India is said to be the home of one third of the world’s poor. The World Bank estimates that over 600 million people in India survive on less than $2/day, the yardstick commonly used to demarcate the poverty line. Sixty percent of the population lives in poverty and they suffer from high rates of hunger and malnutrition. These poor take small credit during crisis periods from moneylenders who charge exploitative rates of interest—often as high as 72%-350% per year. This puts the poor in a debt trap, and often results in their falling into bonded labor—a system of indentured servitude in which a person “sells” his labor for a year in exchange for a loan thus poor falls in a vicious cycle of “ low income, low savings, low investment.

If poor people access low interest credit during times of crisis, they can avoid falling into debt trap. But these poor can not access credit from formal financial institutions due to cumbersome disbursement & high transaction cost. To bridge this gap, SAMRUDHI set out its operations in Gulbarga District, Karnataka State, in the month of May, 2007 by using a using a fast track model-drawn upon the positive features of 'Grameen' methodology'.