micro finance and its impact on women empowerment: an ...

MICRO FINANCE AND ITS IMPACT ON WOMEN EMPOWERMENT: AN EMPIRICAL STUDY

Neeta Majumder1

Soumendu Bhattacharya2

ABSTRACT

The Self Help Group Bank Linkage Programme (SBLP) aims to extend income generating self-employment activities among under privileged women in rural areas with the fulfillment of financial inclusive policy of the Government. It plays a significant role in improving the standard of living and economic wellbeing of the rural household. Previously, lack of loan facilities from the formal institutions had left the poor people with no other option but to borrow money from the local moneylenders at a higher rate of interest. This led to the emergence of microfinance which is considered as the vehicle for achieving empowerment of the women in all spheres - social, cultural, political and economic. The present study will try to examine the impact of micro finance through Self Help Group Bank Linkage Programme (SBLP) on women empowerment through the enhancing employment opportunities which substantially influence to reduce rural poverty. A study was conducted in Mathurapur village, Block 1, South 24 Parganas, WB,India. This project also investigated the loan use pattern of the members and the savings generated from the productive use of the loan. It can be also inferred that the productive use of the credit by the women leads to more contribution in GDP through the transmission channel of consumption demand as well as investment demand.

Keywords: Self Help Group (SHG), Microfinance, Women Empowerment, GDP

INTRODUCTION

“Micro finance stands as one of the most promising and cost efficient tools in the fight against global poverty”.

-Jonathan Morduch

“Maybe our great grandchildren will go to museums to see what poverty was like” -Muhammad Yunus, the notable Noble Laureate of Bangladesh stated this with the expectation that entire world can be made poverty free as poverty is not created by poor people rather it has been formed & sustained by the social & economic system. In developing countries rural people have hardly any access to formal financial institutions, therefore financial system failed to meet up rural people’s urgent credit requirement. The main reason for the failure is the lack of any sort of employment source and collaterals with the poor. Due to the high transaction costs associated with the small loans coupled with lower volume of savings deposits, banking business is not profitable in rural area. The lack of loans from the formal institutions has left the rural people with no other option but to borrow money from the local moneylenders at a higher rate of interests. So the formal financial institutions failed to serve the segment of the rural poor as they perceived it too risky. Thus, inadequate supply of the credit by formal financial institutions effectively has led to the emergence of microfinance to alleviate poverty and as an alternative credit system for the rural people to increase their standard of living.

Micro finance can be defined “As a loan fund especially meant for micro enterprises including agricultural, forestry, agro- forestry, horticultural, animal husbandry, handicrafts, fisheries, bamboo and jute crafting, mushroom cultivation, etc., to provide required start-up capital for local needy people in an organized manner”. It refers to the entire aspect of financial services such savings, money transfers, insurance, production as well as investment credit and includes the need for improvement in skill and entrepreneurial development that would help them to overcome poverty. Access to savings and credit can initiate or strengthen a series of interlinked and mutually reinforcing ‘virtuoso spiral’ of empowerment. It has emerged as a major strategy to combat the twin issues of poverty and unemployment that continue to pose a major threat to the polity and economy of both the developed and developing countries.

(a) History of Micro Finance

The past history of microfinance can be found in early 1700’s, when an amount of savings and credit collections were operating all over the world such as Susus of Ghana, “Chit Funds” in India. In 1870’s a number of formal saving and credit institutions expanded over the region of Germany, Europe and North America. But the actual system of microfinance came into limelight when the famous economist Professor Mohammad Yunus set up Grameen Bank as a project in one of the villages in Bangladesh in 1976 to assist poor families by providing small credit to them. Today microfinance

1 Assistant Professor, Bengal Institute of Business Studies, West Bengal neeta_majumdar@ rediffmail.com 2 Professor, Karnavati University, Gandhinagar, Gujarat, [email protected]

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has been widely spread all over the world as an effective tool not only for poverty alleviation but also for women empowerment as the women workforce in population increases continuously.

In India, in early 1980’s the existing bank policies, procedures and systems were not suited to meet the requirements of the poor. These economically backward class of people were excluded from the facilities provided by the modern financial system. NABARD recommended that alternative policies, systems and procedures should be applicable to rural poor so that they can be able to come out from the clutches of moneylenders. The Integrated Rural Development Programme (IRDP) and the revamped programme named as Swarna Jayanti Grameen Swarozagar Yojana (SGSY) laid emphasis on investment credit needs only. The rural poor did not receive the subsidized and low interest credit, rather the same were channeled to the better off sections of the rural people. Further, poor monitoring and follow up by the bankers resulted into poor repayment of loan. Under the above circumstances NABARD launched a pilot project named as Self- Help Group Bank Linkage model in 1992 where the informal groups are credit linked with the formal financial institution.

After Financial sector reform in 1991, the banking sector witnessed a substantial amount of financial resources being earmarked towards meeting the credit needs of industrial and service sector where expected revenue generation and profitability was high. As a result, the banking sector underwent an expansionary phase. But rural sector was so neglected that they were excluded from the benefit achieved by the financial sector reform in India. Financial inclusion is a process of ensuring the access of financial services to weaker and vulnerable sections of society at an affordable cost of fund under the guidance of organized financial system. While the objectives were laudable and substantial progress was achieved, credit flow to the poor and especially to poor women remained low. Therefore, initiatives taken by National Bank for agriculture and Rural Development (NABARD) toward creating employment opportunities of economically backward class and try to execute financial inclusion policy of Government at all clusters of the economy.

During this period NABARD conducted a vast series of research independently and in association with MYRADA (Mysore Resettlement & Development Agency), a nongovernmental organization (NGO) despite having a wide network of rural bank branches servicing the rural poor. Formal banking system was not able to accommodate a very large number of the poorest of the poor. It also appeared about the strategic planning of employment creation through the financial assistance of backward class rather than just providing cheap subsidized credit. The emphasis therefore was on improving the access of the poor to “microfinance” rather than just micro-credit, which fulfill the requirements of the poorest especially of the women members.

In 1999, the Government of India combined various credit programs together and refined them to launch a new program called Swarna Jayanti Gram Swarazgar Yojana(SSGY). The mandate of SSGY was to continue to provide subsidized credit to the poor through the banking sector to generate self- employment through a self-help group approach & the program has grown to an enormous size. MFIs started playing pivotal role throughout India as one form of financial intermediary to the poor.

(b) Objectives of Microfinance

To promote microfinance institutions in different parts of the world different organizations determined various objectives of microfinance. The important among them are:

(i) To ensure and strengthen people’s groups called Self- Help Groups which facilitate decision making skill and leadership power of rural people mainly women.

(ii) To aggravate socio-economic development through community-based approach.

(iii) To offer the scope of self-employment generation by organizing training to underprivileged population.

(iv) To promote activities which have community participation and sharing of responsibilities

(v) To promote strategies for the disabled neglected class of people.

(vi) To empower conventional under privileged women mainly in rural India.

(vii) To get benefit by using rural resources optimally as inputs for livelihood activities.

(viii) To reduce the adverse impact of rural urban migration due to marginal productivity of labor in rural areas almost tends to zero.

(c) Concept of Self Help Group in India

A Self Help Group is a voluntary informal association formed usually by the rural and semi-urban poor to save their minor savings and to develop banking habit. The members of the group are economically more or less homogenous who voluntarily agree to contribute to a common fund to be lent to its members to meet up mainly precautionary demand for money (depending on the emergency and needs as per decision of the group). These small groups meet frequently and collect small saving from their members and are taught simple accounting methods to enable them to maintain their accounts. They are individually poor and could never have enough savings to open a bank account, the pooled savings enable them to open a bank account in the name of the group which creates the first step in establishing links with the formal banking system. Through the SBLP, the RBI and NABARD have tried to promote relationship banking, i.e improving the existing relationship between the poor and bankers with the


social intermediation of NGOs. The prime purpose of such a group is to make all the members self-reliant and self-sufficient by pooling their small savings.

Formulation of the group does not follow strict guidelines and the decision as to the period of loan rests solely on the group members. Credit is available both for consumption and production purpose. Processes of loan lending would be channelized from NABARD, re-financed to banks and banks would further lend it to groups. This group basically focused on women empowerment regarding decision making, resolving conflict through collective leadership and mutual discussion, mutual agreement to contribute a common fund and increasing the savings habit of rural women. The members of the group regularly collect savings from their group members and channelize the pooled resources to interest bearing small loans to their members. This initiative not only gives financial help to members but builds up financial discipline among the members.

Now the microfinance service providers in India include apex institutions like National Bank for Agriculture and Rural Development (NABARD), Small Industries Development Bank of India (SIDBI) and Rashtriya MahilaKosh (RMK). Commercial Banks, Regional Rural Banks and Cooperative banks are providing microfinance services to people. Another model which is popular other than SBLP Model is Micro Finance Institution(MFI) linkage Model. In the MFI Model, SHG are formed and financed by the Microfinance Institutions which get financial support from various sources.

While the MFI model is growing rapidly, the SBLP model is by far the more dominant model in terms of its wide services and the innovative strategical planning for fulfilling the novel purpose of empowering women. Both these models are very much different in their methodologies adopted and legal form of institutions in service delivery. SBLP model is applied by the government while the MFI model is managed by private organization with few institutions being regulated by the RBI.

There are three different models which have emerged under SHGBLP

i. Model I - Banks take as responsibility to promote and guide SHGs.

ii. Model II - SHGs promoted by government agencies and NGOs.

iii. Model III - SHGs promoted by NGOs and financed by banks under NGOs

iv. Concept of Micro Finance and its Implementation in India

Micro finance was established in Bangladesh by the guidelines of Grameen Bank in 1983. The basic objectives of micro finance that distinguish it from the previous modes of credit delivery are small amounts of loan, lack of physical security but highlighting on social security or peer monitoring and

focus on mainly women borrowers. Micro finance is expected to tackle the major difficulties that are often faced in any credit institution planned for the economically backward class, namely, targeting, monitoring, and implementation of the credit contract. Under the model of microfinance promoted by the Grameen Bank, women borrowers are organized into Self-Help Groups (SHGs), which would be enabled to borrow from the lending institution either for individual or group necessities. The participation of the entire group at every stage of seeking loans and its repayment is important and needs proper monitoring.

The SHG-bank linkage programme is now a decade old, it is high time to review and analyses the lessons learnt from the SHG movement. However, in many countries across the world, micro finance developed from the activities of Non- Governmental Organizations (NGOs) that were supported largely or partly by foreign contributors for their lending operations. Against this context, the Indian experiment with micro finance was different in major two aspects. At the beginning, India started to provide micro finance through its public bank network. The microfinance institution in India developed the strategy as relationship banking rather than parallel banking elsewhere in the world.

(a) Microfinance in West Bengal

Microfinance revolution in West Bengal started comparatively later than the southern region of the country. Microfinance institutions have been the frontrunners when it comes to providing financial services, specifically micro-credit to the low income segment in West Bengal. There are large MFIs such as Bandhan, Arohan, Village financial Services Pvt Ltd. & Sahara Uttarayan that commenced their operations from West Bengal & are headquartered here. According to CRISIL report in 2009, all these MFIs are amongst the 50 largest MFIs in India as Bandhan & Arohan have reported significant increase in the size of total disbursements and client base. The other major source of formal micro-credit is through Self- Help Group. There are 29 MFIs working in West Bengal as on 31st March 2010. The total number of SHGs working under SBLP are 6,85,448 along with total savings client outreach of Rs 37694.40 lakh as on 31st March 2012. Under SBLP, 33 banks are providing microfinance services of which 17 are public sector commercial banks, 3 are Regional Rural Banks (RRBs) and 13 are District Central co-operative Banks (DCDBs). At present 36,93,785 poor members are getting financial service through MFIs working in the state and 53,61,188 members are getting financial services through SBLP and the total portfolio outstanding is Rs. 454492.75 lakh of which the contribution of MFIs is Rs. 297489.38 lakh and SHGs is Rs. 17003.37 lakh (31st March 2012).

Even after six decades of independence, India’s achievements in the development sector are moderate. Unemployment and poverty pose major challenges, especially in rural areas due to the dependence of the poor on non-institutional sources of credit. The growth of micro finance in India is a result of the


failure of all institutional initiatives and heavy exploitation of the poor by indigenous moneylenders in the informal credit delivery system. The evolution and expansion of the micro finance in India has proved to be very useful for women coming forward to mobilize their own savings, eventually curbing gender inequality. The dynamics of the rural economy in India has been changing rapidly. SHG Bank Linkage Model established by NABARD was not just intended for financial inclusion for rural poor women who usually belong to backward classes, scheduled castes and tribes; it also had a holistic methodology besides financial inclusion, i.e., economic and social empowerment of poor women.

LITERATURE REVIEW

The main purpose of microfinance programme is to provide credit on easy terms to the poor and needy people who otherwise cannot access to credit services due to high rates of interest payments. Over the past few decades, microfinance has received considerable attention of many international agencies, policy makers and researchers all around the world. In order to find the impact of microfinance programmes, numerous studies have been undertaken by various researchers in different countries like Bangladesh, India, Pakistan, Nepal, Thailand, Sub-Saharan Africa, Rwanda, Peru and many other Countries of South Asia and Africa. The results showed that while some studies have confirmed the positive role of micro credit in reducing poverty and promoting social and economic development, others have some doubt about the welfare effect of the microcredit. The present study makes a review of some of the studies conducted on microfinance in India and at the International level.

Bera (2011) attempted to study the performance of Self Help Bank Linkage Program in West Bengal in comparison to other states in India and assessed the socio economic condition of the member beneficiaries during pre-joined and post joined SHGs. The study was confined to Purba Midnapore district based on primary data collected from the 2 villages from 2 different blocks. Results showed a significant growth of SHGs in that region. There was a substantial increase in household’s income from livestock and self employment in farm’s activities. Apart from the economic improvement, social outlook of the members has also undergone a radical transformation thus indicating the success of Self Help Bank Linkage program in providing access to finance to the rural people of that region.

Chirkos (2014) studied the impact of microfinance on the lives of poor people in Ethiopia. The study was conducted in two branches of Amhara Credit and savings institutions like Debrator and Estie. For this questionnaires were distributed to the clients of Debrator and Estie branches of ACSI. Sample for this survey was taken 150 with 75 respondents per branch. Findings concluded that the factors which contributed to poverty reduction were vocational trainning, clean water and hygienic environment, nutrition and adequate food,

accommodation, income and savings. The results also showed that access to microfinance led to the increase in the income of almost all the clients, thus improving their standard of living.

Coleman (2002) evaluated the outreach and impact of two microfinance village bank programs that targeted the poor in north east Thailand. Results indicated that even prior to program intervention, the program participants tend to be significantly wealthier than the non participants. The wealthier villagers participated mostly as compared to poor villagers and the wealthier villagers were the major beneficiaries who used their high rank positions to borrow substantially to serve their own interests. Hence the poor members of the villages were deprived from the benefits of microfinance programs.

Das and Patnaik (2016) observed the status of women on the basis of four types of banks that have contributed maximum for the objective of women empowerment in West Bengal in terms of savings, loan disbursement and loan outstanding. The study was based on secondary data collected from the reports of NABARD from the year 2009 to 2014. Results indicated a significant difference in the means of these four types of banks in case of providing microfinance and rural credit to the under privileged women of the society. Further, in the study it was seen that the total requirements of loans was not being fulfilled by the banks which resulted in huge amount of outstanding loan status, even after the huge disbursement of the loan.

Datta and Sahu (2016) conducted a joint study to comprehend the role of MFIs and its associated factors towards women empowerment in Paschim Medinipur district of West Bengal. The study was based on primary data of 220 borrowers collected through structured questionnaires and personal observation. The study found that though MFIs acted as a supportive tool for psychological, economic and social empowerment of women, the area of empowerment was limited due to lack of financial awareness, poor education level, dominance of moneylenders and perceived risk towards MFIs.

Gaiha and Nandhi (2007) focused on the benefits of microfinance through SHGs and assessed the dimension of women empowerment based on a designed survey in selected villages of Pune district. Findings of the study showed that credit obtained by the SHGs were used largely for health, education purposes and for production related expenses especially by the disadvantaged section of poor women. Using different methods and data sources, various dimensions of empowerment were confirmed and its mechanism involved were identified and assessed. Further the study concluded that access to credit reduced the domestic violence of the women and improved the status of women in the household as well as in the society.

Goel (2015) examined the impacts of microfinance on income inequality, poverty alleviation and women empowerment in Gujarat. SEWA Bank being the pioneer of financial institution


in Gujarat was chosen as the unit of analysis. Four districts of Gujarat namely Mehsana, Ahmedabad, Gandhinagar and Sabarkanth were covered in the study and found that availment of loan from microfinance institution SEWA increased the individual and household income of the participant along with reduction in income inequalities. Severity of poverty was reduced among the beneficiaries. Easy access to credit from SEWA led to the empowerment of women economically, socio culturally and politically.

Khan and Raheman (2007) investigated that how microfinance works by using group lending methodology for poverty reduction, empowerment and improving living standards of poor people in Bangladesh. Sample was chosen on the basis of random sampling technique and people involved in microfinance activities were interviewed. The study concluded that access to microfinance has a positive impact on the standard of living of the poor and has also helped the poor to empower themselves.

Khandekar (2003) scrutinised the impact of microfinance on poverty reduction at both the participant and the aggregate level using panel data of two periods of 1991-1992 and 1998- 1999 in Bangladesh. Analysis of data revealed that access to microfinance contributed to poverty reduction, especially for female participants and to overall poverty reduction at the village level. He also highlighted that microfinance reduced poverty among non participants as well through spillover effects in which non participants benefited from the increase in economic activities.

Lavoori and Paramanik (2014) seek to examine the impact of microfinance and other socio economic factors on women empowerment as viewed from their participation in decision making, income as well as employment generation activities. The findings of the study based on a field survey conducted in two villages of Andhra Pradesh suggested that factors such as income, family size and frequency of SHGs meeting had a overall positive influence on women empowerment.

Loomba (2013) assessed the role of microfinance in women empowerment and performance of SHGs in Ghaziabad district. From the study she concluded that microfinance loan availment and its productive utilization had a profound influence on the economic status, decision making power, knowledge and self worthiness of women participants of self help group bank linkage program in Ghaziabad district.

Malakar and Gautam (2016) made an attempt to examine the impact of SHG-bank linkage program in Nalbari district of Assam. For that 100 SHGs who got bank credit in the district were selected randomly. The findings revealed that self help bank linkage program has helped in promoting saving habits and increased the credit absorption capacity of SHG members, thus contributing towards the economic development and social upliftment of economically weaker section of the poor.

Modi, and Patel (2014) conducted a joint study to obtain insights regarding factors empowering women through

microfinance services in rural areas. For that 205 respondents out of 248 questionnaires in rural areas of North Gujarat were approached by following a non probabilistic convenience sampling technique. Results indicated that five factors that were socio-economic upgradation, autonomy in life, choice, women position in family & society and positive approach towards child development had significant effect on rural women empowerment in those rural areas. They concluded that as rural women started to earn and contribute to family expenses, they participate equally with men in decision making process, thus improving their status in both family and society.

Nasir (2013) tried to examine the prevailing condition of microfinance in India and tried to discover a cost effective mechanism for providing financial services to the poor. The research revealed the prevalent gap in the functioning of MFIs such as practices in credit delivery, lack of product diversification, customer overlapping and with practicable suggestions to overcome the issues and challenges related with microfinance in India.

Okwoli, Abubakar and Abubakar (2013) discover the role of microfinance institutions in rural area for the transformation and development in Nigeria. The study revealed the weak institutional capacity and weak empowerment of rural dwellers in the country. Thus the study concluded that microfinance policy and programs can be considered as good empowerment measures which if properly managed would go a long way in improving the condition of lives of rural dwellers.

Patel (2017) studied the impact of microfinance on women empowerment in context of various microfinance models and initiatives taken by programs and schemes of government and non government organizations and found that microfinance plays a very important role in creating financial resources for poor women but requires investment in capacity building over a period of time which will help to build the social capital and bring economic prosperity in future.

Rooyen, Stewart and Wet (2012) methodically studied the evidence of micro-credit and micro savings on poor people in Sub-Saharan Africa. The available evidence showed that microfinance had positive and negative impact to the advancement of the poor.

Samarpreet (2010) analyzed the factors influencing the microfinance services and studied the progress of delivering microfinance services across different states of India over the period 1994 to 2007. Findings of the study showed the intensive growth of microfinance services in southern region and the active participation of poor women in microfinance activities in order to pull out themselves from the shackles of poverty.

Saravanan and Dash (2017) in their joint study examined large panel of SHGs financing across 30 Indian states over the period 2007-2015 by applying panel regression frameworks of both time and state specific effects and confirmed that increase in the number of SHGs have positively influenced


the bank loans particularly from public to private sectors over the years. The study concluded that financial inclusion drive in India has made financial institutions across the sectors to extend loan for small sector initiatives.

Shahnaz and Mahmood (2009) in their study investigated the growth strategy adopted by the microfinance programme and its impact on the performance of microfinance institutions in Pakistan. For this ratio analysis approach was used. They found that though the microfinance programme adopted an extensive growth strategy and made some progress in outreach and performance, yet the challenge of increasing the breadth, depth & scope of outreach at lower level remained high.

Sharma (2007) conducted a study to find the women’s participation in group based micro credit programs during 2004-2006 in Nepal. For this a descriptive cross section analytic design was adopted and field survey related to women empowerment was carried out. The findings revealed that women played an important role in house-hold decision making process and had greater access to financial and economic resources, greater social network and better bargaining power.

Sunny and Pereira (2011) reviewed microfinance through SHGs as a poverty alleviation tool and facilitating empowerment of women. Depending on the information collected through primary survey from five selected different regions of Maharashtra, they came to a conclusion that SHGs played a significant role in providing credit, improving standard of living of the poor and uplifting status of women in those regions.

Thileepan and Soundarajan (2014) considered the strategies of SHGs for micro enterprise development in rural areas and analyzed marketing, financial and socio cultural problem of SHGs. They found that with the help of microfinance SHGs emerged as a popular strategy for the facilitation of micro enterprise development by government, non government organizations and education institutes in rural areas of India.

Zaman (1999) observed the extent to which small credit reduced poverty and vulnerability by focusing on BRAC, one of the largest micro credit providers in Bangladesh. The study found that access to financial services enabled BRAC clients to reduce their weakness through smoothing consumption, construction of assets and receiving services or help by group during natural disasters.

OBJECTIVES OF THE STUDY

The objectives of the study are as follows:

(i) To examine the utilization of micro finance services provided by the self-help groups on income levels and also to study the impact of microfinance on savings of the members of SHG in Mathurapur village block 1.

(ii) To understand the socio economic condition of members of SHGs in Mathurapur village block 1.

RESEARCH METHODOLOGY

The study is based on primary data collected from Mathurapur village block 1. The data were collected by designed questionnaire for the purpose of the study from 38 respondents from different Self-Help groups. All the respondents were female. Primary data is being collected to analyse the socio- economic impact of the study. The structured questionnaire was used to take in depth interview of respondents of Self- Help groups of Mathurapur village. Thereafter qualitative analysis is done to understand impact of microfinance on income levels and savings of the members and to understand the socio economic impact. There are certain advantages of primary data. It is easier and accurate to analyze data that has been collected. When the data are collected by ourselves we are much closer to the data. Therefore we have a much deeper understanding of it. We have considered Mathurapur village block 1 to conduct our survey because of our feasibility attainability of the place.

Type of data: primary & secondary

Tool of data collection: Questionnaire

Sample size: 38 respondents from different Self-Help groups

Sample unit: female

Area oaf study: Mathurapur village

Data analysis technique: Qualitative and Quantitative

Figure 1: Organizational Structure of SHG(Self Help Group) at Mathurapur Village Block-1

There are three clusters in this pyramid style of organizational structure- a. Dal b. Upasangha c. Sangha. Bottom of the pyramid consists of Dal and every Dal has 10-14 members. From each and every Dal one member is co-operatively selected to form Upasangha (named as Sadharan Sadasya), 5 of them is selected by mutual co-operation to form Sangha. If we move from Dal to Upasangha to Sangha, there is a hierarchy. Five members of Sangha can be similar to the functional manager of any formal organization. Functional differentiation measures the degree to which tasks is broken down into functionally distinct units like finance head, admin


head, marketing expert etc. The one who takes the final decision for the pyramid style of organizational structure as is secretary. She is selected on the basis of leadership skill, motivational attitude towards other members, decision making power enthusiasm etc. The SHG of Mathurapur block 1 has proper efficient management and smooth functioning of these groups without any direct control on them by any outside institution. They are trying to achieve self reliance and self- dependency for this economic and social empowerment.

Here the SHG charges an interest rate of 2% per month from the borrowers and the bank charges 7% interest rate on the principal amount of loan. So per year interest earning on the principal amount of loan taken by the SHG is 24% and they have to pay to the bank 7%, so their income on the principal amount is, (24%-7%)= 17%. So own fund generated by SHG from loan disbursed by formal financial institution is, R*?Li ; where i=1 to N (N=total number of members taking loan). Here R that is the interest charged per month which is decided by SHGs which is 2% per month and 24% per year in Mathurapur village Block 1, R is divided into two parts - RB and RSHG, where RB denotes as the rate of interest charged by commercial bank, and RSHG as the rate of interest charged by SHG for generating working and operational fund for the development and fulfilling the financial requirement of the member participants.

DATA ANALYSIS AND INTERPRETATION

Table 1: Number of Years of Association with SHGs

Number of Years Frequency Percent

<=1 year 3 7.89

2-4 years 13 34.21

5-7 years 4 10.53

>= 8 years 18 47.37

Total 38 100.00

Source: primary survey data, March 2018

Figure 1: No of years of association with SHGs

From the above table and figure it is inferred that majority of the sample members have been associated with the Self-Help Groups for more than 7 years which counts for only 47.37 percent and less than half of them i.e. 34.21 percent have been associated with the self help groups for 2-4 years. Apart from that 10.53 percent respondents are in self help group for 5-7 years and only 7.89 percent are in self help groups for less than 1 year.

Table 2: Percentage of Occupation of the Households

Occupation of the Households

Frequency Percent

Small business 20 52.63

Agriculture and allied activities

7 18.42

Other labour 11 28.95

Total 38 100.00


Figure 2: Percentage of Occupation of Households

The above table and figure depicts the various occupations of the households. It is found that 52.63 percent of the samples are engaged in small business activities such as tailoring, sewing, making thermocol products, saris, pickle, ice-creams, selling saris and other clothes, garments and various other small petty shops including grocery, stationary shops, food stalls etc. Other than small business, about 18.42 percent are engaged in agriculture and allied activities like fishing, livestock, poultry and farming and 28.95 percent are doing other types of labours such as working as wage labourers such as mason, carpenters etc. Here it is seen that maximum households are engaged in non-farm activities such as small business and other labour jobs. This is because agricultural jobs being seasonal, labourers remain unemployed during the lean season. This makes the labourers seek regular jobs that could provide them income throughout the year other than agriculture. Besides this higher wages rates prevailing in other non agricultural works which are locally available attracted the agricultural labourers.


Table 3: Percentage of Asset Holding

Asset Holding of The Different Groups

Number of Assets

Percentage of Asset Holding

Live stocks 7 18.42

Electricity 38 100.00

Bi-cycle 30 78.95

Motor-cycle 11 28.95

Mobile 38 100.00

Radio 7 18.42

Television 31 81.58

Plough 1 2.63


Figure 3: Percentage of Asset Holding

In the above table and Figure, we have shown percentage of assets holding. We can see that the number of the mobile holders and electricity consumers are greater in number that is 100% people have mobiles and 100% people are consuming electricity. The percentage of livestock holders and radio holders is as same as 18.42%. The percentage of plough holders is 2.63% which is the minimum percentage of asset holdings. The percentage of motor cycle holders is low but the percentage of holding television and bi-cycle are in average.

Table 4: Amount of loan taken by the Respondents

Loan Amount Frequency Percent

Nil 4 10.53

<5000 2 5.26

5000-15000 7 18.42

15001-25000 16 42.11

25001-35000 1 2.63

35001-45000 3 7.89

>45000 5 13.16

Total 38 100.00


Figure 4: Percentage of Amount of loan taken by the

respondents

Here we have 42.11% of respondents who have taken loan between the ranges of 15001-25000. These members are associated with SHG for more than 2 years. The amount of respondents 2.63% took loan between the ranges of 25001- 35000, because they have been associated with SHG for more than 17 years, so they have confidence in them that they can repay. 13.16% of members took loan above 45000, here all the respondents were associated with SHG for more than 10 years and few of them were associated with SHG for 14 & 11 years respectively. There were 5.26% of respondents who took loan below 5000; this is because they were all associated with SHGs for either 2 or 3 years. So we can conclude that the members who are associated with SHGs for more than 10 or 15 years apply for a large amount of loan as they have confidence in themselves that they can repay the loan on time. This self confidence leads to empowerment of women.

Table 5: Percentage of Respondents invested loan in the field

Loan Invested in the Field

No. of Respondents

% of Respondents

Agriculture 5 14.71

Livestock 1 2.94

Small Business 27 79.41

Fishery 1 2.94


Figure 6: Percentage of Respondents Invested Loan in the Field


Table No. 6 and the bar diagram shows the percentage of respondents invested loan in the field. 27 women invested the loan in small business, i.e., around 79.41% members are in this field which includes mainly grocery shops, sari business, thermocol business, parlor, food stalls, mobile and electronic shops, tailoring and sewing, garments business etc. Investment in this field is remarkable because respondents are getting more return from this field. 5 members, i.e., 14.71%

women are in agriculture because they have their own agricultural land. Very few members invested in livestock and fishery just because of low profitability of these fields. Although there are 4 women who have not yet invested in any field as they have not taken loan, (which is not included here), 34 members are using the loan for productive activities. Thus we can conclude that there has been progressive economic empowerment of women after joining SHGs.

Table 6: Percentage of Income against loan taken

Group Names Sum of incomes of the respondents

Sum of loan taken by the respondents

Percentages

Papri SHG 1500 nil 0

Biswakarma SHG 2000 30000 6.666666667

Mother teresa SHG 6500 40000 16.25

Ma tripura SHG 5500 40000 13.75

Basanta SHG 5000 45000 11.11111111

Matongini Mohila Swanirbhar dol 9000 70000 12.85714286

Prarthana SHG 8000 30000 26.66666667

Moitri SHG 1400 40000 3.5

Sarodamoyi SHG 2000 110000 1.818181818

Jogodhatri SHG 6000 45000 13.33333333

Matongini Swarozgari dol 2700 60000 4.5

lokkhi Narayan SHG 3000 20000 15

Ma Korunamoyi SHG 2700 60000 4.5

Tribeni Swanirbhar Goshti 1300 40000 3.25

Notun Surjo Mohila SHG 1300 2000000 0.065

Sondhyapradip SHG 4800 14000 34.28571429

Subho Swarozgari dol 1400 152000 6.842105263

Lokenath Shg 8300 35000 23.71428571

Panchananda Shg 3200 35000 9.142857143


Figure 6: Percentage of income against loan taken


Here, we can see that sondhyapradip SHG members are earning most that is 34.28% because one member of that group has invested the loan amount (14000) in small business purpose (accessory shop) and is earning also well that is 1800 per month and the other member is earning about 3000 per month and she didn’t apply for loan. So the percentage is higher comparative to other groups. Papri SHG’s income against loan is zero here because they didn’t apply for loan and their association with SHG is also less than 9 months but they have a total earning about 1500.So for calculation of income upon loan taken by the respondents is zero. Here Notun surjo SHG is earning less that is 0.0655 because the respondents took a large amount of loan but they are earning less. They have invested the amount of loan into small business but due to less profitability they are earning less. Less profitability may cause by the inefficiency in business strategies. Other groups as Moitri SHG (3.5%), Sarodamoyi SHG (1.81%) Ma korunamoyi SHG (3.25%) Matongini

Swarozgari dol (4.5%) Biswakarma SHG (6.66%) are earning less than average because of the same reason.

Here we can see that Panchananda SHG members are saving maximum that is 86.95% which is much higher than other groups. One member of the group is saving more than the other member (savings is 1500 against income 2200) as she has a small family size but the other member is saving less due to expenditure (savings is 500 against 1000 income). So the total percentage of savings is higher. In case of Ma Tripura SHG, the percentage of savings is 3.63% as one member is not saving at all and the other member is spending much for household purposes as she is a divorcee. So she has taken the responsibility of her two sons on her. So the percentage of savings on earning of this group is low. Other groups such as Lokenath SHG (8.43%), Prarthana SHG (12.5%) are saving less due to more expenditure. Papri SHG members are saving 60% this is because they don't contribute much for family expenditure. So they can save more.

Table 7: Percentage of Savings on Earnings

Group Name Savings of 1st

member

Savings of 2nd

member

Income of 1st

member

Income of 2nd

member

Total savings

Total income

Percentage of income that

they are saving

Prarthana SHG NIL 1000 3000 5000 1000 8000 12.5

Moitri SHG 400 100 600 800 500 1400 35.71

Sharadamoyi SHG 500 NIL 2000 NIL 500 2000 25

Jagadhatri SHG 500 300 3500 2500 800 6000 13.33

Sandhyapradeep SHG 500 1000 1800 3000 1500 4800 31.25

Subho-Swarozgari Dol

300 3000 400 10000 3300 10400 28.57

Lakkhi Narayan SHG 400 500 1000 2000 900 3000 30

Matongini Swarozgari Dol

800 500 1200 1500 1300 2700 48.15

Natun Surjo Mohila Dol

200 200 700 500 400 1200 33.33

Biswakarma Mohila SHG

500 200 1000 1000 700 2000 35

Mother Teresa SHG 500 500 4000 2500 1000 6500 15.38

Basanta Swarozgari Dol

750 2000 2000 3000 2750 5000 55

Matongini Mohila Swarozgari SHG

1500 300 3000 6000 1800 9000 20

Maa Tripura SHG NIL 200 500 5000 200 5500 3.64

Maa Karunamoyi SHG

500 500 700 2000 1000 2700 37.04

Papri SHG 100 800 500 1000 900 1500 60

Tribeni SHG 200 200 800 500 400 1300 30.77

Lokenath SHG 200 500 300 8000 700 8300 8.43

Panchanada SHG 1500 500 2200 1000 2000 2300 86.96

Source: primary survey data March 2018


Figure 7: Percentage of saving on earning

(a) Comparison between Income and Savings:

Now if we compare the above earnings and savings graph we can see that Panchananda SHG is saving more compared to their income as one respondent is saving higher. Whereas, Papri SHG members are earning 1500 but saving a higher proportion as they don't have to contribute much for expenditure. If we compare the percentage of savings and percentage of earning then we can see in case of Subho Swarozgari dol, the respondents are saving much as household expenditure is bore by their husband mostly. The same is true for Notun Surjo Mohila SHG as well.

Table 8: Comparison of monthly income before and after joining SHGs

Income Level Per Month (in

Rs.)

No. of Respondents

before Joining SHG

No. of Respondents after

Joining SHG

Nil 25 1

Up to 1000 9 17

Up to 2000 2 7

Up to 3000 0 7

Up to 4000 1 2

Up to 5000 1 2

Up to 6000 0 1

Up to 7000 0 0

Up to 8000 0 1


Table 8 represents the comparison of monthly income level of respondents before and after joining SHGs. Before joining SHGs, earning of 25 women out of 38 was nil whereas after joining SHGs the number has gone down to 1 only. Number of women earning up to Rs. 1000 per month becomes 17 which were 9 earlier. The income groups up to Rs. 2000 and up to Rs. 3000 where earlier there were 2 and nil respondents

respectively, now after joining SHG there are 7 members in both levels. We can see that in the income group up to Rs. 4000 and up to Rs. 5000 total number of women increases from 1 to 2 in both income groups. Before joining SHG no single woman was earning more than Rs. 5000 but after joining SHG, 1 member earns up to Rs. 6000 and 1 member earns up to Rs. 8000. Thus it can be inferred that it is praise worthy because after joining the SHG there has been a sharp rise in the level of income

Table 9: Comparison between Total Income and Total Savings

Loan invested in

the field

No. of respondents

Total income

from the field

Total savings

from the field

Agriculture 5 12000 2700

Fishery 1 3000 1500

Small business

27 63600 14850

Livestock 1 400 300


Figure 9: Comparison between Total Income and Total Savings

In the above diagram and table, we have incorporated the comparison between the savings and income, after investing loan in the different fields. From above diagram we can see that income and savings both are high in small business where income is Rs. 63600 and savings is Rs.14850. We can also see from the diagram that in the livestock the respondents are earning less which is 400 and saving less that is 300.From the data and diagram we can see that people are earning more and saving more from investing the loan in small business. They are investing in the small business more to earn a huge amount.

We can see that the difference between the total earning and total savings of the respondents from the small business after investing their loan is very high. The reason is that the respondents are earning more from the small business but they are using their income mostly in household purposes like they are sending their children to the private tuitions,

J-GIBS Volume 10, Number 1, January-December 2018

they have increased their standard of livings, increased their consumption levels also. After spending all their income in household services, they are savingis only Rs. 14850 whereas their earning is Rs. 63600. Same thing is applicable for agriculture also. They12000 but they are saving Rs. 2700, remaining portion they are spending in their household services. Now that the difference between the earning and respondents after investing their loan in livestockreason is that livestock is the additional part of earning. Respondents are taking help from their husbandeveryday needs that is why if they earn Rs. 400Rs. 300. Fishery is same with livestock whatever theyi.e. Rs. 3000 they save Rs. 1500 after keeping which is Rs. 1500.

Table 10: Claimed impact of the microfinance freedom of the SHGs women beneficiaries after joining the

group

Source: primary data survey, March 2018

In our primary survey there are 38 respondentsSHGs. From the above table we can conclude that 86.84% respondents are taking decision by own that is out of 38 respondents, 33 members are taking decisions by own and decide what they will do with the profit. Out ofonly 3 respondents are taking decisions by ownany kind of asset. From this we can say the percentage of making purchases by own is very low which is7.89%. The number of respondents going to the market respondents is 19 which mean only 50% respondents have marketing skill by using this skill they can go to market and sell their products and make profit. 100% respondents can caste their own votes, no one dominates them respondents and 38 respondents are casting their

(b) Impact of Microfinance on Aggregate

Microfinance does not only have a strong impact relatingthe fight against poverty but it may also “empowerment” – amongst the poorest of the poor, namely women. Empowerment as the acquisition of a right to free speech and social recognition may be consideredmoving towards equality between men and women.above study, it is shown that women who havefor the use of productive purposes benefitted to generate income and also have small savings with formal

Microfinance delivery model

Decision regarding the use of the profit from the sales (in

%)

Making purchases

(in %)

Going to the market (in %)

Where women themselves are the sole decision makers

SHG 86.84 7.89 50

December 2018

of livings, they have increased their consumption levels also. After spending all

saving less which their earning is Rs. 63600. Same

They are earning Rs. 12000 but they are saving Rs. 2700, remaining portion they are spending in their household services. Now we can see that the difference between the earning and savings of the

livestock is less. The reason is that livestock is the additional part of earning.

husband to fulfill their 400 they can save

Rs. 300. Fishery is same with livestock whatever they earn a certain amount

programs on the after joining the

institutions. These savings also transmit to investment and capital formation in the economy whichwith other sectors. It enhances aggregate demand economy with achieving the goal ofof the government. How the loan disbursement through the Self Help group can enhance the aggregate demand of the economy is represented by the following flow

Loan disbursement through Self Help Group = L

Employment opportunities mainly in small business = E

Net monthly Income from Loan = I

Savings/ Net Income = S/ IN

Credit creation of banks = Cr

Investment of different sectors = I

Capital Formation = CF

Aggregate Demand = Y

The growth equation from the aboveas:

G = a(I/Y) + b(dWm/W ) + E (dY /Y )m x

respondents from different can conclude that 86.84%

respondents are taking decision by own that is out of 38 respondents, 33 members are taking decisions by own and

of 38 respondents, own for purchasing

can say the percentage of making purchases by own is very low which is7.89%. The

market among 38 respondents is 19 which mean only 50% respondents have

can go to market and sell their products and make profit. 100% respondents can caste their own votes, no one dominates them i.e. out of 38

their own votes.

Impact of Microfinance on Aggregate Demand

Microfinance does not only have a strong impact relating to also serve to push

amongst the poorest of the poor, namely women. Empowerment as the acquisition of a right to free

considered as a process women. From our

have taken the loan for the use of productive purposes benefitted to generate

formal financial

Where, I/Y is the investment ratio; dWm/Wwomen workforce; Ex is the externality effect; dYgrowth of agriculture and allied sector.strategy initiated by the policy improve the growth of agriculture andexternality effect on other sector also enhances the GDP growth in long run. The inclusion ofimproves the explanatory power of thealso explains the interrelationship of societal and economic impact of women empowerment.

CONCLUSION

The above analysis shows that microfinance has provifinancial strength to its members bypurchase decisions by their own. Someearning member and contributed tojoining SHG.This additional incometo increase the annual household expenditure of majority of members and definitely helped in improving thepower of the rural households. Study also revealed that the majority of members having no savingsturned to be having substantial amountin the post-SHG stage. Besides that, asto increase their family income, the social outlook of rural women has undergone a radical change.the group significantly contributed members and decision making skill of members are also augmenting. The members are moresocial evils and problems in the societyincident of family violence declined.

Going to the market (in %)

Casting Votes (in %)

Where women themselves are the sole decision makers

50 100

41

institutions. These savings also transmit to investment and which has positive linkage

with other sectors. It enhances aggregate demand of the of financial inclusive policy

of the government. How the loan disbursement through the Self Help group can enhance the aggregate demand of the economy is represented by the following flow chart:

Loan disbursement through Self Help Group = LSHG

es mainly in small business = ESB

Net monthly Income from Loan = IN

Investment of different sectors = I

above flow chart can be written

G = a(I/Y) + b(dWm/W ) + E (dY /Y ) A A

dWm/Wm is the growth of is the externality effect; dYA/YA is the

sector. If the inclusive growth policy maker can substantially

and allied sector, then the externality effect on other sector also enhances the GDP

run. The inclusion of dWm/Wm considerably the growth equation which

also explains the interrelationship of societal and economic

The above analysis shows that microfinance has provided by making them able to take Some members became an to their family income after

income is playing a crucial role the annual household expenditure of majority of

members and definitely helped in improving the purchasing power of the rural households. Study also revealed that the

savings in pre-SHG era were amount of household savings

as women are contributing to increase their family income, the social outlook of rural

change. The involvement in the group significantly contributed self-confidence of the members and decision making skill of members are also

more assertive in confronting society and as a consequence

declined. It can also be concluded


that SHG-Bank linkages is a successful step in providing access to finance to the rural needy people of Mathurapur village Block 1. Through this process a large number of people have exercised various options to challenge poverty. Banks along with government at local and village level should come forward to provide better training for marketing and technical skills to the group members which may accomplish the ventures of SHGs more profitable and generate a long run economic development.

LIMITATIONS

There are numeral limitations in this study. Firstly, the respondents were limited (38 respondents or samples) in terms of size and structure. Secondly, the data collection was restricted only within the Mathurapur village block 1, which may fail to represent the actual scenario of the whole state. Our study was conducted at a point of time so the data may also fail to show the changes in the fields of loan investment.

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