India: Opportunities and challenges for development finance," MPRA Paper 47815, University Library of Munich, Germany, revised 04 Dec 2009.
    • Handle: RePEc:pra:mprapa:47815
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    References listed on IDEAS

    as
    1. Samuel Munzele Maimbo & Dilip Ratha, 2005. "Remittances: Development Impact and Future Prospects," World Bank Publications - Books, The World Bank Group, number 7339, April.
    2. S. Irudaya Rajan, 2008. "Managing Migration in thePhilippines: Lessons for India," Working Papers id:1346, eSocialSciences.
    3. Puri, Shivani. & Ritzema, Tineke., 1999. "Migrant worker remittances, micro-finance and the informal economy : prospects and issues," ILO Working Papers 993576093402676, International Labour Organization.
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    5. Alexander Tedeschi, Gwendolyn, 2006. "Here today, gone tomorrow: Can dynamic incentives make microfinance more flexible?," Journal of Development Economics, Elsevier, vol. 80(1), pages 84-105, June.
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    More about this item

    Keywords

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    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D6 - Microeconomics - - Welfare Economics
    • G0 - Financial Economics - - General
    • J6 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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