India’s rural women are quietly but powerfully transforming the country’s economic landscape, especially through microfinance and Self-Help Groups (SHGs). What started as small-scale, grassroots financial initiatives has blossomed into a full-fledged revolution, providing millions of women in rural India with the financial tools they need to improve their lives and communities. These women are now at the heart of the microfinance ecosystem, significantly contributing to India’s economic growth.
Microfinance: A Vehicle for Empowerment
India’s microfinance sector is a powerful tool for lifting rural communities out of poverty. The sector has seen rapid growth over the past two decades, with a significant portion of its success attributed to rural women. According to a 2023 report by the Microfinance Institutions Network (MFIN), nearly 70% of microfinance borrowers in India are women, reflecting their central role in the sector’s expansion.
Rural women, who have traditionally been excluded from formal financial systems, have embraced microfinance initiatives that provide small loans for entrepreneurial activities such as farming, dairy, textiles, and small businesses. These women are using microfinance to break the cycle of poverty and create wealth for themselves and their families.
“Access to financial resources has enabled women in rural areas to pursue their entrepreneurial dreams. It’s not just about loans; it’s about financial literacy and economic independence,” says Priya Yadav, a microfinance expert and founder of Maanav Seva, a rural development NGO.

Key Insights:
• India’s rural women are driving a significant change in microfinance, accounting for nearly 70% of microfinance beneficiaries.
• Over 8 million Self-Help Groups (SHGs) across India have empowered women to lead economic change in rural areas.
• The microfinance sector in India is valued at ₹3.5 trillion, with rural women making up the backbone of this growth.
• SHGs are fostering financial independence, literacy, and leadership in rural areas, while also addressing local socio-economic challenges.

Case Study: The Role of SHGs in Empowering Rural Women
Self-Help Groups (SHGs) have played an instrumental role in the growth of microfinance in rural India. These community-based groups, often composed of 10 to 20 women, come together to pool savings and access microcredit. SHGs not only provide financial services but also foster leadership, collaboration, and community development.
In the state of Bihar, for instance, the Bihar Rural Livelihoods Promotion Society (BRLPS) has partnered with more than 100,000 SHGs, benefiting over 1 million women. These SHGs offer a variety of services, from small loans to education on budgeting and savings. Over time, women who were once confined to domestic roles are now managing businesses, participating in local governance, and influencing economic and social policies.
One such story is that of Rita Kumari, a member of an SHG in the village of Rajpur. Rita started a small tailoring business with a ₹10,000 loan from her SHG. Over five years, her business has grown to a thriving cottage industry employing 15 women from her village. Her success story is just one of many that highlight the profound impact SHGs have had on rural women’s lives.
“Before the SHG, I had no means to earn. Now, I run a business and help other women in my village find work. This is not just about money; it’s about dignity,” shares Rita Kumari, 35, a successful entrepreneur from Bihar.
The Power of Financial Literacy
Microfinance has not only provided rural women with financial access but also with the knowledge and skills to manage finances effectively. Training sessions on financial literacy are a core component of most microfinance programs. These programs teach women how to manage loans, save money, and invest in sustainable businesses. As a result, rural women are not only contributing to their families’ income but also making smart financial decisions that benefit their communities.
Data from the National Rural Livelihood Mission (NRLM) shows that 80% of women in SHGs report an increased understanding of savings and financial management after joining an SHG. This boost in financial literacy has led to improved household income, better access to healthcare, and the ability to send children to school.
“Financial education has been a game-changer for rural women. They are now able to make informed decisions about spending, saving, and investing,” says Gita Pradhan, Program Officer at the National Rural Livelihoods Mission.
The Broader Impact: Community and Socio-Economic Development
The microfinance revolution is not just about individual success stories; it’s also about community transformation. Women who benefit from microfinance often become leaders within their communities, driving positive change in local governance, healthcare, and education. In villages across India, women who started with small loans are now leading initiatives to combat child marriage, promote sanitation, and create awareness about women’s rights.
Take the example of Suman Devi, a leader of an SHG in Uttar Pradesh. Suman used the initial loan she received from the SHG to start a small vegetable shop. With the earnings, she funded health and hygiene workshops in her community. Today, she is a well-respected community leader who is helping other women access healthcare, education, and financial resources.
“Once I became financially independent, I realized the power I had to bring about change. Today, I’m not just running a business; I’m helping my community thrive,” says Suman Devi.
Data and Trends: Growth and Future Prospects
The microfinance ecosystem in India has witnessed substantial growth over the last decade. According to the latest MFIN report, the outstanding microfinance portfolio in India crossed ₹3.5 trillion in 2023, with rural women constituting a significant portion of the borrower base. The report further reveals that more than 60 million women in India are now involved in SHGs and microfinance initiatives, a number that is expected to grow as the government and private sector continue to invest in rural empowerment.
The future of microfinance looks promising, with increasing access to technology enabling digital loans and financial services in even the most remote areas. The government’s push for financial inclusion, along with the rise of mobile banking and digital lending platforms, is expected to further elevate the role of rural women in the Indian economy.

Sources:
• Microfinance Institutions Network (MFIN), “India Microfinance Review 2023”
• National Rural Livelihood Mission (NRLM), “Financial Inclusion in Rural India”
• Bihar Rural Livelihoods Promotion Society (BRLPS) Annual Report 2023