empowerment of women through microcredit - concepts and case studies
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Empowerment of Women through Microcredit - Concepts and Case Studies. Aparna Krishnan. Roadmap. The microcredit concept Empowerment of women through microcredit Grameen Bank – A well-known example Origins How it works Kudumbasree – Focus on an effort closer to home How it works - PowerPoint PPT PresentationTRANSCRIPT
Roadmap The microcredit concept Empowerment of women through microcredit Grameen Bank – A well-known example
Origins How it works
Kudumbasree – Focus on an effort closer to home How it works Analysis & suggestions for improvement
The Microcredit Concept One form of microfinance, along with microinsurance, microsavings etc. Extension of microloans to poor people viewed as not bankable
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?
Originated in developing countries and shown to work• Repayment rate is often higher than with traditional banking
Goals go beyond those of traditional banking• Helps raise living standards, enhance the status of women
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
Advances socio-economic development, democracy and human rights UN declared 2005 as International Year of Microcredit
Origins Founded by Dr. Mohammed Yunus in
1976 in Jobra village in Bangladesh Began with lending $27 to 42 families
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
Why Lend to Women?97% of Grameen Bank’s borrowers are women
Benefits reach the family more directly Dr. Yunus: “When a destitute mother starts making some income, her dreams invariably
center around her children ” Women are often the worst affected by poverty – they are left totally insecure and
have few opportunities 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 Handle conflict within the family when the woman is designated to hold purse-strings Support system to help women
How Grameen Bank Works - I
Grameen Bank5 member groups
Centers made of upto 8 groups
Group fund for emergencies
Repayment•One year loans•Equal weekly installments•Repayment starts 1 week after loan
•No offices
•Trained women bank workers who live with the poor
•90% owned by borrowers
•Organizes workshops
•Established Sixteen Decisions as guidelines to give meaning to lives of borrowers
•Grameen is not just a lender – Sixteen Decisions make it a close partner in improving the living standards of the poor
•Relationship built on trust - 99% repayment rate
Analysis of GrameenAchievements 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
KUDUMBASHREE- Quick Facts
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 co-operation with LSG Institutions
How Kudumbashree Works- II Identification of beneficiaries Pooling like-minded individuals into self-
help groups, thus giving it a community based organization (CBO) Neighborhood groups (NHG) - One woman each
from 15 – 40 families at risk
Area Development Society (ADS)- Federation of all NHGs in a ward
Community Development Society (CDS)- The Apex body at the Local Body Level
How Kudumbashree Works (cont’d) 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
Group action to access services, resources and against social evils
Micro-enterprisesMicro-enterprises
Resource assessment-prioritization of needs-Implementation 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
Women Empowerment
Stairway to success
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
Analysis of KudumbashreeAchievements 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
Only basic organisation into groups of 5
More bank-customer interaction
No vocational training provided
Short repayment period
High interest rate
Kudumbashree
3-tier community based organization
Bank interaction more at higher level of organization
Vocational training provided for set up of micro enterprise
Relatively longer repayment period
Relatively lower interest rate