The Impact of Microfinance on Women’s Leadership and Empowerment

Even after years of generational biases, there have always been trailblazing women in every generation in our country. Women who stood strong, and inspired other women to become leaders, and most importantly independent. From fighting for basic legal rights and the right to vote in the 19th century to fighting societal norms and inequities in the 21st century, women in India have shown significant amounts of perseverance and leadership skills. They might not be financially strong, but they are certainly strong-willed and independent. Most of the women from poor backgrounds don’t lack confidence, they only lack the financial support to get them started and going.

Microfinance institutions are filling this gap by providing rural women in India with basic financial support and helping them take their first step towards financial independence. India boasts the largest microcredit clientele in the world, with more than 85% of microfinance clients being women. This signifies the impact of microfinance on women’s independence, empowerment, and leadership. Thanks to MFIs, today there are Joint Liability groups led by women, which work functionally better than many private organizations.  In this blog, let us understand the impact of microfinance on women empowerment and various initiatives and steps that microfinance institutions have taken over the years to bring leaders and independent women out of their shells.

 

The journey of empowerment

Economic independence

Microfinance enables financial access to women and empowers them to take charge of their lives. By becoming economically independent, these women gain confidence in their ability to manage money and their families effectively. These women showcase significant amounts of confidence and perseverance and are dedicated to changing their lives and impacting others.

Social collateral

Microfinance operates purely on trust and social responsibility. Joint Liability Groups by microfinance institutions are a successful initiative, where women support each other financially, share experiences, and learn from each other. This creates a sense of community and in these circles, the leadership emerges organically.

For instance, a woman who has successfully established her tailor business becomes the inspiration for other women in the community.

Breaking social norms

By offering micro loans to economically backward women, microfinance is allowing them to break the social norms and become leaders of their own communities. This communal advantage allows them to grow together and benefit mutually.

 

How microfinance has allowed women to become independent?

Apart from financial aid, the impact of microcredit is enabling women in decision-making, developing various skills, and managing financials.

SHGs

SHGs are informal associations, consisting of 4-10 individuals to help each other financially. These groups primarily focus on savings, credit, and mutual support.

• SHGs work majorly on trust, through regular meetings and interactions, these women develop social networks and build leadership qualities.
• These connections will help them build self-confidence and a sense of belonging.
• In India, over 12 million SHGs exist, with 88% being women-led, These groups serve approximately 142 million families, contributing to economic resilience and leadership development.

JLGs

JLGs are informal groups of 4-10 people, who usually avail loans by taking the responsibility of repayment together without collateral.

• These groups promote collective responsibility and mutual guarantee, which are two of the important qualities of leadership.
• Research shows that women in JLGs exhibit risk-taking behaviour and innovation in women.

Retail loans

Retail loans or microloans are small amounts of loans for short tenures without any collateral.

• These retail loans empower women to invest in income generating activities, making them financially independent and strong.
• MFIs by providing access to these microloans are offering women greater control over financial resources making them leaders of their families, and inspiration for others.

 

Conclusion

In conclusion, the impact of microfinance on women’s leadership and empowerment is significant and far-reaching. Through various initiatives, these institutions have provided women with the financial support and resources necessary to become independent and take charge of their own lives. This has not only led to individual growth but also the emergence of women leaders within their communities.

At Chaitanya India, one of the leading microfinance companies in India, we have personally come across many women who were financially weak but had shown perseverance and leadership qualities to get on their own feet and be strong. Understanding the difficulties faced by these women, we are providing micro-loans at much lower interest rates than other institutions. MFIs play a crucial role in empowering women to become societal leaders, and we strive to lead in supporting their goals.