Abstract
Though Gandhiji considered rural economy as the backbone of Indian economy, today the rural people are in a pathetic condition that most of them are utterly faced with the problem of indebtedness. Indebtedness means an obligation to pay money to another party. Rural indebtedness is an indicator of the weak financial infrastructure of a country, which includes inability of the economic system to reach to the needy farmers, landless people in the villages and the agricultural wage labourers and acts as a encumbrance for the overall sustainable growth, thus it is a serious and complex problem of an economy yet to unravel; it causes the rural people to succumb into the stress of debt. The micro credits are considered as the best platform for the development of confidence in the rural poor which never ever demands any collateral security for taking loan and the procedures for taking loan from micro credit are also very simple with affordable interest rate and timely expendable too. It is improved the confidence and knowledge of banking, utilization of savings and credit, taking the self employment, interaction with the local organisation like – panchayats, Micro Finance Institutions (MFIs), Non-Governmental Organisations (NGO), bank staff etc. The recent innovations in microfinance group formation not only satisfied the financial needs of the poor, but also encourage in improving the skills and knowledge of banking and financial literacy. Mobilised group ventures in the Kerala state, comprising Self Help Group (SHG), Microfinance Institution (MFI), Farmer Entrepreneurial Group (FEG), Ayalkoottam (AK), Neibourhood Groups (NHG) etc., perform an appropriate micro-enterprise wit microfinance as essential component ensuring sustainable development.
Keywords: Rural Indebtedness, Source of loan Micro credit organizations
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