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A RESEARCH REPORT ON
A STUDY ON THE IMPACT OF MICRO FINANCE ON RURAL SOCIETY IN MATHURA, INDIA
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A report submitted towards partial fulfilment of the requirements of the two years full-time Post Graduate Diploma in management Submitted to: Miss swati agarwal Faculty Guide submitted by: satyam rastogi

PREFACE

Whatever taught in the classroom proves useful when it is practically applied. A professional curriculum is not considered completed without work experience. The practical orientation of management studies is must to qualify as a potential manager. It is for the reason that 2 months training is prescribed as essential requirement in the course curriculum for PGDM I got an opportunity to undergo a research project Entering in the organization is like stepping in to a new world. Every concept, which is taught in the classroom, is practiced in the different dimension in the organization. The project titled A study on the impact of micro finance on rural society in India gave me opportunity to understand Functioning of an organization.

ACKNOWLEDGEMENT Acknowledgement is an art, one can write glib stanzas without meaning a word, on the other hand one can make a simple expression of gratitude.
Research project is an integral part of any Master of Business Administration program and for that purposes I had joined one of my respected faculty for his proper guidance who else can be as good as Dr. Ankit Saxena sir. I take the opportunity to express my gratitude to all of them who in some or other way helped me to accomplish this challenging project. No amount of written expression is sufficient to show my deepest sense of gratitude to them. I am very thankful to Faculty Guide, Dr. Ankit Saxena sir, Assistant Professor, Department of Management, GLA University, Mathura and very grateful to Mrs. Aneesya Sharma program coordinator PGDM Department of Business Management in GLAITM Mathura for their everlasting support and guidance on the ground of which I have acquired a new field of knowledge. The course structure created for this curriculum has benefited with the inclusion of recent development in the organizational and managerial aspects.

ABHISHEK KUMAR

DECLARATION

I hereby declare that the dissertation A study on the impact of micro finance on
rural society in India. Submitted for the PGDM Diploma at GLA INSTITUTE OF TECHNOLOGY & MANAGEMENT.

Department of Business Management is my original work place and the dissertation has not formed the basis for the award of any degree, associate ship, fellowship or any other similar titles.

ABHISHEK KUMAR

Executive Summary
It feels greatly encouraged to get such a practical knowledge apart from theoretical and the good response from faculty guide, during research project. The present report on research project is a replicable of what I have done there during the research work period. The object of this study is to examine the Impact of microfinance on rural society in India. This project is concern about the impact assessment of microfinance. As a part of our study curriculum it is necessary to conduct a grand project. It provides us an opportunity to understand the particular topic in depth and which leads to through to that topic. My topic for the grand project is titled as A study on the impact of micro finance on rural society in which emphasis given to the effect of microfinance on rural people. To start with we will give brief information regarding Micro finance sector then moving to the main topic we will explain what is topic is all about. Microfinance is pillar of development in rural area. With respect to target population in rural segment there are many theories in microfinance. Based on secondary source certain theoretical aspects are also included as a part of study. Then after concentration is given to the primary research. It includes the analysis and results of survey which was focuses on change in peoples life by microfinance. The survey was conducted with the help of structured questionnaire. At last conclusion of report, findings and suggestions was given based on study of secondary source as well as primary research.

Table of contents
Topic Page No.

1. Preface
2. Acknowledgement 3. Declaration 4. Executive summary

3 4 5 6 8

5. About the topic 6. Objective of the research 7. The literature review 8. Research design Research Research design Sampling design Data collection Tools and technique of data collection Survey area Sampling size

9. Data analysis and interpretation 10. Findings 11. Recommendation and suggestion 12. Conclusion 13. Limitation of the study 14. Bibliography 15. Annexure

A LITERATURE REVIEW OF THE RESEARCH

In order to help get some kind of bearing on the impact of microfinance, I present here a short literature review on how micro finance affects the lives of the poor. This will be organized into three categories: the broader context, the impact of micro savings. DEFINITIONS AND KEY CONCEPTS: Microfinance: Microfinance is an economic development approach that involves providing financial services, through institutions, to low-income clients, where the market fails to provide appropriate services. The services provided by the Microfinance Institutions (MFIs) Include credit saving and insurance services. Many microfinance institutions also provide social intermediation services such as training and education, organizational support, Health and skills in line with their development objectives. Micro-credit: It is a component of microfinance and is the extension of small loans to entrepreneurs,who are too poor to qualify for traditional bank loans. Especially in developing countries, Micro-credit

8 enables very poor people to engage in self-employment projects that generate income, thus allowing them to improve the standard of living for themselves and their families. Micro finance Institutions (MFIs): A microfinance institution is an organization, engaged in extending micro credit loans and other financial services to poor borrowers for income generating and self employment activities. An MFI is usually not a part of the formal banking industry or government. It is usually referred to as a NGO (Non-Government Organization). Empowerment: Empowerment refers to increasing the spiritual, political, social and economic strength of individuals and communities. It often involves in developing confidence of the individual in his/her own capacities. It has different meanings in different social, cultural and political contexts. It indicates the expression of self-strength, control, self-power, self reliance ,freedom of choice and life of dignity, in accordance with ones values, capable of fighting for ones rights, independence, own decision making, being free, awakening, and capability. Empowerment is relevant at the individual and collective level, and can be economic, social, or political.

Economic empowerment: In our research, we have also emphasized on economic empowerment. As a consequence of economic empowerment, income, savings, employment and self-employment increases and thus reducing unemployment and indebtedness. As a result of this distress, sale of commodities and land also decreases, resulting in the increase of assets and productive investment. Social Empowerment: Social empowerment refers mainly to the literacy rate and social awareness, especially of women who are much oppressed in many parts of the developing countries. We can say, in general, that is related to the participation of people in different community and Political institutions, mobility and decision-making power, access to safe drinking water And sanitation coverage. The other factors which result as the increase in social empowerment are increase in contraceptive prevalence rate and access to public and Common property resources, and decrease in child and maternal mortality. Poverty: Poverty is a condition in which a person of community is deprived of the basic essentials and necessities for a minimum standard of living. Since poverty is understood in many senses, the basic essentials may be material resources such as food, safe drinking water and shelter, or they may be social resources such as access to information, education, health care, social status,

9 political power, or the opportunity to develop meaningful connections with other people in society. According to the World Banks (1980) definition of poverty, A condition of life so Characterized by malnutrition, illiteracy, and disease as to be beneath any reasonable definition of human decency. Extreme Poverty/Absolute Poverty: Extreme poverty is the most severe state of poverty, where people cannot meet their basic needs for survival, such as food, water, clothing, shelter, sanitation, education and health care. Eradication of extreme poverty and hunger by 2015 is a Millennium Development Goal set by UNO. To determine the number of extreme poor people around the world, the World Bank characterizes extreme poverty as living on the daily income of US $1 or less. It has been estimated that around 1.1 billion people currently live under these conditions. Moderate poverty: It indicates the condition where people earns about $ 1 to $2 a day, which enables households to just barely meet their basic needs, but they still have go for many of the Other things education, health care that many of us take for granted. Relative Poverty: It means that a household has an income below the national average income.

Liquidity: Liquidity refers to the availability of liquid funds in an economy and the status of condition of a person or business in terms of its ability to convert its assets into cash and to meet its obligations. It is also an indicator for understanding the capacity of a market in a particular security or commodity to withstand an unusual amount of buying or selling without affecting the market substantially. What Is Microfinance? Microfinance, according to Otero (1999,) is the provision of financial services to low-income poor and very poor self-employed people. These financial services according to Lidgerwood (1999) generally include savings and credit but can also include other financial services such as insurance and payment services. Schreiner and Colombes (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. Microfinance and microcredit. In the literature, the terms microcredit and microfinance are often used interchangeably, but it is important to highlight the difference between them because both terms are often confused. Sinha

10 (1998,) states microcredit refers to small loans, whereas microfinance is appropriate where NGOs and MFIs1 supplement the loans with other financial services (savings, insurance, etc). Therefore microcredit is a component of microfinance in that it involves providing credit to the poor, but microfinance also involves additional non-credit financial services such as savings, insurance, pensions and payment services (Okiocredit, 2005). The History of Microfinance Microcredit and microfinance are relatively new terms in the field of development, first coming to prominence in the 1970s, according to Robinson (2001) and Otero (1999). Prior to then, from the 1950s through to the 1970s, the provision of financial services by donors or governments was mainly in the form of subsidized rural credit programmes. These often resulted in high loan defaults, high lose and an inability to reach poor rural households (Robinson, 2001). Robinson states that the 1980s represented a turning point in the history of microfinance in that MFIs such as Grameen Bank and BRI2 began to show that they could provide small loans and savings services profitably on a large scale. They received no continuing subsidies, were commercially funded and fully sustainable, and could attain wide outreach to clients (Robinson, 2001). It was also at this time that the term microcredit came to prominence in development (MIX3, 2005). The difference between microcredit and the subsidized rural credit programmes of the 1950s and 1960s was that microcredit insisted on repayment, on charging interest rates that covered the cost of credit delivery and by focusing on clients who were dependent on the informal sector for credit (ibid.). It was now clear for the first time that microcredit could provide large-scale outreach profitably. The 1990s saw accelerated growth in the number of microfinance institutions created and an increased emphasis on reaching scale (Robinson, 2001, p.54). Ditcher (1999,) refers to the 1990s as the Microfinance decade. Microfinance had now turned into an industry according to Robinson (2001).Along with the growth in microcredit institutions, attention changed from just the provision of credit to the poor (microcredit), to the provision of other financial services such as savings and pensions (microfinance) when it became clear that the poor had a demand for these other services (MIX, 2005). The importance of microfinance in the field of development was reinforced with the launch of the Microcredit Summit in 1997. The Summit aims to reach 175 million of the worlds poorest families, especially the women of those families, with credit for the self-employed and other financial and business services, by the end of 20154 (Microcredit Summit, 2005). More recently, the UN, as previously stated, declared 2005 as the International Year of Microcredit. MIX defines an MFI as an organization that offers financial services to the very poor. (MIX, 2005). According to the UNCDF (2004) there are approximately 10,000 MFIs in the world but they only reach four percent of potential clients, about 30 million people. On the other hand, according to the Microcredit Summit Campaign Report (Microcredit Summit, 2004) as of December 31st 2003, the 2,931 microcredit institutions that they have data on, have reported reaching 80,868,343 clients, 54,785,433 of whom were the poorest when they took their first loan. Even though they refer to microcredit institutions, they explain that they include programs that provide credit for self employment and other financial and business services to very poor persons (Microcredit Summit, 2004). The differences between these sources highlight a number of points. Firstly, how the two terms, microcredit and microfinance are often confused and used interchangeably, though in the strictest sense microcredit should refer only to the provision of credit to the poor. Secondly, the difference between the statistics shows how

11 difficult it is to get a true picture of how many MFIs are in existence today and how many clients they are reaching. The IMF5 state that no systematic and comprehensive data on MFIs is collected and there are no authoritative figures on key characteristics of the microfinance industry, such as the number and size of MFIs, their financial situation, or the population served (2005,).Despite the lack of data on the sector, it is clear that a wide variety of implementation methods are employed by different MFIs. The Grameen Bank (2000a) has identified fourteen different microfinance models6 of which I will focus on three; Rotating Savings and Credit Association (ROSCAs), the Grameen Bank and the Village Banking models, as these are the three microfinance models that I encountered during my field research. Rotating Savings and Credit Associations :These are formed when a group of people come together to make regular cyclical contributions to a common fund, which is then given as a lump sum to one member of the group in each cycle (Grameen Bank, 2000). According to Harper (2002), this model is a very common form of savings and credit. He states that the members of the group are usually neighbors and friends, and the group provides an opportunity for social interaction and is very popular with women. They are also called merry-grounds or Self-Help Groups (Fisher and Sriram, 2002).The Grameen Solidarity Group model this model is based on group peer pressure whereby loans are made to individuals in groups of four to seven (Berenbach and Guzman, 1994). Group members collectively guarantee loan repayment, and access to subsequent loans is dependent on successful repayment by all group members. Payments are usually made weekly (Lidgerwood, 1999). According to Berenbach and Guzman (1994), solidarity Groups have proved effective in deterring defaults as evidenced by loan repayment rates attained by organizations such as the Grameen Bank, who use this type of microfinance model.

Village Banking Model:

Village banks are community-managed credit and savings associations established by NGOs to provide access to financial services, build community self-help groups, and help members accumulate savings (Holt, 1994). They have been in existence since the mid-1980s. They usually have 25 to 50 members who are low-income individuals seeking to improve their lives through self-employment activities. These members run the bank, elect their own officers, establish their own by-laws, distribute loans to individuals and collect payments and services (Grameen Bank, 2000a). The loans are backed by moral collateral; the promise that the group stands behind each loan (Global Development Research Centre, 2005).The sponsoring MFI lends loan capital to the village bank, who in turn lend to the members. All members sign a loan agreement with th village bank to offer a collective guarantee. Members are usually requested to save twenty percent of the loan amount per cycle (Lidgerwood, 1999). Members savings are tied to loan amounts and are used to finance new loans or collective income generating Activities and so they stay within the village bank. No interest is paid on savings but members receive a share of profits from the village banks re-lending activities. Many village banks target women predominantly, as according to Holt (1994, p.158) the model anticipates that female participation in village banks will enhance social status and intrahousehold bargaining power.

Microfinance and its impact in development

12 Microfinance has a very important role to play in development according to proponents of microfinance. UNCDF (2004) states that studies have shown that microfinance plays three key roles in development. It helps very poor households meet basic needs and protects against risks, is associated with improvements in household economic welfare helps to empower women by supporting womens economic participation and so promotes gender equity. Otero (1999,) illustrates the various ways in which microfinance, at its core combats poverty. She states that microfinance creates access to productive capital for the poor, which together with human capital, addressed through education and training, and social capital, achieved through local organization building, enables people to move out of poverty (1999). By providing material capital to a poor person, their sense of dignity is strengthened and this can help to empower the person to participate in the economy and society (Otero, 1999). The aim of microfinance according to Otero (1999) is not just about providing capital to the poor to combat poverty on an individual level, it also has a role at an institutional level. It seeks to create institutions that deliver financial services to the poor, who are continuously ignored by the formal banking sector. Littlefield and Rosenberg (2004) state that the poor are generally excluded from the financial services sector of the economy so MFIs have emerged to address this market failure. By addressing this gap in the market in a financially sustainable manner, an MFI can become part of the formal financial system of a country and so can access capital markets to fund their lending portfolios, allowing them to dramatically increase the number of poor people they can reach (Otero, 1999). More recently, commentators such as Littlefield, Murdoch and Hashemi (2003), Simanowitz and Brody (2004) and the IMF (2005) have commented on the critical role of microfinance in achieving the Millennium Development Goals9. Simanowitz and Brody (2004, p.1) state, Microfinance is a key more members receive loans and after another period of successful repayment, the final member receives a loan (Lidgerwood, 1999). . The MDGs are (i) eradicate extreme poverty and hunger; (ii) achieve universal primary education; (iii) promote gender equality and empower women; (iv) reduce child mortality; (v) improve maternal health; (vi) combat strategy in reaching the MDGs and in building global financial systems that meet the needs of the most poor people. Littlefield, Murdoch and Hashemi (2003) state microfinance is a critical contextual factor with strong impact on the achievements of the MDGsmicrofinance is unique among development interventions: it can deliver social benefits on an ongoing, permanent basis and on a large scale. Referring to various case studies, they show how microfinance has played a role in eradicating poverty, promoting education, improving health and empowering women (2003). However, not all commentators are as enthusiastic about the role of microfinance in development and it is important to realize that microfinance is not a silver bullet when it comes to fighting poverty. Hulme and Mosley (1996), while acknowledging the role microfinance can have in helping to reduce poverty, Concluded from their research on microfinance that most contemporary schemes are less effective than they might be (1996, p.134). They state that microfinance is not a panacea for poverty-alleviation and that in some cases the poorest people have been made worse-off by microfinance. Regally (1996,) finds five major faults with MFIs. He argues that: they encourage a single-sector approach to the allocation of resources to fight poverty, microcredit is irrelevant to the poorest people,

13 an over-simplistic notion of poverty is used, there is an over-emphasis on scale, there is inadequate learning and change taking place. -Wright (2000,) states that much of the scepticism of MFIs stems from the argument that Microfinance projects fail to reach the poorest, generally have a limited effect on income drive women into greater dependence on their husbands and fail to provide additional services desperately needed by the poor. In addition, Wright says that many development practitioners not only find microfinance inadequate, but that it actually diverts funding from more pressing or important interventions such as health and education (2000, p.6). As argued by Navajaset al (2000), there is a danger that microfinance may siphon funds from other projects that might help the poor more. They state that governments and donors should know whether the poor gain more from microfinance, than from more health care or food aid for example. Therefore, there is a need for all involved in microfinance and development to ascertain what exactly has been the impact of microfinance in combating poverty. Considerable debate remains about the effectiveness of microfinance as a tool for directly reducing poverty, and about the characteristics of the people it benefits (Chowdhury, Mosley and Simanowitz, 2004). Sinha (1998) argues that it is notoriously difficult to measure the impact of microfinance programmes on poverty. This is so she argues, because money is fungible and therefore it is difficult to isolate credit impact, but also because the definition of poverty, how it is measured and who constitute the poor are fiercely contested issues (1998,). Poverty is a complex issue and is difficult to define, as there are various dimensions to poverty. For some, such as World Bank, poverty relates to income, and poverty measures are based on the percentage of people living below a fixed amount of money, such as US$1 dollar a day (World Bank).

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OVERVIEW AND INTRODUCTION ABOUT THE TOPIC

To most, microfinance means providing very poor families with very small loans to help them engage in productive activities or grow their very small businesses. Like us, many poor people need and use financial services all the time. They save and borrow invest in home repairs and improvements and meet occasional and domestic expenses such as food and school fees. 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. 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. It is a tool for empowerment of the poorest; the higher the income and better the asset position of the borrower, the lower the incremental benefit from further equal doses of micro- credit is likely to be. It is not just a financing system, but a tool for social change, specially for women - it does not spring from market forces alone - it is potentially welfare enhancing - there is a public interest in promoting the growth of micro finance - this is what makes it acceptable as a valid goal for public policy.

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INTRODUCTION

Microfinance: Microfinance is defined as the provision of saving, credit and other financial services and products of small amount to the poor for enabling them to raise their income level and improve living. The institution that provides these services to the poor is called as Microfinance Institution. Why poor need credit: Why poor need credit In Stuart Rutherfords recent book The Poor and Their Money, he cites several types of needs Lifecycle Needs: such as weddings, funerals, childbirth, education, homebuilding, widowhood, old age. Personal Emergencies: such as sickness, injury, unemployment, theft, harassment or death. Disasters: such as fires, floods, cyclones and manmade events like war or bulldozing of dwellings. Investment Opportunities: expanding a business, buying land or equipment, improving housing, securing a job (which often requires paying a large bribe), etc. Meaning of impact Assessment: Impact assessment is the process that seeks to determine if any intervention has had the desired outcome. Microfinance impact analysis is the process by which one determines the effects of microfinance as an intervention Impact assessment is a

16 critical element in further improving micro-finance services and promoting innovation. To know the outreach of MFIs Whether the services reached to the poor in sustainable manner i.e. improved their socioeconomic condition or not. When should be impact be assessed: When should be impact be assessed Impact Assessment before intervention Impact Assessment after intervention Impact Assessment during Intervention. Users of Microfinance Impact Assessment: Users of Microfinance Impact Assessment Microfinance Practitioners Donors Policymakers Academics. Grameen Bank - Banking on the Poor Impacting the Masses: Grameen Bank - Banking on the Poor Impacting the Masses Impact on poverty eradication 54% of Grameen borrowers have thus crossed the poverty line and another 27% are very close to it. For those who do not perform as well, poor housing in rain soaked Bangladesh and chronic illhealth are identified as the major reasons. Impact on population growth much better funded family programs leading to reduction in population growth in the country (UNDP. 2007) Housing the Bank also provides a $300 10-year housing loan. A family would qualify for this loan if the land title is in wife's name. So far, more than 350,000 houses have been built with this loan. The interest on the housing loan (8%) is cross-subsidised from the interest earnings on the 'working capital' loan. Medicare Chronic ill-health has been identified as a major reason for the poverty to prevail. Grameen Bank has been successful in reducing the chronic health deceases by 52% in Bangladesh.

Kinds of Impact: Kinds of Impact Economic impacts It can be at the level of economy itself. A large MFI reaching hundreds of thousands of clients may expect or aim at impact in terms of changes in economic growth in a region or sector. Socio-political or cultural impacts To know the shift in socioeconomic status of a particular sub sector. Personal or Psychological Impacts Microfinance can have impact on borrowers sense of self. Impact of Microfinance on women: Impact of Microfinance on women increasing womens income level Control over income leading to greater levels of economic independence. Enhancing perceptions of womens contribution to household income and family welfare increasing womens participation in household and decision making. Access and control over assets. Impact of Microfinance: Impact of Microfinance At the household level. At the individual level. At the enterprise level. Impact Proxies Willingness to pay the magnitude of impact is hard to determine Intra-household effects are not captured Long-term development impact (poverty reduction) is unclear Client oriented impact analysis The dilemma of the human subject as a Dynamic target. Methods of Impact Assessment:

17 Methods of Impact Assessment: Qualitative Approaches and Quantitative Approaches. 1. Qualitative Approaches: 1. Qualitative Approaches Intensively: a continuous or regular presence among client over time. Structured observation Triangulation Open-endedness, Focus group. Qualitative Approaches: Qualitative Approaches Social mapping and modelling. Seasonality maps or calendars daily time use analysis Participatory linkage Venn Diagrams Wealth Ranking. Quantitative Approaches: Quantitative Approaches Experimental Methods. Quasi Experimental methods. NonExperimental methods. Choice of unit of analysis: Choice of unit of analysis the client as a client the client as an individual the enterprise the house hold economic portfolio.

Case study of Bandhan Hope for the poor Bandhan: Bandhan is a microfinance Institution operating in West Bengal since 2001. The organisation is registered under the west Bengal Societies Registration Act, 1961. It started its microfinance operations in July 2002 with technical support from Association for Social Advancement (ASA), Bangladesh. Bandhan was set up to address the dual objective of poverty alleviation and women empowerment. The microfinance activities are carried on by Bandhan Financial Services Pvt. Ltd. (BFSPL), incorporated under the Companies Act, 1956 and also registered as a Non Banking Financial Company (NBFC) with the Reserve Bank of India (RBI). Name of the Funding Agency: Banks ABN - AMRO Bank Axis Bank of India Central Bank of India Friends of Women's World Banking, India HDFC Bank ICICI Bank IDBI Bank Indian Bank Indian Overseas bank. NABARD. Punjab National Bank Ashtray Mahila Kosh SIDBI Standard Chartered State Bank Of India Bank Of Baroda United Bank of India Insurance: Life Insurance Corporation of India (LIC) Donors Consultative Group to Assist the Poor (CGAP)- an affiliate of World Bank Ford Foundation Freedom from Hunger (FFH) Unites . Lending Policy suitable for poors: Lending Policy suitable for poor's Micro Loan Product Group of 10-20 poor women. Loans are disbursed individually. Attendance of minimum two successive weekly group meetings. Assessment done by the staff & approval by the Branch Manager. Client Profile: Landless and asset less women Monthly income less than Rs. 2,500 in rural areas & Rs. 3,500 in urban areas Individuals owning less than 50 decimal (0.5 acre) of land Product Features: The first loan is

18 between Rs. 1,000 - 7,000 for the rural areas and between Rs. 1,000 - 10,000 for the urban areas Tenure of the micro loan is 1 year, repayment in weekly instalments. Micro Enterprise Program: Launched in January 2006 to cater to the needs of business expansion which demands a higher loan cycle, on realizing that certain members required this service. Criteria Bandhan members who have completed at least one loan cycle Those who possess capital equivalent to value of loan amount Existing micro-enterprise which must generate employment opportunity for at least one poor person Features The first loan ranges from Rs. 20,000 Rs. 50,000 These are one year loans and repaid in 45 equal installment. Impact (Success Story): Sima Mukherjee (32) lives with her son and husband. They had a small stationery goods shop before she took a loan from Bandhan. Sudden death of her father-inlaw brought restiveness in their family because the pension that her father-in-law used to get was a major portion of their family income. She heard about Bandhan from her sister and took a loan of Rs. 3,000 in the year 2005 and started distributorship of Apna Chanachur (fries). Receiving Rs. 6,000 as her 2nd loan, in the year 2006, she invested half of that in her existing business while the rest amount was utilized in starting up of a new business of soya nuggets. In the year 2007, with her 3rd loan of Rs. 10,000 she expanded her business and took distributorship of MPS food products. A prominent transformation was visible in her lifestyle. She could give admission to her son in an English school, and a football coaching, also could provide a private tutor. She was in a position to take a bigger loan and a stable income allowed her to apply for a bigger loan under Micro Enterprise Program (MEP). With the MEP loan of Rs.30, 000 she wisely began distributorship of Parle G food products (basically biscuits). The current loan of Rs.40, 000 has been utilized in her existing business only. She is now engaged in the distributorship of Parle G, Apna Chanachur, and Feel Good Soya Nuggets. She is possessing a carrying van and employing a driver and sales man for the same. After meeting all expenses her monthly net profit stands at Rs. 16,000 Rs. 18,000. She is looking forward to take another loan from Bandhan once she finishes this one. Need For Micro Finance Micro finance aims at assisting communities of the economically excluded to Achieve greater levels of asset creation and income security at the household And community level. Access to financial services and the subsequent transfer of Financial resources to poor women enable them to become economic agents of Change. Women become economically self-reliant, contribute directly to the well Being of their families, play a more active role in decision making and are able to Confront systematic gender inequalities. Access to credit has long been Considered a major poverty alleviation strategy in India. Micro credit has given Women in India an opportunity to become agents of change. Poor women, who Are in the forefront micro credit movement in the country use small loans to jump? Start a long chain of economic activity. Micro finance is accessing financial services in an informally formal route, in a Flexible, responsive and sensitive manner which otherwise would not have been Possible for the formal system for proving such services because of factors like high transaction cost emanating from the

19 low scale of operation, high turnover of clients, frequency of transaction etc. (Vijay Mahajan and G. Nagasri, 1999). Micro finance and Self Help Group (SHG) must be evolved to see that SHGs do not charge high rates of interest from their clients and improve access to those who cannot sign by making their use through thumb impression. The current literature on micro finance is also dominated by the positive linkages between micro finance and achievement of Millennium Development Goals (MDGs). Micro Credit Summit Campaigns 2005 report argues that the campaigns offers much needed hope for achieving the Millennium Development Goals especially relating to poverty reduction. IFAD along with Food and Agriculture Organisation (FAO) and the World Food Programme (WFP) declared that it will be possible to achieve the eight MDGs by the established deadline of 2015 if the developing and industrialized countries take action immediately by Implementing plans and projects. Financial Inclusion and Creating Value at the Base Of the Pyramid-: Introduction: In many ways, microfinance -- the provision of financial services to low income people at the base of the pyramid -- has reached a tipping point. Evidence abounds: Mohammed Yunus founder of one of the first and most famous microfinance institutions (MFIs), Grameen Bank won the Nobel Peace Prize. Between October 2003 and August 2010, five of the worlds leading MFIs had initial public offerings, including the thirteen times oversubscribed offering of Latin Americas largest MFI, Compartamos Bank, and SKS Microfinance in India both unwritten by mainstream investment banks (Credit Suisse,Citigroup etc). Inspired by this success, commercial banks across the globe have made a commitment to serve lower income segments through a variety of approaches (bank downscaling, service company model, wholesale financing etc). The success of microfinance have attracted other retail players Including mobile network operators (like Vodafone in Kenya and Tenors in Pakistan) and supermarket chains (like Metro Cash and Carry in India) and big box retailers (like Wal-Mart in Mexico) all of which have become involved in unique ways of providing financial services to the base of the pyramid. There also new virtual players -- like microplace.com or kiva.com which have tried to broaden involvement by individual investors to help mainstream microfinance. As a result, clients at the base of the pyramid have improved service and greater choice, a testament to the ability of social enterprises to meet their double bottom line of achieving financial and social goals. For those committed to broad-based financial inclusion, these successes push us to raise the bar even higher and chart out a new frontier for microfinance. This course Impact Investing: Financial Inclusion and Creating Value at the Base of the Pyramid" -- seeks to scope out this new frontier and explore how investment in social enterprise can catalyze breakthrough innovation to serve the poor. Specifically, the course will help students understand why early stage equity investing is used as a framework for promoting sustainable innovation and how impact investing builds off of and differs from traditional venture capital/ private equity. The course delves deeply into specific impact investment topics like diligence, structuring deals/term sheets, balancing

20 needs of entrepreneurs and investors, governance, performance management, exits and how to establish an asset class of this nascent industry. The course is based on actual experience of the fund managers work in investing and showcases companies trying to overcome existing bottlenecks to broader scale financial inclusion in the following target sectors: Technology: Automated platforms (e.g. core banking systems, switches, credit scoring, etc.) that set standards for, enhance the efficiency of, and improve the reliability and scalability of traditionally customized, paper-and people-intensive microfinance models. Distribution: Mobile banking, ATMs, cards, point of sale devices, retail agents and other branchless banking payment systems that lower costs and expand outreach beyond the high touch, bricks-and mortar models most microfinance use today. New Products: financial products beyond microcredit like housing finance, micro insurance, payments and other linked value-added services that address demands by low income households. These aforementioned sectors make up what we will refer to as the "new business model" for Microfinance, which seeks to radically enhance efficiency and value of financial services delivery for the majority. The means of achieving this ends is via automation, product and channel diversification -i.e., moving beyond the rigidly standardized, mono-product methodologies of microfinance today. This course provides an overview for students with professional interests as: A socially focused investor, venture philanthropist, or grants manager responsible for screening potential companies, allocating capital, and then helping social enterprises scale and flourish. An entrepreneur or senior manager working directly in a high growth social enterprise that has raised (or will need to raise) external capitalAs such, this course has skill-building components and is grounded in case studies on social enterprises to give students a concrete sense of where the industry frontier is and how to push it forward. At the same time, the course will offer a chance to discuss important issues confronting the field. Course Overview and Assignments: The course combines classes on core investment skills with a deep dive into each of the aforementioned social-enterprise sectors. (Class session indicated in parentheses) This course will feature guest lectures by professionals from the investments world and executives of the companies studied. Investment Topic Core Sectors Framework for double-bottom line investing (1) New Business Model for microfinance (1)Funding / Due Diligence / Screening (2) New Products Insurance (3)Structuring deals /terms sheets (4) / Valuation (6) New Business Model Distribution Channels (5)Boards / Governance (8) New Business Model - Technology (7)Investment Readiness: preparing entrepreneurs (10) New Products Housing (9)Social performance metrics (12)/ Exits (13) New Business Model - Risk Management (11)The assignments in the course will mimic the documentation prepared in the investment process of a typical impact investing fund, beginning

21 with identifying and screening potential companies, developing a desk appraisal and finally an investment proposal for approval by a mock investment committee. There are also two smaller graded exercises tied to the classes on valuation and social performance metrics. Students will be asked to synthesize the skills they have developed to prepare and defend an investment recommendation including size, structuring of and rationale for the investment for a social enterprise of Their choice or one provided by the professors. The value of each assigns below-

CLIENTS MICRO FINANCE WHO ARE THE TARGETED

22

-Poor and vulnerable households economically at the Bottom of the Pyramid -How can microfinance improve their lives?

Microfinance: what is it? Often perceived as -Micro credit -Group lending -Charitable activity Whereas objective is... -Suit of financial services -Thrift/saving -credit -Insurance and investment -Transfer, payment and remittances -Group and individual lending -Sustainable activity

The challenge ahead: demand vs. supply gap to bridge Demand

$50Bn 500M un-served poor

Supply
$1.5 Bn* < 2M Households reached

23 Several un-served areas Largely urban Range of risks to be covered Fast growing population and 60% of MF services in South Mostly rural Limited non-credit services Missing market linkages

CONTRAINTS OVERCOME THESE CHALLENGES Information Asymmetry No collateral No credit history Difficult to evaluate enterprises potential success High Costs of Intermediation Low value transactions Geographical isolation High supervision costs (no financial literacy) Informal activities: need flexible access Illiteracy: traditional services inappropriate High cash handling costs Difficult risk assessment High transaction costs

How to release these constraints-: Thus the need for institutions building -Finance Venture capital for start ups Cheaper cost of funds for on lending

-Systems Product development Technology platform

24 Clients authentication by unique ID

-Capacities Staff Skills strengthening / Training Recruiting of professionals MFI Entrepreneurs development

-Research Assess and Increase impact on poverty alleviation Experiment and improve products

Microfinance in India: an overview

The Centre for Micro Finance Research Unit MFI Strategy Unit CMFs objectives and mission CMFs objectives To address knowledge gaps in micro finance sector Experiment on ground solutions CMFs mission Systematically research links between access to financial services and participation of poor in larger economy Participate in maximizing access to financial services

- Research on micro finance and livelihood financing (RU)

25 -Strategy building for MFIs (MSU)

CMFs Objectives
-Training -Research -Advocacy -Influence practice -Strategy building

MSU and RU re-enforcement loop

26
2

CMF collaborates with existing active players in the microfinance sector

27
36666

Goals of Research is to maximize microfinance impact through 3 axes

6
Why are6 recovery rates so high? What is the financial behavior of clients? What is the impact of microfinance?

28

These objectives translate into 4 Research areas to maximize microfinance impact

29

OBJECTIVE

30

1-To know the impact of micro finance on living standard of rural people in India. 2-To study the change in employment status in rural segment. 3-To know the impact on women empowerment in rural area.

Research

31

Methodology
SAMPLING
Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made. In other words, it is the process of obtaining information about an entire population by examining only a part of it. In most of the research work and surveys, the usual approach happens to be make generalizations or to draw inferences based on samples about the parameters of population from which the samples are taken. Population (or Universe) is the aggregate or totality of statistical data forming a subject of investigation, for example, i) The population of books in the National Library, ii) The population of the heights of Indians, iii) The population of Nationalized Banks in India, etc. A sample is a portion of the population which is examined with a view to estimation the characteristics of the population, i.e. i) To assess the quality of a bag of rice, we examine only a portion of it. The portion selected from the bag is called a sample, while the whole quantity of rice in the bag is the population, ii) To estimate the proportion of defective articles in a large consignment, only a portion (i.e., a few of them) is selected and examined. The selected portion is a sample. Basis of Sampling: Sampling is based on two premises. They are: i) There is such similarity among the elements in a population that a few of these elements will adequately represent the characteristics of the total population. For example, the attitudes of post-graduate students towards the examination system can be gauged by studying the attitudes of a few representative post-graduate students in a university. ii) While the sample value (statistic) or some sample units may be more than the population value (parameter), the sample value of other sample units may be less than the population value. When the sample is drawn properly these differences tend to counteract each other. With the result, a sample value is generally close to the population value. Principles of Sampling:

32 The process of sampling is based on the following important principles of statistics: i) Law of Statistical Regularity: This law states that a moderately large number of items selected at random from a given population exhibit nearly the same composition and characteristics of the population.
ii) Law of Inertia of Large Numbers: This law states that, other things remaining the

same, the larger the size of the sample, the more accurate is the result obtained. This is nothing but a corollary to the Law of Statistical Regularity.
iii) Principle of Persistence: If some items of the universe possess some specific

characteristics, these characteristics would be found in the sample also and even if the sample size is increased or the population is increased, these characteristics would be reflected in the same manner as in the previous case.
iv) Principle of Optimization: According to this principle, effort should be made to get best

possible or optimum results both in terms of cost as well as efficiency. Larger the size of the sample more would be the cost of conducting the survey, but better would be the efficiency also. The size is maintained in such a way that the results are optimized in terms of cost and efficiency.
v) Principle of Validity: A sample design is called valid only when the inferences drawn

from it are valid for the universe from which the sample has been taken. At a later stage we will arrive at a conclusion that in general, samples which are drawn at random would be found to be more valid than those drawn otherwise. We had done sampling in Varanasi city. In Varanasi city exist 90 wards but cause of limit time we had taken 16 wards for our research. So based on 16 wards we can forecast regarding the actual status of migrant and informal workers of remaining other wards of Varanasi city.

SAMPLE SIZE
When I decided to conduct a research to know the impact of microfinance on rural people in India, we had have whole country to survey for conducting research but on the basis of convenience I have decided to conducted a census survey and for that we select Mathura region.

33
DATA COLLECTION:

Unlike household surveys where data are collected from a member of each household selected for the survey, in the survey on microfinance impact, data were collected for entire village from knowledgeable person(s). Information for most of the items was recorded in the codes. If more than one code was applicable for any particular item, then the code was given on the basis of majority/predominance criterion. We collected our data by different mode of data collection given below:1. First we meet to pradhan of village and discuss about their village. 2. Then we meet with other famous and aware people of that village. 3. Then we observed whole village. 4. Then we have done Focused Group Discussion with 2-3 Groups having 8-12 members in

every village.
5. Then we recorded relevant data about that village or family. 6. We repeat that process for every village of target population.

DATA SOURES:1. Rural area map of Mathura district. 2. List of authorized village which is defined by DRDA. 3. Data collected from MFIs. 4. Map of villages given by DUDA 5. Questionnaires filled by research team.

6. Other information collected by research team.

TOOLS TO BE USED FOR DATA COLLECTION: Questionnaires Interview

34

Schedule Focused Group Discussion Observation

Research Design
A research design is the arrangement of condition for collection and analysis of data in a manner that aims to combine relevance to the research purpose with economy in procedure. Research design is needed because it facilitates the smooth sailing of the various research operations, thereby making research as efficient as possible yielding maximal information with minimal expenditure of effort, time and money. Types of Research design There are three types of res design1. Exploratory 2. Descriptive 3. Experimental

Descriptive research includes surveys and facts findings enquiries of different kinds. The major purpose of descriptive research is description of the state of affairs as it exists at present.

Objective of Research
The purpose of research is to discover answers to the questions through the application of scientific procedure. The main aim of research is to find out the truth which is hidden and which has not been discovered as yet. Each research study has its own specific purpose, we may think of research objectives as failing into a number of following broad grouping1. To gain familiarity with a phenomenon or to achieve new insight into it 2. To portray accurately the characteristics of a particular individual , situation or a group 3. To determine the frequency with which something occurs or with which it is associated with something else 4. To test a hypo of a causal relationship between variables

35 Sampling Design: Sampling technique is the procedure of selection of respondents from the population. Types of Sampling: Two types of sampling design are there. 1. Non-probability Non-probability sampling is that procedure which does non afford any basis for estimating the probability that each item in the population has of being included in the sample. It is also called as deliberate, purposive, judgments sampling. 2. Probability samplingIs also known as random sampling or chance sampling. Under this design, every item of the universe has an equal chance of inclusion in the sample.

Data collection In dealing with any real life problem it is often found that data in hand are inadequate , and hence it becomes necessary to collect data that are appropriate .there are several technique of collecting the data. Types of data There are two types of data that has to be collected for completion of any type of research. 1. Primary data 2. Secondary data Tools and technique for data collection Primary data can be collected through observation, personal interview, telephone interview, questionnaires and schedules. Secondary data can be collected through the newspaper, journal, mfi, existing our research. Survey area Survey area is that place from where the samples are drawn for the study. Sample size Sample size is the number of samples which are drawn from the population for the study. Research methodology for this study: Research design Descriptive Research

36 Sampling design convenience sampling (Non probability sampling) Sample size 109 Sampling area Mathura

DATA ANALYSIS

37

IMPACT ON EMPLOYMENT STATUS

This chapter provides the empirical findings gleaned from the collected data. It provides demographic information of the respondents and the statistical analysis of the information collected from them. This is followed by the interpretation and discussion about our findings. DEMOGRAPHIC INFORMATION OF THE RESPONDENTS: Table 5 provides the information about the gender distribution of the respondents. It shows that 83.5% of the respondents were female and whereas 16.5% were male. The lion shares of the respondents were women that testify to the fact that most of the beneficiaries of microfinance are female because we have selected people randomly Without any bias towards the gender.There are good reasons to target women by MFIs, because gender discrimination is one of the major causes of poverty, slower economic growth, weaker governance and lower standards of living and women are poorer and more disadvantaged than men. However, women contribute decisively to the well being of their family comparatively more than men. In terms of age, 65.1% of the respondents were in the age group of 25 to 40 years. 24.8% were less than 25 years of age and remaining 10.1% were 40 years and above we also classified the respondents in terms of their educational experience. It could affect the way in which they manage and live their daily lives and manage the household and business. From this survey, we realized that many of our respondents had at least basic primary education, which represents 46.8% of our sample, however 21.1% had secondary educational experiences and only 11% had more than 10 years of educational experiences of the 21.1% had no educational background.

38

DEMOGRAPHIC INFORMATION OF RESPONDENTS:variable Gender Measuring group Male Female Total <25 25-40 >40 Total frequency 18 91 109 27 71 11 109 23 51 23 12 109 43 58 8 109 20 Percentage (%) 16.5 83.5 100 24.8 65.1 10.1 100 21 46.8 21.1 11 100 39.4 53.2 7.3 100 18.3

Age(years)

Not at all 1-5 6-10 10 Total No. of family <2 members 4-5 >5 Total Business exp. Yes

Educational level (in years)

39 before No joining MFIs. Total 89 109 81.7 100

Our analysis shows that 39.4% of respondents had less than two members in their family, which indicates that respondents were either unmarried, or had no children. 53.2% had 2 to 5 members and rest of the 7.3% had more than five members. We tried to find out how many family members each respondent have because a large family size usually has higher expenses than a smaller family. In microfinance field most of the business have sole proprietors. Family members contribute to this small-scale business as additional workers. In table, the analysis reveals that 81.7% of respondents had no business experience before joining the MFIs and rest of 18.3% had previous business experiences. It indicates that MFIs are contributing a lot to start the new small-scale businesses as well as in the expansion of old businesses. Therefore, we can see that more than 50% of the respondents were part of the large families, and at the same time higher proportion of the people did not have any business experience before joining MFI. So indirectly, MFIs were able to reach and benefit more people than those formally linked to them, as when they provide the business opportunity to a large family, other members are also benefited naturally.

SOURCE OF START UP CAPITAL OF THE RESPONDENTS:Table, shows the source of startup capital of the respondents. 78.9% of total respondents have taken their loan from MFIs. Rest of them have either borrowed money from friends and relatives or have started business from their personal savings. It implies that MFIs is the major source of initial capital and is playing a significant role in helping poor people to start their own business. Information regarding source of capital for starting up Business:variable Source of startup capital Measuring group Personal saving Friends and relatives MFIs Other sources Total frequency 5 6 86 12 109 Percentage (%) 4.6 5.5 78.9 11 100

40

Source of start-up capital:-

41

AMOUNT OF LOAN TAKEN FROM MFIs:In the table, we analyzed the loans granted to individuals on three different scales, less than 5 thousand Rs., 5 to 10 thousand Rs. and more than 10 thousand Rs.. Majority of granted loans, around 90% are within 10000 Rs, which implies that MFIs basically emphasize on micro-credit. Few of respondents also got loan above 10,000 Rs. which goes into another criteria of loan offered by MFIs. Indirectly, the result shows the lack of sufficient capital to start up a mediumscale business due to less amount loan offered by MFIs.

AMOUNT TAKEN FROM MFIs variable amount of start-up capital taken from MFIs Measuring group <5 5-10 >10 Total frequency 38 60 11 109 Percentage (%) 35.9 55 10.1 100

Amount of loan:-

42

ONE SAMPLE STATISTICS AND T-TEST OF DIFFERENT VARIABLES:The following table (8) displays the mean, standard deviation and standard error mean for four variables, procedure of loan taking, operational assistance, employment opportunity and reasonability of interest rate of micro credit. All the variables show the satisfaction level to be more than average level of satisfaction (2.5). General Descriptive Statistics:Variables Reasonability of Interest Rate of Micro-credit Procedure of Loan taking N 109 Mean 2.96 Standard deviation 1.009 Standard Error Mean 0.097

109

4.01

0.726

0.070

43 Operational Assistance Employment Opportunity 109 109 3.39 2.86 0.896 0.938 0.085 0.090

To examine the statement, interest rate of micro-credit is reasonable or not, we developed hypotheses and agreed upon the level of significance for rejecting/accepting the hypothesis. Survey respondents indicated their perceptions using the scale, with 5 = strongly agree and 1 = strongly disagree. We took the null hypothesis to be, borrowers are less satisfied than the average level of satisfaction (2.5), in terms of the interest rate of micro credit. Therefore, the alternative hypothesis is the borrowers are satisfied more than the average satisfaction level. The analysis in the table 9 demonstrates that the null hypothesis is rejected and it is strongly significant. So our results are in favor of alternative hypotheses. This means that the satisfaction level of the respondents, about the interest rate of micro-credit, is more than average satisfaction level. From this study, we can conclude that the level of average satisfaction is quite high. One sample t- test:Characteristics Test tValue statistics 2 9.972 Degrees of Freedom 0.000 Significance Level 0.000 Mean Difference 0.963 95% Confidence Interval Lower upper 0.77 1.15

Reasonability of Interest Rate of MicroCredit Procedure of Loan Taking Operational Assistance Employment Opportunity

3 3 2

14.504 4.513 9.603

108 108 108

0.000 0.000 0.000

1.009 0.385 0.862

0.87 0.22 0.68

1.15 0.55 1.04

To examine the statement the procedure of obtaining loans from MFIs is easier or not than conventional banking. We developed statistical test to check the comfort level of the people in obtaining the loans from MFIs in comparison to the traditional banking. We took null hypothesis considering the procedure of obtaining loans from MFIs, is not easier than conventional banking. The alternative hypothesis is the procedure of obtaining loans is easier than conventional banking. From the above table we can draw conclusion that our null hypotheses will be rejected because the mean level of obtaining loan procedure compared to conventional banking is above 4 and it is statistically strongly significant. So our decision will go in favor of alternative hypotheses Which indicates that people think loan taking procedure from MFIs is more easier

44 than traditional banking. However, the mean level of operational assistance from respondents according to degree of satisfaction with five-scale ranking is 3.39. We assumed that our null hypothesis is the mean response to operational assistance is 3. The t-test statistics for operational assistance is 4.513 and the significance level is 0.000. This means that the null hypothesis is rejected and the alternative hypotheses accepted with a high level of confidence. From a practical standpoint, the result of the univariate hypothesis test indicates that respondents felt operational assistance from MFIs was helpful to run the business. Table, shows mean and standard deviation for the satisfaction level for employment opportunity, here we can see that the mean value is little above the midpoint of scale of satisfaction. We took the null hypothesis to be equal to 2 (i.e. people on average are less than satisfied). The t-test statistics for the statement employment opportunity has increased is 9.603 and the significance level 0.000. This means that null hypotheses is rejected and the alternative hypotheses is accepted significantly. We can conclude our decision from the analysis that due to the microfinance activities people feel that the employment opportunity of borrower has increased but not so highly.

RELATIONSHIP BETWEEN THE INCREASE OF INCOME AND THE INCREASE OF SAVINGS:Generally, People take the loan to change their economic condition by operating business or investing in other activities. After maintaining expenditure, they try their best to save because they think savings would be their future hope to improve their financial status as well as improve their living standard. Therefore, we tried to find out the relationship between increase of income and increase of saving using the Pearson correlation test. With SPSS, we computed a Pearson correlation test between two variables increase of income and increase of savings. In this regard, our null hypothesis is that no relationship exists between the level of income increase and the level of savings increase. In contrast, the alternative hypothesis is relationship exist between increase of income and increase of savings. The above table demonstrated that our null hypothesis is rejected and it is statistically significant and the relation between these two variables is strongly positive. We can conclude that people, who were able to increase their income by taking loan from MFIs, also were able to increase their savings.

45

IMPACT ON LIVING STANDARD

Poverty is Multi-dimensional:-

46

RELATIONSHIP BETWEEN POWERTY AND FINANCIAL SERVICES:-

47

THE MILENEUM DEVELOPMENT GOALS: Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria, and other diseases Ensure environmental sustainability Develop a global partnership for development

WHAT DO MEAN BY MICROFINANCE?

Impact is about understanding how financial services affect the lives of poor people

48 Impact considers: income growth asset building reduction of vulnerability

Impact indicators include multiple dimensions of poverty, such as: overall household income social improvements in health and education empowerment

WHAT DO WE KNOW ABOUT THE IMPACT OFMICRO FINANCE: Outreach is important Product characteristics count Client asset base is relevant Sustainability matters Country context is a factor

Outreach Is Important:-

49

Most microfinance clients today fall in a band around the poverty line

The extreme poor are rarely reached by microfinance Social safety net programs are often more appropriate for the destitute and extreme poor

Product Characteristics Count: Specific characteristics of financial products, such as transaction size, affect impact Poor people are diverse and require a variety of financial services:
Short-term working capital loans may work well for traders wanting to

Purchas inventory.
Producers who need to make one-time investments in equipment

purchases may

require other services like term savings.

50

The Asset Base of Clients Is Relevant: Clients initial resource base affects impact The impact of financial services on clients who begin with more financial, physical, or social resources tends to be greater than on clients who start from a very low resource base

Sustainability Matters:-The length of time that an individual has been a client of an institution has a positive correlation with impact. -Sustainable institutions ensure ongoing impact by providing permanent access to services.

51

The Impact of Microfinance:Household Level -:

Microcredit leads to an increase in household income. Loans and deposit services can result in diversification of income sources or enterprise growth. Access to financial services enables clients to build and change their mix of assets. Access to microfinance enables poor people to manage risk better and take advantage of opportunities.

52

Individual Level:-

For women, greater control over resources leads to growth in self-esteem, selfconfidence, and opportunities. Microfinance clients tend to have higher levels of savings than non-clients, important for building assets.

53

Enterprise level:-

Enterprise revenues rise as a result of microfinance services, but not always where expected. Job creation in single-person enterprises appears negligible, but client households often create work for others.

54

How Could Financial Services for the Poor Yield Greater Impact: To date, microfinance has mostly offered microcredit designed for high-turnover microenterprises. Evidence shows that clients use these loans for a variety of purposes like medical expenses, funerals, and school fees. Microfinance could achieve greater impact if it offered a broader range of financial services that better met the more varied needs of poor people.

How Can Donors Increase the Impact of Financial Services for the Poor:-

55

Summary: Microfinance is not a magic bullet. Microfinance impact is about understanding how financial services affect the lives of poor people. Reducing vulnerability and risk is an important impact of microfinance. Impact assessments can help improve MFI focus, products, and performance. Donor support for microfinance should promote the twin goals of sustainability and impact. Donor funding for should complement, not substitute for, investments in core services like health, education, and infrastructure.

MULTIPLE REGRESSION ANALYSIS BETWEEN DIFFERENT VARIABLES RELATED TO STANDARDS OF LIVING:N living 109 109 Better access to education 109 Better access to healthcare 109 Better financial situation 109 Valid N (list wise) In table, the descriptive statistics shows the means of the variables in the regression analysis. It can be noticed that the means for Independent variables excess, to education (4.27), excess to health care (4.31) and better financial situation (3.08), all are above the mid-point of the 5-points satisfaction scale and therefore it shows the positive perceptions of the people about these attributes. 3.08 4.31 MEAN 4.22 4.27

Improvement standard

in

56

Coefficients:Model (Constant) Better access to education Better access to healthcare Better financial situation Unstandardized Coefficients B Std.error 1.299 0.364 0.262 0.192 0.103 0.082 Standard Coefficient Beta 0.240 0.218

t 3.564 2.553 2.354

Sig. 0.001 0.012 0.020

0.316

0.069

0.369

4.546

0.000

Improvement in living standard:In the above table, we consider improvement in the living standard of family as dependent variable and better access to education, better access to healthcare, better financial situation of the family as independent variables. Here is our null hypothesis state that there is no relationship between improvement in the living standard of family and better access to education, better access to healthcare and better financial situation of the family. Where the alternative hypothesis is states that better access to education, Better access to healthcare and better financial situation in the family are related to the improvement in the living standard of the family. Multiple Regressions between different variables related to living standards information provided in the Coefficients table tells us, which of the independent variables are significant predictors of improvement in the living standard of family. In the significance column, we have noticed that beta coefficients for access to education, access to health care and better financial situation in the family are all significant. Using the beta coefficient for better financial situation in family, for example, we can conclude that every time the financial situation in the family increase by 1 unit, improvement in the living standard of family will increase on average by 0.369 units, when the other variables are held constant. Information in the coefficients tables reveals that better financial situation in the family is the most significant predictor of improvement in the living standard of family, with a high beta coefficient 0.369 (probability of 0.000). Information provided in the Coefficients table tells us, which of the independent variables are significant predictors of improvement in the living standard of family. In the significance column, we have noticed that beta coefficients for access to education, access to health care and better financial situation in the family are all significant. Using the beta coefficient for better financial situation in family, for example, we can conclude that every time the financial situation in the family increase by 1 unit, improvement in the living standard of family will increase on average by 0.369 units, when the other variables are held constant. Information in the coefficients tables reveals that better financial situation in the family is the most significant

57 predictor of improvement in the living standard of family, with a high beta coefficient 0.369 (probability of 0.000).

Empowerment of Women
The well being of people is unquestionably the ultimate object of all development efforts and the basic quest of human Endeavour is always to seek a better quality of life. The quality of life of the citizens of a nation can be effectively improved only by raising the standards of living of the people on the street and in backward areas. Social empowerment in general and women empowerment in particular is very fundamental in achieving this goal. The institution of democracy provides a strong foundation for harmonizing social and economic objectives. Thus within the broad democratic framework, there are great opportunities for synergizing women and economic growth programmes to deliver better quality of life in the shortest possible span of time . Importantly, economic empowerment has been considered instrumental for holistic development. In the changed context of rural development, there is more emphasis on sustainable development and promotion of microenterprises, which demand micro credit. Interestingly, women's crucial contribution in community development, social change and economic independence is highly stressed by many individuals, institutions and agencies. Against this backdrop, present chapter purports to review women's status and state initiatives for their development; conceptualization of rural development, paradigms shifting there in and emerging issues of micro finance and development strategies.

Status of Women:
In India, the plight of women is no better than their counterparts in other developing countries. Despite the honour and reverence accorded to them as deities in mythology and personified tribute paid to them as in historical monuments, the ground realities remain opposite in a patriarchal society like Indian, there exists the unfounded belief that man is the bread winner of the family and hence the male child gets the best of limited facilities and resources within the family. The girl child is under constant risk of being aborted through the misuse of modern technology. She is mostly deprived of schooling for sake of taking care of siblings at home. Since she is to be married off soon, investing in her education is a liability. Despite the fact that women are massively involved in almost all sectors of economy, their work and earnings do not count. Their activities as producers of the household are not reflected in National Income Statistics, thus, making their contribution unaccounted for. In an effort to uphold cultural heritage, the past is glamorized and with it, the equality of women and enhancement of their role in development gets inhabited. In terms of every set of indices of development and socioeconomic status, women of all regions and strata have fared worse than men. In work, employment, earnings, education, health status and decision making powers, there is a clear differentiation between male and female entitlements. Women constitute 70 per cent of the world's poor population (1.3 billion). They produce 50 per cent of the food worldwide but receive only 10 per cent of the incomes. Women's access to and ownership of resources is less than that being enjoyed by men and even among those women who own some property. At the turn of 20th century, the Industrial Revolution brought about radical changes in societies the

58 world over particularly societies, which were rooted in the agriculture. One of those radical changes was the removal of manufacturer from households factories and shops. The work done at home offered lifelong educational socialization, communication and other residential benefits to the family members. It kept the unemployment and crime rate low. The spirit of cooperation and respect prevailed. The Industrial Revolution took away this responsibility from women's, brought about a rural urban dichotomy, particularly in agrarian societies and created a demand for some other educational agent outside homes. The educational agent, the school, was assigned two basic goals: (1) development of human resource (particularly men) with skills for the manufacturing sector; (2) undertaking partial responsibility of the home, namely value addition and moral education. It resulted in gender segregation and discrimination within all sectors; a majority of women lacking in productive and technical skills; science and technology and extension and training programmes provided primarily to men as women are conceived only as consumers/beneficiaries of the Industrial Revolution; and education system that caters only to academics through role learning and regurgitated evaluations, resulting in poor female enrolment and retention and consequently their illiteracy and poverty. In sum, it perpetuated a cycle of gender bias and poverty almost impossible to wipe out. Importantly, at the turn of 20th century, the communication revolution, which is technology intensive, has brought about another radical transformation again at the home front. Women Development Empowerment Paradigms: Cardin Moser has identified five paradigms towards womens development in Third World countries. The first paradigm related to welfare approach is based on the traditional view of marking the womens role in development or the basis of customary gender division of labour. The second paradigm came in existence during 1975-85, when the decade was declared as the Decade of Women. This approach was aimed at gaining equity and procuring her as active participant in development process. It further aimed at giving equal opportunities to women even by creating positive discrimination or reservation. The third paradigm was concerned with anti poverty, directed at poor women to ensure and increase their productivity. This is still being followed under the assumption that womens problems arise out of under-development. In this context, the approach of rural development is increasingly confronting itself to the formation of Self Help Groups (SHGs), in stabilizing and linking with viable socioeconomic activities for sustainable livelihood. This is seen as the only solution of poverty eradication, equity and development of women. The fourth paradigm is related with efficiency which depends on the belief that policies of economic stabilization and adjustment rely on womens economic contribution to development and their economic participation is seen as a mechanism to achieve equity. The fifth paradigm is empowerment model, which envisages greater.

59

Different Perspectives to Women Development Type of project goal Welfare Concept of problem Womens Poverty, womens special needs, Women as a vulnerable group, womens lower socioeconomic status Women as under employed, dependent, lacking in productive skills Concept of solution Provision of support services of health, nutrition, child care Type of development interventions Build maternity clinic, health clinics, immunization, health education, nutrition education Income generating projects for women, womens clubs, soap making, school uniform making etc. Integration of women in development planning, maintaining of womens development extension advice for women farmers, appropriate technology for womens access to factors of production Affirmative action to promote equal opportunity, revise development planning so that women are equal partners and beneficiaries in development process Gross roots projects, support for womens collective action, project concerned with democratization and political action

Economic selfreliance

Efficiency

Promote self-reliance and interdependence provide productive skills, encourage womens productive enterprises Women as previously Identify actual overlooked resource productive roles of in women, support development women with skills planning, training and improved women as under technology, invest in develop human capital previously over looked resource Structure of inequality, discrimination against women in schooling, credit access to hand Equality of opportunity for women in schooling, access to factors of production

Equality

Empowerment

Unequal gender power relations the patriarchy, patriarchal resistance

Conscientization, mobilization, solidarity, collective action

60

Self-reliance among women their subordination is seen not only as a problem of men but also of colonialism and neo-colonialism. This approach focuses on overall development and particularly on enhancing social and economic capabilities. In this task, a number of non-governmental organizations are playing crucial role since government is seeking partnership to ensure sustainable, peoples cantered and decentralized development and governance. It is also well accepted that womens active role in ecological and environmental programmes may ensure sustainable development, since increasing ecological and environmental degradation has caused environmental crisis when women belonging to weaker sections of society are protesting against government policies and programmes which are causing development induced displacement, loss of sustainable livelihood and natural resources. The present paradigm of empowerment of women is not a woman in development but a gender and development. The women in development paradigm assumes that women have been left out in development process and hence need to be integrated to give benefit, gender and development paradigm recognizes womens triple role i.e. in reproduction, production and community management. Therefore, the main objectives of development programmes in this context may be categorized as (i) initiate income generating programmes; (ii) sensitize women about their rights, entitlements and legal framework and (iii) take up capacity building measures. Gender and development approach stress as the need for gender analysis and identification of strategic gender needs before initiating any appropriate action for empowering women. It is seen that gender inequality retards economic growth. There is growing evidence to suggest that several aspects of gender relations, the gender based division of labour, disparities between males and females in power and resources, and gender biases in rights and entitlements act to undermine economic growth and reduce the well being of men, women and children. It is commonly held that, investments in female education and health tend to increase the incomes of families; educated women, who know more about health and hygiene, are also able to practice this knowledge; better educated women are able to adapt newer technologies, hold on to new opportunities, and cope us with economic shocks. Womens development has come a long way from the earlier welfare orientation. In the welfare approach, women were taken as vulnerable sections of the population, whose situation could be ameliorated; through the provision of support services like health, nutrition and childcare. The economic self-reliance puts emphasis on income generation projects for women; the equality model put the blame on inequality and promoted affirmative action to promote equal opportunity. The present approach of empowerment looks at unequal gender and power relations and uses conscientization, mobilization, solidarity and collective action. The empowerment approach arises from a strong commitment to womens rights and capacity to make Their own decisions about development strategies, under the credit for empowerment. The SHG offers the canvas to conduct social intermediation, provide women the opportunity to acquire the ability and entitlement to their own lives, set their own agenda, gain skills, solve problems and develop autonomy. Significantly, the member of SHGs may exhibit the following outputs, resulting from their activities: (i) acquisition of literacy and numerically skills; (ii) awareness of basic legal rights; (iii) awareness of projects and state development activities; (iv) critical political consciousness; electoral process, societal analysis and gender issues; (v) enhanced social status as perceived by self and others; (vi) freedom from exploitation, money lenders, landlords etc; (vii) active role in organization of group and other political bodies, viz. Panchayat; (viii) ensuring literacy and education of girl child; (ix) health consciousness; (x) restructuring of Womens time utilization; and (xi) enhanced decision making powers within the household. The

61 status of women in a complex society like ours is not uniform. Within Indian subcontinent, there have been infinite variations of the status of women, differing according to the cultural milieu, family structure, caste, class, occupation, property rights etc. All these factors are significant determinants of variations in her position in different groups. Scheduled caste women who constitute sizeable population of India is subjected not merely to gender bias, but also to indignities arising out of the age old tradition of untouchability, marginalization and exploitation from which incidentally the entire social group of Scheduled Castes suffer. The deep-rooted social discriminations have compelled this section of population to lead a life of bare subsistence level, both in respect of economic terms and human dignity. As per 1991 census, the scheduled caste female population of 66.29 million represents 16.43 percent of the countrys total population, which is 403.36 million of the Scheduled caste female population, 81.46 percent i.e. 54 million live in rural areas and 18.54 percent i.e. 54 million live in rural areas and 18.54 percent i.e. 12.29 million live in urban areas. Although the SCs are listed in 24 states and 4 union territories, the SC female population to the extent of 99.83 percent is reported from only 18 states, each having more than 0.1 million SC female individuals. These states in descending order of numerical strength are: Uttar Pradesh, West Bengal, Bihar, Karnataka, Tamil Nadu, Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Punjab, Orissa, Haryana, Gujarat, Kerala, Assam, Delhi, Himachal Pradesh and Tripura. Strength of Scheduled Castes in various states (1991 census) Strength (million) Above 25 Between 20-25 Between 15-20 Between 10-15 Between 5-10 Between 1-5 Below 1 West Bengal (16) Bihar (13), Tamil Nadu (11), Andhra Pradesh (11) Madhya Pradesh (10), Maharashtra (9), Rajasthan (8), Karnataka (7), Punjab (6), Orissa (5) Haryana (3), Gujarat (3), Kerala (3), Delhi (2), Assam (2), Himachal Pradesh (1) Tripura, Pondicherry, Manipur, Goa, Sikkim, Meghalaya, Arunachal Pradesh, Daman & Diu, Dadra & Nagar Haveli, Mizoram States/ UTs Uttar Pradesh (29)

62 The sex ratio, as per 1991 census, among the scheduled castes has been reported to be 922. There is wide variation in the sex ration among SCs across the states of India. The children in age group 0-6 years constituted 19.63 percent of the SC population as against 17.94 percent for the general population. The SC population has more children than the general population, which appear to show a higher birth rate. Importantly, early marriage among scheduled castes population is generally a reflection of their overall socio-economic status in society. These include mass illiteracy, negligible participation in modern economic activities, excessive participation in agricultural and allied pursuits and lower income. The SC women are prone to occupational health problems associated with degraded working environment, mental stress, long hours of work, lifting of heavy weights, contact with hazardous and infected material and inconvenient postural conditions of work etc. Besides, they suffer from malnutrition, anaemia, post delivery complications, tuberculosis, early child bearing and constant enforced deprivations. The general in ability and occupational health problems result in constant ill health and mortality among this class of women. Womens Education & Employment: Education and employment have direct bearing on economic empowerment, therefore, brief detail of women's education and employment scenario is given here. Education has been a very important part of Indian social and cultural life from the earliest times. Census-wise figures for literacy are given in Table 1.1. The male female combined literacy rate in 1901 was 5.9 per cent, the female literacy rate being only 0.6 per cent. Right up to the 1941 census, it had increased only up to 7.30 per cent, which was a little less than 50 per cent of the total literacy rate of 16.10 per cent. The gender gap works out to 100 per cent. Over the six censuses conducted in India since Independence, the literacy rate for females has increased from 8.86 per cent to 54.16 per cent which means that about half of the women are still illiterate.

CENSUS-WISE LITERACY RATES AMONG WOMEN

Year of Census
1901 1911 1921 1931 1941 1951 1961 1971 1981 1991 2001

Sex Ratio (Per 1000 males)

972 964 955 950 945 946 941 930 924 927 933

Literacy Rates (%) Male

9.83 10.56 12.21 15.59 24.90 27.19 40.40 45.95 -56.50 64.13 75.85

Literacy Rates (%) Female

0.60 1.05 1.81 2.93 7.30 8.86 15.34 21.97 29.85 39.29 56.14

Literacy Rates (%) persons

4.40 5.30 7.60 9.40 16.50 18.30 28.31 34.85 43.56 52.21 65.38

63
Change 1981-2001

--

19.35

24.31

21.82

The literacy gap between male and female is still quite high, though during 1981-2001 there is significant change in literacy rates among females, as compared to their counterparts. Within the country, census wise data given in Table 1.2 shows great variations in literacy rates for rural and urban areas. Only 30.62 per cent women living in rural areas were literate in 1991 though most of the developmental efforts were directed towards this end. In 2001, literacy rate among women in rural areas was recorded to be 46.70 per cent while it was recorded quite high among males. Among males. There is a wide gap in literacy rates between rural and urban areas. Moreover, gender literacy gap is quite high in rural areas. Lower literacy rates in rural areas are primarily due to the more conservative nature of village society. This brings down the total literacy rate of the country. Lower male literacy rates in the villages are primarily due to the physical nature of the work required for agricultural labour and migration of literate men to towns. Table 1.3 shows that large Hindi speaking states of Bihar, Rajasthan, Uttar Pradesh and Madhya Pradesh had a female literacy rate of less than 30 per cent in 1991. In 2001 literacy rate among women in these states were found about 50 per cent. 68.2 per cent Hindu women, 71 per cent Muslim women, 37.3 per cent Christian women, 54.9 per cent Sikh women, 24 per cent Jain women, 68.4 per cent Buddhists, 29.4 per cent Zoroastrians and 71.5 per cent other women were not found to be literate in 1987-88. In 1991, 23.76 per cent Scheduled Castes women and 18.19 per cent Scheduled Tribes women were found literate. Bihar and Punjab were the main states where female literacy rate among Scheduled Castes community was recorded below 10 per cent. Similarly, female literacy rate among Scheduled Tribes was recorded below 10 per cent in Andhra Pradesh and Rajasthan. During 1999-2000, enrolment rates among females were recorded 85.2 per cent at primary level, 49.7 per cent at upper primary level, and 72.0 per cent at elementary level. Enrolment rates in these levels were recorded higher among boys as compared to girls. Interestingly, gender disparity has been reported in enrolment, retention and drop outs (IHDR, 1999-2000). Higher education has remained still a far cry for majority of the people in India and more so for women. The participation of women in higher education is found to be very low i.e. about 33 per cent at university and college level. Education is the key instrument for women's development despite the fact that education could also be used to perpetuate subordinate status of women through systematic institutionalization, traditional social customs and reinforcing the gender belief system. Since education plays a dialectical role and acts as a catalyst in the long term, it has to be viewed as liberating instrument and efforts have to be directed towards removing barriers to women's access to education in general and quality education in particular. According to 1991 census, only 23.29 percent of SC females are literate, as against 52.21 percent general literacy rate in the country. There has been sharp variations in the literacy rates in the rural and urban areas Although the literacy rate among SC women has gradually increased over the years, the literacy gap between them and non- SC/ST female continued to widen. Based on 1981 census, there were 48 districts within the country where the SC female literacy rate is less than 1 percent, Besides, there were some Scheduled Caste communities which have hardly any literate female among them. There has been overall increase in the enrolment of children to SC at all levels over the years. But simultaneously a serious impediment, which arrests literacy, is the phenomenon of drop out, wastage and

64 stagnation. From 1980-81 to 1995-96, there has been progress of enrolment both in primary level and junior high school level. However, rate of progress in primary school level has been higher as compared to Junior high school level with high rate of gender disparity among the shed Women's economic empowerment is absolutely essential for raising their status in society. However, there persists the acute male female disparity in the opportunities available. The total workforce of women is only 89.77 million; out of which substantial percentage are marginal workers. As far as the rural urban divide of female employment is concerned, the situation can be gauged from data available from 1991 census. A very small percentage of women out of total population are employed and the ratio of female employment to male employment is extremely iniquitous. It may be stated that the majority of them are concentrated in the unorganized sector where work is irregular, wages are limited and there are hardly any labour rights under the various labour laws. Thus it may be noticed that the ratio of female to male workers concentrated in the unorganized sector is also unfavourable to women with 95.79 per cent women workers concentrated in this sector as opposed to 89.77 per cent male workers. The percentage distribution of women workers in India. An overwhelming majority of women are engaged in the unorganized sector. About 79 per cent of the total women workers are in the agricultural sector, 49 per cent of them are occupied as agricultural labourers and 30 per cent as cultivators. It is ironical to note that in 1911 the proportion of women in the female work force (33.7 per cent) as well as proportion in the total workforce (34.4 per cent) has substantially declined, to 16.4 per cent and 22.3 per cent respectively in 1991, Hirway and Roy (1999) have remarked that though relatively more women participate in work in rural areas than in urban areas, yet rural females enjoy much lower occupational diversification, very poor employment status and high unemployment rates. Furthermore, the rural female worker was experiencing negative occupational diversification. This is an alarming situation, where economic independence of women seems to be seriously impaired. Women's work is characterized by features such as high labour, high intensity, seasonal work and low skilled people. Policy & Women Empowerment: Gender equality and women empowerment are the buzzwords, entrusted with different interpretations to suit varied socio-political perspectives. The rhetoric of gender equity and women's empowerment has acquired an important place in government policy, nongovernmental advocacy, media and academic research. The terms, women empowerment and gender equality determine the direction of diverse discourses on women, locally, nationally, and internationally. The action plan, as recommended by International Conference on Population and Development at Cairo (1992) Included: (i) establishing mechanism for women's equal participation and equitable representation at all levels of the political process; (ii) promoting the fulfilment of women's potentials through education, skills development and employment, giving paramount importance to the elimination of poverty, illiteracy and ill-health among women; (iii) eliminating all practices that discriminate amongst women and assisting them to establish and realize their rights; (iv) adopting measures to improve women's ability to earn income beyond traditional occupations, achieve economic self-reliance and ensure their equal access to the labour market and social security systems; (v) eliminating violence against women; (vi) eliminating discriminatory practices by employers against women; (vii) making it possible through laws, regulations and other appropriate measures for women to combine the roles of child-bearing,

65 breast-feeding, and child-rearing with participation in the workforce; (vii) strengthening policies and programmes that improve, ensure and broaden the participation of women in all spheres of life as equal partners and improve their access to all resources needed for the full exercise of their fundamental rights. The Beijing Conference (1995) was the first significant milestone in the journey towards ensuring gender equality and women empowerment. The goals of the Conference were; (i) sharing power equally; (ii) obtaining full access to the means of development; (iii) overcoming poverty; (iv) promoting peace and protecting women's rights; (v) inspiring a new generation of women to work together for equality and equity. Economic empowerment is a necessary condition for enabling women to seek justice and equality. Without economic strength, women cannot be able to exercise their guaranteed rights. It is, therefore, necessary to seek participation of women as equal partners with men in all fields of work, equal access to all positions of employment, equal opportunities for work related training and full protection of women at work place. Economic empowerment of women, including reduction of female poverty require programmes that focus on identifying, developing and promoting alternative approaches to increase women's access to and control over the means of making a living on a sustainable and long term basis. It necessitates supporting their existing livelihood, widening choices and building capacity to take advantage of new economic opportunities. Its strategies to advocate that the government undertakes legislative measures to speed up women's participation in economic life, including the right of equality in property ownership and inheritance and access to credit, financial service and assistance in entrepreneurial development. The basic requirements of women's empowerment strategy are; (i) introduction of special measures to increase the proportion of women involved in decision making; (ii) establishment of specific training programmes, especially for women living in extreme poverty, to improve their condition; (iii) creation of equal employment opportunities for educationally, technically and professionally qualified women by dismantling the forbidding walls of silent discrimination in their recruitment and related process; (iv) encouragement to women's entrepreneurship and other self-reliant activities, particularly in the informal sector; (v) integration of gender perspective into all economic structuring; (vi) elimination of all forms of discrimination in employment, including wages and breaking down of gender based occupational segregation; (vii) initiation of measures to improve working conditions of women in the informal sector, particularly, by encouraging them to organize so that they know their rights and are able to obtain necessary support to exercise them; (viii) mobilization of banking sector to increase lending on easier terms to women entrepreneurs and producers, especially in the rural areas; and (ix) activation of enforcement machinery to ensure that the interest of women workers are protected, especially in the informal sector where large scale discrimination persists. As the largest democracy in the world, India has enjoyed the freedom to continuously experiment with a number of forms, structures and modes of organizations to achieve womens equality. The state is seen as the prime mover in bringing about this social change and is charged with the responsibility of ensuring the fundamental rights to equality and freedom of the sexes and prohibition of discrimination on this ground. The replacement of institutional structures and formations from time to time, their modifications, renewal as well as organic growth have come about as responses to emerging concepts on women's issues. During the last six decades, development planning for women straddled theories as disparate as welfare, development, equality, efficiency & empowerment. The institutional structures have undergone changes in response to these evolving concepts and have changed from welfare to empowerment and beyond, in response to experiences of social reality at the field level as well as factors governing external environment.

66 Today, the state has accepted women as active agents, participating in development programmes and schemes & thereby achieving their own Development. The gender dimension on the development approaches at conceptual level came from uncovering several distinct areas of gender bias. Their subordinate status meant development benefits; be it education, health, income, employment did not rest them in same measure as men. All pervasive sexual division of labour that assigned the task of family maintenance and child care to women meant their inability to participation in many activities outside the home, whether social, economic or political. July, 1946, the All India Women's Conference adopted an Indian Women's Charter of Rights that demanded full civil, legal rights, equal opportunities in education, employment, policies etc. In 1947, the National Planning Committee, set up in 1939 by the Indian National Congress, had constituted a special women's committee which submitted its report on 'women's role in a planned economy', their rights and development. Importantly, in 1974, report of the committee on the status of women reiterated many earlier demands with emphasis on the poor, the unorganized and rural women. Its most significant contribution was the extensive documentation of the conditions of women, which had deteriorated in the three decades after independence. Similarly, various UN documents, resolutions, conventions especially Beijing Conference (1995), also gave pre-eminence to state action to enforce and monitor women's rights by establishing a special national machinery for women. A comprehensive plan for women was formulated by the Department of Women & Child Development, called 'The Perspective Plan for women 1988-2000'. A National Commission for Women was established with a view to ensure women's rights and entitlements. From 19th century, the role of the state in defining and influencing the status of women has informed many struggles for their equality. The state, its policies and programmes continue to be the focus of much of the energies of the women's movement in post independence India as well. From 1970's, the women's movement has tried to establish an autonomous identity for itself and attempted to bring about changes through the process of influencing and pressurizing the state and its structures. The trends in planning in India show that in the first Five Year Plan, most of whose members had liberal education and also participated in the national struggle for independence wanted to give women the rights of self centralization to the fullest extent. They laid down very progressive parameters of higher education, the need for women to get employment and to function in a protected labour environment. The Second, Third, Fourth and Fifth plans carried forward on the same strategies. It was only in the mid seventies, in preparation to celebrate the International Women's Year in 1975 that a committee to survey the status of women was set up 1971. From the Sixth Plan onwards, a new exercise in planning stressed on women development and Department of Women & Child Development, GOI was set up in 1985 with a separate minister in-charge. National Commission for Women, a National Crche Fund, a National Credit Fund, a National Women's Fund, Mahila Samridhi Yojana and Indira Mahila Vikas Yojana were set up. This acted as an effective nodal unit for monitoring activities relating to women's development in various ministries of the government and taken for review and its recommendations. The strategy for women's development has been multi-dimension and multi sactorial. Although many schemes have been made for women in different ministries and departments, the agencies for executing them have been the same and they give women a certain consideration. Since 1980's, there has been an effort to give women an integrated approach and to provide health, family welfare, and non formal education and create awareness of their rights and skill training at the same time. Several states have launched the projects for women empowerment, development and welfare. These projects are financially supported by foreign agencies, and implemented with the vital role

67 of NGOs and voluntary sector. Importantly, women empowerment programmes emphasize on SHG's formation, its stabilization and linking with viable micro enterprises. While formulating the First Five year plan (1951-56), it was envisaged that the programmes under various sectors of development would benefit all sections of the population including SCs, STs, OBCs and minorities. But, unfortunately, it never happened. Therefore, special programmes under backward classes sector were formulated keeping in view the special requirements of SCs, STs and OBCs. The second Five year Plan (1956-61) promised to ensure that the benefits of economic development accrue more and more to the relatively less privileged classes of society in order to reduce inequalities. The Third Five Year Plan (1961-66) advocated the principles to establish greater equality of opportunity and to reduce disparity in income and wealth. The Fourth and Fifth Five Year Plan (1969-78) envisaged basic goal as rapid increase in the standard of living of the people through measures, which also promote equality and social justice. The Sixth Five Year Plan (1980-85) marked a shift in the approach to the development of Scheduled Castes. The Special Component Plan (SCP) launched for the Scheduled Castes expected to facilitate easy convergence and pooling of resources from all the other development sectors in proportion to the population of SCs. In the Seventh Five Year Plan (1985-90), SCP for SCs was strengthened, while the other schemes for the welfare and development of SCs continued. There was substantial increase in the flow of funds for development of SCs under SCP from state plans, Central Plans, Special Cultural Assistance and Institutional Finances resulting in the expansion of infrastructure facilities and enlargement of their coverage. Priority in the Plan was given to the educational development of SCs. In the Eighth Five Year Plan (1992-97) national level apex bodies have been set up to act as catalytic agents in development schemes for employment generation and financing pilot projects. The Ninth Five Year Plan (1997-2002) envisaged the empowerment of socially disadvantaged groups as agents of socio-economic change and development through creating an enabling environment conductive for the SCs, OBCs and minorities. The Plan has adopted three pronged strategy of (i) social empowerment; (ii) economic empowerment; and (iii) social justice. The nationwide popular scheme of PostMetric scholarships (PMS) for SC students after its revision in 1997-98 extends its scope for enhancing the income limit of parents of the beneficiaries and for extending some additional benefits to persons with disabilities amongst SCs. Scholarships are given to eligible SC students, which include provisions of maintenance allowance, reimbursement of compulsory non-refundable fees, thesis typing/ printing charges, study tour charges, book allowance for students pursuing correspondence courses etc. The scheme of Pre-metric scholarship for the children of those engaged in unclean occupations introduced in 1977-78 aims at motivating the children of scavengers, sweepers, flayers and tanners to pursue education and also for controlling school drop outs amongst them thereby weaning them away from the obnoxious practice of scavenging. The scheme of hostels for SC boys and girls launched in 1961-62 provides hostel facilities to students studying in middle secondary and higher secondary schools, colleges and universities.

68

FINDINGS 1-Our results indicate the exclusion of very poor households from participation in Group-based credit programmes, at large. 2-The probability of participation is found to be low at the lower end of income distribution and it increases with increase in per capita income of the household. Of course, it declines with very high level of per capita income in particular for the top 20 percent of the households. 3-Since microfinance programmes are aimed at meeting the credit needs of low income clientele, or supporting micro enterprises, they might not be attractive for the high income clients. 4-They would participate only if the returns from joining the programme were higher than their present occupation. The study also finds that some rich households did not join because they were discouraged by the programme agents to join the programme. Besides, it was also below the status of the women in the village from rich households to join the group to save small amount. 5-Many of them reported their inability to join the programme because they could not contribute to the group savings fund. Some of the households also reported that they were rejected by the group as the quorum for the group formation was complete. Therefore, the issue of rejection of households to join the group may not be ruled out on the grounds of vulnerability of the households alone. 6-It is also found that the design and process variables of the programme do influence the household to participate in the group. 7-There is no conclusive evidence on whether peers selection affects the exclusion of very poor from the programme, although qualitative observation point towards such a conclusion. 8-the exclusion of the poorest households is a matter of concern for the policy makers as it questions the hypothesis that microfinance is a tool for poverty alleviation. Therefore, results in this study manifest that, unfortunately, this is not going to help those who need it the most. 9-Impact assessment results show a positive and significant effect of programme participation on increase in the income of the household. The impact is negligible for the households at the lower end of income distribution. 10-The predicted impact on income is not found to be highly significant for any of the programmes individually although the impact is positive. 11-The estimates does show that predicted share of off-farm earnings (including earnings from livestock) increases with increase in landholding.

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12-the returns seem to be much higher for the very big land owners than the small farmers. This implies that the relatively large landowners, some of whom became members of the group, are able to diversify household income sources whereas the landless or small farmers are unable to do so. The impact of participation on increasing share of off-farm income is also noticeable for households with higher level of per capita income compared to the relatively worse-off. 13-There is increase in the income thats why there is increase in the expenditure of people. 14-there is increase in ratio of expenditure in every part of expenditure pattern. 15-Because of enhancement in the awareness level, there is improvement in the living standard of people in rural segment of Mathura. 16-The participation of women has increased in decision making because of their earning. 17-The opportunities of employment has increased and employment status has also increased.

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Reference:
Basu, Priya (2006), Improving Access to Finance for Indias Rural Poor, The World Bank: Washington, D.C. Diagne, A. and M. Zellar (2001), Access to credit and its impact in Malawi, Research Report No.116 Washington, D.C., USA: International Food Policy Research Institute (IFPRI). Edgcomb, E. & Barton, L. (1998), Social intermediation and microfinance programs: A literature review, Microenterprise Best Practices, USAID. Godquin Marie (2004), Microfinance Repayment Performance in Bangladesh: How to improve the Allocation of Loans by MFIs, World Development 32 (11): 1909-1926. Goetz, A. M. and Sen Gupta, R. (1994), Who takes the credit? Gender, Power and control over loan use in rural credit programmes in Bangladesh, World Development, 24 (1): 45-63. Hashemi, S.M., Schuler, S.R and Riley, A.P. (1996), Rural Credit programmes and Womens Empowerment in Bangladesh, World Development, 24 (4): 635-653. Heidhues, F. (1995), Rural Finance Markets An Important tool to fight against poverty. Quarterly Journal of International Agriculture, 34 (2): 105-108 Hossain, M. (1988). Credit for Alleviation of Rural Poverty: the Grameen bank in Bangladesh, Washington DC: IFPRI Hulme David (2000), Impact Assessment Methodologies for Microfinance: Theory, Experience and Better Practices, World Development, 28 (1): 79-98. Hulme, David and Paul Mosley (1996), Finance against Poverty. Vols. 1 and 2. London and New York: Routledge. Jeromi, P.D (2006), Financial Inclusion: Regional Perspective, Paper Presented in the

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National Conference on Financial inclusion and Beyond Issues and Opportunities for India, Cochin, India (19-20 September, 2006). Khandker S.R. (1998) Fighting Poverty with Microcredit Experience in Bangladesh, Published for the World Bank, Oxford University Press Littlefield, E, Morduch, J, and Hashemi, S. (2003), Is Microfinance as Effective Strategy to Reach the Millennium Development Goals, CGAP, Focus Note, 24. McKernan, Signe-Mary (2002), The Impact of Micro-Credit programs on Self-Employment Profits: DO Non-Credit Program Aspects Matter, The Review of Economics and Statistics, 84 (1): 93-115 Morduch, J. (1999), The Micro Finance Promise, Journal of Economic Literature, 37 (4): 1569-1614. Mosely, Paul (2001), Microfinance and Poverty in Bolivia, The Journal of Development Studies, 37:101-132. Mosely, Paul and David Hulme (1998), Microenterprise finance: Is there a conflict between growth and poverty alleviation? World Development 26: 783-790 Navajas, Sergio et al., (2000), Microcredit and the Poorest of the poor: Theory and evidence from Bolivia, World Development 28: 333-346 Otero, M. (1999), Bringing developments back into microfinance, Journal of microfinance, Otero, Maria and Elisabeth, Rhyne (Eds) (1994), The New World of microenterprise Finance: Building Healthy Financial Institutions, Kumarian Press: West Hartford, Connecticut. Pitt, Mark M.; and Shahidur R. Khandker. (1998), The Impact of Groupbased Credit Programs on Poor Households in Bangladesh: Does the Gender of the Participants Matter? Journal of Political Economy, 106 (5): 958-96 Remenyi, Joe and Benjamin, Quinones Jr. (2000). Microfinance and Poverty Alleviation, case

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study from Asia and the Pacific, NewYork: Pinter Publishers, LTD. Schuler, S.R. and Hashemi, S.M. (1994). Credit programs, women's empowerment, and contraceptive use in rural Bangladesh. Studies in Family Planning, 25 (2). Simanowitz, A and Brody, A. (2004), Realising the potential of microfinance, Insights,51: 1-2 Zellar, M. and M. Sharma (1998), Rural Finance and Poverty Alleviation, Washington, D.C. USA: International Food Policy Research Institute (IFPRI). Zeller Manfred and Meyer L. Richard (2002), The Triangle of Microfinance- Financial Sustainability, Outreach and Impact, IFPRI, Washington & The Johns Hopkins University Press: Maryland.

LIMITATION OF THE STUDY

73 1-The respondents are limited in term of size and composition. 2-The data collection is restricted only in Mathura district of India which may fail to represent the actual scenario of whole country. 3-While interviewing the people I have faced the problems in explaining the questions as most of the people involved in microfinance program, are illiterate and living in village. 4-It was too difficult to make them understand some of the technical terms like capital, income etc. 5-The accuracy of the data analysis relied on the data provided by people involved in microfinance program in Mathura, India.

QUESTIONNAIRE

74 We are students of PGDM studying in GLA ITM Mathura, and carrying out a survey for our academic project A study on the impact of micro finance on rural society in Mathura, India. So please fill this questionnaire. Your identity would not be revealed and information will be used only for academic purpose. 1. What is your gender? Male Female 2. What is your age? Less than 25 years (25-40) years 40 and above

3. Do you have any educational experience? Not at all (1-5) Years (6-10) Years More than 10 Years 4. How many family members do you have? Less than 2 members (2-5) Members More than 5 Members 5. Did you have any business experience before entering this program? Yes No 6. What is the source of your initial capital? Personal Savings Friends and relatives Loan from MFIs Others 7. What amount of loan you have received as a help from any of the MFIS Less than 5 thousand (5-10) thousand More than 10 thousand 8. The numbers of following table indicates the degree of satisfaction or agreement level (on a scale of 1-5*) of the household or a person after he or she has received Loan from a microfinance institution. Please circle the number, which accurately reflects your opinion.` Particular The rate of interest of micro credit is Reasonable The procedure of obtaining loans from MFIs is easier than conventional banking The income has increased The savings has increased Better access to education Better access to healthcare Better Financial situation of the family Strongly disagree Neutral agree disagree strongly agree

75 Role in decision making process has increased Operational assistance received from MFIs was helpful to run the business Employment opportunities have increased Improvement in the living standard of the family

9.0 HOUSING FACILITIES: 9.1 Type of House: (1) Own (2) Rented (3) Others 9.2 Electricity :(1) Yes (2) No 9.3 Toilet Facility (1) Dry Latrine (2) Flush Toilet (3) Manual 9.4 Cooking Device: (1) Gas (2) Kerosene Oil (3) Wood (4) Angeethi (5) Others 9.5 Drinking Water: (1) Piped Water (2) Hand Pump (3) Combined Facility (4) Others 9.6 Who spend generally family income:- (1) Self (2) Husband(3) Children (4) Father/ Mother/ In-laws(5)Any other family member 10.0 SAVING PATTERN 10.1 Your saving rate: (i) Present (Rs.) (ii) Initial (Rs.) 10.2 Main Purpose of savings (Give your order of Preferences) 1. Social Security 2. Food Security 3. Education 4. Medical 5. Marriage 6. Festivals 7. Emergencies 8. Agriculture 9. Asset Building 10. Self Respect 11. Others (Spe.) 10.3 Your cumulative savings (Rs.) 10.4 Interest earned on savings (Rs.) 10.5 Your Present bank balance (Rs.) 11.0 IMPACT OF MICROFINANCE 11.1 Changes on socio-economic status after microfinance interventions:

76 (1) Same (2) Increased (3) Decreased (4) Decorated 1. Mobility 2. Recognition in family 3. Recognition in community 4. Interaction with outsiders 5. Literacy/ education 6. Access to Health services 7. Access to Immunization 8. Access to sanitation facility 9. Access to credit sources 10. Asset Building 11. Family Income 12. Skills 13. Voicing your concern 14. Nutrition awareness 15. Family Planning awareness 16. Girl Child development awareness 17. Health awareness 18. Decision making related to child centered 19. Decision making related to money centered 20. Participation in Development Programmes 21. Individual Income 22. Others (Spe.) Respondents Profile: Name: ..... Occupation: Address: E-mail: . .......... Age: . Sex: .... ............................ Nationality: Contact No.: .... Education: ..