ABSTRACT poverty and there has been no change at


to credit to everyone plays a pivotal role in boosting economic growth.  But history shows us clearly that whenever
services of credit were given, it further widened the gap between the rich and
the poor. When the elite sections of the society used loans to generate income
by investing in various industries and businesses, the poor still remained
unnoticed, underprivileged and became poorer. In a country like India, where
two third of the society living in rural villages or urban slums, it is micro credit
that we require for the development of nation.

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to women is considered to be a significant step towards their empowerment. This
study examines the impact of microfinance in reducing the vulnerability of poor
women clients on a number of outcomes using panel household survey in Thrissur
district in Kerala.  It focuses on
poverty reduction impact of 
microfinance. The study showcases the positive impact of a Evangelical
Social Action Forum (ESAF), a microfinance institution in Kerala, India.


we can come up with a system which allows everybody access to credit while
ensuring excellent repayment- I can give you a guarantee that poverty will not
last long – Prof. Dr. Muhammad Yunus.”

Social Action Forum (ESAF) is a microfinance institutuion in Kerala which works
through providing micro credit facilities to groups of women (Sanghams). The
survey was taken among 22 of ESAF’s poor sangams who have completed more than 5
years in ESAF. The objective of this survey is to study the impact of
microfinance in reducing the vulnerability in the lives of poor women. The idea
is to find out if poor sangam members were able to develop their lifestyle
through ESAF’s loans or do they still remain in poverty and there has been no
change at all in their lives.

thorough analysis is made to understand the various factors in the lives of an
ESAF client regarding to how microfinancing helps to reduce the vulnerability
of a poor client.


following observations have been made from the surveyed data. * Kindly see the
collected data and graphical analysis in the attached file.

The general education level of sangam members above 40 years
are 1-10 th std with most of them dropping out of school after 4th class. But
77% among children of sangam members have been educated till undergraduation
and above. 9% dropped out of school after completing 10 th std and 14% could
not continue their education after 12 th due to financial problems.

But all sangam members have used ESAF’s loans to educate
their children. But when a sangam member have 2 or children, higher education
for both becomes a financial burden. Especially, when they join for
professional courses like MBBS, LLB etc, they are not able to afford the cost
of education. Most of the families are joint families with 6 or more members an
also 68% sangams have 2 or less income earning members.

People in sangam members’ household find job if needed in
nearby places only. They do not migrate to different places in search of jobs.
In 39% sangams, there are physically or mentally challenged people in some of
their households. Though there are very few elderly people above the age of 70,
they are active.

46% sangams live in semi urban area whereas, 36% live in
village and 28% live in town. 46% sangams live in houses registered in their
own name and another 45% live in ancestral property. 9% live in rented houses.
But no one lives in illegal property.

Only in 14 out of 22 sangams surveyed in which all of them
live in their own houses. In 27% sangams, most of them live in own houses. But
9% sangams still live mostly in rented houses. But all sangam members have used
ESAF loans for construction, repairing, tiling, roofing etc of the house.

86% sangam surveyed have their own source of drinking water
most of the time. But during summer, everyone experiences water scarcity and
have to depend on public water supply. 14% sangams use public source of water
all round the year.

All houses have their own toilet and one toilet was built
using ESAF loan money.

More than of the sangams use only LPG for cooking. But, 31%
use chulha and LPG together for cooking. Very few use induction and biogas.
None uses only chulha. All sangam members have TV in their houses. 8 sangams
have fridge in their houses and only one sangam have washing machine in all its
members’ houses.

Minimum average income is Rs 5000-10000 range. Half of the
surveyed sangams earn Rs 15000-20000 monthly. Only one earns above 20000. 13
out of 22 sangams spent Rs5001-10000 monthly. There is no sangam which spent
above Rs 20000. 15 sangams responded that their income is sufficient to meet
their expenses. 14% said they are trying hard to meet their needs and 18% said
that they are able to adjust financially.

20 sangams agreed that health issue to the sangam members or
their close relatives disturb their monthly expenses. 12 said demonetization
also was a sudden shock to them and it was very difficult for them to earn
income and pay the weekly instalments as they are daily wage workers.

64% sangams do their short term or long term planning mostly
in Kuries, and very few in Post office deposits and LIC.

Though 64 % sangams have savings account, 50% of them do not
have any money to save. 21% save by reducing their consumption needs whenever
money is needed and 29% save by planning proper budget in the beginning of the

After joining ESAF, their investments were majorly in
children’s education (18 sangams), Housing (12 sangams), business ( 9 sangams),
livestock(2 sangams), land(1 sangam) and for other needs such as marriage,
buying gold etc( 11 sangams). 86% sangams have taken loan from other sources with
most of them from Kudumbasree( Rs 1000 pm), Cooperative society( Rs 5000 or Rs
2390pm ), HDFC etc * Kindly find further details in analysis section.

All sangams, mortgages gold during emergency and most of
them are able to take it back.

95% of them are not affected by natural calamities. 5% was
affected by flooding during heavy rains. 15 out of 22 sangams, agreed that
there has been a personal emergency when they had to borrow a large sum of
money. 80% were affected by sudden health problems.

Sangams have used most of their savings or borrowed large
amount of money for the major events in their life such as house construction,
marriage of children, their education, hospital needs etc. ESAF loans were
mainly used for education of children (19sangams), housing (16 sangams),
marriage and to repay other loans (12 sangams) etc.

86% are not stressed to pay the repayments because they feel
weekly payments are easy, diminishing interest, sangam members help each other
financially in case of any urgent need. But 14 % feel stressed because they
think monthly payments are easier for them and also that the interest charged
is high.

Only 3 sangams have viral fever during rainy season as a
common health problem in their area. All sangam members go to govt. hospital
only. 59% do not have health insurance. Rest 41% have Govt’s Aarogya Mitra
Insurance Smart card.

Members of 15 sangams are availing various govt schemes such
as Awas yojana- housing scheme(in 8 sangams), Old age pension scheme( in 7
sangams), Jalanidhi- drinking water supply( in 4 sangams), Widow pension( in 4
sangams) etc Sangam members have very good social network.

Their neighbours help them even financially during
emergency. 3 sangams go for tours annually and celebrates their sangam
anniversary. 68% sangams surveyed go for outing with family and neighbours.

59% have not ever sold their assets. The rest 41% have sold
their land or gold. Most of the sangams do not feel any insecurity. They said
in a highly optimistic tone that, “since we have been able to live decently,
overcoming all difficulties till today, there won’t be any problem in future

Many of the sangams have overcome their financial
insecurity, worries about housing, children’s marriage, their future, business
etc. But health, children’s higher education, rental house etc still remain as
an insecurity.

All of them have ATM cards, but some of them said they don’t
know to use it. After joining ESAF, most of the sangams have felt changes in
their personality. They said they felt more confident, mature in financial
matters, bolder, courageous, more mingling, happier than before etc.

36% of surveyed sangam said that they expect loans at a
lower interest rate and higher loan amount for children’s higher education. 41%
said that ESAF can give loan for buying vehicle. Higher amount of housing loan,
more amount of business loan, loan for sangam member’s education, gold
mortgaging facility, emergency hospital loan, loan to buy land, to dig a well
etc are the other expectations. Some sangams also said that it would be good if
there was an option for monthly payment of installments.

The major benefits of joining ESAF are easy loan process (14
sangams), various products such as TV, mobile solar lamp etc at low price which
they would not have bought at MRP if they were not ESAF’s sangam members, no
documents required for getting a loan except an Aadhar card’s copy and a
photograph and also, highly beneficial educational loan( Vidya Jyothi loan)
during the school reopening.


the survey I observed that ESAF is an organisation which helps the society
though micro credit to the women in poorest sections for their development.
When banking facilities have still not reached the uneducated, ESAF
microfinance has taken a great step by becoming the first small finance bank in
Kerala. It is evident from the data that ESAF’s microcredit facilities have
reduced the vulnerability of women through providing finance for education,
housing, farming, business, health needs etc.

survey is conducted in the highest literate state, in a district well known for
its sociocultural developments. But when we consider most of the other states
in India, the situation is drastically different. In India, with only 74.04 %
literacy, 70% of rural area without any infrastructure facilities and where
women are not able to avail micro finance credit or other banking facilities,
obstacles in reaching to the poorest sections may be more. But the development
and the opportunities microfinance can create in every nook and corner of the
country will open up huge possibilities and will be a giant leap for the