Wednesday, 16 April 2014

Women Empowerment Through Micro Finance

Empowerment is the process of enabling or authorizing an individual to think, behave, take action andcontrol work in an autonomous way take control over resources and over ideology.

The concept of Micro Finance:
The term micro finance is of recent origin and is commonly used in addressing issues related to poverty alleviation, financial support to micro entrepreneurs, gender development etc.
The term 'Micro' literally means "small". But the task force has not defined any amount. However as per Micro Credit special Cell of the Reserve Bank of India, the borrowable amounts up to the limit of Rs.25000/- could be considered as micro credit products and this amount could be gradually increased up to Rs.40000/- over a period of time which roughly equals to $500- a standard for South Asia as per international perceptions.

The mantra of "Micro finance" is banking through groups. The essential features of the approach are to provide financial services through groups of individuals, formed either in joint liability or co-obligation mode. The other dimensions of the micro finance approach are:
  • Saving/Thrift precedes credit
  • Credit is linked with savings/thrift
  • Absence of subsidies
  • Group plays an important role in credit appraisal, monitoring and recovery
Basically groups can be of two types:
Self Help Groups (SHGs): The group in this case does financial inter mediation on behalf of the formal institution. This is the predominant model followed in India.
Grameeen Groups: In this model, financial assistance is provided to the individual in a group by the formal institution on the strength of group's assurance. In other words, individual loans are provided on the strength of joint liability/co-obligation. This micro finance model was initiated b7y BangladeshGrameen Bank and is being used by some of the Micro Finance Institutions (MFIs) in our country.