Assessing the Effectiveness of Small Borrowing in India
Rajesh Shukla , P.K. Ghosh , Rachna Sharma
Published Report | NCAER
For developing countries like India, operating on a different model, MFIs have been penetrating among unbanked section of society. However, the microfinance industry has come under severe attack on perceived ground that the high interest rates, strong arm tactics are being employed, multiple loans are forced on the hapless poor and the investors in such MFIs are making huge profits. This report is based on primary survey conducted in five clusters, namely Kolkata, Hyderabad, Jaipur, Lucknow and Chennai. The dimensions on which respondents were asked questions included, awareness of different sources of borrowing; loan particulars: source of loan, loan principal, cost of borrowing, interest rate charged, repayment schedule and installment amounts; use of borrowings whether for consumption or productive purposes or both; extent of multiple borrowings; saving habits of rural households and barriers to different sources of borrowings.