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Survey of Literature
Submitted by

Paul Jose P


Dr. Vasanthakumari. P Associate Professor, P.G. Department of Commerce, NSS College, Ottapalam

May 2011

Survey of Literature
Building inclusive financial sectors improves peoples lives, in particular those of the poor. A small loan, a savings account or an insurance policy can make a great difference to a low-income family. They enable people to invest in better nutrition, housing, health and education for their children. They ease the strain of coping with difficult times caused by crop failures, illness or death. They help people plan for the future. (Kofi Annan, Secretary-General of the United Nations)
According to Consultative Group to Assist the Poor (CGAP) the absolute number of savings account worldwide is reported to exceed the Global population (CGAP, 2009).However, half of the world s adult population, which approximately is 2.5billion, does not use formal financial services to save or to borrow (Chaia and others, 2009). A consensus has been arrived at among the academicians with regard to the direct association between well developed and inclusive financial system and faster growth and better income distribution. Bringing the unbanked within the net of financial services is one of the agenda of development interventions widely recognised across the globe. Providing access to financial services to the poor is, technically, financial inclusion. However, it neither implies that everybody should make use of the supply, nor that the providers should disregard risks and other costs when deciding to offer services .Both voluntary exclusion and unfavourable risk return characteristics may preclude a household or a small firm despite unrestrained access, from using one or more of he services. Such outcomes do not fall within the realm policy interventions. Rather policy initiatives should aim at correcting market failures and eliminating non market barriers to accessing a broad range of financial services (Demirguc- Kunt A, et al 2008). The reasons for the poor being excluded from financial services are many: Incomes of the poor are often erratic, available only when harvests go to market, goods are sold, or work can be found. Unable to have savings accounts and other basic financial tools, the poor must resort to alternatives like hiding cash under a mattress, investing in livestock, or buying jewelry, leaving them at risk of loss or theft. A small crisis, like an illness or injury, can often lead to huge financial problems because they must sell household possessions or borrow from unofficial moneylenders at high interest rates afford account fees. Many of the rural poor live too far away from a bank, and just making a trip to deposit or withdraw money can mean a day-long journey resulting in lost wages, transportation costs, and other inconveniences. The different aspects financial services like credit, savings, insurance and other perceivable services are needed and demanded by the poor also. They save, they need credit and they are in search of insurance against exigencies. The various needs of the poor for finance are listed out by Arun, T. et al (2009).They argue that the poor save because they are motivated to by life cycle needs, emergencies and opportunities. Life cycle needs such as childbirth, education, marriage, home-building, old age, funeral expenses, festivals and the desire to bequeath a lump sum to heirs vary from region to region. These can be anticipated as they require relatively large sums of money to be amassed. The amount of cash needed to meet such expenses is much larger than can normally be found in the household. Emergencies also create a sudden and unanticipated need for a large sum of money. Idiosyncratic emergencies such as sickness or injury, the death of a breadwinner, the loss of employment and theft, or the covariant emergencies such as war, floods, fires and cyclones, create a sudden need for more cash than can normally be found at home. There may be opportunities to invest in an existing or new business, to buy land or other productive assets, or to pay a bribe to get a permanent job. Addressing this need for financial services is a complex challenge. Mahajan (2000) identifies three segments of poor people who have various specific demands for microloans. At the very bottom in terms of income and assets, and most numerous, are those who require finance for consumption smoothing. The next market segment is small and marginal farmers and rural artisans and self employed in the urban informal sector, which needs credit for working capital, consumption needs and for acquiring additional productive assets. This group largely comprises the poor but not the poorest. The third segment is of small and medium farmers who have gone in for commercial crops. These persons are not always poor. There is much to be hoped for in the ways of financing the small borrowers by the banks. The cumbersome procedures, unfriendliness of the staff and the transaction costs involved are some worth mentioning. The Committee on Financial Inclusion under the chairmanship of Dr. C. Rangarajan, in its final report (2008), defined financial inclusion as the process of ensuring access to financial

services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost. Such an endeavour world over has been recognised as providing financial services to the hitherto unbanked at a micro scale with many special features like granting loans without the usual collaterals ,and marketing specially designed financial products to specially suit to the requirements of the poor, and mush simplified procedures for extending services. Definition of Microfinance Microfinance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance to poor and low-income households and, their microenterprises. Microfinance services are provided by three types of sources: formal institutions, such as rural banks and cooperatives; semiformal institutions, such as nongovernment organizations; and informal sources such as money lenders and shopkeepers. Institutional microfinance is defined to include microfinance services provided by both formal and semiformal institutions. Microfinance institutions are defined as institutions whose major business is the provision of microfinance services (ADB, 2000).Karmakar, KG (2008), defined microfinance as the provision of thrift, credit and other financial services such as money transfer and micro-insurance products for the poor, to enable them to raise their income levels and improve living standards. He further lists down the principles upon which the concept based is self employment/ enterprise formation is a viable means for poverty alleviation, lack of access to capital assets /credit is a constraint for existing and potential microenterprises, and the poor are able to save despite their low level and sporadic incomes. Microfinance and the impact it produces, go beyond just business loans. The poor use financial services not only for business investment in their microenterprises but also to invest in health and education, to manage household emergencies, and to meet the wide variety of other cash needs that they encounter. The range of services includes loans, savings facilities, insurance, transfer payments, and even micro-pensions. Evidence from the millions of microfinance clients around the world demonstrates that access to financial services enables poor people to increase their household incomes, build assets, and reduce their vulnerability to the crises that are so much a part of their daily lives. Access to financial services also translates into better nutrition and improved health outcomes, such as higher immunization rates. It allows poor people to plan for their future and send more of their children to school for longer. Access to flexible, convenient, and affordable financial services empowers and equips the poor to make their own choices and build their way out of poverty in a sustained and self-determined way. (Littlefield, E. et al 2003) Apart from the micro economic benefits, micro financial endeavours bring in several macro economic results also. First, financially self-sustainable microfinance programs can contribute directly, and at scale, to poverty alleviation, and promote market deepening that in turn advances financial development. Second, microfinance may be a useful strategy to consider in countries with bad governance where other development strategies face significant barriers. Third, microfinance can help financial markets in developing countries to mature, while playing more limited, but useful, roles in poverty alleviation in both financially undeveloped and financially developed countries. Fourth, microfinance can help to break down opposition to, and build support for, domestic financial reforms (Barr, M.S, 2005) Delivery Methods and Institutional Models for Micro-Finance in India Microfinance concepts have existed since 1904 when the Cooperatives Societies Act was passed for ensuring credit loans for farmers through primary credit societies. The formation of long term cooperative credit institutions to meet the investment needs for farmers started in 1928.The Syndicate Bank started in 1921 concentrated on raising micro deposits for its constituents. In the early 1960s, India realized the high welfare costs that resulted from the financial exclusion of low income segments, then predominantly dwelling in the country's rural areas. For those who had access to financial services, the cost of doing business with informal credit providers was very high. Identifying access to credit as an integral component of its development plan, the government initiated focused initiatives to rectify the imperfections in rural credit markets. With the various priority sector targets under social banking in 1967 and after Bank Nationalization in 1969 microfinance concepts in banking institutions once again came to the fore. Microcredit was extended for investment under priority sector lending. IRDP and the of SGSY were the programmes aimed at investment credit. However, the subsidies and directed credit system caused the failure of the programme in as much as that the benefits happened to be taken away by the better off sections of the society. Expansion of rural branch networks, extension of subsidized credit, establishment of Regional Rural Banks (RRBs) and the establishment of apex institutions such as the National Bank for Agriculture and Rural Development (NABARD) and the Small scale Industries Development Board of India (SIDBI) were the other attempts in this direction. By the early 1990s, these measures

showed results in terms of impressive rural outreach and credit volumes. However, it was also found that the institutional structure was neither profitable nor suitable to the needs of low income population segments. The decade also saw the creation of many civil society initiatives such as the SEWA Bank and the Women's Welfare Forum (WWF) extending credit to women workers in the unorganized economy The microfinance industry in India emerged in the 1970s to provide poor people with access to credit without resorting to the usurious interest rates fixed by informal moneylenders. Because of their weak asset base, poor people are generally unable to fulfill loan guarantees requested by traditional banks and remain trapped in a vicious circle of low income, low investment and low revenue. In 1974, SEWA Cooperative Bank was established to help low income women escape this trap and reduce their dependence on moneylenders. Much like Grameen Bank in Bangladesh, SEWA Bank relied on peer pressure groups to ensure high loan repayment rates. Through its success, SEWA Bank proved that the poor were bankable and helped pave the way for the emergence of hundreds of microfinance institutions during the 1980s and 1990s. In 1992, NABARD launched SHG-Bank Linkage programme, which is an important strategy in promoting financial inclusion and inclusive growth. The programme started as a pilot project to finance 500 SHGs across the country in 1992 has resulted in enormous growth along the length and breadth of the country. Studies conducted by various experts show that the programme has indeed helped in the social and economic empowerment of rural folk, especially women, causing significant up-scaling of social capital while at the same time delivering crucial financial services. Thus, it has proved to be a successful model wherein the outreach has expanded substantially leading to many advantages like micro savings, timely repayment of loans, reduction in transaction costs to SHG members and banks, etc. Over the last 15 years, the Micro-Finance initiative of NABARD has passed through various stages like pilot testing (1992-95), mainstreaming (1996-98) and expansion - 1998 onwards (Nirupam et al, 2009). At present, microfinance institutions in India use a variety of lending models to deliver microfinance services. The lending models vary from getting refinance from National Bank for Agriculture and Rural Development (NABARD) and the Small Industries Development Bank of India (SIDBI) as well as a number of state and commercial banks facilitating the formation of self help groups that generate internal funds and link with formal banks for additional financing. Micro-finance encompasses financial services other than credit. In India there are three major models of delivery of micro-credit. They are: Grameen Bank Model, The Self-help Group Model and individual lending with joint liability groups (JLGs). The Grameen Model which was pioneered by Prof. Muhammad Yunus of Grameen Bank is perhaps the most well known, admired and practiced model in the world. The basic element of the model is a homogeneous group of five members who regularly save and meet every week along with eight other eight groups, where the members take decisions on loan proposals and disbursements. The loans are repaid in fifty installments. The strength of the Grameen model is in the simplicity of the design of its products and delivery, which makes it widely replicable. Some of the major Grameen replicators in India are SHARE Microfin Ltd. and Swayam Krishi Sangha (SKS) in Andhra Pradesh, Bharat Seva Samsthe and Grameen Koota in Karnataka, ASA in Tamil Nadu, Cashpor Financial and Technical Services in Uttar Pradesh and the Rashtriya Gramin Vikas Nidhi in Assam and Orissa. The Self-help Group Model Ancient India had self help groups in the form of grain banks: villagers pooled grain which was lent out to those in need .Another SHG forerunner was the chit fund , in which a group of villagers pooled savings that were then loaned to the higher bidder or distributed by lottery (Noe 2003a quoted in S. Swaminathan et al 2007). In the present Indian context, a self- help group, or SHG, is a group of 10 to 20 people, almost always women, who come together to find a collective solution to their common problems. Mobilized by government facilitation, such groups typically start by pooling their savings and lending to members in need, but then go on to tackle broader livelihood and social problems. (S. Swaminathan et al, 2007) It is unique and distinct to India and constitutes the chief mode of microfinance service delivery in the country. Linking banks and self-help groups, involving private and public partners, is the largest and fastest-growing microfinance program in the developing world. (S, Hans Dieter, 2006, IFAD, 2003.) The essential design elements of the SHG model are: y Homogenous members of similar economic status y Affinity- trust and mutual support among members; this tends to restrict the group to 15-20 members

y y y y y Regular meetings studies indicate that SHG s which meet weekly are most likely to evolve as sound institutions providing both savings and credit services as well as taking initiatives for change. Regular savings the group begins by savings which are placed in a group common fund; the stress is on regularity in order to create the savings habit Lending decisions are taken by the group Groups select their leaders which are rotated The group as an institution accesses external funds (IFAD, 2003)

Individual lending with joint liability groups (JLGs) Under this model, individual borrowers are asked to form joint liability groups of 5-7 self-selected members, and are granted loan based on a mechanism of social collateral of the group members participating in the programme. The possibility of repayment improves due to the application of peer pressure in case of willful default by a member, or through mutual help in case one has a genuine setback in the activity and has a temporary shortfall to repay. The JLG also improves repayment because members eliminate those who are likely to be willful defaulters or will not be able to use the loan properly. This is appropriate for borrowers who have graduated from the SHGs or JLGs after a number of cycles.

SHG An SHG is a group of about 20 people from a homogeneous class, who come together for addressing their common problems. They are encouraged to make voluntary thrift on a regular basis. They use this pooled resource to make small interest bearing loans to their members. The process helps them imbibe the essentials of financial intermediation including prioritization of needs, setting terms and conditions, and accounts keeping. This gradually builds financial discipline in all of them. They also learn to handle resources of a size that is much beyond individual capacities of any of them. The SHG members begin to appreciate that resources are limited and have a cost. Once the groups show this mature financial behaviour, banks are encouraged to make loans to the SHG in certain multiples of the accumulated savings of the SHG. The bank loans are given without any collateral and at market interest rates. The groups continue to decide the terms of loans to their own members. Since the group s own accumulated savings are part and parcel of the aggregate loans made by the groups to their members, peer pressure ensures timely repayments (NABARD 2002). Apart from being a vehicle of financial inclusion, among the other outcomes of SHGs cited is empowerment of the participant women. The group provides: (1) confidence and mutual support for women striving to social change; (2) a forum in which women can critically analyze their situations and devise collective strategies to overcome their difficulties; (3) a framework for awareness training, confidence building, dissemination of information and delivery of services and for developing communal self reliance and collective action; and (4) a vehicle for the promotion of economic activities (Meenai, 2003). Definition of SHG-Banking SHG-Banking is a programme that helps to promote financial transactions between the formal rural banking system in India comprising of public and private sector commercial banks, regional rural banks and cooperative banks with the informal Self Help Groups (SHGs) as clients (Kropp, E. W. and Suran B.S, 2002).They usually start by making voluntary thrift on a regular - mostly fortnightly or monthly - basis (contractual savings). They use this pooled resource (as quasiequity) together with the external bank loan to provide interest bearing loans to their members. Such loan provides additional liquidity or purchasing power for use in any of the borrower s production, investment, or consumption activities. Different Models of Linkage Three different models of credit linkage have evolved over time. Model I: SHGs formed and financed by banks. In this model, banks themselves take up the work of forming and nurturing the groups, opening their savings accounts and providing them bank loans.

Model II: SHGs formed by NGOs and formal agencies, but directly financed by banks: Here, NGOs and formal agencies in the field of microfinance act only as facilitators. They facilitate organising, forming and nurturing of groups, and train them in thrift and credit management. Banks give loans directly to these SHGs. Model III: SHGs financed by banks using NGOs and other agencies as financial intermediaries: This is the model wherein the NGOs take on the additional role of financial intermediation. In areas where the formal banking system faces constraints, the NGOs are encouraged to approach a suitable bank for bulk loan assistance. This, in turn, is used by the NGO for on-lending to the SHGs. In areas where a very large number of SHGs have been financed by bank branches, intermediate agencies like federations of SHGs are coming up as links between bank branch and member SHGs. These federations are financed by banks, which, in turn, finance their member SHGs. Other agencies like NBFCs are also coming up to take up this role. (NABARD, 2002) In India, the first survey on SHGs was undertaken by NABARD, along with other Indian members of the Asian and Pacific Regional Agricultural Credit Association (APRACA). They conducted an action research on linking SHGs with the concept of savings and credit in 1987 and published the outcome of the research in the form of a survey report in 1989. The survey , carried out with the specific objectives of understanding the background of the emergence of selfhelp groups, their composition, methods of working and their linkages with the financial institutions, and examining possibilities for development of linkages between the self-help groups, self help promotion institutions and the financial institutions for providing support to the self-help initiatives of rural development, studied 46 SHGs spread over 11 states and associated with 20 SHPIs. Of all the SHGs sampled, 17 had savings collection and credit provision as a major activity. Another 13 were engaged in farming or farm based activities, five were into social forestry and afforestation, eight were engaged in non-farm activities and three were occupied in diverse occupations. The major findings of the study are: SHGs consisted of homogeneous groups of small and marginal farmers, agricultural laborers, artisans, scheduled castes and scheduled tribes and women, who came together with the objective of saving and involving in credit activities created a variety of instruments to promote thrift among themselves. SHGs not having a regular savings fund were observed to have an emergency fund, mainly based on their membership fees or on the surplus from their joint economic activity. The internal loans were generally provided on the basis of trust in order to meet three types of requirements for consumption, working capital requirements medium and long term investments in income generating assets etc. The first study that could be considered a study of impact of the SBLP on SHGs was carried out for NABARD by Puhazhendi and Satyasai (2000). The study used a multistage stratified random sampling method to assess the impact of microfinance on socioeconomic7 conditions of 560 household members in 223 SHGs located in 11 states; Rajasthan (Northern region), Orissa and West Bengal (Eastern region), Madhya Pradesh and Utter Pradesh (Central region), Gujarat and Maharashtra (Western region), and Andhra Pradesh, Karnataka and Tamil Nadu (Southern region). They found that the average value of assets per household (including consumer durables and livestock) increased by 1.72 times in the post-SHG period from the level of Rs6, 843 during the pre-SHG period. When one assesses whether lifestyles have changed after getting into the SHG mould, it is found that people who come together to form SHGs end up better off in social and economic terms. During the post SHG period, the average household savings increased by 214 percent from a meager Rs.460 in the pre SHG period. The share of households among the SHGs living below the poverty line (42 percent) decreased to about 22 percent in the post-SHG period. With regard to employment performance, the study found that employment increased by 17 percent between the pre- and post-SHG periods. Thus, nearly half of all the sampled SHG members were seen as competent to earn higher incomes and stay above the poverty line. The study also found that pre-SHG inequalities in the distribution of income, savings and borrowings declined in the post-SHG period. On empowerment, they found that involvement in SHGs had significantly contributed to the self-confidence of the participating women. Moreover, there was a decline in family violence after members joined SHGs. In addition, the study stated that the composite index of different socio-economic parameters6 increased from 40 to 65 from the pre-SHG to post-SHG period. A study by Puhazhendi and Badatya (2002), also carried out for NABARD, assessed the impact of the SBLP on SHG members in the Indian states of Orissa, Jharkhand, and Chhattisgarh. The study following a multistage random sampling method collected primary data from a sample of 115members of 60 SHGs. A socio-economic impact was

arrived at by comparing the pre and post SHG situations of the members .The overall findings suggest an increase in household savings and assets for the SHG members after they formed the group. . About 83 percent of the sampled SHG members belonged to the SC/ST communities. The study reported frequency and regularity in meetings among the members. It was found that 65 per cent of the time meetings were held on a monthly basis, 18 per cent of the time there were fortnightly meetings, the weekly meetings were held 8 percent of the time and only 1 per cent of SHGs had irregular meetings. Actually, NGO -supported SHGs were more particular about holding monthly meetings (68 per cent) than the bank linked groups (59 per cent). Older SHGs (formed 3 years or earlier) observed monthly meetings more regularly than the new SHGs. However, 24 per cent of new SHGs had irregular meetings and 50 per cent of SHGs had a fixed date and timing for meetings. The average loan amount per member increased significantly by 123 per cent between the pre- and post-SHG periods. About 83.3 percent of the groups had promptly repaid the loans and only 16.7 percent had repaid late. The net annual income of SHG households increased by 23 percent after joining the SHGs. Employment was found to have increased by 34 percent on average in each SHG household. The mean annual savings of households increased two - fold after joining SHGs. About 23 per cent of SHGs reported an increase in savings over a period of time. Higher savings were reported for bank linked groups (36 per cent) than for NGO supported groups (16 per cent). The share of SHG member households below the poverty line fell from 88 percent to about 75 percent. There was also a remarkable improvement in the social empowerment of SHG members in terms of self-confidence, as reflected in their decision-making abilities and communication skills. Sustainability of SHGs was well established A study by Chakrabarti (2004) based on the secondary data available, assessed the impact of microfinance programme on poverty eradication and the role of banking sector in outreaching and financial sustainability. It found that, since the banking sector, particularly the RRBs, in order to overcome the heavy losses incurred till the mid-1990s, had shifted their emphasis from outreach to financial profitability. The study acknowledged that, though over half of the SHGs are formed by government agencies, NGOs continue to play a critical role in promoting and financing SHGs The study further acknowledges the unlimited .scope for further improvement in terms of outreach to make a serious dent on poverty. It also urges that the expansionary zeal of microcredit practitioners should be balanced with the quality of loans. The biggest challenge in development, however, is the simultaneous development of investment potential and improvement of skill levels of the borrowers Another study carried out by Ramakrishna (2006) of the NABARD GTZ Rural Finance Program assessed the SHG banklinkage programme from the survey data collected from 27 public sector banks, 192 regional rural banks and 114 cooperative credit institutions in Tamil Nadu, West Bengal, Karnataka, Chhatisgarh and Maharashtra through a questionnaire as on March 31, 2005, reported that commercial banks had a major share of the market at 61 per cent of total number of active SHG members and 68 per cent of the share in the number of loans outstanding to these SHGs while the RRBs and cooperative banks had market share of 30 per cent and 9 per cent respectively. The cooperative banks in Tamil Nadu, Karnataka and West Bengal, however, had an 82 per cent of share in the overall share of the cooperative banks. The study has defined savings outreach in terms of opening of savings account and amount of money deposited by SHGs in their savings account. In the case of the former, the study found that commercial banks had major share (52 per cent) followed by RRBs (34 per cent) and cooperative banks (14 per cent). On the share of banks in savings of SHGs it was reported that RRBs had the major share of 49 per cent followed by commercial banks (44 per cent) and cooperative banks (7 per cent). The share of SHG loans in overall loans and advances was 0.36 per cent in the case of commercial banks, 6 per cent for RRBs and 0.81 per cent for cooperative banks. With regard to NPAs, the study reported that overall NPA of SHG-bank linkage programme is 1.36 per cent. The NPAs of SBLP under commercial banks were found to be especially low, with only 0.93 per cent, less than the overall NPA ratio of 2.65 per cent reported for their normal lending activities. The NPAs of SBLP under RRBs and cooperative banks were 2.32 and 2.14 per cent and compared also very well with their NPA ratio of 8.70 and 18.84 per cent for normal lending activities respectively. The time taken for sanctioning a loan is found to be the shortest in the case of commercial banks. The average amount per loan outstanding for the Commercial Banks is the highest. A study by MYRADA (2002) on women s empowerment of SHG members for the southern region s states surveyed 13 SHGs and covered four professionally managed NGOs (DHAN, RASS, CHASS and MYRADA), one from each state. For the study four Model types of instruments such as structured interview schedule for SHG household members, indepth interview schedule for SHG leaders, NGO-leaders and bank officials, peer group evaluations for skills and

abilities evaluation of SHG members and in-meeting observations for evaluating the moderation skills of SHG leaders in a live meeting situation were used. The study found that most of the SHG members were young (26-35 years of age) married women in both type of SHGs (less than one year to more than three years old). With regard to impact of the SHG, majority of the members in both the groups agreed that their financial position and overall level of confidence had changed positively signifying an improvement in level of empowerment However, only 10 per cent and 16 per cent members of these two groups revealed that they had participated more than before in the local polity. The study also found that four NGOs have been playing an important role in different activities under the SHG programme. For example, RASS has been focusing on awareness of health and hygiene issues and DHAN on regular documentation. APMAS (2005) carried out a study of 400 SHGs, spread over 8 districts of Andhra Pradesh that had been linked to 20 banks/cooperatives - commercial banks, regional rural banks and primary agricultural credit cooperatives. The objectives of the study were ascertaining the socio-economic profile of the SHGs and their members; the quality of SHGs; the quality and extent of financial services to members and issues in and perceptions around SHG bank linkage; and the impact of bank-linkage on SHGs. The study revealed that members of the SHGs, majority of which had 11-15 members, mainly belonged to economically and socially disadvantaged groups. The 400 SHGs together had around Rs 95 lakhs of on savings. Cumulative savings appeared to grow for some years, and then to reduce in several cases. Loans were more expensive to access than was generally recognised. This was because individuals, perhaps in rotation, met many of the costs incurred in visiting banks to access loans for their groups. As on the impact of the programme on the members, they revealed that they value their association with their SHGs and the SHG s association with its bank and that their income levels and savings had improved. They felt, however, that, since employment opportunities had not significantly increased, they were not quite free from moneylenders yet, and that they did not yet spend as much on food as they needed to. The members admitted that they had been positively empowered with respect to many variables like confidence, ability to make decisions, leadership quality, and education levels. A study by Meissner (2006) examined the viability of SHG lending in a regional rural bank branch, the Alwar Bharatpur Anchalik Gramin Bank (ABAGB), in Alwar district of Rajasthan based on a survey data collected in August and October 2005 for 2004 -05. The study supported the viability of the SHG lending operations of the branch. It was also found that the branch accumulated more profits from SHG lending (3.9 per cent of loan outstanding) than that from other (normal) lending operations (3.1 per cent). The operation cost9 of the branch on lending to SHGs was found to be higher in case of Model Type 1 (directly financed by bank) -Rs. 7,113) -than for Model Type 2 (SHPI as intermediary), Rs. 6,808. With regard to the staff cost, the study reported that staff cost was higher but risk of loan loss (1.5 per cent and 0.4 per cent of loan outstanding) was less, which was just the reverse in the case of normal lending operations. However, the study mentioned that the staff cost calculated over several years (6 years) was found to be less than that for one year (1.3 per cent as compared to 1.5 per cent under one year), but was still more time and cost-intensive than normal lending (0.9 per cent). The importance for the viability of SHG lending operations lies in the low risk costs of SHG lending in comparison to normal transactions. Harper, Malcolm (2002), with the objective of examining and comparing the different ways in which Self Help Promotion Institutions (SHPIs) promote SHGs, the SHG promotion work of banks, NGOs, Village Volunteer Vahini Clubs (VVVs), Government agencies and individual volunteer promoters was compared and a questionnaire was completed by 82 respondents with personal knowledge of SHG promotion and financing, besides undertaking field work in Orissa, Uttar Pradesh and Karnataka. Thirty five SHGs, which had been promoted by each of the types of SHPI, twenty SHPIs and sixteen bank branches, as well as other informants, were interviewed. The study reveals that in the medium term, the banks, particularly cooperatives, are likely to the main SHPIs. Among the recommendations, an urge for monitoring the quality of SHGs promoted by VVVs and member-promoted ones as well as the damage potential of SGSY and other Central Govt. schemes and incentives for NGOs, interest rate hikes for cooperatives and RRBs, training in managing financial affairs of the SHGs are the major ones. S, Hans Dieter and D, Harishkumar R. (2002), addressed the question whether the SHG Bank Linkage Programme is a commercial proposal for the participating banks by presenting a methodology for the study of financial products applied to seven units of three banks in Andhra Pradesh in October 2002. The tools applied are average cost analysis, attributing all costs duly to each product; and marginal cost analysis, in response to the advice of bank managers to

ignore personnel costs of SHG banking because of existing idle capacities. Main performance indicators are nonperforming loans, return on average assets and operational self-sufficiency. The study led to the conclusion that profitability, measured with Return on Assets and Operational Self Sufficiency, of SHG products outperform the other banking products by a wide margin. The self reliance as measured by the internal resources and loan history of the SHGs is remarkable. Besides, the programme has resulted in indirect social and commercial benefits to the village as a whole. The authors recognize five factors upon which the sustainability of the programme depends, viz., overall institutional framework, and viability of the institutions in terms of profitability at all levels, self reliance in terms of resources, maintenance of the value of resources during inflation and regular and effective supervision

Bansal, H (2002), in an attempt to review the spread of credit linkages between SHGs and banks across credit delivery models adapted by the RBI and the NABARD, examined the spread of credit linkages and the participation of commercial banks, RRBs and cooperatives in SBLP across different states in India from secondary data available on SHGs refinanced by the NABARD. The study was limited to 23 states and two union territories .The spread of SBLP was heavily skewed in favour of the south Indian states in general and Andhra Pradesh in particular, which alone accounted for 40%of the total linkage in India. Five north eastern states, Haryana Punjab Jammu &Kashmir, Goa and Union Territory of Andaman and Nicobar and Pondichery accounted for only 1.47%. Commercial banks were predominant in relatively better off states while RRBs were more dominant in poorer states while acting as SHPIs. The author states that the programme was tremendous success albeit the imbalances. Sinha et al (2006) in their study of 214 self-help groups in 108 villages in four states- two southern (Andhra Pradesh and Karnataka) and two northern (Orissa and Rajasthan) - and nine districts undertaken with a view to understanding the promotion and operation of self-help groups, how members related to one another, how groups interacted with their communities, as well as the effect groups had on their social, political, and economic environments and vice versa , find that there are social lights to be happy about and financial shades to worry about in the outcomes of the programme. The study suggests that progress on either - financial or social - will require greater clarity of vision and objectives and a systematic approach to building capacity and providing guidance. Among other things, the study calls for clear guidelines and systematic record-keeping for microfinance transactions , more flexibility in the programme design to cater to varying and seasonal cash flows of the members, simple and user-friendly methods for keeping records and books of accounts, fixing the amount and timing of external loans depending on member capacities instead of basing merely on the repayment of a previous loan, and dealing with defaults as a part of regular troubleshooting - linked to careful monitoring of internal recoveries and clear guidelines.

A more recent study on the impact of the SBLP on SHGs reported that the net household income of SHGs registered a significant growth of 6.1 percent per year between the pre- and post-SHG periods (NCAER 2008). Net change in the value of consumer durable assets per household was Rs4, 329 and the assets recorded a high annual growth of 9.9 percent between the two periods. Average savings (financial and physical savings) per household registered an annual growth of 14.2 percent between 2002 and 2006. The average loan amount per house hold registered an annual growth rate of 20.5 percent between the pre- and post-SHG periods. The study also reported that about 93.0 percent of households took out loans in the post-SHG period as compared to 46.5 percent during the pre-SHG period. Loan repayment was also very good as 96.4 percent of households made regular repayments on their loans. One of the important findings of the study is that the share of households living below the poverty line decreased from 58.3 percent to 33.0 percent between the two periods. Regarding the impact of the SBLP on social empowerment of women, the study found that about 92.0 percent of households reported that women were more empowered socially after joining an SHG. Hannover W ( 2005), in a review of the findings of the major impact studies of the Linkage Banking Programme in India, tries to locate the impact of microfinance linkage banking on the Millennium Development Goals . The review indicates that improved access of SHG members to sustainable microfinance services contribute in several direct and indirect ways to most impact aspects of MDGs 1 to 6. Most SHG members substantially increase their saving rates. In borrowing patterns a shift can be observed over time from consumption loans to loans for income generating purposes.

10 S. Robinson, M (2002) , in her book, explores, inter alia , the extraordinary saga of microfinance endeavors of the three different but similar in goals institutions -. The Badan Kredit Desa, the village owned banks supervised by the BRI, Bank Dagang Bali (BDB), a privately owned one and BRI s Unit Desas that led the micro finance revolution during the Indonesian crisis in the late 1990 s.The author narrates how these institutions -all three hold distinctive unique features in the field of banking service bear testimony from Indonesia for
the stability of commercial microbanking during a critical period when it particularly needed access to financial services.

Kalpana. K (2008) in her paper, prepared from the data collected from 27women SHGs having direct linkage with the banks and having three years successful functioning, argues that micro credit programme does not have any inherent qualities that empower their women clients or alleviate poverty. The ways in which the poor experience reduction in poverty or empowerment are subject to the institutional context of the programme. Anjugam, M. and Ramasamy (2007), in their study conducted mainly with the objective of analyzing the household characteristics, assets and liabilities of the members and non members of SHGs and analyzing the factors determining the women s participation in the microfinance programmes concluded that the factors like the age of women and value of productive assets other than land have a significant negative influence on their participation. On the other hand, social backwardness, indebtedness and presence of other microfinance programmes in the vicinity have a significant positive influence on their participation. Bali Swain, R and Wallentin FY (2008), using household survey data from India, investigates which of the two factors economic or non economic empower the participating women and concludes that for SHG members, economic factors, managerial control and behavioural changes are the most significant factors in empowering women. Anand, Jaya. S (2004), with the objective of evaluating the functioning of SHGs and identifying the factors contributing to the success and sustainability of SHGs in Kerala; assessing the superiority of the programme vis - a- vis other similar poverty eradication programmes; and examining its impact on empowerment of poor women, conducted an exploratory study in the district of Malappuram. The study conclude that the program has resulted in the focused selection of the poorest of the poor and empowerment of about 52% of the participants .The study has identified the external factors as well as the internal factors contributing to the success of the groups. It is concluded that among the external factors the agencies involved in the promotion and motivation is an important factor. Among the internal actors, dynamic leadership, homogeneity, of membership, democracy, cooperation, unity and mutual understanding etc. are identified as important. Suresh Kumar, D (2009),in a study in Coimbatore, with randomly selected households of SHG members and non SHG members (a total of 750 households equally divided ) spread across 27 micro watersheds focuses on the role of SHGs formed under watershed development programme and their potential role in influencing participation in SHGs and the impact on household welfare. It was found that the participation of women is influenced by various household specific factors like educational level of women, their house holds, number of dependents, income from other sources, and pressure of their watershed institutions. Besides, the programme has positive influence on the house hold welfare. Hussain, Zakir et .al 92010),based on the survey conducted in six municipalities of west Bengal, attemps to test the significance of the programme effect of SHGs by comparing empowerment levels of newly

11 onducted and older members of SHGs. He argues that encouraged by the drive of ensuring high success rates, the municipality officials target women who are more likely to repay loan, of those who already participate in economic activities and are already empowered to some extent. The authors also argue that the microfinance programme though SHG are evaluated in terms of economic parameters only and that the programme has not succeeded in challenging the traditional social structures. Banerjee , T (2009)studies the impact of Self Help Groups created under SGSY programme from the primary data collected by interviewing 300 group members (of which 290 are women)of 27 SHGs started from 1 April 1999 in the district of North 24 Parganas of West Bengal . A sample of 143 non group people who self selected t be non members was also interviewed, /The study revealed that there was positive economies empowerment which encouraged the women to have more hygienic habits and more optimal allocation of food expenditure among the family members. The family health related expenditure decreased and the rate of school dropouts has significantly lowered in the families of the participants than in the case of the families which are non participants. Rajasekar(2004), after examining the economic and social benefits of micro finance programmes implemented by two NGOs in Karnataka(Grana Vikas ) and Andhra Pradesh Sangamitra), argues that responsibilities such as development of economic infrastructure and providing bank finance to microfinance groups must be undertaken by the Govt. as only microfinance programmes cannot alleviate poverty. Meher, Shibalal (2003) conducted a study in Korapet District of Orissa to investigate the link between micro credit through SHGs and poverty alleviation and their sustainability. Through multistage sampling, he selected 77 beneficiaries belonging to SHGs promoted by five SHPIs. Of the 77 beneficiaries, 6 were non borrowers .The study revealed no correlation between income impact and asset creation, which means that the increased income had not led to increase in assets. The study showed that though SHG based microfinance had better outreach and positive impact; there is a need to improve the process of empowerment and strength of social capital formation of SHGs so as to make them sustainable in the long run. Wrenn, Eoin (2007) studied the impact of microfinance on a broader spectrum which includes social, cultural and political impacts on clients, their families and the wider community by analyzing the effects of three microfinance projects in Kenya, Uganda and Rwanda supported by the Irish aid agency Trocaire. It is found that apart from the positive impact on financial, physical, human and social capital of the clients,, the wider community also benefited because the increased income of the clients was spent within the community. Basu P and Srivastava P drawing heavily on a rural access to finance survey of 6000 households in India, argues that in order that SHG Bank Linkage Programme to be successfully reaching to the vast rural mass unreached, attention should be paid towards promotion of high quality SHGs that are sustainable, clear targeting of clients, ensuring that banks linked to SHGs price loans at cost covering levels. They also propose for coexistence of diverse microfinance approaches. At the same time, the medium term strategy of access of finance to poor should be to graduate microfinance clients to formal financial institutions. Rogaly B (1996), in his article prepared against the backdrop of microcredit summit in Washington D C in 1997 about the potential of microfinance institutions to reduce poverty argues that the overemphasis of

12 the Summit On Micro Financial Services may run several risks like allocation of fund earmarked for the poorest at the cost of other interventions like health and education. It may also result in diminishing the chance of introducing flexible financial services to the very poor. He concluded with the claim that financial interventions aimed at the poor must be context specific, instead of adopting blueprint approach. Mohindra, K.S (2008) examined the association between female participation in SHGs and women s health in Kottathara Panchayath in Kerala. Primary data from 928 non elderly women participants within the age grou0 of 18-59 were collected and were subject to study. The primary finding is that SHG participation; appears to offer protection against exclusion to health care, regardless of whether the participant is an early joiner or a late joiner. Even a woman who is a non- member but living in house with an SHG member faces less exclusion , The study concludes that reduction in health exclusion is an unintended benefit of the programme. Gaiha, R and Nandini, A.M (2007) assessed some key dimensions of empowerment of women participants of SHGs in six villages of Pune district in Maharashtra. The randomly selected sample consisted of 12 participants from each village and 25 non participants as control group. Besides, officials at various levels were also interviewed. The noteworthy findings of the study consisted of the fact that the loans were used largely for health and education purposes of the children and for production related expenses. Various dimensions of empowerment were confirmed. Greater responsibilities for women involved great hours of work. T, Shurmann A and Johnston, HB (2009) addressed the question of whether participation in group lending reduces health inequalities by promoting social inclusion. The paper outlays four ways through which micro credit can affect health status: taking care in case of emergencies, providing improved nutrition, facilitating health education and increasing social capital through group meeting and mutual support. Even while not explicitly designed to impact health, the micro credit interventions have the potential to empower borrowers and, through several pathways, improve health. Marie, Goetz, A and Gupta, R.S (1996) in their paper argues that the factors like high demand for loan from women and high repayment rates are taken as a proxy indicator for control over the loan and investment activities and the empowerment of beneficiaries . Minh-Phong, T. and Wahhaj, N.Z.(2011) in their paper state that introduction of microcredit programme is likely to have widely heterogeneous impacts and can also adversely affect the bargaining power of some women. Her bargaining power within is strengthened when capital is invested in a cooperative activity to which both the spouses contribute and when a large share of the household budget is devoted to household public goods. Ommen MA (2007) through a study report evaluates how far the Kudumbasree mission introduced in Kerala with the objective of eradicating absolute poverty in ten years has succeeded in its mission. The study based on a sample collected through multistage sampling from six districts in three zones of Kerala concludes, among other things, that the mission has achieved tremendous growth with the prospects of members savings reaching Rs. 800 crore, whereas, the cumulative microcredit disbursed as on September 2007 by all commercial banks in Kerala is only over Rs. 670 crore. It is also conclude that there is great potential for empowerment of women, better health care, gender equity and employment.

13 Khandker,Sahidur, R (2003) from the results of an enquiry using households panel data from Bangladesh addressing whether the poor who lack both physical and human capital participate in microfinance programmes; the issue of the long term impact of micro finance on poverty ; and whether the programme impacts upon the poor beyond programme participation . It is found that the Microfinance programmes have a lot for the very poor and have spill over effects in the local economies. However, the aggregate poverty reduction effects are not quite substantial to influence on national level aggregate poverty. He also suggests that microfinance should go beyond provision of finance and find ways to improve skills, market the products etc. Khandker, Sahidur, R and Pitt, Mark .M,(2007) in their research project , which used time series analysis of repayment habits by members of 200 groups of Grameen Bank enquired the probability of default by the members and the effect of default. The result of the analysis is that joint liability has a strong negative effect on delinquencies of the Grameen Bank. It is also stated that there is less credit risk for women than for men. In a follow up survey of an earlier study in Bangladesh in 1991- 92, Khandker and Pitt (2001) revisited all 1798 households in 72 villages , besides the newly added 17 , and found out , among other things , that the spill over effects of male borrowing are smaller in villages with higher aggregate microfinance borrowing, whereas this is not the case with female borrowing. Fernando Nimal , A (2006) discusses the high interest rates charged by the microfinance institutions against the backdrop of the initiatives by some countries to impose interest rates ceilings. He argues that , even though interest rates fixed by microfinance institutions at higher levels are usually justified on the grounds of high costs involved , ceilings may prompt lenders to desert the poor and may cause to be a disincentive to savers because the rates on savings will be lower. The key to reduce the rates is to reduce costs through competition and innovation. Hashemi , S and Rosenberg (2006) addressed the question whether microfinance reaches the poorest that are at the bottom of the scale of poverty. They conclude that even the Microfinance dedicated to reaching the very poor fall short of reaching at the very bottom. In the paper the authors exhort the microfinance practitioners to explore ways and means to serve the poorest and the practitioners of social protection to find ways to graduate the poorest to financial services. Hashemi in an earlier paper (2001) demonstrates from the experience of IGVG that it is possible to graduate event the most destitute to position where they can access microfinance. The same question as in the above was addressed in their earlier study by Montgomery and Weiss J (2005) in their research paper. They identified the poor into many sub groups such as transitory poor who are temporarily in poverty and chronic poor. Among the chronic poor, there are destitutes who need the support of welfare programmes and policies. And, among non destitute category there are those who are far below the poverty line, representing the core poor category .The survey results suggest that microfinance is not a simple panacea for reaching the core poor. Littlefield al (2003), in a review of evidence on availability of financial services confirm the argument that microfinance helps attain MDGs .According to them, even though there are no studies that specifically address the link between microfinance and improved access to safe drinking water and sanitation, there is

14 evidence to prove that increased income from microfinance leads to enhanced household amenities, which in turn, extend health. In a survey of the microfinance clients of Khushhali Bank, Setboonsberg .S and Parpiew, S (2008) also arrived at the conclusion that microfinance helps achieve MDGs. Gosh ,C and Banerjee,T (2010),in order to find out the continuance of employment among female members of SHGs created under SGSY, studied a set of 290 members twice within a time span of four years from 2005 -06 to 2009-10,and concluded that the decision of the women to work depends on probability of the success of women employment , which in turn, depends on the socio economic and demographic factors of the household as well as on the local political stability, besides the past occupation of the participants. Bhatia, N (2007) carried out a study in Rajasthan taking all the 245 SHGs linked to banks in the state by the end of March 1998 to examine their sustainability and the ways in which their transactions and scale change overtime. It was found that groups which got strong support from the promoting organization had high rate of existence, whereas, the reasons related to group dynamics like conflict, lack of leadership and discipline issues etc. and external issues like migration of group members, continuing drought, lack of support etc caused disintegration. Therefore, the author suggests that, in order to ensure sustainability of SHGs, the quality of groups formed is of utmost importance. Bali Swain, R and Wallentin F.Y. (2009), in a study conducted in various states of India in 2003 with the help of the sample of 961 SHG participant households, conclude that the participation has resulted in significantly higher levels of empowerment. The study has not addressed the problem of self selection .It further states which of the factors like village characteristics, religious norms, behavioural factors of the respondents and family members training etc. is more important in enhancing empowerment. In another study (2008), economic factors, managerial control and behavioural changes are identified as the most significant factors for empowerment. Bali Swain, R and Floro, M (2010), by using cross sectional SHG rural household data collected from five Indian States in 2003, investigated whether participation SHG microfinance programme helps reducing household vulnerability. The empirical results show that vulnerability is not significantly different among SHG member households as compared to those who are non participants (control groups) even though member households are poorer than non members .On the basis of the same set of data, S. Ranjula Bali with Varghese A (2010) examines the impact of training on SHGs. The study leads to the conclusion that the training positively impacts on asset creation and not income. For income generation, other factors like marketable goods infrastructure etc are required. The distinct feature of the study by Deininger K and Liu Y (2009) is that they, in the year 2004, compared the empowerment impact on the new and the old women participants of a CDD (Community Driven Development) programme channelized through SHGs in the state of Andhra Pradesh They study was based on a large survey involving more than 6000 households. It examined the impact of the programme on three sub groups namely; newly joined participants under the programme, members of the SHGs which were subsequently converted into programme groups and non participants. The findings suggest positive spill over effects on non participants also, supporting the argument that the programme s institutional structure has avoided elite capture. That there is no increase in asset formation indicates that the economic impact is mainly through consumption smoothing .As a corollary to the above, the long term economic impacts are

15 also analyzed (2009b) and conclusion is arrived at as to whether the economic effects are limited to those who are more entrepreneurial. The analysis finds that longer pogramme exposure positively impacts upon the participants and even the poorest accumulate assets. In study of 80 SHGs and 400 members by Loyola Extension Services (2004) compared the enabling process and efforts taken by NGOs and Kudumbasree towards the empowerment of the poor women in the districts Thiruvananthapuram and Kannur .The socio economic profile of the respondents show no difference .Except for decisions regarding health and education of children, with regard to almost all other variables of empowerment, there was no significant difference between the members of the two typesgroups - Kudumbasree and NGO-SHGs .In the case of the former, the change with regard to education of the children was more pronounced , while health care decisions experienced greater change in the case of the later. Sunil, R (2005) addresses the question of empowerment of women attained through SHG membership through the study of 358 households equally drawn from 179 SHGs with three years of continuous credit linkage .The samples were drawn from three Taluks of Vynad .The study concludes that the empowerment of women through credit and the empowerment of the poor are not synonymous in the stagnant and declining economies. In such economies, providing credit to rural women will effectively result in empowerment only if such provision results in additional income and employment instead of making use of the credit for meeting sustenance needs for repayment of liabilities. Mohan Kumar, S and George, Susan (2005) argues that micro credit when implemented in accordance with the policies of the global agencies like World Bank and the IMF becomes a tool for perpetuating the social as well as economic prevalent in the 19 the Century .They argue that the spread of micro credit and the mobilization of women serve the twin purpose of enabling the state to withdraw from economic activities and diffusing any form of resistance against the state in the context of globalization by glorifying the use of cheap women labour in micro enterprises as women empowerment. Deshmukh-Ranadive, J (2005) , in his paper argues that just because micro credit is routed through women, it does not imply that gender issues are addressed. Empowerment is a complex concept involving many more dimensions than mere economic considerations of livelihood issues. In a comparative study of social externalities attained by two different micro finance empowerment interventions in Karnataka, Indira, M (2005) concludes that the members have been empowered and have contributed positive social externalities. However, much more spectacular achievements in social externalities can be achieved if endeavors to achieve economic empowerment are coupled with awareness about health, legal and political rights. Lakshmi Devi KR (2005), in a comparative study of NGO led microfinance programme and the state led Kudumbasree Programme, finds that Kudumbasree programme is more successful in generating better incomes and empowering women. Gadenne,L and Vasudevan ,V (2007) in their study conducted Karnataka and Tamil Nadu conclude that the members use their loans for consumption purposes indicating that the programme may not be effective in promoting investment in productive assets. The authors cite inadequacy of loan amount as a plausible explanation for this.

16 Sinha, Anusree (2008) in the report submitted to GTZ- NABARD assesses, among other things, the impact of SBLP at two levels: first, the impact of microfinance on SHGs and, second, the socio economic impact of the program on the members of the SHGs and their households. The results show that SHGs have been performing better as financial service providers and creators of women empowerment. Nair, Ajay (2005) addresses the question whether forming SHGs into federations will enhance the sustainability by studying three SHGs federations that provide a wide range of services and come up with a positive conclusion. Aniket, Kumar (2006) after taking a rather small sized sample of 54 members of 15 SHGs from Haryana observed that there is evidence of negative assortative matching in groups, i.e., relatively wealthy individuals group with poorer individuals and wealthier members get higher proportion of loans in the group. Hishingsuran, Gama (2004) enquires into what keeps microfinance institutions from drifting away from the mission of poverty alleviation even while scaling up. He states that micro finance institutions can stay with the mission during challenges if there is a well set up administrative system and can maintain a platform for development and there is a participatory member responsive assessment and monitoring system. Banerjee, Abijit et al (2009) report the impact of group lending micro credit model b running a randomized control technique of evaluation. In 2005,52 of 104 neighborhoods in Hyderabad were selected for opening branches of Spandana, and MFI. Fifteen to Eighteen months later a household survey was conducted in 6850 households. The results show that the households with a high propensity to starting a business reduced non- durable expenditure, whereas, the households with a law propensity to starting business did not increase spending on durables, borrowed against future income and paid off more expensive debt with the credit availed. Mathew, E (2006) in the doctoral thesis, examines the existence, nature, mechanism and incentives incorporated for and the impact of collective action within the microfinance groups promoted by NGOs (SHGs) and State Poverty Eradication Mission of Kerala (NHGs).The study revealed that the main variables widely recognized as positively influencing collective action within microfinance groups such as small size and homogeneity did not contribute positively to collective action. Only the institutional rules regarding monitoring and repayment had positive impacts. The results hold good with regard to both SHGs and NHGs. The beneficial outcomes of collective action are context specific. Mohindra, K.S (2003) seeks to establish a link between the health of the poor and their membership in microcredit providing Self Help Groups of Kottathara Panchayath of Waynad. For this, the author has identified two variables such as individual sought to be measured through the impact on the dimensions of economic social and political on the one hand, and social solidarity on the other, as having positive influence on health. He argues that once membership in Self Help Group has positively contributed to enhancing these, it has an impact on health of the participants also. Banerjee, Deena M (2002) et al provides practical guidance for practitioners and donors. The study argues that microfinance help reduce vulnerability besides financing income generating activity. It also explains the rationale for gender considerations in micro financing.

17 Chinnasamy, Bharathi(2004) through the book points out that , if the manpower of the women organized into SHGs, their enormous savings can be used to expand the market potential of their own products, whereby they can counter the influence of multinational companies. Besides, such an initiative will provide many spills over effects like end of male domination, better health care, education etc. R.C Choudhary et al (2001), in their book ,documents the results of a case study cum survey in five regions having heavy concentration of Self Help Groups in Tamil Nadu, Karnataka, Andhra Pradesh and Maharashtra. The study examines the structural characteristics of SHGs, their operating systems, effectiveness in identifying and nurturing entrepreneurial talents among members. It also suggests appropriate policy intervention for effective performance of SHGs De Silva, Donatus and Noella Pentry (1992) in their book based on case studies on management of credit by the community groups in eleven countries in Asia and Africa concludes that if credit programmes are properly designed and sensitively implemented, they can bring out creative and productive potentials of the poor. Fisher, Thomas and M.S Sriram analyses the great diversity of micro financial practice in India and its innovative products. The SHGs in India and the groups promoted b Grameen Bank are compared. It challenges the conventional wisdom of analyzing efficiency in microfinance on the framework of financial sustainability and outreach to the poor and demonstrates the naivety of ignoring the real economic costs. Haper, Malcom (2002) provides a comparison of two major group based system of micro finance; the solidarity groups as perceived by the Grameen Bank in Bangladesh and the Self Help Groups. Neither is better than the other one, but both are different. The study compares them by the standard of sustainability, outreach and impact. The conclusion is that SHGs are less likely to include poorer people. The author warns of the twin danger faced by SJHGs in India: that the SHGs can be ready vehicles for attaining the goals of politicians driven by popularity and bureaucrats by numerical targets and urges the members to exploit rather than being exploited. Zeller, M and Meyer Richard (2002), through their book narrates the IFPRI supported household survey in nine Asian and African countries during 1990 undertaken for evaluating the success of the innovative approaches of some MFIs. The authors brings out the concept critical Triangle of Microfinance, which emphasizes the need for any MFI to manage simultaneously the problem of outreach, financial sustainability and impact. S. Swaminathan et al (2007) , on the basis of the lessons learned from the factors that led to success of Velugu - a micro finance programme which was launched in 2000 under the World Bank support in six poorest districts of Andhra Pradesh, urges other Indian States and other countries to innovatively design SHG programme that treat poor women as potentially valuable assets and not as objects of pity .They also demand that the programme design incorporate provisions that mandate community resource persons to be accountable to villagers. Deshmukh- Ranadive J (2004) says that the primary lesson learned from the Andhra experience as manifest by the success of Velugu is in using SHGs for poverty alleviation initiatives. Among many other things, he urges others to recognize that SHGs can be training ground for potential leaders from among rural poor and they can work for the betterment of the regions they represent. He also shows that, to handle a

18 complex problem like poverty a strategy which is a mixture of existing structures and innovative ventures should be implemented.
Khandker, Shahidur R. (1998) in a book evaluated three microcredit programmesin Banglades, whose objective was to help promote self-employment for the unemployed poor and for women in order to reduce poverty. The study revealed that: y y y y y Women have clearly benefited from microcredit programs. That success of microfinance has destroyed three commonly held myths in rural finance that the poor are not creditworthy, that women represent greater credit risks than men, and that the poor do not save. Microfinance reduces poverty by increasing per capita consumption among program participants and their families. Although poverty reduction is the highest priority, the goal of self-sustainability within the shortest possible time should also be incorporated into program design from the beginning The chief lesson learned from experience in Bangladesh is that it is necessary to design a system of accountability that works for both program officials and borrowers.

Karlan, D and Valdivia M (2009) Using a randomized control trial, measure the marginal impact of adding business training to a Peruvian group lending program for female micro entrepreneurs. Treatment groups received thirty to sixty minute entrepreneurship training sessions during their normal weekly or monthly banking meeting over a period of one to two years. Control groups remained as they were before, meeting at the same frequency but solely for making loan and savings payments. It is found that the treatment led to improvements in business knowledge, and revenues. For the institution, the program enhanced client retention rate. It is found that basic training can lead to higher profits, even though the participants were all pre-existing and experienced micro-entrepreneurs. Bhattacharya, S, (2008) argue that, where moral hazard is a problem in group lending microfinance programmes ,high repayment probability can be ensured in lending by promising a joint benefit instead of joint liability as an alternative mechanism to solve informational problems.

An evaluative research paper (Samanta, G, 2009) based on the data and information collected from intensive field survey in five Rural Development blocks of Burdwan district of West Bengal, covering 64 Swarnajayanti Gram Swarojgar Yojana (SGSY) women groups having at least three years of work experience and 500 individual women, examines the success and failure of microfinance in ameliorating poverty, generating livelihoods and empowering women SHG members. It is found that the impacts are mixed in nature. Therefore, the paper raises question on the viability of microfinance as poverty alleviating programme. It is argued that microfinance can not be expected to work everywhere for everyone. Bujar Baruah,P (2009) conducted a research in Nalbari District of Assam with the objective of studying the SHG as an alternative source of Rural Credit and assessing the contribution of SHGs towards asset creation of the members. The study highlights the necessity of asset creation for lifting the people out of poverty in which mission the SHGs did not succeed. With the objective of analyzing the role of grass root level SHG interventions by an NGO and Kudumbasree in empowering women and understanding the problems of experiments Krishnan,C (2009)undertook study collecting primary data from 200 SHGs/NHGs (one hundred each of Women SHG and NHG members) . The

19 overall conclusion is that the SHG and NHG movement have beneficial impact on women empowerment. There is not much difference between the functioning of NHG and SHG in the study area. Karmakar, KG (2009), analyses the financial inclusion schemes implemented by the government and testifies to the success of various innovative schemes like SHG bank linkage programme. However, he urges that total Poverty alleviation is possible only if serious issues like rural livelihoods, entitlements, agro processing, land/water rights, underemployment issues, supplementary income sources, etc. are given priority. Only then, can a serious assault on rural poverty be possible. These issues need to be tackled and not swept away under the carpet. The distinct feature of the study conducted by Stefan L, et. al., (2011) in Tamil Nadu is that it was conducted in two different points of time in the years 1979-80 and 2004-05- in order to examine the empowerment aspects of the participants in SHGs .The study concludes that women s entry into local politics as a result of mandatory reservation is more empowering than their participation in microfinance programme and the claim that microfinance reaches the poor is not confirmed by the research because the benefits of the programme are mainly enjoyed by the wealthier participants. Garikipati, S (2008), using data collected between 2001 and 2003 from two drought prone villages ( Vepur and Guddimalakapura, of the Mahabubnagar district in Andhra Pradesh) argues that participate in the SelfHelp-Group scheme suggests that if the household s demand for credit is high and if it is able to divert the loans given to the woman as required then, given her lack of co-ownership of family s productive assets, her access to credit may not result in her empowerment. In such a situation, the household may benefit, but the woman herself is likely to see further deepening of the gender resource divide between her and her husband. From the same set of data (2008b), the author makes some conclusions about the linkage between the participating women s credit accessibility and self employment, which in turn, is supposed to enhance their self esteem and empowerment. Instead of producing the expected results, the study reveals that, as a corollary of the patriarchal system, it is the husbands who spend more time on self employment and not the wives. Only women from wealthier families who have ownership over productive assets are capable of spending more time on self employment, especially since, their husbands have other productive assets in sufficient quantity. Sudipta De and Sarker, D.(2011) argues that it takes at least eight years of time to ensure a meaningful level of empowerment for the participating women of SHG bank linkage programme. Rahman , A.(1999),from the data collected from the rural community of Bangladesh in the year 1994-95, shows that to ensure timely repayment of the loan, the bank workers and borrowing peers inflict an intense pressure on women clients ,as a result of which ,they are forced to maintain their regular payment schedules through a process of loan recycling that considerably increases the debt-liability on the individual households, increases tension and frustration among household members, produces new forms of dominance over women and increases violence in society Basargekar,P.(2010),with the help of primary data are collected from a random sample of 217 members of sixty self help groups which were formed under the programme of corporate social responsibility by Department of Social Initiative by Forbes Marshall Co. Ltd, Pune, establishes that microfinance programme implemented by the organization has created a social capital which has an empowering effect on SHG members.

20 P, Purna Chandra and Sinha,A.,(2010), examined the performance and sustainability of three different types of SHGs: all-male, all-female, and mixed SHGs. The analysis was based on data from a primary survey from six states in India. The study found that, in terms of savings financial sustainability of the groups, financial management aspects and loan repayment, female SHGs stood out. The male SHGs, according to the authors suffered from ego problems, therefore suffers from irregular loan repayment schedules and bad economic performance. As a policy implication, the authors suggest that all male or mixed SHGs should not be encouraged. The study undertaken by Joseph Kimos Adeji and Thankom Arun, (2009) from February to June 2007 in Ghana covering two groups of respondents, made up of 231 clients of SAT (Sinai Aba Trust) and 305 nonclients residing in the same operational areas of SAT notes that programme placement plays a key role in determining the type of clients reached by SAT, since almost all its branches are located in urban centers. It finds that the objective of financial sustainability being pursued by SAT has eventually caused it to shift the provision of financial from the very poor households to the less poor. Shetty, Naveen K (2008) on the basis of data from a survey of 318 member households of 106 woman SHGs in ten villages in the state of Karnataka, recommends that easily accessible and affordable microfinanceplus services - financial and nonfinancial services- should be provided to the vulnerable poor who are socially and economically excluded for a long period of time so that they can be uplifted out of poverty. Chavan, P and Ramakumar R (2002) reviewed the available empirical evidence on NGO-led micro-credit programmes and institutions implemented across various developing countries. The objective was to judge the performance of these programmes and institutions on the basis of a set of four indicators in comparison with the state-led credit-based poverty alleviation programmes and institutions, such as, the IRDP and RRBs in India. The review indicated that NGO-led micro-credit programmes and institutions, such as Grameen Bank, have been successful in reaching their target groups of poor more effectively than the state-led programmes and institutions even though the change in the incomes of beneficiaries has only been marginal. R, Stewart et al (2010) reviewed the empirical research on the impact of microfinance (specifically micro-credit and micro-savings) on poor people in sub-Saharan Africa to enable policymakers, donors and practitioners to understand the nature of the evidence available. The study team made a comprehensive and deep analysis of 15 studies considered good enough quality, which consisted of studies about micro-credit interventions, combined credit and savings interventions and savings schemes alone within both rural and urban areas of Ethiopia, Ghana, Kenya, Madagascar, Malawi, Rwanda, South Africa, Tanzania (Zanzibar), Uganda and Zimbabwe . The review concludes that particularly micro-credit clients are made poorer, and not richer, by microfinance. The evidence for microfinance enabling poor people to be better placed to deal with shocks is not universal. They state that micro savings is a better model than micro credit. The apparent failure of microfinance institutions makes growing microfinance industry as easily a cause for concern as one of hope. S,Ranjula Bali (2006) opines that for microfinance to show an impact on women s empowerment, instead of maintaining at the minimalist programmes, it needs to be supplemented by microfinance plus or other non-financial services, like training, awareness creation programmes, education, etc. These can empower women to effectively improve their positions within the household, community and society, and not just make them more efficient in their roles defined within the existing norms.
A research project by Hilman, Helianti et al (2007) looks at energy lending on three continents Asia, Africa, and Latin America with a view to documenting the opportunities, challenges, costs, and effects of integrating energy products into a MFI s product mix, develop feedback for future expansions of these energy-lending products, and share the lessons learned with the industry at large. The field research included interviews with selected staff of the MFIs,

energy suppliers, clients, and other energy stakeholders, and analysis of the MFIs lending programs and financial and accounting reports. The MFIs studied are SEWA Bank (India), SEEDS (Sri Lanka), NUBL (Nepal), and AMRET (Cambodia).Research has shown that microfinance for small-scale energy consumers has contributed significantly to greater access to, and affordability of, modern energy technology for the poor and rural consumers. Focusing on loans for energy for income-generating activities may in fact hold the greatest market potential for an energy-lending program because the incremental revenue or cost efficiency generated by energy lending will increase the feasibility of the loan itself. On the energy supply side, the maturity of energy companies and the availability of decentralized sales and service networks are critical conditions for energy lending. The findings reveal that each MFI has its own competitive edge that gives it a unique position, a wide array of best practices and lessons learned that can benefit other MFIs, and schemes and mechanisms that are most appropriate to their respective contexts. Mehrotra,N. , Puhazhendhi, Gopakumaran Nair , B. B. Sahoo (2009) Financial inclusion-an overview Occasional Paper 48,NABARD,Mumbai Karmakar, K.G (2008).Microfinance Revisited, pp 33-54: Microfinance In India, edited by Karmakar, K G,Sage Publications India Pvt. Ltd, New Delhi. Meenai, Zubair, (2003). Empowering Rural Women: An Approach to Empowering Women Through Credit Based, Self Help Groups, Aakar Books, Delhi. ADB, (2000).Finance for The Poor: Microfinance Development Strategy, Asian Development Bank. Arun, T. et al (2009). Finance for the Poor .The way forward? Pp 7-16, Micro finance a Reader: Edited by David Hulme and Thankom Arun, Routledge, New York CGAP92009).Financial Access 2009: Measuring Access to Financial Services around the World, Washington D C. Chaia, Alberto et al. (2009)Half the World Unbanked, Framing Note, New York: Financial Access Initiative (October) Demirguc- Kunt, A, Thorsten Beck and Patrik Honohan (2008)Finance for All? Policies and Pitfalls in Expanding Access, World Bank Policy Research Report, Washington. NABARD, 2002.NABARD and Microfinance 2001-02 Ten years of SHG Bank Linkage (1992-2002)

Michael S. Barr (2005). Microfinance and Financial Development. Michigan Journal of International Law, Vol. 26,
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