The AP Microfinance Crisis 2010: Discipline or Death
Journal Name : Vikalpa
Volume : Vol. 37, No. 4, Oct-Dec. 2012, P 113-127
Year of Publication : 2012
Abstract :Poor people in India take loans from several sources- friends and family, moneylenders, landlords/big farmers and traders. Over the years, the government has tried to replace these informal, high interest rate sources with formal lower interest rate sources. This effort had begun with the forming of agricultural credit cooperatives in the early 1900s, and continued after Independence when the Governmentasked the State Bank of India to open 400 upcountry branches in 1954. Indira Gandhi nationalized all major banks in 1969 to expand credit to agriculture in the wake of the Green Revolution and in 1976 set up Regional Rural Banks after moneylenders were "banned" during the Emergency. These efforts at reaching credit to poorer people were not very successful, however, in terms of either coverage (as a percentage of target population), or sustainability for the lending institutions. Eventually, after liberalization began in 1991, banks began to focus away from the poor and the share of small loans in the total loan amount started coming down.