RECURRING POVERTY AND STATUS OF SOCIAL SECTOR:

NOTE:- THE SOURCE OF DISCUSSION IS BASED ON ECONOMIC SURVEY AND BUDGET OF INDIA, AND VARIOUS REPORTS AVAILABLE ON INTERNET.

RECURRING POVERTY AND STATUS OF SOCIAL SECTOR

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Here we dedicate this article to hit on relation of micro finance (MF ) with social sector. As we have already discussed the impediments related to social sector, now we explore some genuine facts which helps to asserts our mains writing operands.

The common definition of micro-finance as prounanced -  Microfinance,also called microcredit—is a way to provide small business owners and entrepreneurs access to capital, Often these small and individual business don’t have access to traditional financial resources from major institutions. This means it is harder to access loans, insurance, and investments that will help grow their business.

Given that social sector do not have access to organised sources of the finance say through banks and also given their extensive paper work, cumbersome procedures, documentation requirements the micro credit institutions are today seen as offering a solution both for the social sector as well as addressing the issues of poverty.
mf institutions provide credit (loan) to the poor people but at higher interest rate than banks and lower than that of money lenders. these have been seen as partnering SHGs in micro finance in india and also a major ways through which the country could provide "financial inclusion" that is to provide accessibility to organised sources of finance to the poor people and reduce their dependency on the money lenders for their income generating activities enabling them to have sources of income, employment and also get out of poverty.

CASE STUDY OF MICRO FINANCE INSTITUTIONS (MFI) IN ANDHRA PRADESH..........

 micro credit sector in Andhra pradesh posed a series of question with their implementation and by their existence as it was shape distortion of economic system as a result of the extensive and uncontrolled lendings. seeing as whole it was giving an over- indebtness to masses and results to mass loan repayment defaults.

various reports says that these institution used an unethical means to restore their repayment, such as property confiscate and social shaming which ultimately results in suicide of micro credit borrowers. this is a negative aspect related to the micro credit system. findings from these study.

• the prime motives of MFI's is earn as much as profits possible by putting the welfare of people to keep on watch.
• As they charged higher interest than banks but lower than money lenders so people prefer the MFI's which results uncontrolled lendings.
• MFI's have reached to those who immensely ignored by the banks and also they are not complementing (not improving their quality) the efforts of the banks. there is sizeable concentration of MFI's in areas where there is also efficient banking penetration which reverse the objective of MFI's for which they formed.
• MFI's are finding softer options of lending such as SHG's, which leads to multiple financing, debt burden on the borrowers.
• MFI's are aggressive and are more consumer- oriented loans, less productive- oriented, similar like a private banks selling consumer loans or the US banks lending to sub prime borrowings.
• These developments have forced the govt. to rethink on validity of this model of financial inclusion and adding in place regulations for the MFI's
• however, on broader level and to provide greater inclusivity the nationalized banks are in better position than MFI's only need to converts banks into more focusing towards inclusivity with bank, which in need of the poor to connect with banks facility around 5-10 km from doors of people.

Social sector is one of the basic sector of the economy and reaching out to them and drawing them into mainstream of the development is the biggest responsibility of govt. as only the biggest transformation of the economy would happen by bringing all around prosperity.