MICROFINANCE AND FINANCIAL INCLUSION IN KARNATAKA: EMERGING ROLE, ISSUES AND CHALLENGES
Author(s): SIDDARAJU J
Publication #: 2609004
Date of Publication: 11.02.2019
Country: India
Pages: 1-6
Published In: Volume 5 Issue 1 February-2019
DOI: https://doi.org/10.62970/IJIRCT.v5.i1.2609004
Abstract
Microfinance has emerged as an important instrument for extending financial services to economically weaker sections and promoting financial inclusion in India. Karnataka has played a pioneering role in the development of the Self Help Group–Bank Linkage Programme (SHG-BLP), particularly through the early NABARD–MYRADA initiatives. The present study examines the emerging role of microfinance in promoting financial inclusion in Karnataka, with particular emphasis on the status of the sector as on 31 March 2018. The study is based exclusively on secondary data collected from NABARD reports, Reserve Bank of India publications, Government reports and other relevant sources. The analysis indicates that Karnataka remained one of the leading states in India in terms of SHG credit linkage. As on 31 March 2018, about 10.75 lakh SHGs in Karnataka had savings bank accounts with various banks, while 7.44 lakh SHGs had outstanding bank loans amounting to approximately ₹11,126 crore. At the national level, 87.44 lakh SHGs had savings linkage and 50.20 lakh SHGs had outstanding bank loans of ₹75,598 crore. The study finds that microfinance has contributed not only to access to formal credit but also to savings mobilisation, women's empowerment, livelihood promotion and social inclusion. However, inadequate financial literacy, uneven credit linkage, inadequate institutional support, multiple borrowing, weak group quality, non-performing assets and limited opportunities for enterprise development continue to constrain the effectiveness of microfinance. The study concludes that strengthening SHGs, improving financial literacy, expanding digital financial services, enhancing enterprise-oriented credit and improving coordination among banks, government agencies, NGOs and SHG-promoting institutions are essential for achieving sustainable financial inclusion in Karnataka.
Keywords: financial inclusion, Karnataka, microfinance, self-help groups, SHG-Bank Linkage Programme.
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