Microfinance and Women’s Empowerment:

A Case Study of Ilam Municipality Ward No. 1, Ilam District, Nepal

A Thesis

Submitted to Tribhuvan University, Faculty of Humanities and Social Science,

Department of Rural Development, Mahendra Ratna Multiple Campus, in partial
fulfillment of requirements for the Master Degree of Arts (M.A) in Rural
Development

Submitted By:
TEK BAHADUR KATUWAL
Mahendra Ratna Multiple Campus,Ilam
TU Reg. No.6-3-1-528-2016
Exam Roll No: 10070
June, 2024
 Declaration
I hereby declare that the thesis entitled Microfinance and Women’s Empowerment:
A Case Study of Ilam Municipality Ward No. 1, Ilam District, Nepal submitted to
the Department of Rural development is tiredly my original work prepare it of the
guidance and supervision of my supervisor. I have made due acknowledgement to all
ideas in information borrowed from different sources in the course of preparing this
thesis. The results of this thesis have not been presented anywhere else for the award
of any degree for any other purpose. I assure that no part of the content of this has
been published in any form before.

Date: 06/06/2024 (AD) …………………….

24/02/2081 (BS) Tek Bahadur Katuwal

` TU. Reg. No. 6-3-1-528-2016

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 Recommendation Letter
The thesis entitled Microfinance and Women’s Empowerment: A Case Study of
Ilam Municipality Ward No. 1 Ilam District, Nepal has been prepared by Tek
Bahadur Katuwal under my guidance and supervision for his partial fulfillment of
the requirements for the Degree of Master of Arts in Rural Development. I hereby
forward this thesis for the evaluation committee for final evaluation and approval.

…………………..
Bed Nath Giri
( Supervisor)

Date : 06/06/2024 AD
24/02/2081 BS

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 Acknowledgements
I would like to express my sincere gratitude and gratefulness to my supervisor Bed
Nath Giri, Mahendra Ratna Multiple Campus of Rural Development, Ilam, for his
valuable guidance and supervision, throughout the work. I'm most obliged to him for
his kind help and support on completion of this work.

I am much grateful to Milan Chandra Sanyasi, Head of the Mahendra Ratna Multiple
Campus of Rural Development for his valuable suggestion and encouragement.

I would like to express my special thanks to all the respondents, my friend family, for
their continuous support and encouragement to complete this work.

My heartfelt thanks go to the Micro Finance users and non-users respondents for their
generous cooperation and tireless responses. It is hoped that this report tried to
portage accurately the existing and potential impact of microfinance on users in the
study area and shall be instrumental in the development of sustainable Microfinance
program in the future. I cordially thanks all those who were and indirectly involved to
help me and support me in the study.

Date: 06/06/2024 (AD) ...........................

: 24/02/2081 (BS) Tek Bahadur Katuwal

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 Abstract
The present study has examined the impact of micro loans on women’s economic
activities. It has specifically highlighted how women’s income generating activities
through small loans help to improve their status in household and local communities.
This study is based on several semi-structure interviews, two focus group discussions
and field observation. After this study data were critically analyzed and conclusions
was noted .
The term “empowerment” including its three dimensions: identity, agency and
critical consciousness, has been applied as a theoretical lens to further clarify the
informants views on the role of micro loans to improve their household and
community role and responsibilities. Findings of the empirical study have shown that
the access to small loans for income generating activities have positive impact on
women's empowerment. Women’s participation in micro credit has increased their
mobility contributing to the change in the social values. Further, women’s active
participation in local issues mobilization has changed community perception on
women’s roles and responsibilities. However, in some cases, under the pressure of
other family members, small loans have been used in purposes other than income
generating activities making already weak women more vulnerable.
Analytically, this study underlines that microfinance programs are significant sources
of financial services for women, particularly in remote areas where there is absence
of banks and other financial institutions. Through a review of existing literature and
empirical studies, the paper highlights key mechanisms through which micro finances
contributes to empowering women, including increased income generation, enhanced
decision making power within households, improved access to education and
healthcare, and greater social capital. Although the microfinance has provided
financial services to poor and needy women, it has not been able to meet their
exceptions and necessities.
Challenges and criticisms regarding the effectiveness of microfinance in achieving
sustainable empowerment are also discussed. Ultimately, the findings underscore the
transformative potential of microfinance is enabling women to break the cycle of
poverty and achieve greater agency in their lives.

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 TABLE OF CONTENTS
Page no.
Title Page I
DECLARATION II
RECOMMENDATION LETTER III
APPROVED LETTER IV
ACKNOWLEDGEMENTS V
ABSTRACT VI
TABLE OF CONTENTS VII
LIST OF TABLES X
LIST OF FIGURES XI
ACRONYMS/ABBREVIATIONS XII
CHAPTER–I 1-
11
INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 6
1.3 Objectives of the Study 8
1.4 Significance of the Study 8
1.5 Limitations of the Study 10
1.6 Organization of the Study 10
CHAPTER-II 12-32
LITERATURE REVIEW
2.1 Conceptual Review 12
2.1.1 Microfinance 12
2.1.2 Models of Microfinance in Nepal 15
2.1.3 Women Empowerment 17
2.1.4 Microfinance on Women Empowerments 20
2.1.5 Economic Dimension of Women Empowerment Through Microfinance 22
2.1.6 Social Dimensions of Women Empowerment Through Microfinance 23
2.2 Review of Previous Literature 24

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2.2.1 Review of Journals and Article 24
2.3 HYPOTHESIS 31
2.4 RESEARCH GAP 31
CHAPTER-III 33-35
RESEARCH METHODOLOGY
3.1 Research Design 33
3.2 Sources of Data 33
3.2.1 Primary Data 33
3.2.2 Secondary Data 33
3.3 Procedure of Sampling 34
3.4 Methods of Data Collection 34
3.4.1 Questionnaire 34
3.4.2 Observation 35
3.5 Methods of Data Analysis 35
3.6 Reliability and Validity 35
CHAPTER–IV 36-54
PRESENTATION AND ANALYSIS OF DATA
4.1 A Brief Profile of Ilam Municipality 36
4.1.1 Recent Socio-Economic Development Condition 38
4.2 General Information of the Respondents 38
4.2.1 Age Structure of The Respondents 38
4.2.2 Ethnic Composition of The Respondents 39
4.2.3 Educational Status of Respondents 40
4.2.4 Marital Status of The Respondents 41
4.2.5 Head of The Household 42
4.3 Economic Status of The Respondents 42
4.3.1 Respondents Having Land 43
4.3.2 Respondents Having Land Ownership 43
4.3.3 Area of Land With Respondents 44
4.3.4 Quantity Bought of Agricultural Products 44
4.3.5 Quantity Sold of Agricultural Products 45
4.4 Information Related to Micro Credit Program 46

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4.4.1 Reason of Joining Micro Finance Program 46
4.4.2 Sources of Income 47
4.4.3 Level of Saving 47
4.4.4 Income Level of Respondents 48
4.4.5 Loan Amount Taken Last Year 50
4.4.6 Purpose of Taking Loan 50
4.4.7 Payment System of Borrowed Loan 51
4.5 Socio-Economic Empowerment of Women Through Micro Credit Program 52
4.5.1 Increase in Social Participation 52
4.5.2 Access Towards Earned Money 52
4.5.3 Benefit From Micro Finance Program 53
4.6 Women's Empowerment Through The Micro Finance Program 53
CHAPTER–V 55-58
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 Summary 55
5.2 Conclusion 56
5.3 Recommendation 57
5.3.1 Recommendation to Tole Development Committees 57
5.3.2 Recommendation to The Government of Nepal (GoN/NGOs) 57
5.3.3 Recommendation to The Further Researcher 58
REFERENCES:
Annexes-I Questionnaires
Annexes-II Photographs

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 LIST OF TABLES
Table No. Title Page No.
Table No. 4.2.1: Age Structure of the Respondents 39
Table No. 4.2.2: Distribution of Respondents by Ethnicity 40
Table No. 4.2.3: Distribution of Respondents by Level of Education 41
Table No. 4.2.4: Marital status of Respondents 41
Table No. 4.2.5: Head of the Household 42
Table No. 4.3.1: Respondent Having Land 43
Table No. 4.3.2: Respondents Having Land Ownership 43
Table No. 4.3.3: Area of Land 44
Table No. 4.3.4: Quantity Bought of Agricultural Products 45
Table No. 4.3.5: Quantity Sold of Agricultural Products 46
Table No. 4.4.1: Reason of Joining Micro Credit Program 47
Table No. 4.4.2: Source of Income 48
Table No. 4.4.3: Level of Saving 48
Table No. 4.4.4: Income Level of Respondents 49
Table No. 4.4.5: Loan Amount Taken Last Year 50
Table No. 4.4.6: Purpose of Taking Loan 51
Table No. 4.4.7: Payment System of Borrowed Loan 52
Table No. 4.5.1: Increase in Social Participation 52
Table No. 4.5.2: Access towards Earned Money 53
Table No. 4.5.3: Benefit from Micro Credit Program 53

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 LIST OF FIGURES
Figure No. Title Page No.

Figure No 4.1: Map of Ilam Municipality 36

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 Acronyms/Abbreviations
ADB : Asian Development Bank
CBS: Central Bureau of Statistics
FINCA: Foundation for International Community
GDP: Gross Domestic Products
ICNL: International Centre for Not-for-Profit Law
ICIMOD: International Centre For Integrated Mountain Development
IFEL : International Foundation for Electoral System
INGO : International Non Governmental Organization
ILO: International Labor Office
MFI-: Micro Finance Institutions
NFEC: Non-Formal Education Center
NGO: Non Governmental Organization
NIDS: Nepal Institute of Development Studies
RMDC: Rural Micro Finance Development Coorporation
SFCL: Small Farmers Cooperative Limited
SFDP: Small Farmer Development Programs
SHG : Self Help Group
SLC : School Leaving Certificate
TU : Tribhuvan University
UNDP: United Nations Development Programs
UNIFEM: United Nations Development Fund For Women
VCCEL: Vijaya Community Education Cooperation Limited
VDC: Village Development Committee
VICCOL: Vijaya Community Information and Communication Cooperative
Limited
VYCCU: Vijaya Youth Club Co-operative and Credit Union

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