Acknowledgement

ACKNOWLEDGEMENT All the praises and thanks to Allah, the Almighty Creator and Sustainer of the world, I thanks Almighty Allah for granting me health, strength and wisdom to complete this research. It is with utmost pleasure that I include the names of those who have, in some possible way, contributed to the production of this work, supported me, and favoured me during the arduous journey of my research. I am delighted to take this opportunity of expressing deep sense of gratitude to my supervisor, Prof Shamim Ahmad, Department of Agricultural Economics & Business Management, A.M.U., Aligarh, who has directed me, freed me to explore, and listened to the problems that i have faced, suggested me the ways to find solutions, and best of all, praised me whenever it was necessary. His supportive, positive and easy approach made all things comfortable for me. His vast intellect, profound learning, his multidisciplinary vision, his patient and dedicated supervision, keen interest and above all his devotion helped me in the completion of this work. I have been intensely benefited from his concrete and objective criticism, wholehearted cooperation and helpful suggestions during the course of this thesis. The present thesis is a function of his unflinching guidance and this work would not have seen the dawn without his cooperation and help. I thank him from the deepest core of my heart. The painstaking part of this research work has been greatly eased and facilitated by the help and cooperation of my colleagues Mohammed Jamshed and Waseem Khan. Special thanks are due to him for their generous help in every part of my thesis With immense pleasure, I also express my thanks to Prof Akram Khan the chairperson of the Department of Agricultural Economics & Business Management, A.M.U., Aligarh, for his on-going valuable support. A special word of thanks is due to Prof. Saghir Ahmad Ansari, Prof Rais Ahmad and Mr. Shamsuzaman Department of Agricultural Economics & Business Management, A.M.U., and Aligarh they all have been extremely helpful, encouraging and suggestive during my research programme as well. My acknowledgement would be incomplete without mentioning my cordially thanks to them. Most important of all, I am highly obliged to my father and mother and specially my elder brother and my whole family Ahmad Saeed Sherwani, Hafiza Khanam & Imran Khan Sherwani , Iffat Yasmeen , Kamran Sherwani, Fehreen Sherwani , Qurratul Ain Khan , Yeshfeen Sherwani, Burhan Sherwani and all my khalas and khalus I would like to express my heartfelt thanks and sincere gratitude to respect my maternal grandfather and mother (Hafiz Isa khan and Kaneez Fatima) and Uncle Dr Mufti Zahid Ali former Chairman at Faculty of Theology, A.M.U. Aligarh, for his continuous guidance and moral support in every part of my studies. 1 dedicated this thesis and words fail me to express my appreciation to my wife Safia Ahmad her supportive, positive attitude encourage me every time during the course of this thesis. Furthermore, her whole family specially my mother in law Hameendun Nisa brother in laws and all sisters in laws Sadat Ali Khan, Irshad Ahmad, Abdur Rehman, Asma Ahmad, Aisha Ahmad, Zakia Ahmad, Ruqaiya Ahmad and Taiyeba Ahmad. I am also equally happy to acknowledge my sincere regards and thanks to the elders Late Prof Ali Ahmad, Prof Snaullah Khan, Prof Frahiem Khan, Prof Fazle Azeem, Dr Adam Malik Khan and Imran Ahmad they encourage me always in the journey of my study. 1 would like to pay my sincere thanks to the non-teaching staff of the Department of Agricultural Economics and Business Management, A.M.U. Aligarh, especially Mr. Tehseen Iqbal Siddiqui, Mr. Matloobur Rehman, Mrs HinaAzmat (Section Officer) , Mr. Shahzad, Shamshuddin and Mr Mohd Asim. I must acknowledge my gratitude to my child hood friend and best cousins Ali Sufyan, Arfa Khanam, Bushra Khanam and all other cousins. I am indebted to colleagues Abu Zr Nomani, Dr Afaq, Dr Tajdar Qaiser, Suhail Khan and Farheen Khan for giving me their full support and helps in data collection proof reading and in completion of thesis. Finally, I would like to thank my cooperative friends Nazim, Umair, Hamid and everybody who was the part of my field visit and contributed their important time to make this journey possible and successful, as well as expressing my apology that I could not mention their names personally one by one. Thanks with regards Faizan Khan Sherwani Abstract Introduction Micro Finance a tool of inclusive growth which provides the financial services and small credit to the poor in rural, semi urban or urban areas, for enabling them to raise their income levels and improve living standards. The emerging issues and challenges in India need a pragmatic framework to empower microfinance arrangements supporting, in turn, the essential processes of entrepreneurship, capacity building, education, health, and hygiene etc. The achievement of inclusive growth and overall development of the country is highly dependent on the poverty eradication from the country. However, the poverty eradication is not possible without the development of community and households. As we know that the indicators of community development are employment generation, education development, women empowerment and equality and prosperity among the communities. Development of family largely depends upon the women earning potential, financial literacy, skills development, savings, team building, poverty alleviation, rural and semi urban entrepreneur development and community building capabilities. Hence from the past decades’ microfinance has played a significant role in overall development of the country. In short, it is inaccurate that microfinance is the greatest achievement of inclusive growth and best tool to eradicate poverty. Though the microfinance sector has witnessed remarkable growth over the last few years and the government making the quantum of credit available to the needy and financially weaker section the society the expenditure has gone up to Rs.30000 crores furthermore a number of clients benefitted crossed 30 million as of March 2014 (Sa-Dhan,2014). However, it is proved that UN Millennium Development Goals are not going to meet expected results in fighting against hunger and poverty globally because microfinance institutions charging a high-interest rate to meeting their high operating working cost. This study introduces the concept of microfinance and traces its origin in India. It also looks at how the existing models could not really help the cause of financial distress resulting into the birth of Microfinance Institutions. It briefly dwells on the various forms of business models in which they exist in India and the current status of Microfinance in India. 1 Figure 1: Demographics, Poverty Index of India Source: FII 2017 In the context of overall declining poverty rates in India and the relatively small (micro) size of micro-credit the data indicating the sharp decline in poverty percentage in 2016. World Bank Index Survey (2012) states that only 35% of Indian adults had access to a formal bank account and 8% borrowed from a formal financial institution in last twelve months. The level of financial inclusion among Indian adults has increased by 20% between 2014 and 2015 (FII, 2015). As per the IMF, economic growth in the 20 most imperative microfinance markets in 2015 would be double the rate of developed economies (Etzensperger, 2015). Figure 2: Financial Inclusion in India Source: FII, 2017 This is an elementary impact assessment tool that gives a clear idea about Poverty Alleviation approach. However, it is an assessment of APL (above poverty line) and BPL (below poverty line) group or the analysis to recognize being ‘very poor’ to 2 ‘moderately poor,’ which we might also consider poverty alleviation approach. This is a general statement that shows how well an MFI does in targeting poor clients based upon those considered poor by either national standards of living or by the rough measure of loan size as used by some MFIs. Some MFIs such as BASIX have used small loan size as a rough estimation of whether their clients are likely to be ‘poor’. The challenge here will be to find data that is comparable as MFIs tend to have varying ways of measuring social impact using different measures. Purpose of Research India still accommodates a vast majority of the population which is economically deprived in terms of income, access to resources, control over resources and political power, gender biases, child labour, different forms of human abuse, etc. One of the prime reasons for this, which the researchers have often pointed out is the unavailability of timely credit Microfinance has emerged as one of the ways for fighting against poverty in rural areas, where most of the India's poorest people live. It puts credit, savings, and other basic financial services within the reach of poor people so for conducting the study two main factors have been focused first to analyse the level of satisfaction between conventional and interest free microfinance customers for eradicating poverty in India and second to suggest policy makers that they regulate interest free microfinance system by bank linked model or Grameen model or another model which is suitable in Indian context. So for this purpose first we gone through various studies on conventional and interest free microfinance in global and Indian in three perspectives (I) microfinance in global and Indian perspective (ii) interest free microfinance in global and Indian perspective (iii) comparative study of conventional and interest free microfinance in global perspective finally so it is identified research gap the comparative study of interest free microfinance system and Indian microfinance system. The emerging issues and challenges in India need a pragmatic framework to empower interest free microfinance arrangements supporting, in turn, the essential processes of entrepreneurship, capacity building, education, health, and hygiene etc.

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