ArticlePDF Available

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

Authors:

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.
A preview of the PDF is not available
... 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). ...
Article
Full-text available
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]. ...
Article
Full-text available
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). ...
Article
Full-text available
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.
Article
Reducing gender inequality in economic opportunities is considered valuable in its own right and a critical element in ending poverty and boosting economic prosperity. Does the evidence from multiple interventions support this view? This paper investigates the impact of women's economic empowerment (WEE) on human development in low-and middle-income countries (LMICs). This meta-analysis focuses on interventions that increase income generation opportunities for women by supporting agricultural and entrepreneurial activities, expanding financial access, and promoting female labour force participation. The evidence from experimental and quasi-experimental studies indicates that WEE significantly impacts human development. However, the impacts are relatively modest. Our findings suggest that changing social norms is critical to promote SDGs effectively.
Chapter
This paper aims to identify the economic development of rural area people through the self-help group bank linkage programme and financial inclusion plan. Developing country like India, aggressively working towards the economic enhancement of the poor people in India. The financial inclusion policy is one of the boon for the rural people to access various financial services like savings and borrowings. Due to the easy accessibility of these financial services, they could able to generate income through various self-employment activities. The major objective of this study is to identify the role of self-help groups in generating employment and economic empowerment in India and analyse the impact of financial inclusion programmes through self-help groups and bank linkage programmes. This paper follows the descriptive method of research study to analyse the data and interpret it. Data has been collected from various secondary-level open sources published from the Reserve Bank of India, and Government data. The collected data has been tabulated and graphically represented to establish their significance related to the study and inferred as well. The regions like Andaman & Nicobar, Bihar, Kerala, Manipur, Pondicherry, Tamil Nadu and Uttarakhand has significantly contributed to the formation of self-help group. The regions like Andaman & Nicobar, Bihar, Kerala, Manipur, Pondicherry, Tamil Nadu and Uttarakhand has significantly contributed to the formation of self-help group. The women-led self-help organisations (SHG), which disburse billions of rupees annually, are specifically mentioned in the economic report for 2022–2023, which was delivered by the Union's finance minister to Congress on January 31. India boasts 12 million SHGs, 88% of which are made up entirely of women. These teams often have 20 to 25 members, majority of whom are village dwellers (Arora and Singh in JAMA 3:66–88, 2018).
Article
Full-text available
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.
Article
Full-text available
Introduction 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. Methods 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. Findings 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. Conclusion 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. Trial registration number The review was registered with PROSPERO: CRD42019130633.
Article
Full-text available
In this article we provide a critical analysis of the role of market-based approaches to poverty reduction in developing countries. In particular, we analyse the role of microfinance in poverty alleviation by conducting an ethnographic study of three villages in Bangladesh. Microfinance has become an increasingly popular approach that aims to alleviate poverty by providing the poor new opportunities for entrepreneurship. It also aims to promote empowerment (especially among women) while enhancing social capital in poor communities. Our findings, however, reflect a different picture. We found microfinance led to increasing levels of indebtedness among already impoverished communities and exacerbated economic, social and environmental vulnerabilities. Our findings contribute to the emerging literature on the role of social capital in developing entrepreneurial capabilities in poor communities by highlighting processes whereby social capital can be undermined by market-based measures like microfinance.
Article
Full-text available
Most micro-finance institutions (MFI) use some sort of group system to distribute their services to their clients. There are some exceptions, including the Village Unit system of BRI in Indonesia, the world's biggest and most profitable MFI, but groups seem generally to predominate. Many otherwise well informed observers and even some senior bankers in India and elsewhere, appear to believe that the group system pioneered in 1976 by the Grameen Bank in Bangladesh is the predominant or even the only such system. One purpose of this paper is to show that this is not the case. Both systems have their advantages and disadvantages, and practitioners need to be aware of the options that are available. We shall attempt in what follows to describe and explain each system, and to compare their sustainability, their outreach and impact on the poor and their institutional feasibility. Our arguments are briefly summarised in the table which follows the text. There are two very different ways of using groups for financial intermediation. One is the Bangladesh Grameen Bank method, which we shall for convenience refer to as the Grameen system, and the other is the so-called Self Help Group, or SHG, system. There are many variants of each system, and they are often referred to as the 'solidarity group', and the 'village banking' systems. We shall, however, use the terms 'Grameen' and 'SHG', since these are more familiar in the South Asian context. Both systems are dominated by female clients, but they differ in many other fundamental respects, which have important implications for their clients and for the institutions which offer them. The systems are also implemented in many different ways, depending on local circumstances. The fundamental characteristics of each system, and the critical differences between them, are briefly described below. Further more detailed accounts of each system can be obtained from a number of sources, including Fugelsang and Chandler, Wahid, Holcombe and Harper 1998. 1.1 The Grameen system Potential clients are asked by the MFI to organise themselves into 'Groups' of five members which are in turn organised into 'Centres' of around five to seven such Groups. The members make regular savings with the MFI, according to a fixed compulsory schedule, and they also take regular loans. They each have individual savings and loan accounts with the MFI, and the main function of the Groups and Centres are to facilitate the financial intermediation process, through performing tasks such as:
Article
Full-text available
Microfinance is seen as a key development tool, and despite the current deepening crisis within the industry, it continues to grow in sub-Saharan Africa. We systematically reviewed the evidence of the impacts of micro-credit and micro-savings on poor people in sub-Saharan Africa. We considered impacts on income, savings, expenditure, and the accumulation of assets, as well as non-financial outcomes including health, nutrition, food security, education, child labor, women’s empowerment, housing, job creation, and social cohesion. The available evidence shows that microfinance does harm, as well as good, to the livelihoods of the poor.
Conference Paper
Aims: Globally, poverty is the single most important cause of ill health. Microfinance initiatives (MFI), involving small loans, can alleviate poverty and may impact on children’s health. However, methodology of existing studies is often weak and systematic reviews report conflicting findings. Rojiroti is an innovative MFI that functions through self-help groups of village women and supports community development at a low cost. Methods: We undertook a cluster randomised controlled trial (RCT) following consent from self-help groups in 56 villages to determine if the Rojiroti MFI can improve nutritional indices in children under-five-years old. Basic demographic and anthropometric data were collected at baseline and 18 months after Rojiroti implementation in the intervention arm. Z-scores were calculated (ENA and WHO AnthroPlus tools). The primary outcome was weight for height z-score (WHZ). Secondary outcomes were weight for age z-score (WAZ), height for age z-score (HAZ), and mean mid-upper arm circumference (MUAC). Results: Data were collected from 2469 children born to 1560 mothers at baseline and 2534 children born to 1446 mothers at follow-up. There were no significant differences between groups in village and maternal characteristics at baseline. There was no difference in the primary outcome, mean WHZ, at baseline between the two groups. After 18 months of intervention, the mean WHZ score of the under five-year-old children in the intervention tolas was significantly higher when compared with the mean WHZ of those in the control tolas. This difference was because while there was almost no change in the mean WHZ in the intervention tolas over the study period, in control tolas the mean WHZ worsened. At follow up, the mean WAZ and MUAC, and the prevalence of wasting, underweight, and at least moderate malnutrition were also significantly better in the intervention tolas as compared with the control tolas. (See Table on http://adc.bmj.com/content/102/Suppl_1/A3.1). Conclusion: Rojiroti microfinance low cost, focussed on women and led by peers among socio-economically deprived populations can have clinically important impacts on child nutrition.
Article
Rojiroti is a small organization delivering microfinance to the poorest women in Bihar. This article explores Rojiroti's panel data which shows a decline in domestic violence among its members, acknowledging that this result contradicts much of the existing literature on this topic. Detailed analysis of relevant literature and extensive fieldwork involving qualitative interviews with 16 Rojiroti Self-Help Groups (SHGs) in July 2015 inform the outcomes of this inquiry. While evidence from other microfinance organizations is less positive, there are indications that the specific approach to microfinance initiatives by Rojiroti in this context is successful in reducing rates of domestic violence.
Article
Does microfinance support the empowerment of female borrowers? Results of studies analyzing microfinance and empowerment delivered mixed results. In order to explore whether microfinance influences empowerment, the paper compares women in higher loan cycles of a Pakistani microfinance institution with those in the first loan cycle regarding their empowerment. Using a survey and multivariate statistical methods, such as propensity score matching, the study found that women in higher loan cycles were on a higher level of empowerment. We conclude that microfinance has an impact on the empowerment of female borrowers.
Article
This article explores the relationship between women's participation in microcredit groups and domestic violence in Bangladesh. Several recent studies have raised concern about microcredit programs by reporting higher levels of violence among women who are members. These results, however, may be attributable to selection bias because members might differ from nonmembers in ways that make them more susceptible to violence to begin with. Using a sample of currently married women from the 2007 Bangladesh Demographic Health Survey (BDHS) (N = 4,195), we use propensity score matching (PSM) as a way of exploring selection bias in this relationship. Results suggest that the previously seen strong positive association between membership and violence does not hold when an appropriate comparison group, generated using PSM, is used in the analyses. Additional analyses also suggest that levels of violence do not differ significantly between members and nonmembers and instead could depend on context-specific factors related to poverty. Members for whom a match is not found report considerably higher levels of violence relative to nonmembers in the unmatched group. The background characteristics of members and nonmembers who do not match suggest that they are more likely to be younger and from relatively well-to-do households.
Article
Labor force participation of women is expected to decrease the risk of spousal violence by enhancing their bargaining power or diminishing their contacts with abusive partners. The opposite effect is predicted when female employment induces male backlash. I identify the effect of female employment on spousal violence by exploiting the exogenous variations in rural women’s working status driven by rainfall shocks and the rice–wheat dichotomy. The instrumental variable regression result indicates that female employment significantly reduces the incidence of spousal violence. This result is mainly driven by the exposure reduction effect that dominates male backlash. There is, however, no evidence on the bargaining effect. KeywordsViolence–Female employment–Exposure reduction