socio economic impact of micro finance among rural women
TRANSCRIPT
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Socio Economic Impact of Micro Finance Among
Rural Women- A Review Usha J.C1, Pradeep K V2
1, 2 Faculty of Commerce, Department of Management Studies, M. S. Ramaiah University of Applied Sciences,
Bengaluru 560 054 1Contact Author E- Mail: [email protected]
Abstract This review study endeavours to assess the socio economic impact of microfinance in empowering the rural women.
Microfinance transforms and uplifts the livelihood and self-esteem of the rural women. The noticeable changes has been
occurred due to microfinance initiated programme amongst the rural women members. Microfinance enhances the
confidence level and decision making ability of rural women. Microfinance reduced the dependency of rural women on
informal money lenders. The remarkable improvement in education and employment among the rural families are endorsed
as an achievement of microfinance. Despite the fact that microfinance helped in improving the standard of living of rural
women. Micro finance helped to face the challenges like dearth of entrepreneurial skill, experience and expertise amongst
the members. This study reveals how the microfinance lend a hand towards socio economic empowerment of rural women.
Key words: Women Empowerment, Microfinance, Socio economic impact, Micro credit _____________________________________________________________________________
1.0 INTRODUCTION
Recent developments claims that micro finance is new
developmental paradigm for plummeting poverty
through strengthening the low income group, especially
women in rural areas. The other anti-poverty programs
shows that, success lies in the participation of people at
the grass root level. Micro finance is the facility which
requires the people participation in the credit delivery,
recovery and linkage of microfinance institutions with
the intermediate called Self-help groups (SHG’s).
Micro finance connotes providing savings and credit
facilities for low income group of people especially
women. This facility is made available either to set up
business, expand the existing business, self-employment
activities or increase the house hold activities. The main
motto behind this programme is to empower in women in
urban as well as rural areas. Micro finance and self-help
groups not only worked as perfect remedy for poverty
but also empowered the women by building the
awareness. It gives them confidence, improves the
standard of living and helps in making decision making.
Micro finance does not restrict the empowerment only to
finance but also extends towards socio cultural and
political spheres within which borrower’s lives are
rooted.
1.1 Microfinance, Financial Inclusion and
Women Empowerment
Micro finance institutions play key role in smoothing the
financial inclusion as they stood for reach out rural poor.
Many of them function in small geographical area, to
have a greater understanding of issues and problems.
Financial inclusion means availing of financial facilities
at affordable rates for people who have less accessibility,
usually low and middle income segment of the society.
The lion’s share of the benefits of micro finance goes to
women. Empowerment is reflected in the capability set of human
being. The empowerment maybe individual or collective
empowerment. Self-help groups helped the rural women
not only in strengthening their financial empowerment
but also in other areas like social networking’s awareness
to the recent developments, inspirations to be financially
independent, self-employment etc.
SHG’s helped in boosting the self-confidence and active
decision making among the members. Micro loans
extended to the rural population without any collaterals.
All the members of SHG’s are jointly guarantee the
borrowings of the member.
Economically it empowers the women by, cumulating
savings, alleviation of poverty in the family, supports the
children’s education and helps in providing stability
during financial crisis of the family.
Social empowerment means it helps the rural women to
communicate with the society. Social interactions helps
in boosting the confidence and boldness to fight back
against the injustice.
Political empowerment means it gives the assertiveness
for the rural women for contesting in Panchayat election,
attending Grama Sabha meetings etc. It’s the financial
stability which gives the confidence to the rural women
to withstand any kind of crisis. There is no doubt in
saying micro finance empowers the rural women
1.2 Successful Models of Microfinance There are very successful microfinance models like
intermediate models which works with banking
principles which emphasizes on the borrowings as well
as savings to the clients either by directly or indirectly
self-help groups. Apart from this there is wholesale
banking model comprising of NGOs, expansion MFIs
expansion which provides the capacity building support
to members. Individual banking model works either in
Joint Liability Groups or individual liability group.
1.3 Recent Developments in Microfinance
Finance minister Arun Jaitely has proposed to create
Mudra bank (Micro Units Development Refinance
Agency) in the phase of financial inclusion and micro
finance. They are proposing Mudra Bank, with a mass of
Rs 20,000 crore, and credit guarantee of Rs 3,000 crore.
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Mudra Bank, will refinance microfinance institutions
through a Pradhan Mantri Mudra Yojana. This is yet
another attempt by the government to support micro
finance. Reserve Bank of India’s priority in financial
inclusion – providing formal channels of finance to the
under privileged - boosted the micro finance industry
especially rural women. Giving banking license to
“Bandhan” a successful micro finance institution that too
in the first stage of granting banking license reflected the
policy direction. This initiation expects the growth of
Microfinance sector by 24 percentage between FY15-19.
Micro finance industry in India faced serious challenges
during the Andhra Pradesh Crisis during 2010-2011.
Suicides of farmers who took the loan from microfinance
institutions and the unfair practices by MF institutions
forced the experts to predict the death of Indian micro
finance system. This forced the government and
regulators to take some initiatives in this direction.
Alteration of rules in microfinance industry by RBI
helped in revitalizing the microfinance industry and
making it profitable. It helped most of the rural women
to withstand the financial crisis. The industry exhibited a
loan growth of 42 percentage in 2014.
The below table shows the growth of microfinance loan
disbursements between 2013-14
2.0 OBJECTIVES OF THE STUDY
The study is focused towards contribution of
microfinance in women empowerment
To review the socio economic impact of micro
finance on rural women
To identify the challenges faced by rural women
participating in microfinance programme
To give suitable suggestions for successful poverty
alleviation programme through women
empowerment
Table1. Progress of Microfinance programmes as on 31st March (`in crore)
Source: NABARD Annual Report 2014-15
3.0 REVIEW OF LITERATURE
3.1 Microfinance and Women Empowerment Microfinance not only helped in reducing poverty but
also helped in empowering the rural women .The women
empowerment can be studied using the parameters like
decision making, self-confidence, status at households
etc.
Study conducted by Dr. S. Prabhu and Dr. F. Elayaraja
(2015) the micro finance helped the women to face the
financial crisis with confidence. After participating in
micro finance programme they have comparatively
greater confidence in meeting the officials. The study
also found out that the financial skill of the respondents
improved significantly after participating in the micro
finance programme. Although the increase in income
level was small but the social empowerment provided by
these programs were significant. Census data (2011)
states, Literacy rate of rural women increased to 58.8% in
the year 2011 when compared to 46.1% in the year 2001.
Overall 12.7% hike in the literacy level of rural women.
3.2 Social Empowerment
According to the studies conducted The International
Fund for Agricultural Development (IFAD) argues that
microfinance lead to women empowerment in all
dimensions like social, economic and cultural. Economic
sustainability resulted in reduced abuse in the
households. Increased bargaining power, decision
making in domestic as well as outside, building better
social networks are facilitated by micro finance to rural
women
Research by Gaiha and Nandhi (2005) on the role of SHGs in contributing to women’s empowerment states
that empowerment was upheld by different sources
combined with varying degrees. This study includes
better gaining of self-respect, self-confidence,
transactional skills and taking firm moves in households.
Increasing literacy rate in rural women itself is a symbol
of development. Literature on women workers in India
by Sonali Das, Sonali Jain-Chandra, Kalpana Kochhar,
and Naresh Kumar proves that, the labour force
participation in rural areas of India is purely based on the
demography, educational accomplishment and women
decision. Awareness created by microfinance motivated
the rural women groups to the greater accomplishments.
Sl.
No
.
Particulars Self-help groups Microfinance institutions (MFIs)
2013 2014 2013 2014
Number Amount Number Amount Number Amount Number Amount
1 Loans
disbursed
during the
year
1219821
(181172)
20585.36
(2207.47)
1366421
(225675)
24017.36
(3480.60)
426
(41)
7839.51
(408.27)
545
(41)
10282.49
(646.01)
2 Loans
outstanding
4451434
(1193251)
39375.3
(8597.08)
4197338
(1307263)
42927.52
(10177.40)
2042
(102)
14425.84
(1880.63)
2422
(84)
16517.43
(1979.90)
3 Savings
accounts
with banks
7317551
(2047811)
8217.25
(1821.65)
7429500
(2262125)
9897.42
(2477.59)
– – – –
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3.3 Economic Empowerment
Leach, F. & Sitaram, S. (2002) argues in their research
even though micro credit helped in social empowerment
of the women in rural areas, for economic empowerment
it requires knowledge and awareness about the business.
Ratul Lahkar(2012) states that, increase in the number of
MFI’s leads to over borrowing, especially the joint
liability of women members refrains them from availing
the micro credit as the risk of nonpayment is high. This
provided the incentive to take successive loans.
Microfinance to rural women has given a great
opportunity to the rural poor in India to attain reasonable
economic, social and cultural empowerment, leading to
better living standard and quality of life for participating
households.
Dixon-Mueller (1993) substantiates employment plays
vibrant role in women empowerment. Rural women
mainly depend on self-employment and unorganized
sector. Employment may empower the women by
providing financial freedom, social identity and
revelation for power structures free of kin networks.
Microfinance created new employment opportunities for
rural women in informal sector. (Dixon-Mueller, 1993).
SECC survey portrays employment in rural areas
progressed to 31.59 per cent to 6.62 crore in the year
2014 when compared to 2005.
3.4 Poverty Reduction
India is one of the fastest growing economies in the
world. Still a large population doesn’t have the access to
formal channels of banking in the country, especially the
rural poor. Microfinance is started as a movement for
poverty alleviation and financial inclusion in late
seventies. It helped in providing finance to a large
number of unbanked poor.
Study by Devaraja T.S.(2011)reveals that , saving habits
of the members improved significantly after participating
in the microfinance schemes. The dependency on local
money lenders reduced considerably and the social
awareness of members improved. Although the micro
finance paved the way for poverty alleviation it faces
some challenges like high interest rate, lack of skill
among members.
The accessibility of financial resources to assist rural
poor women turn out to be change agents. Micro finance
has worked for manifestation of rural women into self-
reliant. Rural women who are in the pole position, micro
credit effort help out start a extended chain of economic
movement.
Vijay Mahajan and G. Nagasri (2000) displays Micro
finance is retrieving financial services in an informally
formal direction, in flexible, reactive and thoughtful
manner, overcoming the barriers of formal sector like
high transaction cost, low scale of operation etc.
4.0 FINDINGS
The success of micro finance lies in availing and proper
usage of funds for the required purpose. Proper training
facilities, skill developments and awareness should be
provided for empowerment of women economically
along with microcredit. Even though microfinance
claims that financial inclusion is their main moto, the rate
of interest charged by the MFI’s are quite high (12.25%
to 18%).
Being rural women as major borrowers of microcredit,
women entrepreneurs are not motivated to the required
level. The issues like polygamy and patriarchal society
works as blockades for empowerment of women in rural
areas.
5.0 SUGGESTIONS
Microfinance Institutions required to cut down the
interest rates to affordable levels of rural people and
increase the funds available for borrowings.
Microfinance institutions should also focus on skill
development and training for upcoming rural women
entrepreneurs
Microfinance institutions should build trust, unity and
bond among the members of SHGs
6.0 CONCLUSION
Micro finance is a panacea for issues faced by rural
women. Micro finance boosts self-confidence, financial
sustainability and social network building skills. It
supports underprivileged rural women in availing micro
credits denied by the other financial institutions.
Micro finance will inspire the rural women to reap the
benefits of micro credit and enable them to be self-
employed. Even though the income levels of the women
participants has not improved considerably microfinance
has left positive impression on the socio economic
aspects of women empowerment.
7.0 REFERENCES
(1) Chaudhury, Suman Kalyan, (2012). Rural
Microfinance and Micro-enterprise. 2nd ed. New
Delhi: Discovery Pub. House.
(2) Modi, D., Patel, M., & Patel, M. (2014). IOSR
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JBM). Impact of Microfinance Services on Rural
Women Empowerment: An Empirical
Study, 16(11), 68-75.
(3) Lahkar, R., Pingali, V., & Sadhu, S. (2012). Does
Competition in the Microfinance Industry
Necessarily Mean Over-borrowing? Indian Institute
of Management Ahmedabad, 2-18.
(4) Prabhu, S., and F. Elayaraja. "A Study On Micro
Finance And Women Empowerment In Thanjavur
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Futuristic Research 2.8 (2015): 2636-
643. International Journal of Informative &
Futuristic Research.
(5) Gaiha, R., and M. Nandhi (2005) Microfinance,
self-help groups and empowerment in Maharashtra.
Rome: International Fund for Agricultural
Development.
(6) Leach, F. & Sitaram, S. (2002, November).
Microfinance and women’s empowerment: a lesson
from India. Development in Practice, Vol. 12, No.
5, pp. 575-588.
37
(7) Devaraja, T.S., 2011. “Microfinance in India - A
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(8) Kulkarni, Vani S. (2011) Women’s empowerment
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(The Indian Express)