MSc

Micro finance is about provisioning of thrift, credit and other
financial services and products of very small amounts to the poor for
enhancing them to raise their income levels and to improve their living
standards. The present study entitled "Impact of Micro finance
through self-help groups in Malappuram district" was undertaken
with an objective of (i) to assess the socio-economic impact of self-
help groups on beneficiaries and (ii) to identify thc factors that•
determine the effective functioning of self-help groups. Primary data
collected with the help of a structured schedule from 200 sample
households in 30 SHG's functioning in 11 Grama Panchayats in
Nilambur block of Malappuram district formed the basis for the study.
The impact of the programme was assessed by comparing the pre-SHG
and post-SHG situations. Group effectiveness index was computed for
each group for identifying the factors determining the effective
functioning of the groups.
The economic impact of SHGs on beneficiaries could be
visible III terms of increased savings habit, increased accessibility to
credit, increased contribution to household income, acquisition of
household assets, increased control over financial resources, and
increased income and employment generation. The study revealed that
SHGs places a lot of emphasis in developing savings habit among the
. members. It is also worth to note that SHGs have emerged as the major
sources of credit for its members. As much as 93 percent of them had
availed credit from the group. The number of respondents who availed


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bank credit also increased from 2.5 percent in the pre-SHG period to
24 percent in the post SHG period. An examination of number of sources
of household income in the pre- and post-SHG period showed an
increase in number of sources of income for many of the households.
The number of households reporting only single source of Income
declined from 57.5 percent to 32 percent in the post SHG period,
whereas the number of households reporting two and three sources
increased from 27.5 percent and 11 percent to 44.5 percent and
19.5 percent respectively. Members acquired a wide variety of assets
with the help of programme loan. Fourty nine percent of members
acquired income generation assets including livestock, sewing machine
and other work related implements. The respondent's control over
household financial resources is reflected from their involvement in
decision making with respect to savings, credit and income generation
activities. The study revealed that the involvement of the members in
SHG significantly contributed their ability to control these financial
resources. It was also observed that as many as 35.5 percent of the
respondents had constructed new latrine, repaired their house
(9 percent), constructed new house (8.5 percent). As many as 47 percent
of the respondents had started their own income generation activities. It
is significant to note that majority of the respondents being housewives
are able to make use of their idle time more productively and thereby
supplementing their household income.
The social impact of the programme was visible in terms of the
members' increased role in household decision making increased
self-confidence, increased ability to deal with adversities and their

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involvement in community activities. The members generally reported a
higher level of involvement in their household decisions which IS
reflected from their role in common household decisions such as
purchase of food items, household investments, children's education,
marnage etc. The study also indicated that involvement in SHGs
significantly improved their level of self-confidence, which is reflected
from their contribution to household, contribution to community and
their free interaction with others. It is particular to note that the
association of the members with SHGs equiped them to deal with certain
types of adversities. In addition the group activities also helped in
developing a greater sense of solidarity, closeness and will to shoulder
responsibilities among the group members.
The group effectiveness index showed high values indicating
the effective functioning of the groups. The relationship between the
various components with group effectiveness index revealed that all the
components except understanding of scheme objectives and transparency
exhibited strong and significant relationship with group effectiveness.
The regression analysis carried out for the purpose of identifying the
most influencing factors showed that group interaction, autonomy,
equity, accountability and transparency mostly influenced the group
effectiveness.
The findings of the study revealed that the SHG as institutional
arrangement could positively contribute to the social and economic
dev.elopment of the poor.