Micro Finance Case Study

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NABARD has defined micro finance as follows: “Micro finance is all about provision of thrift, credit and other financial services and products of very small amount to the poor in rural, semi urban and urban areas for enabling them to raise their standard of living.” UN declared the year 2005 as year of micro credit since the policy makers of UN supported the view that micro finance is an instrument to fight against poverty. According to Nobel Committee, micro finance can help the people to break poverty, which in turn is seen as an important prerequisite to establish long last peace. In the development paradigm, micro-finance has evolved as a need-based programme for empowerment and alleviation of poverty to the so far neglected target groups…show more content…
The experience across India and other countries has shown a robust potential of Microfinance to integrate with the development issues thereby significantly impacting the lives of poor. There are plenty of studies which narrate success stories of many microfinance initiatives across the world and the factors that contributed to its success. Robinson opined that microfinance services in general can help low-income people to reduce the personal risk of going default, improve management capabilities, raise productivity, obtain higher returns on investments, increase their incomes and improve the quality of their lives and those of their dependents such as children and other family members (Robinson, 2001). Various empirical studies carried out in India, indicates that micro finance and Self Help groups, by and large contributed to the development of core poor in terms of economic well-being, alleviating poverty and empowerment leading to overall development of rural poor.( K.Rajendran,2012)…show more content…
UNESCAP (2006) defined sustainability as the ability of the organization to meet the cost of the operations and build enough reserves for capitalization. Chaves and Gonzalez - Vega, (1996), assert that sustainability is the institution’s ability to grow and provide financial services on a continuous basis by the financial resources that they have or by borrowing from other financial or non – financial institutions based on market interest rate. A focus on self‐sufficiency will help MFIs to control costs. According to Meyer (2002), there are two kinds of sustainability that one could observe in assessing MFIs performance are Operational self -sustainability and financial self-sustainability. Operational self -sustainability indicates whether enough revenue has been earned to cover the MFI’s direct costs, excluding the cost of capital but including actual financing costs. Financial self-sustainability on the other hand, portray the actual financial health of

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