Micro-finance and Development of Rural WomenA Mixed Methods Approach

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Micro-finance and Development of Rural Women A Mixed Methods Approach

Anand Jerard Sebastine1 and P. Ilango2

ABSTRACT In recent years, self-help groups and micro-finance institutions have become significant institutions for rural development in most of the developing nations including India. This has been particularly so in the case of poor women. It is now being increasingly realized that instead of targeting individuals in the process of development, it would be more useful to adopt the approach of group development. Poor women do not have enough capital to take up any business enterprise on an individual basis. The group approach makes available, the collective wisdom and the combined resources for any task. Microfinance is one way of fighting poverty in rural areas, where most of the worlds poorest people live. It puts credit, savings, insurance and other basic financial services within the reach of poor people. Through micro-finance institutions such as credit unions and some non-governmental organizations, women from poor rural families can obtain small loans, receive remittances and safeguard their savings. Accessing small amounts of credit at reasonable interest rates gives people with the willingness and know-how and opportunity to set up small businesses. Records show that poor rural women are a good risk, with higher repayment rates than conventional borrowers. The present study is an attempt to assess the contributions of micro finance in the development of rural women among the members of two micro-finance institutions using appropriate sampling techniques in Tiruchirappalli District. A mixed methods research design has been used for analyzing both quantitative and qualitative data.

INTRODUCTION

Micro-finance is one way of fighting poverty in rural areas, where most of the worlds poorest people live. It puts credit, savings, insurance and other basic financial services within the reach of poor people. Through Micro-Finance Institutions (MFI) such as credit unions and some non-governmental organizations, poor people can obtain small loans, receive remittances from relatives working abroad and safeguard their savings. Accessing small amounts of credit at reasonable interest rates gives people with the willingness and knowhow an opportunity to set up a small business. Records show that poor people are a good risk, with higher repayment rates than conventional borrowers. In countries as diverse as Bangladesh, Benin and Dominica, repayment rates are as high as 97 per cent.
1

Teaching Assistant, Department of Social Work, Bharathidasan University, Tiruchirappalli, India. 2 Professor and Head, Department of Social Work, Bharathidasan University, Tiruchirappalli, India.

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Poor women often have the best credit ratings. In Bangladesh, for example, women default on loans less often than men, and credit extended to women has a much greater impact on household consumption and quality of life for children. Womens 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. (Source: Rural Finance and Rural Poverty Micro-finance: Macro Benefits, IFAD (2004). Women in India have passed through numerous vicissitudes in their socioeconomic life since time immemorial. Today, women stand at crossroads. They are in the process of revising and redefining their roles and values in all spheres of activities. NABARD Chair Unit (2000) from their study on Micro-Finance and its impact on rural development concluded that a typical rural Self-Help group performs a number of useful functions: (a) Enabling members to become Self dependent and self-reliant, (b) Providing a forum of members for discussing their social and economic problems, (c) Enhancing the social status of members by virtue of their being members of the group, (d) Providing a platform for members for exchange of ideas, (e) Developing and enhancing the decision making capacity of members, (f) Fostering a spirit of help and co-operation among the members, (g) Instilling in members the confidence and strength they need for solving their problems. (h) Promoting literacy and increasing general awareness among members, (i) Promoting numeracy and equipping women with the basic skills required for understanding monetary transactions, (j) Providing poor women a forum where they can learn about collectively mobilizing and managing money and people.
REVIEW OF LITERATURE

A study conducted by Pugazhendi (2000) on Evaluation study of self -Help Groups in Tamil Nadu reveals that the participation of women in SHGs made a significant impact on their empowerment both in Social and economic aspects. Most of the women were able to increase their income level manifold and contributed to the development of their family. Lalitha, N. and Nagarajan, B.S. (2002) in the study entitled Self Help groups in Rural Development reported that a key ingredient of a thrift and credit group is its ability to bind its members together by instilling in them a feeling of mutual trust and confidence. Groups provide a sense of safety and security to women which are both psychological and material. Group enable the members to share their own views and abilities with each other, subject themselves to group horns and values, surrender a part of their own interests and judgment, shed their prejudices and smoothen their angularities and their strength from the group which enhance their sense of competence and confidence. The women become more social and open in their Approach after becoming part of the micro-finance programmes.

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Asian Development Bank (2000) in its report entitled Finance for the poor: Microfinance Development strategy reports that Micro-finance can be a critical element of an effective poverty reduction strategy. Micro-finance can provide an effective way to assist and empower poor women, who make up a significant proportion of the poor and suffer disproportionately from poverty. Because Micro-finance is primarily targeted to the poor who are disadvantaged, social mobilization is necessary to introduce them to a normal or semiformal, market-oriented institutional environment. Zohir and Matin (2004) stated that many MFI loans are used for agricultural production, trading, processing and transport, resulting in an increase in the use of agricultural inputs and increased output of agricultural production. This leads to enhanced employment opportunities in these sectors for the wider community and a reduction in the prices of such produce due to increased supply. They also state that trading activities financed by MFIs can help to establish new marketing links and increase the income of traders, and this can lead to reduced migration due to increased employment opportunities and increased income.
MATERIAL AND METHODS Objectives

1. To assess the development of the self-help groups members due to the provision of micro-credit assistance. 2. To study the social involvement of rural women after joining the micro-finance institution.
Sampling

Multi stage random sampling method was used to select the SHG members from the two MFIs (PSA and SHEPHERD) who have micro credit programme as the main activity and have more than 400 self- help groups. The sample size for the present study consists of 300 members of SHGs from four blocks of Tiruchirappalli district. Apart from the sample size, six individuals were selected for case study and two focused group discussion consisting of 12 members each were conducted to elicit the impact of micro-finance in the development of rural women.
Tools of Data Collection

The primary data were collected with the help of a detailed self structured interview schedule along with personal data of the SHG members. Case study and FGD methods are made to study each aspect of the concerning unit in minute details and then from data generalizations and inferences are drawn.

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Design

The quantitative and qualitative datas collected from survey, case study and focus group discussions, a mixed research methods were used and findings were derived using triangulation, which were converging and diverging each other.
RESULTS AND DISCUSSION
Table 1: Change in Personal Cash Savings
S. No. 1. 2. 3. 4. 5. Nature of Change Increased greatly Increased No change Decreased Decreased greatly No. of Respondents (n : 300) 3 243 36 12 6 Percentage 1.0 81.0 12.0 4.0 2.0

The changes in terms of personal cash savings of the respondents after joining MFI is shown in table 1. A very high majority (81%) of the respondents accepted that their cash savings got increased after joining the MFI. Apart from the compulsory savings system in the Self Help Groups, the respondents had developed the habit of personal savings through agencies like banks, post office and other traditional mode of savings practices like local chits, jewel chits etc. In Table 2, the result of the one way anova is presented for comparing the quantum of the loans with the purposes for which the loans were availed.
Table 2: Comparison of Quantum of Loan and Purposes of Utilization
Quantum of Loan Purpose Between Groups 4373.33 4250.00 3350.00 4000.00 3809.52 3666.78 3777.78 3976.67 G1 G2 G3 G4 G5 G6 G7 = = = = = = = 587.56 899.92 1299.61 1259.45 813.58 816.50 1197.89 Mean SD df Mean Sum of Squares F Ratio Significance

7224391.53

7.164

.000 (P < 0.01) Highly Significance

Within Groups

29 9

1008499.38

G1 = Agriculture, G2 = Animal raising, G3 = Trade, G4 = Manufacturing, G5 = Housing, G6 = Education, G7 = Others.

It is observed from the table 2 that, the observed value of F is 7.164 and the corresponding significant value is 0, which means that the quantum of loan differs

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significantly based on the purposes for which the loan was availed. Further from the above table it is inferred that for agriculture the highest amount (Rs. 4373) is given; followed by animal raising (Rs. 4250) and manufacturing (Rs. 4000). Hence it is understood that the purpose of utilization of loan greatly differ with each respondent. As majority of the respondents have agriculture as their main occupation, loan amount received for agriculture remains the highest while comparing with other purposes for which the loan was utilized.
Table 3: Comparison of Preferences between the Social Activities Involvement by the Respondents
S. No 1. 2. 3. 4. 5. 6. Social Activities Laying Roads in the village Construction of the drainages Drinking water bore wells and Construction of the water tanks Womens groups have taken few government projects Bus Facilities Construction of the individual toilets and common toilets Street Light facility Assumed Rank 1 2 3 4 5 6 Mean Rank 1.59 2.18 2.34 4.00 5.22 5.93 Statistical Inference

X2 = 1656.87 df = 6 (P < 0.01) Highly Significant

7.

6.75

Table 3 shows that the first preference is given to laying roads in the village, second for construction of the drainages and third for drinking water bore wells and construction of water tanks. From the Friedmans test, the observed Chi-square value is 1658.87 and the corresponding significant value is 0 which indicates that there is a significant preference among various social activities.
Triangulation

Convergent Findings: By analyzing the findings, it is revealed that majority of them were actively participating in the group activities and they were happy with their group performance in all aspects. All the three methods reveal that majority of the respondents has started savings only after joining the MFI. Majority of the respondents had spent the loan for agriculture purposes is reflected in all the three methods. Many of them agree that there was an increase in their income after every loan they receive from MFI.

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It is inferred from all the three methods that majority of them have agreed that

they have acquired new skills after joining MFI.

Divergent Findings

1. Survey: More than half of the respondents were having the monthly income of only upto Rs. 1000. 2. Case Study: Increases in the loans support were utilized mostly for health and education. 3. Focus Group Discussion: Most of the respondents expect bigger size of loans for asset creation.
CONCLUSION

The micro-finance has made a significant impact on the lives of rural women in various aspects like social, economical, and other developmental activities which in turn will have a positive implication on their standard of living.
REFRENCES
ADB (2000). Finance for the poor: Micro-finance Development Strategy, Manila: ADB. Anand Jerard Sebastine and Ilango (2004) Social Problems in India: Perspectives for Intervention ed., by Stanley, Selwyn, Allied Publishers, New Delhi. IFAD (2004). Rural Finance and Rural Poverty Micro-finance: Macro Benefits. Lalitha, N. and Nagarajan, B.S. (2002). Self Help Group in Rural Development Dominant Pub., New Delhi. Puhazhendhi, V. (2000). Evaluation Study of Self Help Groups in Tamil Nadu, National Bank for Agriculture and Rural Development, Mumbai. Zohir, Sajjad and Matin, Imran (2004). Wider Impacts of Micro-finance Institutions: Issues and Concepts, Journal of International Development.