Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
1) Access to credit is a human right, essential for the poor to create self-employment and income. In the backdrop of the above statement discuss the role played by microfinance institutions and explain whose interests are microfinance institutions serving today?(250 words)
Why this question:
The question aims to analyse the role played by microfinances in the country to alleviate poverty.
Key demand of the question:
Discuss what are microfinancing institutions, what role they play in alleviating poverty in the country.
Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.
Structure of the answer:
Define what are microfinance institutions.
Explain the role played by microfinance institutions in rooting out poverty.
Microfinance is the provision of financial services to low-income clients or solidarity lending groups including consumers and the self-employed, who traditionally lack access to banking and related services. It is not just about giving micro credit to the poor rather it is an economic development tool whose objective is to assist poor to work their way out of poverty. It covers a wide range of services like credit, savings, insurance, remittance and also non-financial services like training, counseling etc.
Then discuss the salient features. Explain how they can fulfill the gaps in the system.
Conclude with way ahead.