A STUDY OF WOMEN EMPOWERMENT THROUGH

MICRO FINANCE BY SELF HELP GROUPS BANK

LINKAGE PROGRAM IN RANCHI
Abstract
Microfinance is a type of banking service that is provided to unemployed or low-income individuals or
groups who would otherwise have no other means of gaining financial services. Micro-finance through
Self Help Group (SHG) has been recognized internationally as the modern tool to combat poverty and for
rural development. Micro finance and SHGs are effective in reducing poverty, empowering women and
creating awareness which finally results in sustainable development of the nation. The main aim of
microfinance is to empower women. In this paper the role played by Microfinance in women’s
empowerment are considered into three dimensions namely psychological, social and economic. Both
primary and secondary data have been used. Primary data is enumerated from a field survey in the study
region. Secondary data is collected from NGOs’ reports and other documents. The researcher has used
percentage method, Descriptive Statistics, Regression and Anova. Analysis showed that there is a gradual
increase in the all the three factors among rural women’s. From the interaction among the respondents it
is noticed that some members are expecting the NGO to come up with more training sessions in income
generating activities. All they need is a way to develop their skills and talents by participating in various
training programs. There is a definite improvement in psychological wellbeing and social empowerment
among rural women as a result of participating in micro finance through SHG programs.

Keywords: Microfinance, Women’s Empowerment, Non-Governmental Organization, Self Help

Groups.

Introduction:
Microfinance is the provision of financial services to low-income clients, including consumers and the
self-employed, who traditionally lack access to banking and related services. Microcredit or microfinance,
is banking bringing credit, savings and other essential financial services within the reach of millions of
people who are too poor to be served by regular banks, in most cases because they are unable to offer
sufficient collateral. In general, banks are for people with money, not for people without are based on the
premise that the poor have skills which remain unutilized or underutilized. Microcredit fits best to those
with entrepreneurial capability and possibility. Ultimately, the goal of microfinance is to give low income
people an opportunity to become self-sufficient by providing a means of saving money, borrowing money
and insurance. The main aim of microfinance is to empower women.

Self Help Groups are voluntarily formed informal groups. A SHG consists of 10-20 members. The
members are encouraged to save on regular basis. They use the pooled resources to meet the credit
needs of the group members.

Objective :
1. To study the Performance of SHG bank linkage program with microfinance

2. Relation of microfinance vis-à-vis women empowerment.

3. To find out improvement in empowerment status of women.

Research Methodology:
Sources of Data:

The study will be undertaken in Ranchi. Both primary and secondary data will be used. Primary data is
enumerated from a field survey in the study region. Secondary data is collected from NGOs’ reports and
other documents. One NGO is selected and six Self-Help Groups promoted by that NGO in Ranchi are
taken for study. Areas covered under the study are:

Sample Size: 10 self help group’s data will be collected for the research from Ranchi which also include
NABARD in special reference because this program was introduced by this organization.

Research Hypothesis:
H1: Participation in micro-financing program improves women empowerment.

Review of Literature:
S.N YEAR AUTHOR
O
1 1997 Chen .1997. Cited in Linda
Mayoux, Gender and
empowerment concepts,
September 2005, available at
http://www.genfinance.info/D
ocuments/GenderConcepts.pdf
. thrown light on the origin and the
CONCLUSION
In their micro level study aimed to
examine the role of non-governmental voluntary
organizations in promoting the micro credit
institutions and to comment on their sustainability in
the years to come. The
study was based on secondary data. The study has
nature of micro credit organization and its superiority
over macro ones in catering to
the need of farmers. study also
discussed the role of micro credit organisations with
particular reference to the Indo Swiss project and
their sustainability and concluded that the NGOs have
succeeded in
promoting SHGs.

2 2002 Cheston, and Lisa In his study primarily intended to document the
Kuhn.2002. Empowering experiences of SHGs in promoting micro enterprises
women through through micro credit
microfinance, Publication intervention. The study was conducted in the Pune
sponsored by UNIFEM, district of Maharastra state. For the
available at purpose of the study 15 sample cases of SHGs were
www.microcreditsummit selected on a random basis.
.org/papers/+ 5cheston_kuhn Among them 10 groups were promoted jointly by
NGOs and Banks. While the
remaining five of them were formed by District Rural

3 2002 How Microfinance Programs
have Helped Women Gain
Empowerment (Study done in
South Africa)
4 2008 Ghate ,Prabhu. 2008. Micro
finance in India – A state of
the sector report (2007). New
Delhi: Sage publications
5 1997 Building on Success- the Next
Challenges for Microfinance’,
written by Robert Eichfield
and Henry Wendt,
6 2010 K. Rajendran and R.P. Raya
(2010) Impact of Micro
Finance - An empirical Study
on the Attitude of SHG
Leaders in Vellore District
(Tamil Nadu, India). ‘Global
Journal of Finance and
Management’- ISSN 0975 -
6477 Volume 2, Number 1,
pp. 59-68,
http://www.ripublication.co
m/gjfm/gjfmv2n1_5.pdf.
7 Pitt, M. Mark, Shahidur R.
Khandker and Jennifer
Cartwright. 2006. Empowering
women with micro finance:
Evidence from Bangladesh,
Economic Development and
Cultural Change
Development Agency.
This study explains how gender violence can lessen,
when women start earning money and gain some
autonomy. In some cases the microfinance programs
did help lessen violence against the participating
women. Even in cases where it didn’t help decrease
the violence, women gained knowledge, confidence
and self-respect.
studied 120 borrowers of Grameen Bank in one village
and reported that 18% experienced a decrease in
violence while 70% reported an increase in violence
within the household as a result of their involvement
with the bank.
the authors talk about the growth of the microfinance
sector and its astonishing success in harnessing capital
markets to alleviate global poverty. They feel that
expansion of micro finance and its integration with the
global banking system can create the economic
opportunity for many and unite communities. Micro
Insurance, covering health, life, agricultural, and
livestock risks is also coming up. The authors also say
that technology companies are entering the field by
designing data processing and telecommunications
systems serving micro finance units and small business
at the village level and micro finance units now are
being integrated with the capital markets.
Women members income increased and increased
opportunities of employment in non-farm and off farm
employment in addition to social empowerment
This article examines the effects of men’s and
women’s participation in micro credit programs on
various indicators of women’s empowerment using
data from a special survey carried out in rural
Bangladesh. These credit programs are well suited to
studying how gender‐specific resources alter intra
household allocations because they induce differential
participation by gender through the requirement that
only one adult member per household can participate

8 2009 Ranjula Bali Swaina and Fan
Yang Wallentin (September
2009) Does microfinance
empower women Evidence
from self-help groups in India,
‘International Review of
Applied Economics’
Vol23,No.5, , 541–
556,http://pdfserve.informawo
rld.com/595379_758077589_9
13075296.pdf.
9 Shylendra, H. S. 1999. Micro-
finance and Self-Help Groups
(SHGs): A study of the
experience of two leading
NGOs, SEWA and AKRSP in
Gujarat (India), Research
paper No. 16. IRMA.
in any micro credit program. Empowerment is
formalized as an unobserved latent variable reflecting
common components of qualitative responses to a
large set of questions pertaining to women’s
autonomy and decision‐making power. The empirical
methods are attentive to various sources of
endogeneity, and the results are consistent with the
view that women’s participation in micro credit
programs helps to increase women’s empowerment.
The effects of male credit on women’s empowerment
were generally negative.
Microfinance programmes like the Self Help Bank
Linkage Program in India have been increasingly
promoted for their positive economic impact and the
belief that they empower women. However, only a
few studies rigorously examine the link between
microfinance and women’s empowerment. This article
contributes to this discussion by arguing that women’s
empowerment takes place when women challenge the
existing social norms and culture, to effectively
improve their well‐being. It empirically validates this
hypothesis by using quasi‐experimental household
sample data collected for five states in India for 2000
and 2003. A general model is estimated by employing
appropriate techniques to treat the ordinal variables in
order to estimate the impact of the Self Help Group
(SHG) on women’s empowerment for 2000 and 2003.
The results strongly demonstrate that on average,
there is a significant increase in the empowerment of
women in the SHG members group. No such significant
change is observed however, for the members of the
control group. The elegance of the result lies in the
fact that the group of SHG participants show clear
evidence of a significant and higher empowerment,
while allowing for the possibility that some members
might have been more empowered than others.
The SHG members have saved satisfactory amount of
money, though not cent per cent, in relation to
planned savings. Internal loans are reported to be well
distributed among the SHGs members. The SHGs have
received external loans which are in tune with
NABARD guidelines. Repayment performances of the
SHGs are quite impressive for both internal as well as
external loans. It is suggested that banks can follow
the group lending mechanism to channelise the
priority sector loans and also can easily target the poor
section of the society. Each SHG has financed more
than a couple of income generating activities.