MICROFINANCE
IN THE BILATERAL
RELATIONS
BETWEEN INDIA AND
ARGENTINA
By Ab. Sabrina Victoria Olivera*
S
ince Independence from the British in 1947, successive
governments in India have implemented public policies
on rural development to eradicate the extended poverty
and promote self-employment. It must be noted that one of
the problems aff ecting the rural sector in the country is the
land fragmentation, resulting in the existence of small and
marginal farmers. Thereby, the National Bank for Agriculture
and Rural Development (NABARD) and regional rural
banks were created to fi nance and develop microfi nances
programmes. As an example of national schemes, a linkage
programme for Self Help Groups and fi nancial institutions
(Self – Help Group Bank Linkage Programme or SHG-BLP)
and the National Rural Livelihoods Mission (NRLM) –
implemented since 2011 and kept through the government
changes in 2014- must be highlighted.
As for Argentina, microfi nance sector is in a beginning
step. Nonetheless, the topic is relevant to the bilateral agenda
and some recent facts reveal its growing importance. A
demonstration of this conclusion, this article refers to the
author’s experience as an Indian Technical and Economic
Cooperation (ITEC) trainee, a programme conducted by the
Ministry of External Aff airs of India and the visit to Argentina
of Chetna Gala Sinha, a well-known social activist, who
works with rural women in India on their capacities building.
Microfi nance in rural India
Until the nineties, a large number of rural Indians were
excluded from the banking system. Poor people from rural
areas in India found themselves in a vicious circle: they
produced in a subsistence level, being hard to save money and
no investments in productive resources were possible. As a
result, the rural population chose the informal credit sources,
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as they were more fl exible and more accessible than formal
ones. In return, they accepted to pay an exorbitant interest rate,
without bearing in mind the consequences of this decision
and, during crisis times, farmers fell into poverty (Murthy et
al., 2017; NABARD, 2017; Sharma, 2017).
Even though the Government of India and Reserve Bank
of India endeavour to create and support fi nancial services
to reach marginalized population, the informal sector still
operated this way. In fact, central governments of India, in
the last decades, implemented initiatives to achieve a total
fi nancial inclusion – as the banks nationalizations in 1969
and 1980, the creation of regional rural banks in 1975 and
bank linkage programmes-, but their results did not reach the
poor (Murthy et al., 2017; NABARD, 2017; Srikanth, 2017a).
In this context, microfi nances schemes saw the light.
Microfi nance refers to the fi nancial services provision to low
income persons or solidarity groups, including consumers
and self-employers, which traditionally could not access
the banking system. Microfi nance institutions (commercial
banks, regional rural banks, cooperative banks, cooperatives
and non-banking fi nancial institutions) play a major role in
fi nancial services. They provide loans to individuals or Self –
Help Groups (SHG) or Joint Liability Groups (JLG) members.
The fi rst ones are groups between ten and twenty persons,
generally, women sharing a similar background, which collect
their savings for internal lending and its rate repayment is
decided internally. After that, the capital is considered a
collateral to access to a credit. The latter are groups formed
by fi ve or ten members – small and marginal farmers- with
the strict purpose of endorsing a bank loan both individually
and collectively through mutual guarantee (Ambrish, 2014;
Malleswari y Reddy, 2017; NABARD, 2017; Gurumurthy,