Microfinance and Its Impact on the Rural Sector- A Study of Mirzapur District, Uttar Pradesh

Abstract

- This paper investigates how microfinance, channelled chiefly through Self-Help Groups (SHGs), has affected household welfare in a poor, predominantly agrarian district of eastern Uttar Pradesh. Drawing on a field survey conducted in Mirzapur district in association with the microfinance institution CASHPOR, the study combines an exploratory research design with descriptive statistical analysis of primary data gathered from 100 SHG member-beneficiaries and 10 programme officials and non-officials, spread across 10 SHGs in 4 villages of two development blocks (Mirzapur City and Marihan). This is triangulated against secondary data drawn from CASHPOR's operational records and national-level microfinance statistics. The evidence points to a modest but tangible improvement in beneficiary households following SHG membership — higher savings discipline, wider use of institutional rather than informal credit, and additional annual income of roughly Rs. 2,000 – 4,000 that respondents directed mainly toward child nutrition and healthcare. At the same time, the study documents structural frictions that blunt this impact, including low female literacy, husband-dominated control over household spending, slow bank-linkage processing, and thin capacity-building support for members. The paper closes with a set of practical recommendations for deepening SHG outreach and strengthening the credit-delivery chain in the district.