IDS working papers;303

The vulnerability of ‘self-help’ : women and microfinance in South India

Published on 1 January 2008

Self-help groups (SHGs) play a major role in providing microfinance in India. But
they do not work alone. State institutions are also a big part of the microfinance
landscape. They promote and finance SHGs, and also interact directly with them.
How does this kind of ‘institutionalised co-production’ in service delivery work in
My research shows that the relationships are not symmetrical. When they seek
access to bank credit, women’s groups are in a dependent relationship, and are
subject to, and tarnished by, the institutional imperatives, systemic corruption and
political compulsions that shape the behaviour of rural development bureaucracies
and banks. Part of the problem lies in a legacy of bank staff mistrusting borrowers
due to arrears from previous credit granted under a different set of public
schemes. Banks still try to recover old loans, and sometimes grant new loans to
womens’ SHGs conditional on repayments by their male relatives. Women
consider the ways in which bank officials assess credit-worthiness of SHGs as
sometimes being discriminatory and suggestive of caste-profiling. Since banks, as
institutions, are not very sensitive to the realities of their SHG borrowers, the
quality of the relationship often depends on the attitude of the bank’s branchmanager.
Success in accessing loans is often contingent on how SHGs, bank
staff, government officers and non-government organisations collude to subvert
the official objective of the loan programme – enterprise-promotion. Manufacturing
evidence about non-existent enterprises involves substantial costs and risks for
Providing financial services in rural India is now a profitable venture and is
attracting private financing institutions, including transnational banks. My research
suggests that we need to enquire further into the power dynamics that underlie
relationships between the poor people using the financial services and their providers.

Keywords: Self help groups, microcredit, Tamil Nadu, co-production, gender,
caste, banks, development bureaucracy, enterprise loans, policy subversion,
corruption, power relations.

Publication details

published by
Kalpana, K.


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