Women walk away with credit

Unlike the Latin American countries where the disbursal ratio is more proportionate in the microfinance sector, in India more than 75 per cent of the loans disbursed for these purposes is to the female fraternity.

In fact, according to the chairman of State Bank of India, A K Purwar, around 80 per cent of the finance given by the financial behemoth in the rural areas in India has been to women.

Says Frances Sinha, the executive director and founder of EDA Rural Systems in Gurgaon, "Traditionally, microfinance has been developed to empower women. Besides, although there are some microfinance institutions that give loans to individuals also, it is primarily group-based. A majority of the self-help groups comprise women and there is therefore a tendency for women to be the major receivers of microfinance."

EDA Rural Systems is a development sector consultancy, research and capacity building organisation with microfinance and micro-enterprise as its focus areas.

Sinha, however, adds that although women may be the major receivers of the finance, men may turn out to be the beneficiaries.

"We still live in a patriarchal society where the man has the authority to take important decisions. So although the loan may be taken on a woman's name, it may as well be used by her husband in many cases," she adds.

K Rama, a practitioner in the microfinance field, says that there is therefore a need to assess if the woman is actually being benefited from the loans taken on her name.

"I have come across some instances where there has been an increase in domestic violence because of the woman getting easy finance and refusing to give it to the man of the house," she adds.

Rama, however, also says that nevertheless microfinance institutions give more loans to women as they tend to be better savers than men. "Besides, it has also been seen that when it comes to repayment of loans, women are more prompt," she adds.

Abhijit Banerjee, a professor of economics at Massachusetts Institute of Technology, says that there is evidence that women do not like defaulting.

"And although she may ultimately take the loan to support the man, she feels that she is compelled to honour it because it is on her name," he says.

Ask him if this means that the default rate is higher among men and he just shrugs and leaves with a smile.

Banerjee is also the director of Poverty Action Lab that works with NGOs, international organisations, and others to improve the effectiveness of poverty programmes.