Micro Credit a Tool of Financial Inclusion and Women Empowerment

Abstract Credit is an important in the lives of the rural poor in a developing economy. Faced with a weak social security system to fall back upon, landless or near-land-less rural population is forced to depend upon credit for its livelihood. The low economic growth of these countries was perceived to be due to the lack of low capital resources, especially in the rural areas. A vicious cycle of low capital, low productivity, low incomes, low savings and consequently, a weak capital base was perceived to be operating, perpetuating a permanent poverty syndrome. Therefore the main challenge before developing countries like India is to provide financial services and credit to the poor so that poor emerges out of the poverty syndrome through meaningful income generating activities. It was this understanding that led various developing countries to make credit as an integral part of their poverty alleviation programmes. The conception and implementation of such programmes more often based on the broad principles of social banking helped several developing countries including India. Social banking is described as “the elevation of the entitlements of previously disadvantaged groups to formal credit even if this may entail a weakening of the conventional banking practices” [Copestake ET al1984]. In India After nationalization of commercial banks in 1969, a number of programmes have been designed specially to enlarge the flow of credit to the poor. The government (state) adopted the direct lending programmes, development of credit institutions such as Regional Rural Banks (RRBs) and Integrated Rural Development Programme (IRDP), a credit based poverty alleviation programme implemented through Commercial Banks. Later TRYSEM, DWCRA, SITRA and GKY which came into existence one of after another and viewed as independent programmes, resulting in a lack of coordination and linkages. Taking into all the strengths and weakness of above programmes, a single self-employment program SGSY on 1.4.99 which offers perfect balance -between credit and subsidy. The focus of this program is towards micro- enterprises and involvement of SHGs.