A Comparative Analysis of Self-Help Groups and Microfinance Institutions in Advancing Women’s Financial Inclusion in Maharashtra

Abstract

Financial inclusion has become a major policy agenda towards the achievement of equitable and inclusive economic growth in India. Nevertheless, it is apparent that some gender-based obstacles in Maharashtra (poor financial literacy, social customs, and inadequate access to formal credit) remain to impede the access of women to the formal financial system, especially in rural and semi-urban societies. As a way of handling this dilemma, the current paper will analyse two of these financial inclusion interventions: the Self-Help Group (SHG) model as applied by the Mahila Arthik Vikas Mahamandal (MAVIM) and the Microfinance Institution (MFI) model as applied by the Bharat Financial Inclusion Ltd. (previously SKS Microfinance).

The research design is based on secondary data because the authors use governmental reports, institutional publications, and previous scholarly research and uses the Diffusion of Innovation (DOI) framework developed by Rogers as a conceptual framework that considers SHGs and MFIs as financial innovations that affect the adoption behavior of women. By using comparative analysis of outreach and loan characteristics, loan repayment performance, and empowerment-related indicators, the study evaluates the effect of innovation attributes like relative advantage, compatibility, complexity, trialability and observability on the outcome of financial inclusion of women in Maharashtra.

The results show a definite difference between the two models as SHGs have more successful results in empowering women and making them financially literate with the help of collective participation and capacity building and MFIs are more successful in outreach and access to credit in outer and in peri-urban areas. The research concludes that a complementary strategy that combines the strength of SHGs in social empowerment of women with the potential to scale MFIs can improve financial inclusion of women. Gender barriers are presented with policy recommendations that are provided to support an inclusive and sustainable financial ecosystem in Maharashtra.