Page 327 - DMGT509_RURAL MARKETING

Rural Marketing

Notes Self Assessment

Fill in the blanks:
1. ....................... is expected to play a significant role in poverty alleviation and development.
2. Microfinance has been attractive to the lending agencies because of demonstrated
sustainability and of low costs of ....................... .
3. Institutions like ....................... and NABARD are hard nosed bankers and would not work
with the idea if they did not see a long term engagement.

4. Banks and ....................... institutions have been partners in contract farming schemes, set
up to enhance credit.

!
Caution To succeed in India, agribusiness must empower the farmer by making agriculture
profitable, not by expropriating him for this particular purpose the farmer should be
funded for their basic and small needs.

17.4 Success Factors of Microfinance in Rural India

Over the last ten years, successful experiences in providing finance to small entrepreneur and
producers demonstrate that poor people, when given access to responsive and timely financial
services at market rates, repay their loans and use the proceeds to increase their income and
assets. This is not surprising since the only realistic alternative for them is to borrow from
informal market at an interest much higher than market rates. Community banks, NGOs and
grass root savings and credit groups around the world have shown that these micro enterprise
loans can be profitable for borrowers and for the lenders, making microfinance one of the most
effective poverty reducing strategies.

For NGOs

1. The field of development itself expands and shifts emphasis with the pull of ideas, and
NGOs perhaps more readily adopt new ideas, especially if the resources required are
small, entry and exit are easy, tasks are (perceived to be) simple and people’s acceptance is
high – all characteristics (real or presumed) of microfinance.
2. Canvassing by various actors, including the National Bank for Agriculture and Rural
Development (NABARD), Small Industries Development Bank of India (SIDBI), Friends of
Women’s World Banking (FWWB), Rashtriya Mahila Kosh (RMK), Council for
Advancement of People’s Action and Rural Technologies (CAPART), Rashtriya Gramin
Vikas Nidhi (RGVN), various donor funded programmes especially by the International
Fund for Agricultural Development (IFAD), United Nations Development Programme
(UNDP), World Bank and Department for International Development, UK (DFID)], and
lately commercial banks, has greatly added to the idea pull. Induced by the worldwide
focus on microfinance, donor NGOs too have been funding microfinance projects. One
might call it the supply push.
3. All kinds of things from khadi spinning to Nadep compost to balwadis do not produce
such concrete results and sustained interest among beneficiaries as microfinance. Most
NGO-led microfinance is with poor women, for whom access to small loans to meet dire
emergencies is a valued outcome. Thus, quick and high ‘customer satisfaction’ is the USP
that has attracted NGOs to this trade.

322 LOVELY PROFESSIONAL UNIVERSITY