MICRO-FINANCE AND ITS ROLE IN WOMEN EMPOWERMENT

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  • Lysander Spooner an American philosopher, argued that the small credit should be provided to poor people without interest by government. Friedrich Raiffeisen started Agricultural Cooperative Bank in Germany to provide small credit to farmers.Md younus started a project of financing rural poor women without any collateral
  • Central bank of Bangladesh sponsored project later it converted into separate bank. He selected a village called jobra near to the chittagong agril university and started financing a group of women without any collateral.
  • Microfinance in India started in 1974 in Gujarat as Shri Mahila SEWA (Self Employed Women’s Association) Sahakari Bank. Registered as an Urban Cooperative Bank, they provided banking services to poor women employed in the unorganised sector. Microfinance later evolved in the early 1980s around the concept of informal Self-Help Groups (SHGs) that provided deprived poor people with financial services. From modest origins, the microfinance sector has grown at a steady pace. Now in a strong endorsement of microfinance, the National Bank for Agriculture and Rural Development (NABARD) and Small Industries Development Bank of India (SIDBI) have committed themselves to developing microfinance.In 1972 the Self Employed Women's Association (SEWA) was registered as a trade union in Gujarat (India), with the main objective of "strengthening its members' bargaining power to improve income, employment and access to social security." In 1973, to address their lack of access to financial services, the members of SEWA decided to found "a bank of their own". Four thousand women contributed share capital to establish the Mahila SEWA Co-operative Bank. Since then it has been providing banking services to poor, illiterate, self-employed women and has become a viable financial venture with today around 30,000 active clients.

Transcript

  • 1. 111/05/2013
  • 2. PRESENTATION BYGOPALA, Y.MPALB-1028II Ph.D (Agril. Extn)MICRO-FINANCE AND ITS ROLE IN WOMENEMPOWERMENT11/05/2013 2
  • 3. INTRODUCTION11/05/2013 3
  • 4. Objectives of Seminar11/05/2013 41• To understand the concept of micro-finance2• To know the role of micro-finance in womenempowerment3• To review the research studies related to micro-finance
  • 5. History of Microfinance• The concept evolved in 18th century with the publications ofLysander Spooner on benefits from small credits.• Friedrich Raiffeisen founded the first cooperative lendingbanks to support farmers in rural Germany.• The modern use of the expression "micro-financing" has rootsin the 1970s when Dr. Muhammad Yunus started GrameenBank in Bangladesh11/05/2013 5
  • 6. GRAMEENA BANK• The Grameen Bank has over 1000 branches.• A branch covers 25-30 villages, around 240 groups and 1200borrowers.• GB has branches in all the provinces of Bangladesh,• Later this model was replicated in other developingcountries in the world11/05/2013 6
  • 7. HISTORY OF MICRO-FINANCEIN INDIA• Microfinance in India started in 1974 in Gujarat with ShriMahila SEWA (Self Employed Women’s Association) SahakariBank.• Microfinance later evolved in the early 1980s around theconcept of informal Self-Help Groups (SHGs).• During 1992, NABARD started linking SHGs to banks inIndia11/05/2013 7
  • 8. Need of micro-finance in India• In India around 27 per cent population living below thepoverty line.• About 60 percent of the poorest households do not have accessto credit.• Only 20% access loan from the formal sources• Annual credit demand by the poor is estimated to be about Rs.60,000/- crores and only Rs.12,000/- crores are disbursed.11/05/2013 8Source: Indiastat, 2012
  • 9. • As on today 8 Million SHGs are linked to banks.• 6.29 million SHGs are exclusively for women• 800 MFIs are working in India• SHGs maintain a balance of over Rs. 6550/- crores in theSavings with the Banks.• Together, 4.4 million groups have Rs. 36340/- crores loanoutstanding against them.11/05/2013 9Current Status of micro-finance in IndiaSource: Status of Micro-finance in India- 2012, NABARD
  • 10. 11/05/2013 101. CONCEPT OF MICRO-FINANCE
  • 11. Concept of Micro-FinanceJoshi, 2006Micro-finance is defined as “The provision of thrift, creditand other financial services and products of very smallamounts to the poor in rural, semi-urban or urban areas forenabling them to raise their income levels and improve theirliving standard”.11/05/2013 11Source: JOSHI, D.P., 2006, Social Banking, Foundation Books Private limited, New Delhi.
  • 12. International Labour Organization (ILO), 2000“Microfinance is an economic developmentapproach that involves providing financialservices through institutions to low incomeclients”.11/05/2013 12
  • 13. Activities of Micro-FinanceMicro-finance involves the activities like1. Small loan for working capital,2. Collateral securities such as group guarantees or compulsorysavings,3. Access to repeat and larger loans based on repaymentperformance,4. Streamline loan disbursements and monitoring5. Secure savings.11/05/2013 13Rao and Sharma (2006)
  • 14. Microfinance Models in India• Self Help Group- Bank linkage model• Micro-finance Institution Model (MFI)• Grameen Model• Individual Lending11/05/2013 14> 97 per cent ofMicrofinance business
  • 15. THE SELF HELP GROUP-BANKLINKAGE MODEL• It is the dominant microfinance methodology in India.• Started as a pilot project in 1992 by NABARD.• SHGs were linked to banks.11/05/2013 15
  • 16. BANKNGO /FACILITATORSHGCLIENTCREDITPROMOTION & TRAININGMEMBER/CLIENTWORKING OF SHG-BANK LINKAGEMODEL
  • 17. TYPES OF SHG-BANK LINKAGEMODEL11/05/2013 17Model TypeI Banks forms SHGs and finance themII NGOs forms SHGs and banks finance themIII NGOs and other agencies, as financingintermediaries between banks and SHGs
  • 18. LOANS ISSUED TO WOMEN SHGs BYBANKSParticulars 2008-09 2009-10 2010-11 2011-12No. ofSHGs(lakh)Amt.(Crores)No. ofSHGs(lakh)Amt.(Crores)No. ofSHGs(lakhs)Amt.(Crores)No. ofSHGs(lakhs)Amt.(Crores)Savings 48.64 44.34 53.10 44.98 60.98 5298 62.99 5104Bank Loansdisbursed13.75 10527 12.94 12429 10.17 12622 9.23 1413211/05/2013 18Source: Status of Micro-finance in India- 2012, NABARD
  • 19. MICRO-FINANCE INSTITUTIONSMODEL (MFI)Micro-finance Institutions (MFls)• MFIs include NGOs, trusts, NBFCs,• These lend small sized loans to individuals or SHGs.• They also provide other services like capacity building,training, marketing of products etc.• Example– Bhartiya Samruddhi Investments and Consulting Services Ltd.(BASICS Ltd) in Hyderabad11/05/2013 19
  • 20. WORKING OF MFI MODELBANKSHGCREDIT CLIENTCLIENT PROMOTION & TRAININGMEMBER/CLIENTMFI/NGO
  • 21. 11/05/2013 21Year No. of MFIs Amount(crores)2008-09 581 3732.332009-10 779 10728.502010-11 471 8448.962011-12 465 5206.29Loans disbursed to MFIs bybanksSource: Status of Micro-finance in India- 2012, NABARD
  • 22. CLIENT OUTREACH OF SBLPAND MFIsSEGMENT 2006-07 2007-08 2008-09 2009-10 2010-11 GrowthpercentBank-SHG 38.00 47.10 54.00 59.60 62.50 4.90MFIs 10.00 14.10 22.60 86.30 31.40 17.60Total 48.00 61.20 76.60 86.30 93.90 8.8011/05/2013 22In millionsSource: Status of Micro-finance in India- 2012, NABARD
  • 23. State-wise position of MFIs(2010)S No State No of MFIs Share %1 Andhra Pradesh 484 622 Bihar 44 63 Gujarat 8 14 Jharkhand 1 05 Karnataka 20 36 Kerala 18 27 Madhya Pradesh 14 28 Maharashtra 15 29 Orissa 28 410 Rajasthan 18 211 Tamil Nadu 101 1312 Uttar Pradesh 5 113 West Bengal 30 4Total 786 10011/05/2013 23
  • 24. PROBLEMS IN MICROFINANCE• Insufficient loan amount• High interest rate (12 to 36% p.a. )• Low recovery of loans• Regional Imbalances in formation of SHGs• High level of illiteracy and lack of organizational experienceof most members is a constraint for most SHG members inperforming this role (Risk management, repaymentmonitoring, financial management, accountability etc.)11/05/2013 24
  • 25. HOW MICRO-FINANCE HELPS INAGRICULTURE DEVELOPMENT1. Financial services:-Funding for purchase of implements and inputs.2. Non-financial services:-Technical assistance, capacity building and information bythe development officers3. Market access for the produce:-Formation of groups and encouraging group marketing- Coordination with local extension agencies11/05/2013 25
  • 26. 11/05/2013 262. ROLE OF MICRO-FINANCE INWOMEN EMPOWERMENT
  • 27. Role of Micro-finance in womenempowermentThe role of Micro-finance contributing for women’sempowerment includes• Economic empowerment• Social empowerment:• Education, skill and training empowerment:• Political empowerment:11/05/2013 27
  • 28. Micro-finance in economic empowermentRoles include,• Enhances the women’s contribution to the household’s incomeas a result of credit access.• Helps in employment generation,• Helps in understanding the bank transactions.• Improves women’s access and control over the resources.11/05/2013 28
  • 29. Micro-finance in social empowermentRoles include,• Micro-finance helps women to gain confidence,• Helps to gain respect in the family,• Increase the role of women in household decision making,• Improves the ability of women to freely interact with membersof the group and outsiders and• Increase mobility of women within and outside their locality.11/05/2013 29
  • 30. Micro-finance in education,skill and training empowermentRoles include,• Micro-finance improves the literacy level of the family Members.• Creates awareness about children’s education.• Imparts training on income generating activities.• Helps in gaining knowledge on maintaining records of financialtransactions.11/05/2013 30
  • 31. Micro-finance in politicalempowermentRoles include,• Micro-finance increases the participation of women in localbodies.• Increase the number of women in decision making power oflocal governments.• Increase the number of women in local protests and politicalcampaigns.11/05/2013 31
  • 32. 11/05/2013 32CASE STUDY
  • 33. Case study of SKDRDP• Established in 1991and registered under societies act• SKDRDP is presently working with 24,80,754 families.• 1.5 lakh Self Help Groups have been promoted.• During 2012,Rs. 345.44 crores were disbursed to the SHGs.• As on 2012, the micro-finance outstanding is Rs. 2,013.00crores.11/05/2013 33
  • 34. PRAGATHI NIDHI OF SKDRDP• Features of Pragathi Nidhi include– The provision of adequate funds without any administrativeformalities.– Easy accessibility and easy weekly repayment installments.– The funds required for lending are sourced from bank loansor the savings of the members.11/05/2013 34
  • 35. Loans availed by the members ofPragathi Nidhi (2012-13)Purpose Loan In rupeesAgricultural Development Program 79,053Irrigation Program 12,864Housing and Sanitation 1,01,318Self Employment 54,367Other Programs 2,97,331Total 5,44,43311/05/2013 35
  • 36. 11/05/2013 363. RESEARCH STUDIES RELATEDTO MICRO-FINANCE
  • 37. Research Study 1.Title of the study:Income generating activities of Self Help Groups in theJFM committees under NAP scheme in four Southern States-ASpecial study,Authors:Bhaskar, V., Lakshminarayan, M.T., Umamaheshwar, P,And Siddeshwara, H.E.Year:200611/05/2013 37
  • 38. Methodology• The study conducted by Regional Centre, NationalAfforestration and Eco-development Board (NAEB),Bangalore during 2005-06.• A total of 71 women SHGs were sampled in four states• Totally 181 respondents were selected for the study.11/05/2013 38State No. of SHGs selectedKarnataka 18Andhra Pradesh 18Kerala 15Tamil nadu 20
  • 39. Findings• Micro-financing was the common activity of SHGs.• Rate of interest on loans•Loans were used for taking up income generating activities11/05/2013 39Activity ROI(Per Cent/Month )Income generating activity 2Other purpose(marriage and education )1
  • 40. 11/05/2013 40Income generating activities in four states• Collection and sale of NTFPs (Honey, Tamarind, soap nut, etc.) andmedicinal plants.• Preparation and sale of bamboo handicrafts• Nursery raising and selling seedlings• Petty shops and canteen• Cloth, milk and tailoring business• Collection of plastic wastage, grinding and reselling• Sheep and goat rearing and• Vegetable cultivationSHG Members were able to get full employment throughout the year andsave money
  • 41. FindingsState Income of SHGmember/monthAndhra Pradesh Rs. 500-Rs. 1800Karnataka Rs. 750-Rs. 1400Kerala Rs. 500-Rs. 1500Tamil nadu Rs. 500-Rs. 150011/05/2013 41Table1. Additional income generated by SHG membersutilizing loans through microfinance
  • 42. FindingsSocial impact of micro-finance includes• Peer support• Mobility of members outside the locality• Expansion of knowledge and awareness• Collective discussion and action• Skill building and training• Greater respect within the family11/05/2013 42
  • 43. Research Study 2.Title of the study:Role of Micro-finance in women’s empowerment(A study in Pondicherry region rural SHGs)Authors:Sarumathi, S, and Mohan, K.Year:201111/05/2013 43
  • 44. METHODOLOGY• Locale of the study- Rural areas of Pondicherry region• Selection of SHG- Six SHGs promoted by NGO were selected• Selection of respondents-181 SHG women membersMembers who are engaged in micro enterprises throughmicrofinance were selected for the study11/05/2013 44
  • 45. FindingsTable 1. Perception of members about reduction in poverty leveldue to micro finance11/05/2013 45Category Number PercentageTo greater extent 167 92.26To some extent 14 07.74To lower extent 0 0.00Total 181 100(n=181)
  • 46. FINDINGSTable 1: Social empowerment of women members11/05/2013 46Dimensions Response Frequency PercentageExpression of opinionsfreelyYes 179 98.90No 2 1.10Moving independently Yes 164 90.60No 17 9.40Role in decision making infamilyYes 176 97.20No 5 100.00n=181
  • 47. FindingsTable 3: Cross tabulation of psychological variables with different age groups11/05/2013 47Variables 20-30 31-40 41-50 51-60 TotalYes No Yes No Yes No Yes NoSelf confidence 85 0 40 0 31 0 25 0 181Improvement in courage 90 0 35 0 36 0 20 0 181Improvement in skill 93 0 30 0 38 1 20 2 181Improvement in literacy level 76 9 22 11 18 13 7 25 181Awareness on childrenseducation78 7 40 7 18 10 10 11 181Awareness about theenvironment84 1 38 2 31 21 21 4 181Happiness and peace in thefamily83 3 38 1 29 23 23 2 181n-=181
  • 48. Research Study 3.Title of the study:Role of micro-finance in political empowerment ofwomen: Bangladesh experience.Authors:Mohshin Habib and Christine JubbYear:201211/05/2013 48
  • 49. Methodology• Locale of the study: Three districts Gaibandha, Gazipur andKurigram in Bangladesh.• Respondents:11/05/2013 49Sl.no Sample Number1 Members of Bangladesh Associationfor Social Advancement (BASA)1982 Control group 99
  • 50. FINDINGSTable 1: Voting practice of BASA members and control group11/05/2013 50Voted atlastelectionNon members(n=99)BASA members(n=198)Number Per cent Number Per centYes 80 80.81 195 98.00No 19 19.19 3 02.00
  • 51. FINDINGS11/05/2013 51Factors Influencing on votingdecisionNON members(n=99) *BASA members(198) *No. Per cent No. Per centPersonal preference 24 24.24 124 62.60Local community preference 23 23.23 18 09.10Perceive candidate will bringeconomic prosperity15 15.55 91 45.95Influence of the leader is from locality 2 02.02 34 17.17Candidates personal qualities 7 07.07 28 14.14Candidates educational attainment 1 01.01 18 09.09Candidates financial capacity 1 01.01 3 01.50Party affiliation 0 0 49 24.74Pressure from local leader 37 37.37 25 12.62* Multiple responsesTable 2: Factors influencing the voting decision of the membersand non-members
  • 52. Research Study 4.Title of the study:Impact of Microfinance - an empirical study on theattitude of SHG leaders in Kanyakumari district of Tamil NaduAuthors:N. Thalavai Pillai and S. NadarajanYear:201211/05/2013 52
  • 53. Methodology• Locale of the study-Kanyakumari District of Tamil Nadu• Selection of SHGs -• Selection of respondents- leader of each SHG11/05/2013 53Blocks No of SHGsThovalai 30Thiruvattar 26Total 56
  • 54. FINDINGS11/05/2013 54Table - 1 Impact of Microfinance on Psychological well beingSl.No Variable No Percentage1 Improvement in Courage 54 96.422 Improvement in Self confidence 53 94.643 Improvement in Self worthiness 51 91.074 Improvement in Skill development 28 50.005 Improvement in Literacy level 26 46.426 Awareness on Health and Sanitation 25 44.647 Awareness on Children’s Education 34 60.718 Awareness on Food and Nutrition 22 39.289 Awareness about the Environment 29 51.7810 Awareness about Peace in the family 41 73.21(n=56)
  • 55. FindingsTable - 2 Impact of Microfinance on Economic Improvement of women11/05/2013 55Sl.No Variable Number Percentage1 Women are economically empowered 39 69.642 Microfinance reduce poverty 37 66.073 Microfinance improve rural savings 38 67.854 Increased employment opportunities 34 60.715 Created assets in rural areas 28 50.006 Increase the standard of living 26 46.42(n=56)
  • 56. FINDINGSTable -3 Impact of Microfinance on Social empowerment of women11/05/2013 56Sl.No Variable Number Percentage1 Managerial abilities of women 32 57.002 Role in decision making within thefamily increased30 54.003 Group management skill improved 28 50.004 Awareness about training by NGO 35 62.505 Micro enterprises in study area 28 50.006 Participation in democratic institutions 21 37.507 Freedom to express opinion in society 40 71.428 Improved independent movement 39 70.00(n=56)
  • 57. Research Study 5.Title of the study:Impact of SHG based micro finance in womenempowerment and poverty alleviationAuthors:Himanshu TiwariYear:201211/05/2013 57
  • 58. Methodology• Locale of the Study- Nagpur city• Selection of SHGs- 3 SHGs were selected randomly• Selections- 50 respondents selected from 3 SHGs11/05/2013 58
  • 59. FindingsTable-1: Impact of micro finance on standard of living11/05/2013 59Sl.No Name of the instrumentpurchasedNumber Percentage1 Cooking gas 6 122 Sewing machine 5 103 Television 5 104 Motorcycle 3 65 Washing machine 2 46 Refrigerator 4 87 Cooker 6 128 Phone 6 129 Cooler 5 1010 Utensils 8 16(n=50)
  • 60. Table 2. impact of micro finance on employment11/05/2013 60Sl.no Average number ofmandaysBefore joining SHGsAverage number ofmandays afterjoiningmandays 120 180(n=50)
  • 61. CONCLUSIONMicro-finance has been proved to be an important tool inthe development process empowering the rural poor womeneducationally, socio-economically and politically. Impact ofmicro-finance is appreciable in bringing confidence, courage,skill development and empowerment among rural poorwomen.11/05/2013 61
  • 62. 17/11/2012 62
  • 63. Introduction11/05/2013 63
  • 64. RBI regulation on micro-finance• The loan is to be extended to a borrower whose householdannual income in rural areas does not exceed Rs.60,000/-while for non-rural areas it should not exceed Rs.1,20,000/-.• Loan should not exceed Rs.35,000/- in the first cycle andRs.50,000/- in the subsequent cycles• Total indebtedness of the borrower does not exceedRs.50,000/-.11/05/2013 64
  • 65. Number of Self Help Groups (SHGs), Women SHGs and their Saving Amount, Loan Disbursedby Bank and Loan Outstanding in Karnataka(As on 31st March, 2010)(Rs. in Lakh)StateSaving of SHGs Bank Loans Disbursement to SHGsBank Loans OutstandingAgainst SHGsTotal SHGs Women SHGs Total SHGs Women SHGs Total SHGsWomenSHGsNo. of SHGs Saving AmountNo. ofSHGsSavingAmountNo. ofSHGsLoanAmountNo. ofSHGsLoanAmountNo. ofSHGsLoansO/sNo. ofSHGsLoansO/sKarnataka 534588 62705.32 407389 38561.72 104151113044.238168585957.30300738205530.33239298168710.1India 69,53,250 619870.89 5310436449865.7615868221445330.3612944761242936.8048513562803828.073897797230303611/05/2013 65Abbr. : SHGs : Self Help Groups.Source : Rajya Sabha Unstarred Question No. 1008, dated on 09.08.2011.