A STUDY ON “IMPACT OF MICRO FINANCE ON WOMEN EMPOWOREMENT”

Project report submitted in partial fulfillment of the

requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

Under the guidance of,

Dr. LALITHA

Department of Management Studies

Project by
THOMAS THANKACHAN

ROBIN K JOHN

JOSEPH S JOSEPH

ANISH SHAJIN

SURYAKANTH
 DECLARATION

We hereby declare that, “A STUDY ON IMPACT OF MICRO FINANCE

IN WOMEN EMPOWERMENT ”

is the result of the project work carried out by us under the guidance of Prof. LALITHA in

partial fulfillment for the award of Master’s Degree in Business Administration.

We also declare that this project is the outcome of our own efforts.

Place: Bangalore

Date:08-12-2019

THOMAS THANKACHAN

ROBIN K JOHN

JOSEPH S JOSEPH

ANISH SHAJIN

SURYA KANTH
 TABLE OF CONTENTS

Chapter TITLE PAGE NO.

1 Introduction 01-06

2 Research Methodology 07-11

3 Data analysis & Interpretation 12-24

4 Findings, Suggestions & Conclusion 25-28

5 Bibliography 29
CHAPTER – 1

INTRODUCTION

4
 INTRODUCTION

Microfinance is defined as any activity that includes the provision of financial services such as
credit, savings, and insurance to low income individuals which fall just above the nationally defined
poverty line, and poor individuals which fall below that poverty line, with the goal of creating social
value. The creation of social value includes poverty alleviation and the broader impact of improving
livelihood opportunities through the provision of capital for micro enterprise, and insurance and savings
for risk mitigation and consumption smoothing. A large variety of sectors provide microfinance in India,
using a range of microfinance delivery methods. Since many banks in India, various actors have
endeavored to provide access to financial services to the poor in creative ways. Governments also have
piloted national programs, NGOs have undertaken the activity of raising donor funds for on-lending, and
some banks have partnered with public organizations or made small inroads themselves in providing
such services. This has resulted in a rather broad definition of microfinance as any activity that targets
poor and low-income individuals for the provision of financial services. The range of activities
undertaken in microfinance include group lending, individual lending, the provision of savings and
insurance, capacity building, and agricultural business development services.
The two main mechanisms for the delivery of financial services to such clients are: (1)
Relationship-based banking for individual entrepreneurs and small businesses and (2) Group-based
models, where several entrepreneurs come together to apply for loans and other services as a group.
Microfinance is a movement whose object is “a world in which as many poor and near poor households
as possible have permanent access to an appropriate range of high quality financial services, including
not just credit but also savings, insurance and fund transfers”. Many of those who promote microfinance
generally believe that such access will help poor people out of poverty. Microfinance is a way to
promote economic development, employment and growth through the support of micro-entrepreneurs
and small business.
In India, the trickle down effects of macroeconomic policies have failed to resolve the problem of
gender inequality. Women have been the vulnerable section of society and constitute a sizeable segment
of the poverty-struck population. Women face gender specific barriers to access education health,
employment etc. Micro finance deals with women below the poverty line. Micro loans are available
solely and entirely to this target group of women. There are several reason for this: Among the poor, the
poor women are most disadvantaged- they are characterized by lack of education and access of
resources, both of which is required to help them work their way out of poverty and for upward
economic and social mobility. The problem is more acute for women in countries like India, despite the
5
fact that women’s labor makes a critical contribution to the economy. This is due to the low social status
and lack of access to key resources. Evidence shows that groups of women are better customers than
men, the better managers of resources. If loans are routed through women benefits of loans are spread
wider among the household.
By extending small loans to poor individuals, microcredit enables its borrowers to take up
income-earning activities that lead to a series of improvements in their economic situation. In addition to
the improved income-earning ability, microcredit has increasingly promoted for its positive impact on
empowerment, especially for women’s empowerment by enabling poor women to earn an independent
income and contribute financially to their household. This is supposed to give women greater power
within the household. Also, microcredit is seen as a tool in enabling women to free themselves from
household confines and get exposure to the outside community. The exposure to the outside community,
together with the formation of networks with other women, is expected to lead to greater self-confidence
and courage. However, there is no real consensus among academics on women’s empowerment.
Microcredit has a role in increasing female borrower’s income-earning ability, leading to stronger
decision-making power and ability to overcome gender-related constraints.

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 CHAPTER - 2
RESEARCH METHODOLOGY

7
RESEARCH METHODOLOGY:

Research methodology deals with the objective of research study methods of defining the

research problems, the type of hypothesis formulated type of data collected used for

collecting and analyzing the data etc.

RESEARCH DESIGN

Research design is the arrangement of condition for collecting and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in procedure.

The research design used in this study descriptive in nature

COLLECTION OF DATA

A Researcher design is the arrangement of conditions for collection and analysis of data is a

manner that aims to combine relevance to the researches purpose with economy in procedure.

The research design used in this study descriptive in nature. A researcher can collect the

required data from the two sources namely primary and secondary data

PRIMARY DATA

Data was collected from the questionnaire personnel interview and observation.

SECONDARY DATA

The secondary data collected from the company journals, attendance, registers, booklets, etc.

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SAMPLE DESIGN METHOD OF SAMPLING

Sampling is process of obtaining the information about in the entire population by the examining

only a part of it .for the purpose of this study the researcher has to study the researches has used

the stratified random sampling method. The total population stratified into groups based on job

profile and the samples arecollected randomly from these groups.

SAMPLE SIZE

From a population of 50 respondents.

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 CONSTRUCTION OF TOOLS

The tools for collecting data are questionnaire. A questionnaire is simply formulated
scheduled to obtain and specified and relevant information, with tolerance accuracy and
completeness.

In other words it directly the questionnaire process and promotes the clear and proper
recording. The data are collected through a specified designed questionnaire for the present
data .This study four points likely scaling is used in order to elicit frank opinion of the
respondents with the regards to work value
.For his purpose the researcher interviewed the workers of different levels and in variants
departments’ .They are selected at stratified random sampling.

PRIMARY DATA:

The instrument used to collect primary data is a well-designed questionnaire

.The questionnaire consisted to the only the Likers scalded respondents .The questionnaire is
carefully constructed and properly setup.

SECONDARY DATA

Secondary data are extracted from the files, resisters, records, obtained from the personnel
department
OBJECTIVES OF THE STUDY
1) To analyze the institutional financial assistance given by the bank for the SHG group members.
2) To know the risk is face by the employees in the bank.
3) To know the bank action if any microfinance loan holder fails to repay the loan amount.
4) To clarify the limitation of microfinance programmes as the tool for women’s empowerment and
the type of support service necessary to maximize the contribution of microfinance service.
5) To offer suggestions for the betterment of microfinance service to poor women for their women
empowerment and poverty alleviation.

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Limitation of the study
1) The study is confined with the rural area. Hence the results may not be applicable to urban
area.
2) All the information available was from secondary sources and data was very vast to analyze
properly and accurately.
3) Study being conducted was very wide and analysis requires expertise knowledge and skills
which was lacking.
4) The information is collected from indirect sources so in some information data is not
available.

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 CHAPTER – 3
DATA ANALYSIS & INTERPRETSTION

12
Objective No.1 To analyze the institutional financial assistance given by the bank
for the SHG group members.
Table No. 4.1
No. of SHGs in the bank
Year No. of SHGs in the
bank

2010-11 40

2011-12 65

2012-13 80
2013-14 95
2014-15 110

Source: Bank record

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GRAPHICAL REPRESENTATION
100
90 No. of SHGs in the bank
80
70
60
Axis Title

50
40
30
20
10
0
2010-11 2011-12 2012-13 2013-14

INTERPRETATION
Table number 4.1 represents number of SHGs in the bank. The number of SHGs have been
increased from 40 to 110 from 2010-11 to 2014-15. In the year 2014-15 number of SHGs was
recorded to be 110. This was followed by 2013-14 and 2012-13 numbering 95 and 80 respectively.
In the year 2010-11, number of SHGs was only 40. To conclude the number of SHGs is increasing
which indicates a good progress in the bank.

Table No. 4.2:

SHGs savings with bank
Year Total Savings (Amt in Lakh)
2010-11 4
2011-12 8
2012-13 12
2013-14 18

14
 2014-15 25
Source: Bank record
GRAPHICAL REPRESENTATION

total savings(amnt in lakh)

2010-11 2011-12 2012-13 2013-14 2014-15

6%
12%
37%

18%

27%

INTERPRETATION
Table number 4.2 represents total amount of savings of SHGs in the bank. The total savings
of SHGs have been increased from Rs. 4 lakhs to Rs. 25 lakhs from 2010-11 to 2014-15. In the year
2014-15 total savings of SHGs was recorded to be Rs. 25 lakhs. This was followed by 2013-14 and
2012-13 numbering Rs. 18 lakhs and Rs. 12 lakhs respectively. In the year 2010-11 total savings of
SHGs was only Rs. 4 lakhs. To conclude the total savings of SHGs is increasing which indicates a
good progress in the bank.
Table No. 4.3
Loan disbursed to SHGs
Year Total Loan disbursed (Amt in Lakh)
2010-11 60
2011-12 120
2012-13 180
2013-14 280
2014-15 350
Source: Bank record
GRAPHICAL REPRESENTATION
15
 Total loan distrubuted
2010-11
6%

2011-12
12%
2014-15
36%

2012-13
18%

2013-14
28%

INTERPRETATION

Table number 4.3 represents total amount of loan disbursed to SHGs from the bank. The total
loan disbursed to SHGs have been increased from Rs. 60 lakhs to Rs. 350 lakhs from 2010-11 to
2014-15. In the year 2014-15 total loan disbursed to SHGs from the bank was recorded to be Rs.350
lakhs. This was followed by 2013-14 and 2012-13 numbering Rs. 280 lakhs and Rs. 180 lakhs
respectively. In the year 2010-11 total loan disbursed to SHGs was only Rs. 60 lakhs. To conclude
the total loan disbursed to SHGs is increasing which indicates a good progress in the bank.
Objective No.2 To know the risk is faced by the employees in the bank.
Table No.4.4
Major Risk Categories

Financial Risks Operational Risks Strategic Risks

Governance Risk
Credit Risk Transaction Risk Ineffective oversight
Transaction risk Human resources Risk Poor governance
Portfolio risk Information & structure
Liquidity Risk technology Reputation Risk
Market Risk risk External Business
Interest rate risk Fraud (Integrity) Risks

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 Foreign exchange Risk Event risk
Risk Legal & Compliance
Investment Risk
portfolio risk

Table No. 4.5

Proportion of Financial, Operational & Strategic Risks faced by the employees in
the bank
Risks Proportion (%)
1. Financial Risk 49
2. Operational Risk 28
3. Strategic Risk 23
TOTAL 100
Source: Bank record

17
GRAPHICAL REPRESENTATION

Proportion of risk
b) Reputation C) EBR
3%
a) Govt 3%
5%

1) Financial
25%
3) Strategic
c) L & C 13%
4%

b) Fraud a) credit
3% 11%

2) Operatonal
a) Transaction 14%
7%

b) liquidity
7%

c) Market
6%

INTERPRETATION
Table number 4.4 and 4.5 represents some of the major risks and proportion of risk faced by
the employees in the bank. In the above table we can see 3 types of major risk i.e., financial risk,
operational risk and strategic risk and also every 3 risk are sub-divided into 3 types. That is financial
risk are sub-divided as credit risk, liquidity risk and market risk. Operational risk are sub-divided as
transaction risk, fraud risk and legal & compliance risk. Finally, strategic risk are sub-divided as
government risk, reputation risk and external business risk.
The proportion of risk faced by the employees in the bank is as follows. The total proportion
of financial risk was 49% and it includes 22.05% of credit risk, 14.70% of liquidity risk and 12.25%
of market risk. The total proportion of operational risk was 28% and it includes 14% of transaction
risk, 5.6% of fraud risk and 8.4% of legal & compliance risk. The total proportion of strategic risk
was 23% and it includes 9.2% of government risk, 6.9% of reputation risk and 6.9% of external
business risk. So the total proportion of financial, operational and strategic risks are 49%, 28% and
23% respectively. To conclude by facing this much risk also bank employees are giving better
services to the customer regarding microfinance concept.

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Table No. 4.6
Proportion of Financial Risk
Financial Risk Proportion (%)
1. Credit Risk 45
2. Liquidity Risk 30
3. Market Risk 25
Source: Bank record

GRAPHICAL REPRESENTATION

Proportion of financial risk

Market risk
25%
Credit risk
45%

Liquidity risk
30%

INTERPRETATION
Table number 4.6 represents the proportion of financial risks faced by the bank employees.
Financial risk includes credit risk, liquidity risk and market risk. Financial risk includes 45% of
credit risk, 30% of liquidity risk and 25% of market risk. These risk lead loss of principle and
management fails to maintain sufficient cash reserves on hand. To conclude bank should take
effective steps to reduce the above risk faced by the bank employees.

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 Table No. 4.7
Proportion of Operational Risk
Operational Risk Proportion (%)
1. Transaction Risk 50
2. Fraud Risk 20
3. Legal & Compliance Risk 30
Source: Bank record

GRAPHICAL REPRESENTATION

Proportion of operational risk

Legal &
compliance risk
30% Transaction risk
50%

Fruad risk
20%

INTERPRETATION
Table number 4.7 represents the proportion of operational risks faced by the bank employees.
Operational risk includes transaction risk, fraud risk and legal & compliance risk. The operational
risk includes 50% of transaction risk, 20% of fraud risk and 30% of legal & compliance risk. To
conclude bank should take effective steps to reduce the above risk faced by the bank employees.

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 Table No. 4.8
Proportion of Strategic Risk
Strategic Risk Proportion (%)
1. Governance Risk 40
2. Reputation Risk 30
3. External Business Risk 30
Source: Bank record

GRAPHICAL REPRESENTATION

Proportion of strategic risk

30%
40%
Governance risk
Reputation risk
30% External business risk

INTERPRETATION
Table number 4.8 represents the proportion of strategic risks faced by the bank employees.
Strategic risk includes governance risk, reputation risk and external business risk. It includes 40% of
governance risk, 30% of reputation risk and 30% of external business risk. To conclude bank should
build good reputation among the customers and in society and it should aware about the government
structure, rules and regulation.

Objective No.3 To understand the risk management process followed by the

bank.

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 Figure No. 4.1

1. Identify, assess & prioritize risks

2. Develop strategies to measure risk

3. Design operational policies and procedures to mitigate risk

4. Implement into operations and assign responsibility

5. Test effectiveness & evaluate results

6. Revise policies & procedures as necessary

INTERPRETATION
Figure number 4.1 represents the risk management process followed by MFI. The above 6
steps are allowed by the bank to reduce the risk such as financial risk, operational risk and strategic
risk.

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 Table No. 4.6

Perceptions of areas of difficulties in business as a woman

CHALLENGES FACED BY THE WOMEN ENTREPRENEURS

Challenges are faced by the women entrepreneurs due to many reasons. Some of the challenges faced
by the women entrepreneurs include-

 Intense competition from similar products, limited knowledge, production and quality
standards as well as low confidence and morale.
 Many women started their own business due to the adverse circumstances, such as loss of
spouses, divorce or financial hardship.
 Lack of follow up and holding support (i.e. Capital, market linkages, technical information
and marketing techniques) after receiving Entrepreneurship development training.
 A risk adverse mindset.
 Inadequate capital.
 Networking problem (i.e. with raw supplier to buyer of products)
 Insufficient management and marketing skills.
 Low level of motivation and courage.
 Lack of support from male members (of the families) as well as banks
 Large magnitude of the target group of poor people.
 Attitudinal rigidities.
 Difficulty in creating awareness among people.
 Limited resources with the NGOs.
 Large requirements of training and sensitization of issues.
 Limited number of experienced intervention agencies.
 Diversities of situations due to wide coverage.

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OVERCOMING THE CHALLENGES

The challenges faced by the women entrepreneurs can be overcome with the help of the following
measures-

 Creating the Importance of Entrepreneurship program and skills training, and MF and support
under single roof.
 Training programme operating in several states helped NGOS-MFIs provide their
microfinance clients different set of skills for successfully running enterprises.
 Provide micro credit for livelihood support and to micro enterprises development.
 Encouraging women entrepreneur to utilize the loans for productive purposes and have the
potential to become entrepreneur.
 Establishing a network of SHG to serve as a “self-help community” for micro enterprises
development activities.
 Social recognition of women leading an enterprise.
 Developing female mentors, trainers and advisors.
 Establishing sources of credit.

INTERPRETATION

Table number 4.6 represents perceptions of areas of difficulties in business as a woman. As a

woman if she wants to become entrepreneur she will face many challenges, problems and difficulties
to run a enterprises. But now a days she was overcoming those challenges, problems and difficulties
just because of microfinance concept. To conclude microfinance concept helps woman to overcome
from many problems which indicates a good progress in women empowerment as well as
microfinance concept.

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 CHAPTER - 4
FINDINGS SUGGETIONS & CONCLUSION

25
FINDINGS

 With the help of relationship data we can see that there is more percentage of women SHGs
out of total SHGs. So that is good indicator for women entrepreneur.
 The loan distributed data show increase the % of loan amount to women as compare to last
year. This show the economic development of women entrepreneur.
 The savings of SHGs also increasing year by year. This shows that financially women’s are
becoming stronger.
 From the current situation we can understand that today the main focus of micro finance
industry is to empower the woman that’s why more loans are provided to woman and on easy
terms.
 There are many challenges face by women to doing the business as entrepreneur like lack of
capital, networking problems etc. But these challenges can be overcoming with the help of
Provide micro credit for livelihood support and to micro enterprises development,
establishing sources of credit.
 Under microfinance concept the bank has facing many risk such as financial risk, operational
risk and strategic risk.
 In total risk we can see, 49% of financial risk it includes 22.05% of credit risk, 14.70%
liquidity risk and 12.25% of market risk. 28% of operational risk it includes 14% of
transaction risk, 5.60% of fraud risk and 8.40% of legal & compliance risk. 23% strategic risk
it includes 9.20% of governance risk, 6.90% reputation risk and 6.90% external business risk.
 We can find the micofinance risk management process taken by the bank. By applying those
steps bank is try to reduce the risk.

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SUGGESTIONS

 Continue and time to time consultation and education programs should be conducted by the
bank for the beneficiaries in order to teach them on how to manage and utilize the loan
provided by bank.
 The bank has to conduct monthly meeting for all SHG members not only for one or two
members of SHGs. By conducting the meeting bank manager should take each member
opinion about group representative such as relationship with each group member, is she take
her responsibility seriously etc.
 Table No. 4.6 represents the proportion of financial risk faced by the bank. Under this credit
risk leads to loss of principle and interest. So the bank has to follow the strict loan repayment
process. It should give the strict direction to the SHGs to repay the loan amount at correct
time without any capital due.
 Bank should maintain sufficient cash reserves on hand to reduce the liquidity risk under
operational risk.
 Bank employees should maintain good relationship with customers to build good reputation.
 Making a proper follow up to the beneficiaries regarding the loan provided by the bank so as
the bank can recover their dues on time.
 Initiating and rewarding of innovative work performing by the individual. This will motivate
the beneficiaries to perform better and repaying their loan on time.

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CONCLUSION

Traditionally women have been marginalized. A high percentage of women are among the
poorest of the poor. Microfinance activities can give them a means to climb out of poverty.
Microfinance could be a solution to help them to extend their horizon and offer them social
recognition and empowerment. Numerous traditional and informal system of credit that was already
in existence before micro finance came into vogue. Viability of micro finance needs to be understood
from a dimension that is far broader- in looking at its long-term aspects too.
A conclusion that emerges from this account is that micro finance can contribute to solving
the problems of inadequate housing and urban services as an integral part of poverty alleviation
programmes. The challenge lies in finding the level of flexibility in the credit instrument that could
make it match the multiple credit requirements of the low income borrower without imposing
unbearably high cost of monitoring its end use upon the lenders. A promising solution is to provide
multipurpose lone or composite credit for income generation, housing improvement and
consumption support. Consumption loan is found to be especially important during the gestation
period between commencing a new economic activity and deriving positive income.
India is the country where a collaborative model between banks, NGOs, MFIs and Women’s
organizations is furthest advanced. It therefore serves as a good starting point to look at what we
know so far about ‘Best Practice’ in relation to micro-finance for women’s empowerment and how
different institutions can work together.
It is clear that gender strategies in micro finance need to look beyond just increasing
women’s access to savings and credit and organizing self-help groups to look strategically at how
programmes can actively promote gender equality and women’s empowerment. On the other hand,
thank to women's capabilities to combine productive and reproductive roles in microfinance
activities and society has enabled them to produce a greater impact as they will increase at the same
time the quality of life of the women micro-entrepreneur and also of her family.

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 BIBLIOGRAPPHY

Articles

 S.Sarumathi and Dr.K.Mohan, “Role of Microfinance in women’s Empowerment”, Journal of

Management and Science, Vol.1, No.1, Sep 2011.
 Economic and Social Affairs, “Microfinance as a poverty Reduction Tool-A critical
Assessment”, DESA Working paper No.89, Dec 2009.
 Susanna Khaval, “Microfinance: creating opportunities for the poor”?, Academy of
Management Perspectives (2010).
 Padmalochan Mahanta, Gitanjali Pandu and Sreekumar, International Journal of Marketing,
Financial Services and Management Research, Vol.1, Issue 11, Nov 2012.
 Dr. Dirk Steinwand, “A Risk Management Framework for Microfinance Institutions”, July
2000.
 Dan Norell, “How To Reduce Arrears In Microfinance Institutions”, Journal of Microfinance,
Vol.3
 Prof. V. Narasimha Rao and Dr. M. Venkateshwara, ‘ Financial Inclusion: A study on
Opportunities and Challenges of Microfinance’, Vol, Issue 7, July 2013.
 Jayati Ghosh, ‘Microfinance and the Challenges of financial inclusion for development’
Cambridge Journal of Economics, 2013.

Websites
 www.google.com
 www.sbm.co.in

Bank records
 Annual report
 SHGs records

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