Analysis of Problems Faced by Leaders of Rural and Urban Self-Help Groups Benefitted By Micro-Finance Institutions in Madurai District

Abstract

Micro-finance refers to the financial services to the members of Self-Help Groups (SHGs) who have poor access to banking. It is the provision of thrift, credit and other financial services to the poor in rural and urban areas to enable them to improve their living standards. It was started in the early 1980s in India with the formation of informal SHGs to provide access to savings and credit services. It is a powerful tool to eradicate poverty in the country. It encourages entrepreneurship and assists economically poor women to uplift their status. Moreover, it aims at achieving women empowerment. It is obvious that the individual effort is not so effective to improve the economic conditions of women in India. Thus, organizing women in a group is essential for achieving the goal of uplifting their economic conditions. SHG is an informal group through which women get icrocredit from Micro-Finance Institutions (MFIs). It is either a registered or an unregistered group of 10 to 20 members primarily involved in savings and credit activities. It is an alternative to achieve the objectives of rural development and ensures community participation in all rural development programmes. In particular, it is an organized set up to provide micro-credit to women on the strength of group savings without insisting on any collateral security for the purpose of motivating women to venture into entrepreneurial activities. It is a fact that lending to a small women group is less risky and benefits the whole family. Thus, NGOs and other financial institutions come forward to provide micro-credit to SHGs. However, the members of SHGs face a lot of problems in involving themselves in these group activities. In particular, the leaders of the groups encounter various difficulties in ensuring the successful functioning of SHGs. Poor attendance of the members, poor
repayment of internal loan by members, raising family responsibility and poor financial support from the family are some of the problems faced by the leaders of SHGs. Unless the problems of leaders of SHGs are solved, the success of the micro-credit scheme will be a distant dream. In this context, the present work aims at analyzing the problems faced by leaders of rural and urban SHGs benefitted by MFIs in Madurai district.