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org (E-ISSN 2348-1269, P- ISSN 2349-5138)

MICROFINANCE AND ITS IMPACT ON

WOMEN EMPOWERMENT
by
Keerti Shree
Research Scholar, Department of Commerce
B. R.A. University Muzaffarpur
Abstract:

One of the many forms of financial assistance that are made available in India with the goal of enhancing the
economic standing of women is known as microfinance. One of the many financial programmes designed to
assist individuals who are unable to get loans from traditional financial organisations such as banks or credit
unions is presented here. One of the goals of microfinance is to boost women's economic independence. The
practise of providing underserved people with small, unsecured loans or other forms of financial help is
known as microfinance. Microfinance is primarily used to aid in the economic development of regions that
do not have access to traditional forms of credit. We will come across a variety of microfinance institutions,
some of which focus on financial inclusion, as well as non-governmental groups that, in general, target
browsers. Microcredit provides enough financial assistance for optimising the use of physical capital to its
fullest potential value.

Index-Terms: Microfinance Women Empowerment Microcredit

Introduction:

Microfinance refers to the provision of small loans, savings, and other financial services to low-income
individuals and communities, who lack access to traditional financial institutions. Microfinance has been
shown to have a significant impact on women empowerment, particularly in developing countries where
women often face social, economic, and cultural barriers.

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The impact of microfinance on women empowerment can be seen in various ways, including:
 Increased Financial Independence: Microfinance provides women with access to credit, savings, and
other financial services, which can enable them to start or expand their own businesses. This, in turn,
provides them with a source of income and financial independence, which can help to reduce their
dependency on male relatives or spouses.
 Improved Social Status: Microfinance can also help to improve the social status of women in their
communities. By having their own businesses and being able to contribute to their family's income,
women can gain respect and recognition in their communities, which can help to break down gender
barriers and promote gender equality.
 Improved Education: Microfinance can also help to improve the education of women and girls. By
having access to credit and financial services, women can invest in their education, as well as the
education of their children. This can lead to increased economic opportunities and social mobility for
themselves and their families.
 Increased Decision-making Power: Access to credit and other financial services can also help to
increase women's decision-making power within their households and communities. By having their
own income and financial resources, women can have a greater say in household decisions and in the
management of their businesses.

Overall, microfinance has the potential to play a significant role in women empowerment, by providing them
with the financial resources and independence needed to break down social and economic barriers. However,
it is important to note that microfinance is not a panacea, and it must be implemented in a way that is
responsive to the local context and the needs of the women it is intended to serve.

History of Microfinance in India:

The history of microfinance in India dates back to the 1970s, when the first microfinance organizations were
established to provide credit to low-income households and individuals who did not have access to formal
banking services. The earliest microfinance institutions (MFIs) in India were largely informal, and were set
up by non-governmental organizations (NGOs) and other non-profit organizations.
In the 1980s and 1990s, the Indian government began to take a more active role in promoting microfinance
as a means of poverty reduction and economic development. In 1992, the Reserve Bank of India (RBI) issued
guidelines for the establishment and regulation of small-scale finance institutions, which paved the way for
the growth of the microfinance sector in India.
The 1990s also saw the emergence of the self-help group (SHG) model, which became popular among MFIs
in India. Under this model, groups of women come together to save money and take out loans, which are
guaranteed by the group members. The SHG model has been successful in promoting financial inclusion and
empowering women in rural areas of India.

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In the early 2000s, the microfinance sector in India experienced rapid growth, with many new players
entering the market. However, the sector also faced criticism for high interest rates and aggressive loan
recovery practices. This led to the Microfinance Bill, which was introduced in 2011 to regulate the
microfinance sector and protect borrowers from exploitation.
Despite these challenges, microfinance has continued to play an important role in promoting financial
inclusion and empowering women in India. Today, India has one of the largest microfinance sectors in the
world, with over 60 million active borrowers and a loan portfolio of over $20 billion.

Microfinance Organisations:
There are many organizations involved in microfinance in India, including both government-supported and
private-sector organizations. Here are some of the most prominent organizations and their achievements:
 National Bank for Agriculture and Rural Development (NABARD): NABARD is a development
finance institution that provides credit and other support to farmers and rural communities in India. It has
been instrumental in promoting the self-help group (SHG) model of microfinance, and has helped to
establish over 3.5 million SHGs across the country. NABARD has also helped to promote the use of
digital technologies in microfinance, and has launched a mobile app called e-Shakti to help SHGs
manage their finances.
 State Bank of India (SBI): SBI is the largest public sector bank in India, and has been involved in
microfinance since the 1990s. It has set up a dedicated microfinance unit to provide credit to low-income
households and individuals, and has established partnerships with many MFIs to expand its reach. SBI
has also been a leader in using technology to promote financial inclusion, and has launched several
mobile banking and digital payment solutions.
 Bandhan Bank: Bandhan Bank is a private sector bank that was originally founded as a microfinance
institution in 2001. It has since grown to become one of the largest banks in India, and has a strong focus
on serving the needs of low-income households and individuals. Bandhan Bank has been recognized for
its innovative use of technology in microfinance, and has launched several mobile apps and digital
payment solutions to make financial services more accessible to its customers.
 SKS Microfinance: SKS Microfinance is one of the largest MFIs in India, and has been credited with
pioneering the use of the SHG model of microfinance. It has helped to establish over 1.5 million SHGs
across the country, and has provided credit and other support to millions of low-income households and
individuals. SKS Microfinance has also been recognized for its commitment to social impact, and has
won several awards for its work in promoting financial inclusion and women empowerment.
 Ujjivan Small Finance Bank: Ujjivan Small Finance Bank is a private sector bank that was originally
founded as a microfinance institution in 2005. It has since become a full-fledged bank, and has a strong
focus on serving the needs of low-income households and individuals. Ujjivan Small Finance Bank has
been recognized for its commitment to customer service, and has won several awards for its innovative
use of technology in microfinance.

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These are just a few examples of the many organizations involved in microfinance in India, and their
achievements in promoting financial inclusion and empowering low-income households and individuals.
Here are some of the major microfinance NBFCs in India and their finance disbursement as of the end of the
fiscal year 2020-2021:
 Bharat Financial Inclusion Limited (BFIL): BFIL is one of the largest microfinance NBFCs in India,
and has a loan portfolio of over Rs. 19,000 crore. As of March 2021, BFIL had disbursed over 10 million
loans to low-income households and individuals.
 Satin Creditcare Network Limited: Satin Creditcare is another major microfinance NBFC in India,
with a loan portfolio of over Rs. 8,000 crore. As of March 2021, Satin Creditcare had disbursed over 7.2
million loans to low-income households and individuals.
 Ujjivan Small Finance Bank: Ujjivan Small Finance Bank is a microfinance NBFC that has since
become a full-fledged bank. As of March 2021, Ujjivan had disbursed over 6.4 million loans to low-
income households and individuals, with a loan portfolio of over Rs. 14,000 crore.
 Janalakshmi Financial Services: Janalakshmi is a microfinance NBFC that provides credit and other
financial services to low-income households and individuals. As of March 2021, Janalakshmi had
disbursed over 3.3 million loans, with a loan portfolio of over Rs. 7,000 crore.
 Spandana Sphoorty Financial Limited: Spandana Sphoorty is a microfinance NBFC that operates in
several states across India. As of March 2021, Spandana Sphoorty had disbursed over 3.2 million loans,
with a loan portfolio of over Rs. 9,000 crore.

It's important to note that the finance disbursement figures may have changed since the end of the fiscal year
2020-2021, and may vary depending on the source of the data.

Microfinance empowering Women:

Microfinance organisations have played a significant role in empowering women in India by providing them
with access to financial services and credit. Here are some of the ways in which women in India have been
empowered by microfinance organisations:
 Economic empowerment: By providing women with access to credit, microfinance organisations have
helped to create opportunities for women to start or grow their own businesses, purchase assets like
livestock or equipment, and invest in their education or the education of their children. This has not only
benefited individual women, but has also had a positive impact on their families and communities.
 Financial inclusion: Microfinance organisations have helped to promote financial inclusion by reaching
out to women who may not have had access to formal banking systems. By providing financial services
like savings accounts, insurance, and remittance services, microfinance organisations have helped to
bring women into the mainstream financial system and provide them with a sense of financial security.
 Social empowerment: Microfinance organisations have also helped to promote social empowerment by
providing women with a platform to come together and support each other. Self-help groups (SHGs),
which are often supported by microfinance organisations, have provided women with a space to share

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their experiences, learn new skills, and advocate for their rights. SHGs have also provided a space for
women to build social capital, which has helped to strengthen their overall sense of empowerment.
 Improved livelihoods: Microfinance organisations have helped to improve the livelihoods of women in
India by providing them with access to credit and financial services, which has allowed them to increase
their income and improve their standard of living. This has also had a positive impact on their families
and communities, as they are better able to support their children's education and healthcare needs.

Women have a significant role in many developing areas' agricultural productivity, particularly in crop
processing. One of the ways in which they participate is as described above. It's not the same as men's labour,
and it can't be commercialised in any manner, either. Women who have a higher fertility rate but no
education or marketable skills are likely to be too preoccupied with raising their children to pursue other
interests. In addition to this, it is common for dads to pass on their wealth to their sons in the form of
property and other conventional assets, regardless of whether or not the sons are working or saving.
Microfinance institutions provide people with a variety of financial needs, including savings, credit,
insurance, remittances, loans, housing, and money. Housing loans and money transfers are two further
examples of microfinance services. Thanks to these offerings, women may take part in a wide range of
activities that significantly lessen the influence of patriarchal structures on their lives and resources. That's
why it's great for the economy and for gender parity.
The major goal of microcredit is to ensure that women have access to credit regardless of their ability to offer
collateral or proof of income. Microcredit comes in a range of sums that may be used by students. While
deciding which option is ideal for you, it's important to think about your specific needs and personal
preferences.
Those who need the loan have the option of making payments on a daily, weekly, or monthly basis, among
other options. Moreover, the interest rates linked with these types of financial help are far lower than those
associated with more formal organisations like banks. By increased self-assurance and pride in one's abilities,
microfinance may help women gain economic independence. In addition, it allows local ladies to meet one
another and form a wide range of supportive relationships. Also, it aids them in becoming more effective
decision-makers at home.
As compared to men, women have a higher propensity to repay loans, making them a more desirable
customer for financial institutions. When we look at the gender differences in this issue, we find that men are
more likely to gamble, drink excessively, and engage in other dangerous behaviours if they get financial help.
Women, on the other hand, are statistically more likely to borrow money and invest it in a wide range of
economic activities. They are able to provide better for their families because of this. They gain economically
as a consequence of their higher rates of consumption, better nutrition, more asset accumulation, and larger
student bodies at various educational institutions. To improve any area's economy, we must first improve the
position of women within that region, which is a reality universally acknowledged. This trend reflects the
belief held by many microfinance institutions (MFIs) that include women in the development process is
essential to the success of their mission. Although if women have the legal right to request financial
assistance, several studies have demonstrated that a loan provides one spouse a great lot of control over the
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other. This statement implies that female borrowers can never put their borrowed funds to a bad use.
Moreover, many women often defy conventional gender roles, putting them at increased risk for suffering
domestic violence. This is because men have a natural tendency to exert their dominance over others.
In addition, some critics of microfinance point out that many microfinance institutions have a reputation for
using effective strategies for recovering loan repayments, which may explain why they are opposed to the
practise. In rare cases, they may even seize the debtors' property. They also condemn women who have gone
into default to a life of grinding poverty. To give an all-encompassing assessment of the impact of
microfinance on women in many developing countries, the true concept of women's power must be
operationally defined.
What we mean by "female empowerment" may be summarised as a surge in women's confidence in their
ability to make choices that affect their own lives, even in cultures where males have historically held such
authority. Their ability to make decisions improves, allowing them to take a more proactive role in caring for
their health.
Two methods for assessing microfinance's actual impact on women's financial autonomy are presented.
Many process-based impact studies have also been conducted, and their findings reveal that empowerment is
a completely dynamic process whose determinants can only be identified via the help of a variety of indirect
variables. Microloan management by managers, accounting literacy, family budgeting discipline, and a host
of other variables fall under the category of indirect causes.
Health, education, food security, fertility, labour force participation, wealth, and many more factors may all
be measured by various metrics. When we talk about diversified outcome-based evaluations, we're talking
about something that uses those direct indicators, which may include the evaluation of a wide range of social
networks and a firm conviction in the effects of one's actions.
Have in mind that this may have an effect on the actual structures of gender inequality, especially in the
context of the family and the community. While microfinance and empowering women may have a major
influence, it is important to remember that a variety of variables, such as the availability of time series data,
the heterogeneity of women, and the multi-dimensional character of empowerment, can lead to contradicting
results. Microfinance organisations have been essential in India's effort to help women achieve economic
independence. Microfinance institutions' provision of loans and other financial services to economically and
socially disadvantaged women in India has improved living standards throughout the country.

Conclusion:
Microfinance has played a significant role in promoting women's empowerment and driving economic
growth in India. Here are some benefits of microfinance in these areas: Women's Empowerment:
Microfinance has enabled women to become financially independent by providing them with the necessary
capital to start their own businesses or to expand existing ones. This has helped women to increase their
income and improve their social status. In addition, microfinance institutions often provide financial literacy
and business training to their clients, which further enhances women's empowerment.

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Increased Access to Credit: Microfinance has increased access to credit for low-income individuals,
including women, who have been excluded from traditional banking services. By providing credit,
microfinance institutions have helped to improve the financial inclusion of women, which is essential for
their economic and social development.
Poverty Reduction: Microfinance has contributed to poverty reduction by providing low-income individuals
with the capital they need to start or expand their businesses. This has led to increased employment
opportunities and higher incomes, which has in turn reduced poverty levels.
Economic Growth: Microfinance has played a significant role in driving economic growth in India by
creating employment opportunities, increasing productivity, and promoting entrepreneurship. The growth of
small businesses, supported by microfinance, has contributed to the overall economic development of the
country.
Overall, the benefits of microfinance in women's empowerment and economic growth in India are significant.
Microfinance has helped to increase financial inclusion, reduce poverty levels, and promote entrepreneurship,
leading to sustainable economic growth. When it comes to bettering the lives of women and assisting them in
making sound financial investments, microfinance is doing an incredible job of making a difference.
Microfinance loans are readily available to women, so they may get the financial backing they need to launch
their own businesses and transform their lives.

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