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Microfinance for the marginalized: The impact of the Rojiroti approach in India

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Abstract

The Rojiroti approach to microfinance involves creation of women's self-help groups (SHGs), rotated loans from savings, and subsequent credit from CPSL, a Bihar-based NGO. Rojiroti serves customers who are significantly poorer and more marginalized than those typically served by microfinance (MF) in India. In the data analysed, more than 90 per cent of members are from scheduled caste and tribes (62 per cent) or other disadvantaged castes. This paper analyses the impact of Rojiroti MF using panel data on 740 new SHG members and 340 women in matched control sites at baseline and after 18 months. We consider changes in assets, children's education, empowerment, and domestic violence among other indicators. These results show significant gains for Rojiroti borrowers relative to control sites for important, but not all, variables. Comparison with more long-standing SHGs (at least 36 months) helps to explain how the borrowing patterns of poor and marginalized SHG members evolves.
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... Alemu et al. (2018), De Hoop et al. (2010,Kundu and Mukherjee (2011), Lombardini andYoshikawa (2015),,Yaron et al. (2018). We assessed half of the QED studies evaluation SHG and VSLA as having high risk of bias and the other lf as having some concerns, none was assessed as having low risk or bias. ...
... p < 0.01, τ = 0.02 2 , I = 81.12 2 %). An examination of the studentised residuals revealed that one study(Yaron et al., 2018) had a value larger than ±2.50 and may be a potential outlier in the context of this model. According to the Cook's distances, none of the studies could be considered to be overly influential. ...
... According to the Cook's distances, none of the studies could be considered to be overly influential. Sensitivity analyses leaving each study out indicated that removingYaron et al., (2018) would increase the average effect (μ = 0.08 [95% CI: −0.02 to 0.18]), but the effect would still be insignificant (z = 1.52, p = 0.13). ...
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Background: Across the globe, gender disparities still exist with regard to equitable access to resources, participation in decision-making processes, and gender and sexual-based violence. This is particularly true in fragile and conflict-affected settings, where women and girls are affected by both fragility and conflict in unique ways. While women have been acknowledged as key actors in peace processes and post-conflict reconstruction (e.g., through the United Nations Security Council Resolution 1325 and the Women, Peace and Security Agenda) evidence on the effectiveness of gender-specific and gender-transformative interventions to improve women's empowerment in fragile and conflict-affected states and situations (FCAS) remains understudied. Objectives: The purpose of this review was to synthesize the body of evidence around gender-specific and gender-transformative interventions aimed at improving women's empowerment in fragile and conflict-affected settings with high levels of gender inequality. We also aimed to identify barriers and facilitators that could affect the effectiveness of these interventions and to provide implications for policy, practice and research designs within the field of transitional aid. Methods: We searched for and screened over 100,000 experimental and quasi-experimental studies focused on FCAS at the individual and community levels. We used standard methodological procedures outlined by the Campbell Collaboration for the data collection and analysis, including quantitative and qualitative analyses, and completed the Grading of Recommendations, Assessment, Development and Evaluations (GRADE) methodology to assess the certainty around each body of evidence. Results: We identified 104 impact evaluations (75% randomised controlled trials) assessing the effects of 14 different types of interventions in FCAS. About 28% of included studies were assessed as having a high risk of bias (45% among quasi-experimental designs). Interventions supporting women's empowerment and gender equality in FCAS produced positive effects on the outcomes related to the primary focus of the intervention. There are no significant negative effects of any included interventions. However, we observe smaller effects on behavioural outcomes further along the causal chain of empowerment. Qualitative syntheses indicated that gender norms and practices are potential barriers to intervention effectiveness, while working with local powers and institutions can facilitate the uptake and legitimacy of interventions. Conclusions: We observe gaps of rigorous evidence in certain regions (notably MENA and Latin America) and in interventions specifically targeting women as actors of peacebuilding. Gender norms and practices are important elements to consider in programme design and implementation to maximise potential benefits: focusing on empowerment only might not be enough in the absence of targeting the restrictive gender norms and practices that may undermine intervention effectiveness. Lastly, programme designers and implementation should consider explicitly targeting specific empowerment outcomes, promoting social capital and exchange, and tailoring the intervention components to the desired empowerment-related outcomes.
... Previous research with Rojiroti found that there were positive impacts on women's lives in relation to increased assets and reductions in domestic violence with the results being attributed to some of Rojiroti's operating mechanisms (Yaron, Gordon, Best & Choudhary, 2018). This study seeks to build on the gap in the literature on the impact of microfinance on girls' education specifically, whilst examining the Rojiroti's specific operating mechanisms to understand why change might occur. ...
... If a scheduled repayment cannot be made, the borrower has to repay the interest component plus at least one rupee of the initial loan. The strong relationships between members and communitybased group facilitators and the very high cost of alternative sources of credit make defaults extremely rare (Yaron et al., 2018), and the flexibility in timespan of loan repayment makes this process more feasible for members. The fact that Rojiroti delivers microfinance in a way that is cognisant of the different needs of its members is perhaps one of its most important features. ...
... A previous study looking at Rojiroti microfinance and its influence on the most marginalised found that women experienced increased asset accumulation and improvements in household property (Yaron et al., 2018). This has also been noted in other studies of microfinance (Deininger & Liu, 2009). ...
Thesis
Microfinance, the idea of giving small loans to those without access to formalised financial services, has been a widely adopted intervention since the 1990s. However, debates about the impacts of microfinance are ongoing and arguably intensifying. Critics argue that many of the mechanisms through which microfinance is delivered can lead to higher levels of poverty. Additionally, the fact that microfinance predominantly focuses on women has led to widespread feminist critiques that it does not consider wider structural constraints facing women. Increasingly, there have been calls to better understand the mechanisms through which microfinance organisations operate. This research explores Rojiroti microfinance, a grassroots and community-led organisation, designed by and for its members to support women from the most socio-economically marginalised groups in rural Bihar, India. This has led to a number of distinct operating mechanisms which differentiate it from the microfinance organisations subject to mainstream critique. This study seeks to assess whether Rojiroti’s distinct mechanisms have enabled positive changes for its women members. It aims to do this through looking at girls’ education, recognising that changes in girls’ education could be indicative of more widespread and longer-term shifts in gender equality. Theories of empowerment, with a foundation in the capability approach, are used to conceptualise pathways through which change may have occurred for Rojiroti members in relation to being able to support girls’ education. These pathways are firstly that, through membership, women may experience a change in their financial, social and cultural resources. They may then experience shifts in individual and collective agency which could influence their ability to support girls’ education. Secondary panel data were analysed and found that Rojiroti members experienced significant positive impacts on their spending on children’s education. Choosing to spend on education indicates a shift in women’s financial position, as well as a commitment to support children’s education. Subsequently, to understand in more depth the impact on girls’ education in particular, whether Rojiroti’s operating mechanisms had facilitated this change, and the pathways through which this change had occurred, twenty one-on-one interviews with Rojiroti staff and thirty focus group discussions with Rojiroti self-help group members were conducted. Findings demonstrate that Rojiroti’s low interest rates and flexible repayment mechanisms had particularly supported women to build up financial resources, which they then used to support girls’ education. Rojiroti’s focus on group cohesion and solidarity, and the fact it was predominantly women-led, led to increased social resources, and individual and collective agency that contributed to women’s increased ability to take decisions to support girls’ education and to challenge inequality in their homes and communities. Significant for those involved in microfinance, it appears that Rojiroti’s deep understanding of the context, and flexibility to adapt to the needs of its members, enabled positive change. In terms of longer-term gender transformative changes, the study cautions against interventions that focus purely on building up women’s financial resources. Social resources were essential for building skills which enabled women to advocate for, and challenge barriers inhibiting, girls’ education.
... However, the earlier studies lacked consensus in their findings. [2][3][4][5][6], pinpoint microfinance as a successful instrument for reducing poverty and inequality among the participants. Earlier studies documented that Self-Help Group (SHG) led microfinance programme becomes a successful model for income and employment generation [7][8][9]. ...
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In order to link the unorganised with the formal financial sector in India, the National Bank for Agriculture and Rural Development (NABARD) introduced the Self-Help Group Bank Linkage Programme (SHG-BLP) as a trial initiative in 1992 and mainstreamed it in 1996. Microfinance services are available in Assam through SHG-BLPs registered with the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM). In central Assam, there are the most active SHG-BLP units. In light of this, the present study aims to explore contribution of SHG-BLP in financial along with the social inclusion of the marginalised rural people of central Assam. The impact of SHG-BLP is facilitated by the application of the propensity score matching method. The empirical results show that the SHG-BLP considerably reduces social exclusion among participants relative to their non-participant counterparts and ensures financial inclusion too. Based on this empirical finding, the study recommends that the coverage of SHG registration under DAY-NRLM be expanded. Simultaneously, efforts must be made to expand the alternative model of SHGs, the MFI-Bank Linkage Model, for expanding SHG coverage.
... The pattern of providing loans for SHGs members is providing loans to the poor and marginalized members of SHGs in rotation. Yaron et al. (2018) proved that the pattern of rotating loans for SHGs members was developed. The success of this group-based rotating loan pattern as an instrument of women's economic empowerment is also strengthened by the research of Wulandari and Kassim (2016) (2020); Gogoi (2020); Manikandan and Muthumeenakshi (2020). ...
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This study examined the role of the Micro Waqf Bank in empowering women micro-entrepreneurs. This research used a mixed-method with an explanatory design. Quantitatively, this study examines the effect of the joint responsibility system, financing, and mentoring on the growth of the micro-enterprises business. The sample used was 200 women micro-entrepreneurs using a purposive sampling technique. Quantitative data analysis was performed using the Structural Equation Model based on Partial Least Squares (SEM PLS) technique. This research qualitatively analyzes how the Micro Waqf Bank has carried out its role in empowering women, including dealing with crises due to the COVID-19 pandemic. Thematic analysis was used as the qualitative data analysis technique. Informants in this study amounted to 6 informants from MWB Mawaridussalam consisting of Management, Mentors, and female micro-enterprises. The research results quantitatively indicate that there is a positive and significant impact on the joint responsibility system, financing, and mentoring on the development of micro-enterprise members. Mentoring is the most significant variable that impacts the growth of a micro-enterprise business. Qualitatively, the research results show the role of the Micro Waqf Bank in the economic empowerment of women micro-business entrepreneurs by specifically recommending reinforcement of the mentoring function.
... Sharma et al. (2017) and Khatibi and Indira (2017) also evaluated the impact of SHG interventions and found that SHGs significantly and positively contribute to the empowerment of women members in rural areas. Yaron et al. (2018) studied the impact created by Rojiroti microfinance in India using panel data on 740 new SHG members and 340 women in matched control sites at baseline and after 18 months. Changes in assets, children's education, empowerment, and domestic violence among other growth indicators. ...
Article
The objective of this study is to analyse whether self-help groups (SHGs) play catalyst role in the inclusive and sustainable development of rural poor. This has been empirically examined in Indian scenario with a specific case of SHGs promoted by Shri Kshetra Dharmasthala Rural Development Project (SKDRDP), using secondary and primary data. A sample survey of 419 SKDRDP-promoted SHG members was conducted in Dakshina Kannada and Madikeri districts of Karnataka state in India. The data collected are analysed by adopting factor analysis technique. The results exhibit that SKDRDP-promoted SHGs contribute significantly to reforms in the society, enhance the capability of rural poor, and enable economic well-being and financial inclusion of the poor. Thus, SHG activities enable inclusive and sustainable rural development. The results have significant implications to the policymakers, non-government organisations, and local government organisations of underdeveloped economies.
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Microfinance is globally trusted for corroborating the upliftment of the rural vulnerable poor sections. It is looked upon as a means of credit-based poverty alleviation through financial inclusion. India also witnesses the same. In India, the self-help group bank linkage programme (SHG–BLP) is architected by NABARD in 1992 as a pilot project. The programme was mainstreamed in 1996 to link unorganised with the formal financial sector. In Assam, microfinance services are made available through SHG–BLP registered under Deendayal Antyodaya Yojana–National Rural Livelihoods Mission. Central Assam is the epicentre of operative SHG–BLP. This backdrop motivates us to explore the contribution of SHG–BLP in financial and social inclusion of the marginalised rural people of central Assam. Two self-developed indices, viz., financial inclusion index and social exclusion index are constructed by applying Multiple Correspondence Analysis. The impact analysis is facilitated by the Propensity Score Matching method. The study concludes that the SHG–BLP is successful in ensuring financial inclusion and simultaneously also assists in reducing social exclusion among the stakeholders.
Article
In this article, we explore the impacts and implications of ‘Rojiroti’, a women’s self-help group (SHG) microfinance scheme operating in poor communities in Bihar, India. We focus particularly on how improvements found in women’s circumstances and in children’s health might result from Rojiroti SHG membership. Through data from 5 focus groups and 19 individual interviews with women in communities where Rojiroti operates, we discover how the scheme is regarded and how it affects women’s management of household budgets. Moreover, we explore the relational aspects of SHG microfinance and the ways that it can alter family and social dynamics. Drawing on notions of ‘earmarked’ money and ‘safeguarded’ money, we argue that the money itself has meaning and non-pecuniary value in the form of other currencies, including power and agency, which can lead to the improved well-being and health of families.
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India is home to over 6 million women’s groups, including self-help groups. There has been no evidence synthesis on whether and how such groups improve women’s and children’s health. We did a mixed-methods systematic review of quantitative and qualitative studies on women’s groups in India to examine effects on women and children’s health and to identify enablers and barriers to achieving outcomes. We searched 10 databases and included studies published in English from 2000 to 2019 measuring health knowledge, behaviours or outcomes. Our study population included adult women and children under 5 years. We appraised studies using standard risk of bias assessments. We compared intervention effects by level of community participation, scope of capability strengthening (individual, group or community), type of women’s group and social and behaviour change techniques employed. We synthesised quantitative and qualitative studies to identify barriers and enablers related to context, intervention design and implementation, and outcome characteristics. We screened 21 380 studies and included 99: 19 randomised controlled trial reports, 25 quasi-experimental study reports and 55 non-experimental studies (27 quantitative and 28 qualitative). Experimental studies provided moderate-quality evidence that health interventions with women’s groups can improve perinatal practices, neonatal survival, immunisation rates and women’s and children’s dietary diversity, and help control vector-borne diseases. Evidence of positive effects was strongest for community mobilisation interventions that built communities’ capabilities and went beyond sharing information. Key enablers were inclusion of vulnerable community members, outcomes that could be reasonably expected to change through community interventions and intensity proportionate to ambition. Barriers included limited time or focus on health, outcomes not relevant to group members and health system constraints. Interventions with women’s groups can improve women’s and children’s health in India. The most effective interventions go beyond using groups to disseminate health information and seek to build communities’ capabilities.
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