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Challenging Task for MFIs in Rural Areas Need for Developing Products & Product Marketing Strategy Dr Amrit Patel, Member –Editorial Board , Microfinance Focus


ndia has a century old Cooperative Credit Institutions having 106,400 Primary Agricultural Credit Societies at the village level with a total membership of over 125 million rural people. On an average one PACS serves six villages. Besides, there have been 47,468 branches of public sector and regional rural banks in rural & semi-urban centers providing banking facilities. However, while 45.9 million farmer households neither accessed credit from institutional agencies nor from non-institutional agencies, as many as 22.9 million were indebted to non-institutional agencies for loans, which are normally not provided by formal financial institutions. It is, therefore, a challenging task for banks, MFIs & Government to create enabling environment so as to bring 45.9 million farmer households within banking fold as a part of financial inclusion and facilitate 22.9 million households to redeem debt from the non-institutional agencies for which banks/MFIs should develop innovative credit products [including debt swapping] and formulate strategic marketing policy. Existing Rural Credit Scenario According to the National Sample Survey Organization data, 45.9 million [51.4%] farmer households out of a total of 89.3 million households in the country did not access credit, either from institutional or non-institutional sources and according to All India Debt and Investment Survey, as on end -June 2002 out of 39.2 million indebted households in rural areas as many as 22.9 million [58.4%] were indebted to non-institutional agencies. Of these, while 10.2 million [44.5%] were indebted to professional moneylenders, 4.9 million [21.4%] had sourced debt from agricultural moneylenders, followed by 0.6 million from landlords. It may be noted that between 1991 and 2002, number of indebted households in rural areas significantly increased from 27.2 million to 39.2 million [144.1%]. However, number of indebted households to non-institutional agencies sharply shot up from 11.4 million to 22.9 million [200.9%] during the decade as compared with from 18.2 million to 19.8 million [108.8%] indebted to institutional agencies during 1981-91.

Microfinance Focus [ April 2009 ] 16

Microfinance Focus April issue 2009  
Microfinance Focus April issue 2009  

A Global Magazine on Microfinance and Sustainable Development