A summary of the dissertation done in the final year of my Masters program in Social Work. I wanted to understand first hand if Micro Finance through Self Help Groups is really transforming and empowering women economically and otherwise.

1. Self Help Groups
Economic Empowerment or Easy Credit?

2. Objectives of the Study
Self Help Groups
A tool for economic
empowerment of
women?
A way to access cheap
and easy credit
through women ?
OR

3. What are Self Help Groups?
The underlying concept behind
Self Help Groups, lies in the
answers to the following
questions:
1. What is Microfinance?
2. Who are the key players in
Microfinance?
3. Why are women pivotal to
Microfinance?

4. What is Microfinance?
 A poverty alleviation methodology
A financial tool to those who are excluded from formal
financial institutions due to inability to provide
security
Clients are essentially the poor, classified according to
poverty level as upper poor, poor and very poor.
Tools include loans or micro credit, savings and
insurance

5. Objectives of Microfinance
 Enhance household income
 Will increase savings
 Help households manage cash
flows
 Decrease instances of selling
assets in time of need
.Asset Building
 Invest in productive assets like
cattle or land
 Build security through purchase
of a home
 Enjoy the convenience of
consumer durables

6. Objectives of Microfinance
 Reduce vulnerability
 Prevention against illnesses
and malnutrition
 Access to adequate
education
Empower women
 Create more gender equality
 Enhance their position
socially
 Give voice to their opinions
and decisions

7. Who are the key players?
Microfinance providers or MFIs (Microfinance
Institutions) are primarily the following:
1. Formal – Development banks, NBFIs, Commercial
banks
2. Semi formal – Financial NGOs, Credit Unions, Co-
operatives
3. Informal – Rotating savings and credit unions, Self
Help Groups
Source: www.cgap.org

8. Mohammad Yunus
- Founder, Grameen Bank
- 2006 Nobel Peace Prize winner along with Grameen
Bank for “their efforts to through microcredit create
economic and social development from below”
Image from flickr ©
Shows Grameen Checks produced by rural weavers funded by Grameen
Bank and marketed by Grameen Udyog.

9. Are we pro women?
In most poverty ridden countries, what could be worse
than being poor?
The answer is being a poor woman.
It is an unwritten law that in a poor family that when
someone has to starve it is invariably the woman of the
house.

10. Are we pro women?
Also in most developing countries, the banking system is
largely male dominated. This means that if a woman
were to approach a bank for a loan (even a woman not
living in poverty) she would be asked the following
questions:
1. Have you discussed this with your husband?
2. Is he supportive of your decision?
3. Would you please bring your husband so that we can
discuss this with him?
Source: Banker to the Poor – Mohammad Yunus and Alan Jolis. Penguin (2007)

11. So, then why lend to women?
Poor women adapted quicker and better to microfinance
than men.
Here’s why:
1. They suffer the most from poverty and therefore are
willing to work harder to get out of it.
2. They are attentive to their needs of their children and
their own vulnerability, so they strive for financial
security
3. They save more regularly than men, and are less likely to
spend on short term, non productive uses
Source: Banker to the Poor – Mohammad Yunus and Alan Jolis. Penguin (2007)

12. So, where do SHGs fit in?
Self Help Groups are the major
form of delivery of microfinance.
A SHG is formed when a community of
women come together and are supported
by a NGO or MFI or some other local
initiation.
The SHG members decide to make
contributions to the group which are
banked.
The members then borrow individually
from the group on terms or rates of
interest decided by the members.

13. PPp
MFIs and SHGs
1. The Self Help Group could decide to open a savings account in the groups
name in a MFI.
2. Money is deposited in this account which is not immediately required by
the Group or to qualify for a loan from the MFI.
3. The MFI grants a loan to the Group which is used to supplement its own
funds or lend to members.
Supplementary
credit
Reduce
transaction
costs and paper
work
Mobilize
savings
Build mutual
trust and
confidence
Decrease
dependancy on
money lenders

14. Microfinance & Empowerment
So what is empowerment to a woman?
It is the process by which women take control and
ownership of their choices.
The core elements of empowerment are:
1. Ability to define ones goals and act on them
2. Awareness of gender power structures
3. Self esteem
4. Self confidence
Source: Women’s Empowerment Through Self Help Groups: A Case Study

15. Microfinance & Empowerment
So does Microfinance promote Empowerment amongst
women?
Microfinance and SHGs have been touted as being a
great success story in grassroot empowerment amongst
women, whether it is in increasing access to money and
higher incomes or in participation at decision making at
the familial and community level.

16. Success Stories
Ammajan Amina was one of th first
borrowers of the Grameen Bank.
A Bangladeshi widow who had lost 4
out of 6 children to and her husband
to hunger and disease, she was evicted
from her home.
In 1976 when the Grameen Bank
approached her she was old, illiterate ,
had never worked a day in her life and
was clutching her only surviving
daughter in her arms.
There was no question of any money
lender, let alone a bank giving her a
picture.
With loans from Grameen, she started
making and selling bamboo baskets.
She remained a member of Grameen
till her last days.
Today her daughter is a member of
Grameen.
Image flickr ©
The beginning of Grameen Bank, Jobra
Source: Banker to the Poor – Mohammad Yunus and Alan Jolis. Penguin (2007)

17. Success Stories
After more than 8 years of
borrowing, 57.5% of
Grameen borrowers were
no “longer poor”
Borrowers of Bank Rayat,
Indonesia recorded a 112%
increase in income and
90% of them graduated
from poverty
The Consultative Group to
Assist the Poor or CGAP
has found that
microfinance clients suffer
less malnutrition, adopt
greater use of
contraceptives and better
breast feeding practices

18. Validating the Premise
Study carried out in 2009 to validate the premise
“Does Microfinance promote empowerment amongst
women?”
By looking at only two aspects of empowerment for
women:
1. Are women able to identify their needs and prioritize
them?
2. Do they have the ability to take decisions relating to
those needs?

19. Who & Where
Women
Who are
1. employed in low
paying unskilled jobs
2. earning less than
minimum wage
Living
1.in a low income urban
area
2. in south Bangalore.
Members of a Self
Help Group
(30)
Not members of a
Self Help Group
(30)

20. Collecting Data - Questionnaire
The questionnaire covered 5 objectives:
1. Which needs (physiological, safety, children and self
actualization) were considered important
2. Could respondents take decisions related to these needs
independently
3. Did respondents believe that SHGs could help them
fulfill their needs
4. Have respondents fulfilled basic needs and moved on to
higher order needs
5. Are there any sources (apart from SHGs) which help
respondents fulfill their needs
Questionnaire was created and administered by the researcher. 60 respondents were covered.

21. Findings – Respondents Profile
1. 60% employed as
domestic workers
2. 8% were self employed
3. More than half earned
between INR 1000 – 3000
per month
3. Self employed respondents
were SHG members for
around 5 – 7 years
4. 31% of respondents were
members of SHG for less
than a year
5. Primary reason of joining
the SHG was to access
cheap credit (as
compared to a money
lender or a pawn broker)
1. 80% employed as
garment workers
2. 3% were self employed
3. 20% earned between INR
1000 – 3000 per month
4. 60% earned between INR
5000 – 7000 per month
5. More than half had
completed Class 10 (as
compared to 6% of SHG
members who had studied
up to Class 10)
6. Cleaner and more
hygienic living
environment (as
compared to SHG
members)
SHG
Members
Not SHG
Members

22. Findings – Ranking of Needs
SHG members Not SHG members
Children’s needs (milk,
eggs, clothes)
Very high Very high
Education Very high Very high
Equal no of respondents in both categories (45%) stated that educating daughters was critical .
SHG members Not SHG members
Constructing a latrine Very high Very high
For SHG respondents, own latrine was required to avoid using paid public facilities.
Non SHG respondents wanted a better latrine or did not want to share their latrine with other residents
of their rented accommodation.

23. Findings – Ranking of Needs
SHG members Not SHG members
Own house Very high Medium
51% of SHG respondents were living in owned acco, but wanted to renovate existing homes.
74% of non SHG respondents were living in rented acco and were not keen on owning a house.
SHG members Not SHG members
Jewellery Health
Religious ceremonies and
pilgrimages
Tuitions for children
Some needs which ranked very high in each group

24. Findings – Role of SHGs
Less than 1 year* 3 – 5 years* 5- 7 years*
Helped in
building of latrine
Highly effective Highly effective Effective
* Duration of SHG members in Self Help Groups
Less than 1 year* 3 – 5 years* 5- 7 years*
Helped in
building or
renovation of
house
Highly effective Highly effective Effective
* Duration of SHG members in Self Help Groups

25. Findings – Role of SHGs
Less than 1 year* 3 – 5 years* 5- 7 years*
Education of
children
Effective Effective Effective
* Duration of SHG members in Self Help Groups
Less than 1 year* 3 – 5 years* 5- 7 years*
Milk/eggs for
children
Less effective Less effective Less effective
* Duration of SHG members in Self Help Groups

26. Findings – Role of SHGs
Less than 1 year* 3 – 5 years* 5- 7 years*
Purchase of
clothes and
jewellery
Effective Less effective Less effective
* Duration of SHG members in Self Help Groups
Less than 1 year* 3 – 5 years* 5- 7 years*
Purchase of gas
stove
Highly effective Highly effective Highly effective
* Duration of SHG members in Self Help Groups

27. Findings – Decision Making
Construction of latrine:
Poor decision making ability
Non SHG: 54%
SHG: 42%
Building/renovation of house
Poor decision making ability
SHG: 56%
Non SHG: 43%

28. Findings – Decision Making
Education of sons:
Average decision making ability
SHG: 22%
Non SHG: 40%
Education of daughters:
Good decision making ability
Non SHG: 22%
SHG: 34%

29. Findings – Decision Making
Purchase of milk and eggs:
Average decision making ability
Non SHG: 14%
SHG: 19%
Purchase of apparel for self and children:
Good decision making ability
Non SHG: 26%
SHG: 36%

30. Findings – Decision Making
Number and nature of jobs:
Good decision making ability
SHG: 61%
Non SHG: 69%
Changing of jobs:
Good decision making ability
SHG: 58%
Non SHG: 66%

31. Findings – Decision Making of SHG
members
 67% of SHG members said they independently
decided to become members of a SHG
 61% of SHG members stated they could independently
decide on how much to save with the SHG
 58% of SHG members said that they could not
independently decide on borrowing from the SHG
 45% of SHG members said they felt compelled to take
loans from the SHG on behalf of their spouse

32. Conclusions
Self employment or entrepreneurship
1. Self employment among SHG members was
minimal to non existent
2. Monthly income of those SHG members who were
self employed was around INR 3000 p.m.
3. SHG members who were self employed did not begin their enterprises due to
Intervention or aid from SHG
4. SHG operating in the area had its primary focus as lending money for purposes of
construction of houses

33. Conclusions
Shelter
1. SHG’s primary focus was to provide shelter
2. Shelter was the highest ranking need among
SHG members
3. SHGs accorded priority in disbursing loans for construction of houses to those
members who owned land to construct house
3. As a result, loans were largely disbursed to those members who were living in own
accomodation; loans were used for renovation of homes
4. Some of the homes renovated were already in good condition; renovations covered
extension or construction of additional floors

34. Conclusions
SHG membership
1. 31% of SHG respondents have been members for less
than a year
2. 36% of SHG respondents have been members between
3 – 5 years
3. SHGs seen as effective in meeting needs like construction of house and latrine,
not so much other needs
4. 56% of SHG respondents saw SHGs as a means to secure additional finances
5. However, SHG members were still reaching out to other informal sources like
money lenders (19%) and pawn brokers (11%) (still less than non SHG respondents)

35. Effectiveness of SHG - analysis
 SHGs policy of lending is not inclusive. As many SHG
respondents stated, when they do not have the resources to
meet basic needs, how can they buy land?
 SHG dependant on banks for credit slowing down the pace
at which loans were being disbursed to members
Researcher’s point of view:
“The SHG is functioning along the lines of commercial banks
by making distinctions between those who are credit
worthy and those who are not. The slow pace of loan
disbursement also means that there has been no significant
improvement in quality of life of SHG respondents”

36. Effectiveness of SHG - analysis
 Significant percentage of SHG respondents have been
members for more than 3 years, but have not received aid
to build houses
 Many SHG members do not have own latrines and are
forced to use public toilets which have poor hygiene and
lack privacy
Researcher’s point of view:
“The SHG has not focused on skill building or alternate
sources of income for its members. They have inadvertently
built dependence amongst members on credit. This is not
empowering for a majority of its members.”

37. Effectiveness of SHG - analysis
 SHG respondents who wanted loans for extension or
renovation of homes were peeved that the SHG had not yet
disbursed their loans
 The priorities of those members who had more critical
needs was not given due credence by the more “fortunate”
members of the SHG
Researcher’s point of view:
“The SHG has not fostered empathy amongst its members. The collective or group
formation should empower women as it allows them to meet others with
similar problems and discuss redressal mecahnisms. Hierarchies within the
group between those who meet eligibity criteria versus those who don’t, does
not create the right foundation for empowerment. So there is limited hope of
these women taking on larger issues like gender/class/caste disparity”

38. Effectiveness of SHG - analysis
 17 % of SHG respondents believed in putting aside money
for the future. However, savings were made in chit funds
and not through SHGs
 31% of non SHG respondents claimed to be saving money
for contingencies
Researcher’s point of view:
“The SHG has not created avenues for saving. Economic
empowerment cannot be achieved without creating the
awareness, infrastructure and opportunity to mobilize
savings, particularly for women as vulnerable as those
covered in this study.”

39. Effectiveness of SHG - analysis
 Health was not a priority for many SHG respondents, as
compared to non SHG respondents who were conscious
about saving money to meet health contingencies
 46% of SHG respondents stated that the SHG would not be
able to meet medical expenses of themselves or their family
Researcher’s point of view:
“The SHG needs to move beyond the role of credit providers
for specific needs and begin looking at factors which
increase vulnerability.”

40. Validating the premise – Factor 1
Ability to be aware of and prioritize one’s needs
1. Respondents in both groups prioritized were able to
identify, prioritize and articulate needs
2. Well being of children, home and hygiene ranked
very high in both groups of respondents
3. No difference noted between the two groups in this
area

41. Validating the premise – Factor 2
Ability to take decisions on prioritized needs
1. Respondents in both groups had poor decision
making ability with regard to construction of house
and latrine
2. Non SHG respondents had better decision making
ability in relation to spending on one’s health and
well being and household decisions like installing a
gas stove
3. Non SHG respondents had better decision making
ability in relation to matters of employment like
nature of jobs, changing of jobs etc

42. Validating the premise – Factor 2
Ability to take decisions on prioritized needs
4. SHG respondents had better decision making ability
in relation to membership (should I join or not?) and
amount of money to deposit with SHG
5. However, more than half stated that they could not
independently decide to take loans from the SHG.
Spousal permission was a pre requisite
6. 39% of SHG respondents stated that they had taken
loans from the SHG on the behest of their spouse
even in situations where it was not required

43. Recommendations
1. Integrate notions of empowerment – those of
beneficiaries of SHGs and those of organizations
supporting SHGs
2. Create lending rules based on needs of respondents.
Eg, needs which require immediate redressal,
constraints which prevent women from meeting
needs like availability of land
3. Identify attitude of community in lending support to
SHG members. Eg, will the men be threatened or
will women require spousal approval to borrow or
save

44. Recommendations
4. Educate SHG members on what more a SHG can do for
them. Eg, empowering them to take decisions for
themselves, become self reliant, improve their standing
in the community
5. Involve men by educating them about the SHGs
philosophy so that it is not seen as exclusionary. Create
understanding that by investing in income generating
assets for women and prioritizing their needs, household
responsibility can be shared
6. Use SHGs as a space for women to look beyond income
and share their life experiences. Allow democracy by
giving members the freedom to formulate their own rules

45. “When a destitute mother starts earning an income, her dreams of success
invariably center around her children. A woman's second priority is the
household.
She wants to buy utensils, build a stronger roof, or find a bed for herself
and her family.
A man has an entirely different set of priorities.
When a destitute father earns extra income, he focuses more attention on
himself.
Thus money entering a household through a woman brings more benefits to the
family as a whole.”
- Muhammad Yunus