Impact of Microfinance Interventions on Empowerment of Women Entrepreneurs in Rural Tamil Nadu

Abstract

Financial inclusion is a major step to eradicate poverty in developing nations. Access to formal finance is seen as a luxury for many. Over the last few years more organizations have been working towards bridging the gender gap in the economic space. Microfinance which overtook the rural finance industry after the Grameen Bank experiment in Bangladesh has seen a spurt in many third world country where credit is difficult to get by. However, the collateral-free loan from microfinance institution, which are area-specific often come with a caveat. This dissertation considers various factors and interventions methods of microfinance companies to understand what the stakeholders’ expectation of the scope of such a loan distributed to rural women entrepreneurs. Using the Most Significant Change method, it was found that the stakeholders’ understanding of empowerment is limited to physical expansion of enterprise and profits. In an attempt to balance this expectation, this research also dwells in the to the positives and negatives of microfinance interventions through a case study methodology. It is seen that there is considerable social empowerment because of the group lending model. This socioeconomic empowerment has led to enhancement of economic status of women in the household and outside, while some societal restrictions still lurk around the corner.