Role Of Microfinance In Womens Empowerment Economics Essay

According to 2001 Census, women constitute about 48 % of the total population of the country. Their participation at grassroot level is increasingly recognized for empowerment and developmental perspectives. Microfinance, the current buzzword in the the developmental sector, delves with the problems of community development. “Microfinance” is defined as financial services for poor and low-income clients offered by different types of service providers. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs). The history of microfinancing can be traced back as long to the middle of the 1800s when the theoristÂ Lysander SpoonerÂ was writing over the benefits from small credits to entrepreneurs and farmers as a way getting the people out of poverty. The modern use of the expression “microfinancing” has roots in the 1970s when organizations, such as Grameen Bank of Bangladesh with the microfinance pioneerÂ Muhammad Yunus, were starting and shaping the modern industry of microfinancing.

Evaluating the activities of various microfinance institutions, the study aims to access the impact of microfinance on socioeconomic empowerment of women particularly in Hadoti region. Most of the research studies and annual reports found that credit programme allows women to take a greater role in household decision making, greater access to financial and economic resources, more bargaining power and greater of mobility. The study is based on the data collected from 50 women members participating in microfinance schemes, based on profile consisting poverty level, age education, caste, type of land holdings, income, expenditure and savings. Analyses of various factors with different pace of empowerment have greater significance. In Rajasthan, to fuel to microfinance movement, steps taken cared. ‘Arth’ was created, so as to contribute its bit in taking this mission towards greater height. Operates in the Hadoti region, it provides full range of financial products and services particularly customized to meet the needs of its clients. Microfinance panorama is dominated by the rapid progress of self help groups (SHG) across the country. Activities are carried out by various forms of institutions and individuals such as microfinance institutions (MFIs), Non Governmental Organizations (NGOs), Government Institutions, Self Help Groups (SHG) and commercial Banks. MFIs offer a variety of financial products including credit, savings, insurance, business development services. The analysis of data in the study covers major aspects like source of awareness about microfinance, saving patterns, loan and income generating activities (IGA) etc. The international, national, and regional studies escort us to find that microfinance have a great demeanor on women empowerment. Some other aspects viz., promoting womens’ access to public services, and employment opportunities, stronger partnerships between private banking sector and MFIs, inclusion of women empowerment indicators used to achieve this noble idea with full potential. This paper also made an effort to suggest the ways to increase women empowerment as to enhance the literacy rate, organized and planned way for intervention in schemes, group cohesion.

Role of Microfinance in Womens’ Empowerment: A study of selected experiments in Rajasthan

Introduction

According to 2001 Census, women constitute about 48% of the total population of the country. Their participation at grassroot level is increasingly recognized for empowerment and developmental perspectives. Rajasthan has historically been a patriarchal and feudal society where gender discrimination has been a concern. This has drastically affected women’s health, financial status, literacy level and

political involvement. The paradigms for social development have been rapidly changing with greater attention to gender issues both at the global and national levels. Since 1970s the attempts to redefine development in terms of women and her productive role are increasingly in consideration. During the 1980s various perspectives labeled, “mainstreaming women” which called for bringing women towards development efforts. The empowerment approach, which evolved in the 1990s, has interpreted it in terms of participation in policymaking and planning process. For womens’ participation and empowerment, the organization of women into self-help groups (SHGs) and provision of microfinance through them is to be viewed in this background. In 2001, the “National Policy for Empowerment of women” was adopted in India, with the ultimate objective of ensuring women their equitable place in the society by empowering them as ‘catalyst’ of societal change and development. Since womens’ empowerment became key to socio economic development, bringing women into the mainstream of national development has been a major concern of government. The ministry of rural development has special gears for women in its programmes. Funds are earmarked as “Women’s component” to ensure flow of adequate resources for facilitation. Ministry of Rural Development is implementing various schemes like Indira Awas Yojona (IAY), Restructured Rural Sanitation Programme, Accelerated Rural Water Supply programme (ARWSP) Swarnagayanti Grameen Swarazgar Yojona (SGSY), by National Social Assistance Programme (NSAP), the (erstwhile) Integrated Rural Development Programme (IRDP), the (erstwhile) Development of Women and Children in Rural Areas (DWCRA) and the Jawahar Rozgar Yojana (JRY) are the schemes having women’s component .

Many MFIs in india viz., AsmithaÂ – Provides rural poor women access to financial resources in the form of collateral free small loans for income generation and livelihood promotion. Bandhan MF – In this microfinance activities are carried on by Bandhan Financial Services Pvt. Ltd. (BFSPL), incorporated under the Companies Act, 1956 and also registered as a Non Banking Financial Company (NBFC) with the Reserve Bank of India (RBI). Grameen FoundationÂ – Works in 6 key areas : Connecting microfinance institutions with capital markets, Strengthening organizations by building people practices, Harnessing the power of technology, Helping track people’s movement out of poverty, Sharing knowledge widely for broader impact and Social Business. Cashpor India -is to identify and motivate poor women in the rural areas and to deliver financial services to them in an honest, timely and efficient manner. SaadhanaÂ – is a non- profit organization established in the year 2001 to reach out to the urban and rural poor women with the specific mandate to catalyze the ‘Endeavour of the Poor for Self-Sufficiency’.

Womens’ Empowerment and Microfinance

Empowerment implies expansion of assets and capabilities of people to influence control and hold accountable institution that affects their lives (World Bank Resource Book). Empowerment is a multi-dimensional social process that helps people to gain control over their own lives, communities and in their society, by acting on issues that they define as important. Microfinance, the current buzzword in the developmental sector delves with the problems of community development. “Microfinance” is defined as financial services for poor and low-income clients offered by different types of service providers. In practice, the term is often used more narrowly to refer to loans and other services from providers that identify themselves as “microfinance institutions” (MFIs). The history of microfinancing can be traced back as long to the middle of the 1800s when the theoristÂ Lysander SpoonerÂ was writing over the benefits from small credits to entrepreneurs and farmers as a way getting the people out of poverty. The modern use of the expression “microfinancing” has roots in the 1970s when organizations, such as Grameen Bank of Bangladesh with the microfinance pioneerÂ Muhammad Yunus, were starting and shaping the modern industry of microfinancing. Microfinance commonly works through group systems like the Grameen Bank of Bangladesh, solidarity groups of Latin America, and self-help groups of India. Self-help groups, the most common microfinance institutions in India, are small voluntary associations of poor people from the same socio-economic background who come together for the purpose of solving their common problems through self-help and mutual help (NABARD, 2000).

MFIs offer a variety of financial products including credit, savings, insurance, business development services. Microfinance clients are poor and low-income people that do not have access to other formal financial institutions. They are often self-employed, household-based entrepreneurs with their diverse micro enterprises viz., small retail shops, street vending, artisanal manufacture, and the like. In rural areas, micro entrepreneurs often have small income-generating activities such as food processing and trade. Hard data on the poverty status of clients is limited, but tends to suggest that most microfinance clients fall near the poverty line, both above and below. Households in the poorest 10% of the population, including the destitute, are not traditional microcredit clients because they lack stable cash flows to repay loans. Women often comprise the majority of clients. By helping women meet their practical needs and increase their efficacy in their traditional roles, microfinance may in fact help women to gain respect and achieve more in their socially defined roles, which in turn may lead to increased esteem and self-confidence.

MFIs are autonomous financial institutions, which help members to keep their savings safe in the form of grant loans to people in exigencies without any troublesome procedure. It is argued that, through microfinance, poverty can be reduced as well as the resultant increased access and control over financial resources by women can itself become an empowering instrument. In microfinance sector, many private sector banks came forward 3-4 years back to provide credit to poor through SHGs and MFIs. The models involved, to name a few, collaborating with microfinance institutions, using business facilitators for microfinance services etc. Microfinance is about women lifting themselves out of poverty, and achieving economic and political empowerment within their homes, their villages, and their countries as, 40 per cent of poverty reduction in rural Bangladesh has been attributed to the role of microcredit (Khandker, Shahidur R. 2005) A strong “son preference” exists in the Hadoti region, as it does throughout the country, and high rates of female infanticide and female feticide plague the area. Even if it does not happen then the empowerment aspect is not considerable for women so far. A strong need for women empowerment is apparent considering the present status of Rajasthan’s women. Most MFIs started as not-for-profit organizations like NGOs (Non Governmental Organizations), credit unions and other financial cooperatives, and state-owned development and postal savings banks. ‘Arth’ was created, so as to contribute its bit in taking this mission towards greater height. Operates in the Hadoti region, it provides full range of financial products and services particularly customized to meet the needs of its clients, which facilitate income generating activities to employ the working capital in best possible way. With its current products and future product, offering Arth tries to meet the credit needs both for consumption and commercial purposes like loan and insurance.

Economic Empowerment of Women is to be achieved through convergence of the schemes and programmes having focus on formation and promotion of SHGs so as to enable women to have access to micro credit and micro finance. Programmes like National Rural Livelihood Mission ofÂ Ministry of Rural Development,Â SmayamsidhaÂ of Ministry of Women and Child Development and similar programmes of other Ministries and organizations would need to be converged to help the identified SHGs in a coordinated fashion. The Mission would see that access to credit by women SHGs under schemes of NABARD,Â RashtriyaÂ MahilaÂ Kosh (RMK), financial institutionsÂ and nationalized banks, are coordinated well and delivers credit facilities.

Many self-help groups, especially in India, underÂ NABARD’s SHG-bank-linkage program, borrow from banks once they have accumulated a base of their own capital and have established a track record of regular repayments. This model has attracted attention as a possible way of deliveryÂ microfinanceÂ services to poor populations that have been difficult to reach directly through banks or other institutions. “By aggregating their individual savings into a single deposit, self-help groups minimize the bank’s transaction costs and generate an attractive volume of deposits. Through self-help groups the bank can serve small rural depositors while paying them a market rate of interest. NABARD estimates that there are 2.2 million SHGs in India, representing 33 million members, that have taken loans from banks under its linkage program to date. This does not include SHGs that have not borrowed. The provision of formation of state level nodal agencies to empower women and to strengthen the SHGs in Rajasthan. Also the provision to invest Rs. 45 crore on women SHGs for the development purpose. In view to implement this, the registaration of ‘mission gramya shakti’ is in procedure.

Women Development programme

To achieve the noble idea to strengthen economy, women development programmes are running. The most important step is the formation of SHGs .

Formation of SHGs:- In Rajasthan Integrated Child Development Scheme (ICDS) proposed the target to form general women 800 and Saharia (tribe in shahbad area) women 800 (total 1600 SHGs). Progress till January is as follows:

Table 1: Progress of formation of SHGs in the district Baran

Sr. No.

project

year 2011-2012

project from beginning to present

Target

Progress

Anta

160

1048

Atru

150

779

Baran Urban

225

Baran Rural

150

902

Chhabra

110

517

Chhipabarod

110

113

519

Kishanganj

435

617

1276

Shahbad

435

601

656

Total

1600

1479

5922

source: ICDS Baran

The tremendous progress has been seen in the area of Chhipabarod, Kishanganj and Shahbad.

Objectives of the Study

Objectives of the study are as follows:

1. To analyze the contribution of microfinance initiatives in the area of women empowerment in Hadoti region,

2. To measure the role of selected Self Help Microfinance programmes towards microfinance,

3. To discuss the important problems of microfinance experiments and offer solutions to resolve them.

Hypotheses:

Hypothesis 1: H0 – There is no significance difference between the impact of microfinance programmes run by BASIX and MUPS for womens’ empowerment.

Hypothesis 2: H1 – There is the significance difference between the impact of microfinance programmes run by BASIX and MUPS for womens’ empowerment.

In Rajasthan, 1615 VOs / NGOs registered with the major thrust areas of Education & Literacy, Health & Family Welfare, Micro Finance (SHGs), Nutrition, Panchayati Raj, Rural Development & Poverty Alleviation, Tribal Affairs, Urban Development & Poverty Alleviation, Vocational Training, Women’s Development & Empowerment, Youth Affairs etc. Concerning on this study, experiments are taken from various NGOs namely- Aoes, Mahila Udyog, Nehru Yuva mandal etc. operating within the Hadoti region and microfinance institution called Bhartiya Samruddhi Investments and Consulting Services (BASICS Ltd. Generally called BASIX ) promote and support large number of sustainable livelihoods. BASIX strategy is to provide a comprehensive set of livelihood promotion services which inlcude Financial Inclusion Services (FINS), Agricultural / Business Development Services (Ag/BDS) and Institutional Development Services (IDS) to rural poor households.

The study is carried out in Baran, Rajasthan with the objective of assessing the experiments of the SHG intervention of various Non Governmental Organizations (NGO) called the ‘Nehru Yuva mandal and another one called Mahila Udyog Prashikshan Samiti (MUPS) in the process of women empowerment. The Mahila Udyog Prashikshan Samiti (MUPS) registered under Societies act/ trust acts and exempted under 35 AC and 80 G, is dedicated to the socio economic upliftment of communities across regions by coordinating and executing the various government schemes on various projects. MUPS works primarily in the field of Women Empowerment, Non-formal Education, Training, Health, Creation of Rozgaar Platforms, Various Awareness Campaigns, Girl Child, Bamboo, Honey and miscellaneous Craft items. MUPS has staff of 12 permanent employees along with the 355 project based employees.

The study is largely based on primary data and supplemented by secondary data wherever necessary. The primary data were collected from a cross section of 50 SHG members of the selected programmes through an multi-stage random sampling method. In the first stage, data collected from Baran district from the region, with the presence of both the BASIX and MUPS members. In the second stage, a Grama Panchayat (the lower tier rural Local Self Government) with the presence of both the SHG and MUPS members district was identified. In the third stage, women SHG and MUPS members were selected from the selected Grama Panchayat. Each of 25 Women from BASIX’s SHG and MUPS members were included in the study. The field survey for the study was conducted during December 2011 to January 2012. The data were obtained through a structured interview schedule and questionnaire. The beneficiaries were contacted during their group meetings. The questions were mainly on their household, individual profile, experience with microfinance programmes, savings and borrowing particulars, utilization and repayment of loan, role of Microfinance Organizations and their attitude towards microfinance. The information collected, were analyzed using simple statistical tools. The attitude towards microfinance was analyzed using a Likert type scale.

The Analysis of Data

The study is based on the data collected from 50 women members participating in microfinance schemes, based on profile consisting poverty level, age education, caste, type of land holdings, income, expenditure and savings. Analysis of various factors with different pace of empowerment have greater significance. This section serves the purpose of examining the multiple roles played by microfinance in empowering women in the study area. The source of awareness, years of association with microfinance, monthly savings, source of savings, utilization of loans availed, repayment of loan, income generating activities and the impact of these activities on the attitude of women as well as their outlook are the major aspects examined. The analysis of data in the study covers major aspects like source of awareness about microfinance, saving patterns, loan and income generating activities (IGAs) etc. Measuring the impact of the Self Help Group (SHG) program on women’s empowerment, the analysis and estimation is done through the mean level of women’s empowerment for 2011 and 2012.

Table 2: Source of awareness of BASIX/MUPS and Microfinance

Source

MUPS

BASIX

Total

NGO

Members

Friends/Relatives

Media

Total

source: Survey data

Â

Analysis indicates the significant increase in womens’ empowerment of the SHG members group. The elegance of the result lays the fact that even though the degree of change and the pace of empowering women are likely to vary, the group of SHG members experiences a significant and higher empowerment. An enquiry has been done to understand the source of information about the BASIX / MUPS activities and microfinance. In the case of MUPS members, friends/relatives played a major role in enrolling members to their programmes.

Source of Savings

It is of interesting to know the source of savings of BASIX/MUPS members and their family members.

Table 3: Source of Savings of BASIX / MUPS Members

Source

MUPS

BASIX

Total

Husband/Children

Own Savings

All the family members

Total

souce: survey data

The information given in Table 3 reveals that own savings forms a portion lesser than the contribution of their husbands/children in the total monthly savings in microfinance programmes. Also this is to be appreciated that the data of earning is more than they previously handled. Actually, the microfinance programmes envisages that the savings of the members should come from their own earnings.

Availing of Loan

Bank credit to SHGs:- The proposal to distribute credit facility to 1800 SHGs (800 general and 1000 Sahariya women) has the following progress in the district Baran:-

Table 4 : Progress of credit facility of SHGs in the district Baran

Sr. No.

project

year 2011-2012

project from beginning to present

target

Progress

Anta

135

753

Atru

150

720

Baran Urban

Baran Rural

150

688

Chhabra

110

307

Chhipabarod

110

422

Kishanganj

560

689

Shahbad

535

606

Total

1800

134

4265

source: ICDS Baran

Microfinance programmes envision provision of loan to their members without much cumbersome procedures.

Utilization of Loan

It has been exhibited from the study that women are better repayers and hence bankable (As no any defaulter case arises in the sample). Therefore, the donors and other agencies promote microfinance through self help groups. Information on the repayment of loan by the respondents (SHG / MUPS members) showed that around 96% repay promptly. While, the remaining borrowers repay after the due date. No one founded as defaulters. Reason of prompt payment is their own decision. In most of the studies on micro credit, peer pressure played a major role in the repayment of micro credit. But, here ‘not to be a defaulter’ consciousness prompted timely repayment.

Income Generating Activities and Microfinance

One of the aver objectives of microfinance is the promotion of Income Generating Activities (IGA) among the rural poor women for sustainable livelihood. Of the total respondents surveyed, 24% of the members have started IGAs.

Table 5: Percentage of Respondents Who Utilised the Loan for Starting IGAs

Response

BASIX

MUPS

Total

Â

No. of Members

No. of members

%

Yes

souce: survey data

Though the proportion of borrowers who have utilized the loan for starting an IGA is low, it is true that microfinance has helped them in meeting their immediate consumption requirements. There is no significant difference between the BASIX and MUPS members studied in this matter. Utilization of loan for any IGAs, is of interest in the type of IGAs initiated by them. Majority of them were involved in homemade working like stitching clothes, production activities, services, livestock and agriculture.

Factors Contributed in Selecting IGA

This is interesting to examine the contributing factors to the setting up of economic activities. To this question, there were few options provided to them and they had to give preference to either any of these factors, or any factors beyond these. These factors are low fixed investment, low cost technology, availability of raw materials, market demand, encouragement of microfinance organizations (MFOs) and leisure time. The weighted scores calculated for each of the problems were added up for all the respondents.

Role of Microfinance Programmes

There is a significant role of MFIs in Promoting IGAs among the women members of the selected experiments. Hence, an attempt is made to reveal in what way these MFIs are helpful in promoting the IGAs. The MFIs can promote the entrepreneurial capabilities of SHGs and MUPS members in several ways like marketing, training etc. Microfinance programmes envisage several other changes along with the IGAs among the women members. An enquiry into the impact of microfinance on the members reveal that a number of qualitative changes have been brought into their life. Mobility, increased role in family decision making, gain family respect, attending public meetings, deal with officials, banking habit were the major perceived changes among the BASIX and MUPS members.

Attitude Towards Microfinance Programmes

On the basis of the objectives of the study, a Likert-type attitude scale has been distributed among the selected BASIX/ MUPS members to understand their attitude towards microfinance programmes. This attitude scale consisted of 6 items as described below:

Microfinance programmes are useful in increasing women’s status;

Participation in Microfinance programmes increased women’s self esteem;

Microfinance have improved enhanced women’s decision making in domestic matters;

Male family members utilize and manage Microfinance programme loans;

Microfinance Programmes have less impact in reducing poverty;

Microfinance programmes have failed in promoting income-generating activities.

Out of these six items, (3 positive and 3 negative). The five point scale is used for analyzing response ranged from strongly agree (SA) to strongly disagree (SD). The item-wise attitude scores for each individual were monitored and Chi-square test was applied to analyze data. The results are as follows:

Table 6: Chi-square values for the selected MUPS / BASIX members on 6 attitudinal Items

Items

III

Chi-square values

8.6564

2.3809

3.9516

13.8539

3.4872

10.2121

Table vaue of Chi-square at 5% significant level = 9.488

Source: Survey Data

As far as quantitative analysis was concerned, the Chi-square results presented in the Table shows insignificance of all the Chi-square values for each of the six attitudinal items except for item IV and VI. The value (Chi-square value is 9.488 at 0.05 significance level) for item IV and VI showing significant difference in the attitude of MUPS/ BASIX members. The detailed attitude scores and Chi-square results of item IV and VI are presented in Table 7 and 8 respectively.

Table 7: Chi-square value for Item IV

Response category

MUPS

BASIX

Total

Â

No.

%

No.

%

No.

%

Strongly Agree

Agree

Undecided

Disagree

Strongly Disagree

Total

100

Table vaue of Chi-square at 5% significant level = 9.488

Calculated Vaue of Chi-square = 13.85396825

From the Table 7, it can be observed that 60% of MUPS members and 20% of the BASIX members showed favourable attitude towards the statement given in Item IV. It means that Male family members utilize and manage Microfinance programme loans which somehow decreed the aspect of empowering women (particularly of BASIX) in the area of study. Almost all the beneficiaries of microfinance gave a positive response regarding microfinance programmes during the period of survey. And because of the calculated value is more than the table value of Chi-square (13.8539), the Null hypothesis is rejected and hence this shows that there is the significance difference between the impact of microfinance programmes run by BASIX and MUPS for womens’ empowerment.

The detailed attitude scores and Chi-square results of item VI are presented in Table 8. From the Table 8, it can be observed that none of the MUPS members and very few (8%) of the BASIX members showed unfavourable attitude towards the statement given in Item IV. It means that Microfinance programmes have not failed in promoting income-generating activities in the area of study.. And because of the calculated value is more than the table value of Chi-square (10.2121), the Null hypothesis is rejected and hence this shows that there is the significance difference between the impact of microfinance programmes run by BASIX and MUPS for womens’ empowerment and hence, the members shows the positive attitude towards microfinance.

Table 8: Chi square value for Item VI

Response category

MUPS

BASIX

Total

Â

No.

%

No.

%

No.

%

Strongly Agree

Agree

Undecided

Disagree

Strongly Disagree

Total

100

Table vaue of Chi-square at 5% significant level = 9.488

Calculated Vaue of Chi-square = 10.21212121

Â

Almost beneficiaries of microfinance gave a positive response regarding microfinance programmes during the period of survey.

Conclusion and Suggestions

The differences in swiftness of empowerment might be a result of various factors including cultural and religious norms within the society, household and village characteristics, behavioral differences among the respondents and perception of family members, and the kind of training and awareness programs rendered for women. All the factors are equally important for empowering women though it is difficult to say which factor is more concerning in its degree of implementation. The views regarding the potential contribution of microfinance programmes to women’s empowerment has been the subject matter of many studies.

It is brought out that there is a definite relationship between the attitude of those members participating and the microfinance. As this is observed from the source data, the progress of SHG formation is not up to the mark that has to be improved through implementation of various supporting schemes. The important findings emerged from the study are the following: The average monthly savings of MUPS members was found to be higher than the BASIX SHG members. Regarding the sources of savings, contribution of husbands/children became a potential source rather than own savings. A large majority of the sample availed loan from the MUPS / BASIX. Though the average savings of MUPS members were found to be higher than BASIX members, the average size of loan of MUPS members were found to be lower than that of the BASIX members.

The study reveals that the majority utilized the loan for consumption purposes. As evident in earlier studies, the repayment in the selected programmes was high. However, regarding the reasons for prompt repayment, own decision to repay became the prime reason. The operation of IGAs with the help of microfinance is yet to strengthen. The structure of IGAs revealed that about 25.5% with income generating activities. The difficulties in conducting IGAs revealed that availability of sufficient loan, marketing and time are important factors. The attitude towards microfinance is measured on the sasis of 6 items (three positive and three negative), revealed that for each item, the attitude of MUPS/BASIX members differ on positive and negative basis. In general the attitude towards microfinance is positive and impact from MUPS and BASIX made a significance difference for womens’ empowerment.

Hence, It may be concluded that microfinance has benefited the women members to enhance their role in society, decision making, mobility and economic empowerment. However, on the matter of economic empowerment, the MFIs need to take much more initiative to empower women for economic activities. The overall conclusion is that the MUPS/ BASIX movement have beneficial impact on women empowerment. The MPUS and BASIX need to properly motivate and train their members to overcome the difficulties in the way of conducting IGAs. For SHG programmes, the results seem to indicate that the nominal microfinance approach need to include additional services like awareness raising workshops, well-timed training, and other activities over and above microfinance programs that focus on financial services too. Future research needs to identify which factors in SHG programs have a greater impact on womens empowerment. Further we suggest the ways to increase women empowerment as to enhance the literacy rate, organized and planned way for intervention in schemes and group cohesion.

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