What happens when rural women gain access to finance, resources, and community support?

A quiet revolution begins.

According to a 2024 report, women now own 20.5% of India’s micro, small, and medium enterprises (MSMEs), with a growing number of entrepreneurs (GEO24News, Dec 2024). This surge signals a powerful shift in the rural economy with microfinance and Self-Help Groups (SHGs) creating pathways for women to lead sustainable businesses and uplift their communities.

Microfinance supports rural women by providing small loans and financial services to low-income women. Self-Help Groups (SHGs), typically formed by women in rural India, are grassroots collectives that save together and access microcredit to build their economic resilience and drive change.

Together, microfinance through SHGs in India has transformed the rural entrepreneurial landscape. These tools empower women with money, build confidence, skills, and fosters a sense of women-driven rural entrepreneurship.

The Ground Reality: What Are the Barriers Faced by Rural Women of India?

Despite significant improvements in financial inclusion, rural women in India continue to face systemic challenges:

1. Societal Constraints

In many rural parts of India, women are still expected to stay home and follow strict traditions. These cultural rules often prevent them from making their own decisions, especially when it comes to money and work. Even if a woman wants to start a small business, she might not get permission from her family or community. This lack of independence holds back her dreams and potential.

2. Lack of Financial Literacy

Most rural women have limited knowledge about how banks work or how to manage money effectively. They might not know how to open a bank account, save money, or take a small business loan. Because they haven’t been exposed to these things, they often feel nervous or unsure about stepping into financial activities. Without proper support and guidance, they struggle to grow financially.

3. Limited Mobility and Exposure

In traditional rural communities, many women don’t travel alone or go far from their homes. This limits their chances of attending training sessions, meeting new people, or selling their products in nearby markets. Without seeing how businesses work or learning from others, it becomes harder for them to start or grow any kind of income activity. Their world stays small, even if they have big dreams.

4. Resource Scarcity

Even if a woman has a great business idea, she usually doesn’t have the tools or money to make it happen. Basic things like startup capital, raw materials, or even space to work are often out of reach. Many don’t own land or assets, making it difficult to take loans. Without these resources, it becomes nearly impossible for rural women to turn their skills into sustainable income.

These barriers explain why, in Husaini village of Mathura’s Chhata block, none of the twelve active SHGs were running income-generating activities—until recently.

From Inactivity to Enterprise: The Story of Shree Ji SHG

In Husaini, Uttar Pradesh, S M Sehgal Foundation initiated a transformative intervention under a CSR-supported project. The village’s Shree Ji SHG, comprised of ten women, was selected to establish a mustard oil expeller unit—an idea rooted in local resource availability and potential demand.

What are the Key Elements of the Intervention?

What began as a micro-enterprise idea soon evolved into a functioning business run by rural women—breaking barriers and setting an example for other women.

Impact on the Ground: What Tangible Shift was Noticed After the Launch of this Transformational Intervention?

Over the past fourteen months (Dec 2023–Jan 2025), the Shree Ji SHG generated a revenue of ₹11.03 lakh. Each of the ten women involved is now contributing to their household incomes, improving their families’ standard of living, and securing long-term stability.

The initiative has also created a ripple effect:

The Voice from a Beneficiary

Akila, a landless woman and member of the SHG, shares:

“I used to depend on uncertain wage labor. Now I have a consistent income and can pay for my children’s education. We started small, learned from the market, and slowly grew confident in managing production and sales. Today our product reaches beyond the village.”

What is the Role of Microfinance in Enabling Women Entrepreneurs?

The transformation seen in Husaini village through the Shree Ji SHG is not an isolated success—it’s part of a growing movement across rural India, where microfinance and self-help groups are unlocking the hidden potential of women. Microfinance doesn’t just offer credit—it builds confidence, community, and long-term capabilities. Here’s how:

1. Easy Access to Credit

Traditional banks often ask for collateral or formal income proofs—something most rural women lack. Microfinance institutions, on the other hand, offer small, low-interest loans that are accessible even to landless women like Akila from Shree Ji SHG. With the support of the CSR-backed initiative, the group accessed the funds needed to purchase a mustard expeller and set up the business. For women who never imagined owning or running a machine, access to this initial capital was the first step toward entrepreneurship.

2. Collective Responsibility

In the SHG model, every member is jointly responsible for loan repayments and business outcomes. This system builds trust and encourages regular engagement. The ten women of Shree Ji SHG didn’t just receive individual loans—they formed a community of support. They worked together through challenges such as arranging for electricity infrastructure and coordination to keep the unit running. The pressure of collective responsibility pushed everyone to stay committed and accountable.

3. Empowerment through Savings

Regular savings, even as little as ₹10 a week, gradually help women build a safety net. These habits introduce financial discipline and security into their lives. For the women of Husaini, being part of the SHG meant learning how to manage earnings, reinvest profits, and plan expenses. Over time, they moved from uncertain daily wages to a structured business model that offered consistent income, as seen in their ₹11 lakh revenue over fourteen months.

4. Increased Bargaining Power

When women earn their own income, their voices grow stronger. For the members of Shree Ji SHG, success brought them more than money. It gave them dignity and recognition within their households and the larger village community. The support of male counterparts grew as the business expanded, and the women began to make decisions that affected their families’ future—such as investing in their children’s education or improving household facilities.

In Husaini, microfinance didn’t just launch a mustard oil business—it lit a spark of confidence, independence, and transformation. The Shree Ji SHG story proves how targeted support, when combined with training and community backing, can fuel women’s entrepreneurship in even the most traditional rural areas.

How to Drive Entrepreneurship Through Capacity Building?

Financial assistance alone is not enough. Entrepreneurial growth in rural areas needs consistent capacity-building support for women entrepreneurs that includes:

These steps were integrated in the Husaini intervention—ensuring sustainable growth and self-reliance.

Collaborations That Work: Government, NGOs, and Community

The synergy between government institutions, NGOs, and local communities can fast-track rural entrepreneurship. In Husaini, partnerships with ICAR–NRCRM and UPSRLM played a crucial role in legitimising and scaling the venture.

Such collaborations help to:

In the long run, this network of support creates an ecosystem where rural women feel seen, supported, and successful.

Looking Ahead: What Needs to Be Done?

To replicate this success across rural India, consider the following measures:

More Than Income, It’s Empowerment

Microfinance and SHGs are not merely financial tools—they’re instruments of social change. When women like Akila take charge of a business, it transforms not just their income, but their status, confidence, and role in society.

The success story of Shree Ji SHG in Husaini is a shining example of how the right support, combined with community trust and women’s resilience, can spark entrepreneurship in new places. By scaling such interventions, we can unlock the vast untapped potential of rural women entrepreneurs across India.

About the Author

Pawan Kumar

Pawan Kumar is the Principal Lead for Agriculture Development at Sehgal Foundation, with over 27 years of experience in scaling NGO and CSR initiatives. An Oxford-educated development professional, recognized as one of the top agri-food pioneers by the World Food Prize Foundation in 2024, Pawan has a strong track record in organizational growth, fund mobilization, and sustainable development.

The post Microfinance and Self-Help Groups (SHGs): Fueling Women’s Entrepreneurship in Rural Areas of India appeared first on S M Sehgal Foundation.