SWOT Analysis of Micro Finance Credit as Financial Stability Model in Rural India

Microfinance, a financial innovation, originated in Bangladesh when Prof. Mohd. Yunus changed the lives of millions of Bangladeshis by creating the concept of micro loans. The idea came to his mind through involving himself in fighting poverty during the 1974 famine in Bangladesh. Besides teaching through the traditional methods, he wanted to understand the real life economics also. He gave $27 as the first loan from his pocket to a villager near to his university campus and discovered that villagers are quickly repaying the money by selling their goods in the market; and there evolved the concept of microfinance with the establishment of Grameen Bank in 1976. Prof. Yunus earned a nobel peace prize in 2006 for his most valuable credit to the financial system for the poor.

Astonishing growth rates in Bangladesh, particularly during 1990s created a new dimension for microfinance worldwide as microfinance institutions grew to include millions of clients. In India, a substantial microfinance system based on self-help groups (SHGs) progressed during 90s.