Paper Contents
Abstract
The process of financial inclusion for the urban poor requires households to access bank credit. However, banks often avoid serving the poor due to historical issues like high default rates and high transaction costs, making small loans economically unviable. This paper looks into the issue relating to households demand for bank credit. The study, based on data from 368 MFI clients in Delhi slums, reveals an increase in bank account ownership among MFI clients, though many still face challenges in obtaining bank loans. The high rejection rates are due to collateral demands and incomplete paperwork. The majority avoided bank credit due to complicated paperwork, lack of collateral, and ignorance of loan procedures. MFIs fill this gap with group loans that require no physical collateral and offer easier access and flexibility.
Copyright
Copyright © 2024 Dr. Vandana Sethi. This is an open access article distributed under the Creative Commons Attribution License.
