Myth and the Reality of the Micro Credits Generated by the Micro Finance Institutions at The Grassroots: A Primary Level Study in the Urban Slums of West Bengal

Abstract

The Government of India is trying to boost the economic and social uplifting of the downtrodden women through micro financing. Since 1990s, the states in India are trying to broaden microcredits, through self-help groups and the bank linkage models. Leveraging micro finance institutions to generate micro credits for the downtrodden women. The process of credit generation by the micro finance institutions is different from self-help group and cooperative model. Social empowerment drives micro finance institutions but profit generation is the primary objective. Without profit, financial viability will be questioned and will be under the scanner of the Central Bank. The study questions the functioning of these institutions at the local level and shows that financial inclusion of the unprivileged only through credit generation by Joint Liability Groups (JLG) raises doubts about the financial stability. There is wide gap between financial literacy and financial inclusion of women which cannot ensure economic and social sustainability of these micro credits.