Introduction to microfinance “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”. Loans are granted for agriculture, dairy, livestock, poultry, plantation, pickle-making, carpet-weaving, handicrafts, handloom, house based craft, toy making and other formal & informal occupation. Forbes magazine named seven microfinance institutes of India in the list of the worlds top 50 microfinance institutions. Bandhan, Microcredit Foundation of India (ranked 13th) and Saadhana Microfin Society (15th), Grameen Koota (19th), Sharadas Womens Association for Weaker Section (23rd), SKS Microfinance Private Ltd (44th) and Asmitha Microfin Ltd (29th).
Why Women? Women make up a large and growing segment of the informal-sector Women tend to be more credit constrained Commercial banks focus on men because men form a larger portion of the formal sector.
Cont….. Women are better customers Higher repayment rates Conservative in investment strategy – more risk averse More vulnerable to peer pressure and threat of public humiliation Less access to credit which reduces risk of moral hazard Less mobile Reduces monitoring costs – for bank as well as peer monitoring Enables women to attend repayment meetings (if applicable) Less argumentative Lower staff costs. Institutions can hire more female staff.
Empowerment It consists of change, choice and power. It is a process of change by which individuals or groups with little or no power gain the ability to make choices that affect their lives. Women’s empowerment argues that it needs to occur in multiple dimensions: economic, sociocultural, familial/interpersonal, legal, political and psychological .
Beyond credit for empowerment Additional services like training, awareness raising workshops are important. Differences in pace of empowerment might be a result of various factors: household and village characteristics, cultural and religious norms within the society, behavioral differences between the respondents and their family members. The acquisition of new skills and knowledge, improved attitude, reinforced values, and a changed way of thinking . Micro finance can contribute to solving the problems of inadequate housing and urban services as an integral part of poverty alleviation programmes.• Commitment Savings Product
Conclusion A fair degree of empowerment has taken place among Indian women. Hindering factors are how much shall be the interest on these credits and what shall be the repayment time and loan waivers in case of business losses and re-financing systems etc..
Bibliography: Adams, Dale W., Douglas H. Graham & J. D. Von Pischke (eds.). Undermining Rural Development with Cheap Credit. Westview Press, Boulder & London, 1984. de Aghion, Beatriz Armendáriz & Jonathan Morduch. The Economics of Microfinance, The MIT Press, Cambridge, Massachusetts, 2005. From Creative Credits for the Poor: India’s Microfinance Movement By fundsforngos, 2003. Ranjula Bali Swain and Fan Yang Wallentin from Uppsala University. - “Empowering women through Microfinance” December 2007 issue of UNDP’s Poverty in Focus. Swain, R.B. and Wallentin, F.Y.: Does Microfinance Empower Women? Evidence from Self Help Groups in India. Uppsala Universite, Dept. of Economics Working Paper 2007:24. Susy Susy Cheston, (Senior Vice President, Policy and Research, Opportunity, and Executive Director Emeritus of the Women’s Opportunity Fund) and Lisa Kuhn,( Program Analyst, Opportunity International Research sponsored by the Women’s Opportunity Fund ) Research paper -“Empowering woman through microfinance “ its funding partners: Elizabeth Foster and Michael Walsh, Gems of Hope USA, and the Morrow Charitable Trust Publication sponsored by UNIFEM ).2004. Tiyas Biswas - research article “Women Empowerment Through Micro Finance: A Boon for Development” National Institute of Technology, Durgapur 2005 “State of the Microcredit Summit Campaign Report 2012”.