Associate Professor

Commerce

Satyawati College (Day)

University of Delhi,  Delhi, India 

Associate Professor

Commerce

Shyam Lal College (Eve), University of Delhi

Delhi, India

Abstract

Uttar Pradesh, as well as India patterns are noted in the development of the micro-finance programme utilizing secondary details. The analysis of secondary data showed that the scheme, as regards its customer outreach, has quickly spread in India, and is already the largest microfinance programme in the world. NABARD's SHG-bank linkage model represents over 75% of the country's overall microfinance customers, a large number in the whole country. In this model, loans are made available to SHGs through the network of different commercial private and public banks, rural regional banks and cooperative banks. As regards the amount of SHGs that these private, provincial rural and cooperative banks fund in India, the overall share is 55%, 31% and 14% respectively. Some issues with this software have been identified in India. These concerns limit in different forms the effects of microfinance. One of the main problems is that the curriculum is not sufficiently wide. About 60 million citizens in India have been insured by microfinance, but these are just 22 per cent of the country's overall poor. Just 1,16,545 microfinance customers live in Uttar Pradesh. The microfinance programme in Uttar Pradesh is therefore just 0.20% and the program's penetration in population and in poverty is very poor. Another significant issue with microfinance in India is that the microfinance programme is not widely distributed. The main focus of the paper is to know the role of micro finance with SLF in poverty.

Key Words: Microfinance Poverty Penetration Index (MPPI), National Capital Region (NCR), Self Help Groups (SHGs), HCI (Headcount index), Microfinance Programme.

I. Introduction

Microfinance is described as any hobby consisting in providing economic business, including credit, financial savings and coverage to low-income people just above the nationally determined poverty line and negative people below that poverty line. to achieve a social price. The advent of the social prize consists of poverty alleviation and the broader impact of improving livelihoods through the provision of capital for micro-enterprises, and coverage and financial savings to mitigate threats and smooth absorption. In India, numerous sectors offer microfinance using a range of microfinance methods. From the ICICI Bank in India, numerous actors have endeavoured to provide access to economic offers up to and including rejection in innovative ways.

Governments have also launched pilot programs across the country, NGOs have taken up the hobby of raising donor funds to make loans, and some banks have partnered with public groups or made small strides in submitting such offers. This has led to a changing broad definition of microfinance as any hobby aimed at negative and low-income people in order to offer cheap deals. The variety of sports done in microfinance consists of institutional loans,
loans for men or women, offering financial savings and coverage, and capacity building. , and farm improvement offers. Regardless of the form of However, the general purpose that unites all actors in the delivery of microfinance is the introduction of the social price.

I (a) Microfinance Meaning

Muhammad Yunus is frequently taken into consideration the father of microfinance. In 2006, he received the Nobel Prize for his "efforts thru microcredit to create monetary and social improvement from below." In this TED talk, Yunus describes his revel in with microfinance. Microfinance is a banking provider furnished to unemployed or low-profits people or businesses who in any other case could haven't any different get entry to monetary services. Microfinance permits humans to tackle affordable small commercial enterprise loans safely, and in a way this is steady with moral lending practices Microfinance consists of microcredit, the supply of small loans to terrible clients; financial savings and checking accounts; microinsurance and price systems, amongst different services.

I (b) Impact of Microfinance on Poverty

Two separate processes have been used to evaluate wage changes. In the primary procedure, the contributors' earning are as compared with the earning of the equal contributors after coming into the microfinance program (post-SHG) (pre-SHG), in the 2nd procedure, the contributors' earning are as compared with the ones of non-contributors for the reason that they entered the microfinance venture have occurred. It changed into observed that the earnings of the contributors has extended 2.five instances for the reason that they joined the microfinance venture. The overall person earnings of the contributors for the month after SHG is Rs 725 as compared to Rs 718 for the month earlier than SHG. A contrast among contributors and non-contributors indicates that the common earnings of the contributors is 2.00. Seven instances greater than the common earnings of non-contributors. Non-contributors have a median month-to-month earnings of simply Rs 638 as compared to Rs 725 in keeping with month for contributors. This enabled contributors to boom their contribution to family earnings via the microfinance program. Total studying for collaborating families in Uttar Pradesh is Rs five,905 in keeping with month probable earlier than SHG and Rs 6,912 in months after SHG. This suggests a month-to-month development of Rs.1007. For example, family earnings in Uttar Pradesh extended via way of means of 17% after coming into the microfinance software. The difference additionally indicates that the earnings of collaborating families is 18% better than that of non-collaborating families. and the own circle of relatives earnings of software contributors extended thanks to the microfinance software. SHGs have been divided into 3 companies primarily based totally on organization age to estimate the effect of pattern adulthood on player earnings. These 3 lessons are referred to as Youth (under three years), Intermediate (three to six) and Adult (three to six years and over) lessons.

In comparison with previous SHGs the total rise in income in young classes was Rs. 625 per month, in medium ages 924 per month, and in maturity in groups of participants Rs. 1745 per month. Therefore, the addition of income increases as the group reaches maturity over the years. Study of the methodology of variance reveals that the variance is significant at a stage of one per cent. The growth in revenue is attributed largely to the reality that the participants of a mature community take advantage of repeated loans in income-generating operations.

For the BPL families, the influence of the microfinance initiative was individually evaluated. In order to classify the BPL families, the absolute poverty line established by the Uttar Pradesh government at Rs 2500 per month per Family has been used. It was observed that very fewer participants in the BPL Family were chosen when the SHGs had been created. Just 19 percent of Family participating in Uttar Pradesh are BPL, while the other 81 percent are over the poor, as identified in the poverty line. Both BPL Family were prevented from crossing the poverty line after profit from the initiative and nine percent of the overall Family were still BPL. The study indicates that the income growth of these poor people is only 13%, and just 12% of their loans were used for production. This may be because the salary of these disadvantaged citizens was considerably smaller, and the loans were used for consumption and to satisfy other specific and urgent needs. The other 10% of BPL Family used 66% of their loans for positive reasons and reached the poverty line with a 63% rise in their income when they completed the initiative. These deprived Family are the main microfinance beneficiaries. It has thus been shown that families with very poor incomes that are far below the poverty line could not cross the poverty line.

I (c) Influence of Micro-finance on empowerment of women

The microfinance programme has been shown to improve beneficiaries' economic opportunities that assist them in obtaining and managing domestic economic capital, such as home ownership, land ownership of gold and jewelry. This changes the status of women altogether; they get financially independent; and they participate in each of their family's financial decisions. Microfinance programme increases women's status from a mere customer to a producer and from economic to an independent. When women continue to contribute to Family revenue, the study indicates that they take part in different Family decisions, such as planning of Family budgets, making small and big shopping, selling properties etc. It has been shown that, relative to 11 percent of non-participants, 21 percent of participants control Family financial decisions. However, both husband and wife take Family decisions together in most situations. Members of SHG contribute regularly to the community savings fund by means of fixed installments. The habit of thrift and banking is then established. 54% of participants have deposit accounts with banks, although only 37% of those who have not participated. 30% of the participants routinely invest money in their savings bank accounts relative to 18% of the non-participants.

The SHG microfinance software is a joint project of the community members. The participants discuss various members of community and often participate in their joint party sessions with members of other parties. They would be able to come out and encounter other representatives of community that contribute to socio-cultural and family liberation from the four walls of their homes. The curriculum frequently raises the consciousness of participants and their physical mobility. Program participants became more optimistic than non-participants as they explore other cities and towns. It was noted that 46 and 79% of participants are more interested in visiting a city and the closest city than 14 and 69% of non-participants. The participating women who begin their small businesses would visit the market for the procurement and occasionally even for the distribution of the raw material. This raises the participants' morale and can quickly go into the store to buy merchandise. The research indicates that 85% of participants are more interested in visiting and buying products than 71% of non-participants. In this survey, respondents were asked to lift their voice against societal issues such as dowry, female feticide, addiction to drugs, inequality, domestic abuse and more. 74% and just 27% of non-participants are more optimistic that they can raise their voice against these societal evils. The research indicates that participants' family members have already been assisting them with their homework. Seventy-three% and 55% of non-participants showed that their spouses and other family members actively assist them in many Family jobs. This shows the participants' improved social and family empowerment.

It was noticed that the microfinance initiative has contributed to the political empowerment of the woman participants in addition to the socio-economic empowerment. The effect is calculated by contrasting the degree of political knowledge and the participation of programme participants and non-participants in the village's political activities. The research indicates that the local authority is known to both participants and non-participants. The research also attempted to detect the position and decisions made in the village growth of women at panchayat meetings. The panchayat meetings account for 58% of the delegates, along with 43% of all non-participants.

II. Literature Review

Rahman (2010) disclosed that most of the customers in microfinance are women. The analysis also indicates that geographical position is not a relevant consideration either. It functions in urban and rural areas. However, the spread of MFIs in Nigeria is impeded by variables, such as caste, ethnic origin, and political affiliation.

Varghese (2011) In Sohar area of the sultanate of Oman, performed an analytical analysis on motivating women. This observational research is focused on a collection 150 women which was primary data. This study assessed the equality of women by defining Family decision making skills, measuring women's capacity to make economic choices and evaluating women's freedom of movement. The author notes that women's empowerment, economic, Family and social, is three dimensional. A female empowering indice has been calculated according to the UNDP methodology used in the Human Development Index measurement for each dimension. Finally, the author measured the Women's Empowerment Index using the basic average of these axis variables (WEI).

Babandi, G. (2011) In his research, explores the impact of microfinance institutions in Nigeria on their outreach and sustainability. The thesis employed 400 samples. Analyzing the data has been done using ANOVA, t-test and informative statistics. The results of the analysis show that microfinance programmes include all types of work. Gender in the provision of microfinance services is also not an important consideration.

Sahoo (2013) In the Cuttack District of Odisha, explores the role and success of HGS in fostering women's empowerment. The thesis was principal and secondary. 150 women were included in the report as a group. Sample representatives from 15 SHG groups from ten Cuttack district villages have been picked. Questions regarding their age, family system and amount of dependents in family, respectively, were gathered via a questionnaire. Records of working parties, NGOs and government agencies with the benefit of primary data are known as secondary data. The study showed that most participants of the survey will raise their income per month.

Vansiya (2015) takes BPL data as calculated by the Government of India's Ministry of Rural Development. The methodology is focused on 13 socio-economic indicators which indicate the quality of life and the score of all family. The analysis analyzed the relative location of various geographical differences in the Tapi district of Gujarat. Furthermore, there has been a difference in poverty between the various caste classes, class groups, and their relationship with the educational level in the Tapitaluka. The report included statistics on the number of families listed as bad and very poor below the poverty line (BPL). According to the Gujarat BPL study, the rate of poverty is 38.04%. The number of severe disadvantaged citizens is 50.53%. The report finds that the BPL in south Gujarat accounts for 41.43% and that the low intense BPL is 55.57%. 44.82% of BPL families in the district of Tapi are extremely poverty-stricken and 22.00% in this family. The overall poor and weak BPL family in the Tapi district has higher incidences of poverty compared with other districts in southern Gujarat and Gujarat.

Sayed Samer Samer (2015) As an important mechanism for poverty reduction and socio economic growth in credit markets, microfinance has become a buzzword. However, the effect is also disputed and differs between countries and between the cities and the countryside. It aimed to investigate AmanahIkhtiar Malaysia (AIM position)'s in Family income in the role of Malaysian micro-finance. 780 respondents in Malaysia were interviewed a cross-sectional poll. Random stratified data collection from urban and rural neighborhoods was used. A multinomial logistics result shows the Target has good consequences for the Family revenue of woman lenders who have invested three years in the programme, relative to fresh lenders who haven't been cured.

C. Maindargi Shivganga (2016) In a wider sense, the main problem for a sustainable micro-finance programme targeted at women must be viewed as a family heart, essential for society's development and change. The microfinance programme focuses on empowering women, especially in rural areas, who give their companies but who also provide them and their families with a competitive environment. The massive change of family organisation, culture, the economy and urban life of women across the world over the last three decades has brought about dramatic transformations. The success and skill of women influences and builds self-confidence in working conditions in the home. Microfinance then provided vulnerable women with a stronger forum to explore their skills and know-how to improve their social empowerment levels This article illustrates how SHG has affected women's empowerment after membership, the function and role model of the Self Help Community, the performance of SHG in Shoapur Region, and how the challenges and future model for developing the SHG through microfinance in Sholapur city, through increasing the empowerment of women are acknowledged.

Chatterjee, Gupta and Upadhyay (2018) on the empowerment of women through SHGs, the writers elaborate the cause of SHG empowerment in India. This paper was about the literature of the Indian SHGs. Given the historical history of self help groups in the Indian context, it is anticipated that scholars who conduct studies in this field would find it useful. This paper also analysed research on the empowerment of the self-help community. They also take the view that SHGs constitute an integral part of India's emancipation.

Jie Yu Jie Yu (2020) The micro-credit programme on poverty reduction is one of China's most notable financial poverty reduction policy in recent years. However, it is controversial whether this programme would really raise the revenues of poor family. We studied the process of poverty micro-credit relief in low Family incomes to assess the enforcement impact of the scheme. The paper then used micro-survey results for the analytical research using the tool for the propensity score matching to analyse its impact on these poor family output profits. The findings demonstrate that microcredit reduction in poverty positively impacts the income from development of poor homes, including poor people due to lack of funds and poor families with women. We should also continue the strategy of micro-credit poverty reduction and establish support mechanisms that would be important to us, such as strengthening subsidies for agricultural production, increase insurance for agricultural production, further enhancing the implementation efficiency of the microcredit mitigation policy, and increasing Family incomes for poor people.

PK Bhura and AK Jha (2019) said in their paper of role of microfinance in eradication of poverty in India: an Overview that many government and non government organization tried to remove the poverty form India. Microfinance is one of the key that help in removing the poverty. Loan facility through microfinance is easy available to the poor family and they can improve the life standard and make them self reliant.

III. Objectives of the Study

1.     To understand the connection among SHG’s members, micro finance banks and entrepreneurs

2.     To analyze the pattern or structure of microfinance programme in rural Indian by the MFIs, NBFCs in reduction of poverty.

IV. Research Methodology

The current paper would used qualitative and quantitative analysis methods. Data are both primary and secondary in nature obtained for this analysis. Primary details was gathered using questionnaires. The secondary data was derived from different outlets such as newspapers, magazines, official accounts, etc.

IV (a) Study Area

The most populous state in India is Uttar Pradesh. The Taj Mahal is one of the seven wonders of the world. Uttar Pradesh was one of the most ancient countries in the world and represents India's life and community in any way. The government is split into four economic zones, namely the Western, Central, Eastern, and Bundlekhand regions. The condition is between 24°-31°N latitude and 77°-84°E longitude. In a wise way, it is India's fourth largest county. Three quarters of the state are in the Gangetic Plain. In 2000, a new state of Uttar Pradesh was formed, which now covers approximately 7% of the total India area. Uttar Pradesh's total area is 240,928 km. Uttar Pradesh's density is 829 km and over the national average 382 km."

IV (b) Selection of Sample

In the third level, 5% of the loan-linked SHGs are chosen in the three districts. Thus 30, 25 and 9 SHGs are respectively chosen from the districts of Bulandshahr, Ghaziabad and Meerut. These SHGs shall be taken according to the total number of the chosen blocks in this block. Three SHG participants will be randomly chosen and questioned during the last process. Thus, the chosen blocks of Bulandshahr, Ghaziabad and Meerut respectively for survey.

 IV(c) Microfinance and Frequency of Poverty

The HCI is the maximum extensively hired technique to estimation of poverty frequency. It checks the awful percent of the residents. This is the percentage of the population whose sales are below the poverty line of Rs. 2,500 per month in grant document. The popularity of the BPL player and non-player family may be contained in table 1.1. The table shows that before entering the micro currency program, all individuals were no longer BPL. It can be withdrawn from all elected meeting of the SHG, but now it is no longer necessary to have a poverty line to run a microfinance program. A well-known study shows that in Bulandshahr, Meerut and Ghaziabad districts, 18%, 22% and 19% of BPL households are most effectively equipped with microfinance in the study area. As this initiative is targeted, the authorities and implementing companies therefore also cover all people in need. BPL families are also not to be included in the program. Another reason to protect residents who are less in need could be to avoid grid losses in the event of an outage due to negative repayments of loans from financial institutions. The lack of a monthly financial savings decision is another obstacle to designating people with exceptional needs as community units. In Navajase et al. document (2000), there is evidence that MFIs favor people above the poverty line.

Table 1.1
BPL Family based on HCI (Numbers with percent)

The pre- and post-SHG evaluation via way of means of programme students exhibits that, earlier than becoming a member of the microfinance system, 19% of the collaborating Family had been BPLs in Uttar Pradesh, however that once having access to the advantages of the undertaking they bolstered their monetary fame and the wide variety of BPL families became decreased to 8%. Thus, the wide variety of BPL families has fallen on common via way of means of 54%. 43% of collaborating BPL families from Bulandshahr and Ghaziabad districts have reached the poverty line following their initiative, compared to 99% in Meerut districts.

Table 1.2

Impact of Microfinance Programme on BPL

The table 1.2 above shows that in their post-SHG condition, several BPL Family crossed the line of hardship. In post-SHG 9% of the participants reached the poverty line in Bulandshahr city, 11% in Ghaziabad district, 20% in Meerut district and 10% of Uttar Pradesh. The wealth of these BPL families indicates that before they entered the initiative, they were near to the poverty line. For Bulandshahr, Ghaziabad, Meerut and Uttar Pradesh, the revenue of these BPL family was 2,159, 2,228, 2,279 and Rs, respectively, 2219 per month. The Microfinance Scheme has contributed to a large rise in sales and moved it beyond the poverty line. Wage rises for Bulandshahr, Ghaziabad, Meerut and Uttar Pradesh respectively are 72.3 percent, 62.9 percent, 53.6 percent and 63.6 percent.

V. Results and Discussion of the Primary Study

Primary details from participants and non-participants in the microfinance programme was compiled for this analysis. Here are the key findings:

1.     The study found that there is strong connection among SHG’s members, micro finance banks and entrepreneurs.

2.     The socio-economic profile of respondents indicates that, in an age ranges between 26 and 40 years, the bulk of participants and non-participants are married people.

3.     The majority of respondents are told and fall into the expected groups of castes.

4.     The respondents' residential status indicates that nearly all are home-owned.

5.      Many respondents have drainage facilities in their homes, but almost 50% do not have a toilet. 77% and 85% do not own farm property by the participants and the non-participants.

6.     The groups of 9 to 20 members in the subject region and 13 members on average in each party.

7.     Both participants of the Community save and donate to the Group Saving Fund an average of Rs. 100 every month.

8.     The loans are mostly issued by commercial banks and usually divided according to their individual criteria by community members.

9.     It was established that only 42.8% of the sample community loans are used for productive reasons, whereas most of the loans are used for other purposes, such as usage, building, marriage, Family consumer durables etc.

Bibliography

1.     Meher, S.(2007), ‘Impact of Micro-Finance on Poverty A study of Self-Help Groups in Orissa’, Journal of Rural Development, NIRD, Hyderabad, Vol. 26 (3), pp. 315-333.

2.     Mehra., R (1997), ‘The Role Of NGOs: Charity and Empowerment: Women, Empowerment, and Economic Development’, The Annals of The American Academy of Political and Social Science, Vol. 554, pp. 136-193.

3.   Molhotra, A. and M. Mather (1997), ‘Do Schooling and Work Empower Women in Developing Countries? Gender and Domestic Decision in Sri Lanka’, Sociological Forum, Vol. 12(4), PP. 559-630.

4.     Moser, C. and A. Moser (2005), ‘Gender mainstreaming since Beijing: a review of success and limitations in international institutions’, Gender and Development, Vol. 13(2), pp. 11-21.

5.    Oluseye, M.J. (2017). Microfinance banks: antidote to poverty alleviation in Nigeria: case study of Ekiti state, Nigeria. European Journal of Economic and Financial Research, 2(6), 24-34.

6.     Onyele, K.O., &Nwokocha, B.E. (2016). The relationship between capital flight and poverty: the case of Nigeria. Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development, 16(3), 225-236.

7.     Opara, G.C. (2010). Microfinance banks and poverty alleviation in Nigeria. Journal of Sustainable Development in Africa, 12(6), 177-199.

8.     PK Bhura and AK Jha (2019) Role of microfinance in eradication of poverty in India: an overview. International Journal of applied research 2019, 5 (5) pg 313-318

9.     Puskar, S. (2016). A study of impact of microfinance for poverty alleviation in selected District of Uttar Pradesh. International Journal of Engineering and Management Sciences, 7(4), 292-299.

10.   Samer, S., Majid, I., Rizal, S., Muhamad, M., Halim, S., & Rashid, N. (2015). The impact of microfinance on poverty reduction: Empirical evidence from Malaysian perspective. Procedia - Social and Behavioral Sciences, 195, 721-728.

11.   Sohn, W., & Ume, L. (2019). Impact of microfinance on poverty alleviation: a global analysis. Journal of Economics and Development Studies, 7(2), 82-102.

12.   Thrikawala, S., Locke, S., & Reddy, K. (2013). Social performance of microfinance institutions (MFIs): does existing practice imply a social objective? American Journal of Business and Management, 2(2), 173-180.

13.   Usifoh, K.S., & Ezeanyeji, C.I. (2017). Impact of microfinance banks on poverty alleviation and economic growth in Nigeria. NG - Journal of Social Development, 6(5), 22-34.