Microfinance: A Tool for Poverty Alleviation, An Empirical Study of Rural Areas in Selected Districts in Gujarat

Microfinance has achieved a significant recognition in all over the world by producing considerable evidence of poverty alleviation. Microfinance is the provision of providing financial services to low income people who have been neglected by formal banking institutions. The main objective of micro-finance is to alleviate poverty by enabling the poor self-dependent and empowerment of women. The aim of present study is to analyze the role of microfinance as a tool of poverty alleviation in rural area of selected districts of Gujarat by taking the responses of SEWA bank (Shri Mahila Sewa Sahakari Bank Ltd.) members. SEWA bank is a pioneer financial institute has been doing a yeomen service for poverty alleviation and empowerment of women. It enjoys great reputation in India and abroad. They have been extending microfinance to individual beneficiaries as well as to SHGs. To study the impact of microfinance role in poverty alleviation of women beneficiaries, a sample of 520respondents who have availed micro loan and 520 are those respondents who did not avail micro loan are collected in four districts namely Mehsana, Ahmedabad, Gandhinagar and Sabarkantha. Survey technique was used to collect the appropriate information. Poverty indicators recommended by Worlds bank namely Head Count ratio, Poverty Gap ratio and Squared Gap ratio are incorporated. Paired t-test was applied to measure the impact of micro loan. The study found that availment of loan has increased the individual income as well as household income. It indicates that with the increase income beneficiaries are now better off. Availment of loan has decreased the head count ratio. Poverty gap and square poverty gap are also reduced. Result of paired t-test indicates that Microloan has significant impact on mean income of the borrowers after availment of loan in different area.