THE IMPACT OF MICROFINANCE ON RURAL SECTOR AND ITS CONTRIBUTION TOWARDS INDIAN ECONOMY

Abstract

This paper delineates three distinct aspects of microfinance: first, present scenario of microfinance (MFIs and SHGs) in India, secondly, to study the impact of microfinance on rural sector and its contribution towards Indian economy and third, to study how MFIs and SHGs work and also examine their current progress. Also from this paper we can came to know that further steps need to be taken by Microfinance establishments to increase the awareness of MFIs and SHGs in Punjab as majority of the population is not aware about these institutions and they seek bank loans to balance their financial position. Further they need to educate the people regarding different services like loans, savings, insurance etc. In Punjab, only one or two MFI's exist and in many villages public and private banks are located. Also MFIs create self-employment opportunities and that proves to be the best way of poverty alleviation and solving the problems of unemployment.