The study finds that impact of microfinance on women is substantial in building confidence, courage, skill development and empowerment but there is no positive impact in sustainable rural development especially reduction of poverty, creation of employment opportunities and creation of assets in rural areas. | UEH-JED February 2012 | 17 Empowerment of Women through Self Help Groups (SHGs): A Study of SHG Microfinance Project in Sri Lanka *, ** & MIHIRI WARNASURIYA*** ABSTRACT Microfinance has become a powerful tool for poverty reduction, women’s empowerment, and inclusive growth for over two decades. Microfinance providers are constantly on the lookout for innovative approaches and distribution channels they could use in order to better serve their clientele. One of the greatest developments that have been made in this respect is the formation of Self Help Groups (SHGs). SHGs are small, informal, homogenous groups who come together for addressing their common problems. The fundamental concept of SHGs is the creation and utilization of a group savings and resource fund to make low cost loans to its members. The groups which predominantly consist of women promote women’s participation in politics through financial and psychological support, thereby also advancing the objective of women’s empowerment. The aim of this paper is to assess the impact of SHGs on women’s empowerment. The study finds that impact of microfinance on women is substantial in building confidence, courage, skill development and empowerment but there is no positive impact in sustainable rural development especially reduction of poverty, creation of employment opportunities and creation of assets in rural areas. Keywords: self help groups, microfinance project, women‟s empowerment 1. BACKGROUND AND SCOPE OF THE STUDY Microfinance (MF), as the name suggests, is the provision of financial services to low income earners and their micro enterprises. There is no universally agreed definition for MF. It can vary from one country to another, within the same country, and from one institution to another. The Asian Development Bank (ADB) defines MF as „the provision of a broad range of financial services such as deposits, loans, payment services, money transfers, and .
