Historically, women have contributed substantially to the social and economic development of the country. They have handled different situations with strength and unity. There has been a marked shift in thinking both at the level of policy for women and also the level of implementation of policies for women. Microfinance, an important strategy which emerged in the nineties for poverty alleviation and empowerment has been extremely relevant for women. The Microfinance Movement has created a vision of increasing numbers of women borrowers who have successfully established a model of economic self reliance leading to social change.
Empowerment is defined as the processes by which women take control and ownership of their lives through expansion of their choices. Two vital processes have been identified as important for empowerment. The first is social mobilization and collective agency, as poor women often lack the basic capabilities and self-confidence to counter and challenge existing disparities and barriers against them. Often, change agents are needed to catalyse social mobilization consciously. Second, the process of social mobilization needs to be accompanied and complemented by economic security.
As long as the disadvantaged suffer from economic deprivation and livelihood insecurity, they will not be in a position to mobilize. The Self Employed Women’s Association Movement (SEWA) (an organization of poor, self-employed women workers. SEWA has a membership of nearly 700,000 members all of whom are women in the informal economy in all rural and urban sectors of work. Source: www. sewa. org) is a living example to illustrate this point. Leadership of women with different skills and occupations has blossomed because of SEWAs integrated approach.The women have become the leaders of their own regional development programs.
These movements have helped women to tread on large scales and they are ready to defeat corruption and get results. Women today have more alternatives, have become more self reliant and have multiple options to choose with respect to the direction they want their organization to take. There is now mounting hope that micro credit can be the most effective poverty alleviation tool. The understanding is that micro credit can help the poor reach their dreams of equal opportunities; however, it is not a magic wand.Every tool needs to be utilized in the right manner and method. The same reasoning applies to micro credit. In India, micro credit has worked largely through self-help groups. The groups are dominated by women, have simple rules – save, accumulate and give loans to each other.
Globally, it is proving to be one of the most effective strategies to reduce poverty. Micro credit lending institutions are currently estimated to reach some two million households in India. Microfinance has caused a shift in values and expectations that affects women’s roles in society.Traditionally women were expected to stay within the four walls of the house, cook food for her family, take care of her children and her in-laws and probably help her husband with his work. Today with the availability of micro credit, women have taken up entrepreneurial activities.
Women today have become the bread earners of the house. In Bangladesh, a study of experience in a project aided by the International Fund for Agricultural Development has found that women involved in microfinance not only change the way they manage household income, they also change their own roles and the roles of others in their families and communities.Research states that these women spend less money in comparison to their men. Women’s status, both in their homes and communities, is improved when they are responsible for loans and for managing savings.
When they generate and control their own income, women gain a level of power that means they can make decisions independently and command more respect. Many women members of microfinance groups no longer believe they should be dependent or that they should remain confined to the home. Through their involvement in microfinance, many women become leaders, instigating changes in social practices, relationships and mobilising social action.Micro finance was initially devised in order to help the poor – both rural and urban – gain easy access to credit.
This, it was believed, would light a spirit of entrepreneurship in them and empower them. The objective was to bring about the upliftment of the society. Today besides the social motive, companies entering the microfinance domain, have a profit motive. It has been found that serving the poor is more profitable that serving the better-offs. As it turns out the interest rates on micro loans are higher in comparison to the other loans and the default rate much lower.
Also the customer base for micro loans is much bigger with more than a million people living in poverty. Banks have recognized the potential in rural banking and are now willing to lend to the poor. They are looking to tap the expertise of micro credit groups to create a new market.
Banks have neglected this sector for so long and today they lack the capacity to service the small lenders. V. K. Chopra, Chairman and Managing Director, Corporation Bank, admits, “Lending without any collateral for commercial banks to the poorest of the poor is very difficult as banks do not have the expertise or facilities in these areas.That is why micro finance institutions should step in. Today’s banks are flush with money. If micro finance institutions are strong, banks will readily lend to them. ” Banks like ICICI have increased their rural financing targets and are ready with their task forces to take up the micro finance revolution.
Nachiket Mor, Executive Director, ICICI says: “A lot has been done in Andhra Pradesh, but we want to build 250 micro finance institutions to build a network in 600 other districts each one serving a million households.It will involve around INR 2 trillion and it is not an unreasonable dream. ” Mor feels that the micro credit movement must now move beyond their members and look at financing for roads and water.
Today a large number of banks are also seeking help from the micro credit institutions. The banks need to understand the requirements of the small borrower, their constraints, their culture, and their dreams. Micro financing is a totally new experience for them and they need to reach there fast!