ArthFinance – Striving For Prosperity Everywhere

  • A-64, Residential Colony Sitapura Industrial Area,
  • Tonk Road Jaipur-302022
  • arth@arthfinance.com
  • 0141-2988234

Author: admin

prem kanwar

Prem Kanwar - Story Of A Atta Chakki Owner

Prem kawar has been associated with art since over 4 years, she assessed the need of electric powered flour mill and started her business of flour mill in her village and has a monopoly in her village and neighboring villages. More power to micro enterprise owners like her who understand the gap in market and are bold enough to start their enterprise.

Poonam Yadav - Soap Manufacturer

We bring you Arth finance’s impact story of the week from the village of goner. Story of unsung heroes Poonam Yadav has an inspiring story behind starting her soap manufacturing micro enterprise. Her husband suffered a major accident and was completely bed ridden for almost 2 years, given the entire situation she took it up on her to change the lives of her kids and husband.

In her words “Paristhiti insaan ko sab seekha bhi deti hai aur kaabil bhi bana deti hai” she got trained on soap making and took a mirco loan from ARTH to start her enterprise within 2 years her production capacity has increased 200x.Glad to be enabler’s to such powerful women who inspire us to work harder.

Suman Devi

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Kanchan Devi

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How Are Microfinance Banks Shaping The Future Of The Country.

How are Microfinance banks shaping the future of the country.

‘Microfinance industry has been growing at a steady rate of 20% in terms of volume.’ 

The above massive growth of microfinance institutions reported by SIDBI in 2019 suggests that the Indian economy has a huge potential in this sector and which can be harnessed conveniently if worked upon. In the economic pyramid funnel, microfinance institutions like Arth focus on the lower strata of the pyramid, which is composed of the financially weaker section of the society. Of these poverty-stricken strata, the majority of the population dwell in rural areas that have an acute shortage of proper world-class amenities required to enhance the financial conditions of the people. Moreover, a high proportion of our population is still under the BPL category. It needs some extra efforts to gain financial inclusion.

Microfinance institutions have performed quite commendable in the timeframe by providing credit schemes to more than 64 million people till now, based on their requirements. This sector has been playing a prime role in shifting the unorganized loans in rural areas to a well-structured, organized platform by eliminating the various cheating and frauds happening in the informal loans.

More and more rural people are coming to the surface and taking part in the microcredit schemes to gain financial freedom by establishing their new business units/ services and supporting the agricultural sector. One of the major beneficiaries of Arth microfinance is the rural women, who have the potential to be the bread earner for the family as well as taking care of the household. These women need guidance and support to come out from the web of the paternalistic dynasty and sharpen their entrepreneurial and leadership skills. To facilitate a well-structured microcredit disbursal, we need to penetrate their society at the local level by making one person as a mediator from their group only. These women are partaking to create an SHG and take care of each member’s needs upon loan sanctioning. With all these domains to work upon, there are certain needs of these microfinance ecosystems which need to be looked upon:

Alternate channels for capital funding: When it comes to seeking fundings, the best and most reliable source is the nationalized banks. Although medium to small MF institutions also look for other financial institutions for funding as banks are overwhelmed with the borrowing capacity required by various players of the economy. The case with smaller MFs is that their credibility is still low and growing. Hence, they need to take on help from other alternative financial institutions that can trust them and push money.

Customer centricity: Microfinance institutions works on the model of legitimate banks for the poverty-stricken people heavily residing in rural areas. One way to penetrate in the region is by making credit access easy and promoting financial literacy. While there is slightly less scope of monetary benefits in microcredits when compared to loans given to people by banks as house, car, and educational loans, which have a high-interest rate, the prime focus of these institutions should never fluctuate from these lower strata of our financial population pyramid.

Credit risk assessment process: Microfinance institutions deal with the low-income level people who often do not have any legitimate credit history officially, and hence it becomes hard to analyze their intentions. There is a lack of written data records for those people. Hence, it becomes very necessary to do a thorough background check by going in the field to analyze the financial conditions of the beneficiary. Further compliance to rules may become a challenging task if a proper risk assessment is not done.


All these challenges and needs are essential to look upon by both government and organizations to keep this sector booming and help the poor people in gaining financial independence. There are some ways in which the MF institutions can gain more traction in the coming years.

Affordable Borrowing: What interests the most curiosity in poorer people is that they have to pay less interest in the principal sum borrowed by them. These are poor strata of people who put in each penny to make a large saving. Providing them access to affordable loans is a crucial step to make them use micro-credit schemes. MF should lookout for new investment channels and access and analyze new business models, which helps in saving money.

Reaching to more and more customers: This is a challenging job, as going to each unbanked persons and trying to give them knowledge about financial principles is a hard job. One thing is that they reside in rural areas, which are sometimes inaccessible and are not literate enough. MF institutions should come up with customer focussed products and services which are easy to integrate into their everyday tasks. One such example can be of microinsurance.

Providing allied skills training: It becomes important to give them training for skills and entrepreneurship abilities which they can further use to grow their services/ business. Uneducated people cannot survive long term business and can get in a debt trap, which can put a hold on their business model. They should be rained and provided enough knowledge on how to use the credit resources wisely. It will also help in better compliance in the future leading to a better credit rating.

Also, focussing on women entrepreneurs is crucial in uplifting the society as a whole. When a woman gets financially independent, the whole household gets benefitted. In long term macroeconomic consideration for our economy, microcredit institutions are a necessary building block just like banks. Microfinance intuitions are also digitalizing their internal processes for a faster and more streamlined experience. These online platforms can help them grow in other areas quickly and escalate their operations. MFs are like a pillar of our economy as they are putting their hard work in making the rural sector of our economy a more independent entity, which ultimately works alongside the urban and metro cities’ economy to foster our country’s GDP. Becoming a 5 trillion economy by 2025 will only be possible when we bring more and more poor people into the financial mainstream as early as possible.

Microfinance And Rural Women Empowerment Go Hand In Hand

Microfinance and rural women empowerment go hand in hand

Much of India’s economic development started after the 90s liberalization policies, which targeted to reform the structural and constitutional parts of the economy, opening the hands of the private sector. In recent decades, India’s GDP rate reached a high of 7%, reaping the benefits of the 90s changes. 2011 census showcased an interesting fact that nearly two-thirds of the population still dwelled in rural areas, and agriculture was the chief occupation. Of these two-thirds, there was almost half the population of women who lived with the conventional laws of paternalistic society. India was still miles away to harness this side of our population for their entrepreneurial and leadership abilities, which would prove to be a driving force for the economy. 

Indian rural societies are run on conventional norms that still see our prejudiced paternalistic society as the upfront household law. While many feminists go vocal for a modern equalized society, much of their voices are only to be heard in the urban educated world. They are unable to penetrate deep into the rural household, which is running on the same lines as it was ten years ago. Although many government schemes which focus on women in rural areas are being implemented, the fact remains that these are essentially being used only as a money extraction policies. While we talk about change, we often forget that our informational chanting is only suitable and work for urban living educated folks. Rural households are not too concerned about these equalizing societies’ chants.

We can tackle this issue of reaching more women in rural areas and supporting them to gain financial independence through microcredit schemes. Arth microfinance is leading and helping the rural women in shaping their futures through our micro lending schemes, which targets to help them develop an entrepreneurial mindset and gain financial independence. Arth encourages rural women to build an SHG group and mobilize their workforce for a better experience in terms of business or entrepreneurship. We push different suitable credit options to them according to their skills and requirements and even provide pieces of training assistance as required. The microfinance institutions play a commendable role in uplifting the rural sector when the private and established banks and institutions are reluctant to open in these areas. Secluding a particular section of our society based on gender and education will never bring equality, let alone justice. The census also showcased us that women’s participation in labor is only 28%. 

World Bank conducted a survey to check the growth of inequality in various countries in 2018 and found that India has the highest growth in inequality from 1980 to 2016. The contribution factor is the uneven distribution of wealth, and wealth comes with opportunities. Microfinance institutions are playing a major role in creating opportunities among the rural areas and driving wealth in these areas, which balances the wealth distribution in the country. Women’s financial independence has a direct correlation with the country’s financial inclusion.

Problems faced by rural women in credit sector schemes:

  • Lack of collateral: Rural areas are usually underdeveloped compared to their urban counterparts and faces a shortage of advanced amenities, including major banks, good hospitals, and educational institutes. The only thing which the people have here which can be used as collateral is the agricultural land, which is often the chief source of their income. Hence there is a high risk of security among both the borrowing and lending parties. And when we come to the case of rural women, the case even worsens. They don’t have even minimum assets in their names, which can be provided as collateral at times.

  • No banks and reliable financial institutions: Rural areas still use the unorganized credit sector as their chief borrowing needs. The wealthy people like zamindars, mukhiya, etc. are the lending parties who charge high-interest rates on the principal amount. These high rates can even lead to a debt trap that can force the borrower to sell their lands.

  • No entrepreneurship knowledge: With even basic amenities not being provided in rural areas, it is wrong to think that these people know much about entrepreneurship qualities. Without proper training, even if they collect a lot of money to start a small business, they will eventually fail and fall in debt.

  • Social exclusion: In a paternalistic society, very less value is given to women. Hence, it is difficult for women in rural areas to survive in a male-dominated business environment.

These are some of the major challenges faced by women in rural areas, which led to the development of microfinance sectors and saw booming growth in these regions. Arth microfinance is one such institution working primarily in rural areas for skill development in women through our personalized micro-credit options. We have a tie-up with some major banks which facilitate the loan process in these areas. Also, timely interest submission is assured through the joint incorporation of SHGs, where the group’s credit reputation is connected with each member. This has ensured timely submission and management of resources along with the upliftment of these women.

As rightly said, each drop fills an ocean; we know that our small addition in improving the lives of these women who are haunted by the conventional laws made by the paternalistic society will surely add up in our nation’s development. Initially, when we started, it was only a village in Rajasthan; we started at a small level, though, however, with people’s love and support, we grew our operations in multiple states. It had been a rewarding journey for our team in terms of knowledge and experience, and now we hold a significant number of women in rural areas who have got financially independent through our help. Microfinance institutions have always been an integral part of our country’s development and raise a whole lot of more upcoming opportunities in the future. Penetrating rural areas can be easily done now through various local branches of these microfinance institutions whose primary motive remains to help women become financially independent.