Microfinance in India and How it Empowers Women

Abstract

MICROFINANCE IN INDIA AND HOW IT EMPOWERS WOMEN

Vidhi Kotahwala, B.A.

Mentor: Ariel Glucklich, Ph.D.

ABSTRACT

Poverty is widespread in India, where the poor lack basic resources and opportunities. The rural poor and women in general have a harder time generating income or obtaining resources because of the cultural environment, lack of education, and geographical location. Thus there needs to be other avenues to help lessen poverty as a whole and target women and poor communities to help them generate income.

In recent years microfinance has spread throughout India, making an impact on the lives of the poor by providing them with microcredit to start their own small businesses, so they can generate income and provide for their families. Many of these loans are distributed to women in rural areas providing them with tools to become self-sufficient and independent. Indian women are often considered as second class citizens in India and microfinance has the capability of empowering women by giving them the opportunity to be heard and the means to make educated decisions.

This thesis is comprised of five chapters that examine the level of poverty in India, analyze the microfinance industry, and explain the impact of microfinance in India and its role in empowering Indian women. Chapter one gives a background of the level

of poverty in India, a financial history of India's banking system, and the status of Indian women. I explain how the banking system lacks the tools to help the poor, therefore needing the assistance of microfinance institutions. I describe how microfinance began in India and its impact on the poor.

Chapter two details the movement of microfinance and its affect globally. I explain exactly what microcredit is and how it can benefit the poor. I explain microfinance's benefits and weaknesses, and explain solutions to those weaknesses. Additionally, I also give examples of different microfinance institutions in different countries. Chapter three examines microcredit in India. I describe the impact microfinance has on the Indian poor. Furthermore, I illustrate the different types of microfinance organizations that operate in India and explain why, who, and how they target women and poor communities. I include numerical data in this chapter, citing the monetary value of the loans distributed; and the percentages to whom they are delivered. These numbers demonstrate the impact microcredit is having on the poverty stricken.

Chapter four discusses women's status in India and the importance of providing women with credit. In Indian society women are viewed inferior to men. The distribution of loans provides women with a way to generate income, which increases their status within the household as well as within the community. In Chapter five, I give examples of different case studies in India that illustrate the influence microfinance has on empowering women and making them self-sufficient and independent. Finally I conclude with, if executed right microfinance institutions can alleviate poverty but also provide women with the tools for empowerment and autonomy. Microfinance is a system that can provide women with the means and opportunities to gain control over their lives, have a say in their actions, while earning a living.