GS3 PYQ(Mains Answer Writing): Micro Financing and Self Help Groups | Indian Economy for UPSC CSE PDF Download

“Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and income security of the rural poor in India”. Evaluate the role of Self-Help Groups in achieving the twin objectives along with empowering women in rural India (UPSC GS3 Mains)

Granting of very small loans to impoverished borrowers and enabling the borrowers to use that capital to become self-employed and strengthen their businesses is referred as micro financing For instance Loans given as microcredit to people who may lack collateral, credit history, or a steady source of income due to which it has gained much traction as a tool for ensuring the welfare of the most impoverished in the society but also there are certain flaws in the model. Micro financing being the anti – poverty vaccine because Micro finance Institutions, also known as MFIs, a microfinance institution is an organisation that offers financial services to low income populations.
Usually, their area of operations of extending small loans are rural areas and among low-income people in urban areas. MFIs provide the much-needed aid to the economically underprivileged who would have otherwise been at the mercy of the local moneylender and high interest rates. The model had its genesis as a poverty alleviation tool, focused on economic and social upliftment of the marginalised sections through lending of small amounts of money without any collateral to women for income-generating activities. . Some of the MFIs, that qualify certain criteria and are non-deposit taking entities, come under RBI wings for Non-Banking Financial Company (NBFC) Regulation and supervision.
These “Last Mile Financiers” are known as NBFC MFI. Role of SELF – HELP Group 

• Credit availability– Individual poor are not familiar with the formal banking system, but by forming a SHG, there are make better prospects for bank credits. (Often without collateral). Under the SHG-Bank linkage programme, many SHGs have become institutions of micro-credit. • Entrepreneurship– Increased Opportunities for self-employment through setting of micro-enterprise. 
• Skill development–SHGs generally undergoes with some kind of Skill development program to improve employability of members involved. 
• Rural poverty– SHGs have become a vehicle to lift people from below poverty line. There is a Positive correlation between SHGs and poverty that can be inferred from the fact that southern states with high number of SHGs (71%) have average poverty rate at 9% as against nation’s average of 21%. 
• Improved living standards– As a result of increased jobs there is rise in income which enhances access to food, health services and overall rise in living standards. 
• Women empowerment– By providing employment opportunities, financial and social security SHGs help improve the status of women and creating awareness regarding their rights and responsibilities, as pointed by the 2nd ARC report. 
• Literacy rates– with more women participation and their enhanced status address issues such as nutrition poverty and low literacy rate. 
• Social capital– The SHGs provide a forum in which people can meet on a regular basis and discus various issues or concerns that the members face in their day-to-day life which acts as the basic source of social capital generation. 

Some of the examples 

• Kudumbashree in Kerala. 
• Pressure groups for policy framing in Bihar. 
• Tamil Nadu used SHGs to inculcate sanitation habits among the community 
• Haryana government used SHGs for making betibachaobeti 
• SHGs like SEWA, Lizzatpapad promotes entrepreneurial culture among women. 
• Andhra Pradesh Government programme of poverty alleviation

Conclusion
As we all know financial institution is the integral part of our economy as it plays key role in economic development. Therefore, India financial institution is very strong but operations of the same are adverse, somewhere we are lacking in its implications. However micro finance plays the major role in the alleviation of poverty from the society. Many banks in India have initiated to lend money to the micro finance institution. It works towards the empowerment of women which is the great move towards the development of the country.