Women's Access to Credit and Rural Micro-finance in India

The transaction costs
of reaching the
poorest are very high.
Further, the poorest
do not have the
capacity to absorb
credit, especially
credit meant to
generate income
through the starting of
small enterprises
3.2 Recommended Approach
to Assess Methods of
NGOs
• It is imperative for the IES to ascertain
whether the concerned mediating
NGO has managed to really reach the
‘poorest’.
Existing literature on micro-finance interventions
highlight the fact that while
it is the poorest that have to be reached,
often it is not easy. The transaction costs
of reaching the poorest are very high.
Further, the poorest do not have the
capacity to absorb credit, especially
credit meant to generate income through
the starting of small enterprises. Again
here it is very important for IES to pay attention
to the poverty measurement indicators used
by the participating NGOs in identifying the
poorest. There should be a consistency in
the measurement used even while it
encompasses the local context of poverty.
If attention is paid to this factor then
the IES can ascertain the extent of the
impact of the program and the efforts of
the NGO. The effect on the poorest will
be different from that on the poor and
on the not-so-poor. Hence the IES should
first determine which segment of the
population has benefited from the initiative.
This finding will be of particular
relevance to policy makers.
• IES should try and match the inputs
of ‘best practices’ with the actual
functioning of the NGO in determining
the impact upon the clients.
IES enter the field with a presumption
that the concerned MFI/NGO has performed
to the best of its ability. While
this may be true in spirit, the actual performance
of the organization has to be
matched by the best practices outlined
in various contexts. The value of such
an exercise lies in the fact that best practices
deal with the supply side of the
intervention and IES trace the demand
requirements of clients in the same directions
- loans, repayments, interest
rates, training, capacity building, group
formation, conflict resolution etc. In as
much as the study can fathom whether
best practices are being adhered to, the
IES can locate matches and mismatches
of demand with supply. Many IES have
used different research methods to examine
not only clients but also the corresponding
NGO. However the questions
that are raised do not locate themselves
in any way that will assist in the
study throwing light on whether the
NGO actually delivers what is wanted
by the client, and in what way are the
best practices proving to be really the
best ones to be practiced.
• IES should be willing to experiment
with new conceptual tools that could
assist them to capture poverty,
sustainability and empowerment in
more relevant ways.
There are conceptual tools available that
can lend new dimensions to the search
for the impact of micro-finance programs
on client’s lives. For example, it
is important to build in the concept of
the life cycle of the household and of
the client while considering the purpose
for which the loan is taken. A ‘young’
client/ household will have different
requirements as against a mature one.
Again, the concept of the ‘credit limit’
is useful in studying the constraints that
the borrower has to face while availing
a loan. Somewhere, underlying all IES,
32 WOMEN’S ACCESS TO CREDIT AND MICROFINANCE IN RURAL INDIA