Empowering women through micro-finance

By Priya Chetty on March 4, 2012
Image by UN Women on Flickr.com

Micro-finance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to poor and low-income households. A majority of the microfinance programmes target women with the explicit goal of reducing poverty and empowering them. Some argue that women are among the poorest and the most vulnerable of the underprivileged and thus, helping them should be a priority. Others believe that investing in women’s capabilities empowers them to make choices and further contributes to greater economic growth and development. Moreover, an increasing number of microfinance institutions (MFIs) [1] prefer women members as they believe that they are more trustworthy and reliable.

Microfinance is usually administered through microfinance institutions which use various delivery methods, such as group lending and liability, pre-loan savings requirements, gradually increasing loan are repaid fully and promptly. Indeed, the SHG Programme in India [2] uses group lending and liability as a way of delivering microfinance to its predominantly female members (about 90 percent).

Most microfinance programmes [3] empower their clients through direct and indirect strategies. Direct empowerment through microfinance takes place when women become members of a group and or when they are exposed to training or workshops intended to foment greater awareness and self-esteem. Belonging to a group leads to the creation of social capital and a support structure.

Women empowerment and its impact

  1. The empowerment through microfinance has a positive impact on the physical mobility of the women. About 47 per cent of members of AS A (all women) had reported to have visited new places and travelled further than before. About 90 per cent of them had travelled alone to the ration shop and to the hospital after joining the programme [4].
  2. The second aspect of empowerment relates to women’s control over their labour. SAPAP Research Team had measured this in terms of how often women have to help their husbands in the male-dominated activities such as agriculture and how much access they had to their husband’s labour in the women dominated activities such as agriculture and how much access they had to their husband’s labour in the women dominated activities such as agriculture and how much access they had to their husband’s labour [5] in the women dominated activities such as looking after livestock. Interestingly, women who were participating in the programme reported a higher degree of access to their husband’s labor in women dominated activities than non-members from the same social stratum.
  3. The third aspect of empowerment relates to leadership and recognition within the community. The practice among groups of rotating leadership has proved to be a positive factor in building confidence of members. Moreover, the proportion of leaders emerging from the more backward caste groups in the study was more than their representation in the groups. There is indicative of empowerment of the women from these backward groups on two counts, gender and caste.
  4. An important indicator of strategic empowerment is whether the women’s organizations are able to make their view heard in matters relating to non-gender specific issues such as caste and class issues such as caste and class issues. This was clearly evident from the groups’ participation in the Gram Sabhas and their articulation of non-gender specific goals, such as, getting access to drinking water, getting a road built, etc [6].
  5. The last aspect of empowerment relates to financial decision making power among women money management, greater control over resources and access to knowledge leads to greater choices and voices in a family and community matters.


  1. Basu, Kishanjit (2000), Microfinance: emerging challenges, Tata McGraw Hill, New Delhi.
  2. Capoor, Jagdish (2000), Microfinance in India: role of banks., Kogan Page, New Delhi.
  3. Rutherford (1999), The Poor and their money, Oxford University Press, New Delhi.
  4. Schreiner M (1987), Development finance institutions, Prentice Hall, New Delhi.
  5. Ajit Kanitkar (2005), Good Practices in SHG Book keeping, Pradan Publishers, Pune.
  6. David J (1993), Microfinance Revolution, Corwin Press, Calcutta.