EMPOWERMENT OF WOMEN THROUGH MICRO FINANCE: A BOON FOR DEVELOPMENT OF

ECONOMY

DR. SHEFALI VERMA THAKRAL

DESK EDITOR, M. M. UNIVERSITY JOURNAL OF MANAGEMENT PRACTICES (ISSN 0974
7257) ASSOCIATE PROFESSOR MAHARISHI MARKANDESHWAR UNIVERSITY

MULLANA – 133 203

MS. NITIMA UPPAL

LECTURER M.M. INSTITUTE OF
MANAGEMENT MAHARISHI
MARKANDESHWAR UNIVERSITY
MULLANA – 133 203

MS. ESHA CHAWLA

LECTURER M.M. INSTITUTE OF
MANAGEMENT MAHARISHI
MARKANDESHWAR UNIVERSITY
MULLANA – 133 203

ABSTRACT
There is growing interest in microfinance as one of the avenues to enable low income population to access financial services. India with a
population of around 300 million poor people has emerged as a large potential opportunity for the microfinance sector. With only 48% of the
population accessing financial services, expanding the microfinance sector is also important from the perspective of financial inclusion (World
Bank, 2008). Since 2004, the Reserve Bank of India (RBI) has emphasised financial inclusion as an important goal. Microfinance is emerging as a
powerful instrument for poverty alleviation in the new economy. In India, Microfinance scene is dominated by Self Help Group (SHGs)‐Bank
Linkage Programme as a cost effective mechanism for providing financial services to the “Unreached Poor” which has been successful not only in
meeting financial needs of the rural poor women but also strengthen collective self help capacities of the poor ,leading to their empowerment.
Rapid progress in SHG formation has now turned into an empowerment movement among women across the country. Empowerment is the
state of feelings of self‐empowered to take control of one’s own destiny. Empowering women puts the spotlight on education and employment
which are an essential element to sustainable development. The paper looks at the impact of Micro finance with respect to poverty alleviation
and socioeconomic empowerment of rural women. An effort is also made to suggest the ways to increase women empowerment.

KEYWORDS
women empowerment, poverty, rural women, microfinance.

INTRODUCTION
Micro‐finance refers to small savings, credit and insurance services extended to socially and economically disadvantaged segments of society. In
the Indian context terms like "small and marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly
define micro‐finance customers. The recent Task Force on Micro Finance has defined it as "provision of thrift, credit and other financial services
and products of very small amounts to the poor in rural, semi urban or urban areas, for enabling them to raise their income levels and improve
living standards". At present, a large part of micro finance activity is confined to credit only. Women constitute a vast majority of users of micro‐
credit and savings services. In the NSSO survey it has also been estimated that a large percentage of rural women in the age group of 15 years
and above, who are usually engaged in household work, are willing to accept work at household premises (29.3 percent), in activities such as
dairy (9.5 percent), poultry (3 percent), cattle rearing, spinning and weaving (3.4 percent), tailoring (6.1 percent) and manufacturing of wood
and cane products etc. Amongst the women surveyed, 27.5 percent rural women were seeking regular full‐time work, and 65.3 percent were
seeking part‐time work. To start or to carry on such work, 53.6 percent women wanted initial finance on easy terms, and 22.2 percent wanted
working capital facilities, as can be seen from the table below:

Assistance Required (by women marginal workers seeking Percent of Women

or available for work at their household premises). Seeking Assistance
No assistance 2.1
India
Some
SUPPLY isprogrammes
theOF country have
where
MICRO‐FINANCE developed
a collaborative
effective
SERVICESmodel
methodologies
between banks, for poverty
NGOs, MFIstargeting
and Women’s
and/or operating
organizations
in remoteis furthest
areas. advanced.
Such strategies
It therefore
have
recently
serves asbecome
a good starting
a focus of
point
interest
to lookfromat what
some we
donors
know and
so far
also about
the Microcredit
‘Best Practice’Summitin relation
RBI data shows that informal sources provide a significant part of the total credit needs of the rural population. The magnitude Campaign.
to micro‐finance
Here, gender for
lobbies
women’shave empowerment
argued for of and
the
targeting
how different
dependence women ofinstitutions
thebecause can
rural poor on Initial
of higher
work levelsfinance
together.
informal It ison
ofsources
female easy
clear terms
poverty
of that
creditgender
and
canwomen’s
strategies
be observedresponsibility
infrom
microthe finance
for 53.6
household
need
findings oftothelook
well‐being.
Allbeyond However
just increasing
India Debt and although women’s
Investment gender
Survey,
inequality
access
1992, to savings
which is recognised
shows and credit
that as
theanand
issue,
shareorganizing
ofthethefocusselfis help
on assistance
non‐institutionalgroupsagencies
totolook
households
strategically
(informaland atthere
sector)howinisprogrammes
a tendency
the outstandingto
cansee
actively
cashgender promote
dues issues
of theasgender
cultural
rural equality
and hence
households and
was
not
women’s
subject
36 percent. empowerment.
to outside the
However, intervention.
Moreover
dependence theoffocus
Working rural should
households
capital be onon
facilities developing
such informala diversified
sourcesmicro finance22.2
had reduced sector
of theirwhere different type
total outstanding of steadily
dues organizations,
from
NGO, MFIs andinformal
83.7 percent 2005sector
to 36banks all should
percent in have gender policies adapted to the needs of their particular target groups/institutional roles and
capacities
2008. This and
FINANCIAL collaborate
SUSTAINABILITY
is shown and work
in the table below. together to make a significant contribution to gender equality and pro‐poor development.
PARADIGM
Raw materials availability 4.6
The financial self‐sustainability paradigm (also referred to as the financial systems approach or sustainability approach) underlies the models of
microfinance promotedOutstandings sincefrom
the Informal
mid‐1990s by most
Sources asdonor agenciesofand
a Percentage theDues,
Total Best Practice
for Variousguidelines promoted
Occupational in publications
Categories of RuralbyHouseholds
USAID, World
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Ackerley,
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institutions the able
Toolstoofraise
Development:
funds fromCredit Programmes
international , Loan
financial Involvement
markets and Women's
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P. 2008.claims
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to welfare 1051‐1064.
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Within Beyond Micro‐credit:
paradigm Puttinghave
gender lobbies Development
been ableBack into
to argue
Microfinance,
for targeting women New Delhi:on the Vistaar
grounds Accommodation
Publications;
of high female Oxford: Oxfam. Harper,
repayment rates andMalcolm,
the need 2002, “Promotion
to stimulate 0.4of Selfeconomic
women’s Help Groups under
activity asthe SHG Bank
a hitherto
Linkage Program
underutilized in India”,
resource Paper presented
for economic growth.atThey the Seminar
have hadon SHG‐bank
some successLinkage
in ensuringProgramme at New Delhi,ofNovember
that considerations 25‐26, 2002.
female targeting Kabeer N
are integrated
(2001),“Conflicts
into conditions ofOver Credit: Re‐evaluation
micro‐finance delivery andthe Empowerment
programme
2005 evaluation.81.6Potential of Loans
Definitions89.5oftoempowerment
Women in Rural areBangladesh”:
83.7 in individualist World
terms with the ultimate
MICRO FINANCE INSTRUMENT OtherFOR WOMEN’S
assistance EMPOWERMENT 4.9
Development,Vol.29,No.1.
aim being the expansion ofMayoux, individualL.choice
1998a.orWomen's
capacity Empowerment
for Self‐reliance. andIt isMicro‐finance
assumed thatprogrammes : Approaches,
increasing women’s accessEvidence and Waysservices
to micro‐finance
Micro Finance for the poor and women has received extensive recognition as a strategy for poverty reduction and for economic empowerment.
Forward.
will in itselfThe Open
lead Universityeconomic
to individual Working Paper No 41.
empowerment 2006 Rahman,
through A.enabling
60.3 1999. “Micro‐Credit
women's
89.2 Initiatives
decisions For
about Equitable
savings
70.8 andAnd Sustainable
credit Development:
use, enabling women to
Increasingly in the last five years , there is questioning of whether micro credit is most effective approach to economic empowerment of
Who
set upPays?” World Development,
micro‐enterprise, increasing27(1):
incomes67‐82.under their control. It is then assumed that this increased economic empowerment will lead to
poorest and, among them, women in particular. Development practitioners in India and developing countries often argue that the exaggerated
increased well‐being of women and also to social and 2007 political36.8
empowerment. 63.3 38.8 in addressing employment and livelihood
focus on micro finance as a solution for the poor has led to neglect by the state and public institutions
needs of the poor. Credit for empowerment is about organizing people, particularly around credit and building capacities to manage money.
The focus is onEMPOWERMENT
WOMEN’S getting the poor to mobilize AND MICRO their own 2008 33.7DIFFERENT
funds, building
FINANCE: 44.7PARADIGMS
their capacities and empowering 36.0 them to leverage external credit.
Perception
In women is that
India organizations learning to manage
like Self‐Employed Women’s money and rotate(SEWA)
Association funds builds
amongwomen’sothers with capacities
origins andand confidence
affiliations in tothe
intervene in localand
Indian labour
PROBLEMbeyond
governance AND CHALLENGES
women’s movementsthe limited goals
identified creditofasensuring
a major accessconstraint to credit.
in their Further,
work with it combines
informalthe goals
sector of financial
women workers. sustainability
The problem withofthat
women’sof creating
access
These elements are:institutions. Before 1990’s, credit schemes for rural women were almost negligible. The concept of women’s credit was born
community
to credit wasowned given particular emphasis at the first International Women’s Conference in Mexico in 1975 as part of the emerging awareness of
on the
the insistenceofby
importance women productive
women’s oriented studies thatfor
role both highlighted the discrimination
national economies, and forand struggle
women’s of women
rights. This led intohaving the access
the setting up ofofthecredit.
Women’sHowever,
World•isBanking
there a perceptible gapand
Inadequate
network in financing
book‐keeping.
production genuine
of manualscreditfor needs
women'sof thecredit
poor provision.
especially Otherwomen in the rural
women’s sector. There
organizations are certain
world‐wide setmisconception
up credit and
about the
savings • components
worthiness
poor people both
Employment
thatastheyaof needincreasing
way
tooofmany
loan at subsidized
relatives women’s rate of interest
which incomes
increasesand
on soft terms,
bringing
social pressure women they
to share
lack education,
together to addressskill,
benefits. wider capacity
gendertoissues.
save, From
creditthe mid-
1980s thereand wastherefore
a mushrooming are notof bankable. Nevertheless,
donor, government andthe experience of several
NGO‐sponsored SHGs reveal in
credit programmes thattherural
wake poor
of theare1985
actually efficient
Nairobi women’smanagers
of credit• and(Mayoux,
conference Lack of
finance. capital.
Availability
1995a). Theof1980s
timely andand1990sadequate
also saw credit is essential and
development for them
rapid to undertake
expansion of any
largeeconomic
minimalist activity rather than credit
poverty‐targeted micro‐
subsidy.
finance • institutions
The Government
High and measures
networks
interest likehave
rates. attempted
Grameen Bank,toACCION
help the andpoor
Fincaby among
implementing
others. different poverty alleviation
In these organizations programmes
and others evidence butofwith little
success. Since
significantly mostfemale
of themrepaymentare targetrates basedled involving lengthy procedures for loan disbursement, high transaction
strategycosts, and lack of recovery.
•
supervision
A number ofand
higher
Lack of knowledge
monitoring.
donors also sawSince
of the
the credit
female‐targeted
market
to increasing
and potential
requirements
financially‐sustainable
emphasis on targeting
of theprofitability,
ruralmicro‐financethus making
poor cannot
women as an efficiency
be the choice
as aadopted
means of
of business
onmarrying
project lending
internalapp
to increase
difficult. roach as
demands
credit
forit increased
is in the case
of • becauseInventory
organized
efficiency sector, there
of declining emerged
and budgets the
inflation withneed for
accounting
demands an informal
is never credit
of theundertaken. supply through SHGs. The rural
increasingly vocal gender lobbies. The trend was further poor with the assistance fromby
reinforced NGOs have
the Micro
demonstrated their potential for self helpwhich
to secure economic and empowering
financial strength. Various case studies showafter thatpoverty
there is reduction
a positive (RESULTS
Credit • between
Summit
correlation
Campaign starting in 1997 had ‘reaching and women’ as its
Credit policies that can gradually ruin their business (many customers cannot pay cash; on the other hand, suppliers are very
credit availability and women’s empowerment.
second key goal
CONCLUSIONS
1997). harsh towardsAND
Micro‐finance for women
women). SUGGESTIONS has recently been seen as a key strategy in meeting not only Millennium Goal 3 on gender equality, but also
poverty Reduction,
Viability of micro finance Health, needsHIV/AIDS
to beand other goals.
understood from a dimension that is far broader‐in looking at its long‐term aspects too, very little
attention has been given to empowerment questions or ways in which both empowerment and sustainability aims may be accommodated.
Failure to take into account impact on income also has potentially adverse implications for both repayment and outreach, and hence also for
LITERATURE
FEMINIST
financial REVIEW
EMPOWERMENT
sustainability. An effort is made PARADIGM here to present some of these aspects to complete the picture.
Microfinance
This paradigm didenjoyed
A conclusion has
that emerges
not originate afrom
wealth this
as aof literature
account
Northern in the
isimposition,
that past,
micro and
finance
but is can
quitecontribute
is firmly often in
rooted seen toas
the one ofthe
solving
development theproblems
most
of somesignificant tools developed
ofofinadequate
the earliest housing and
micro‐finance(in urban
recent
history)
services
programmes to
as combat thepoverty
aninintegral South, at poverty
partincluding
of the grassroots in level.
alleviation
SEWA India. This proposalThe
programmes.
It currently focuses on
challenge
underlies thefiveliesselected
gender in finding studies
policies the in order
of level
many ofNGOs to and
survey
flexibility in athe
the representative
credit instrument
perspectives sample
of some of of
that the
literature
could make addressing
it match issues
the faced
multiple by the
credit formal
requirements microfinance
of the sector.
low income Today concerns
consultants and researchers looking at gender impact of micro‐finance programmes (e.g. Chen 1996, Johnson, 1997). Here the underlying end
borrower are
without abound
imposing regarding
unbearably the sustainability
high cost of of the
monitoring its
microfinance
use upon are
concerns enterprises,
the gender The specifically
lenders.equality organizations
and women’s because
involved of the
human nature
inrights.
micro of the
credit
Women’s lending
initiatives itself.
empowermentshouldLoanstake are constantly
account
is seen the being
as anofintegral factand made
that: to high‐risk
inseparable part low
of aincome
wider
individuals,
process with unique
of social and innovative
transformation. The main methods
targetbeinggrouputilized
is poorto createand
women re‐payment
women capable incentives. Thus, thealternative
of providing most significant femaleconcern
role models at thefor
moment is whetherattention
change. Increasing the formal hasmicrofinance
also been paid institutions
to men's are roleactually impacting
in challenging genderpoverty in a significant
inequality. manner.
Micro‐finance It is with this
is promoted idea
as an in mind
entry pointthat
in
the •
the context
literature of was
a selected.
wider strategy for women’s economic and socio‐political empowerment
Credit is important for development but cannot by itself enable very poor women to overcome their poverty. which focuses on gender 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
•
METHODOLOGY
by
Making credit available to women does not automatically mean they have control over its use and over any income they might
UNIFEM, microfinance must be: Economic empowerment is however defined in more than individualist terms to include issues such as
generate
The paperrights, from
takes changes micro
a close look enterprises.
into the life experiences
property intra‐household relations andoftransformation
a few women to ofexplore the pressing question
the macro‐economic context. of, Manywhat makes ‘poor’gowomen
organisations further than
•
entrepreneurs?
interventions Initsituations
at Is
the support
industry from of chronic
level their poverty
husbands;
to include it their
is more
gender‐specific important
parents tofor
and siblings
strategies provide saving
or extended
social services
and political than
kin; their to offer credit.
education;
empowerment. their
Somework experience;
programmes have their
health;
developed• natural
veryand othermeans
effective
A useful infrastructural
indicator theresource
forofintegrating
tangible availability
gender
impact awarenessand access;
of micro into
credit what combination
programmes
schemes and number
is the of these
for organizing factors
women
of additional work andasmen
proposals motivating factors?
to challenge
and demands andWhat
pushes her
change to participate
gender discrimination. in incomeSome generation;
also have to withstand
legal rights shocksforinwomen
support it and toand continue
engage with
in it or what
gender factorsThese
advocacy. lead to failure? Theto
interventions diversity
increasein
presented by local villagers to public authorities.
•social
theNevertheless
combination
and political ensuring
ofempowerment
factors thatthatthe micro‐finance
contribute
are seento aswomen’ssector continues
essential experiences
prerequisites to move
infor
incomeforward
economic in
generation relation to gender
is high
empowerment. and beyond equalitytheand scope women’s empowerment
of this paper or any
research
will require forathat matter.strategic
long‐term Nevertheless,process this
of paper
the same based orderon the
as thesecondary data. to poverty if gender is not to continue to ‘evaporate’ in a
one in relation
combination of complacency and resistance within donor agencies and the micro‐finance sector. This will involve:
POVERTY
OBJECTIVEREDUCTION PARADIGM
This underlies many NGO integrated poverty‐targeted community development programmes. Poverty alleviation here is defined in broader
• than
terms market incomes
Ongoing exchange
To know
toof
the
encompass
experienceincreasing capacities
and innovation
Sources ofsustainable
Credit for Rural
and choices
between
Households.
and decreasing the vulnerability of poor people. The main focus of
practitioners
programmes as a whole is on developing livelihoods, community development and social service provision like literacy, healthcare
•and infrastructure
Constant
 Toawareness
Analyze the
development.
and questioning
women
There seeking
is not
of ‘bad practice’
only financial
a concernassistance.
with reaching the poor, but also the poorest. Policy debates have focused
•particularlyon the importance of small savings andfinance
lobbyingTo Analyze
donors for the impact
sufficient of Micro
funding for with respect
empowerment
loan provision to poverty alleviation
forstrategies
consumption as well as and socioeconomic
production, empowerment
group formation of possible
and the rural women.
 To level
studyofthe problems & challengesworking
faced bywith
ruralparticular
women. client groups or in particular context.
•
justification

for some
bringingTo
together
suggestthe
subsidy for
thedifferent
programmes
players inwomen
ways to increase the sector to develop coherent policies and for gender
empowerment.
advocacy.

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