CONTRIBUTION OF MICROFINANCE INSTITUTIONS TOWARDS SUSTAINABLE DEVELOPMENT - AN EMPIRICAL STUDY

Abstract

Sustainable Microfinance has undergone a paradigm shift and is now recognized as a crucial mechanism for poverty alleviation and promoting sustainable livelihoods, which is a key focus area for achieving the Sustainable Development Goals. Microfinance institutions cater by offering small loans, savings, and insurance, which are often unavailable through formal banking and financial services. Thus, Microfinance Institutions enable marginalized communities to access credit, build assets, and engage in income-generating activities. The focus of microfinance has shifted from providing basic credit access to promoting sustainability through social, economic, and environmental considerations. In recent times, the microfinance institutions are concentrating on long-term impact through changing the lives of the low-income people by making them social entrepreneurs rather than just rendering short-term financial support.

The research aims to analyze the contribution of sustainable microfinance in reducing poverty and promoting inclusive development. It stresses the credit trend of the microfinance institutions, which are rapidly growing the sector towards indebtedness. The research also highlights on the innovative digital mechanisms that are engaged, focused on digital financial services, women-focused lending and green microfinance, which support poverty reduction and also ensure empowerment and environmental balance. The study also provides the challenges on repayment and regulatory barriers and explores measures to strengthen it.