Mahatma Gandhi Mission’s

Institute of Management Studies & Research

MGM Educational Campus, Sector 1, Kamothe – 410 209

PROJECT REPORT
ON

“TO STUDY ROLE OF MICROFINANCE IN WOMEN

EMPOWERMENT“
SUBMITTED TO

MGM’S INSTITUTE OF MANAGEMENT STUDIES &

RESEARCH, NAVI MUMBAI

BY

NAME - PRAJAKTA KHANDAGALE

ROLL NO – 01

BATCH -2018-2020

IN PARTIAL FULFILLMENT OF

MASTER OF MANAGEMENT STUDIES (MMS),

UNIVERSITY OF MUMBAI

MARCH 2020
 INDEX

Chapter Title Pg.no

I. Declaration i.
II. Certificate from Guide ii.

III. Acknowledgement iii.

1 INTRODUCTION 1
1.1 Introduction of microfinance 1-3

1.2 Purpose of microfinance 4

1.3 Empowerment : Focus on poor 6

women
1.4 Different paradigm :women 10
empowerment
1.5 Role of microfinance in women 15
empowerment
1.6 Microfinance Instrument for 16
women empowerment

1.7 Problem and challenges 18

1.8 Client of microfinance 23

1.9 How does microfinance help the 24

poor?
1.10 Microfinance Institution 25
1.11 Self-help group 26-32

2 RESEARCH 33
METHODOLOGY
2.1 Research Objectives
2.2 Types of Research
3 FINDINGS 34

4 CONCLUSIONS 35

5 BIBLIOGRAPHY 36

36
 DECLARATION

I, Ms. PRAJAKTA KHANDAGALE

Hereby declare that this project report is the record of authentic work carried out

by me during the period from --------to----------and has not been submitted to any

other University or Institute for the award of any degree / diploma etc.

I
 CERTIFICATE

This is to certify that Mr. / Ms. PRAJAKTA KHANDAGALE of MGM’s

Institute of Management Studies & Research has successfully completed the

project work titled To Role of microfinance in women empowerment in

partial fulfillment of requirement for the completion MMS as prescribed by

the University of Mumbai.

This project report is the record of authentic work carried out by her

during the period from ----------- to -------------.

She has worked under my guidance.

Signature

Prof. Shija Abhilash

Project Guide (Internal)

Date: `

Counter signed by

Signature

Mrs.Ashwini Arte

Director

Date:

II
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my mentor prof.Shija

Abhilash as well as our Director Mrs. Ashwini Arte who gave me golden

opportunity to do this wonderful project on the topic of “To study role of

microfinance in women empowerment” which also helped me doing a lot of

research and I came to know about so many new things I am really thankful to

them.

Secondly I would also like to thank my parents and friends who helped me a

lot in finalizing this project within the limited time frame.

III
 Chapter – I

INTRODUCTION

1
 INTRODUCTION
Microfinance is the provision of financial services to low-income clients, including

consumers and the self-employed, who traditionally lack access to banking and related

services. Microcredit, or microfinance, is banking the unbankables, bringing credit, savings

and other essential financial services within the reach of millions of people who are too poor

to be served by regular banks, in most cases because they are unable to offer sufficient

collateral. Microcredit fits best to those with entrepreneurial capability and possibility.

Ultimately, the goal of microfinance is to give low income people an opportunity to become

self-sufficient by providing a means of saving money, borrowing money and insurance.

The main aim of microfinance is to empower women. Women make up a large proportion

of microfinance beneficiaries. Traditionally, women (especially those in underdeveloped

countries) have been unable to readily participate in economic activity. Microfinance

provides women with the financial backing they need to start business ventures and actively

participate in the economy. It gives them confidence, improves their status and makes them

more active in decision-making, thus encouraging gender equality. According to CGAP,

long-standing MFIs even report a decline in violence towards women since the inception of

microfinance.

The most of the microcredit institutions and agencies all over the world focuses on women

in developing countries. Observations and experience shows that women are a small credit

risk, repaying their loans and tend more often to benefit the whole family. In another aspect

it´s also viewed as a method giving the women more status in a socioeconomic way and

changing the current conservative relationship between gender and class when women are

able to provide income to the household. There are many reasons why women have become

the primary target of microfinance services.

2
A recent World Bank report confirms that societies that discriminate on the basis of gender

pay the cost of greater poverty, slower economic growth, weaker governance, and a lower

living standard for all people.

At a macro level, it is because 70 percent of the world’s poor are women. Women have a

higher unemployment rate than men in virtually every country and make up the majority of

the informal sector of most economies.

They constitute the bulk of those who need microfinance services. Giving women access to

microcredit loans therefore generates a multiplier effect that increases the impact of a

microfinance institution’s activities, benefiting multiple generations.

NABARD (2005) explains that the Self Help Group is a group with “an average size of

about 15 people from a homogenous class.

They come together for addressing their common problems. They are encouraged to make

voluntary thrift on a regular basis. They use this pooled resource to make small interest

bearing loans to their members. The process helps them imbibe the essentials of financial

intermediation including prioritization of needs, setting terms and conditions and accounts

keeping. This gradually builds financial discipline in all of them. They also learn to handle

resources of a size that is much beyond the individual capacities of any of them.

The SHG members begin to appreciate that resources are limited and have a cost. Once the

groups show this mature financial behavior, banks are encouraged to make loans to the

SHG in certain multiples of the accumulated savings of the SHG. The bank loans are given

without any collateral and at market interest rates. The groups continue to decide the terms

of loans to their own members.

3
 WHAT IS MICRO FINANCE?

Microfinance is a category of financial services targeted at individuals and small businesses

that lack access to conventional banking and related services. Microfinance

includes microcredit , the provision of small loans to poor clients; savings and checking

accounts; micro insurance; and payment systems.

Microfinance services are designed to reach excluded customers, usually poorer population

segments, possibly socially marginalized, or geographically more isolated, and to help them

become self-sufficient. Microfinance initially had a limited definition - the provision of

microloans to poor entrepreneurs and small businesses lacking access to credit.

The two main mechanisms for the delivery of financial services to such clients were:

(1) Relationship-based banking for individual entrepreneurs and small businesses; and

group-based models, where several entrepreneurs come together to apply for loans and

other services as a group.

(2) Over time, microfinance has emerged as a larger movement whose object is "a world in

which as everyone, especially the poor and socially marginalized people and households

have access to a wide range of affordable, high quality financial products and services,

including not just credit but also savings, insurance, payment services, and fund transfers.

HOW MICROFINANCE IS WORKS?

4
Proponents of microfinance often claim that such access will help poor people out of

poverty, including participants in the Microcredit Summit Campaign. For many,

microfinance is a way to promote economic development, employment and growth through

the support of micro-entrepreneurs and small businesses; for others it is a way for the poor

to manage their finances more effectively and take advantage of economic opportunities

while managing the risks. Critics often point to some of the ills of micro-credit that can

create indebtedness. Due to diverse contexts in which microfinance operates, and the broad

range of microfinance services, it is neither possible nor wise to have a generalized view of

impacts microfinance may create.

5
 PURPOSE OF MICRO FINANCE
(1) Encourage Entrepreneurship and Self-Sufficiency

Underprivileged people may have potentially profitable business ideas, but they

cannot put them into action because they lack sufficient capital for start-up costs.

Microcredit loans give clients just enough money to get their idea off the ground so

they can begin turning a profit. They can then pay off their micro-loan and continue

to gain income from their venture indefinitely.

(2) Empower Women

Women make up a large proportion of microfinance beneficiaries. Traditionally,

women (especially those in underdeveloped countries) have been unable to readily

participate in economic activity.

Microfinance provides women with the financial backing they need to start business

ventures and actively participate in the economy. It gives them confidence, improves

their status and makes them more active in decision-making, thus encouraging

gender equality. According to CGAP, long-standing MFIs even report a decline in

violence towards women since the inception of microfinance.

(3) Provide Access to Funds

Typically, the poor acquire financial services like loans through informal

relationships. These loans, however, come at a high cost per dollar loaned and can be

unreliable. Furthermore, banks have not traditionally viewed poor people as viable

clients and often will reject them due to unstable credit or employment history and

lack of collateral. MFIs dismiss such requirements and provide small loans at high

interest rates, thus providing MFIs the funds they need to continue operation

6
(4) Provide Access to Funds

Typically, the poor acquire financial services like loans through informal

relationships. These loans, however, come at a high cost per dollar loaned and can be

unreliable. Furthermore, banks have not traditionally viewed poor people as viable

clients and often will reject them due to unstable credit or employment history and

lack of collateral. MFIs dismiss such requirements and provide small loans at high

interest rates, thus providing MFIs the funds they need to continue operation

(5) Manage Risk

Microcredit can give impoverished people enough financial stability to cross from

simply surviving to accruing savings. This gives them protection from sudden

financial problems that could have been devastating. Savings also allow for

educational investment, improved nutrition, better living conditions and reduced

illness. Micro insurance provides people the ability to pay for health care when

needed, so they can receive treatment for health conditions before they become grave

and more costly to treat.

7
 EMPOWERMENT: FOCUS ON POOR WOMEN

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 fact that women’s labour

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.

Since women’s empowerment is the key to socio economic development of the

community; bringing women into the mainstream of national development has been

a major concern of government. The ministry of rural development has special

components for women in its programmed. Funds are earmarked as “Women’s

component” to ensure flow of adequate resources for the same. Besides

Swarnagayanti Grameen Swarazgar Yojona (SGSY), Ministry of Rural

Development is implementing other scheme having women’s component .They are

the Indira Awas Yojona (IAJ), National Social Assistance Programmed (NSAP),

Restructured Rural Sanitation Programmed, Accelerated Rural Water Supply

8
programmed (ARWSP) the (erstwhile) Integrated Rural Development Programmed

(IRDP), the (erstwhile) Development of Women and Children in Rural Areas

(DWCRA) and the Jowahar Rozgar Yojana (JRY).

9
 WOMEN’S EMPOWERMENT AND MICRO

FINANCE: DIFFERENT PARADIGMS

Concern with women’s access to credit and assumptions about contributions to

women’s empowerment are not new. From the early 1970s women’s movements in a

number of countries became increasingly interested in the degree to which women

were able to access poverty-focused credit programmes and credit cooperatives. In

India organizations like Self- Employed Women’s Association (SEWA) among

others with origins and affiliations in the Indian labour and women’s movements

identified credit as a major constraint in their work with informal sector women

workers.

The problem of women’s access to credit was given particular emphasis at the first

International Women’s Conference in Mexico in 1975 as part of the emerging

awareness of the importance of women’s productive role both for national

economies, and for women’s rights. This led to the setting up of the Women’s World

Banking network and production of manuals for women's credit provision. Other

women’s organizations world-wide set up credit and savings components both as a

way of increasing women’s incomes and bringing women together to address wider

gender issues. From the mid-1980s there was a mushrooming of donor, government

and NGO-sponsored credit programmed in the wake of the 1985 Nairobi women’s

conference

The 1980s and 1990s also saw development and rapid expansion of large minimalist

poverty-targeted micro-finance institutions and networks like Grameen Bank,

ACCION among others. In these organizations and others evidence of significantly

10
higher female repayment rates led to increasing emphasis on targeting women as an

efficiency strategy to increase credit recovery. A number of donors also saw

female-targeted financially-sustainable micro-finance as a means of marrying

internal demands for increased efficiency because of declining budgets with

demands of the increasingly vocal gender lobbies.

The trend was further reinforced by the Micro Credit Summit Campaign starting in

1997 which had ‘reaching and empowering women’ as its second key goal after

poverty reduction (RESULTS 1997). Micro-finance for women has recently been

seen as a key strategy in meeting not only Millennium Goal 3 on gender equality, but

also poverty Reduction, Health, HIV/AIDS and other goals.

 FEMINIST EMPOWERMENT PARADIGM

The feminist empowerment paradigm did not originate as a Northern imposition, but

is firmly rooted in the development of some of the earliest micro-finance

programmes in the South, including SEWA in India. It currently underlies the gender

policies of many NGOs and the perspectives of some of the consultants and

researchers looking at gender impact of micro-finance programmes

Here the underlying concerns are gender equality6 and women’s human rights.

Women’s empowerment is seen as an integral and inseparable part of a wider process

of social transformation. The main target group is poor women and women capable

of providing alternative female role models for change. Increasing attention has also

been paid to men's role in challenging gender inequality.

Micro-finance is promoted as an entry point in the context of a wider strategy for

women’s economic and socio-political empowerment which focuses on gender

11
awareness and feminist organization. As developed by Chen in her proposals for a

sub sector approach to micro credit, based partly on SEWA's strategy and promoted

by UNIFEM, microfinance must be:

Part of a sectorial strategy for change which identifies opportunities, constraints and

bottlenecks within industries which if addressed can raise returns and prospects for

large numbers of women. Possible strategies include linking women to existing

services and infrastructure, developing new technology such as labour-saving food

processing, building information networks, shifting to new markets, policy level

changes to overcome legislative barriers and unionization.

Based on participatory principles to build up incremental knowledge of industries

and enable women to develop their strategies for change (Chen, 1996). Economic

empowerment is however defined in more than individualist terms to include issues

such as property rights, changes intra-household relations and transformation of the

macro-economic context. Many organizations go further than interventions at the

industry level to include gender-specific strategies for social and political

empowerment. Some programmers have developed very effective means for

integrating gender awareness into programmers and for organizing women and men

to challenge and change gender discrimination. Some also have legal rights support

for women and engage in gender advocacy. These interventions to increase social

and political empowerment are seen as essential prerequisites for economic

empowerment.

 POVERTY REDUCTION PARADIGM

The poverty alleviation paradigm underlies many NGO integrated poverty-targeted

community development programmer. Poverty alleviation here is defined in broader

terms than market incomes to encompass increasing capacities and choices and

decreasing the vulnerability of poor people.

12
The main focus of programmer as a whole is on developing sustainable livelihoods,

community development and social service provision like literacy, healthcare and

infrastructure development. There is not only a concern with reaching the poor, but

also the poorest.

Policy debates have focused particularly on the importance of small savings and loan

provision for consumption as well as production, group formation and the possible

justification for some level of subsidy for programmed working with particular client

groups or in particular contexts7. Some programmed have developed effective

methodologies for poverty targeting and/or operating in remote areas. Such

strategies have recently become a focus of interest from some donors and also the

Microcredit Summit Campaign.

Here gender lobbies have argued for targeting women because of higher levels of

female poverty and women’s responsibility for household well-being. However

although gender inequality is recognized as an issue, the focus is on assistance to

households and there is a tendency to see gender issues as cultural and hence not

subject to outside intervention.

The assumption is that increasing women’s access to micro-finance will enable

women to make a greater contribution to household income and this, together with

other interventions to increase household well-being, will translate into improved

well-being for women and enable women to bring about wider changes in gender

inequality.

 FINANCIAL SUSTAINABILITY PARADIGM

The financial self-sustainability paradigm (also referred to as the financial systems

approach or sustainability approach) underlies the models of microfinance promoted

since the mid-1990s by most donor agencies and the Best Practice guidelines

promoted in publications by USAID, World Bank, UNDP and CGAP.

13
The ultimate aim is large programmers which are profitable and fully self-supporting

in competition with other private sector banking institutions and able to raise funds

from international financial markets rather than relying on funds from development

agencies. The main target group, despite claims to reach the poorest, is the ‘bankable

poor': small entrepreneurs and farmers.

This emphasis on financial sustainability is seen as necessary to create institutions

which reach significant numbers of poor people in the context of declining aid

budgets and opposition to welfare and redistribution in macro-economic policy.

Policy discussions have focused particularly on setting of interest rates to cover costs,

separation of micro-finance from other interventions to enable separate accounting

and programmer expansion to increase outreach and economies of scale, reduction of

transaction costs and ways of using groups to decrease costs of delivery. Recent

guidelines for CGAP funding and best practice focus on production of a ‘financial

sustainability index’ which charts progress of programmed in covering costs from

incomes.

Within this paradigm gender lobbies have been able to argue for targeting women on

the grounds of high female repayment rates and the need to stimulate women’s

economic activity as a hitherto underutilized resource for economic growth. They

have had some success in ensuring that considerations of female targeting are

integrated into conditions of micro-finance delivery and programmed evaluation.

Alongside this focus on female targeting, the term ‘empowerment' is frequently used

in promotional literature. Definitions of empowerment are in individualist terms with

the ultimate aim being the expansion of individual choice or capacity for

Self-reliance. It is assumed that increasing women’s access to micro-finance services

will in itself lead to individual economic empowerment through enabling women's

decisions about savings and credit use, enabling women to set up micro-enterprise,

increasing incomes under their control.

14
 ROLE OF MICROFINANCE IN WOMEN

EMPOWERMENT
Microfinance is a type of banking service which provides access to financial and
non-financial services to low income or unemployed people. Microfinance is a
powerful tool to self-empower the poor people especially women at world level and
especially in developing countries. Microfinance activities can give them a means to
climb out of poverty. From early 1970's women movement in number of countries
increasing to alleviate poverty through microfinance programs. The problem of
women less access to credit was given a particular concentration at First
International Women Conference in Mexico in 1975.
The evolution of microfinance is from Bangladesh since late 1970s and a very
successful project. But in Pakistan, the movement of microfinance sector started
from Agha Khan Rural Support Program (AKRSP) and Orangi Pilot Project (OPP).
With the passage of time microfinance becomes NGO activity and five microfinance
banks have been started under State Bank of Pakistan (SBP) ordinance.
Microfinance services lead to women empowerment by positively influencing
women’s decision making power at household level and their overall socioeconomic
status. By the end of 2000, microfinance services had reached over 79 million of the
poorest of the world. As such microfinance
has the potential to make a significant contribution to gender equality and promote
sustainable livelihood and better working condition for women. (ILO Geneva)
It has been well documented that an increase in women resources or better approach
for credit facilities results in increased well-being of the family especially children.

15
 MICRO FINANCE INSTRUMENT FOR
WOMEN’S EMPOWERMENT

Micro Finance is emerging as a powerful instrument for poverty alleviation in the

new economy. In India, micro finance scene is dominated by Self Help Groups
(SHGs) – Bank Linkage Programmed, aimed at providing a cost effective
mechanism for providing financial services to the “unreached poor”. Based on the
philosophy of peer pressure and group savings as collateral substitute , the SHG
programmed has been successful in not only in meeting peculiar needs of the rural
poor, but also in strengthening collective self-help capacities of the poor at the local
level, leading to their empowerment.

Micro Finance for the poor and women has received extensive recognition as a
strategy for poverty reduction and for economic empowerment. Increasingly in the
last five years , there is questioning of whether micro credit is most effective
approach to economic empowerment of poorest and, among them, women in
particular. Development practitioners in India and developing countries often argue
that the exaggerated focus on micro finance as a solution for the poor has led to
neglect by the state and public institutions in addressing employment and livelihood
needs of the poor.

Credit for empowerment is about organizing people, particularly around credit and
building capacities to manage money. The focus is on getting the poor to mobilize
their own funds, building their capacities and empowering them to leverage external
credit. Perception women is that learning to manage money and rotate funds builds
women’s capacities and confidence to intervene in local governance beyond the
limited goals of ensuring access to credit. Further, it combines the goals of financial
sustainability with that of creating community owned institutions.
Before 1990’s, credit schemes for rural women were almost negligible. The concept
of women’s credit was born on the insistence by women oriented studies that
highlighted the discrimination and struggle of women in having the access of credit.

16
However, there is a perceptible gap in financing genuine credit needs of the poor
especially women in the rural sector.

There are certain misconception about the poor people that they need loan at
subsidized rate of interest on soft terms, they lack education, skill, capacity to save,
credit worthiness and therefore are not bankable. Nevertheless, the experience of
several SHGs reveals that rural poor are actually efficient managers of credit and
finance. Availability of timely and adequate credit is essential for them to undertake
any economic activity rather than credit subsidy.

The Government measures have attempted to help the poor by implementing

different poverty alleviation programmed but with little success. Since most of them
are target based involving lengthy procedures for loan disbursement, high
transaction costs, and lack of supervision and monitoring. Since the credit
requirements of the rural poor cannot be adopted on project lending app roach as it is
in the case of organized sector, there emerged the need for an informal credit supply
through SHGs. The rural poor with the assistance from NGOs have demonstrated
their potential for self-help to secure economic and financial strength. Various case
studies show that there is a positive correlation between credit availability and
women’s empowerment.

17
 PROBLEM AND CHALLENGES
Surveys have shown that many elements contribute to make it more Difficult for

women empowerment through micro businesses. These elements are:

• Lack of knowledge of the market and potential profitability

• Inadequate book-keeping.

• Employment of too many relatives which increases social pressure to share

benefits.

• Setting prices arbitrarily.

• Lack of capital.

• High interest rates.

• Inventory and inflation accounting is never undertaken.

• Credit policies that can gradually ruin their business (many customers

cannot pay cash; on the other hand, suppliers are very harsh towards women). Other

shortcomings includes,

1. Burden of meeting: Time consuming meetings, in particular in programmes based

on group lending, and time consuming income generating activities without

reduction of traditional responsibilities increase women’s work and time burden.

2. New Pressures: By using social capital, in-group lending/group collateral

programmed, additional stresses and pressures are introduced, which might increase

vulnerability and reflect disempowerment.

3. Reinforcement of traditional gender roles: lack of economic empowerment:

Micro finance assists women to perform traditional roles better and women thus

remain trapped in low productivity sectors, not moving from the group of survival

18
enterprises to micro-enterprises. There are evidence of men withdrawing their

contributions to certain types of household expenditures.

 CHALLENGING ECONOMIC EMPOWERMENT

However impact on incomes is widely variable. Studies which consider income

levels find that for the majority of borrowers income increases are small, and in some

cases negative. All the evidence suggests that most women invest in existing

activities which are low profit and insecure and/or in their husband’s activities. In

many programmed and contexts it is only in a minority of cases that women can

develop lucrative activities of their own through credit and savings alone.

It is clear that women’s choices about activity and their ability to increase incomes

are seriously constrained by gender inequalities in access to other resources for

investment, responsibility for household subsistence expenditure, lack of time

because of unpaid domestic work and low levels of mobility, constraints on sexuality

and sexual violence which limit access to markets in many cultures.

These gender constraints are in addition to market constraints on expansion of the

informal sector and resource and skill constraints on the ability of poor men as well

as women to move up from survival activities to expanding businesses. There are

signs, particularly in some urban markets like Harare and Lusaka, that the rapid

expansion of micro-finance programmed may be contributing to market saturation in

‘female’ activities and hence declining profits.

19
  CHALLENGING WELL BEING AND INTRA

HOUSEHOLD RELATION

There have undoubtedly been women whose status in the household has improved,

particularly where they have become successful entrepreneurs. Even where income

impacts have been small, or men have used the loan, the fact that micro-finance

programmed have thought women worth targeting and women bring an asset into the

household may give some women more negotiating power.

Savings provide women with a means of building up an asset base. Women

themselves also often value the opportunity to be seen to be making a greater

contribution to household well-being giving them greater confidence and sense of

self-worth.

However women’s contribution to increased income going into households does not

ensure that women necessarily benefit or that there is any challenge to gender

inequalities within the household. Women’s expenditure patterns may replicate

rather than counter gender inequalities and continue to disadvantage girls. Without

substitute care for small children, the elderly and disabled, and provision of services

to reduce domestic work many programmed reported adverse effects of women’s

outside work on children and the elderly. Daughters in particular may be withdrawn

from school to assist their mothers.

Small increases in access to income and influence may therefore be at the cost of

heavier workloads, increased stress and women’s health. Although in many cases

women’s increased contribution to household well-being has improved domestic

relations, in other cases it intensifies tensions.

20
  CHALLENGING SOCIAL AND POLITICAL

EMPOWERMENT

There have been positive changes in household and community perceptions of

women’s productive role, as well as changes at the individual level. In societies like

Sudan and Bangladesh where women’s role has been very circumscribed and women

previously had little opportunity to meet women outside their immediate family there

have sometimes been significant changes. It is likely that changes at the individual,

household and community levels are interlinked and that individual women who gain

respect in their households then act as role models for others leading to a wider

process of change in community perceptions and male willingness to accept change

Micro-finance has also been strategically used by some NGOs as an entry point for

wider social and political mobilization of women around gender issues. For example

SEWA in India, CODEC in Bangladesh and CIPCRE in Cameroon, indicate the

potential of micro-finance to form a basis for organization against other issues like

domestic violence, male alcohol abuse and dowry.

However there is no necessary link between women’s individual economic

empowerment and/or participation in micro-finance groups and social and political

empowerment. These changes are not an automatic consequence of microfinance per

se. As noted above, women’s increased productive role has also often had it costs.

There is no necessary link between women’s individual economic empowerment

and/or participation in micro-finance groups and social and political empowerment.

These changes are not an automatic consequence of microfinance per se. As noted

above, women’s increased productive role has also often had it costs21.

21
In most programmed there is little attempt to link micro-finance with wider social

and political activity. In the absence of specific measures to encourage this there is

little evidence of any significant contribution of micro-finance. Micro-finance

groups may put severe strains on women's existing networks if repayment becomes a

problem. There is evidence to the contrary that micro-finance and income-earning

may take women away from other social and political activities.

The evidence therefore indicates that contributions of micro-finance per se to

women’s empowerment cannot be assumed and current complacency in this regard

is misplaced. In many cases contextual constraints at all levels have prevented

women from accessing programmed, increasing or controlling incomes or

challenging subordination. Where women are not able to significantly increase

incomes under their control or negotiate changes in intra-household and community

gender inequalities, women may become dependent on loans to continue in very

low-paid occupations with heavier workloads and enjoying little benefit.

For some women micro-finance has been positively disempowering, as indicated by

some of the cases shown above which are far from isolated examples:

 Credit (i.e. debt) may lead to severe impoverishment, abandonment and put

serious strains on networks with other women.

 Pressure to save may mean women forgoing their own necessary consumption.

 The contribution of micro-finance alone appears to be most limited for the poorest

and most disadvantaged women.

22
 WHO IS CLIENT OF MICRO FINANCE?
The typical microfinance clients are low-income persons that do not have access to

formal financial institutions. Microfinance clients are typically self-employed, often

household-based entrepreneurs. In rural areas, they are usually small farmers and

others who are engaged in small income-generating activities such as food

processing and petty trade. In urban areas, microfinance activities are more diverse

and include shopkeepers, service providers, artisans, street vendors, etc.

Microfinance clients are poor and vulnerable non-poor who have a relatively stable

source of income.

Access to conventional formal financial institutions, for many reasons, is directly

related to income: the poorer you are the less likely that you have access. On the

other hand, the chances are that, the poorer you are the more expensive or onerous

informal financial arrangements. Moreover, informal arrangements may not suitably

meet certain financial service needs or may exclude you anyway. Individuals in this

excluded and under-served market segment are the clients of microfinance.

As we broaden the notion of the types of services microfinance encompasses, the

potential market of microfinance clients also expands. For instance, microcredit

might have a far more limited market scope than, say, a more diversified range of

financial services which includes various types of savings products, payment and

remittance services, and various insurance products. For example, many very poor

farmers may not really wish to borrow, but rather, would like a safer place to save the

proceeds from their harvest as these are consumed over several months by the

requirements of daily living.

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 HOW DOES MICROFINANCE HELP THE

POOR?
Experience shows that microfinance can help the poor to increase income, build

viable businesses, and reduce their vulnerability to external shocks. It can also be a

powerful instrument for self-empowerment by enabling the poor, especially women,

to become economic agents of change.

Poverty is multi-dimensional. By providing access to financial services,

microfinance plays an important role in the fight against the many aspects of poverty.

For instance, income generation from a business helps in not only expanding the

business activity but also in contributing to household income and its attendant

benefiting on food security, children's education, etc. Moreover, for women, who, in

many contexts, are secluded from public space, transacting with formal institutions

can also build confidence and empowerment.

Recent research has revealed the extent to which individuals around the poverty line

are vulnerable to shocks such as illness of a wage earner, weather, theft, or other such

events. These shocks produce a huge claim on the limited financial resources of the

family unit, and, absent effective financial services, can drive a family so much

deeper into poverty that it can take years to recover.

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 MICRO FINANCE INSTITUTIONS
Microfinance institutions (MFIs) are financial companies that provide small loans to

people who do not have any access to banking facilities. The definition of “small

loans” varies between countries. In India, all loans that are below Rs.1 lakh can be

considered as microloans.

The different types of institutions that offer microfinance are:

• Credit unions

• Non-governmental organizations

• Commercial banks

Groups Organized by Microfinance Institutions in India

There are several types of groups organized by microfinance institutions for offering

credit, insurance, and financial training to the rural population in India:

1. Joint Liability Group (JLG)

This is usually an informal group that consists of 4-10 individuals who seek loans

against mutual guarantee. The loans are usually taken for agricultural purposes or

associated activities.

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Farmers, rural workers, and tenants fall into this category of borrowers. Each

individual in a JLG is equally responsible for the loan repayment in a timely manner.

This institution does not need any financial administration, as it is simple in nature.

2. Self Help Group (SHG)

A Self Help Group is a group of individuals with similar socio-economic

backgrounds. These small entrepreneurs come together for a short duration and

create a common fund for their business needs. These groups are classified as

non-profit organizations. The group takes care of the debt recovery.

The NABARD SHG linkage programed is noteworthy in this regard, as several Self

Help Groups are able to borrow money from banks if they are able to present a track

record of diligent repayments.

3. Grameen Model Bank

The Grameen Model was the brainchild of Nobel Laureate Prof. Muhammad Yunus

in Bangladesh in the 1970s. It has inspired the creation of Regional Rural Banks

(RRBs) in India. The primary motive of this system is the end-to-end development of

the rural economy. However, in India, SHGs have been more successful as MFIs

when compared to Grameen Banks.

4. Rural Cooperatives

Rural Cooperatives were established in India at the time of Indian independence. The

resources of poor people were pooled in and financial services were provided from

this fund. However, this system had complex monitoring structures and was

beneficial only to the creditworthy borrowers in rural India. Hence, this system did

not find the success that it sought initially.

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 SELF – HELP GROUP

A self-help group (SHG) is a financial intermediary committee usually composed of

25 to 40 local women or men. Most self-help groups are located in India, though

SHGs can be found in other countries, especially in South Asia and Southeast Asia.

SHG is nothing but a group of people who are on daily wages, they form a group and

from that group one person collects the money and gives the money to the person

who is in need.

Members also make small regular savings contributions over a few months until

there is enough money in the group to begin lending. Funds may then be lent back to

the members or to others in the village for any purpose. In India, many SHGs are

'linked' to banks for the delivery of micro-credit.

SHG is a holistic programmed of micro-enterprises covering all aspects of

self-employment, organization of the rural poor into self Help groups and their

capacity building, planning of activity clusters, infrastructure build up, technology,

credit and marketing.

It lays emphasis on activity clusters based on the resources and the occupational

skills of the people and availability of markets.

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Self-Help Group refers to self-governed, peer controlled, informal group of people

with same socio-economic background and having a desire to collectively perform

common purposes.

Here poor people voluntarily come together to save whatever amount they can save

conveniently out of their earnings, to mutually agree to contribute to a common fund

and to lend to the members for meeting their productive and emergent needs.

SHGs have been able to mobilize small savings either on weekly or monthly basis

from persons who were not expected to have any savings. They have been able to

effectively recycle the resources generated among the members for meeting the

emergent credit needs of members of the group.

SHG is a group formed by the community women, which has specific number of

members like 15 or 20. In such a group the poorest women would come together for

emergency, disaster, social reasons, economic support to each other have ease of

conversation, social interaction and economic interaction.

A SHG is an informal association to enhance the member’s financial security as

primary focus and other common interest of members such as area development,

awareness, motivation, leadership, training and associating in other social

inter-mediation programmed for the benefit of the entire community.

Objectives of SHG:

1. To inculcate the savings and banking habits among members.

2. To secure them from financial, technical and moral strengths.

3. To enable availing of loan for productive purposes.

4. To gain economic prosperity through loan/credit.

5. To gain from collective wisdom in organizing and managing their own finance and

distributing the benefits among themselves.

6. To sensitize women of target area for the need of SHG and its relevance in their

empowerment.
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7. To create group feeling among women.

8. To enhance the confidence and capabilities of women.

9. To develop collective decision making among women.

10. To encourage habit of saving among women and facilitate the accumulation of

their own capital resource base.

 Who helps to form SHGs?

A reasonably educated and helpful local person has to initially help the poor people

to form groups. He or She tells them about the benefits of thrift and the advantages of

forming groups. This person is called an ‘animator’ or ‘facilitator’. Usually, the

animator is a person who is already known to the community.

Any of the following persons can be a successful animator:

 Retired school teacher or a retired government servant, who is well known

locally.

 A health worker/a field officer/staff of a development agency or department of the

State Government.

 Field officer or a staff member of a commercial bank/regional rural bank or a field

staff from the local co-operative bank or society

 A field level functionary of an NGO.

 An unemployed educated local person, having an inclination to help others.

 A member/participant in the Vikas Volunteer Vahini (VVV) Programmed of

NABARD.

Woman animators can play more effective role in organizing women SHGs. The

animator cannot organize the groups all alone. He or she will need guidance, training,

reading material, etc. Usually, one of the following agencies help:

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 A voluntary agency or Non-Governmental Organization (NGO).

 The development department of the State Government.

 The local branch of a bank.

SHG AS AN EFFECTIVE APPROACH TO

WOMEN EMPOWERMENT
One has to believe that the progress of any nation is inevitably linked with social

and economic plight of women in that particular country. Empowerment by way of

participation in SHG can bring enviable changes and enhancement in the living

conditions of women in poor and developing nations. The underlying principle of

SHG is to provide to the poorest of the poor and to achieve empowerment.

Self Help Group (SHG) is a process by which a large group of women (10 – 20),

with common objectives are facilitated to come together voluntarily to participate in

the development activities such as saving, credit and income generation thereby

ensuring economic independence. SHG phenomenon definitely brings group

consciousness among women, sense of belongingness, adequate self-confidence. In

fact, what she cannot achieve as an individual, can accomplish as a member of

group with sufficient understanding about her own rights, roles, privileges and

responsibilities as a dignified member of society in par with man.

When she becomes a member of SHG, her sense of public participation, enlarged

horizon of social activities, high self-esteem, self-respect and fulfillment in life

expands and enhances the quality of status of women as participants, decision

makers and beneficiaries in the democratic, economic social and cultural spheres of

life. In other words, we can say that SHG is an effective instrument to empower

women socially and economically which ultimately contributes in the overall

development of the country like India wherein still large segment of women
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population are underprivileged, illiterate, exploited and deprived of basic rights of

social and economic spectrum. The experiences of SHGs in many countries have

been proving great success as an effective strategy and approach in recent years.

PROGRESS OF WOMEN SHGS AS ON 2017-2018

PROGRESS OF WOMEN SHGS AS ON 2018-2019

The Self-Help Group programmed has become a well-known instrument for

bankers, developmental agencies and even for corporate houses. SHGs are not only

limited to providing financial services but also they have turned out to be focal point

for purveying various services to the poorest of the poor in many ways. With the

help of this, SHG programmed has become the common vehicle in the development

process. Women can start economic activities through SHG movement. Even with

the limited monetary help the members of SHGs could expand their horizon of
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productive activities which have become their means of living. Economic and social

upliftment took place with SHG movement. In this way, SHG concept is getting

greater support from women as well as from the financial institutions.

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 CHAPTER – II

RESEARCH METHODOLOGY

 RESEARCH OBJECTIVE

1. To study the role of micro finance in women empowerment.

2. To study the status of empowerment of women beneficiaries after access to micro

finance.

3. To explore the role of women in Indian economy.

4. To analyses the empowerment which women members get in SHGS.

 TYPES OF RESEARCH DESIGN

Descriptive Research method:

The data is purely secondary in nature and the knowledge has been obtained only

through various articles available on various websites.

 DATA

Secondary data – Books, Websites

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 FINDINGS
 Women are economically and socially empowered after joining SHG and

getting microfinance as 70 percent reported that poverty level reduced by

participating micro finance program.

 Women are given full freedom to express their opinions

 It is found that microfinance improved the literacy level of rural women

improved awareness on children education to high level of respondents.

 There is a definite improvement in psychological well-being and social

empowerment among rural women as a result of participating in micro

finance through SHG program.

 Most of the women were employed and the take loan to start their business.

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 CONCLUSIONS

Thus it can be concluded from the above study that microfinance is playing a vital

role in the social, psychological as well as economic empowerment of women in

India. Microfinance loan and its productive utilization found to be having a

profound role and impact on women empowerment. The empirical findings of the

study suggests that microfinance has a profound influence on the economic status,

decision making power, knowledge and self-worthiness of women participants of

self-help group linkage program in India. Microfinance is accepted as a key mantra

for attaining and maintaining the sustained and long term economic growth in all

over the world. Reaching poor people on massive scale with popular products on a

continuous basis involves rethinking the basic assumptions and making the changes.

Today microfinance is striving to match the convenience and flexibility of informal

sector while adding flexibility and continuity. Though different studies conducted at

various levels show different conclusions, it can be acknowledged from the present

study that despite of bottlenecks, microfinance is capable of helping the poor to

upscale themselves to a better living and playing a significantly positive role in

upgrading women empowerment.

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 BIBLIOGRAPHY

 www.microfianace.com

 www.microfinanceinwomenempowerment.com

 www.microfianceinindia.com

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