A STUDY ON THE PERFORMANCE OF MICRO FINANCE WITH RESPECT TO SELF HELP GROUPS IN KARNATAKA

Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, Micro-Finance is dominated by Self Help Groups (SHGs) - Banks linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the ‘unreached poor’. In the Indian context terms like “small and marginal farmers”, “rural artisans” and “economically weaker sections” have been used to broadly define micro-finance customers. Research has shown that, over time, microfinance customers increase their income and assets, increase the number of years of schooling that their children receive and have shown improved health and nutrition of their families. A more refined model of micro-credit delivery has evolved lately, which emphasizes the combined delivery of financial services along with technical assistance and agricultural business development services. Compared to the wider SHG bank linkage movement in India, private Micro Finance Institutions have limited outreach, because SHG’s open bank account with either commercial banks or regional rural banks or co-operative societies. However, it is seen that recently large number of microfinance institutions are transforming into Non-Bank Financial Institutions (NBFCs). This changing face of microfinance in India appears to be positive in terms of the ability of microfinance to attract more funds and therefore increase outreach.