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1. 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.

2. 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

3. LITRATURE REVIEW
 Mohammed 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.

4. 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.

5. 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

6. Legal Regulations
 Banks 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.

7. Microfinance in India
 At 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.

8. 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.

9. 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

10. 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.

11. 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

12. 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 India
Rabo 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 Markets
Similarly, Mother Dairy Foods Processing, a wholly owned
subsidiary of National Dairy Development Board (NDDB)
has established auction markets for horticulture producers
in Bangalore.

13. Commercial banksas Microfinance
Vehicles
 Commercial 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).

14. 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.

15. 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.

16. Core banking products
 FINO 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.

17. ICICI Bank's thrust on micro-
finance
 CHENNAI, 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.

18. 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.

19. 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.

20. MICRO FINANCE INSTRUMENT
FOR WOMEN’S EMPOWERMENT
 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) –
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.

21. 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

22. RESEARCH METHODOLOGY
 Research 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.

23. METHOD OF DATA COLLECTION
 After 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 Data
The primary data are those, which are collected afresh and for
the first time, and thus happened to be original in character.
 Secondary Data
The 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

24. ANALYSIS AND INTERPRETATION OF
DATA
Particular 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