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Microfinance challenges: empowerment or disempowerment of the poor?

Isabelle Guérin
Jane Palier

Part III - Assessing microfinance

14. Microfinance and women’s empowerment: research approach and findings from an impact assessment of MFIs in India

Meenal Patole et Frances Sinha

Note de l’auteur

This paper is a joint effort of EDA’s impact assessment team led by Frances Sinha. It draws from the impact assessment study of the Micro-Finance Support Project (MFSP) in India, funded by the Department For International Development (DFID) and International Fund of Agricultural Development (IFAD) through the SIDBI Foundation for Micro Credit (SFMC). The full baseline report – The maturing of Indian microfinance: a longitudinal study – is available on the EDA website: Details of the overall research design are also available on:;

Texte intégral

1Women are the primary clients of many microfinance programmes, especially in the group based (self-help group [SHG] and Grameen) models. Does the role of women as microfinance clients translate into empowerment for them? Or is it merely instrumental, to ensure discipline and repayments? Questions about women’s empowerment are among the key research questions of the impact assessment study.

2Impact assessment is essentially about whether a programme is meeting its objectives. The overall goal of the MFSP is “substantial poverty elimination and reduced vulnerability in India amongst users of microfinance services, especially women”.

3The impact assessment study therefore has a wide agenda, exploring issues of outreach, and different dimensions of poverty (income and non-income related) and vulnerability. It was designed within a social/development audit framework that explores the objectives and indicators of different stakeholders in a programme – incorporating the perspectives, in this case, not only of the donors (DFID and IFAD) but also the implementers (SIDBI, the microfinance institutions [MFIs]) and their clients. It also, accordingly, incorporates elements of market research, exploring the different approaches to microfinance delivery, alternative financial services (formal – banks/informal – moneylenders, chit funds) and access to these, and client feedback on their utility.

4The overall study covers 20 MFIs selected to represent different models of microfinance (group based and individual banking) and regions of India. In line with best practice in impact assessment, it combines both quantitative and qualitative methods, with a substantial sample size for both: 5,600 households interviewed by questionnaire (4,000 clients, 1,400 non-clients, 300 dropouts), 260 focus groups and 150 case studies. It is a longitudinal study, presently at the baseline stage. Since the aim is both to document impact for the end-users and also to improve the practice of microfinance, the baseline data have been analysed to provide interim findings and recommendations.

5This note therefore summarises one component of the overall study, reflecting on the combination of different methodologies used to explore the role of women as microfinance clients, and presenting some of the baseline findings.

1. Research approach

1.1. Hypotheses

6The key research hypothesis is Microfinance contributes to women’s empowerment at individual, household and community levels and sub-hypotheses studied include:

- Increases women’s access to financial services (savings and credit).
- Increases women’s economic activity through access to credit for investment.
- Involvement increases women’s awareness, mobility and skill development.
- Increases women’s ownership of assets within the household.
- Increases women’s management of enterprises within the household economy.
- Enhances women’s status in the household as income contributors and decision-makers.
- Increases women’s empowerment at the community level.

1.2. Study variables

7The input variables are the services that vary across MFIs – savings (internal circulation), credit, support services (to group, enterprise related, other development) and insurance services as well. While MFI inputs vary, they are also local and context specific (socio-cultural variations) and tempered by the MFI approach to microfinance (group based or individual banking), MFI focus (credit only or plus), intensity of client interaction with the programme (such as number of loans and who has access), status of a woman client within the household, whether she is educated or is the sole bread winner and so on.

1.3. Impact indicators

8Those included in the study’s conceptual framework are:

  • 175 Women’s priorities reflect broad development concerns: a better quality of life for their families (...)




- Increase in family savings in women’s name(s)
- Increased role of women in managing enterprises supported by MFI loans in their name
- Increase in women’s direct contribution to family income
- Greater say in household decision making

- Significant changes identified by members175
- Increased self-respect from savings in own name, ability to access loans, mobility, group membership

- Community initiative taken by MFI women members
- Women clients become active members/representatives of other local institutions/groups

1.4. Indicators of change mentioned by women include:

Objective indicators

Subjective indicators

- Ability to save and access loans
- Opportunity to undertake an economic activity
- Mobility – opportunity to visit nearby towns
- Increased financial awareness
- A role in community awareness

- Increased self-confidence
- Ability to command respect within the household and participate in house-hold decision-making.

1.5. Methods

9Typically, we start with a discussion with the management and staff of the MFI to understand the MFI’s gender focus, activities and their views on local women’s issues. The three main study tools are surveys, focus groups and case studies.

  • Household survey: to profile socio-economic characteristics, and to quantify the following variables.
  • Focus groups: to identify significant changes from the women’s perspective, and obtain their feedback on microfinance products and services; also to obtain men’s views on the same.
  • Case studies: to explore in detail different contexts, the process of change (or lack of it) and the reasons thereof.

10Triangulation is key – for example, if a client reports no savings in a questionnaire, then we would follow it up with an informal discussion with peers or MFI field staff to cross-check the data and also to find out what situation has led to this. Informal discussions with the neighbourhood including local stakeholders as well as observation provide insight into local dynamics.

1.6. Relevance / limitations

11The relevance of different methods is discussed in good research manuals, and our experience strongly endorses the principle that a combination of quantitative and qualitative methods helps to understand the direction of change (Focus Group Discussions), the process of change in different contexts (case studies) and to quantify that change (quantitative data). Each approach by itself has limitations, and requires careful sampling and research rigour.





Generates comparative quantitative data between women, men and non-clients.

Cannot be exhaustive, cannot capture perceptions, situations.

Focus groups

Help to discuss an issue in detail and allows the facilitator to talk to women, men, and non-clients at the same time.

Sometimes having many participants can be chaotic. Also, usually there are very general responses.

Case studies

Very effective in following up with individual or household situations. Provides the whole picture at a micro level.

Do not help in generalisation. Can be very time consuming as well and intimidating for the individual case.

2. Findings

2.1. How do Micro Finance Institutions (MFIs) view their women clients?

12The key reasons that emerge are instrumental ones – women are sincere, disciplined and interested in small transactions or benefits reach families through women. Group based microfinance may be seen as a “women’s movement” in terms of targeting women as clients. MFIs that focus on financial services – especially those based on the Grameen model – tend to be “gender-neutral”: they provide basic finance related training (group norms, procedures, signing one’s name) whilst MFI staff conducts all transactions.

13Some SHG-model MFIs are gender-supportive: the approach provides for the involvement of members in group-based activities and decisions, with a greater role for group leaders (managing accounts, taking responsibility for group meetings and activities) and also parallel development programmes (especially health, hygiene, reproductive health, sometimes enterprise skills) – though these do not necessarily reach microfinance clients. None in our sample (though there are a few such MFIs in the country) have a ‘gendertransformative’ approach that incorporates a policy of gender equity.

14MFIs that primarily target men believe that overall economic development takes care of the gender imbalances and so, specific targeting of women may not be required.

2.2. Who are the women clients?

15In terms of schooling 60% had none and 31% have completed primary education. 82% in southern India and 65% in northern India are productively engaged, with 35% in the south and 9% in the north involved in casual labour work. In terms of social background of the households, 32% are scheduled castes, 37% are backward caste and 17% upper caste. As for the wealth categories, 41% are poor and 37% are borderline (around the $ 1-aday international poverty line) (Sinha 2003).

16Savings with MFI groups are important and many women clients, especially the poor saving for the first time feel that saving in small amounts is convenient and safe. 96% of women clients compared to 21% women in non-client households contribute to household savings.

17Access to loans has provided an option to borrow. Women clients mention that loans are important to meet a range of household as well as enterprise needs and increase creditworthiness. The study findings indicate that men often play a role in the access and use of credit as women manage less than half the enterprises they take loans for (42% in the south and 33% in the north). There are many cases of loans passed on to husbands for their enterprise, without women’s involvement (26% in the south, 51% in the north).

18In India traditionally, men own assets and in terms of stated ownership of assets (productive, household and housing) in the previous two years, the findings indicate that they still continue to do so. However, microfinance has made some difference – 40% of the productive assets purchased in client households are in the women’s name, compared to 17% in non-client households. In terms of total value of assets purchased, 50% is in the men’s name, 31% is held jointly, and 19% is in the women’s name.

19On a series of questions related to awareness about MFI procedures just eight women clients knew all the answers (sub sample of 92 women clients).

  • Two-third knew their savings amount, but less than half knew the interest rate payable on savings.
  • Half the SHG sample did not know what records are kept with the group.

2.3. Feedback gathered from FGDs and case studies

  • 176 Including single women whose husbands are dead, and who are the sole breadwinners (14% in southern (...)


Less positive

Savings are important for all the women clients and its end use sets out priorities such as paying school fees, spending for the family, medical expenses and self purchases as well.

Prefer flexibility in deposit/withdrawability and transparency in maintenance of savings accounts. The issue of continuing dependence on men for microfinance transactions and some MFIs (including most Grameen model MFIs) – women have to get their loan applications signed by a male relative.

Access to loans and involvement in enterprise management – some women clients feel that are more involved in household decision-making and have gained respect from family members.

Men’s opinions on this vary:
My wife runs the shop entirely – I am just a worker”
She is just a womandoes she have the brains to handle enterprise finance?”

Being a woman-headed household176 is a special case. Such women clients feel that microfinance provides them with moral support, business capital or cash to take care of household needs.

There are exceptions where being single/widowed was seen as handicap – their low capacity to service loans and lack of family support.

Group mechanism has the potential to accelerate the process of empowerment of women. Unlike men, the feedback shows that women clients like to be part of a group. They draw moral support from their peers and involvement in the group helps them in sharing their difficulties and relieving stress.

Group mechanism can often be mundane with routine work, while financial transactions are key – women clients would like the meeting agenda to go beyond this.

  • 60% of the SHG sample and 40% of the Grameen sample knew the loan terms.
  • Roughly half the women clients in the sub-sample had visited a bank, which was more likely for SHG clients.

20At the community level, there are hardly any initiatives. Groups would like to take action against alcoholism – but group based initiatives within the community in our sample were few, and not necessarily successful.

21There is also less positive feedback that group leaders get more opportunities than other members, that women sometimes find it difficult to find the time for meetings and that there is some continuing discrimination against lower caste women in mixed groups.

3. MFI practice can be more empowering

22In the context of the socio-cultural limitation on the role of women, targeting women for financial services seems to be a good start. A detailed look at various microfinance practices in India suggests certain strategic features that could make MFI practice more empowering. These features are given in Box 1 with rationale/explanation in Box 2.

Box 1. Strategies to support women’s empowerment


What can microfinance do?

Beyond microfinance – a ‘wish list’

Support to women as microfinance clients

• Gender sensitivity of staff (men or women)
• Clear and systematic communication about the programme to all clients

- Guidance on management of finances
- Support to undertake viable enterprises
- Social programme/guidance
- Wider social/community participation
- Exposure/opportunities in new fora

Support to women’s groups

• Groups guided to be autonomous
• Leadership rotation

- Women interact with external financial institutions
- Leadership/capacity development

Box 2. Empowering strategies – rationale



Support to women as microfinance clients


- Gender sensitivity of staff (men or women)

Staff behave in an ‘open and equal’ manner, without being patronising, top-down


- Clear and systematic communication about the programme to all clients

Ensure that all women members know and understand MFI policies and products


- Guidance on finance management

Support women to take financial decisions (savings strategy, household cash flow)

Other development support


- Economic Support to undertake viable enterprises

Business development support-backward/forward linkages, production related support


- Social programmes/guidance

i.e. health and literacy programmes for women


- Wider social/community participation: Exposure/articulation in new forums

Encourage women to participate in community affairs; provide a platform for/promote women's involvement in wider social interactions (non financial as well), exposure to ideas, guidance in understanding/participating


- Groups guided to be autonomous

Encourage groups to take own decisions with low dependence on staff or external person


- Leadership development/capacity development

Guidance to group leaders to enhance practices of group governance, develop accounting skills and ability to communicate


- Leadership rotation

Wherever possible, encourage groups to rotate leaders to avoid centralisation of group leadership; different women members get opportunities for skill/leadership development


- Women interact with external financial institutions

Women clients expected to transact with formal financial institutions, or central agencies constituted by the Microfinance Institution

23We marked 16 MFIs that aim to work with women on the 10 empowering components on a simple scored index (0-1).

  • Only 1 scored well (0.9) and 2 scored more than 0.5. All 3 are the SHG model – south.
  • Average scores – 0.4 for SHGs, 0.1 for both Grameen and individual banking.

24It is clear that the impact of microfinance on women’s economic integration and empowerment is conditioned significantly by the local context, influenced by the existing social and cultural milieu and the available livelihood opportunities. There are also strong indications that access to finance has begun to alter the economic opportunities available to poor women as well as men. MFIs that target women clients need to understand the regional and local contexts and adapt their approach/strategies and products accordingly.


175 Women’s priorities reflect broad development concerns: a better quality of life for their families, stable employment and incomes, education for their children and eradication of social evils such as alcoholism.

176 Including single women whose husbands are dead, and who are the sole breadwinners (14% in southern India and 8% in northern India).

Table des illustrations

Fichier image/jpeg, 198k


Team Leader (Impact Assessment–Capacity Building), EDA Rural Systems, Gurgaon (India)

Executive Director, EDA Rural Systems, Gurgaon (India)

© Institut Français de Pondichéry, 2005

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