Microfinance Institutions in India and its Legal Aspects
14 Pages Posted: 12 Jul 2011
Date Written: July 12, 2011
Abstract
The objective of the present paper is to deal with the concept and working of MFIs with special focus on micro credit and the after effects on the poor occurring specially due to its mode of functioning in Indian economy. As there is no clear demarcation of the regulatory framework of the microfinance institutions in India, overlapping of regulation is prevalent. The government sectors as well as the stakeholders in the microfinance institutions have shown their eagerness to overcome this problem. This paper discusses the recent committee reports and the conflict arising out of the recommendations made in it. The critical financial condition of the MFIs and the suicides committed by the farmers due to financial distress shows the graft involved in the institutional setup and lack of proper vigilance on the government’s part. MFIs are observed as an important instrument for the welfare of the poor so it is the social responsibility of the government to revamp the structure of MFIs and make it more receptive for the benefits of the poor.
Keywords: financial inclusion, self help promoting institutions, priority lending, low cost funds, non-banking financial companies
JEL Classification: G21, G28
Suggested Citation: Suggested Citation