Micro Loan from Non-Institutional Sources: Causes and Consequences

ABSTRACT

Money is a kind of economic unit, which has universally been recognized and accepted as a fundamental medium of exchange as well as transaction. In society also, it serves numerous functions such as formation of social class, fulfillment of wants and many more. The people earn and avail small or large amount of money from many institutional and non-institutional sources to fulfill their needs. Thus, keeping in view the above facts, this article is an attempt to examine the socio-economic background of 60 persons who availed loans from non-institutional micro credit providers; their difficulties in repaying the loan installments; and a sociological examination of challenges associated with opening an account with an institutional bank. Further, the paper will determine the respondents needs and requirements for availing microcredit, as well as the quantum of interest rate they are bound to pay in lieu of loans. It will also analyse whether they suffer any penalties in case the loan amount or installments are not paid on time. Apart from this, efforts are made to track how demonetization and COVID-19 lockdown affected their working style. The results of the study reveal that as compared to institutional sources, the people do seek short term loans from the non- institutional sources due to their easy access and less complexities in spite of on higher rates of interests.

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