Individual Lending versus Group Lending in Microfinance: An analytical Study

Microfinance, over the years, has evolved from the traditional joint liability method to the new innovations such as individual lending and differential banking. Institutes which initially focussed only on production loans are now also attempting to provide consumption loan to the existing and potential customers. Group lending, which was once considered as the fundamental stone of the microfinance model, has now become obsolete and new models are emerging. Through this paper, with the help of existing literature, an attempt has been made to find the reason of the diminishing importance of group lending. The writer has also find that there is an absence of empirical research analyzing the impact of individual lending in India. It has also been found that several microfinance institutes have now started operating as a small finance bank, the impact of which on customers has not been established yet.