Microfinance for the marginalized: the impact of the Rojiroti approach in India

The Rojiroti approach to microfinance involves creation of women’s self-help groups (SHGs), rotated loans from savings, and subsequent credit from CPSL, a Bihar-based NGO. Rojiroti serves customers who are significantly poorer and more marginalized than those typically served by microfinance (MF) in India. In the data analysed, more than 90 per cent of members are from scheduled caste and tribes (62 per cent) or other disadvantaged castes. This paper analyses the impact of Rojiroti MF using panel data on 740 new SHG members and 340 women in matched control sites at baseline and after 18 months. We consider changes in assets, children’s education, empowerment, and domestic violence among other indicators. These results show significant gains for Rojiroti borrowers relative to control sites for important, but not all, variables. Comparison with more long-standing SHGs (at least 36 months) helps to explain how the borrowing patterns of poor and marginalized SHG members evolves.