Micro Finance and Poverty Alleviation Proposal
An Investigation on the Roles of SBLPs and MFIs in Poverty Alleviation and Development of Socio-Economic Structure in India
1.0 Background of the Study
Started by non-profit organisations, self-help groups are community-based financial intermediaries that are usually composed of twenty and below local women. These self-help groups, whom pool money to regular contributions to generate enough financial capital, may be registered and non-registered. The funds that the group was able to collect will be lent back to the members or other members of the community for specific purposes. On the basis of mutual helping, self-help groups function in accordance with broad anti-poverty agendas. Self-help groups are basically viewed as an instrument for women empowerment and leadership development in communities.
Further, one of the basic distinctions of a self-help group is that it serves as a financial intermediary between informal financial market and formal financial actors like micro finance institutions (Rutherford, 1999). Microfinance, on the other hand, is defined as the provision of various financial services to poor or low-income clients including consumers and self-employed for the purpose of supporting their financial and non-financial needs. As a practice, microfinance aimed at sustainable delivery of these services. It is intended that micro finance could lead into effective money management strategies in order for poor people to address their own financial needs hence to live out of poverty in the future.
In theory, microfinance encompasses all initiatives in increasing the access to, or improving the quality of, financial services of people in poverty who could use or could benefit from using the lent money other than the traditional financial services. Nevertheless, the goal of microfinance is not merely monetization but instead to address the several types of needs of poor, near-poor and low-income families. These needs include lifecycle needs, personal emergencies, disasters and investment opportunities (Rutherford, 2000). As such, micro financing conforms to creative, flexible and collaborative way of meeting the needs of underprivileged group of people.
In this way, poor people are given the opportunity to engage in entrepreneurial activities as an instrument in alleviating poverty. Micro financing puts emphasis on building the capacity to participate in micro entrepreneurship, aside from generating employment. Hence, microfinance is considered as a tool for socioeconomic development as it aimed to create self-sustaining businesses among the poor people. These livelihood opportunities are also regarded as an avenue to cope up with financial difficulties such as sending children to school and putting nutritional foods in the table.
In India, the growth of microfinance is stable and continuous through self-help group-bank linkage programme (SBLP) and microfinance institutions (MFIs). SBLPs and MFIs are the main channel of microfinancing in the country wherein they served over 33 million Indians in 2008. Four out of five microfinance clients in India are women. Women, most specifically, are mobilised into self-help groups to build their social capital and facilitate access to finance for the groups and their members. Self-helped groups in Pakistan thus served as specialised microfinance institutions to reintegrate people towards a quality living which impacts literacy and health.
2.0 Statement of the Problem
The problem that will be addressed in this study is the position that SBLPs and MFIs are taking in alleviating poverty and developing socioeconomic structure in India. The key question to be answered is: How SBLPs and MFIs helped in alleviating poverty and developing the socioeconomic structures of people in India? In particular, the research will seek to answer the following research questions.
1) How do SBLPs and MFIs contribute in poverty alleviation and socioeconomic development in India?
2) In what specific ways does micro financing proved to be beneficial for the people in India?
3.0 Overview of the Methodology
The study will explore the problem in an interpretivist view, using exploratory research strategy because it aims to determine the present facts as well as facts that are not yet explored about the phenomenon. Exploratory research will enable the study to look at the problem in both descriptive and exploratory manner. It will look into the problem by exploring the views of different sets of respondents, as well as by exploring different literatures related with the study.
This study will also employ qualitative research method because it will try to find and build theories that will explain the relationship of one variable with another variable through qualitative elements in research. Through this method, qualitative elements that do not have standard measures such as behavior, attitudes, opinions, and beliefs within the business domain will be analyzed.
This qualitative study will conduct primary and secondary research. The primary source of data will come from the researcher-made questionnaire. The primary data frequently gives the detailed definitions of terms and statistical units used in the study. These are usually broken down into finer classifications.
The secondary sources of data will come from published articles, books, business journals, theses and related studies and the Internet. Acquiring secondary data are more convenient to use because they are already condensed and organized. Moreover, analysis and interpretation are done more easily.
References
Rutherford, S. (1999). Self-help groups as microfinance providers: how good they can get? Mimeo.
Rutherford, S. (2000). The Poor and Their Money. Oxford University Press: New Delhi.
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