“A Critical analysis of micro-finance sector for women

Empowerment in India”

(With References to Branch in Indore Region)

A REVISED SYNOPSIS

For

MASTER OF BUSNESS ADMINISTRATION

Submitted to

DEVI AHILYA VISWAVIDHLAYA, INDORE

RESEARCH SUPERVISOR RESEARCHER

Prof. Vikas jain Sharad Shrivastava

Senior lecturer (Finance) MBA 2nd year
DMS, Truba College (Finance &
marketing)
Indore. Roll No. 9170016
 RESEARCH CENTER

TRUBA COLLEGE OF ENGINEERING AND

TECHNOLOGY
INDORE

INDEX

1. INTRODUCTION OF STUDY

2. LITERATURE REVIEW

3. OBJECTIVE

4. HYPOTHESIS

5. RESEARCH METHODOLOGY

6. SCOPE & LIMITATION

7. ANALYSIS AND INTERPRETATION

 BIBLIOGRAPHY

WEBLIOGRAPHY

REFERENCES

Introduction:

Microfinance in India started in the early 1980s with small efforts at forming
informal self-help groups (SHG) to provide access to much-needed savings and
credit services. From this small beginning, the microfinance sector
has grown significantly in the past decades. National bodies like the Small
Industries Development Bank of India (SIDBI) and the National Bank for
Agriculture and Rural Development (NABARD) are devoting significant time
and financial resources to microfinance. This points to the growing importance of
the sector. The strength of the microfinance organizations (MFOs) in India is in
the diversity of approaches and forms that have evolved over time. In addition to
the home-grown models of SHGs and mutually aided cooperative societies
(MACS), the country has learned from other microfinance experiments across the
world, particularly those in Bangladesh, Indonesia, Thailand, and Bolivia, in
terms of delivery of micro financial services. Indian organizations could also
learn from the transformation experiences of these microfinance initiatives.

Understanding Microfinance

Robinson (2001) defines microfinance as “small-scale financial services—

primarily credit and savings—provided to people who farm, fish or herd” and
adds that it “refers to all types of financial services provided to low-income
households and enterprises.” In India, microfinance is generally understood but
not clearly defined. For instance, if an SHG gives a loan for an economic activity,
it is seen as microfinance. But if a commercial bank gives a similar loan, it is
unlikely that it would be treated as microfinance. In the Indian context there are
some value attributes of Microfinance

1. Microfinance is an activity undertaken by the alternate sector (NGOs).

Therefore, a loan given by a market intermediary to a small borrower is not seen
as microfinance. However when an NGO gives a similar loan it is treated as
microfinance. It is assumed that microfinance is given with a laudable intention
and has institutional and nonexploitative connotations. Therefore, we define
microfinance not by form but by the intent of the lender.

2. Second, microfinance is something done predominantly with the poor. Banks

usually do not qualify to be MFOs because they do not predominantly cater to the
poor. However, there is ambivalence about the regional rural banks (RRBs) and
the new local area banks (LABs).

3. Third, microfinance grows out of developmental roots. This can be termed the
“alternative commercial sector.” MFOs classified under this head are promoted
by the alternative sector and target the poor. However these MFOs need not
necessarily be developmental in incorporation. There are MFOs that are offshoots
of NGOs and are run commercially. There are commercial MFOs promoted by
people who have developmental credentials. We do not find commercial
organizations having “microfinance business.”

4. Last, the Reserve Bank of India (RBI) has defined microfinance by specifying
criteria for exempting MFOs from its registration guidelines. This definition is
limited to not-for-profit companies and only two MFOs in India qualify to be
classified as microfinance companies.

Microfinance in India
In India, microfinance is done by organizations having diverse orientations,
NGOs in India perform a range of developmental activities;
Microfinance usually is a sub-component. Some of these NGOs organize groups
and link them to an existing provider of financial services. In some cases NGOs
have a “revolving fund” that is used for lending. But in either of these cases,
microfinance is not a core activity for these NGOs. An example is the Aga Khan
Rural Support Program me India (AKRSP-I). For AKRSP-I, the microfinance
component is incidental to its work in natural resource management.
Examples like MYRADA and the Self-Employed Women’s Association (SEWA)
fall in the same category. However, as their microfinance portfolios grew, both
organizations decided to form separate entities for microfinance. MYRADA set
up an MFOs called Sanghamitra Rural Financial Services (SRFS), while SEWA
set up the SEWA Cooperative Bank. At the next level, we find NGOs helping the
poor in economic activities. Their purpose is developmental. They see
microfinance as an activity that feeds into economic activities. For instance, the
South Indian Federation of Fishermen’s Societies (SIFFS) started as a support
organization for fishermen, providing technical and marketing support. It then
arranged for loans to its members through Journal of Microfinance

Literature Review

Impacts of micro finance on women were addressed by researchers and some

important studies are presented here. Hashemi, Schuler, Riley (1996) and
Kabeer(1998) reported that micro finance empowered women in Bangladesh,
Makumbe et al. (2005) found that microfinance has a positive impact on decision
making in Tanzania, Hulme and Mosley (1996) found growth of income of
microfinance borrowers in Indonesia, India, Bangladesh and Sri Lanka, Mk Nelly
et al. (1996) found positive benefits in Thailand, Chen and Snodgrass (2001)
reported income increase in India, Pitt and Khandker (1998) quoted positive
impact of per capita income, household expenditure and increase in non-land
assets in Bangladesh, Goldberg (2005) informed poor no longer remained as poor
as a result of micro finance in Bangladesh. Navajas et al. (2000) studied micro
finance in Bolivia and reported majority of clients were below poverty line and
similar conclusions were reported by ACCION (2003) in Lima and Peru and
Stanton (2002) in Mexico. Khandker (2004) found that micro finance helped in
poverty reduction and Zubair (2004) reported reduced vulnerability to domestic
violence in Bangladesh. Studies carried out by Schuler, Hashemi and Pandit
(1995) for India, Mayoux (2001) for Cameron and Schuler, Jenkins and
Townsend (1995) for Bolivia indicated that there is no positive effect of micro
finance. Zeller (1994) found that wealthier households are benefited in
Madagascar; Datta (2004) eported that 59 per cent microfinance clients in
Bangladesh are better off poor. Coleman (1999) reported noevidence of
programme impact in Thailand and during 2004 he reported that the programme
did not reach poor and impact is larger on Committee Members. Duong and
Izumida (2002) reported that poor have difficulties in accessing credit facilities
in Vietnam and Amin et al. (2003) reported that poor and vulnerable are excluded
in Bangladesh. Matin and Hulme (2003); Halder and Mosley (2004) reported that
political and social connections instead of poverty status decides the selection of
participants in Bangladesh. Maggiano (2006) studied the impact of micro finance
in Uganda and concluded that there is a measurable impact on social development
but no impact on economic development. Ssendi and Anderson (2009) observed
that there are some benefits to poor women and two third poor women remained
as before in Tanzania.

What Is Microfinance?

Microfinance, according to Otero (1999, p.8) is “the provision of financial

services to low-income poor and very poor self-employed people”. These
financial services according to Ledgerwood (1999) generally include savings and
credit but can also include other financial services such as insurance and Payment
services. Schreiner and Colombet (2001, p.339) define microfinance as “the
attempt to improve access to small deposits and small loans for poor households
neglected by banks.” Therefore, microfinance involves the provision of financial
services such as savings, loans and insurance to poor people living in both urban
and rural settings who are unable to obtain such services from the formal
financial sector.

1. Women In Micro Finance

In developing countries, women play a pivotal role as risk managers and drivers
of development, particularly in settings of severe poverty. Microfinance programs
have enabled thousands of women to use small sums in creative and successful
ways to develop livelihoods, improve their families’ well-being, and build up
savings. However, microfinance has proven limited in its ability to really
empower women, create upward mobility, and contribute to long-term economic
growth. More is needed if we are to help the poor, especially women, move
beyond subsistence-level, small income generating activities to become full social
and economic participants in their country. There are four basic views on the link
between micro-finance and women's empowerment:
• There are those who stress the positive evidence and are essentially optimistic
about the possibility of sustainable micro-finance programs world-wide
empowering women;
• Another school of thought recognizes the limitations to empowerment, but
explains those with poor program design;
• Others recognize the limitations of micro-finance for promoting empowerment,
but see it as a key ingredient as important in themselves within a strategy to
alleviate poverty; empowerment in this view needs to be addressed by other
means;
• Then there are those who see micro-finance programs as a waste of resources.

2. Women’s empowerment and micro-finance: contrasting

paradigms

From the early 1970s, women’s movements in a number of countries identified

credit as a major constraint on women’s ability to earn an income and became
increasingly interested in the degree to which poverty-focused credit programs
and credit cooperatives were actually being used by women. SEWA in India, for
example, set up credit programs as part of a multi- pronged strategy for an
organization of informal sector women workers. Since the 1970s, many women’s
organizations world-wide have included credit and savings, both as a way of
increasing women’s incomes and to bring women together to address wider
gender issues. In he 1990s, a combination of evidence of high female repayment
rates and the rising influence of gender lobbies within donor agencies and NGOs
led to increasing emphasis on targeting women in micro-finance programs.

SECTOR
Micro finance provider are classified into three categories as follows

Formal sector :- It covers the entire banking industry including all public,
private, regional rural bank, NABARD and RBI.
Semi-Formal sector :- It covered exclusive micro- financing institution ,
NGOs and various self helping group (SHG).
Informal sector :- It covered family, friends relatives, trand etc.

Generally, the micro finance products are classified into three categories -Micro
Credit, Micro Savings and Micro Insurance. Various credit products are available
ranging from consumption to production besides savings products. However, micro
insurance is still in experimental stage.

Objective

Any activity done without an objective in a mind cannot turn fruitful. An

objective provides a specific direction to an activity. Objective may range from
very general to very specific, but they should be clear enough to point out with
reasonable accuracy what researcher wants to achieve through the study and how
it will be helpful to the decision maker in solving the problem. The main
objectives behind the study are as follows:
• To study of women empowerment, improvements of society
• To study the impact on person belong BELOW POVERTY LINE
• To study of micro finance SELF HELPING GROUP
• To study of awareness about micro-finance.

Hypothesis
Ho: There is impact on Economic independency strengthen and boost up
women empowerment level.

H1: There is no impact on Economic independency strengthen and

boost up women empowerment level.

Research Methodology
Two type were take into consideration i.e. primary data and
secondary data but major emphasis was given on gathering the
secondary data. Only to supplement the primary and make thing
• Primary data :- primary data are those which are
collected afresh and
for the firstTime, and thus happen to be orignal in character.
• Secondary data:- the secondary data, on the other hand , are those
 which have already been collected by some one else and which
have already been passed through the statistical prosses.

DATA SOURCE

To satisfy the objectives, the primary data has been collected with
the help of a structured questionnaire. A convenient randomized
sample of 100 women respondents from the aforesaid blocks was
selected. Chi-square test, weighted average scores and percentages
have been used to draw the meaningful inferences from the study.

And secondary data are using from Empirical study collected to the
various sources

 Internet
 References from books
 Journals and magazines.
 Past Research based data
Data Analysis Methodology
o Percentage Analysis
o Weighted average
o Profitability ratio
o Activity ratio

Expected Contribution of Research

Women clients who have become business leaders are more exceptions to the rule
than the norm. However, they can help make a business case for paying more
attention to the full package of business development, support networks and
financial services that women need to help them move up. If MFIs and banks are
able to think about women as emerging market opportunities, and market
research as well as impact data could be designed with an end outcome on
products and services specifically designed for women, we may see a significant
improvement in client retention and risk reduction, not to mention fulfillment of
social performance. Ultimately, empowering women requires fundamental
changes within each country context. It necessitates more direct policy
instruments that can replace the rules sustaining gender inequality and establish
incentives that will improve access to and quality of education as well as offer
opportunities for professional advancement. Fundamental change such as this
does not happen easily or quickly; at least in the near term, however,
microfinance offers one platform for change. Whereas the last decade has seen a
move away from the multi-sectoral development approaches of the 1980s, and
towards microfinance as a separate activity to better track costs and measure
sustainability, it may be time for a modified version of integrated service delivery
to make a comeback. Armed with better market research methods and simplified,
practical impact information that feeds back into developing better products and
services, we will realize that the key to improved service delivery is what we
knew from the beginning: Know your customer

Scope
Evidence suggests that, even in financially successful microfinance programs,
actual contribution to empowerment is often limited:
• Most women remain confined to a narrow range of female low-income
activities.
• Many women have limited control over income and/or what little income they
earn may substitute for former male household contributions, as men retain more
of their earnings for their own use.
• Women often have greater workloads combining both production and
reproductive tasks.
• Women’s expenditure decisions may continue to prioritize men and male
children, while daughters or daughters-in-law bear the brunt of unpaid domestic
work.
• Where women actively press for change, this may increase tensions in the
household and the incidence of domestic violence.
• Women remain marginalized in local and national level political processes.
This is not just a question of lack of impact, but may also be a process of
disempowerment:
• Credit is also debt. Savings and loan interest or insurance payments divert
resources which might otherwise go towards necessary consumption or
investment.
• Putting the responsibility for savings and credit on women may absolve men of
responsibility for the household.
• Where group meetings focus only on savings and credit, this uses up women’s
precious work and leisure time, cutting program costs but not necessarily
benefiting women.

Limitations
• Repayment pressures may increase tensions between women and/or lead to the
exclusion of the most disadvantaged women who may then be further
disadvantaged in markets and communities. Impacts are therefore very complex.
Women themselves are not passive victims, but active participants using
opportunities as best they can in the context of the many constraints of gender
inequality and poverty. There may be trade-offs for individual women because of
reinforcing and conflicting opportunities and constraints. At both household and
community level different women may be affected in different ways
• Lack of knowledge of the market and potential profitability, thus making the
choice of business difficult.
• Inadequate bookkeeping.
• Employment of too many relatives which increases social pressure to share
benefits.
• Setting prices arbitrarily.
• Lack of capital.
• High interest rates.
• Credit policies that can gradually ruin their business (many customers cannot
pay cash; on the other hand, suppliers are very harsh towards women).

ANALYSIS AND INTERPRETATION

Book references

1. IIB, Bank Financial Management, 2010 Macmillan Publishers

2. Research mathology by R. PANNEERES LVAM
3. Research methodology:, methods & technilogy: by C.R. KOTHARI
4. financial management & system:,by I.M. PANDAY
5. news paper
6. magazines
7. journals
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WEBLIOGRAPHY:-
www.google.com
www.apmas.org
www.ijeronline.com
www.scholarshub.net