The subject of money and finance in general and economics of microfinance (Armendáriz & Morduch, 2010), in particular, is very important for creating trickle-down effect on growth and development prospects of an economy, a particularly under-developed economy like India and is constructing a new line of autopsy or investigation from the ground up (Bruton, Chavez & Khavul, G.D., 2011). The nature and significance of the subject-matter of micro-finance provide a platform for questioning income inequality and identify the determinants of income inequality. Does micro-finance affect income inequality? (Hermes, 2014). Does it reduce Gini-coefficient and eliminate poverty? Wants are unlimited and the resources are limited, and accordingly, we have a strong tendency for widening our income levels and create income gaps in order to meet and satisfy our needs and greed. Muhammad Yunus, a Bangladeshi investment banker and social entrepreneur, was conferred Nobel Peace Prize for striking the balance in microfinance (Branch & Klaehn, 2002) and revolutionizing the ideas, philosophies, designs, and planning of microcredit coupled with founding Grameen Bank.
Microfinance is fundamentally a loan which is given toentrepreneurs who are incapable of satisfying the requirements for traditionalbank loans and their repaymentrate of success is sandwiched between 95 and 98percent(Qadri, 2018). It is an approach with the aim to mend our creditmarkets,make over businesses of the customers, and providing physical capitalalong with improvements in the productive competences of poor folks(Hulme&Mosley, 1996) who are by and large self-starting or self-employed. It not onlyoffer household finance but entrepreneurial finance as well. It benefits byoffering wide-ranging sequence of liquidity for a varied assortment ofnecessities rather than just improving trade and business(Cull, Robert J.;Morduch, 2017) and group lending and lending in installments(Ghatak, M. &Timothy, 1999).
We witnessed autonomous and self-determining creativitiesand ingenuities in Latin America and South Asia as early asthe 1970s thatstarted a revolution of micro-finance which opened the door for 65 million poorpeople around the world to obtain build up capital, small loans devoid ofanysecurity or collateral and purchase insurance coverage.There is a need for thecomprehensive appraisal of microfinance which aims at connecting the researchgap in the existing body of literature on micro-lending and microfinancebetween theoreticians and practitioners. We need to move beyond theory andfollow the subject microfinance not only in ivory tower or academic circles buton the ground itself through fieldwork which is socially constructed byindividuals in interaction with the world since world or reality is not fixed,single,agreedupon or measurable phenomenon, EMIC Research, field research from within thesocial group (from the perspective of the subject) should be followed.Micro-finance research and development should move beyond the typicalhypothetical, speculative, and conjectural focus in the microfinance literatureand appeal on new developments in models, social business models in particular(Yunus, M; Moingeon, B; Lehmann, 2010) and theories of efficiency-wages,unions, agreements etc.
The microfinance movement is bringing hope, prosperity, and progress to many of the poorest people in the world. It is necessary to use economics and critical economic reasoning to understand why microfinance is need of the hour and gaining popularity at the same time? Is it the theory or model that is appealing? Or is it that we are poor, hungry, underdeveloped, and unhappy or may more? Accordingly, the SWOT analysis of micro-financeis a million dollar demand at the present moment which must be assessed and scrutinized. We need a splendid contribution to achieve it that will offer great help to one and all.
When the gap between rich and poor is increasing atincreasing rate microcredit and microfinance are welcome steps with mutualsecurities and wellbeing. Microfinance groups are feasible, reasonable, andsustainable substitutes to realize the goalmouths and objectives of agriculturedevelopment in general and rural development in particular(Adams, D, W.;Graham, D, H.; Von, 1984)which permit communities involvement in all the ruraldevelopment tasks.
Through the backing of small startups, small productions,and micro-innovations, microfinance is a key to stimulate key macroeconomicvariables on the one hand and economic development, employment and growth onanother hand for many. It is a way for poor to bring about positiveimprovements in their finances and use them more efficiently and take benefitof economic openings whereas handling the jeopardies and uncertainty. Whilehighlighting some misfortunes of microfinance, Feigenberg; Field & Pande(2010) argue that it can create indebtedness. Because of the fact thatmicrofinance operates in miscellaneous settings encompassing broad assortmentof microfinance services, we cannot generalize its consequences.
Conclusion
It is very important for the underdeveloped economies,particularly India to meet the basic needs of food, clothing, and shelter.Furthermore, different models of microfinance and microcredit will succeed ifthey provide safety nets to the poor, prospects for them to become successfulentrepreneurs, and increase their productivity levels. Microcredit andmicrofinance are the best ways to make people realize the benefits of savingsand investment, groups/collective efforts, high productivity, and innovations.They are the ways and means to generate physical capital, human capital andsocial capital, drivers to growth and development, which are indebted to thepioneer of microfinance, Muhammad Yunus (2006). Microcredit is the extensionlead of microloans to needy and penurious borrowers who naturally aredeficit ofsupportable credit history or security stable employment. It boostsentrepreneurship. Such initiatives by Yunus made people believe that a capableleader can very well translate visualizations into real-world action for thebenefit of millions of people, particularly poor people. They generate andhatchadvanced,innovative, groundbreaking solutions to the ordinary business oflife andday-to-day macroeconomic problems of income, savings, output, poverty,and unemployment. The typical models of Microcredit and Microfinance providefinancial solutions to budding entrepreneurs, agricultural solutions to farmersin general and poor and small farmers in particular. They encompass know-how,skill applications and modern business models intended to reinforce cooperationand group efforts for the long-run goals and targets of a successful business.Therefore, budding entrepreneurs need to visit the fundamentals of microcreditand micro-finance so as to start their business.