A Study on Select Self Help Groups with reference to Kumbakonam Central Cooperative Bank Ltd., Kumbakonam, Thanjavur District

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1 A Study on Select Self Help Groups with reference to Kumbakonam Central Cooperative Bank Ltd., Kumbakonam, Thanjavur District Dr. B. SUMATHISRI, APIII, & Ms. N.Nithya,II yearm.com, Department of Commerce and Management Studies, Srinivasa Ramanujan Centre, SASTRA University, Kumbakonam, TamilNadu, India, Abstract In India, Self Help Groups represent a unique approach to financial intermediation. The approach combines access to low-cost financial services with a process of self management and development for the women who are Self Help Group members. Self Help Groups are formed and supported usually by Non-Government Organizations or (increasingly) by Government agencies, linked not only to banks but also to wider development programmes. Micro finance scene is dominated by SHGs- bank linkage programme, aimed at providing a cost effective mechanism for providing financial services to the Unreached poor. It equips women the right of entry to savings and credit. It also leads to increase security for women and their family unit. So the intend of Self Help Group is to fight poverty through self confidence, solidarity and social security to control and guide their destinies. Key words: SHGs- Bank linkage programme, Unreached poor, Micro finance, Empowerment, Self confidence, Social security, Solidarity. I.INTRODUCTION In India, Self Help Groups represent a unique approach to financial intermediation. The approach combines access to low-cost financial services with a process of self management and development for the women who are Self Help Group members. Self Help Groups are formed and supported usually by Non-Government Organizations or (increasingly) by Government agencies, linked not only to banks but also to wider development programmes. Self Help Groups are seen to bestow many benefits, both economic and social. It enable women to grow their savings and to access the credit which banks are progressing more willing to lend. It is also a community platforms from which women become active in village affairs, stand for local election or take action to address social or community issues (France Sinha, EDA, et al.,2006). Micro finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro finance scene is dominated by SHGs- bank linkage programme, aimed at providing a cost effective mechanism for providing financial services to the Unreached poor. Based on the philosophy of peer pressure and group savings as collateral substitute, the SHG programme has been successful not only in meeting peculiar needs of the rural poor, but also in strengthening collective self-help capacities of the poor at the local level, leading to their empowerment, Arivazhagan and Krishnaveni,(2008). SHG-Bank Linkage. Self Help Groups (SHGs) meet the smaller consumptions and emerging needs of its members from own savings and common fund. As the capacity of the group and quantum of credit also went up, SHG linked with the formal rural banking system in India comprising of public and private sector commercial banks, Regional Rural Banks and Co-operative banks. The SHG-Bank Linkage Program was started as a Action Research Project in 1989 which was the off shoot of a National bank for Agriculture and Rural Development (NABARD) initiative during The SHG-Bank Linkage programme is a major plan of the strategy for delivering financial services to the poor in a sustainable manner. The search for such alternatives started with internal > RJSSM: Volume: 02, Number: 08, December-2012 Page 1

2 introspection regarding the innovations which the poor had been traditionally making to meet their financial services needs. It was observed that the poor tended to come together in a variety of informal ways for pooling their savings and dispending small and unsecured loans at varying costs to group members on the basis of need,jebamalai Raja et al(2008) Literature Review Few studies are available on Self Help Groups. The researcher has reviewed the following: The formal financial institutions in India have ventured into microfinance in a massive way by adopting the SHG-Bank Linkage Program model.(hema Bansal, 2002).Osman (2000) in his article remarked that micro-finance schemes alone can not alleviate poverty. The battle for total eradication of poverty requires combining micro-finance schemes with parallel, complementary programmes addressing the social and cultural scope of want, privation, impoverishment and dispossession. Pattanaik (2003) in her study reveals that Self Help Groups are continuously striving for a better future for tribal women as participants, decision-makers and beneficiaries in the domestic, economic, social and cultural spheres of life. But due to certain constraints like gender inequality, exploitation, women torture for which various Self Help Groups are not organised properly and effectively. Narasaiah (2004) in her study mentioned that the change in women s contribution to society is one of the striking phenomena of the late twentieth century. According to him micro-credit plays an important role in empowering women. Giving women the opportunity to realize their potential in all spheres of society is increasingly important. Manimekalai (2004) in his article commented that to run the income generating activities successfully the SHGs must get the help of NGOs. The bank officials should counsel and guide the women in selecting and implementing profitable income generating activities. He remarked that the formation of SHGs have boosted the self-image and confidence of rural women. Sahu and Tripathy (2005) in their edited book views that 70 per cent of world s poor are women. Access to poor to banking services is important not only for poverty alleviation but also for optimizing their contribution to the growth of regional as well as the national economy. Self Help Groups (SHGs) have emerged as the most vital instrument in the process of participatory development and women empowerment. They can lift themselves from the morass of poverty and stagnation through micro finance and formation of Self-Help Groups. Venkatesh and Kala 2011).The study infers that low status for women obstructs a country to economic development. The microfinance is the sector which puts forwards women the chance to enter the public sphere and thus it makes the women as businesswomen by expanding their roles beyond housewife to breadwinner. II STATEMENT OF THE PROBLEM Poverty alleviation is one of the primary objectives of any planning in a national economy. Therefore it becomes imperative to formulate situation specific poverty alleviation policies and programmes for generation of a minimum level of income for rural poor, which form the substantial percentage of national population in developing societies. One initiative is credit infusion in the rural sector. Increased involvement of banks in rural credit in post nationalization was considered as integral part of socio-economic development efforts for the rural areas. In this context performance of Self Help Group with bank linkage programme and benefits of its members in Kumbakonam Central Cooperative Bank had been undertaken for the study. III OBJECTIVE OF THE STUDY The main objective of the study are: i) to study the progress of SHG-Bank linkage programme in India, ii). to know the fillip in the income of the members of the group and iii).to study the improved status of the members in the family and society. > RJSSM: Volume: 02, Number: 08, December-2012 Page 2

3 IV PERIOD OF THE STUDY The study covered the period of 3 financial years from and The financial year starts from 1 st day of April of a year and ends on 31 st day of March of next year. V. FRAME WORK OF ANALYSIS The researcher has selected 10 Self Help Groups from Kumbakonam central cooperative bank Ltd. and 12 members from each group were selected by applying stratified random sampling technique. So out of total 120, 105 respondents have been considered for the analysis of the study. The following techniques were used to study the objective: Percentage, Chi square test and Correlation (Karl Pearson s and Spearman s rho correlation) A. Data Collection Both Primary data and Secondary data have been used for this study. In this study, the primary data has been collected from the members with the help of questionnaire. Secondary data has been collected from websites, journals, office records, reports and books. B. Analysis and Interpretation The following pages show analysis and interpretation under two stages: a. Individuals member and b. Members in a Group (Head) a. Members as an individual: The table no 1 represents about the number years the respondents was in the Self Help Group. Nearly percent of the respondents have been in the self help group which falls under the category of years. The respondents under the category of 1-5 years and 6-10 years were percent each respectively. Above 15 years category there was only 8.57 percent in the Self Help Group. The table No.2 depicts about the size of the family of the respondents. Out of total, percent of the respondents are in the family size of 4-5 members. It was followed by 1-3 members in the family i. e percent and percent shows under the category of above 5 members in the family The table 3 shows the occupation of the respondents. Most of them were in a position of daily labour i.e., percent. Employed respondents were percent. Agriculture and Nonagriculture represent the percent of and 4.76 respectively. It infers that most of the respondents are earnings in the way of daily labour. The table No. 4 represents the reasons for selecting the Kumbakonam Central Cooperative Bank Ltd. Nearly 51 respondents have choosen the bank for the reason of interest rate. It was followed by easy requirements and procedure i.e, percent. Next and 2.85 percent of the respondents have given importance to close location and other reasons respectively. This shows that nearly 50 percent of the respondents were satisfied with the interest charged by the bank. In order to find out the relationship between the number of years the respondents in the SHG and reasons for choosing Kumbakonam Central Co-operative Bank, Chi-square test was used. Null Hypothesis: The association between the number of years the respondents in the SHG and reasons for choosing Kumbakonam Central Co Kumbakonam Central Co-operative Bank is not significant. As the calculated value (16.501) is greater than the table value (7.215) at 5% level of significance for 3 degree of freedom, the null hypothesis is rejected and it could be concluded that the association between the number of years the respondents in the Self Help Group and reasons for > RJSSM: Volume: 02, Number: 08, December-2012 Page 3

4 choosing Kumbakonam Central Cooperative bank is significant. Therefore, it is inferred that the number of years the respondents in the Self Help Group and reasons for choosing Kumbakonam Central Cooperative bank are closely related. Table no.5, the purpose of the loan has been categorized under three heads. Occupation refers to domestic and emergencies. A factor sector refers to agriculture and animal husbandry, and non- factor sectors represents the income generation and self use. Out of 105 respondents, nearly 63 percent of them have used the loan for personal purpose. Remaining 26 and 13 percent respondents are availed the loan for occupation and factor sectors respectively In order to find out the relationship between the size of the family members and the purpose of loan availed, Chi-square test was used. Null Hypothesis: The association between the size of the family members and the purpose of loan availed, is not significant. As the calculated value (45.181) is greater than the table value (5.991) at 5% level of significance for 2 degree of freedom, the null hypothesis is rejected and it could be concluded that the association between the size of the family members and the purpose of loan availed is significant. Therefore, it is inferred that the size of the family members and the purpose of loan availed are closely related. The table no.6 reveals that the respondents have taken loan besides the Self Help Group. Fifty eight respondents told that the loan has been availed from money lenders. Twenty one respondents have taken the loan from other banks. Fourteen and 12 respondents have taken loan from the private finance institution and Federations respectively. It can be inferred that respondents find easy to avail credit facilities from the money lenders. Table no.7 reveals that out of total, only 79 respondents have savings other than the Self help Group. Remaining respondents have savings only with Self Help Group that is 26. So the table shows the responds of 79. The table no. 7 displays the savings of the respondents other than Self Help Group. Out 79, 40 respondents have savings in post office. It was followed by bank i.e 22. Negligible percent have savings in NBFC and in others like Jewels etc. The table no.8 gives the information about the changes in economical situation of the respondents after joining the self help group. Nearly percent of the respondents have increased their savings. Next percent of respondents were relieved from their debt problem. Also percent of respondents are independent in their economic situation and percent of members were involved in the income generating activity. Correlation Analysis: In order to find out the interrelation between the number of years in the Self Help Group and the changes in economic situation among the respondents, Pearson s correlation is used. The correlation co-efficient is So the correlation between the number of years the respondents in Self Help Group and changes in economic situation is perfect and positive. The table no.9 shows the changes in social status of the respondents. Fifty three respondents became decision maker in their family. Thirty seven respondents have got good recognition in the society. Ten respondents have a chance to serve the community. And 5 respondents serve the public life. The table concludes that the respondents those who have joined in Self Help Group were given rights in decision making and also given importance in both family and society. Correlation Analysis: In order to find out the interrelation between the number of years the respondents in the Self Help Group and the changes in social status among the respondents, Pearson s > RJSSM: Volume: 02, Number: 08, December-2012 Page 4

5 correlation is used. The correlation co-efficient is So the correlation between the number of years the respondents in Self Help Group and changes in social status is perfect and positive. b) Members in a group (TEAM HEAD). The group member use collective wisdom and peer pressure to ensure proper end use of credit and timely payment. The researcher has colleted information s pertaining to the performance of group activity from the head of the team. The table No 10 reveals the life time of the members in the group. Out of 10 groups, 6 groups are 12 years old i.e 60 percent and 4 groups are nearly 14years old. Above 14 years no members exists in the group as per the study. The table no.11 depicts the reasons for dropout of the respondents from the group. Out of total, 50 percent of them withdraw from the group because of conflict with others. Next 20 percent gave the reasons that it is difficult to meet and co-ordinate the work and also high financial burden of loan. Another reasons focused was compulsory savings. So this indicates that there was lack of coordination among the members as well as groups, which dominates to exist in the group. Table No 12 shows the details of loan availed and savings made by the group members over the 3 years [ 4 ], [ 5]. Out of 10 groups, G8 has shown the highest amount of loan availed from the bank i.e. Rs 8, 50,000. Also other groups shows increasing trend in availing the loan from the bank except group number one, two and ten. The savings limit differs among the groups. The range of savings was from Rs.105 to Rs Among the groups, Group 8 has shown good saving amount. Correlation Analysis: In order to find out the best performance among the groups, the loans availed and savings made by the respondents have taken as variables and, Spearman s rho correlation is used. The Spearman s rho correlation is 0.536, so it was observed that the performance level of Group 8 is comparatively good among the others because they avail more loans and generate income and make more savings. Table No 1 Number of years with the SHG Years No. of Respondents Percentage (%) Above Table No 2 Size of the family Size of the Family No.of Respondents Percentage (%) Above > RJSSM: Volume: 02, Number: 08, December-2012 Page 5

6 Table No 3 Occupation wise classifications Occupation No. of Percentage (%) Respondents Agriculture Non-agriculture Employed Daily Labour Table No.4 Reasons for choosing KCC bank Reasons No.of Respondents Percentage (%) Close Location Interest Rates Easy Requirement and Procedure Others Table No.5 Purpose of the loan availed Purpose No. of respondents Percentage (%) Occupation Factor sectors Non-Factor sectors Table No.6 Loan availed other than SHG scheme Loan availed No. of respondents Percentage (%) Money lenders Federations Private finance institution Other banks > RJSSM: Volume: 02, Number: 08, December-2012 Page 6

7 Table No.7. Savings other than the Self Help Group Savings No. of Respondents Percentage (%) Bank Post office NBFC Others Total Source: primary data Table No.8 Changes in economic situation Economic Changes No.of Respondents Percentage (%) Savings Liberation from debt trap Economic Independence Income Generation Table No 9 Changes in social status Social changes No. of Respondents Percentage (%) Good Recognition Role in Family Decision Making Change to Serve the community Participation in Public Life Table No.10 Life time of the Groups. No. of years old No. of respondents Percentage (%) years years 4 40 Above 14 years NIL NIL Total Table No. 11. Reasons for drop out of the members from the group Reasons No. of Respondents Percentage (%) Unable to meet regularly 2 20 High financial burden of loan 2 20 Conflict with group 5 50 Compulsory savings 1 10 Total > RJSSM: Volume: 02, Number: 08, December-2012 Page 7

8 Table No 12 Loan availed and Savings made by the group over three years Groups Total Loan Amount Total savings Amount Group 1 3,10,000 45,360 Group 2 3,00,000 45,360 Group 3 3,10,000 45,360 Group 4 7,50,000 47,520 Group 5 7,60,000 47,520 Group 6 4,50,000 45,360 Group 7 6,00,000 47,520 Group 8 8,50,000 64,800 Group 9 3,10,000 51,840 Group 10 3,00,000 47,520 Source: Secondary data VI PROCEEDINGS AND CONCLUSIONS Major findings of the study reveal that the respondents who joined in Self Help groups falls under the category of and majority of them were married. The occupations of the members were daily labors. Nearly 50per cent of the respondents were in the group for years. Generally all members availed credit facilities and the loan interest of the bank is affordable to the members. The loan amount was used for income generating purpose and few percent for self use. Though members availed loan from Kumbakonam Central Cooperative Bank, they have also borrowed finance from money lenders. The members were encouraged to habits of savings every month from the range of Rs 105 to Rs 120. The training for the members was given by the bank as well as the Self Help Group itself i.e by HEAD. There are some drop outs from the scheme, because of the conflict among the members in the group. So it can be inferred that the number of years the respondents in the Self Help Group and reasons for choosing Kumbakonam Central Cooperative Bank are closely related. The association between the size of the family members and the purpose of loan availed is significant. The relationship between number of years in Self Help Group with changes in economic situation and social status are positive and perfect. Finally, among the selected groups, it was observed that the performance level of Group 8 is comparatively good among the others because they avail more loans and generate income and make more savings. VII SUGGESTIONS The Cooperatives Banking system faces several difficult challenges: it has to promote and reorient their strategy to compete with the market, especially when they implement schemes for rural people. Some of the suggestions in the context to enhance the Self Help Groups by bank are: Bank should promote awareness regarding the need and importance of Self Help Group among the rural people that is to both men and women. Bank should arrange regular meeting with the group members to analysis the progress of their activities. Provide sufficient training for income generating activities, so it helps the members to make more savings. Educate the members about the utilization of the schemes in full-fledged manner. > RJSSM: Volume: 02, Number: 08, December-2012 Page 8

9 Existing norms can be liberalized and increase more seed capital. Entrepreneurship development programme should be contacted with help of experts and professional. Bank should teach about the maintenance of accounts among the members. Bank should recognize the best performance groups by monetary and non-monetary way like refinancing facilities, consideration in lending rates etc. Finally, action to make involvement of Self Help Groups in PURA ( Programme of Urban Amenities Rural Areas) which will also enhance the empowerment of women in the society. VIII CONCLUSIONS The present study entitles the performance of Self Help Group with Kumbakonam Central Co-operative Bank. This study will help to know the strength and weakness of their Self Help Groups. Present study is empirical in nature based on mainly primary data collected through field survey. It is especially useful for bankers and policymakers as it provides information about the importance of Self Help Groups which leads to enhance the empowerment of women in this society. From the study it can be understand that the concept of Self Help Groups is predominantly used in the case of economically poor people, generally women, who come together to pool their small savings and then use it among themselves. Self Help Groups- bank linkage programme accomplish millions of people extensive bring them together in organized groups repeatedly. And moreover it equips women the right of entry to savings and credit. It also leads to increase security for women and their family unit. It can be infer that the intend of Self Help Group is to fight poverty through self confidence, solidarity and social security to control and guide their destinies. References: 1. Account Statements of Selected SELF HELP GROUPs 2. Annual report of KCCB , , Arivazhagan and Krishnaveni,(2008), Micro Finance For Women s Empowerment, Journal of the Association of Economists of Tamil Nadu, vol xxi, No.1, Pg Cheston & Kuhn (2004) Cheston, Susy and Lisa Kuhn (2002), Empowering Women Through Microfinance, Unpublished Background Paper for the Micro-credit Summit 15, New York, November ( 5. Dhandapani,C, Micro- Finance: SHG-Bank Linkage programme,journal of the Association of Economists of Tamil Nadu, vol xxi, No.1, Pg 40,41 6. France Sinha and EDA Group( 2006), A Self help groups in India a lights and shades, EDA Rural Systems Private Ltd, PP13, available at : 7. Hema Bansal (2002), SHG-Bank Linkage Program in India- An Overview, Journal of Microfinance- 22 Volume 5 Number 1,Pg Ishwar C.Dhingra (2006), The Indian economy-environment and Policy, Sultan Chand & Sons, New Delhi, Pg Jebamalai Raja and Suvakkin(2008), Self Help Group-Bank Linkage Programme in India-A Study, Journal of the Association of Economists of Tamil Nadu, vol xxi, No.1, Pg > RJSSM: Volume: 02, Number: 08, December-2012 Page 9

10 10. Manimekalai, K. (2004), Economic Empowerment of Women Through Self-Help Groups Third Concept, February. 11..Mitthani.D,M.i(2004), Money,Banking, International Trade and Public finance, Himalaya Publishing House, Mumbai, Pg no. 381, ISBN Narasiah, M.L. (2004), Women and Microcredit, Sonali Publications, New Delhi. 13. Osman, Khalil, Microfinance Institutions: Effective Weapon in the War against Rural Poverty, a.pattanaik, Bijoy Kumar, Smaranika, 2003, Gajapati at a Glance. 15. b.pattanaik, Sunanda, Smaranika,( 2003), Empowerment through SHG: A Case Study of Gajapati District Sahu and Tripathy (2005), Self-Help Groups and Women Empowerment, Anmol Publications Pvt. Ltd., NewDelhi > RJSSM: Volume: 02, Number: 08, December-2012 Page 10