NABARD'S Role in Financing and Development of Microfinance in India

Abstract

India is considered to host around one-third of world's rural population. The official estimates range between 25-50% percent of the total population. It is stated that around 80% of the rural house holds don't have access to credit. The demand for micro credit has been around $30 billion (3000 crores), however, the supply is less than $2.2 billion (220 Crores) as combined by all involved in the sector. In India to meet the credit needs of the poor rural population, an alternative financial services delivery mechanism started emerging in the villages and small towns of the country named as Microfinance Institution.

Microfinance is the form of services such as saving and uncollateralised credit extended to the poor. It has been lauded as a powerful vehicle for reducing poverty and empowering rural people. Today Microfinance becomes an important instrument in rural economic development.

One of the key players of Microfinance is NABARD. It is an apex bank, accredited with all matters concerning policy, planning and operations in the fields of credit for agriculture and other economic activities in rural areas in India. The Micro Finance program of NABARD, which began in 1992 with formation of 500 self help groups (S. H. Gs) has emerged as the largest Micro Finance program in the world. The important roles played by NABARD in field of Micro Finance are- (i) to provide refinance to the lending institution in rural India, (ii) promoting institutional development, (iii) evaluation, monitoring and incepting the client bank.

In Assam, NABARD has played a vital role by extending grant assistance to 358.06 Lakhs to 199 NGOs for promotion of 14249 SHGs up to 31st Oct, 2010. With the help of secondary data, we have endeavoured to explain the role of NABARD in promoting microfinance in India.