Contribution of Rural Financial Services and Microfinance to Agricultural Productivity and Poverty Reduction

Abstract

Access to rural financial services has the potential to make a difference in agricultural productivity, food security, and poverty reduction. However, an efficient, sustainable and widely accessible rural financial system remains a stumbling block as a major development challenge in most of the developing countries. This paper assesses the structure of the rural financial services and the role of financial institutions from the viewpoint of their success in improving the rural population’s livelihoods in India, with emphasis on Chhattisgarh is a state within the country of India in the midwestern part of the country. The aim is to highlight some key issues that could be drawn to the attention of the Finnish development cooperation authority for possible action and consideration. The paper also highlights the contributions of microcredit and cooperatives to help people come out of the deeply rooted poverty trap and their significant contribution to agricultural productivity.