An autonomous research institute under the Ministry of Finance


Gendering Microfinance in India: A Study of SGSY

Publication date

Jan, 2007


Report submitted to the NIPFP-NIBM GoI


Lekha S. Chakraborty


The specific objectives of the project are the following six: (i) to identify the access and utilisation patterns of microfinance programmes across gender; (ii) to analyse the structure of interest rates, loan portfolio, pattern of collateral (if any), frequency of repayment terms, any evidence of Ponzi finance across gender; (iii) to analyse whether ‘peer monitoring’ instead of tangible asset-based collateral ensure better welfare of women borrowers; (iv) to analyse the determinants of the Self Help Group formation process and their participatory management in microfinance programme in reducing the transaction costs of both banks and borrowers; (v) to analyse the feedback mechanism of microfinance and economic activity, whether microfinance is a strategic tool for income generating activities and poverty alleviation; (vi) to analyse whether access to microfinance leads to economic empowerment of women through improving the bargaining power of poor women in intrahousehold and societal decision making processes; and (vii) to analyse that the financial implications of microfinance on bank branch business as attaining financial viability and sustainability are the two institutional challenges of microfinance programmes.:

The methodology adopted is Control Group Methodology through longitudinal surveys across six banking zones of India in 12 blocks (out of which 6 are control blocks) to analyse the SGSY, the largest poverty linked microfinance programme.

The overall conclusion of the study is that any kind of subsidy targeted at the individual level must be stopped; instead the entire amount of central and state grant must be utilised for the development of human capital, viz., formation of SHG, training. This is based on the empirical evidence that subsidy seemed to be the major motivation factor for SHGs functioning under SGSY; therefore majority of SHGs have not generated economic surplus from their credit led assets. The recovery rate is barely 42 percent. The study emphasised that government machinery must take only a development role and leave credit decisions to banks. The gender lens applied to the study revealed that micro credit is not a panacea for economic underdevelopment; and it has not led to the economic and social empowerment of women in totality.

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