The Indian economy is the second fastest growing economy in the world. Majority of the population in India resides in rural areas. Thus development of rural India is a key step towards economic development for a country like ours.
Credit is one of the very important inputs of economic development. The timely availability of credit at an affordable cost has a big role to play in contributing to the well being of the weaker sections of the society. Proper access to finance by the rural people is a key requisite to employment, economic growth and poverty reduction which are primary tools of economic development.
India has a huge network of institutional credit. Institutional credit refers to credit offered by financial institutions like banks. The Indian financial system is considered to be one of the finest systems in the world. It is only because of the strong grip of the financial system that even the global financial crisis could not affect India that severely.
In spite of having such a strong financial system it has been evident that financial awareness has not been able to penetrate into the rural sections of the society. Non institutional credit givers in the form of money lenders still continue to grasp the poor in their clutches. This is a matter of concern and proper action needs to be taken for the same.