Microfinance, Self-Help Groups and Empowerment in Maharashtra

Abstract

The 1990s were marked by partial deregulation of interest rates, greater competition in the banking sector, and a new nationwide microfinance initiative linking banks, NGOs and informal local groups (self-help groups or SHGs).¹ Better known as ‘SHG Bank Linkage’, it is expected to become a dominant form of financial access for the rural poor. However, informal/local moneylenders continue to have a strong presence in rural India, delivering finance to the poor, as a vast majority of them still lack access to formal sources of finance (Basu and Srivastava, 2005, Dasgupta, 2005, and Ghate, 2007). A major challenge therefore is to widen access to finance of the rural poor-especially women as a highly disadvantaged and deprived group- to meet their diverse needs (for example, savings, credit, insurance against unexpected events) through flexible products at competitive prices.²

This study was conducted under the overall guidance and support of T. Elhaut and G. Thapa. The field-work in Pune was conducted by P. Sadolikar and his team of investigators under the authors’ supervision. An earlier version was discussed at a conference organised by Australia South Asia Research Centre, Australian National University, Canberra, in August, 2007. The present version has benefited from the comments of several participants. Data processing and analysis were done by R. Bhatia. We are grateful to Sundeep Vaid and Monica Bugghi for valuable research support. The authors are, however, responsible for the views expressed here.