Role of Microfinance in Financial Inclusion in India

2018 ◽  
pp. 322-343
Author(s):  
Madhuri Malhotra
Keyword(s):  
Economic Development ◽  
Rural Population ◽  
Economic Benefit ◽  
Banking Sector ◽  
Financial Inclusion ◽  
Microfinance Institutions ◽  
Modes Of Operation ◽  
The Poor ◽  
The Status

The purpose of this chapter is to critically evaluate the status of microfinance in India, the types, characteristics, and modes of operation of MFIs. It also highlights the main differences between commercial baking and microfinance institutions and examines the extent to which banks fulfill financial requirements and of whom? This chapter presents a linkage among microfinance institutions, financial inclusion, and economic development on a country. The study reveals that MFIs contribute in the upliftment of the society leading to economic benefit to the country as a whole. It makes the reader realize the importance of microfinance in the economic development of a country which cannot be realized just by uplifting the structured and most sophisticated banking sector. Handholding of the poor and rural population is required in order to accelerate the process of financial inclusion and thereby reaching the goal of economic development.

Role of Microfinance in Financial Inclusion in India

2021 ◽  
pp. 336-357
Author(s):  
Madhuri Malhotra
Keyword(s):  
Economic Development ◽  
Rural Population ◽  
Economic Benefit ◽  
Banking Sector ◽  
Financial Inclusion ◽  
Microfinance Institutions ◽  
Modes Of Operation ◽  
The Poor ◽  
The Status

The purpose of this chapter is to critically evaluate the status of microfinance in India, the types, characteristics, and modes of operation of MFIs. It also highlights the main differences between commercial baking and microfinance institutions and examines the extent to which banks fulfill financial requirements and of whom? This chapter presents a linkage among microfinance institutions, financial inclusion, and economic development on a country. The study reveals that MFIs contribute in the upliftment of the society leading to economic benefit to the country as a whole. It makes the reader realize the importance of microfinance in the economic development of a country which cannot be realized just by uplifting the structured and most sophisticated banking sector. Handholding of the poor and rural population is required in order to accelerate the process of financial inclusion and thereby reaching the goal of economic development.

Journey of Financial Inclusion Driven by Indian Banking Industry

2018 ◽  
pp. 186-223
Author(s):  
Abhineet Saxena ◽  
Ashish Sharma
Keyword(s):  
Economic Development ◽  
Financial Institutions ◽  
Rural Areas ◽  
Rural Population ◽  
Banking Industry ◽  
Financial Inclusion ◽  
North Eastern ◽  
North Eastern Part ◽  
Made In

Financial institutions, especially banks, have proved to be a boon for the economic development of a country like India. An attempt has been made in the present chapter to analyze the state of financial inclusion and the role of banking in achieving full financial inclusion in India. The journey of financial inclusion through banking in India has been critically appraised. Some of the important outcomes that can be highlighted are increased banking access of rural population in past few years together with the huge expansion in banking infrastructure in rural areas. Banking in India has been transformed with the introduction of PMJDY, BC Model, etc. Increasing trend has been observed in IMPS and M-Wallet penetration. North-eastern part of the country is still a challenge in the way of financial inclusion. The journey of financial inclusion on the wheels of Indian banking industry is still in search of the ultimate destination, and it will take miles to achieve full financial inclusion.

scholarly journals IMPROVING FINANCIAL EDUCATION TO THE POOR AT THE BOTTOM-OF PYRAMID: THE ROLE OF SOCIAL FINANCE VIS A VIS FINANCIAL INSTITUTIONS

2016 ◽  
Vol 1 (1) ◽  
pp. 44
Author(s):  
Laily Dwi Arsyianti ◽  
Salina Kassim
Keyword(s):  
Financial Institutions ◽  
Financial Education ◽  
Financial Inclusion ◽  
Financial Resources ◽  
Microfinance Institutions ◽  
Operational Costs ◽  
The Poor ◽  
Bottom Of Pyramid ◽  
The Cost

This paper aims to explore the role of Islamic social finance and financial institutions in contributing towards improving financial inclusion through financial education among the poor. While there have been a lot of efforts undertaken by financial institutions, especially microfinance institutions, to achieve the financial inclusion agenda, the financial inclusion programs would normally require high operational costs which many financial institutions would consider them as not commercially viable. The costs thenare transferred back to the customers, resulting in the financing/ credit cost higher than commercial financial institutions. As a result, incidences of bankruptcyincrease when the cost of credit is higher. Thus, financial education is essential for average family in managing their day to day financial resources. While financial institutions keep busy with financial inclusion agenda and trying to find the best way without disturbing their core business agenda, Islam offers social finance institution (amil and nadzir) as the solution to this problem.

Marketing of Microfinance for Rural Women

2017 ◽  
pp. 153-184
Author(s):  
Pallavi Mathur ◽  
Parul Agarwal
Keyword(s):  
Economic Development ◽  
Transaction Cost ◽  
Rural Women ◽  
Financial Services ◽  
Banking Sector ◽  
Financial Inclusion ◽  
Rural Economic Development ◽  
The Poor ◽  
High Transaction Cost ◽  
Poor Population

Microfinance, the provision of financial services to poor and under-served societies, has emerged as one of the most promising possibilities for stimulating rural economic development through local enterprise. Banking sector in India has proved to be one of the largest sectors in the Indian financial system. Earlier banks restrained from lending to the poor due to high transaction cost and high credit risk involved in dealing with such kind of population. Microfinance programme aims at reaching out to the poor population especially women thus fulfilling the objectives under the financial inclusion.

scholarly journals DEVELOPMENT BANKING SERVICES FOR THE POOR

2021 ◽  
Vol 71 (2) ◽  
Author(s):  
Mykola Miroshnik ◽  
Iryna Didenko
Keyword(s):  
Social Relations ◽  
Low Income ◽  
Banking Sector ◽  
State Regulation ◽  
Financial Inclusion ◽  
Poor People ◽  
Microfinance Institutions ◽  
Banking Services ◽  
The Poor ◽  
Wide Range

Despite the many achievements of the XXI century in the development of economic and social relations, comprehensive globalization and digitalization of most sectors of the national economy, the problem of poverty remain still quite urgent worldwide. That is why its improvement is recognized as one of the goals of sustainable development adopted by the UN. Moreover, according to the World Bank in the 2017, more than 1.7 billion adults were not served in banking institutions (or were unbanked), which indicates another pressing problem - financial inclusion. All this presupposes the high relevance of the study of the basic practices of the banking services development for the poor people, which is the main goal of this article. To achieve this goal, the paper proposes to conduct a conceptual analysis of the phenomenon of financial inclusion and highlight the main factors that affect it (territorial, financial, educational, legal, psychological), as well as such group of the population as low-income (or poor). Based on this, the author considered two main practices that can be used to develop the market of banking services. First, the model of branchless banking is considered, which involves use of a wide range of retail agents (for exampl'e, mobile operators, post offices, gas stations, retail outlets, etc.). It allows the poor, regardless of territorial and financial constraints, receive basic banking services from such retail agents, and banks to act as their guarantor. Secondly, model of microfinance for banks is researhed, which allows to provide financial resources for business initiatives of the poor people on fairly favorable terms.In this model, banks can also either provide such services directly, or involve intermediaries (primarily microfinance institutions) to interact with customers. Both of the above models have their advantages and risks for the banking sector, but their implementation will help not only to attract the unused (or unbanked) customer sector, but also to help overcome poverty in the country.The obtained results indicate the need for state regulation of the above models for their effectiveness in Ukraine and are the basis for more thorough research in this area.

The Role of Mobile Money in Moderating Financial Exclusion: A Tanzanian Experience

2020 ◽  
Vol 2 ◽  
pp. 1-24 ◽  
Author(s):  
Deogratius Joseph Mhella
Keyword(s):  
Developing Countries ◽  
Financial Institutions ◽  
Banking Sector ◽  
Research Question ◽  
Microfinance Institutions ◽  
Mobile Money ◽  
Access To Credit ◽  
Financial Exclusion

Prior to the advent of mobile money, the banking sector in most of the developing countries excluded certain segments of the population. The excluded populations were deemed as a risk to the banking sector. The banking sector did not work with cash stripped and the financially disenfranchised people. Financial exclusion persisted to incredibly higher levels. Those excluded did not have: bank accounts, savings in financial institutions, access to credit, loan and insurance services. The advent of mobile money moderated the very factors of financial exclusion that the banks failed to resolve. This paper explains how mobile money moderates the factors of financial exclusion that the banks and microfinance institutions have always failed to moderate. The paper seeks to answer the following research question: 'How has mobile money moderated the factors of financial exclusion that other financial institutions failed to resolve between 1960 and 2008? Tanzania has been chosen as a case study to show how mobile has succeeded in moderating financial exclusion in the period after 2008.

scholarly journals The Nexus between Mobile Money Regulation, Innovative Technology and the Promotion of Financial Inclusion in Zimbabwe

2021 ◽  
Vol 24 ◽  
pp. 1-33
Author(s):  
Howard Chitimira ◽  
Elfas Torerai
Keyword(s):  
Low Income ◽  
Rural Areas ◽  
Financial Services ◽  
Banking Sector ◽  
Regulatory Framework ◽  
Financial Inclusion ◽  
Innovative Technology ◽  
Technological Innovations ◽  
Mobile Money ◽  
The Poor

The advent of mobile money innovations has given people in rural areas, informal settlements and other poor communities an opportunity to participate in Zimbabwe's mainstream financial economy. However, the technology-driven money services have presented some challenges to the traditional banking sector in general and the regulation of financial services in particular. Firstly, most mobile money services are products of telecommunication corporations, which are not banks. Telecommunication companies use their network reach to provide mobile money services via mobile devices at a cheaper cost than banks across the country in Zimbabwe. As such, banks face unprecedented competition from telecommunications companies that are venturing into financial services. It also appears that prudential regulation of banks cannot keep up with the fast pace at which technological innovations are developing and this has created a disjuncture between the regulation and the use of technological innovations to promote financial inclusion in Zimbabwe. The Banking Act [Chapter 24:20] 9 of 1999, the Reserve Bank of Zimbabwe Act [Chapter 22:15] 5 of 1999 and the National Payment Systems Act [Chapter 24:23] 21 of 2001 have a limited scope in terms of the regulation of mobile money services in Zimbabwe. The Ministry of Finance and Economic Development launched the National Financial Inclusion Strategy (NFIS) 2016-2020 to provide impetus to the financial inclusion of the poor, unbanked and low-income earners in Zimbabwe. However, the NFIS appears to push more for bank-led financial inclusion than it does for innovation-driven initiatives such as mobile money services. This article highlights the positive influence of mobile money services in improving financial inclusion for the poor, unbanked and low-income earners in Zimbabwe. The article also seeks to point out gaps and flaws in the financial services regulatory framework that may limit the potential of mobile money services to reach more people so that they actively participate in the Zimbabwean economy. It is submitted that the Zimbabwean mobile money services regulations and the financial regulatory framework should be carefully amended in line with the recent innovations in mobile money to adequately regulate the use of mobile money services and innovative technology to address the financial exclusion of the poor, unbanked and low-income earners in Zimbabwe.

Collective action among rural poor

2019 ◽  
Vol 37 (1) ◽  
pp. 20-43
Author(s):  
George Okello Candiya Bongomin ◽  
John C. Munene ◽  
Joseph Mpeera Ntayi ◽  
Charles Akol Malinga
Keyword(s):  
Collective Action ◽  
Financial Institutions ◽  
Financial Intermediation ◽  
Financial Inclusion ◽  
Content Type ◽  
Mediating Role ◽  
The Poor ◽  
Bootstrap Approach ◽  
The Relationship

PurposeThe purpose of this paper is to establish the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda.Design/methodology/approachThe paper uses structural equation modeling (SEM) through bootstrap approach constructed using analysis of moment structures to test for the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. Besides, the paper adopts Baron and Kenny’s (1986) approach to establish whether conditions for mediation by collective action exist.FindingsThe results revealed that collective action significantly mediates the relationship between financial intermediation and financial inclusion of the poor in rural Uganda. The findings further indicated that the mediated model had better model fit indices than the non-mediated model under SEM bootstrap. Furthermore, the results showed that both collective action and financial intermediation have significant and direct impacts on financial inclusion of the poor in rural Uganda. Therefore, the findings suggest that the presence of collective action boost financial intermediation for improved financial inclusion of the poor in rural Uganda.Research limitations/implicationsThe study used quantitative data collected through cross-sectional research design. Further studies through the use of interviews could be adopted in future. Methodologically, the study adopted use of SEM bootstrap approach to establish the mediating effect of collective action. However, it ignored the Sobel’s test and MedGraph methods. Future studies could adopt the use of alternative methods of Sobel’s test and MedGraph. Additionally, the study focused only on semi-formal financial institutions. Hence, further studies may consider the use of data collected from formal and informal institutions.Practical implicationsPolicy makers and managers of financial institutions should consider the role of collective action in promoting economic development, especially in developing countries. They should create structures and design financial services and products that promote collective action among the poor in rural Uganda.Originality/valueAlthough several scholars have articulated financial inclusion based on both the supply and demand side factors, this is the first study to test the mediating role of collective action in the relationship between financial intermediation and financial inclusion of the poor in rural Uganda using SEM bootstrap approach. Theoretically, the study combines the role of collective action with financial intermediation to promote financial inclusion. Financial intermediation theory ignores the role played by collective action in the intermediation process between the surplus and deficit units.

Mobile Financial Services

2020 ◽  
pp. 96-119
Author(s):  
Alexander Maina Kimari ◽  
Eric Blanco Niyitunga
Keyword(s):  
Financial Services ◽  
Developing World ◽  
Service Providers ◽  
Customer Experience ◽  
Financial Service ◽  
Financial Inclusion ◽  
The Poor ◽  
Financial Exclusion ◽  
Mobile Financial Services

The chapter explores financial exclusion, its causes, and consequences in society. The chapter found that the existing discrepancy in financial inclusion between the developed and developing world is driven by financial exclusion that makes it difficult for financial service providers to expand outreach to the poor at affordable prices. The chapter aims to investigate the role of mobile financial service design and development in dealing with financial exclusion. It was found that mobile financial services are promoting financial inclusion in various markets. However, few studies have been undertaken on the benefits of mobile financial services in dealing with the high rates of financial exclusion. The chapter recommended that to achieve financial inclusion, there is need for mobile financial services providers to take into account customer experience through the ease of using the phone interface. The chapter concluded that there is need for scholars in the fields of finance and economics to conduct research in the areas of mobile financial services and their role in society.

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