Microfinance in Kerala:Impact and Emerging Issues

The study is an attempt to assess impact of microfinance programme and its emerging issues. Microfinance programme in Kerala has achieved remarkable success in reaching the poor and bringing banking services to their door-steps. It has succeeded in making the poor economically active by way of raising their level of employment and income as well as the asset base. The econometric results indicate that a 10% increase in average borrowing by the beneficiary households from microfinance programme enhances household monthly income by 7.9%, per capita monthly income by 2% and household per capita monthly total consumption expenditure by 1.3%. The microfinance intervention has also become a vital channel for reducing under-nourishment and poverty and promoting human capital investment. The rate of poverty alleviation is significant through this programme as 27% of the beneficiary households feel themselves to be non-poor. This study, therefore, acknowledges the ability of microfinance to promote economic and social development based on grass-ischolar_main strategies. The emerging issues of microfinance identified by the study are categorised into four, namely, organisational problem, financial problem, production problem and marketing problem.