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International Conference on Rural Finance Research: Moving Results - page 2 / 9





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"Though you do not pay your debt to others, you must pay your debt to the goddess. Mâri-Mâri is a form of the goddess Durga who sends small-pox. The meaning is that a powerful creditor is not to be trifled with."

Tamil Proverbs. Herman Jensen (2002: 118) [1897]


This communication presents the preliminary results of a long-term study on the geo- economic analysis of microfinance and, more specifically, of microfinanciarization.

What is microfinanciarization? In the broadest sense, microfinanciarization is the process of structural change that involves financial inclusion, bankarization, or the regulation of informal financial practices, and the utilization of voluntary sector and third sector capabilities in the provision of financial services to people who are excluded from financial and banking institutions – i.e., from 60 to 90 % of the entire population. It is one of the most fascinating features of financial economics today.

A considerable body of literature has accumulated over the past years documenting and monitoring the development of the microfinance sector [Sidney et. al. 1997, Fisher and Sriram 2002, Littlefield and Rosenberg 2004, Tsai 2004, Dasgupta 2005]. Based on macro as well as household survey data, previous studies on empowerment, income generating or other socio-economic indicators highlight the risk of increasing inequalities in the microfinance sector [Montgomery 1996, Mosley and Hulme 1998, Hulme 2000, Guerin and Palier 2005, Rao 2005]. Neglected to date have been issues of territorial inequalities, despite the major role they play in the process of growing inequality.

India is experiencing a huge expansion in terms of households linked to microfinance, more specifically linked to Self-Help Groups (SHGs). An average annual growth rate of 82 % was observed in the period from March 1993 to March 2006, in relation to a 110 % growth rate in terms of credit amounts. One of the most important programmes conducting this development is the SHG Banking Linkage Programme. Working with 620,109 SHGs during the financial year 2005-2006, it incorporates more than nine million households into the financial sector.

Apart from the aggregate numbers, very little is known about the spatial distribution and evolution of this economic phenomenon across India. Our communication will attempt to fill

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