The Vulnerability of 'Self-Help': Women and Microfinance in South India

Examining the role of state institutions in the microfinance sector
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This paper demonstrates the impact of asymmetrical power relations on relationships between self-help groups (SHGs) and state institutions. It draws insights from field work and interviews with NGOs in Tamil Nadu, India. SHGs in India work with state institutions that promote and finance them. Research on this kind of institutionalized co-production shows that:

  • Women's groups are in a dependent relationship, subject to institutional imperatives, systemic corruption and political compulsions that exist in rural development bureaucracies when they seek bank credit;
  • Bank staff mistrust borrowers due to arrears from previous credit;
  • Banks try to recover old loans, and sometimes grant new loans to women's SHGs conditional on repayments by their male relatives;
  • Women find the ways in which bank officials assess SHG credit-worthiness discriminatory;
  • Success in accessing loans depends on how SHGs, bank staff and government officers collude to subvert the official objective of the loan program enterprise-promotion;
  • Manufacturing evidence about non-existent enterprises involves substantial costs and risks for SHGs.

There is a need to enquire further into the power dynamics that underlie relationships between poor people using financial services and their providers.

About this Publication

By Kalpana, K.