This article presents a case for micro credit as a viable financing strategy for catering to the financial needs of the rural poor. The conventional rural financing structure is briefly explained along with the details of micro credit. The FAPILVI approach toward establishing micro credit institutions, developed by the authors, is presented in detail. The study is primarily based on interviews conducted by the authors of the various players involved in rural financing.

In the recent years, the increased incidence of poverty in rural areas and the inability of the majority of the rural poor to gain access to financial services being offered by the formal financial sector have necessitated a rethinking of conventional rural finance strategies. The Indian rural finance system is typical in a way that the demand is for lesser amount and at a much lower frequency than in the case of urban areas. To cope with the challenges, there have been constant efforts towards reaching the rural people by the government. The strategies include restructuring of formal financial institutions, developing viable outreach structures and designing rural and micro financial products and services that meet the financial needs of the rural poor.

The study is qualitative in nature, primarily based on interviews conducted by the authors of the people involved in rural financing as well as the beneficiaries. The methodology is also influenced by the phenomenological approach to business research (Sanders, 1981). It is supported with extensive literature review from secondary sources such as news papers, magazines, etc. The direction of study is primarily towards the micro credit institutions in the context of India but wherever necessary, relevant ideas have been supported by examples from other economies too. Most of the studies aimed at finance as the broad field area are targeted towards exploring the financial structures that best serve the urban elite investors' class, their risk management or sources of finance to the corporates. Very little research has been done on financing strategies and needs of rural enterprises. This study is an endeavor to bridge this gap in literature. Suggestions made in this study would be helpful to not only to the credit providers and policy makers, but also academicians in extending research for the benefit of rural people also.

micro credit, financing strategy,financial,rural poor, conventional rural financing structure, micro credit FAPILVI credit institutions, rural financing, incidence of poverty,rural areas, inability of the majority, rural poor, financial services, financial sector.