Sahulat Journal 4, Vol. 3, June 2015, No.1
Dr. D K Yadav1
Unavailability of working capital has been identified as one of the biggest problems faced by non-farm unorganized sector. In spite of consistent effort of government to cater to the credit requirement of this sector, it is still facing huge shortage of institutional credit. This paper is an effort to understand the nature of credit issues faced by the non-farm unorganized sector. It critically analyzes the present institutional structure of credit delivery and its underlying problems. The main cause that has been identified in this paper is the mismatch between demand and supply of product portfolio of traditional institutions (like banks) and it thus recommends the role of Microfinance Institutions (MFIs) for filling the gap. It also assesses the problems in development of MFI sector in India and recommends for separate independent regulatory body to ensure the healthy competition and enabling environment.