Microfinance in Indian banking industry and its future

摘要

Indian banking system, which is among the largest banking networks in the world, did not reach most of the rural poor in India. About 70% of the Indian population from rural areas accounted for only 30% of bank deposits. In the early 1990s, to provide credit and savings services to the poor, microfinance was envisaged. By the mid 1990s, several mainstream banks began providing credit and savings facilities to SHGs that built credible financial discipline. The government and RBI announced several measures to boost microfinance activities in the country. With increase in competition and availability of funds, the Indian microfinance sector could be the ultimate beneficiary. This paper is an attempt to understand microfinance in India and also to make a comparative analysis between public and private sector banks with respect to micro financing.