INTRODUCTION

Microfinance is defined as any activity that includes the provision of financial services such as credit, savings, and insurance to low income individuals which fall just above the nationally defined poverty line, and poor individuals which fall below that poverty line, with the goal of creating social value. The creation of social value includes poverty alleviation and the broader impact of improving livelihood opportunities through the provision of capital for micro enterprise, and insurance and savings for risk mitigation and consumption smoothing.

Concept and Features of Micro-finance:  It is a tool for empowerment of the

poorest. Delivery is normally through Self

Help Groups (SHGs). It is essentially for promoting self-

employment, generally used for: It is a tool for empowerment of the

poorest. Delivery is normally through Self

Help Groups (SHGs). It is essentially for promoting self-

employment, generally used for: It is not just a financing system, but a

tool for social change, specially for women.

Because micro credit is aimed at the poorest, micro-finance lending technology needs to mimic

LITRATURE REVIEWMohammed AnisurRahaman (2007)

Has examined that about microfinance and to investigate the impact of microfinance on the poor people of the society with the main focus on Bangladesh. We mainly concise our thesis through client’s (the poor people, who borrowed loan from microfinance institutions) perspective and build up our research based on it.

SusyCheston (2002) Has examined that Microfinance has the potential to have a

powerful impact on women’s empowerment. Although microfinance is not always empowering for all women, most women do experience some degree of empowerment as a result.

Linda Mayoux (Feb 2006)Has examined that Micro-finance programmes not only give women and men access to savings and credit, but reach millions of people worldwide bringing them together regularly in organized groups.

INDUSTRY PROFILE The Origin of Microfinance Although neither of the terms

microcredit or microfinance were used in the academic literature nor by development aid practitioners before the 1980s or 1990s, respectively, the concept of providing financial services to low income people is much older.

While the emergence of informal financial institutions in Nigeria dates back to the 15th century, they were first established in Europe during the 18th century as a response to the enormous increase in poverty since the end of the extended European wars (1618 – 1648). In 1720 the first loan fund targeting poor people was founded in Ireland by the author Jonathan Swift.

Role of Microfinance:-The micro credit of

microfinance progamme was first initiated in the year 1976 in Bangladesh with promise of providing credit to the poor without collateral , alleviating poverty and unleashing human creativity and endeavor of the poor people. Microfinance impact studies have demonstrated that

Legal RegulationsBanks in India are

regulated and supervised by the Reserve Bank of India (RBI) under the RBI Act of 1934, Banking Regulation Act, Regional Rural Banks Act, and the Cooperative Societies Acts of the respective state governments for cooperative banks.

Microfinance in IndiaAt present lending to the

economically active poor both rural and urban is pegged at around Rs.7000 crores in the Indian banks’ credit outstanding. As against this, according to even the most conservative estimates, the total demand for credit requirements for this part of Indian society is somewhere around Rs.2,00,000 crores.

Microfinance changing the face of poor India

Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro-Finance scene is dominated by Self Help Groups (SHGs) - Banks linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the 'unreached poor'. In the Indian context terms like "small and marginal farmers", " rural artisans" and "economically weaker sections" have been used to broadly define micro-finance customers. Research across the globe has shown that, over time, microfinance clients increase their income and assets, increase the number of years of schooling their children receive, and improve the health and nutrition of their families.

Distribution of Indebted Rural Households: Agency wise

Credit Agency Percentage of Rural Households

Government 6.1

Cooperative Societies 21.6

Commercial banks and RRBs 33.7

Insurance 0.3

Provident Fund 0.7

Other Institutional Sources 1.6

All Institutional Agencies 64.0

Landlord 4.0

Agricultural Moneylenders 7.0

Professional Moneylenders 10.5

Relatives and Friends 5.5

Self Help Groups (SHGs) Self- help groups (SHGs) play today a

major role in poverty alleviation in rural India. A growing number of poor people (mostly women) in various parts of India are members of SHGs and actively engage in savings and credit (S/C), as well as in other activities (income generation, natural resources management, literacy, child care and nutrition, etc.). The S/C focus in the SHG is the most prominent element and offers a chance to create some control over capital, albeit in very small amounts. The SHG system has proven to be very relevant and effective in offering women the possibility to break gradually away from exploitation and isolation.

Bank Partnership Model This model is an innovative way of

financing MFIs. The bank is the lender and the MFI acts as an agent for handling items of work relating to credit monitoring, supervision and recovery. In other words, the MFI acts as an agent and takes care of all relationships with the client, from first contact to final repayment. The model has the potential to significantly increase the amount of funding that MFIs can leverage on a relatively small equity base.

A sub - variation of this model is where the MFI, as an NBFC, holds the individual loans on its books for a while before securitizing them and selling them to the bank. Such refinancing through securitization enables the MFI enlarged funding access

Marketing of Microfinance Products:-Contract Farming and Credit Bundling

Banks and financial institutions have been partners in contract farming schemes, set up to enhance credit. Basically, this is a doable model.

Agri Service Centre – Rabo IndiaRabo India Finance Pvt. Ltd. has established agri-service centres in rural areas in cooperation with a number of agri-input and farm services companies.

Non Traditional MarketsSimilarly, Mother Dairy Foods Processing, a wholly owned subsidiary of National Dairy Development Board (NDDB) has established auction markets for horticulture producers in Bangalore.

Commercial banksas Microfinance VehiclesCommercial banks recently have stepped into the realm of

microfinance. They have taken tentative but very important steps toward distributing Microfinance loans to the poor. One advantage of these institutions is that they bring in the risks management practices that they regularly use in their commercial operations risk management practices that they regularly use in their commercial operations. The other important aspect they bring in is the professional credit appraisal practices that are used in their normal operations. These important features combined with a mission to provide the poor entrepreneurs will enhance the social lives and they can run their business effectively with proper access to credit. In some cases, successful microfinance NGOs have transformed themselves into for profit commercial banks (BancoSol of Bolivia is a prime example of a microfinance NGO that has successfully transformed itself into a for-profit commercial bank).

MICROFINANCE INSTITUTIONS Microfinance institutions are perhaps one of the most

important vehicles to reach the rural poor. These institutions can act as very important tool to provide the rural entrepreneurs with micro-loans, which will help them to start their own businesses and sustain them. One advantage that these institutions have over other financial services delivery vehicles is the focus. While NGOs have to straddle with various non-financial and financial services activities and commercial bank with other operations. MFIs can solely focus on providing the financial service to the poor since the very objective of starting this kind of institution is to provide financial services in the rural areas.

ICICI Bank launches new initiative in micro-finance

ICICI Bank has taken a stake of under 20 per cent in Financial Information Network and Operations Private Ltd (FINO), which was launched on Thursday, July 13, 2001.

FINO would provide technological solutions as well as services to finance providers to reach the underserved in the country. ICICI Bank is the lead facilitator.

According to Mr. NachiketMor, Deputy Managing Director, ICICI Bank, FINO is an independent entity. "We would reduce our stake in the company when required," he said.

ICICI Bank expects to target 200 micro-finance institutions (MFIs) by March 2007, he said, speaking on the sidelines of the press conference to launch FINO. At present, the bank has tie-ups with 100 MFIs.

Core banking productsFINO has partnered with IBM and i-flex to offer

core banking products. It would also provide credit bureau services, which includes individual customer credit rating and analytics based on transaction history. It also launched biometric cards for customers, which would be a proof of identity and give collateral to them. The card would also offer multiple products including savings, loans, insurance, recurring deposits, fixed deposits and remittances. The company would also build-up customer database, thus bringing them into mainstream banking.

ICICI Bank's thrust on micro-financeCHENNAI, MARCH 9. ICICI Bank has entered into partnerships

with various microfinance institutions (MFI) and non-Government organizations (NGOs) to scale up its micro lending business. Addressing presspersons here, today, NachiketMor, Executive Director, ICICI Bank, said, the partnership model would provide assured source of funding to NGOs and MFIs. The bank had extended advances to the tune of Rs.150 crores as on February 29, this year, under this scheme, Mr. Mor said.

The bank had acquired a network of self-help groups (SHGs) developed by the erstwhile Bank of Madura after its merger with ICICI Bank. Since then the SHG programme had grown substantially and 10,175 groups had been promoted reaching out to 2.03 lakh women spread across 2,398 villages, the Executive Director said.

MICROFINANCE AND WOMEN EMPOWERMENT

Women as micro and small entrepreneurs have increasingly become the key target group for micro finance programs. Consequently, providing access to micro finance facilities is not only considered a pre-condition for poverty alleviation, but also considered as a strategy for empowering women. In developing countries like INDIA micro finance is playing an important role, promoting gender equality and is helping in empowering women so that they can live quality life with dignity.

The study conducted by FINCA Client Poverty Assessment conducted in 2003 revealed that of the interviewed clients 81 percent were women, and it was found that food security was 15 percent higher among their village banking clients than non-clients. The report also showed clients to have 11 percent more of their children enrolled in school with an 18 percent increase in healthcare benefits. Clients’ housing security was reported as 18 percent higher than non-clients.

EMPOWERMENT: FOCUS ON POOR WOMEN

Women have been the vulnerable section of society and constitute a sizeable segment of the poverty-struck population. Women face gender specific barriers to access education health, employment etc. Micro finance deals with women below the poverty line. Micro loans are available solely and entirely to this target group of women. There are several reason for this: Among the poor , the poor women are most disadvantaged –they are characterized by lack of education and access of resources, both of which is required to help them work their way out of poverty and for upward economic and social mobility. The problem is more acute for women in countries like India, despite the fact that women’s labor makes a critical contribution to the economy.

MICRO FINANCE INSTRUMENT FOR WOMEN’S EMPOWERMENTMicro Finance is emerging as a powerful instrument for

poverty alleviation in the new economy. In India, micro finance scene is dominated by Self Help Groups (SHGs) – Bank Linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the “unreached poor”. Based on the philosophy of peer pressure and group savings as collateral substitute , the SHG programme has been successful in not only in meeting peculiar needs of the rural poor, but also in strengthening collective self-help capacities of the poor at the local level, leading to their empowerment. Micro Finance for the poor and women has received extensive recognition as a strategy for poverty reduction and for economic empowerment.

OBJECTIVES OF THE STUDY:To study the impact of micro finance in empowering

the social economic status of women and developing of social entrepreneurship.

To know about relationship between SHG’s members, micro finance banks and entrepreneur’s women.

To clarify the limitation of microfinance programmes as the tool for women’s empowerment and the type of support service necessary to maximize the contribution of microfinance service.

To study potential hurdles in the development of women entrepreneurship

RESEARCH METHODOLOGYResearch methodology is a framework for the

study and is used as a guide in collecting and analyzing the data. It is a strategy specifying which approach will be used for gathering and analyzing the data. it also includes time and cost budget since most studies are done under these two constraints. The research methodology includes overall research design, the sampling procedure, the data collection method and analysis procedure.

METHOD OF DATA COLLECTIONAfter the research problem has been identified and selected the

next step is to gather the requisite data. While deciding After the research problem has been identified and selected the next step is to gather the requisite data. While deciding about the method of data collection to be used for the researcher should keep in mind two types of data i.e. primary and secondary.

Primary DataThe primary data are those, which are collected afresh and for the first time, and thus happened to be original in character.

Secondary DataThe secondary data on the other hand, are those which have already been collected by someone else and which have already been passed through the statistical processes

ANALYSIS AND INTERPRETATION OF DATAParticular Year Total SHGs All Women SHGs % ofWomanGroups

No. Amount No. Amount No. Amount

SHG Savingswith banks as on 31st March

2009-10 69.53 6198.71 53.10 4498.66 76.4 72.6

2010-11 74.62 7016.30 60.98 5298.65 81.7 75.5

Loan disbursed to SHGs during the year

2009-10 15.87 14453.3 12.94 12429.37 81.6 86

2010-11 11.96 14547.73 10.17 12622.33 85 86.8

Loan outstanding against SHGs as on 31st March

2009-10 48.51 28038.28 38.98 23030.36 80.30 82.1

2010-11 47.87 31221.17 39.84 26123.75 83.2 83.7