CHAPTER V THRIFT AND CREDIT OPERATIONS IN THE SAMPLE VILLAGES. V.7. Computerised Financial Accounting System-Pilot Project

Transcription

1 CHAPTER V THRIFT AND CREDIT OPERATIONS IN THE SAMPLE VILLAGES V.1. Introduction V.2. Thrift and Credit Societies Features V.3. Linkage Banking V.4. Matching Grant to Thrift &Credit Societies V.5. Financial Literacy Campaign V.6. Interest Subsidy Scheme V.7. Computerised Financial Accounting System-Pilot Project V.8. Management Information System Pilot of Microfinance Modules V.9. Neighbourhood Groups in the Sample Villages V.10. Major Three Activities Conducted by the Respondents V.11. Credit Operations V.12. Kudumbashree and Government Assignment V.13. Bank Linkages and Subsidy V.14. Conclusion V.15. References 129

2 Thrift and Credit Societies 130

3 CHAPTER V THRIFT AND CREDIT OPERATIONS IN THE SAMPLE VILLAGES It s not people who aren t credit-worthy. Its banks that isn t people-worthy - Muhammad Yunus V.1. Introduction It is a matter of concern that despite the vast expansion of the formal credit system in India, the institutional credit flow has not effectively reached the rural poor who include landless labourers, rural artisans, operators of small and tiny enterprises and especially women to undertake a wide diversity of production of goods and engage in petty trade and retail activities. This is primarily due to difficulties in dealing with a large number of small borrowers who required credit frequently and in small quantity without collateral limitations imposed by the legal framework of the formal financial institutions and also their perceptions of risk and creditworthiness of the small rural borrowers. Moreover, rural poor found the formal institutions alien and inaccessible, the attributes, characteristics, and personal circumstances of the rural people were not very much acceptable for the financial institutions. With a view to come out of this hapless situation, the deprived and vulnerable class of the society developed their own ways and means of mobilising funds. This has resulted in Self Help Groups and Micro Financing. Microfinance is an integral part of NHGs which has successfully enabled many extremely impoverished women to engage in self-employment and group employment activities in developing countries. Poor women with limited assets and no guarantee cannot access formal banking system for financial resources even if 131

4 they are keen on starting some new venture. Taking cues from ACCION micro loan model in Recife (Brazil), Bangladesh Grameen Bank, Bolivia Village Banking, Kudumbashree has successfully launched microcredit system to meet the poor women s no bank to bank upon situation. The microcredit system helps to reach the unreached and the underserved poor women. In this system women are the depositors, creditors, managers and cashiers. The financial empowerment achieved through thrift accessibility intends to improve their status. Collective thrift or savings of the Neighbourhood Groups is the corner stone of each credit unit and it also ensures the active involvement of all the members. The NHGs become Thrift and Credit Societies (TCSs) and their basic function is to mobilize the poor to make small savings. These savings are deposited in a commercial/cooperative bank and are used to provide loans among members especially for income generating activities. The NHGs of Kudumbashree double up as thrift & Credit Societies to encourage the poor to save and to provide them cost effective and easy credit (Somanath Gopika, 2008). The function of thrift and credit is the core activity of the neighbourhood group (NHG), and forms the basis of the weekly meetings of the NHG. Accounts are scrupulously maintained and are subject to annual audit by KAAS, Kudumbashree home grown audit and account support service. The amount of loan and the priority of disbursement are decided by the NHGs. The repayment is collected weekly during routine NHG meetings. It is assessed on the basis of CDS reports to Kudumbashree mission (Kudumbashree Annual Reports ) that number of NHGs promoted is out of which 9779 NHGs were created during the financial year The cumulative thrift mobilized by all NHGs from the beginning to March 2010 is Rs. 1375/- crore and 132

5 the internal loans disbursed to members are to the tune of Rs.3914/- crore (As on March 2010). It is also estimated that during the year , the total thrift collected by all NHGs is Rs /- crore and the internal loan disbursed is Rs /- crore. The total thrift collected by NHGs in the state comes to Rs 1041/- Crore and the internal loans generated are to the tune of Rs 4591/-Crore (as on November 2011). Details are reported in the monthly meetings by the CDS. V.2. Thrift and Credit Societies Features Poor can save Flexible financial service Enables them to undertake Micro Enterprises Informal banks Easy to avail Facilitate timely credit Low transaction costs Poor can pay interest at market rate Weekly repayment Transparency in operation Need based loan disbursement Loans at the convenience of the poor No collateral security Time saving Credit at the doorstep Prompt repayment due to peer pressure 133

6 V.3. Linkage Banking NHG-Bank linkage scheme is one of the flagship programmes of Kudumbashree. NABARD SHG-Bank linkage grading procedures are applied while selecting eligible NHGs for availing loan. CDS assists NHG in getting graded by the bank. Banks provide loans to those NHGs which score 80 per cent of marks in the grading. Loan amount to a NHG is linked to thrift amount mobilized and retained within the group as internal loans. Maximum loan amount possible for a NHG is four times of its thrift. NABARD has developed a 15-point index for rating NHGs on the basis of which they will be allowed to link with various banks under the Linkage Banking Scheme. The criteria adopted for the linkage-banking Programme are as follows:- a) Composition b) Age of the group c) Weekly group meetings d) Attendance e) Minutes f) Participation in group discussion g) Savings (frequency) h) Savings and loan recovery i) Style of functioning & group decisions j) Sanction and disbursement of loans k) Interest on loans l) Utilisation of savings on loaning m) Recovery of loans n) Books of accounts 134

7 o) Bye laws /group rules Once the groups are linked they become eligible to receive finance in the ratio ranging from 1:1 to 1:9. The assistance so received can be utilised by the groups for internal lending and taking up of Micro Enterprises. Under the leadership of Kudumbashree District Mission Team, efforts are being taken to verify the performance of NHGs throughout the State. About NHGs are linked with NABARD under the linkage-banking scheme and about Rs /- crore is mobilized as loan from banks. The district wise figures of the Linkage Banking Programme for the 14 districts of the state show that the NHGs are highly competent in channelling resources to the local bodies from banks. In some cases, CDSs borrow from the bank as bulk loan for on lending to eligible NHGs. In Bulk linkage, CDS charges 1 or 2 percentage points more than the bank s interest rate. A certain date is fixed by the bank within which NHGs are required to repay the amount to CDS. CDSs in turn pay the collected amount to bank. The total loan amount disbursed under linkage banking in the state from the beginning and upto March 2010 is Rs /- crore. Cumulative number of NHGs availed bank linkage is NHGs. For the year , the total amount of loan disbursed through linkage banking is Rs /- crore to 17,605 NHGs. Kerala State Backward Classes Development Corporation Limited (KSBCDC) has provided loans for backward communities through Kudumbashree Community Development Societies. Kudumbashree in association with KSBCDC has implemented this scheme in five CDSs in Trissur and three CDSs in Palakkad districts. KSBCDC provides loan at 3 per cent to CDSs and eligible NHGs avail loan at 5 per cent from CDSs. Loan amount of Rs. 2.2/- crores were provided to above mentioned CDSs. 135

8 V.4. Matching Grant to Thrift and Credit Societies Matching grant is an incentive provided to NHGs. This grant is linked to amount of thrift mobilized and performance of NHG in the Grading and loan availed from banks. An amount of 10 per cent of the savings of the NHG subject to a maximum of Rs 5000/- is provided as matching grant to each NHG. The grant is released based on their assessment rated using a 15-point grading criteria developed by NABARD. In order to avail Matching Grant a NHG must have passed the grading and availed loan from bank. In case of SC/ST NHGs, matching grant will be provided if the NHG has passed grading. Availing bank loan for a SC/ST NHG is not compulsory in order to be eligible for matching grant. Table No. V.1 Matching Grant Matching Grant Cumulative Year No of NHGs Cumulative for the year Matching Grant (Approx) no NHGs (Rs in Lakhs.) (Rs in Lakhs) , , , , Source: Kudumbashree Annual Report For the year , Rs.1559/- lakh have been disbursed to NHGs as matching grant. Achievement in under matching grant is about five times compared to the previous year. It became possible because of the enormous efforts put in by the Kudumbashree Mission. District Mission Teams devised different 136

9 strategies which have obviously resulted in manifold increase in matching grant. Some of the strategies adopted for disbursing the matching grant is highlighted as under. A. Identification of CDSs/wards: Information on the basis of CDS Action Plans regarding how many NHGs availed Matching grant is analyzed by the District mission. This information has helped the team to focus on most potential CDSs/wards. B. Identified CDSs/wards were targeted with special campaigns/melas/ clinics for disbursing Matching Grant to NHGs particularly, in the districts of Kannur, Thiruvananthapuram, Wayanad, Kozhikode, Malappuram, and Pallakad. C. Training and Orientation /Campaigns a. Special trainings for CDS Chairpersons, Micro Finance Subcommittee, Accountants, NHG Secretaries and resource persons were organised b. CDS executive committee was trained to assess ward level status of Grading, Linkage and Matching grant. c. Training on grading was given to NHGs by MF Subcommittees and CDS Accountants. d. Orientation to NHGs for Familiarisation on Matching Grant applications was done e. Special campaigns in Grama Panchayats which had not availed of matching grant were conducted. 137

10 D. Assistance to NHGs a. Block level micro finance resource person were positioned to give assistance to NHGs to prepare matching grant applications. E. KAASS Audit - Insisted on providing matching grant forms at the time of NHG Audit. F. Notices and Advertisement were given in print media particularly in Wayanad. G. A cell was created under DMC for distributing Matching Grant H. Special Matching Grant reviews held in District Plan Review Meetings V.5. Financial Literacy Campaign Kudumbashree programs cover about 37 Lakhs families organized under 2.02 Lakhs NHGs through 1061 CDSs. All NHGs have bank accounts through which members of NHGs have access to savings and credit services of banks. The NHG is acting as intermediary between banks and ultimate beneficiary. Kudumbashree has promoted 202,879 NHGs but number of NHGs graded and linked are 141,434 and 118,711 respectively upto March As such about 70 per cent of NHGs only have been graded and 84 per cent of graded NHGs provided Bank linkage. About NHGs remain unlinked, of which NHGs are yet to be graded. At NHG level, it is observed that there is lack of knowledge about banks procedures, misconceptions regarding interest rates and lack of awareness about banking ombudsmen etc. The financial literacy campaign conceptualization, training to Resource Persons (RPs) and orientation were completed before March A detailed literacy plan was prepared to extensively cover all NHGs in the first half of the next financial year

11 V.6. Interest Subsidy Scheme Government has sanctioned the interest subsidy scheme for Kudumbashree NHGs vide GO (Rt) No 2725/09/LSGD dated As per the scheme, all commercial and cooperative banks that are prepared to lend to Kudumbashree NHGs under the linkage banking programme at 9 per cent or below, will be participants in the scheme. The CDS would be raising the claim with the banks and the amount would be dispersed to a designated nodal branch by Kudumbashree State Mission in the case of commercial banks and to the concerned cooperative banks/societies by the district missions in the case of cooperative institutions. The interest subsidy would be provided as annual instalments to the banks. Following activities were undertaken before March Kudumbashree facilitated bankers meeting for finalizing draft interest subsidy guidelines. A final Interest Subsidy Operational guideline was proposed to State Level Bankers Committee (SLBC) which was approved on 14 th January A subcommittee with members from district mission teams was constituted to finalize cooperative bank-interest subsidy guidelines. V.7. Computerised Financial Accounting System-Pilot Project Out of 991 CDSs, Kudumbashree selected 7 accountants for implementing 'financial accounting system pilot project for strengthening the Community Development Societies (CDS) to computerize financial transactions. As part of the pilot project the 7 accountants were provided training on tally accounting software. Tally ERP 9 software was provided to each of the seven CDS. Periodical reviews were conducted to monitor the tally accounting system. It is observed that CDS receipts and vouchers 139

12 details are up-to-date. At any time, it is possible to ascertain balance sheet, income and expenditure account and receipts and payments account. V.8. Management Information System Pilot of Microfinance Modules Kudumbashree has entered into an agreement with C-DAC to develop a digitized Management Information System (MIS) which would be uploaded from each CDS. The software development is funded by the Ministry of Information Technology (IT), Government of India. The first 2 modules to be developed and tested in the field were the general information and micro finance modules. V.9. Neighbourhood Groups in the Sample Villages Neighbourhood Groups (NHGs) are the soul of Kudumbashree programme in Kerala. The most interesting part of the survey was to attend the weekly meeting of the NHG. Once the women start the proceedings of the meeting with a prayer, and little gossips about the neighbourhoods and then getting into the business is an interesting thing to watch. Thrift and credit are the major component of the neighbourhood groups. Thrift collection is an activity found in the 300 respondents surveyed. Table No. V.2 Frequency of the Meetings Conducted Sr. No. Frequency of Meetings Number of Respondents Percentage 1. Weekly Fortnightly Monthly Total

13 It is found during the survey that the frequency of the meeting held was weekly. As most of the women are engaged in one or the other entrepreneurial activity, most of the meetings are held on Sunday afternoons. Frequency of the meetings is shown in Table No. V. 2. It is very well noted that women in the NHG see to it that they attend the meeting regularly. They avoid it only in the unavoidable circumstances. These meetings are get together for the women. According to one respondent, Shyamala didi who is a Panchayath member also says meetings are our stress busters; our discussion is not only on money and business, but also on our problems too. We find solution to our worries here. Table No.V.3 Attendance in the Meetings Sr. No. Attendance Number of Respondents Percentage 1. Regular Sometimes Rarely Never Total per cent of the women attend the meetings regularly, whereas 13.3 per cent some times and only 1.7 per cent attends rarely. This indicates the importance of the meetings to these women as quoted above. 141

14 The NHGs taken for the survey was began before No NHGs were taken for the survey which was begun after The older the NHGs, the better were the response and recordings of procedure amongst the units. V.10. Major Three Activities Conducted by the Respondents Thrift collection is an activity conducted by all the NHGs. The 300 respondents conducted thrift as their first activity through which they save money. The money collected monthly was also found to be uniform. Rs.40/- is collected per month. 90 per cent of the thrift collected is given away in the form of credit to the needy members. It is well realised from the table no. V. 4 that 45.7 per cent of the people opted for cattle/goat rearing activity. Preparing and selling of sweet savouries is another activity with 19 per cent responses, tailoring has been accepted by 18 per cent of women, masala powder, rice powder comprise 15.3 per cent and 12.3 per cent respective responses from the women. For these activities women were provided with adequate loan amount activity wise. The Story of Geetha Geetha lost her husband at the age of 25 and was striving hard to earn her livelihood. It was then few women in her neighbourhood informed her about ayalkootam. She joined Srihari NHG and started saving money. The Secretary encouraged her to take loan and start any business like buying a cow. Initially she was hesitant as there was very little space to keep a cow in her house. With the support and encouragement from fellow members she bought a cow with the credit she received. Today she is the proud owner of 14 cows and supplies milk to Natures Fresh Diary of Kudumbashree. In this venture she earns more than Rs. 17,000/- per month. She inspires many women to join NHGs and start business like her. 142

15 Table No.V.4 Major Three Activities Conducted by the Respondents Sr. No. Major Activities No. of Respondents Percentage 1. Thrift Goat Rearing/Cattle Rearing Sweet Savouries Tailoring Masala powder Rice Powder Vegetable plantation Soap powder Catering Pickle business Papad Making Grocery Selling Readymade Garments Fish Products Mushroom Plantation Earthen Ware Grass Brooms artificial jewellery Making Rabbit rearing Paper Bags Umbrella making Jute Bags Home Shop Poultry Jasmine Cultivation Inner Ware Production Bamboo Products Swantanam Service Centre Quail Hollow Bricks Direct Marketing Chocolate making Bio Fertiliser Beauty Parlour Anti-Diabetic Juice Aluminium Fabrication 1.3 Total

16 V.11. Credit Operations (A) Purpose of the Loan Women in NHGs are found with the dire need for money. There are various purposes behind demanding advances from an NHG. Table No. V.5 Purpose of the Loan Sr. No. Purpose of the loan No. of Respondents Percentage 1. Repayment of old loan Festival celebrations Children s Education Purchase of household items Health Care Marriage or any other family occasion 7. House Construction Day to Day Expenditure For Income generating Activities As depicted in Table No.V.5, 60.3 per cent women demanded loan for day to day expenditure. For Children s education, 19.3 per cent women were asking an advance. Surprisingly for health which is almost neglected by these women respondents, 23 per cent of women were found asking loan for it. Another major purpose found to take loan was marriage or any other family occasion and 29 per cent of women have taken advances for this purpose. To support the construction of the house 33.3 per 144

17 cent of the women have taken loan and for repayment of old loan 16 per cent reported to take advances from the NHGs. For celebrating festival 17.7 per cent women have demanded advances and for purchasing household items 19.3 per cent have taken loan from their NHGs. But above all large number of women i.e. 96 per cent has taken advances for income generating activities, which clearly indicates that NHGs stand for promoting economic empowerment of women. The table clearly reflects that the women in the NHG have taken largely loan for income generating activities than for any other purposes.. Table No.V.5 reflects various purposes behind taking advances from the NHGs. Chart No. V.1. illustrates the various purposes of advances for the women members in the village. Chart No. V.1 PURPOSE OF THE LOAN No. of Respondents Purpose of Loan 145

18 (B) Loan Amount Sanctioned by the NHGs for Various Purposes Table No.V.6 reflects the magnitude of advances sanctioned by the NHGs for various purposes. Magnitude of loan amount varies between Rs.1000/- to Rs.60000/-. Out of 181 respondents who have taken loan for day to day purposes 62.4 per cent of the people have taken loan up to Rs.5000/-. Similarly for health care, Children s Education, Repayment of old loan, and Festival celebrations the larger number of loans are in the range of Rs. 1000/- Rs.5000/-. But for the purposes like Marriage or any other family occasion, House Construction, Purchase of household items the magnitude of advances is seen higher in the range of Rs. 5001/- - Rs.10000/-. Income Generating Activities (IGA) got maximum advances sanctioned by the NHG i.e. up to Rs.60000/ women have taken advances for these purposes. 133 women beneficiaries have taken loan amount more than Rs /- and 26 women have taken an amount more than Rs /-. The women are seen to be encouraged more for taking loan for income Generating Activities (IGA), because they are been supported by the Government of Kerala with interest subsidies and matching grant. 146

19 Table No.V.6 Loan Sanctioned by the NHGs for Various Purposes Sr. No. Purpose of the Loan No. of Respondents 1. Day to Day Expenditure Children s Education Health Care Marriage or any other family occasion House Construction Repayment of old loan Festival Celebrations Purchase of household items 9. For Income generating Activities Magnitude of Loans No. of Respondents Percentage

20 Table No. V.7 Activity Wise Advances Provided to the Respondents Sr. No. Activity No. of Respondents Minimum amount of Loan (Rs) Maximum amount of Loan (Rs) Range 1. Tailoring Savoury making Catering Vegetable plantation Soap Powder Papad making Readymade garments Cattle/Goat rearing Mushroom plantation Rabbit rearing Fish products Pickle business Earthen ware Grass brooms Grocery Selling Jute bags Artificial Jewellery Making Umbrella making Jasmine cultivation Innerwear Masala Products Bamboo products Chocolate making Paper bags Bio fertilizer Direct Marketing Quail Sevana service centre Anti - diabetic juice Hollow bricks Swantanam Beauty parlour Aluminium fabrication Total

21 Table No. V.7 reveals the activity wise advances provided to the members. Tailoring activity members received more advances as 36 respondents received minimum Rs.5000/- to maximum Rs.50, 000/- in the form of loans. Government encourages garments stitching and provide advances to purchase sewing machine. There are few group ventures existing in the sample villages in stitching. Savouries making another favourite venture amongst the women are also promoted by the government by providing advances between minimum Rs.6, 000/- to maximum Rs.50, 000/-. Similarly for Catering, Vegetable plantation, Soap Powder, Papad making, Mushroom plantation, Aluminium fabrication, Swantanam, Beauty parlour, Direct Marketing, Quail, Umbrella making and all other activities run by the women in the villages do receive advances ranging between Rs.2, 000/- to Rs.50, 000/- provided their NHGs are doing well and capable of generating profit and income for the women entrepreneurs. Maximum numbers of women have opted for those activities where investment requirement is less rather than high investment activities. Activities like tailoring, vegetable plantation, grocery selling, catering, cattle/goat rearing, bamboo products; papad making can be started with low investment as well as with high investment. Therefore most of the respondents have started these activities with low investment but some of them have chosen a larger scale making large investment. This has resulted in high range of investment. Whereas products like jute bags, umbrella making, jasmine cultivation, Paper bags, Bio fertilizer, Chocolate making, Direct Marketing, Quail, Sevana service centre, Anti - diabetic juice, Hollow bricks, Swantanam, Beauty parlour, Aluminium fabrication can be started only with large 149

22 amount of investment and hence range is zero. Very few women members opted for high level investment activity. Thus table V.7 concludes that out of 37 activities carried out in the villages, 33 activities are promoted and encouraged by the government through subsidy. Advances form a base for several NHGs in the villages to work. They perform well so that they are provided with subsidy or interest subsidy. Women welcome this movement of the government but also curse the delay in getting it. (B) Rate of Interest on Loan Interesting facts were revealed when enquired about interest rate on advances. Kudumbashree mission says to collected Re. 1/- for Rs.100/- per month as rate of interest. As the Table No.V.8 reveals that 24 per cent women were charged with 24 per cent rate of interest per annum. Remaining 76 per cent were charged with 12 per cent rate of interest per annum. Table No.V.8 No. of Respondents Paying different Rates of Interest on Loan Rate of Interest No. of Respondents Percentage 12% % Total

23 The table V.9 gives frequency distribution of the respondents by rate of interest and whether they are below poverty line. It is reflected in the table that 77.1 per cent of the women who belong to BPL pay 12 per cent rate of interest on the advances whereas 65.5 per cent women from APL also pay the same. But the most interesting finding here is about the higher interest rate of 24 per cent per annum per cent of the women from BPL pay it and per cent of APL women pay the same. It indicates that women from below poverty line are also paying higher rate of interest. If we see the absolute number 62 BPL and 10 APL beneficiaries are paying interest on loan at 24 per cent per annum. Table No.V.9 No. of Respondents Paying different Rates of Interest on Loan APL/BPL Analysis Rate of Interest on Loan (%) Number of Respondents APL BPL Total (65.5) (34.5) 29 Total (100.0) 209 (77.1) 62 (22.9) 271 (100.0) 228 (76.0) 72 (24.0) 300 (100.0) Figures in Parenthesis indicate Percentage to the Respective Total 151

24 Table no. V.10 reveals the classification of rate of interest caste wise per cent of SC/ST members pay 12 per cent rate of interest per annum and 8 per cent pay 24 per cent per annum. And amongst the OBCs 67.8 per cent pays 12 per cent rate of interest and 32.2 per cent pay 24 per cent. Amongst the general category 21.7 per cent pays 24 per cent rate of interest Table V.10 No. of Respondents Paying different Rates of Interest on Loan Caste Wise Classification Rate of Interest on Loan (%) No. of Respondents Caste General OBC SC/ST Total (78.3) 61 (67.8) 41 (83.7) 228 (76.0) (21.7) 29 (32.2) 8 (16.3) 72 (24.0) Total 161 (100.0) 90 (100.0) 49 (100.0) 300 (100.0) Figures in Parenthesis indicate Percentage to the Respective Total (C) The mode of repayment is the same for all 300 members who said they pay back their loans monthly. 152

25 (D) Timely Repayment /Default in loan repayment The table no. V.11 mentions about the promptness or default in loan repayment. 87 per cent of the beneficiaries show delayed repayment whereas only 13 per cent of the respondents showed timely repayment. Table No.V.11 Promptness/Default in Loan Repayment Sr. No. Category Number of Respondents Percentage 1. Prompt Payment Default Total In order to know whether there is any significant relation between APL or BPL in delayed repayments, Chi Square test is used. Table No.V.12 Timely Repayment/Delay in Loan Repayment - APL/BPL Analysis Category Number of Respondents APL BPL Total Chi Square Df P Promptness 11 (37.9) 28 (10.3) 39 (13.0) Delay Total 18 (62.1) 29 (100.0) 243 (89.7) 271 (100.0) 261 (87.0) 300 (100.0) Figures in Parenthesis indicate Percentage to the Respective Total 153

26 Table no. V.12 analyses that defaulters are seen more in the category of BPL than in APL per cent of BPL category is found to be defaulters in repayment than 62.1 per cent are found to be defaulters in APL. Promptness for repayment is lower in BPL than APL. The number of defaulters is large in BPL category if see the absolute numbers. At 5 per cent level of significance, the calculated value of Chi Square for BPL for delay in the payments is for 1 degree of freedom. The table value of Chi Square for 1 degree of freedom at 5 per cent significant level is Comparing the calculated and table values of Chi Square, we find that calculated value is more than the table value thus indicating a significant relationship between People below poverty level and defaulters in loan repayment. (E) Reasons for Default After finding out 261 women who delayed loan payment or were defaulters, when asked about the reason, they revealed many reasons. As indicated in the earlier table maximum numbers of women have taken loan for income generating activities, hence 137 women said revenue generation was below their expectation so they could not pay back in time. Along with the on-going recession and competition 47 women find sudden slump in business. 28 women defaulters have diverted the money in other activities like festival or marriage. 44 women respondents convinced with the fact that their health did not allow them to work and hence could not repay on time. 154

27 No. of Respondents Table No.V.13 Reasons for Default Sr.No. 1. Reasons for Default No. of Respondents Percentage Revenue generation below expectation Sudden slump in business Health related reasons Diversion of money in other activities None Total Chart No. V.2 Reasons for Default Revenue generation below expectation Sudden slump in business Health related reasons Diversion of money in other activities None Reasons for Default 155

28 In order to find out whether any of these reasons have any relationship with their income status, Chi Square test was done. The result indicates that Revenue generation below expectation is seen maximum in BPL families whereas diversion of money in other activities is seen in APL families. The women below poverty line are unable to generate income which will create profit pay back the loan. Table No. V.14 Reason for Default APL/BPL Analysis Number of Respondents Sr. No. 1. Reasons for Default Revenue generation below expectation 2. Sudden slump in business 3. Health related reasons 4. Diversion of money in other activities 5. None Total APL BPL Total 5 (27.8) 0 (.0) 6 (33.3) 7 (38.9) 0 (.0) 18 (100.0) 132 (54.3) 47 (19.3) 38 (15.6) 21 (8.6) 5 (2.1) 243 (100.0) 137 (52.5) 47 (18.0) 44 (16.9) 28 (10.7) 5 (1.9) 261 (100.0) Chi Square Degree of Freedom p Figures in parenthesis indicate percentage to the respective total 156

29 No. of Repondents Chart No. V.3 Reason for Default - APL/BPL Analysis BPL APL Reasons for Default The table value of Chi Square for 4 degree of freedom at 5 per cent significant level is Comparing the calculated and table values of Chi Square, we find that calculated value is more than the table value. This indicates a significant relationship between poverty status of the people and reasons for default in repayment. 157

30 Most of the BPL members responded positively for the reason, revenue generation below expectation, and most of the APL members responded for diversion of money for other activities. Hence it is proved that BPL members are unable to generate enough income due to which they are not able repay on time. On the contrary, APL members are diverting the funds to other activities and unable to pay the advances on time. (F) Unsettled Amount of Advances Taken by the Respondents The table below reflects the unsettled advances taken by the respondents. The frequency is seen maximum in the range of Rs. 1000/- Rs.5000/- with 189 women. 18 women have to repay an amount greater than Rs. 25,000/-, which is alarming. Table No. V. 15 Unsettled Amount of Advances taken by the Respondents Sr.No. Amount Outstanding No. of Respondents Percentage > Total V.12. Kudumbashree and Government Assignment Kudumbashree, the State Poverty Eradication Mission of the state is the State Level Nodal agency (SLNA) for Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS). In the year , MGNREGS was scaled up from 4 to all 14 districts of Kerala. Kudumbashree ADS is actively involved in implementation of 158

31 MNREGS in Kerala. Other than MGNREGS, CDS is also involved in government assignment like surveys on various issues and programmes and Anganwadi in these sample villages. Table No.V.16 Nature of Government Assignment with Kudumbashree Programme Nature of No. of Sr. No. Assignment Respondents Percentage 1. ANGANWADI SURVEY MGNREGA Total No Assignments Total Mahatma Gandhi Rural Employment Guarantee Scheme (MGNREGS) is real hit in these sample villages. Table no.v.16 reveals that 92.3 per cent of women are a part of this initiative. Efforts were also made to capacitate and equip Kudumbashree NHGs and ADS networks to pay a more proactive role in MGNREGS and in social audit. MNREGS was included as one of the topics in the Kudumbashree CDS action plan. Other than MGNREGS, the assignments which earned income for the respondents are survey and anganwadi work with 1and 5 per cent respectively. Table No.V.17 reveals that most of the beneficiaries in Survey and MGNREGA activities were from BPL category. 159

32 Table No.V.17 Nature of Government Assignment with Kudumbashree Programme - APL/BPL Analysis Nature of Government Assignment Anganwadi Survey MNREGA Total No. of Respondents APL BPL Total (6.9) (.4) (1.0) (.0) (5.6) (5.1) (93.1) (94.0) (93.9) (100.0) (100.0) (100.0) Chi Square Df P Figures in Parenthesis Indicate Percentage to the Respective Total The table also reflects whether any relationship exists between the government assignment and BPL. It is found from the analysis that as far as anganwadi is concerned more members from APL is working with it, but for survey it is only people from BPL category is taken for it. The Chi Square analysis later proves that: Chi Square = P =.002 Degrees of freedom = 2 At 5 per cent level of significance, the calculated value of Chi Square is for 2 degrees of freedom. The table value of Chi Square for 2 degree of freedom at 5 per cent significant level is Comparing the calculated and table values of Chi Square, we find that calculated value is more than the table value thus indicating a significant relationship between People below poverty line and government assignment. 160

33 Chart No. V.4 Nature of Government Assignment with Kudumbashree Programme - APL/BPL Analysis BPL APL ANGNAWADI SURVEY MNREGA (A) Annual Income from Government Assignments The table V.18 specifies about the annual income earned from the activities associated with Kudumbashree programme per cent of women respondents earn an income which is more than Rs25, per cent earn income amounting between Rs.10000/- to Rs.25, 0000/-. Only 1.3 per cent of respondent earns between Rs.1000/- to Rs.10000/. Table No. V.18 concludes that women members who joined Government Assignments with the help of Kudumbashree benefitted in terms of income. 161

34 Table No.V.18 Annual Income from Government Assignments Range of Amount (in Rs) No. of Respondents Percentage > Total Chart No.V.5 Annual Income from Government Assignments >

35 (B) Annual Income from Activities Associated with Kudumbashree Annual income from government assignment is indicated in the table.no. V.19 as 93 per cent of the respondents received an income between Rs.10000/- to Rs.25, 000/-. Hence it is seen in these sample villages that they welcome all government assignments whole heartedly. Table No.V.19 Annual Income from Activities Associated with Kudumbashree Range of Amount No. of (in Rupees) Beneficiaries Percentage Total No Activity Total V.13. Bank Linkages and Subsidy There are various forms of subsidies provided by the government for Kudumbashree women such as interest subsidy, revolving fund and matching grant. Out of these various forms of subsidies 97 per cent of the total subsidy is provided in the form interest subsidy. Under the provisions of the Central law discussed in Parliament, banks give money to micro-finance institutions which in turn give loans to self-help groups (SHG). 163

36 This ends up distancing the poor from the banks. The law envisages no role for local bodies in micro-financing SHG schemes. Under the interest subsidy scheme, neighbourhood groups of Kudumbashree get bank loans of up to Rs.1 lakh at an interest of nine per cent with five per cent subsidy from the government. Joint liability groups engaging in collective farming under Kudumbashree are also entitled to receive such subsidy. The government provides the subsidy amount to the banks in advance as annual instalments or as a claim reimbursement on a bi-annual basis. The Government of Kerala has earmarked Rs. 20/- crore for this scheme. In the sample villages, we have also witnessed the waves of this magical subsidy schemes. Several NHGs associated with Nadathara Panchayath have been benefitted more with the subsidy. Table No.V.20 Subsidy Provided by the Government on Loan Amount Category Number of Respondents Percentage Subsidy not received Subsidy received Total Table V.20 reflects the subsidy provided by the Government of Kerala on loan amount per cent of the respondents have not received any subsidy on the loan 164

37 amount whereas 86.3 per cent of the respondents have benefitted through the subsidy. Chart No. V.6 Subsidy Provided by the Government on Loan Amount Subsidy Provided by the Government on Loan Amount - APL/BPL Analysis Table no. V. 21 show APL/BPL analysis of subsidy provided by the government per cent of the women who belongs to below poverty line receives subsidy and 72.4 per cent women members who belong to APL category also receives subsidy per cent of BPL category has not received subsidy and 27.6 per cent APL 165

38 category women also has not received subsidy. At 5 per cent level of significance, the calculated value of Chi Square is for 1 degree of freedom. And P= 0.29 which is less than 0.5. The table value of Chi Square for 1 degree of freedom at 5 per cent significant level is Comparing the calculated and table values of Chi Square, we find that calculated value is more than the table value thus indicating a significant relationship between subsidy provided by the government on loan amount and APL/BPL analysis. Table No.V.21 Subsidy Provided by the Government on Loan Amount APL/BPL Analysis Category Subsidy not received Subsidy received Total Number of Respondents APL BPL Total (27.6) (12.2) (13.7) (72.4) (87.8) (86.3) (100.0) (100.0) (100.0) Chi Degree Of P Square Freedom Figures in Parenthesis Indicate Percentage to the Respective Total Subsidy provided by the Government on Loan Amount - Caste Wise Classification: - Table V.22 indicates caste wise classification of subsidy provided by the government on the loan amount per cent of the SC/ST category women received subsidy on loan amount per cent of people who belong to OBC 166

39 category of the sample population also received subsidy on loan amount per cent of the women from general were also successful in receiving subsidy on loan amount. It is only 6.3 per cent of the SC/ST women did not receive any subsidy on their loan amount and similarly 16.7 per cent OBC, 14.3 per cent of general category women also did not receive any subsidy on loan amount. Table No.V.22 Subsidy Provided by the Government on Loan Amount- Caste Wise Classification No. of Respondents Category Caste General OBC SC/ST Total Subsidy not received (14.3) (16.7) (6.1) (13.7) Subsidy received (85.7) (83.3) (93.9) (86.3) Total (100.0) (100.0) (100.0) (100.0) Figures in Parenthesis Indicate Percentage to the Respective Total 167

40 (A) Respondent s NHG lending surplus funds to other NHGs in other ADS/CDS When the respondents were enquired upon whether their NHGs borrow from other NHGs, the collective answers from the 300 women were negative. The women responded that their NHGs do not borrow from the other NHGs. But they do lend their surplus amount to other NHGs of other ADS/CDS. The table below reveals the data. Table No.V.23 Respondent s NHG Lending Surplus Funds to Other NHGs in other ADS/CDS Number of Category Respondents Percentage No Yes Total women respondents said their NHGs lend to other NHGs. But 93.7 per cent of women responded they do not lend surplus funds to others. (B) Sources of Funding for Kudumbashree The major source of funding remains the government, say the respondents per cent agreed that government is the major source of finance per cent women said banks do help and are a source for funding the projects undertaken in Kudumbashree. 168

41 Table No.V.24 Sources of Funding for Kudumbashree Number of Sr.No. Source Respondents Percentage 1. Banks Government Total Figure V.7 Sources of Funding Banks Government 169

42 V.14. Conclusion The Thrift and Credit Societies are considered as poor women s bank. The poor women, who were hitherto dependent on their men folk for every need and did not know the meaning of economic independence, have managed the impossible under Kudumbashree. Members can avail loans to meet their urgent needs like medical treatment, purchase of school books and uniforms for children, to pay off their old debts, etc. It is interesting to note that more than 90 per cent of the savings in the thrift societies are given away as loans. The selection of beneficiaries, the rate of interest, the quantum of loans and the period of repayment, etc. are all decided and implemented by the women themselves. Since the decisions regarding the repayment of loans with the rate of interest are taken by the NHGs, the monitoring mechanisms are inbuilt. But still it is noticed that the defaulters are seen maximum in the BPL category of women borrowers. The chapter can be summarised as: Advances are given for various purposes like day to day expenditure, children s education, health care, marriage or any other family occasion, house construction, repayment of old loan, festival celebrations, purchase of household items, and for income generating activities. Maximum number of women has taken advances for income generating activities. Out of 300 respondents 288 women have taken loan for income generating activities. 170

43 Rate of interest although prescribed by the government as 12 per cent per annum, but survey reveals that there are members who are paying even 24 per cent. Women have expressed various reasons for delay in repayment of loans such as revenue generation below expectation, sudden slump in the business, and diversion of money to other activities and health related issues. MNREGA dominates the scene as 92.3 per cent of women being a part of it. Bank linkage programme and interest subsidy are seen very well-functioning in these villages. Apart from that the women members are keen to lend money to other NHGs. V.15. References 1. Kudumbashree (2009), Annual Report , Thiruvananthapuram, Kerala, India. 2. Somanath Gopika (2008), Kudumbashree A Microcredit Facilitated Women Centered Poverty Eradication Model, New Delhi, Financing Agriculture - A National Journal of Agriculture and Rural Development March April, Volume 40, Pg State Planning Board (2009), Economic Review 2010, Thiruvananthapuram, Kerala, India Yunus Muhammad (2007), Banker to the Poor, Noida, Penguin Publications. 6. Yunus Muhammad (2010), Building Social Business New York, Public Affairs 171