Microcredit for Income Generation: The Role of Rosca

Microcredit institutions have played an important part in income generation activities in developing countries. In India, rotating savings and credit associations (Rosca), a special type of microcredit organisation, largely meets the credit needs of the poor. These organisations also improve the loan repayment habits of the poor borrower. This paper investigates important features of Rosca such as group formation procedures, loan sequencing, peer monitoring, loan repayment, rate of default, etc. It also analyses how Rosca achieves sustainability with low social sanction and policy implications are discussed.