Evolution of Microfinance in South Asia
by Microfinance emerged as financial services for low-income families.
The emergence of microfinance:
Microfinance emerged as financial services for low-income families.
· Informal system especially money lending existed from ancient times.
· Formal microfinance – MF provided by registered institutions – from about 100 years ago: CCS Act, 1904 in pre-independence India, 1911 in Srilanka and the 1950s in Nepal
· Rural cooperatives were conceived as channels of agriculture credit, not specifically for low income clients.
· But cooperatives dominated by large farmers and were incorporated into directed credit mechanism.
· Ultimately cooperatives are not very effective in reaching MF clients except in Sri Lanka.
Other countries have seen an evolution through:
· Directed credit- It was popular initially in 1970s
· Integrated development programme of 1980s-90s were held with high level of subsidy.
· Growth of microfinance institutions in the late 1990s – following Bangladesh.
Banks increasing interest in microfinance through MFIs over the last few years in India, Bangladesh.
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