Microfinance: A Tool for Human Development

Finance being the life blood of any commercial activity, availability of sufficient pecuniary resources at rational terms is constitutive to secure prompt economic development. It is a widely accepted fact that microfinance maneuvers an evidential function in financing commercial activities ventured by people dwelling under the poverty line. Microfinance is a financial service of small measure rendered to entrepreneurs, particularly women micro entrepreneurs, from low income households. These financial services may include saving, credit, insurance, money transfer etc. In India, various microfinance related programmes are carried through group structures popularly recognised as Self Help Groups which are small and informal associations of poor people having preferably similar socio-economic background and who have come together to realise some common goals based on the principles of self-help and collective responsibility. The present paper is a modest attempt to examine the impact of microfinance on human development with the objective of appraising its impact on employment, income, health and education apart from investigating the problems associated with the implementation of microfinance related schemes and suggesting maoeuvres to overcome them. Primary data pertaining to economic activities, amount of loan, man-days created, income, utilisation of income on education and health et cetera were pulled together through structured schedules from the members of Self Help Groups selected on the basis of a simple random sampling method. Simple statistical tools have been utilised for comparative analysis and interpretation of the outcomes. It was found that microfinance has not only increased the saving habit of the poor but also helped in reducing the intensity of poverty. It has been helpful in removing illiteracy and making people health conscious. The linkage programmes between Self Help Groups and banks have extended wider opportunities for closer interaction between banks and group members. As a result, the poor masses have been able to earn their living, generate self-employment and uphold their living standards. In other words, microfinance has contributed immensely towards human development and revitalised the grassroot economy of agrarian India.