Can the vicious cycle of gender inequality, poverty and malnutrition be broken through microfinancing of women SHGs? Explain with examples.

The SHG ‘bank-linkage’ programme is the flagship microfinance programme of the National Bank for Agriculture and Rural Development (NABARD) which has actively supported to break the vicious cycle of Gender inequality, poverty and malnutrition.

Usefulness of Micro Financing SHG for virtuous cycle:

• By offering financial services to the poor unprivileged women of the country, the institutions have opened a door for their economic growth. For example, Jay Ambe SHG, in Rajasthan facilitates credit availability for its poor members.

• Women’s engagement in income-generating microenterprises enhances their status and decision-making capacity within the household. This helps women in making effective expenditure on nutritious food.

• Some of the SHGs like Kudumbashree, Jeevika, etc. are focussed on poverty reduction by engaging women in microenterprises.

• The UP Government has tied with SHG to provide cooked meal to beneficiaries.

CASE STUDY:

• SHG Laksh in Rajasthan have managed to earn a bulk order of making 1000 bangles worth Rs. 1 lakh that would fetch them a minimum income of Rs. 3000/head/month. This new role as an entrepreneur has earned a new respect within the family structure. 

However, there are lot many challenges that Microfinancing faces today like High interest rate, demand of collateral, non-effective utilisation of loans, thus focus should be on:

• MFIs should provide a comprehensive range of products, including credit, savings, remittance, financial advice, and so on, to help consumers transition away from commercial banks.

• Instead of lowering the initial cost in places where MFIs exist, these institutions should begin focusing on the rural poor and open additional branches throughout the areas.

• MFIs should adhere to an actual interest rate on products and amounts disclosed to clients.

Microfinance model will improve gender equality only when SHG is being supported by the Government and its institutions and its members get support from their family members. Along with these new financial mechanisms based on the individual needs of the particular area is also essential for the SHGs to achieve their aims and objectives.