Models of Microfinance in India
The four most important Micro Finance models prevalent in India are:
Model I - individuals or group borrowers are financed directly by banks without the intervention/facilitation of any Non-Government Organisation (NGO).
Model II - borrowers are financed directly with the facilitation extended by formal or informal agencies like Government, Commercial Banks and Micro-Finance Institutions (MFIs) like NGOs, Non Bank Financial Intermediaries and Co-operative Societies;
Model III - financing takes place through NGOs and MFIs as facilitators and financing agencies;
Model IV - is the Grameen Bank Model, similar to the model followed in Bangladesh.
In India, Model II of MF constitutes three-fourths of total micro-financing where activity/joint liability/Self-Help Groups are formed and nurtured by facilitating agencies and are linked directly with banks for the purpose of receiving credit.