This IDS working paper looks at the role of self-help groups (SHGs) in providing microfinance in India. The author finds state institutions also play a big role, directly and by promoting and financing self-help groups.
The research finds there are relationships between SHGs and institutions that are not symmetrical. It also finds:
- women’s groups are often more dependent and so suffer from corruption and institutional rules
- there is a history of mistrust between banks and borrowers women are often discriminated against for there cast
- banks vary in there sensitivity to such issues
Providing financial services in rural India is a profitable venture and is attracting private financing institutions, including transnational banks. This research suggests the need to look further into the power dynamics in relationships between the poor people using the financial services and their providers.