MICRO FINANCE AND EMPOWERMENT OF WOMEN: AN IMPACT OF STUDYOF

SHGs – ERODE DISTRICT

 Dr. B. POORANA JEYA

ABSTRACT
Micro Finance is the source of financial services for entrepreneurs and small
businesses lacking access to banking and related services. Micro Finance through Self Help
Groups (SHGs) has been recognized internationally as the modern tool to combat poverty and
for rural development. Micro Finance and Self Help Groups are effective in reducing poverty,
empowering women and creating awareness which finally results in sustainable development
of the nation. The main aim of micro Finance is to empower women. In this paper the role
played by Micro Finance in Women’s empowerment are considered into two dimensions
namely social and economical. Analysis should that there is gradual increase in the two
factors among rural women. From the interaction among the respondents it is noticed that
some members are expecting the NGO to come up with more training sessions in income
generating activities. All they need is a way to develop their skills and talents by participating
in various training programs. There is a definite improvement in economical well being and
social empowerment among rural as a result of participating in Micro Finance through SHG
program.

Key words: Micro Finance, Women Empowerment, Non- Governmental Organization, Self
Help Group, Below Poverty Line.

1. INTRODUCTION

At present, we cannot imagine a world without Finance. In other words, Finance is

the soul of our economic activities. To perform any economic activity, we need certain
resources which are to be pooled in terms of money. Finance is a prerequisite for obtaining
physical resources, which are needed to perform productive activities and carrying business
operations such as sales, pay compensations, reserve for contingencies (unascertained
liabilities) and so on. Hence, finance has how become an organic function and inseparable
part of our day-to-day lives. Today, it has become a word which we often encounter on our
daily basis.

 Assistant Professor, P.G. & Research Department of commerce (CA), Bharathidasan

College of arts & Science, Erode. Mob:7708094239 e-mail: [email protected]
 Micro Finance is a type of banking service that is provided to unemployed or low
income individuals or groups who would otherwise have no other means of gaining financial
services. Micro Finance services aim to alleviate poverty and help low income individuals.
Ultimately, the goal of Micro Finance is to give low income people opportunity to become
self sufficient by providing a way to save money, borrow money and get insurance, money
transfers and other banking services to customers that lack access to traditional financial
services, usually because of poverty. Micro Finance has a significant role in bridging the gap
between the formal financial institutions and the rural poor.

Women Empowerment

The World Bank (2011) has estimated that there were an estimated 1.345 million
poor people in developing countries who live on $1.25 a day or less. The 2007 World Bank
report “Global Economic Prospects” predicts that in 2030 the number living on less than the
equivalent of $ 1 a day will fall by half, to about 550 million.

Empowerment is a process that helps and assists women realize their identity,
capacity, capability, strength and power and its application in day-to-day life in various
spheres. It enables them to have access to resources, greater say in decision making, more
ability to plan their time and family size also free them from irrelevant customs, traditions,
practices and prejudices.

In order for women to be empowered, they need access to the material, human and
social resources necessary to make strategic choices in their life. Not only have women have
been historically disadvantaged in access to material resources like credit, property and
money but they have also been excluded from social resources like education or insider
knowledge of some businesses. Access to resources alone does not automatically translate
into empowerment or equality, however because women must also have the ability to use the
resources to meet their goals. In order for resources to empower women, they must be able to
use them for a purpose that they choose.

Self Help Groups

A Self Help Group is a village based Financial Intermediary Committee usually

composed of 12 to 20 Below Poverty Line (BPL) women members in the age group 18 to 60
years residing in the same area. A mixed group (men and women) is generally not preferred.
Most SHGs are located in India, though SHGs can be found in other countries, especially
South Asia, Southeast Asia.

In 1979 many Non- Governmental Organisations (NGOs) in India, came forward to

form SHGs with rural poor and provide financial services to the rural poor and Rural Non-
Farm sector (RNFS) enterprises to them.

NABARD (National Bank for Agricultural and Rural Development) initiated the
process of Micro Finance in India through bank linkage program of SHGs by providing
technical, financial support to subsidiary banks in 1991. Government of India started to
provide Micro-Credit through banking sector (Commercial Banks, Regional Rural Banks and
Co-Operative Banks) to generate self employment through SHG approach by launching
Swarna Jayanti.

Now-a-days more and more SHGs formed in India, particularly in Tamil Nadu, total
number of new SHGs to be formed was 3,19,054. In Erode district, actually number of
groups formed is 29,268 are functioning in 13 blocks and the population size is 600.

2. REVIEW OF EARLIER LITERATURE

S. PORKODI, and D. ARAVAZHI (2013), Present the Micro Financial Institutions

and Government has initiated to start savings with availability of finance in rural finance and
with the help of some formal sources of funds. The MFIs have immense opportunities in the
new avatar of micro credit in India. However, in the light of recent experiences, and the need
for qualitative growth, we suggest that Micro Finance will manage and fully support the self
help groups in the terms of financial assistance to developmental activities

M. Saravanan (2016), The study is related to women empowerment through self help
groups in Tamilnadu it’s completely based on secondary data. To develop the self-help
groups are developed with the help of availing financial assistant from many financial
institutions. The result is the development of self Help Groups is an impact on both economic
and social benefits.

Dr. M. Nandhini, Dr.M.Usha, Dr.P.Palanivelu (2018), Poverty and unemployment

are the major problems of any under developed countries, to which India is no exception. In
the rural area 27.1% of the population is living under poverty. The overall unemployment rate
is estimated to 7.32%. The female unemployment rate is 8.5%. The rate of growth of women
unemployment in the rural area is 9.8%. In Tamil nadu to eradicate women unemployment
more attractive schemes are introduced, one of which with less effort is Self Help Group,
hereafter called as SHG.

3. STATEMENT OF THE PROBLEM

In olden days women were restricted to take part in any social activities and not given
roles in decision making in her family. The situation was even more worsening in rural and
remote areas. Now the situation has been changed. She is given freedom to do what she
wishes. In today’s scenario more women are engaged in income generating activities. This is
because of NGO and other Financial Institutions came forward to provide Micro Finance to
poor women. They believe that a woman is the small credit risk and often benefits the whole
family. The main aim of Micro Finance is to empower women. This included the researcher
to focus more on the empowerment of rural women who participates in the Micro Finance.

4. OBJECTIVES OF THE STUDY

The main objectives of the study are as follows:

1. To study the role of Micro Finance in Women Empowerment.

2. To review the genesis, formation and development of SHGs in India.

3. To evaluate the economic and social enhancement that has been achieved
both individuals and family levels.

4. To analyse the impact of Micro Finance on socio economic of SHGs in

Erode District.

5. Finally conclude if SHGs are enhance and effective for socio economic of
women empowerment as well as effective and efficient functioning in Erode District.
5. METHODOLOGY

5.1. Sources of Data

Present study is empirical in nature based on both primary and secondary data.
Primary data were collected from the SHG members from Erode District through Interview
Schedule. Secondary data and pertinent literature has also been compiled from published and
document sources and also collected from the web.

5.2 Sample Size

50 samples from 10 SHGs from Erode District have been considered to

conduct the present study.

5.3 Area of Sampling

The study was conducted in the Erode District in sight of the benefits and
challenges faced by women in SHGs.

5.4 Statistical Tools

Simple correlation co- efficient, paired t-test, tabulation and percentage

analysis are used for analysis of the data.

6. DATA ANALYSIS AND INTERPRETATION

Table 6.1

Socio- Economic characteristics of the Respondents (n=50)

Variables Respondents Percentage

Age

Up to 25 4 8

26 – 35 16 32

36 -45 20 40

45-60 10 20

Marital status

Married 38 76

Unmarried 5 10
 Widow 6 12

Divorced 1 2

Educational Qualifications

Elementary 2 4

Primary 8 16

Secondary 15 30

Higher Secondary 5 10

UG 3 6

Nil 17 34

Caste

SC 6 12

ST 2 4

OBC 33 66

General 9 18

Purpose of loan

Household 11 22

Business 22 44

Education 7 14

Repayment 10 20

Reduction in Poverty

Very Much 44 88

To an extent 5 10

Not much 1 2

The above table 6.1 mentioned 34% of the women are illiterate and 30% of the
women have completed up to secondary level education. It is noticeable that only 6% of the
respondents are graduates.
 88% of the respondents believe that Micro Finance has reduced their poverty levels to
a greater extent. 44% of the beneficiaries use the loan for starting a new business or for
expanding the existing business. It is interesting to note that 20% of the respondents take
loan for the repayment of an existing loan. However 14% of the respondents take loan for the
education of their Children, which signifies their awareness.

Paired t-test

Hypothesis: Ho = There is no difference in mean income of respondents before and

after joining SHG.
Table – 6.2
Paired t- test Table
Paired sample statistics
Mean N Std. deviation Std. Error
mean
Pair 1
Income 1.2640E3 50 222.01305 31.39739
before
joining SHG
Income after 1.7720E3 50 222.27029 31.43377
joining SHG

Paired sample test

T d. Sig.
Paired differences
f. (2-
tailed
)
Mean Std. Std. 95%
deviation Error confidenc
mean e interval
of the
difference

Lower Upper

Incom - 160.15299 22.6490 - - - 4 .000

e 5.08000E 9 5 553.51498 462.4850 22.42 9
before 2 2 9
joining
SHG-
Incom
e after
joining
 SHG

Since the probability value is 0.000 (p<0.01), we reject the null hypothesis and
conclude that mean salary after joining SHG is significantly higher than the mean salary
before joining SHG. Thus the Micro Finance is significantly increasing the salary of the
respondents.

On the basis of t-test it can be easily concluded that Micro Finance is playing an
important role in increasing the income of women.

7. FINDINGS OF THE STUDY

Findings of the study can be summarized as follows:

 Maximum number of respondents accepted that Micro Finance has brought economic
development directly and indirectly and thus happiness and peace in the family.
 It is found that Micro Finance improved literacy levels of the respondents and also
improved their awareness on child education.
 Women are getting economically and socially empowered after getting Micro Finance
has 88% of the respondents reported that poverty level has reduced by participating in
Micro Finance program.
 More than 96% respondents said that they plan an important role in decision making
and they were consulted for making important decisions of the family. This is an
important factor of economic empowerment.
 There is a significant improvement in the income of the respondents after joining
SHG.

8. SUGGESTIONS FOR FURTHER DEVELOPMENT

The following suggestions were made for further development of women

empowerment through self-help groups.

 The members of the group are encouraged to meet on a regular basis to discuss their
savings, new developments, and credit operations.
 Members can also plan future activities for achieving their big goals step by step.
 Government and also Finance department to take more steps for increasing rural
women’s empowerment through self help groups and micro finance.
9. CONCLUSION

Micro Finance program is one of the most important programs in India as developing
countries are facing initial capital problem to investment that is why micro finance system is
providing financial facility through SHGs.

Commercial Banks are playing vital role in providing loan facilities to SHGs through
SHG bank linkage programs in Erode district. But, unfortunately majority of SHG members
are using loans to unproductive purpose this leads to indebtedness so that the members should
use loans to productive purpose, in order to improve and empower the economic conditions
of the women in Erode district.

REFERENCES

1. Sharma, P., & Varma, S. K. (2016). Women empowerment through entrepreneurial

activities of Self Help Groups. Indian Research Journal of extension education, 8(1),
46-51.
2. Sarania, R. (2015). Impact of Self-Help Groups on Economic Empowerment of
Women in Assam. International Research Journal of Interdisciplinary &
Multidisciplinary Studies, 1(1), 148-159.
3. Vishnuvarthini, R., & Ayyothi, A. M. (2016). The Role of SHG in Women
Empowerment-A Critical Review. IOSR Journal of Economics and Finance, 7(3), 33-
39.
4. Porkodi, S., & Aravazhi, D. (2013). Role of micro finance and self help groups in
financial inclusion. International journal of marketing, financial services &
management research, 2(3), 137-149.
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