Impact of Microfinance Programmes on Rural Women Savings and Credit

Abstract

This study attempts to under rand the impact of microfinan ce programmes on rural women in terms of change in income, saving , and credit. The tudy wa conducted o n a sample of two hundred and twenry women benefi ciaries of microfinance services o f a leading microfin ance in titutio n operating in Kerala state. The sample was selected by multi- cage du ter ampling. The re ults of the study sugge t that microfin ance programmes have crea ted a positive impact fo r its beneficiaries. The majoriry of the res ponden ts are engaged in various income generating activiti es beca use of th e cred it faciliti es provided by microfinance institutio ns. Thi has resulted in a significant change in their income level and avings after participating in microfinance programmes. This ha helped them to earn income fo r their fa milies and has al o enabled them to play an important role in their families and in ociery. The results of the study also show that microfinance programmes have also red uced the be nefi ciaries' dependence for info rmal financial so urce . Thus microfinance programmes have lead to a ignificanr improvement of fin ancial literacyThe resul of the tudy also indi cate that while microfinance programmes had the mo t dramatic improvement in income and savings fi r beneficiaries who had little o r no income and avings prior to participation, there was considerably lower shift to fo rmal saving instruments and fo rmal source of credit fo r the same group. This could refl ect socio-eco n mic difficulties encountered by tho e with little or no income in coming out of info rmal financial systems. This suggests chat microfin ance programmes should be more specifically designed taking in to consideration the socio-economic requirements of those with little or no income. Also, an implication of the results is chat microfinance institutions should encourage beneficiaries to increa e their propensiry to save, as chis would imp rove their lo ng-term benefit from the microfinance programmes.