Empowerment of Women
through Microcredit Concepts and Case Studies
Aparna Krishnan
Roadmap
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The microcredit concept
Empowerment of women through microcredit
Grameen Bank – A well-known example
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Origins
How it works
Kudumbasree – Focus on an effort closer to
home
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How it works
Analysis & suggestions for improvement
Empowering Women through
Microcredit - Concept
The Microcredit Concept
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One form of microfinance, along with microinsurance, microsavings etc.
Extension of microloans to poor people viewed as not bankable
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No collateral, steady employment, credit history or education
Helps poor people engage in self-employment & generate income
Allows poor people to help themselves through self-help groups
Why care about microcredit?
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Originated in developing countries and shown to work
• Repayment rate is often higher than with traditional banking
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Goals go beyond those of traditional banking
• Helps raise living standards, enhance the status of women
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Better than handing out charity
• Gives the poor a say in their own destinies, and returns self-confidence
• Provides greater incentive to employ the money for generating income
• Poor countries are no longer prisoners of foreign aid
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Advances socio-economic development, democracy and human rights
UN declared 2005 as International Year of Microcredit
Case Study-1: Grameen Bank
Origins
Founded by Dr. Mohammed Yunus in
1976 in Jobra village in Bangladesh
 Began with lending $27 to 42 families
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Were forced to borrow under oppressive
terms (dadan system)
 Considered non-creditworthy by traditional
banks
 $300 capital secured from Janata Bank with
Dr. Yunus as guarantor
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Why Lend to Women?
97% of Grameen Bank’s borrowers are women
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Benefits reach the family more directly
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Women are often the worst affected by poverty – they are left totally insecure and
have few opportunities
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Dr. Yunus: “When a destitute mother starts making some income, her dreams invariably
center around her children ”
Have more at stake, and given the smallest opportunity are willing to work extra hard
Adapt quicker to self-help groups
Boosts self-confidence of women
Gender equality key to socio-economic development
Higher repayment rates than loans to men
Challenges with lending to women
 Hard to reach women overcoming societal barriers like purdah system
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Handle conflict within the family when the woman is designated to hold purse-strings
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Support system to help women
How Grameen Bank Works - I
5 member groups
Group fund for
emergencies
Grameen Bank
•No offices
•Trained women
bank workers who
live with the poor
Repayment
•One year loans
•Equal weekly installments
•Repayment starts 1 week after loan
•Grameen is not just a lender – Sixteen
Decisions make it a close partner in
improving the living standards of the poor
Centers made of
upto 8 groups
•Relationship built on trust - 99%
repayment rate
•90% owned by
borrowers
•Organizes
workshops
•Established Sixteen
Decisions as
guidelines to give
meaning to lives of
borrowers
Analysis of Grameen
Achievements
 99% repayment rate
 Improved status of
oppressed women in
Bangladesh
 Helped in economic
development of small
villages
 Reached out idea of
microcredit to other
countries as well. E.g.:
Kashf in Pakistan
Issues / Continuing
problems
 Changing the mind-set
of people in villages
 High interest rates for
microloans.
 Ineffective measures to
tackle problems of
interest rate. E.g.: rate
ceiling
Case Study-2: Kudumbashree
KUDUMBASHREE- Quick Facts
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A multifaceted women based poverty reduction
programme
Jointly initiated by Government of Kerala and
NABARD.
Scaled up from two UNICEF assisted initiatives
in Alappuzha Municipality (UBSP) and
Malappuram district (CBNP)
Implemented by Community Based
Organizations(CBOs) of Poor women in cooperation with LSG Institutions
How Kudumbashree Works- II
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Identification of beneficiaries
Pooling like-minded individuals into selfhelp groups, thus giving it a community
based organization (CBO)
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Neighborhood groups (NHG) - One woman each
from 15 – 40 families at risk
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Area Development Society (ADS)- Federation of all
NHGs in a ward
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Community Development Society (CDS)- The
Apex body at the Local Body Level
ADS
NHG
ADS
NHG
CDS
How Kudumbashree Works
(cont’d)
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Initially, groups collect money for use by needy
member and maintain finances.
This process assessed by bank.
Bank account created for future loans and
savings. (Microloans)
Repayment within stipulated time
Special vocational training administered.
Microenterprise set up
Development: Gender empowerment, improved
standard of living
Stairway to success
Women Empowerment
Group action to access
services, resources and against social evils
Micro-enterprises
Resource assessment-prioritization of needsImplementation of action plan
Problem Identification, need Assessment-Micro-plan
Day-to-day management and financial management
Collection of Thrift, Micro Credit &
Repayment monitoring
Regular weekly meetings and sharing of information
Some initiatives undertaken by
Kudumbashree
Health enterprise: Santhwanam
 Lease land farming: Harithashree
 Microhousing: Bhavanashree
 Microenterprises- Garment manufacture,
solid waste management, mosquito
eradication
 Destitute rehabilitation: Ashraya
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Analysis of Kudumbashree
Achievements
 Successfully reached out
to many women living
below the poverty line
 Initiated and carried out
numerous developmental
projects in different areas
 Reduced the gap
between rich and the
poor by improving the
latter’s economic status
Issues / Continuing
problems
 Complicated
organizational system
leading to rift between
higher authorities and
groups at grassroots
level
 Longer repayment period
might lead to
psychological tendency
to hold on to money for
longer
Comparing and Contrasting
Grameen Bank & Kudumbashree
Grameen Bank
Kudumbashree
 Only basic organisation
into groups of 5
3-tier community based
organization
More bank-customer
interaction
Bank interaction more at
higher level of organization
No vocational training
provided
Vocational training provided
for set up of micro enterprise
Short repayment period
Relatively longer
repayment period
High interest rate
Relatively lower interest
rate