Definition:

Thedefinitionofmicrofinance,whichhasitsrootsinmicrocredit,hasevolvedinrecent
decades.Microfinance,today,referstosmallsavings,creditandinsuranceservices
extendedtosociallyandeconomicallydisadvantagedsegmentsofsocietyandis
emergingasapowerfultoolforpovertyalleviation.
AccordingtotheUnitedNations,microfinanceinstitutionscanbebroadlydefinedas
providerofsmallscalefinancialservicessuchassavings,creditandotherbasicfinancial
servicestopoorandlowincomepeople.Thetermmicrofinanceinstitutionnowrefersto
awiderangeoforganizationsdedicatedtoprovidingtheseservicesandincludesNGOs,
creditunions,cooperatives,privatecommercialbanks,NBFCsandpartsofstateowned
banks.
Accesstofinancialserviceshasbeenrecognizedasahumanright.Strengtheningcredit
deliveryservicesandincreasingtheiroutreachhasalwaysbeenanimportantcomponent
ofIndiandevelopmentstrategy.Alargeproportionofthepoorhavealwaysbeenoutof
reachofformalbankingfacilitiesandboththemarketandthegovernmenthavefailedto
providecreditservicesaccesstothepoor.Itwasthefailureoftheseformalprocedures
andsystemsthatnecessitatedthebirthofmicrofinanceinstitutions.
Microfinanceprogramssometimesalsoprovideskillbasedtrainingandeducationto
enhanceproductivityandoperationalefficiencyamongthosewhoavailmicroloans.
HistoryofMicrofinance:
Thehistoryofmicrofinancestartedinthe1800swiththeoristLysanderSpooner.
However,itwasattheendofWorldWar2,thattheconceptbegantohavemajorimpact,
withthecreationoftheMarshallPlan.

ThoughthemodernformofmicrofinanceiscreditedtoBangladeshiprofessor
MuhammadYunus,microfinanceexistedinvariousformsmuchbeforethe1970s.
Informalcreditandsavingsinstitutionsforthepoorhaveexistedfordecades,asan
alternativetocommercialbankingthatwasgenerallyavailabletothemasses,suchas
chitfundinIndia,tontinesinWestAfrica,tandasinMexicoandvariousothers.
OneoftheearliestmicrocreditinstitutionswastheIrishLoanFundsystem,initiatedby
authorandnationalistJonathanSwift,inthe1700s.Theirmainobjectivewasgivingout
smallloansforshortperiods.Attheheightoftheiroperations,theywereproviding20%
ofallfundstoIrishhouseholds.
TheconceptofcreditunionswasdevelopedbyFriedrichWilhelmRaiffeisenandhis
supporters,motivatedbytheirneedtobreakthedependenceoftheruralpopulationon
moneylendersandtoimprovetheireconomicwellbeing.Thecooperativemovement
spreadquicklytootherpartsofEuropeandNorthAmerica,andsoonmadeitswayto
otherdevelopedandthendevelopingcountries
Abrieftimelineofthehistoryofmodernmicrofinanceisasfollows:
1961:ACCIONInternationalwasfoundedinVenezuelawith$90,000,raisedfrom
privatecompaniesbyJosephBlatchford.Initiallythefundingwasusedtobuildschools
andwatersystems,beforeturningtomicrocreditin1973.
1971:OpportunityInternational,foundedbyAlWhittakerandDavidBussau,lendto
microentrepreneursinIndonesiaandColumbia.In1979theyexpandacrossSoutheast
AsiaandSouthAmerica.
1976:AMilestoneEventProf.MuhammadYunus,aneconomistinBangladesh,finds
thataloanof$27canchangethelivesof42familiesinanimpoverishedvillagein
Bangladesh.Allloansarepaidbackwithinterest.

1983:Prof.YunuscreatesGrameenBank.Todate,Grameenhaslentmorethan$6
billion(to7.4millionBangladeshis).Itsmethodshavebecomethebasisformodern
microfinancethatincludesgrouplending,womenfocused,andgoodrepaymentrates.
1992:ACCIONhelpsfoundBancoSol,amicrofinanceinstitutioninBoliviaasa
nonprofitorganization.
1997:TheNationalMicrofinanceBankinTanzania(NMB)iscreated.Meanwhile,
DeutscheBankentersmicrofinanceaspartofitsdrivetoembracesocialinvesting.And,
GrameenFoundationisfoundedintheUS.
2000:BancoSolinBoliviabecomesthefirstregulatedbankintheworldthatissolely
dedicatedtomicrofinance.
2001:TheMicroenterpriseAccesstoBankingServicesinitiativeinthePhilippineshelps
integrateruralbanksmicrofinanceloanclientsintothecreditsystem.
2005:TheUNnames2005theInternationalYearofMicrocredit.CitibankopensCiti
Microfinance,basedinLondon,NewYork,IndiaandColombiatobroadenthereachof
itsfinancialservices.
2006:
*TheMicrofinanceSummitCampaignReportestimatesthattherearemorethan3,000
microfinanceinstitutionsserving106millionpoorpeopleindevelopingcountries.The
totalcashturnoveroftheseinstitutionsworldwideisestimatedat$2.5bn.
*Prof.YunusisawardedtheNobelPeacePrize
*BarclaysLaunchesGhanaianMicrofinance,tappingintooneofAfricasmostancient
formsofbanking,Susucollection.
*InternationalFinanceCorporation,partoftheWorldBank,announcesa$45m

investmentincreditlinkednotestobeissuedviaStandardCharteredbanktofacilitate
microfinancelendinginAfricaandAsia.
2008:Microfinancecontinuesgoingmainstream.Retailinvestors/lendersparticipatein
Kiva.organdMicroPlace.orgthatallowsindividualstoinvestinsmallloansto
microfinanceclientsdirectlyonline.
Objective:
Themainobjectiveofmicrofinanceisfinancialinclusion.Financialinclusionorinclusive
financeisthedeliveryoffinancialservicesataffordablecoststosectionsof
disadvantagedandlowincomesegmentsofsociety.
TheEconomicandSocialCounciloftheUnitedNations,inamovetobuildthe
entrepreneurialspiritofthepoor,worldwide,proclaimedtheyear2005asthe
InternationalYearOfMicrofinance.
TheInternationalyearofMicrocreditconsistsoffivegoals:

1. AssessandpromotethecontributionofmicrofinancetotheMFIs
2. Makemicrofinancemorevisible forpublic awareness undunderstanding as a
veryimportantpartofthedevelopmentsituation
3. Thepromotionshouldbeinclusivethefinancialsector
4. Makeasupportingsystemforsustainableaccesstofinancialservices
5. Supportstrategicpartnershipsbyencouragingnewpartnershipsandinnovationto
buildandexpandtheoutreachandsuccessofmicrofinanceforall

Evolutionofmodernmicrofinance:

Prof.MuhammadYunuswasawardedtheNobelPeacePrizein2006forhiseffortsin
alleviation of the status of poor and his work in the spread of formal modern
microfinance.

Sincethen,microcreditprogramsthroughouttheworldhaveimprovedupontheoriginal
methodologies and defied conventional wisdom about financing the poor. First, they
showedthatpoorpeople,especiallywomen,hadexcellentrepaymentratesamongthe
better programs, rates that were better than the formal financial sectors of most
developingcountries.Second,thepoorwerewillingandabletopayinterestratesthat
allowedmicrofinanceinstitutions(MFIs)tocovertheircosts.Recently,therehavebeena
slewofinnovationsinthemicrofinancesector.Someinnovationsinclude:

1. ICICI Bank (India): Two state banks in India (Corporation and Canara)
partneredwithanNGOtoprovidesalariedlowincomeworkerswithaccessto
savings. The project uses the already established automatic teller machines
(ATMs)inthefactoriestoofferarecurringsavingsproduct,alongwitheducation
onpersonalfinance
2. BASIXinIndia reducedtransportationandtransactioncostsforitsclientsand
decreasedstaffexpensesbyestablishingtellersinmannedphoneboothsoperating
inIndia.Thecompanyoperatingthephonebooths receives aservicefeeand
phone booth operators are being trained in basic collection operations and
accounting. BASIX is currently redesigning the project after the pilot and
preparingitforrelaunching.
3. TheinternationalNGOTechnoservehasdevelopedaninventorycreditscheme
inGhanathatenablesfarmers'groupstoobtainhighervaluefortheircropsby
providingpostharvestcreditthroughlinkagewitharuralfinancialinstitution.
Insteadofsellingalloftheircropatharvestwhenpricesarelowestinorderto
meet cash needs, smallscale farmers in the scheme store their crop in a
cooperativelymanaged warehouseand receive a loan ofabout 7580% ofthe
valueofthestoredcrop,whichservesascollateral.Thisloanpermitsthemto
clear their accumulated debts and satisfy immediate cash requirements. Then,
whenpriceshaverisenintheoffseason,thefarmerseithersellthestoredcropor
redeemitforhomeconsumption.

MicrofinanceinIndia:

1.

SHGBankLinkageModel:
SHGsareamannerofcooperativecreditsocietiesthatarelinkedtoacommercial
bankinsteadofacooperativebank.TheSHGsarethengivenaccesstopooled
savingsfordisbursementtomembers.AnSHGselectsitsleaderonarotation
basisandthemembersalsoappointatreasurer.Minutesofeachmeetingare
recorded,alongwithallreceiptsofsavingsanddisbursementofloans.High
repaymentratehasencouragedbankstoinstitutionalizeSHGsunderthebank
SHGlinkagemodel.

2.

MFIModel:
MicrofinanceInstitutionsformSHGsandfinancethembyobtainingresource
supportfromvariouschannels.InIndia,majorityofmicrocreditactivityisunder
theBankingmodel(NABARDsBankSHGLinkage)and1015%ofthe
activityisthroughMFImodel
SHGsemergedasacomponentoftheIndianfinancialsystemafter1996.Theyaresmall,
informalandhomogenousgroupsofnotmorethan20memberseach.Thesizeof20has
beenmademandatorybecauseanygrouplargerthatthishastoberegisteredunderthe
IndianSocietiesRegistrationAct.

Empowerment:

Empowermentliterallymeansmakingsomeonepowerful;facilitatingtheweaktoattain
strength,enablingsomeonetoconfrontinjusticeandoppression.Empowermentisa
process,whichmakesthepowerlesstoacquireandcontroloverpowerthrough
awareness,capacitybuilding,participationindecisionmaking,acquiringinformation,
attainingconfidenceandselfemployment

One must be clear about the notion of empowerment, with the concept of gender,
ideologyandpower.Empowermentisdefinedastheprocessanditresultsinasituation
wherethepowerlessorlesspowerfulmembersofsocietygaingreatercontrolandaccess
over material resources and knowledge and challenge the ideologies that justify the
unequal distribution. Empowerment is displayed through a change in the balance of
powerintermsofwaysofthinking,ordistributionofresources.Itishenceaprocessby
whichanindividualgainscontroloverintellectualandmaterialresourcestochallenge
andchangetheprevailingideologiesandthestructuresofsociety.

Ithasalsobeenlinkedtotermssuchasselfdirection,agency,liberation,autonomy,self
determination,lifeofdignityinaccordancewithonesvalues,capacitytofightforones
rights,independence,owndecisionmaking,beingfree,awakening,selfstrength,
capabilityparticipation,control,ownchoice,selfconfidenceandmobilization
All these definitions however, contain the idea that empowerment is about making
personalchange,changingtheperceptionofthecommunityandimprovingcapabilitiesto
formulatestrategicchoicesforoneslife.

Theunderlyingassumptionofempowermentthroughmicrofinanceisthatpeoplecan
effectivelystrategizewaystogetoutofpovertyiftheyhavedirectaccesstoeconomic
resourcesandareabletoemploytheminmeaningfulways.

MicrofinanceandWomen:

Empowermentisabouttheabilitytomakestrategiclifechoices,andconstitutesthree
dimensions:resources(definedbroadlytoincludenotonlyaccess,butalsofutureclaims
tomaterial,humanandsocialresources);agency(includingprocessesofdecisionmaking
andlessmeasurablemanifestationsofagencysuchasnegotiation,deceptionand
manipulation);andachievements(wellbeingoutcomes).

Empowermentandeducationincreaseselfconfidenceandtheorganizationalandmental
abilitiesofanyindividual.Womenexperienceanincreaseintheirdecisionmakingareas
bothinfamilylife,aswellasfinancialaspects,whichweretraditionallymaledominated.
Theempowermentofwomenthroughmicrofinanceismeasuredintermsofthefollowing
threeaspects:
1. Economicempowerment:Whenthewomanofahouseholdisgiventhepowerto
make economic decisions, they tend to optimize their own as well as the
households welfare. Thus, investment in womens economic pursuits tend to
haveapercolatingeffectandequatetoaninvestmentintheentirefamilyunit.
Economic empowerment emphasizes a womans own income generating
activities,andthereismoreemphasis onincreasingincomesatthehousehold
levelanduseofloansforconsumption.Individualeconomicempowermentofa
womanisseenasdependentofsocialandpoliticalempowerment.
2. Increasedwellbeing:Controloffinancial,creditandsavingsdecisionsincreasesa
womanssayineconomicdecisionsofthehousehold.Thisenableswomento
increasetheexpenditureonoverallwellbeingofthefamily,withspecificfocuson
themselvesandtheirchildren.Thisalsopreventsthemoneyofthefamilyfrom
beingutilizedinharmfulordetrimentalavenuesandleakingtheincomeofthe
household.Improvedwellbeingisthereforeanassumedoutcomefromincreasing
awomanseconomicactivitiesandincomes.
3. Politicalandsocialempowerment:Awomensstatuswithinthecommunityis
enhancedwithherincreasedcontroloverfinancialandeconomicmatters.The
creation of groups enhances the power of social and political movements
organizedbythem.Socialstandingisescalatedwithregardtodecisionmaking
andimplementation.

Microfinanceinstitutionsaroundtheworldhavefoundavarietyofwaysanddeveloped
multipleproductsandservicesthathelpovercomethebarriersthathavetraditionallykept

womenfromhavingaccesstofinancialservices.Thesearerequirementssuchas
collateral,maleorsalariedguarantorrequirements,documentationrequirements,cultural
barriers,limitedmobility,andliteracy.Themajorreasonsformicrofinanceinstitutions
andthebanks,whichencouragethetargetingofwomen,include:
1. GenderEqualityforDevelopment:
ResearchdonebyUNDP,UNIFEM,andtheWorldBank,amongothers,indicate
thatgenderinequalitiesindevelopingsocietiesinhibiteconomicgrowthand
development.Forexample,aWorldBankreportconfirmsthatsocietiesthat
discriminateonthebasisofgenderpaythecostofgreaterpoverty,slower
economicgrowth,weakergovernance,andalowerlivingstandardoftheirpeople.
TheUNDPfoundaverystrongcorrelationbetweenitsgenderempowerment
measureandgenderrelateddevelopmentindicesanditsHumanDevelopment
Index.Overall,evidenceismountingthatimprovedgenderequalityisacritical
componentofanydevelopmentstrategy.Bygivingwomenaccesstoworking
capitalandtraining,microfinancehelpsmobilizewomensproductivecapacityto
alleviatepovertyandmaximizeeconomicoutput.
2. WomenarethePoorestofthePoor:
Itisgenerallyacceptedthatwomenaredisproportionatelyrepresentedamongthe
worldspoorestpeople.AccordingtotheWorldBanksgenderstatisticsdatabase,
womenhaveahigherunemploymentratethanmeninvirtuallyeverycountry.In
general,womenalsomakeupthemajorityofthelowerpaid,unorganized
informalsectorofmosteconomies.Thesestatisticsareusedtojustifygiving
prioritytoincreasingwomensaccesstofinancialservicesonthegroundsthat
womenarerelativelymoredisadvantagedthanmen.
3. WomenspendingontheirFamilies:
Womenhavebeenshowntospendmoreoftheirincomeontheirhouseholds;
therefore,whenwomenarehelpedtoincreasetheirincomes,thewelfareofthe
wholefamilyisimprovedaswomenhaveagreatertendencytospendontheir
childrenshealth,educationandoverallwelfareofthefamily.Awomanssuccess

benefitsmorethanoneperson.Assistingwomenthereforegeneratesamultiplier
effectthatenlargestheimpactoftheinstitutionsactivities.
4. EfficiencyandSustainability:
Proponentsoftargetingwomenonthegroundsofsustainabilitycitewomens
repaymentrecordsandcooperativeness.Acollectivewisdomhasemergedthat
womensrepaymentratesaretypicallyfarsuperiortothoseofmen.Lowerarrears
andloanlossrateshaveanimportanteffectontheefficiencyandsustainabilityof
theinstitution.Manyprogramshavealsofoundwomentobemorecooperative
andprefertoworkwiththemforthatreasonaswell.
5. Women'sRightsPerspective:
Women'sequalaccesstofinancialresourcesisahumanrightsissue.Because
accesstocreditisanimportantmechanismforreducingwomen'spovertyand
accesstocredithasbeenrecognizedasabasichumanright,ithasbeenanexplicit
focusofavarietyofhumanrightsinstruments.
6. EmpoweringWomen:
Last,butnotleast,oneoftheoftenarticulatedrationalesforsupporting
microfinanceandthetargetingofwomenbymicrofinanceprogramsisthat
microfinanceisaneffectivemeansorentrypointforempoweringwomen.By
puttingfinancialresourcesinthehandsofwomen,microfinanceinstitutionshelp
leveltheplayingfieldandpromotegenderequality.
IMPACTOFWOMENEMPOWERMENT
1. ImpactonDecisionMaking:
Womensabilitytoinfluenceormakedecisionsthataffecttheirlivesandtheir
futuresisconsideredtobeoneoftheprincipalcomponentsofempowermentby
mostscholars.Itismuchlessclear,however,whattypesofdecisionsandwhat
degreeofinfluenceshouldbeclassifiedasempowermentindifferentcontexts.
TheWomensEmpowermentPrograminNepal,forexample,conductedastudy
thatshowedanaverageof89,000outof130,000or68percentofwomeninits
programexperiencedanincreaseintheirdecisionmakingrolesintheareasof

familyplanning,childrensmarriage,buyingandsellingproperty,andsending
theirdaughterstoschoolallareasofdecisionmakingtraditionallydominatedby
men.
2. ImpactonSelfConfidence:
Selfconfidenceisoneofthemostcrucialareasofchangeforempowerment,yet
itisalsooneofthemostdifficulttomeasureorassess.Selfconfidenceisa
complexconceptrelatingtobothwomensperceptionoftheircapabilitiesand
theiractuallevelofskillsandcapabilities.ItisrelatedtoKabeersconceptof
agencythatallowswomentodefineandachievegoalsaswellasthesenseof
powerwomenhavewithinthemselves.
3. ImpactonFamilyRelationshipsandDomesticViolence:
Althoughtherehavebeenafewstudiesthathaveassertedthatwomens
participationinmicrofinanceleadstoanincreaseindomesticviolence,most
practitionershavereportedtheoppositeexperience.Microfinanceprograms
strengthenwomenseconomicautonomyandgivethemthemeanstopursuenon
traditionalactivities.Insomecases,womenwhobegintoassertthemselvesand
theiropinionsintheirhouseholdsincurthewrathofangryhusbandswhofeel
theirauthorityandsometimestheirreputationsarebeingthreatenedbytheir
wivesbehaviour.Otherwayroundmanypractitionershavefoundthatfamily
relationshipscanbestrengthenedwhenthehomebecomesamorecomfortable
placetobe,andwheneachmemberofthefamilyfeelssecureinhisorherability
tocontributeproductivelytothefamily.
4. ImpactonWomensInvolvementandStatusintheCommunity:
Severalmicrofinanceandmicroenterprisesupportprogramshaveobserved
improvementsinwomensstatusintheircommunities.Contributingfinancial
resourcestothefamilyorcommunityconfersgreaterlegitimacyandvalueto
womensviewsandgivesthemmoreentitlementsthantheywouldotherwise
have.Studiesofmicrofinanceclientsfromvariousinstitutionsaroundtheworld
showthatthewomenthemselvesveryoftenperceivethattheyreceivemore

respectfromtheirfamiliesandtheircommunitiesparticularlyfromthemale
membersthantheydidbeforejoiningamicrofinanceprogram.
5. ImpactonPoliticalEmpowermentofWomenandWomensRights:
Widespreadpoliticalempowermentisafairlyrareoutcomeofmostmicrofinance
programs.Microfinanceprogramsofferservicesandproductsthatcanenhance
individualwomensabilitiestoparticipateeffectivelyinpolitics.Nevertheless,
manyexamplestestifythatwomensparticipationinlendingcentersandgroups
increasestheirknowledgeofpoliticalparties,processes,andchannelsof
influence.WomenclientsofOpportunityMicrofinanceBankinthePhilippines
havegainedleadershipexperienceandconfidenceasleadersoftheirTrustBanks
andhavegoneontobeelectedasleaderswithintheirbarangays.

ReviewofLiterature

LongweandClarke(1994)explainedwomenempowermentasanongoingcyclical
processhavingfivestages.Thefirststageiswelfarestageandatthisstagethewomens
resourcesarenotfullyrecognizedandmet.Thesecondisaccessstage,wherewomen
recognizeitandtakeactiontogainaccesstotheseresources.Thethirdstageisthe
awarenesslevelstage,wherewomenrealizethattheirlackofaccesstoresourcesand
theirgeneralsubordinatestatusareduetosociallyconstructedbeliefsandphenomena.
Thefourthstageistheparticipationlevelstage,wherewomenbecomeactivelyinvolved
indecisionmakingprocesseswithintheirhouseholds,communitiesandsocieties.The
finalstageiscontrolstage;inwhichwomengetcontroloveraccesstoresourcesand
distributionofbenefitsbyincreasingtheirparticipation.Thiscontrolincreaseswomens
powerandrespectwithintheirhouseholds,communitiesandsocietiesatlarge.

AccordingtoPillai(1995),womenempowermentisanactive,multidimensional
process,whichenableswomentorealisetheirfullidentityandpowersinallspheresof
life.Powerisneitheracommoditytobetransactednorcanitbegivenawayasalms.
Powerhastobeacquiredandonceacquireditneedstobeexercised,sustainedand
preserved.

Stromquist(1995)wrotethatempowermentincludesbothcognitiveandpsychological
elements.Itinvolveswomensunderstandingoftheirconditionsofsubordinationand
thecausesofsuchconditionsatbothmicroandmacrolevelsofsociety.Itinvolves
understandingtheselfandtheneedtomakechoicesthatmaygoagainstculturaland
socialexpectations.

Kabeer(1999)explainedthatwomensempowermentreferstotheprocessbywhich
thosewhohavebeendeniedtheabilitytomakestrategiclifechoices,acquiresuch
ability.Theabilitytoexercisechoicesincorporatesthreeinterrelateddimensions:

Resources,whichincludeaccessaswellasfutureclaimstobothmaterialandsocial
resources;Agency,whichincludestheprocessofdecisionmaking,negotiation,
deceptionandmanipulation;andAchievements,whichreferstothewellbeingoutcomes
ofchoice.
Kabeer(2001)hasshownthattherearetwoessentialelementsofwomenempowerment,
i.e.,processandagency.Aprocessisdefinedastheseriesofeventsthatproducegradual
change.Theprocessofwomenempowermentleadstoexpansionintheirabilitytohave
resourcesandtomakestrategiclifechoices.Theagencyelementofwomen
empowermentdescribesthatwomenthemselvesarethesignificantactorsintheprocess
ofchange.Itistheprocessthroughwhichchoicesaremade.Empowermentcannotbe
offeredbyathirdparty;rather,ithastobeclaimedbythosewhowouldbecome
empowered.
Kalpana(2008)hasshownthediversityofbypassstrategiesimplementedbywomen
(arrangementswiththestaffandwithbankers,useofintermediaries,etc.)todoasif
theywereusingmicrocreditforproductiveuse.Themotivationtherewastoaccess
creditratherthantoredefinetheusestowhichitwasputasproductive.Butdefinitely
thatisareflectionofwomenscapacitytonegotiateaccesstoresourcesandusethemfor
theirlivelihoodpromotion.
SenguptaandAubuchon(2008)havefocusedonachievementmadebyProf.
MuhammadYunusandtheGrameenBankfortheireffortstocreateeconomicandsocial
developmentfrombelow.Theirarticlewasintendedasanontechnicaloverviewonthe
growthanddevelopmentofmicrocreditandmicrofinance.TheGrameenbankandits
achievementwerereviewed.Thepaperalsoemphasizedonthegrouplendingmodeof
grantingmicrofinanceanditsbenefitandreviewedthemodesandmethodsof
microfinanceindifferenteconomiesanditsfuture.
Mummidi(2009)discussedinherpaperthatwomenshouldbeentitledtoworkwiththe

utilizationofresourcesprovidedtothemthroughmicrofinanceinstitutions.Alongwith
this,theefficiencyofutilizationoftheseresourceshasalsobeendiscussed.Thepaper
suggeststhatabetterunderstandingofthediversityofwomenslivelihoodandabetter
understandingoftherangeofconstraints,motivations,skillsandcapabilitiesofwomen
throughthelivelihoodframeworkmighthelptounderstandtheimpactofmicrofinance.
Thelimitation,however,liesinthebroadscopeofthisframeworkmakingitdifficultto
operationalize.Thispaperwasanarrowdemonstrationofthisdifficultpossibility.
PillaiandNadarajan(2010)intheirpaperprovidedevidenceaboutMicrofinancebeing
apowerfultooltoalleviatepovertyandempoweringruralwomenandalsoinbringing
socialandeconomicchangesintheruralIndia.Microfinanceandselfhelpgroupswere
foundtobesuccessfulinpromotingempowermentofwomenleadingtodevelopment.
TheirpaperanalyzedtheimpactofmicrofinanceontheempowermentofSHGleadersin
psychological,economic,socialaspects,managerialskillsandtheirattitudesinthe
KanyakumariDisrtict.
Devaraja(2011)hasdescribedtheevolutionoftheMicrofinancerevolutioninIndia.The
studystatedthattheoutreachofsuchactivitieshasbeenlowalongwiththequestion
markontheprofitabilityandsustainabilityofMFIs.Thispaperdefinedthethreedistinct
aspectswheregovernmentneedstoplayasignificantrole.Thefirstwastoprotectthe
rightsofthemicroborrower.Thesecondwasthatofprudentialoversightofrisktaking
byfirmsoperatinginmicrofinance.Thethirdwasadevelopmentalrole,emphasizing
scaleupofthemicrofinanceindustrywherethekeyissuesarediversificationofaccessto
funds,innovationsindistributionandproductstructure,andtheuseofnewtechnologies
suchascreditbureausandtheUID.Healsosuggestedhavingproperregulation
mechanismforthemicrofinanceindustry.
MamunandAdaikalam(2011)investigatedtheeffectofAmanahIkhtiarMalaysias
(AIM)UrbanMicrofinanceProgramontheirclientsqualityoflifeinPeninsular
Malaysia.Thisstudyemployedacrosssectionaldesignwithstratifiedrandomsampling
method.Aqualityoflifeindexusingelevenselectedindicatorswasdeveloped.Findings

ofthisstudyextendtheliteraturebyprovidingempiricalevidencethataccessto
microfinanceimprovedqualityoflifeofparticipatinghouseholdsinurbanPeninsular
Malaysia.Thefindingsshowedthattherespondentsparticipationstatusisassociated
withthesizeandqualityofclientshouses.ItwasrecommendedthatAIMshouldfocus
onincreasingtheoutreachbytargetinglowincomeclientsinurbanPeninsular
Malaysia.Moreoveritshouldalsoreviewandreorganizetheirprogramsinorderto
presentadynamicandwelldiversifiedmicrofinanceprogramthatfulfillsthefinancial
needsoftheirurbanclients.
AminandPatel(2012)statedthatinanydevelopingeconomycontributionofvillagesor
therulersegmentisessential.Aspertheauthor,toimproveefficiencyatthislevelin
developingeconomymaximumweightageshouldbegiventofinancialinstitution.Now
daysthroughSelfHelpGroupsuchtargetedpopulationisprovidedfinancialhelpfor
economicupliftmentandalsoforbettermentofthepoorpeople.Tohavefaster
developmentofanysegmentcontributionofthewomanisessential.InIndia,48%
populationisofwomanandliteracyratioofwomanis54.16%,butstilltheircontribution
intheeconomyisverynegligible.Microfinanceinstitutesplaythemostsignificantrole
toprovidewomanempowermentintotheIndianeconomy.Suchfoundationnotonly
givesthemempowermentwithfinanceonlybutalsorevolutionizestheirsocial,cultural
andbehavioralpattern,whichishelpfulfordevelopmentoftheeconomy.

Statementoftheproblem:
Earlier,womenwerestoppedfromtakingpartinanysocialoreconomicactivityand
nevergivenanactiveroleindecisionmaking.Thissocialsituationwasonlyheightened
inruralareas.However,withtheconceptsofempowermentandeducationofwomen,and
provisionofmicrofinancetothis,thissocialstructureisstartingtoseechange.NGOs
andfinancialinstitutionshaveseenthatwomenarethesmallestsourceofcreditriskand
themostfavorablebetwhenitcomestogeneratingincomefromactivitiesengagedinby
availingmicrocredit.Thishasinducedresearchtofocusonempowermentofurban
womenwhoparticipateinmicrofinance.
Objectiveofthestudy:
-

Tooutlinethevariousbenefitsexperiencedbywomenwhohaveavailed

microfinanceandcreatedtheirownbusinesses
Todeterminedegreeofpenetrationofmicrofinancetowomen
Totraceouttheproblemsinprovisionofmicrofinanceandprovidepossible
solutionstothesame

ResearchMethodology:
Thisresearchisbasedondescriptiveresearchmethod.Thestudyisbasedonthe
secondarydatasodescriptiveresearchmethodissuitableforthisstudy.
Secondarydataisusedfortheresearch.Thisstudyisnotbasedontheprimary
datasothereisnorequirementforsamplingtechniques.Secondarydatafromvarious
microfinancerelatedwebsitesandresearcharticlesarebeingusedforthisstudy.

Limitationsofthestudy:
Themainproblemsinmeasuringthedegreeofempowermentofwomenare:
The measurement of women empowerment involves both quantitative as well as
qualitativedatasuchasaccesstofinancialresources,participationinhouseholddecision
making,changeinthelevelofselfconfidence,selfesteem,levelofspatialmobility,
level of awareness etc. The qualitative indicators of empowerment are difficult to
measure.
Empowermentisanongoingprocessandtomeasurethechangesinaprocess,dataisto
becollectedforatleasttwopointsintime.Butthismethodisfurtherrestrictedasitis
difficulttodecidethetimegapoverwhichthechangesaretobemeasuredbecausesome
signsofempowermentcanbeseeninashorttimeperiodof2to3yearswhileforothers
a longer time period may be required. There may be a shift in the relevance of
empowerment indicators over time. Also, more time and resources are required to
measuretheimpact.
PROBLEMANDCHALLENGES
Previousresearchandstudieshaveshownthatmanyfactorsareinvolvedinincreasing
the difficulty for women empowerment through microfinance and micro businesses.
Theseinclude:
-

Lackofknowledgeandtraining
Inadequatebookkeeping
Lackofcapital
Highinterestrates
Employment of too many relatives which increases social pressure to share
benefits

Creditpoliciesthatcangraduallyruintheirbusiness(manycustomerscannotpay
cash;ontheotherhand,suppliersareveryharshtowardswomen).

Inventoryandinflationaccountingisdisregarded

Othershortcomingsinclude:
1. Burdenofmeeting:Timeconsumingmeetings,inparticularinprogrammesbased
ongrouplending,andtimeconsumingincomegeneratingactivitieswithoutreduction
oftraditionalresponsibilitiesincreasewomensworkandtimeburden.
2. New Pressures: By using social capital, ingroup lending/group collateral
programmes,additionalstressesandpressuresareintroduced,whichmightincrease
vulnerabilityandreflectdisempowerment.

4. Reinforcement of traditional gender roles: Lack of economic empowerment:

Microfinanceassistswomentoperformtraditionalrolesbetterandwomenthus
remaintrappedinlowproductivitysectors,notmovingfromthegroupofsurvival
enterprises to microenterprises. There is evidence of men withdrawing their
contributionstocertaintypesofhouseholdexpenditures.
Urban Poor Statistics:
Indias population 1.1 billion
Urban population 352 million (32% of total population)
Urban poor 106 Million (30% of urban population)

Reasonsforborrowingbyurbanpoor:

Chapter1:Introduction
Chapter2:ReviewofLiterature
Chapter3:ResearchMethodology
Chapter4:AnalysisandInterpretation
Chapter5:Findings,SuggestionsandConclusion