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Cultura Documentos
Empowerment
Submitted to-
Prof. Simranjeet Kaur
What is Microfinance ?
• The extension of small loans to entrepreneurs
too poor to qualify for traditional bank loans.
• An effective and popular measure in the ongoing
struggle against poverty, enabling those without
access to lending institutions to borrow at bank
rates, and start small business.
• The global microfinance sector has nearly
reached US$30 billion in asset size reaching 130
million clients worldwide
Objectives of Microfinance
• In context of empowering the women are-
Increasing women's income levels and control over income leading to greater
levels of economic independence
Access to networks and markets giving wider experience of the world outside the
home, access to information and possibilities for development of other social and
political roles
Enhancing perceptions of women's contribution to household income and family
welfare, increasing women's participation in household decisions about
expenditure and other issues and leading to greater expenditure on women's
welfare
More general improvements in attitudes to women's role in the household and
community
How does Microfinance work?
The availability of
Small amounts of Short processing repeat loans in higher
loans and savings periods amounts for clients
who pay on time
No collateral is
Simple application
required contrary to
Short loan terms forms which are easy
formal banking
to complete
practices
Payment schedules
Easy access to the
featuring frequent High interest rates on
microfinance
instalments (or credit
intermediary
frequent deposits)
Microfinance role in Development
Why Target WOMEN?
Evidence that improved gender
- Only 19 % of the world’s
Gender and equality is a critical component of any
parliamentarians
Development development strategy.
- 1/3 of all women are
subjected to violence
HOUSEHOLD WELL-BEING
•play a more active role in household
decision-making
•decrease their own and household
vulnerability
•increase investment in family welfare
Social Impact of Microfinance
• In context of Empowerment of Women
• Women are now more financially literate and
confident
Contd.
Social Impact of Microfinance
• Building Economic citizenship
Financial services foster Independence.
Microfinance can help clients to grow more
confident and with that economic citizenship
they can step out and become a part of main
stream of society.
• To fight with poverty
Financial services give clients to access to
education, healthcare, and other necessities that
improves their quality of life. i.e. school fee loan,
health insurance and home improvement loan.
Scope of Microfinance
• In India, Micro finance is growing faster than
banking and, if the experience in other
developing countries is mirrored here,
microfinance “will reach more individuals than
the banking sector,”
- Robert Annibale, global director Citigroup Inc.
Microfinance
Scope of Microfinance
35
30
Nos. of Clients in Millions
25
20
Banking
15 Microfinance
10
5
0
2008 2010 2015
Contd.
• Shows the use of various formal and informal source of finance The study found that the
majority of the respondents prefer formal sources of finance in order to park their hard
earned money.
• As depicted in the above table maximum respondents are having bank accounts (46.9 %),
though a significant proportion of the sample still prefer to keep cash at home (21.4 %)
while only 18.4% were having post office savings. In contrary to this, the majority of
respondents preferred informal sources of finance over the formal ones for availing credit.
As the table shows the most common informal source of finance is the relatives/friends
(44.4 %) followed by employer and colleagues while only 22.2 % of the respondents availed
credit from the banks. And interestingly, use of semi formal sector such as MFIs, SHGs and
NGOs was found to be almost negligible. This may be because of lack of awareness among
rural people about these channels.
Level of Satisfaction
• This section of the article deals with examining the satisfaction level of the respondents with
regards to the microfinance services availed from different sources of finance. A
questionnaire containing twenty variables related to micro credit was administered to 110
respondents. These variables have been derived from the earlier literature (Kamble, Sonar,
2006; Pandey, 2008; Albino, Subramanian, 2008; Ramji 2009). Out of the total number of
respondents only 54 respondents reported having taken credit from one or the other
sources of finance. The respondents were asked to rate each variable on a five point likert
scale
• Savings according to the satisfaction derived from it. For the purpose of analysis of the
satisfaction level of the respondents, Weighted Average Score (WAS) was calculated for
each variable. The variables were categorized as variables of high satisfaction, moderate
satisfaction, and slight satisfaction depending upon their WAS as explained in Table V.
Perceived satisfaction level of the women
microfinance borrowers
• It is observed that out of total twenty variables only 2 variables
have been ranked in the category
• of high satisfaction, 12 variables in the category of moderate
satisfaction and the remaining 6 as
• of slight satisfaction. A majority of the respondents (70.3 %)
perceived the ‘Amount of
• loan availed’ to be yielding highest satisfaction having WAS of 4.30
and ‘Repayment policy’ has
• been ranked at the lowest among the activities of slight satisfaction
with WAS of 2.52. The
• study shows that women are not satisfied with the bank formalities
like demand for collaterals,
• loan utilization checks, repayment policy. They experienced the
procedural difficulties too, for
• getting the loan sanctioned, specifically while going for the formal
sources of finance like banks.
Chi- square test
• In order to determine whether there is a significant difference
between the satisfaction level of
• those availing micro credit from the formal and the informal
sources of finance. The following
• was the set of hypothesis:
• H0: There is no significant difference between the satisfaction level
of formal and informal
• sources of micro credit.
• The above hypothesis was analyzed at 5 % level of significance. The
calculated chi-square
• values have been presented in the table 5. Which is compared with
the tabulated chi-square value
• at 5 % level of significance for 4 df i.e. 9.48
Chi- square test
• There are six variables in column I of the table 4 whose calculated chi-square values
are greater than the tabulated chi-square value (9.884) at 4 df. Therefore, null
hypothesis is rejected for these six variables at 5 % level of significance. This is to
mean that there is a significant difference among the satisfaction level of the
formal and informal sources of micro credit with respect to the loan amount, rate
of interest, loan utilization check, recognition and respect from the providers,
availability of suitable products, complaints/ problems solving attitude of the
providers. However, for the rest of the fourteen variables null hypothesis is
accepted. ‘Amount of loan availed’ is the variable showing the highest significant
difference between the satisfaction level of formal and informal sources of micro
credit. ‘Loan duration’ is showing highest insignificance.
Level of Impact
• This section of the article deals with the examination of the level of impact which
the respondents observed after taking micro credit. All 54 respondents availing
micro credit were asked to rate the activities showing impact on their lives of micro
credit on five point Likert scale. The impact level has been analyzed by calculating
the WAS for each activity
Level of impact on the women
microfinance borrowers
• It is observed that out of 9 variables not a single
variable has been ranked as the activity of high impact.
Interestingly only 1 activity has been ranked as of slight
impact i.e. ‘Awareness of social issues’ with WAS of
2.92 while rest 8 activities ranked as that of having
moderate impact. This shows that microfinance has
been able to mark some impact on the lives of the
women clients as they reported improvement in their
in their communication skills, decision making power
and the confidence level. But still there is a long way to
go before the microfinance may lead to sustainable
women empowerment.
Level of impact on the women
microfinance borrowers
FINAL CONCLUSION
The study found good saving habit among females as maximum number of the respondents was
having saving bank accounts (46.9%) and post office savings (18.4 %) but still there are so many
obstacles in the way of financial inclusion of women such as the lack of awareness regarding
micro financing services being provided by the banks as 80.7 % of the respondents were
unaware of the banks opening of 0 minimum balance saving bank account. The dissatisfaction
from various service activities followed by banks such as requirement of collaterals,
inconvenient procedural formalities, loan utilization checks and difficult repayment terms is also
one of the major reasons for a significant proportion of the rural women to prefer informal
sources of finance(74.1 % of the respondents availing credit) instead of the formal ones. They
find an ease in getting finance from their personal contacts. This attitude needs to be changed.
The banks should introduce some proactive strategies primarily aiming at spreading more
awareness of the micro financing services available with the banks and encouraging the use of
such services. More interestingly, despite of the prevailing dominant SHG-Bank linkage model,
the study found very negligible use of the SHGs services by the respondents (2.1 % in case of
savings). These SHGs need to be regulated and supervised in order to keep them actively
engaged in the microfinance movement. Moreover the banks should make provision of more
services under the microfinance umbrella as per the requirements of women. Some attitudinal
changes are required on part of the finance providers also to break the age old stigma of the
gender discrimination. Women should be encouraged to take up entrepreneurial activities by
giving them proper guidance and developing their business skills. Women empowerment to a
great extent depends upon the economic empowerment of women and microfinance can prove
to be a very powerful instrument of women empowerment in the times to come.