Business and Management Dissertation: Microcredit Impact in India

This dissertation report investigates the impact of microcredit on small businesses in India, focusing on a case study of A G Technologies Pvt Ltd in Mumbai. The study explores the theoretical background of microcredit, its benefits, and its role in supporting economic development. It examines the research aim, objectives, and questions related to microcredit's influence on small business operations, including how it aids in expansion and contributes to the country's economic position. The report provides a comprehensive analysis of the importance of microcredit for entrepreneurs and MSMEs, addressing the challenges and opportunities within the Indian context. It delves into the justification and contextualization of the research, emphasizing its timeliness and relevance to the current business environment. The report also highlights the importance of financial support and credit access for small business growth and offers insights into how microcredit can help overcome financial constraints and contribute to economic development. The study builds upon existing evidence, providing a detailed overview of the topic.

Business and
Management
Dissertation

Table of Contents
Title..................................................................................................................................................1
A) Introduction.................................................................................................................................1
B) Theoretical background and research focus................................................................................2
C) Justification and contextualization..............................................................................................4
D) Methodology...............................................................................................................................5
E) References...................................................................................................................................9

Title
“The Impact of microcredit on small businesses in India. A case study A G
Technologies Pvt Ltd, Mumbai, India."
A) Introduction
The present study is related to The Impact of microcredit on small businesses in India.
Microcredit is described as a common type of micro-finance, which involves a very small loan to
support self-employed people or to establish a small company (Hermes, Lensink and Meesters,
2011). Therefore, people are very concerned about becoming an entrepreneur in today's modern
scenarios and starting their own company in order to gain long-term benefits. Microcredit
nevertheless allows companies to expand their plans or to strengthen their ideas to achieve
growth and development. Micro-credit is common type of micro-financing which involves a very
small loan to assist people develop or self-employed. These lenders are typically low-income
individuals, especially from the LDCs. Micro-credit is sometimes called "micro-crediting."
Micro-credit loans very small amounts to people for the launch or expansion of small businesses.
In this present report analysis has been executed over businesses in India, thus it is a developing
country which has gained higher development in Urban industries likewise services and
information technologies. Therefore, around 172 million Indians continue to live in poverty and
of these, 69 percent live in rural areas. Thus, More than two-thirds of the population based on
agriculture mainly at a small-scale or subsistence level for their livelihoods. Hence, in India there
are assorted number of microfinance businesses who plays a significant role to the growth of
Indian economy (Banerjee And et. al., 2015). The Indian microcredit industry is fragmented in
around 3000 businesses like MGIs, NGO, MFIs and so on, which supports an individual or
business in rendering financial ability to execute operations in effective manner. Credit and some
very limited financial services and goods for the rural, semicircular and urban poor so that they
are able to increase their income and boost living standards. From business creators access is
extremely difficult, but from existing small businesses that have records it is less difficult to
fund.
Research Aim
“The Impact of microcredit on small businesses in India. A case study of A G Technologies
Pvt Ltd Mumbai, India."
Research Objectives
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 To access knowledge regarding the aspect of microcredit in the context of business.
 To examine the benefits of microcredit in context of small businesses in India.
 To determining the impact of microcredit over developing operations of small businesses
in India.
 To suggest ways to implement through small businesses to contribute towards economic
position of the country.
Research Questions
 What is the concept of microcredit in the context of business?
 How microcredit is beneficial for the small businesses in India?
 In what manner microcredit impacts on operations of small businesses in India?
 What are the effective ways through which small businesses can contribute towards
economic position of country?
B) Theoretical background and research focus
Theoretical background can be recognised as the imperative area of an investigation as it
helps in providing significant support to the entire work via developing theoretical perspective
which provides a way to individual for enhancing knowledge base over a specified research area.
This section of investigation is mainly encompasses over secondary sources like books, journals,
articles and past investigation and so on (Bauchet And et. al., 2011). Therefore, the present
analysis is based on determining how microcredit helps the small business to gain growth and
success. Thus it is a wider area of recognition which needs detailed analysis to get suitable idea
and information.
As per the views expressed by Julia Kagan, 2020, microfinance is also known as microcredit
which defined as the way of banking services that are offered to the unemployed or low income
people or groups who are not having any other source or access to financial services.
Microfinance mainly involves assorted banking facilities likewise loans, saving accounts,
insurances and transfer services to poor people without access to commercial banks. In addition
to this, microcredit’s are the most common of the microfinance services. Therefore, this also
termed to be the most growing business all over the world with an increasing number of
providers which is mainly considered to provide best help to the poor and it is recommended to
offer them a variety of services and focus on the specific need of every client. In today’s modern
business era the primary obligation of the businesses is to attaining higher growth and success
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and for this they are focuses over implementing their own business, starting up an idea and
become an entrepreneur and for this they need finance and microcredit helps the small and
medium size businesses to attain growth via making appropriate use of capital within a less or no
interest charges.
According to the views analysis of George Brown, 2020, In India, the MSMEs also
accounted for 6,11% of GDP growth, 24,6% of GDP services and 40% of export. In the future,
this industry has potential to gain much greater economic long - term savings if essential
bottlenecks like financing and infrastructure are dealt with. Micro-credits offer small business
owners with the ability to create or reconstruct their personal lending background. Numerous
applicants have a low credit record or no collateral for large firms, such as commercial property,
account receivables or inventory that can be employed to secure financing (Karim, 2011). India
used to be a backward country where opportunities are only provided to the males and now,
India has growing and providing equal opportunity and equality to the women to grow and
putting their skills in the light of generating money for their own and developing the economy of
the country. Thus, the micro finance helps the business or individuals to taken an effective step
in the direction of attaining growth and success.
According to the opinion stated by Prabhakar Gampala, 2018, Micro and Small Enterprise is
most promising jobs and economic growth markets in India. Smaller businesses are
fundamentally creative organizations and are unable to match some other market outlet for
inventive skill, risk-taking skill and pursuit. The sector has an important role to help in
contributing substantial career opportunities at comparatively lower cost of capital than major
industries and in assisting urban and backward industrialisation. This industry makes an
significant contribution to country's socio-economic growth (Al-Mamun And et. al., 2014). India
has grateful human resource management that are essential for governments although their abuse
of resources could pull country people and create social inconsistency. It is therefore more
necessary to give young graduates and graduates in India suitable job opportunities. The
extension of the MSME sector is governments' right choices to obtain this national goal. Thanks
to the industry, one of fastest job growth and a significant share of manufacturing producers and
exporters has already been attributed. In addition to the promotion of indigenous technology, this
sector helps to create a rising entrepreneurial eco-system. Therefore, Most of the microfinance
institutions in India attempt to go beyond savings and credit groups to render microfinance
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facilities in the form of savings and insurance. The Indian government has acknowledged the
value and range of support and growth programs for the MSME market. Such systems are
created and governed by specific public governments and ministries. The output of MSEs is
affected by different factors. Two aspects analyzed in order to determine its effect on the
performance of MSEs are financial and loan. The study found that access to finance is MSE's
most important and highly influential factors in the success of MSEs. Along with this, micro
finance mainly has positive impact over the businesses in India and also imperative in the
manner of appraising the economy of India by providing opportunities to the businesses to
expand their operations and attain suitability within market to gain growth and success. Limited
funding, high interest rates, complexity in procurement and minimum financial management
competences contributes to a decline in manufacturing operation because of the lack of the
equipment needed and a small production facility for capital. In order to solve these issues, there
has offered numerous approaches, such as better culture for saving, the search for various
financial access mechanisms, increasing financial institutions and capacities and finally the
analysis of interest rates. It has been examined that small business are having a strong impact and
are more critical to solve funding and lending related problems. This is one factor that has taken
most part in causes 50% dropouts.
C) Justification and contextualization
Why the research is is important?
Current investigation is based on determining how microcredit helps small businesses in
India, therefore, it termed to be the most concerned area as it has significant value for the
personal as well as professional perspective. Thus, the investigation is important because it helps
in rendering detailed evaluated in regards to the concept of microcredit and how it supports the
businesses in India to get success (Newman, Schwarz and Borgia, 2014). In addition to this, this
investigation is significant for an individual, business or group of people to attain significant idea
about microfinance and how it provides benefits to the businesses in gaining growth and leads
the business in providing support to the economic development of the country. The another
major intention of executing this investigation is the individual interest of the researcher, thus the
analyst wants to explore own ability and skills in relation to this specified area to develop
personal and professional ability which would be proficient for them in gaining success in future.
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This research is mainly considered to render significant idea of the people in taking help from the
microcredit businesses in moving ahead to the direction to gain growth and success.
Why is it important to find what you are trying to find?
The investigation is concern over finding how microcredit helps the small businesses in
India to growth, therefore, it is important to find because it is the major concern of today’s
modern business environment and the study assist an individual to know about the relevance of
microcredit and its benefits for the start ups, entrepreneur, and individual to gain financial
support. This study is important for an individual or business to gain appropriate idea about the
use of microcredit in the context of appraising business operations (Roodman and Morduch,
2014). Therefore, India is a developing country, where people are concern over establishing
businesses and setting up their own plan and for this they need financial support and on the
initial level, the microfinance companies are offering small credit to the businesses to implement
their operations in effective manner. The micro credit is helpful for the small business
organisations. There has been examined that small business funding still was the missing link for
micro-enterprises in the MES microfinance programmes. For new and emerging businesses,
restricted access to loans is a major obstacle to the start-up and expansion of microentrepreneurs.
Micro-credits has been regarded as tool to help financially constrained micro-entities. A credit
helps micro-enterprises to acquire properties, start up businesses, fund crises, and take care of
economic downturns. Finally, it has been shown that loans can enable micro companies improve.
How will it build on the existing body of evidence?
This will build by the suitable support of accumulation of information from the effective
sources like books, journals, published articles and so on, thus, these sources will leads the work
in right direction to develop suitable idea about the effectiveness of microcredit in the context of
providing support to the small businesses in India.
Is it timely? Does it respond to an existing need? What makes it so?
Yes, the investigation is timely as this takes time in accumulation of relevant information
about the area of microcredit that are significant for the businesses in India to attain progression.
Therefore, the investigation will timely accomplish via the support of developing time scale. The
study has responded to an existing need as finance is recognised to be the major challenge for the
businesses to make easy set up as large financial institutions are not really providing any kind of
loan facility to the people without an effective background. Thus, the study is effective in
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fulfilling the present need of businesses to gain efficient knowledge about the microfinance small
businesses and how these are providing benefits to the businesses to attain growth. The effect of
the availability of credit on the expanded market share has been shown to not guarantee an
improvement in credit quality. The inference is that MSEs do not automatically contribute to
good results. MSEs should also take very better performance to loans through lending
institutions such as sort of business, size of business operations and its expenditures, access costs
to loans and sum for credit (Chen, Chang and Bruton, 2017). In this the investigator putting
efforts to gain suitable idea to develop own abilities regarding the area of microcredit and its
significant for small as well as medium size businesses to attain success.
D) Methodology
In the context of conducting an effective research project the guidance of research
methodologies are imperative to lead the whole investigation in right manner to generate
valuable results (Taiwo, Agwu and Benson, 2016). Therefore, this section basically encompasses
over assorted tools that are valuable to lead the entire activity in right direction to drawn valuable
results, the suitable selections of application for determining how microcredit helps businesses in
India, are associated as under:
Research Paradigm
This is the another significant part of the philosophy as it is characterized as a
methodology or an examination model to executing an exploration that has been confirmed
through the examination network for long and which has been practice for a long time. Along
these lines, the majority of the examination ideal models are rise through one of the two
fundamental viewpoints like Interpretivism and positivism research. In the current research
setting, positivism philosophy will be the most appropriate instrument as it is basic in executing
quantitative investigation and furthermore viable in accumulation of data that are based on
hypothesis testing (Guérin, D'Espallier and Venkatasubramanian, 2015). Therefore, positivism
philosophy will also be supportive in gather information through observing views of others and
measuring through actual facts and figures. In quantitative examination the entire examination is
in comprise over probabilistic model which is broke down through the past examination.
Methodological Approach
Research approach is mainly encompasses over two general aspects i.e. inductive and
deductive research approach, therefore, On account of inductive approach inquire about work
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can be pushing ahead through considering existing raw numbers which are aggregated by
researcher. On the opposite side deductive methodology is rely upon new speculations which
depend on making theory and hypothesis relevant to a specified area. For undertaking the
existing research based on evaluating the aspect of microcredit and how it helps the businesses in
India, deductive approach will be the most proficient approach which incorporated over
quantitative research and also providing support the investigation through developing suitable
hypothesis and theories that are relevant for the area of microcredit and its significance for
businesses.
Research Methods
The choice of investigation is relay over qualitative or quantitative aspects, thus, the
selection is required to lead the wok in suitable direction for accumulation of valid information.
Qualitative research is mainly implemented to gather deciphering and furthermore dissecting
information through investigating the conduct of individuals and it is abstract in nature.
Furthermore, Quantitative research requires explicit information and abilities in researcher to
decipher information in statistical and mathematical aspects o substantial outcome can be drawn
toward the finish of research (Ball, 2012). For recognition the present exploration, quantitative
analysis will be the most effective tool for executing detailed analysis over the area of how
microcredit helps businesses in India, thus this is compassionate in congregation of data via the
examination of human participants and rendering data with actual facts and figures.
Research Techniques
This segment of examination is for the most part dependent on two perspectives for
example primary and secondary source data collection, in this way the choice depends on the
exploration and aides in do the entire exploration in right way to coming to at the key result.
With regards to this current examination, in light of how microcredit helps the business in India,
both primary and secondary tools will be pertinent to assemble reasonable data to help the
examination in right way. Primary examination will direct by means of creating survey through
the joining of structuring questionnaire (Siqueira, Mariano and Moraes, 2014). Along these
lines, it will be the most appropriate part of executing investigation over deciding the selected
investigation area as information from observation mainly helps to develop the base of
investigation. On the contrary side, secondary sources like books, journals, distributed and non-
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distributed articles are steady in executing hypothetical structure which is viable in creating
understanding concerning the picked investigation zone.
Sample size
This is the powerful region of an examination, along these lines, sampling is for the most
part involves over social affair data from the first populace. Subsequently, this segment of
examination is basically includes over probabilistic and non-probabilistic sampling tools. Thus,
in this current exploration work, random sampling will be the most appropriate sampling device
as in this individual are arbitrarily select to assemble important data. Along these lines, sample
size 50 will be the reasonable for helping the general work in right way to assemble significant
data to coming to at the key outcomes.
Research Ethics
In the suitable implementation of an investigation the primary recognition of the
investigation is to follow the research ethics in respect to lead the exploration in well structured
manner and reducing the chances of issue. In this considered project, researcher needs to ensure
their participants about the safety and security of their private information as the individual are
not really concern about providing information as they are having the issue of lacking their
private data. Researcher needs to provide consent form to the participants for receiving their
approval on the project.
Limitations of the Research
The key limitation of this present analysis is the efficient time, thus, this is a wide
investigation area which needs suitable long duration to get success in all the aspects to be
completed the each section of investigation in suitable manner (Toindepi, 2016). In addition to
this the another limitation of this investigation will be the lack of authenticity in the information
as in this primary research will be considering to gather information and respondents might not
taking serious the work and not providing relevant data.
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E) References
Books and Journals
Hermes, N., Lensink, R. and Meesters, A., 2011. Outreach and efficiency of microfinance
institutions. World development, 39(6), pp.938-948.
Banerjee, A. And et. al., 2015. The miracle of microfinance? Evidence from a randomized
evaluation. American Economic Journal: Applied Economics, 7(1), pp.22-53.’
Bauchet, J. And et. al., 2011. Latest findings from randomized evaluations of microfinance.
World Bank.
Karim, L., 2011. Microfinance and its discontents: Women in debt in Bangladesh. U of
Minnesota Press.
Al-Mamun, A. And et. al., 2014. Empirical investigation on the impact of microcredit on women
empowerment in urban Peninsular Malaysia. The Journal of Developing Areas,
pp.287-306.
Idris, A. J. and Agbim, K. C., 2015. Micro-credit as a strategy for poverty alleviation among
women entrepreneurs in Nasarawa State, Nigeria. Journal of Business Studies
Quarterly, 6(3), p.122.
Newman, A., Schwarz, S. and Borgia, D., 2014. How does microfinance enhance entrepreneurial
outcomes in emerging economies? The mediating mechanisms of psychological and
social capital. International Small Business Journal, 32(2), pp.158-179.
Roodman, D. and Morduch, J., 2014. The impact of microcredit on the poor in Bangladesh:
Revisiting the evidence. Journal of Development Studies, 50(4), pp.583-604.
Chen, J., Chang, A.Y. and Bruton, G. D., 2017. Microfinance: Where are we today and where
should the research go in the future?. International Small Business Journal, 35(7),
pp.793-802.
Taiwo, J. N., Agwu, P. E. and Benson, K. N., 2016. The role of microfinance institutions in
financing small businesses. JIBC, 21(1).
Guérin, I., D'Espallier, B. and Venkatasubramanian, G., 2015. The social regulation of markets:
Why microcredit fails to promote jobs in rural South India. Development and
Change, 46(6), pp.1277-1301.
Ball, S. J., 2012. Global education inc: New policy networks and the neo-liberal imaginary.
routledge.
Siqueira, A. C. O., Mariano, S. R. and Moraes, J., 2014. Supporting innovation ecosystems with
microfinance: Evidence from Brazil and implications for social
entrepreneurship. Journal of Social Entrepreneurship, 5(3), pp.318-338.
Toindepi, J., 2016. Investigating a best practice model of microfinance for poverty
alleviation. International Journal of Social Economics.
Online
Brown, G., 2020. When Small is Big: Microcredit and Economic Development. [Online].
Available through: < https://timreview.ca/article/392>.
Gampala, P., 2018. CREDIT IMPACT ON PERFORMANCE OF MICRO AND SMALL
ENTERPRISES IN TELANGANA. [Online]. Available through: <
https://www.abacademies.org/articles/Credit-Impact-on-Performance-of-Micro-and-
Small%20-Enterprises-in-Telangana-1528-2686-24-1-125.pdf>.
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Kagan, J., 2020. The Microfinance. [Online]. Available through: <
https://www.investopedia.com/terms/m/microfinance.asp>.
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