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Research Article

Critical Analysis of Relevance of Microfinance in India in the Post COVID Era

Prof. Kshitij Naikadea_{, Dr. Sukalpa Chakrabarti}b

a_{Deputy Director, Assistant Professor, Symbiosis Law School, Pune , Symbiosis International (Deemed University)} b _{Deputy Director, Associate Professor, Symbiosis School of International Studies, Symbiosis International (Deemed} University)

Article History: Received: 10 January 2021; Revised: 12 February 2021; Accepted: 27 March 2021; Published online: 28

April 2021

Abstract: COVID-19 has been an attack on the economy, health, and the growth structures of all countries. All development

and growth plans have been doomed due to the situation of lockdown and social distancing norms. There is no positive news of vaccines and many migrants and daily wage earners have become jobless as well as homeless. In such pertinent periods of uncertainty, there is no demand, and supply chains have been shut. Moreover, to survive and support livelihoods, there is a dire need for funds by the people. Banks have been refraining from indulging in any supply of credit that can increase their NPA. On the other hand, the informal credit lenders have been seeking to turn this demand into an opportunity by lending at unreasonably high rates. For this purpose, microfinance can serve as a one-stop solution to employ the unemployed as well as generate a reasonable level of income to boost the stagnant demand and consumption levels. The current study, therefore, aims at analyzing the relevance of microfinance in India in the post-COVID era.

Keywords: Microfinance in India, COVID-19, Demand, Supply, NABARD, SHG, MFI.

INTRODUCTION

The COVID-19 is the biggest setback to the world economy after the Great Depression of 1929. Approximately 60 percent of the world population is still under severe or partial lockdown. This is because there is no medical solution discovered that can restart the economic activities across the countries that have been stalled and stagnant. Moreover, it has taken millions of lives from varied parts of the world. Due to the pandemic, the global economy is forecasted to undergo a sharp decline of -4.9 percent in 2020. This is worse than the Financial crisis of 2008-2009 (World Economic Outlook, 2020). India is a densely populated country and has insufficient medical facilities available to support its large population. Moreover, the density per square mile is as high as 171.9 persons (Desai, 2020). Only lockdown and social distancing can help the country to fight against coronavirus as there is no availability of pertinent medicines or vaccines that can be given. The world economy is proceeding towards dunking in a period of recession and India is no exception. The current pandemic is flowing like a fluid covering all the highly globalized and developed countries under its trap and disrupting their interconnected production and supply chain. These disruptions directly influence financial markets with their negative sentiments. The effects of COVID-19 are going to be so huge that even after falling out of the lockdown phase, the Indian economy will need some pertinent monetary and fiscal measures to help the Micro, Small, and Medium enterprises to strive strongly in a phase of falling demands.

In lieu of this augment, the current study aims at critically analyzing the role of microfinance institutions and their relevance in the post-COVID era. This is because unemployment numbers are high and account for majorly informal sector or daily wage earners. Such people will not be easily employed even after the commencement of the business activities post the pandemic. As a result, to make them economically and financially stable enough to support their livelihood Microfinance loans will act as a major game-changer. The question arises why Microfinance? To begin with, not only in India, but in varied countries around the world, microfinance has become an indispensable part of development policies and ensuring poverty alleviation (Baland, Somanathan, & Vandewalle, 2019). In the early 90s, the dominant model of microfinance emerged in India with the guidelines issued by RBI to all nationalized commercial banks concerning the lending to informal groups for starting ground-level economic activities. These groups came to be called Self Help Groups (SHGs). In the year 2015, statistics define that nearly 86 million clients adjourn loans from microfinance institutions in India and about two-thirds of these clients are members of village-based SHGs (Nair, 2017). However, today the phase and circumstances are completely different. Today, microfinance institutions themselves might be suffering from losses as a large no. of their prevailing clients would not be able to repay them on time. In such a condition, it is evident to outline whether microfinance is still relevant in the post-COVID era.

1.1. Research aims and objectives

Research aims and objectives prevent the study from deviating to other areas that are not essential for the course of the study. The current study aims to critically analyze the relevance of microfinance in India in the

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post-COVID-19 era and the way forward. For accomplishing this aim, the study will be directed at fulfilling the following objectives:

1. To map out the importance of microfinance in India in the Pre COVID era.

2. To evaluate the challenges faced by people engaged in Microfinance during the COVID era.

3. To identify the various policies and steps undertaken by the Government of India to boost Microfinance during the COVID era.

4. To analyze the way forward for Microfinance in eradicating poverty during the Post COVID era. 2. Literature Review

2.1. Impact of COVID-19 on Livelihood of small firms:

The crisis has already transmitted its devastating effects into economic and labor market shocks. These effects are not just refrained to production and supply of goods and services also demand-side comprising consumption and investment (ILO, 2020). Ban on travel, closure of borders, and strict quarantine measures have resulted in unemployed workers or employed workers with no income level (BBC News, 2020c). Sustaining and surviving this setback of business operations in such times poses a challenge for varied organizations consisting of both large organizations as well as Small and Medium Enterprises (SMEs). Moreover, due to the growing number of coronavirus confirmed cases, the government prolonged the prevailing lockdown, and a series of lockdowns were thereby put into force. Nonetheless, during the 2nd lockdown, certain sectors were allowed to be operational with a limited number of workers that too adhering to essential industries only (ET Online, 2020). Accentuating the interest of the farmers and daily wage earners in mind, the state officials granted some relaxations allowing economic activities in some specific demographics including cargo movements, agricultural activities - allowing only work on the field and not other pertinent allied activities, fisheries, plantations, animal rearing, and certain commercial and private entities. These included companies engaged in e-commerce, manufacturing, and other industrial activities, majorly supplying raw materials or finished products of essential items. This was facilitated to create job opportunities with assuring safety protocols are followed and maintained (ET Online, 2020).

Bhalotia, Dhingra, & Kondirolli, (2020), in their study, conducted a survey with 8500 workers to explore their employability status during the COVID-19. The authors elucidate that several states in India are discussing the urban job guarantee for addressing the crisis. 70.0% of the urban workers have no assurance as to the minimum number of days they will be employed in a year. Out of this 70%, three-quarters of them were willing to be employed with a guarantee of a minimum of 100 days of employment majorly to overcome the livelihood crisis faced due to COVID-19. The study also outlined that globally and in India, unemployment increased dramatically which forced the workers to migrate to their native places in villages of India with no work assurance and income level. 15.5% of the daily wage earners had lost their job and 21.7% of them worked for zero hours amounting to a stamp of employment with no salary. Nonetheless, 52% of the total urban workers had received no financial aid or assistance from the government to support their livelihood.

2.2. Techniques for financial inclusion of a most affected group of people:

Financial inclusion can be regarded as a key to deliver financial aid to the most affected and vulnerable groups of the society that are deprived of access to prevailing financial products and services. It is conducive to break barriers of inequality that prevent millions of households from investing their money for some productive purposes that can contribute to the economic cycle of a country. Moreover, in the current pandemic situation, it can help in uplifting the consumption that has become stagnant (Ahamed, & Gutierrez-Romero, 2020). The G20 members have prepared an Action Plan to protect and save the lives of the people, preserve people’s jobs and maintain a reasonable level of income, enforce confidence, safeguard financial stability, and assist countries that require help concerning public health issues. It also aims at reducing the disrupting effects posed to the global supply chain (ET Bureau, 2020b). Mogaji, (2020), in their study, outlined that the government should provide relaxations to the industries and individuals for paying their loan installments. Moreover, they must assist the vulnerable groups by asking banks to provide loans at reasonable rates of interest to those individuals or groups that seek to start a small business supporting their livelihoods. Sharma, (2020), highlights the government should set up an online platform to help people to learn some economic activities like handicrafts, weaving, and others which can be done and sold from home. In alignment with this, the government can create a market through the creation of its own e-commerce platform that facilitates this supply chain.

2.3. The role played by microfinance in leveraging the economy:

National Bank for Agriculture and Rural Development (NABARD) has taken the initiative of introducing microfinance in India and it is also responsible for the regulation of these institutions. The implementation of this initiative proved conducive to the people residing in both rural and urban areas providing self-sustenance and livelihood enhancement (Kumar, & Sensarma, 2017). Most importantly, it has been instrumental to bring women in the economical backdrop. India’s population comprises almost 9 females for every 10 males. This indicates the dire need for including women in the economic cycle for uplifting the national wealth. Microfinance has helped these women to step out of the house and indulge in some activities that not only fetch them a reasonable amount

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to assist the finances in their household but also significantly contribute to the GDP of the country (Arunachalam, & Crentsil, 2020). Samineni & Ramesh, (2020), outlined that microfinance institutions strategically helped the people and especially women in the northeastern and southern regions for gaining access to financial products and services. Moreover, it was revealed that the loans provided through the MFI institutions either government or non-government had a repayment rate of 99%. This rate cannot be matched by the existing state banks that are of utmost importance to the country. Thus, microfinance acts as a strategic tool for economic enhancement along with self-sustenance and a stable level of income for the poor.

2.4. Initiatives undertaken by the government for boosting micro-financing:

Shri, (2017), in his study, outlines that Microfinance Institutions (MFIs) and SHGs play a major role in delivering finance to the vulnerable and financially deprived groups. These are followed by banks, insurance companies, NBFCs, etc. However, the banks refrained from providing loans to the poor and vulnerable due to the risk of NPA. Moreover, paperwork and other legal formalities discouraged people to avail loans from banks. For this purpose, the Government of India transferred the regulatory of MFIs from RBI to NABARD. This facilitated the seamless movement of funds and easy allocation of funds to especially people residing in the backward and rural areas. Recently, the government of India announced the Jan Dhan scheme for poor people for opening up bank accounts at zero charges and balances to be maintained (Mayakkannan, 2020). This was specifically done for the purpose of financial inclusion. Moreover, it served the additional motive of boosting microfinance. The majority of the population in India did not possess a bank account. Microfinance and SHGs are credited with microcredit only in their bank account so as to maintain the records of the transactions. The scheme gained huge responses from the people.

3. Research methodology 3.1. Research Design:

A research design serves as a plan or structural framework that outlines the way in which the results of the study will be interpreted and presented to the readers. To ensure that the pre-defined objectives of the study are exhaustively addressed without leaving any dearth, it is essential to make use of the most appropriate research design. There are four major and distinct types of research designs that are conducive to represent the results of the study. These are namely: Exploratory, Experimental, Descriptive, and Explanatory research designs (Ridder, 2017). The current study will make use of Descriptive research design. Descriptive research design presents the findings acquired as they happen independently in nature through various stages of events without any manipulation or interruption from the researcher (Colorafi & Evans, 2016).

3.2. Research Paradigm

The research Paradigm is also known as research philosophy. It refers to the clustered group of scientific ideas, values, and assumptions that are channelized through the course of a research framework (Walsh, 2019). There are two primary forms of research philosophies, namely: positivism and interpretivism. A positivist research paradigms the most primitive form of research philosophy that accentuates that science is the only medium of acquiring any knowledge. Thereby, human actions and behaviors too should be tested scientifically to portray it as a universally acceptable phenomenon (Prasad, 2017). The Interpretivism research paradigm is the complete opposite of the positivist philosophy. Philosophers that propagate the interpretivism research paradigm are of the view that facts of the social world cannot be generalized as tend to differ under varied circumstances (Thanh & Thanh, 2015). As a result, the current study will make use of the interpretivism research paradigm as microfinance and its relevance will tend to alter in different countries as well as time periods.

3.3. Reasoning Strategy/Approach:

Data analysis or interpretation is also termed as a reasoning strategy or approach. The reasoning approach or strategy outlines guidelines or steps according to which the findings of the study gained will be directed. It refers to a hierarchical structure that is implemented to present and discuss the findings acquired (Kruschke & Liddell, 2018). There are two basic types of reasoning approaches, i.e. Inductive and Deductive reasoning approaches. The former follows a bottom-up approach (Stephens et. al., 2020), while the latter follows a top-to-bottom approach (Ju & Choi, 2018). Based on the objectives of the current study, it will follow a Deductive reasoning approach as the study aims at deriving specific facts on a prevailing issue and not developing a new theory or phenomenon from the same.

3.4. Data Collection Techniques

Data collection is the most crucial step in a research framework followed by the analysis of the data acquired. Primary and Secondary are two pertinent techniques of data collection. Primary research aims at collecting first-hand data that has not been previously collected by other researchers. Secondary data, on the other first-hand, aims at collecting or accumulating data that has been already amassed by other researchers but will be utilized to provide a new dimension to the prevailing phenomenon, trends, or issues. Moreover, apart from primary and secondary data collection techniques, there are two forms of data that are acquired. These adhere to quantitative and qualitative data approaches. Quantitative data aims at amassing numerical data while the qualitative data focuses

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on acquiring elaborative data. As for the current study, primary data collection techniques will be employed along with a quantitative data collection approach. The study will make use of a survey-based questionnaire technique. The respondents of the study will comprise members of the microfinance institutions and agencies. The sample size of the study will be 20 and will only account for females.

3.5. Data Analysis Techniques

After the collection of data, analyzing the raw numerical data into pertinent findings is essential for sufficing the objectives of the study in a logical manner. The current study makes use of a survey-based questionnaire which fetches numerical data. The conversion of this data is done by SPSS software and varied tools like Descriptive statistics, ANOVA, Levene’s test of variance, and other statistical tools have been implied.

4. Results and Discussion: a) Respondent’s Demographics:

The table below depicts the demographic information of the respondents with respect to their gender, age, educational level, income level, marital status, name of the organization they are working in, designation, and tenure completed in their organization.

Table No. 1: Respondent’s Demographics Frequenc y Percentag e Gender Female 20 100.0 Age 21 - 30 6 30.0 31 - 40 5 25.0 41 - 50 9 45.0

Education Level Secondary 8 40.0

Higher Secondary 7 35.0

Bachelors 5 25.0

Income Level Less than 1 lakh 1 5.0

1 lakh - 2 lakh 3 15.0

2 lakh - 3 lakh 6 30.0

3 lakh - 4 lakh 7 35.0

4 lakh and above 3 15.0

Marital Status Single 3 15.0

Married 17 85.0

Name of the organization Mahalaxmi SHG 10 50.0

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Tenure in the organization 3 3 15.0 4 1 5.00 5 3 15.0 6 2 10.0 8 2 10.0 9 6 30.0 10 3 15.0 Designation Co-Treasurer 1 5.0 Head 1 5.0 Member 12 60.0 Secretary 2 10.0 Treasurer 4 20.0

From the above table, it can be comprehended that the total sample size is 20 which comprises of females only. 45.0% of the respondents are in the group of 41 - 50 years, followed by 30.0% of them that are in the age-group 21 - 30 years, and the remaining 25.0% are in the age-age-group 31 - 40 years.

The majority of the respondents are educated till the secondary level which accounts for 40.0% and this is followed by higher secondary with 35.0%. The remaining respondents adhering to 25.0% have completed a bachelor’s degree.

Moving on to the income level of the respondents, nearly 35.0% of the respondents have an income level of 3 lakh - 4 lakh and this is followed by 30.0% whose income level is 2 lakh - 3 lakh. 30.0% of the respondents are equally divided for an income level of 1 lakh - 2 lakh and 4 lakh & above respectively, accounting to 15.0% each. Only 5.0% of the respondents or 1 in headcount has an income level of less than 1 lakh.

Further, 85.0% of the respondents are married while the remaining 15.0% are single. 50.0% of the total respondents are employed in Mahalaxmi SHG and the other 50.0% of the respondents are employed in Panchshil SHG.

30.0% of the respondents have completed a tenure of 9 years in their organization. Followed by this, 15.0% of the respondents have completed 3 years, 5 years, and 10 years each respectively. 10.0% of the respondents have completed 6 years and 8 years each respectively. While only 5.0% or 1 in headcount has completed 4 years of tenure in their organization.

Lastly, the designation of the respondents in their organizations was acquired. It was found that 60.0% of the total respondents were a member of the organization. 5.0% each were Co-Treasurer and Head respectively. Moreover, 2 respondents i.e. 10.0% were designated as secretary. And 4 of them were designated as Treasurer which accounted for 20.0% of the total respondents.

b) Use of microfinance products and services:

The table below summarizes the aggregate responses of the respondents concerning the varied activities and areas for which microfinance is most active in providing funds for and loans are availed.

Table No. 2: Mapping out the use and importance of Microfinance services

Areas/ Activities Frequency Percentag

e

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2. Animal Husbandry 18 90.0

3. Income-generating activities 15 75.0

4. For Building Assets 10 50.0

5. For starting a new business and acquiring sources for its development

12 60.0

6. Consumption or Household expenditure 10 50.0

7. Educating children 9 45.0

8. Wealth creation purpose 8 40.0

9. To acquire land or assets 9 45.0

10. Medical expenses 14 70.0

11. Emergency circumstances 18 90.0

12. Social Security 12 60.0

13. Farm Mechanization 10 50.0

From the above analysis, it can be clearly stated that Agriculture, Animal Husbandry, and Emergency circumstances are the three areas or activities that are highly outlined by the respondents. This accounts for 90.0% of the views of the total respondents. Further, Income Generating activities hold the next highest area for which loans are availed and this adheres to 75.0%. With a difference of 5.0%, Medical expenses are the next avenue accounting for 70.0% for which loans are availed through microfinance institutions. For starting a new business and acquiring sources for its development, 60.0% of the respondents felt that microfinance funds are provided. This status is shared by Social Security activity with an equivalent view gained from 60.0% of the respondents. Moreover, activities like Building assets, Consumption and Household Expenditure, and Farm Mechanization account for 50.0% of the views each. Lastly, 45.0% of the respondents were of the view that loans are availed for Educating children and Acquiring land and assets; and only 40.0% of the respondents held the view that loans are availed for Wealth creation purposes.

c) To evaluate the challenges faced by people engaged in Microfinance during the COVID era Table No. 3: Test Statistics a,b

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f Sig The costs of lockdown have resulted in consumption from prior

savings.

2.155 2 .340

There is a decline in the rate of repayment to stagnation of economic activities.

3.362 2 .186

There is a strong need for finance at lower rates of interest for restarting life after lockdown.

7.519 2 .023

There is little or no demand for the products. 2.242 2 .326

Some of the assets acquired have been sold to support life presently.

.036 2 .982

a. Kruskal Wallis Test

b. Grouping Variable: 2. Age Group

Based on the findings, it can be observed in the above table that the statement “There is a strong need for finance at lower rates of interest for restarting life after lockdown”, has a p-value of 0.023. This p-value is less than 0.000 value of significance. Thus, it can be stated that the majority of the respondents are of the view that there is a significantly strong need for finance to be made available at lower rates of interest for restarting stagnant economic activities after the lockdown.

d) Identifying various policies and steps undertaken by the Government of India to boost Microfinance during the COVID era.

Table No. 4: Test Statistics a,b,c

Statements Chi-square D

f

Assump. Sig

There is a reduction in the lending rates of the loans provided by the Microfinance institutions.

6.800a ₃ _.079

The government of India has increased access to collateral-free loans.

5.200a ₃ _.158

There is an increase in guarantee cover from 50% to 75% for loans provided by the banks.

9.100b ₂ _.011

Increasing liquidity to the people at the bottom of the pyramid for ensuring an increase in demand.

17.000c ₄ _.002

Increase in minimum wages earned. 7.600a ₃ _0.55

a. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell frequency is 5.0. b. 0 cells (0.0%) have expected frequencies less than 5. The minimum expected cell frequency is 6.7.

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From the above table, it can be delineated that the statement, “Increasing liquidity to the people at the bottom of the pyramid for ensuring an increase in demand”, has gained a Chi-square value of 17.000 and the corresponding p-value is 0.002 which is less than 0.05 level of significance. In addition to this, the statement, “There is an increase in guarantee cover from 50% to 75% for loans provided by the banks”, has gained a chi-square value of 9.100 and its corresponding p-value is gained as 0.11 which is also less than 0.05 significant value. Thus, it can be comprehended that there is a need for increasing liquidity to the people at the bottom of the pyramid for increasing demand, and along with it, it can also be highlighted that there is an increase in guarantee cover for loans provided at the state level. Hence, these steps should be taken by the government to boost microfinance facilities.

e) Analyzing the way forward for Microfinance in eradicating poverty during the Post COVID era and outlining its relationship with the tenure of the respondents in an organization

Table No. 5: Descriptive Statistics

Mean Std. Dev. N

7. Tenure in the organization 7.00 2.555 20

There should be postponed repayment of clients’ loan installments until liquidity in the hands of borrowers on the ground improves.

1.20 .410 20

The public sector banks must not refrain from providing loans to MFIs by thinking about risk aversion.

1.35 .489 20

The MFI must have separate norms for funding clients of different socio-economic backgrounds.

1.50 .607 20

The government must allow setting up of local businesses by providing access to credit at lower rates of interest.

1.45 .510 20

MFIs must allow repayment of loans provided after the lockdown period once demand and supply chain disruptions are subsided.

1.40 .503 20

Levene’s Test for Equality of Error Variances is applied to determine if the two conditions have equal or different values of variability. A value greater than 0.05 refers to the variability in two conditions is the same.

Table No. 6: Levene's Test of Equality of Error Variances a

F df

1

df 2

Sig.

There should be postponed repayment of clients’ loan installments until liquidity in the hands of borrowers on the ground improves.

8.960 5 1

4

.001

3.462 5 1

4

.030

The MFI must have separate norms for funding clients of different socio-economic backgrounds.

3.156 5 1

4

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The government must allow setting up of local businesses by providing access to credit at lower rates of interest.

7.396 5 1

4

.001

26.52 8

5 1

4

.000

Tests the null hypothesis that the error variance of the dependent variable is equal across groups.

a. Design: Intercept + @8.Designation

From the above table, it can be depicted that all the statements have gained p-values less than the significant value of 0.05, this indicates that there is homogeneity in variance.

Table No. 7: Model Summary b

M odel R R Square Adjus ted R Square Std. Error of the Estimate

Change Statistics

Durbin-Watson R Square Change F Change d f1 d f2 Sig. F Change 1 .594 a .353 .122 2.394 .353 1.52 6 5 1 4 .244 2.600

a. Predictors: (Constant), MFIs must allow repayment of loans provided after the lockdown period once demand and supply chain disruptions are subsided., There should be postponed repayment of clients’ loan installments until liquidity in the hands of borrowers on the ground improves., The MFI must have separate norms for funding clients of different socio-economic backgrounds., The government must allow setting up of local businesses by providing access to credit at lower rates of interest., The public sector banks must not refrain from providing loans to MFIs by thinking about risk aversion.

b. Dependent Variable: 7. Tenure in the organization

From the above table, it can be observed that the Durbin-Watson value is 2.600 which lies between 2 - 3. This indicates that there is no autocorrelation between the independent variables. Moreover, as the above model is a good fit, the study proceeds with another test of ANOVA.

Table No. 8: ANOVA a

Model Sum of Squares df Mean Square F Sig.

1 Regression 43.746 5 8.749 1.52 6 .244 b Residual 80.254 14 5.732 Total 124.000 19

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a. Dependent Variable: 7. Tenure in the organization

b. Predictors: (Constant), MFIs must allow repayment of loans provided after the lockdown period once demand and supply chain disruptions are subsided., There should be postponed repayment of clients’ loan installments until liquidity in the hands of borrowers on the ground improves., The MFI must have separate norms for funding clients of different socio-economic backgrounds., The government must allow setting up of local businesses by providing access to credit at lower rates of interest., The public sector banks must not refrain from providing loans to MFIs by thinking about risk aversion.

Table No. 9: Coefficients a

Model Unstandardized Coefficients Stand ardized Coeffici ents t Sig. Collinearity Statistics B Std. Error Beta Tole rance VIF 1 (Constant) 6.65 1 2.61 1 2.547 .02 3

There should be postponed repayment of clients’ loan installments until liquidity in the hands of borrowers on the ground improves. -.870 1.89 5 -.140 -.459 .65 3 .499 2.00 5

-2.540 1.79 6 -.487 -1.415 .17 9 .391 2.55 9

The MFI must have separate norms for funding clients of different socio-economic backgrounds. 2.27 9 1.24 1 .541 1.837 .08 8 .532 1.88 0

The government must allow setting up of local businesses by providing access to credit at lower rates of interest. -1.177 1.34 7 -.235 -.874 .39 7 .638 1.56 6

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2.22 2 1.32 7 .437 1.675 .11 6 .679 1.47 3

a. Dependent Variable: 7. Tenure in the organization

From the above table, the VIF value gained is less than 5 for all the independent variables. This shows that there is no multicollinearity in the data acquired. However, the p-value for the independent variables is more than the value of significance of 0.05. Therefore, the study concludes that there is no significant relationship in the variables with regard to the tenure of the respondents in the organization in eradicating poverty during the post-COVID era.

5. Conclusion

Microfinance plays a major role in eradicating the disruptive effects caused due to COVID-19. Based on the findings of the current study, it can be outlined that there is a dire need to lower rates of interest rates in the case of regulated MFIs and SHGs. This is because the informal sector will raise their interest rates to as high as 50% - 100%. In order to save the poor and vulnerable from falling prey to such indebtedness, it is evident that the Government takes pertinently well in advance to mitigate the predictable risks. Moreover, there is a greater need to focus on enhancing the commercialization of agriculture and allied activities as the majority of the loans are availed for this purpose. Such commercialization can be done through the medium of e-commerce engaged in selling these products. Along with it, the government can develop a platform for the export of these commodities to boost its demand. In addition to these, there is also a need for the MFIs to adopt technology to speed up the supply of information and funds to the people. Lastly, it is needless to state that microfinance is more relevant today in such daunting times than yesterday for uplifting the economy and enhancing people’s lost livelihoods.

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