Supply of formal sector credit to the countryside as a whole has been inadequate.

Rural credit markets in India themselves have been very imperfect and fragmented.

Thirdly, as the foregoing suggests, the
distribution of formal sector credit has been unequal, particularly with respect to region and class, caste and gender in the countryside. Formal sector credit needs specially to reach backward areas, income-poor households, people of the oppressed castes and tribes, and women.

Fourthly, the major source of credit to rural households, particularly income-poor working households, has been the informal sector. Informal sector loans typically are advanced at very high rates of interest. Further, the terms and conditions attached to these loans have given rise to an elaborate structure of coercion - economic and extra-economic - in the countryside.

E-Micro Financing

E-micro financing is free from all the fall-outs mentioned above. It is a simple and elegant solution for the rural financial problems. The cash delivery chain is shorter and efficient with direct electronic ATMs.

Micro finance through electronic means provides lots of benefits. It

Makes the delivery of micro credit more efficient

Enhances income generating opportunities for the rural poor

Reduces transaction cost immensely enabling viability of the very concept.

Reduces possibility of corruption and increases transparency

Provides insurance opportunities as well

Allows benefit to reach ground roots.

The interest rates are reduced due to shorter chain.

Reduced time involved in transaction

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* Contributed by -
Meenal Nigam & Vivek Patni,
NITIE, Mumbai.