Microfinance: Contemporary Issues and Challenges A Case Study of J&K State

Abstract

Microfinance refers to financial services for poor and low-income clients offered by different types of service providers. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as "microfinance institutions” (MFIs). It is developing as a powerful tool for poverty alleviation in J&K state. This paper makes an attempt to outline the prevailing condition of the Microfinance in J&K in the light of its emergence. The prospect of Micro-Finance is dominated by SHGs (Self Help Groups) - Banks linkage Program. Its main aim is to provide a cost effective mechanism for providing financial services to the poor.This paper discovers the prevailing gap in functioning of MFIs such as practices in credit delivery, lack of product diversification, client consumption and individual loan demand with lack of mitigation measures, less thrust on enterprise loans, collection of loans and highest interest rate existing in micro finance sector. These are conditions, which tell us that the circumstance is moving without any direction. Finally this paper accomplishes with practicable suggestions to overcome the issues and challenges associated with microfinance in J&K.