Microfinance in Haryana: Evaluation of Self Help Group-Bank Linkage Programme of NABARD in Haryana Sachin 1 and Sameesh Khunger 2 1,2 (Assistant Professor, Department of Business Administration, Chaudhary Devi Lal University, Sirsa, Haryana, India) Abstract: The present study attempts to examine the growth in savings of SHGs with Commercial banks, Cooperative and Regional Rural loans disbursed by these banks to SHGs and the growth in loans outstanding to SHGs of these banks in micro finance practices in Haryana using the data collected through the reports of National Bank for Agriculture and Rural Development (NABARD). The study shows that, in case of savings, number of SHGs having savings with Cooperative increased by 290.40 percent followed by 65.71 percent and 62.01 percent in Regional Rural Bank and Commercial respectively, whereas the amount of savings of SHGs Increased by 526.71 percent in Cooperative followed by 213.33 percent and 80.74 percent in Commercial and Regional Rural during the period under study. In case of loan disbursement, number of SHGs availed loan from Commercial increased by 200.27 percent in Commercial and decreased by 38.50 percent and 21.58 percent in Cooperative and Regional Rural, whereas the amount of loans disbursed to SHGs increased by 197.74 percent followed by 9.80 percent in Regional Rural and decreased by 69.84 percent in Cooperative during the period under study. In case of Loans outstanding, the number of SHGs having loan outstanding with Cooperative increased by 2086.78 percent in Commercial banks followed by 74.41 percent in Commercial and decreased by 79.28 percent in Regional Rural whereas amount of Loans outstanding to SHGs increased by 1778.40 percent in Cooperative followed by 9.63 percent in Commercial and decreased by 88.48 percent in Regional Rural during the period under study. Keywords: Micro Finance, SHG-Bank Linkage, NABARD, Commercial, Cooperative, Regional Rural Bank, Self Help Groups I. INTRODUCTION Micro finance in India is still in its nascent. Micro finance yet remains a powerful tool for development. It may be a panacea, but it has brought a sea of change in the lives of many in the poor and overpopulated country India. By reaching the un-reached rural poor in the rural areas, micro finance innovations are yielding results and giving hope to the millions of poor through providing credit. Today micro finance programs and institutions have become increasingly important components of strategies to reduce poverty or promote micro and small enterprise development. SHGs Linkage with banks helps in reducing the incidence of poverty through increase in income enabled the poor to build assets and enables households that have access to it to spend more on education than non-client households. The Task Force on Supportive Policy and Regulatory Framework for micro finance has defined it as Provision of thrift, credit and other financial services and products for very small amounts to the poor in rural, semi-urban or urban areas for enables them to raise their income levels and improve living standards. Micro finance is a participative model that can address the needs of the poor especially women members. It envisages the empowerment of the members by promoting their saving habits and extending bank loans to them. Micro finance is recognized and accepted as one of the new development paradigms for alleviating poverty through social and economic empowerment of the poor with special emphasis on empowering women. The core problem of rural finance is high transaction costs to the banks in financing a large number of small borrowers who require credit frequently and in small quantities. The same holds true of costs involved in providing saving facilities to small, scattered savers in rural areas. The rural savers and borrowers also face high transaction costs while dealing with banks due to distances, small value of financial transactions, etc. Besides the high transaction costs, the perception of risks in financing small borrowers who are unable to offer physical collateral, articulate their case or submit proper loan proposals, the urban orientation and the lack of flexibility in their operations are the other constraints which restrict the outreach of the formal banking system for the poor. Involvement of SHGs with banks could help in overcoming the problem of high transaction costs in providing credit to the poor, by passing on some banking responsibilities regarding loan appraisal, follow-up and recovery, etc. to the poor themselves. Self-Help Groups (SHGs) or Thrift and Credit Groups are mostly informal groups whose members pool savings and relend within the group on rotational or needs basis. These groups have a common perception of need and impulse towards http://indusedu.org Page 130
collective action. Many of these groups got formed around specific production activity, promoted savings among members and use the pooled resources to meet emergent needs of members, including consumption needs. Micro finance helps in reducing the incidence of poverty through increase in income, enabled the poor to build assets and enables households that have access to it to spend more on education than non-client households. The Indian micro finance sector has two models for micro finance delivery viz. the SHGs-Bank Linkage Model and the Micro Finance Institution Bank-Linkage Model. In SHGs Bank-Linkage Model, SHGs are directly financed by the banks and MFI Bank-Linkage Model covers financing the Micro Finance Institutions (MFI) by banking agencies for on lending SHGs and other small borrowers covered under micro finance sector. II. REVIEW OF LITERATURE Various articles appeared in journals/magazines on different aspects of micro finance but they are restrictive in nature and do not give a comprehensive picture. A brief review of some of the relevant literature is as under: Krishna (2004) found that very large numbers of households have escaped from poverty as a result of microfinance services; but a very large number of households have also fallen in to poverty during the same time. According to his findings, diversification of income sources is the most important reason for households escape from poverty whereas poor health, high health expenses, high interest private debt and large social and customary expenses constitute major reasons for households declining in to poverty; This study will also see how the poor are escaping out of poverty as a result of microfinance. Reddy (2005) observed that the state of SHG identifies key areas of weakness which undermine the sustainability of SHG movement. He identifies the major areas such as financial management, governance and human resource ranges from weak to average quality for a majority of SHGs. Rangarajan (2006) outlined the evolution of SHGs through micro finance evolve through in three stages. First, to meet survival requirement need, the second stage is to meet the subsistence level through investing in tradition activities and in the final stage by setting up of enterprises for sustainable income generation. Ghate (2007) highlighted the need for creating awareness to charge cost-recovering interest rates, the importance for the NGO sector of building long-term and healthy relationships with the government and other stakeholders, importance of maintaining diversity in delivery channels of micro-credit. Srinivasan (2008) stated that microfinance has to develop a greater sensitivity to the needs of the poor clients. The small loans should give way to livelihood support loans of a larger size and longer duration. Only when livelihoods and incomes are targeted, micro finance sector can claim that its mission is achieved. Singh (2009) has given a comprehensive overview of all aspects of micro finance in India i.e. its essence, different institutions involved in its promotion, different modes of delivery, its weakness and the challenges that lay ahead, the programme of micro finance that has made rapid strides in India. Sahu (2010) said that micro finance has evolved as an accepted institutional framework to provide financial services to the poor in the developing countries and Self Help Groups (SHGs) are considered as the vehicle for advancement of micro-credit to them. The "credit-plus approach of micro finance through SHG not only provides small, timely and easy loan to the poor without any collateral but also inculcates saving behaviour amongst them. The micro finance movement through SHGs has also been considered as an effective development tool to enabling SHGs members to graduate to microenterprises and in turn, to tackle poverty. Moses (2011) stated that micro finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro finance scene is dominated by Self Hel Groups (SHGs) - linkage Programme aimed at providing a cost effective mechanism for providing financial services to the unreached poor. The study aimed at identifying the origin and concept of micro finance, features and role of micro finance in India, reviewing the progress and weakness followed by suggestion for making micro finance as an effective instrument of poverty elevation, women empowerment and rural development in India. Das (2012) reported that Self Help Groups (SHGs) under Indian micro finance programme have become a vehicle to pursue diverse developmental agendas and even for the profit motive. Removal of regional disparity in the implementation of the programme leads to target oriented approach which again considered as hindrance in the qualitative growth of the movement. Ayuub (2013) stated that Microfinance scheme help people to improve their living standard and provide them financial opportunity to expand their business. Microfinance is the key strategy that leads to quick revival of economy, increase in living standard and empowerment. Choudhary (2013) observed that micro financing services would surely lead to achieve the motive of poverty reduction. However, Government efforts alone cannot solve the problem of financial inclusion without the cooperation of the banking sector particularly, in the developing nations like India, where most of poor people do not have access to any kind of banking services. Commercial banks will definitely lead to good financial governance by changing their conventional attitude towards the poor that they are bankable as their good repayment behavior is evident through various studies. Gundappa (2014) stated that Microfinance program is one of the most important programs in India as developing countries are facing initial capital problem to investment that is why Micro Finance system is providing financial facility through SHGs. http://indusedu.org Page 131
Mudaliar & Mathur (2015) Microfinance has the potential to have a powerful impact on women s empowerment. Although microfinance is not always empowering for all women, most women do experience some degree of empowerment as a result. Varghese (2016) stated that harmonious progress of a nation is possible only when women are considered as equal partners in the development process. Since early 1970s the emergence of Self Help Groups (SHGs) as a vehicle of transformation in poverty alleviation and women empowerment became worldwide phenomenon. Self Help Groups are considered as one of the means to empower women as it enables them to pool resources through thrift and opens them to easy access to credits. Annapurna (2017) Mutual benefit for banks as well as SHGs is the core theme for the successful implementation of the program. Pro active approach of banks, creation of exclusive fund at bank level for lending to SHGs will help increasing the volume of credit available for SHGs. A special cell to cater the needs of SHGs at bank level will help in thorough monitoring of the groups and their activities and also extended financial consultancy to improve their economic conditions. In view of above review of the literature, the present study entitled Microfinance in Haryana: Evaluation of Self Help Group-Bank Linkage Programme of NABARD In Haryana is an addition to the existing literature. Objective of the Study The present study is conducted to examine the growth in savings of SHGs with Commercial banks, Cooperative, and Regional Rural, loans disbursed to SHGs by these banks and the growth in loans outstanding to SHGs of selected public sector banks. III. RESEARCH METHODOLOGY The present study is of analytical nature and used the secondary data of savings of SHGs of selected public sector banks, loans disbursed by these banks and loans outstanding to SHGs of selected public sector banks under SHG-Bank Linkage Programme in Haryana is collected from the annual reports of NABARD, websites and journals from the period 2007-08 to 2016-17 and various statistical tools like percentage, trend analysis and one way Anova statistics has been applied to arrive at the conclusions. IV. RESULTS AND DISCUSSIONS Table -1 shows the number of SHGs having savings with Commercial banks, Cooperative banks and Regional Rural in Haryana during the period under study. The number of SHGs having savings with banks increased by 62.01 percent, 290.40 percent and 65.71 percent in Commercial, Cooperative and Regional Rural respectively. Table-1 Number of SHGs having Savings with in Haryana Year Commercial Co-operative Regional Rural 2007-08 12302 100.00 896 100 10372 100 2008-09 17926 145.72 2891 322.66 12440.00 119.94 2009-10 19167 155.80 3532 394.20 14063.00 135.59 2010-11 20397 165.80 2003 223.55 12919.00 124.56 2011-12 22655 184.16 3415 381.14 18114.00 174.64 2012-13 19011 154.54 4288 478.57 19281.00 185.89 2013-14 18813 152.93 3749 418.42 20467.00 197.33 2014-15 20839 169.40 3801 424.22 17013.00 164.03 2015-16 21987 178.73 3903 435.60 17031.00 164.20 2016-17 19930 162.01 3498 390.40 17187.00 165.71 Source: NABARD Annual Reports Source of Variation SS Df MS F P-value F crit Between Groups 1440312204 2 720156102 108.4934 1.2416E-13 3.354131 Within Groups 179220248.6 27 6637787 Total 1619532453 29 The value of statistics shows that there is no significant difference between the number of SHGs having savings with Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is a significant difference between the numbers of SHGs using savings with Commercial, Cooperative and Regional Rural in Haryana is accepted. Table - 2 shows the number of SHGs having amount of savings with Commercial, Cooperative and Regional Rural in Haryana during the period under study. The number of SHGs having http://indusedu.org Page 132
savings with banks increased by 313.33 percent, 626.97 percent and 80.74 percent Commercial, Cooperative and Regional Rural in respectively. Table-2 Amount of Savings of SHGs with in Haryana (Amount Rs. Lakhs) Year Commercial Cooperative Regional Rural 2007-08 584.17 100.00 42.38 100.00 738.60 100.00 2008-09 1604.41 274.65 167.12 394.34 776.40 105.12 2009-10 9465.55 1620.34 234.51 553.35 1062.49 143.85 2010-11 7891.11 1350.82 179.37 423.24 1849.97 250.47 2011-12 1618.17 277.00 211.90 500.00 1848.28 250.24 2012-13 1646.25 281.81 304.16 717.70 2080.32 281.66 2013-14 2147.85 367.68 336.01 792.85 2055.61 278.31 2014-15 1694.36 290.05 309.92 731.29 1646.80 222.96 2015-16 1379.9 236.22 337.47 796.30 1844.00 249.66 2016-17 1830.36 313.33 265.71 626.97 1334.93 180.74 Source of Variation SS df MS F P-value F crit Between Groups 37792442.4 2 18896221 5.925868 0.007351 3.354131 Within Groups 86096754 27 3188769 Total 123889196.4 29 The value of statistics shows that there is a significant difference between the number of SHGs having savings with Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is no significant difference between the numbers of SHGs using savings with Commercial, Cooperative and Regional Rural in Haryana is rejected. Table -3 shows the number of SHGs availed loan from Commercial, Cooperative and Regional Rural in Haryana during the period under study. The number of SHGs availed loan from banks increased by 200.27 percent, decreased by 38.50 percent and decreased by 21.58 percent in Commercial, Cooperative and Regional Rural respectively. Table-3 Number of SHGs Availed Loan from in Haryana (Amount Rs. Lacs) Cooperative Regional Rural Years Commercial 2007-08 1118 100.00 213 100.00 1251 100.00 2008-09 2973 265.92 309 145.07 1292 103.28 2009-10 2225 199.02 236 110.80 1562 124.86 2010-11 2141 191.50 161 75.59 2487 198.80 2011-12 22655 2026.39 3415 1603.29 18114 1447.96 2012-13 1243 111.18 166 77.93 1832 146.44 2013-14 1012 90.52 83 38.97 825 65.95 2014-15 1845 165.03 224 105.16 454 36.29 2015-16 2649 236.94 52 24.41 1168 93.37 2016-17 3357 300.27 131 61.50 981 78.42 Source of Variation SS Df MS F P-value F crit Between Groups 68762535.47 2 34381268 1.420521 0.259073 3.354131 Within Groups 653488576 27 24203281 Total 722251111.5 29 The value of statistics shows that there is no significant difference between the number of SHGs availed loan from Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is no significant difference between the number of SHGs availed loan from Commercial, Cooperative and Regional Rural in Haryana is accepted. http://indusedu.org Page 133
Table - 4 shows amount of loan disbursed to SHGs by Commercial, Cooperative and Regional Rural in Haryana during the period under study. The amount of loans disbursed to SHGs by banks increased by 197.74 percent, decreased 69.84 and increased by 9.80 percent in Commercial, Cooperative and Regional Rural respectively. Table-4 Amount of Loan Disbursed in Haryana (Amount Rs. Lakhs) Regional Rural Year Commercial Cooperative 2007-08 1640.2 100.00 131.15 100.00 842.54 100.00 2008-09 4038.15 246.20 280.97 214.24 2064.79 245.07 2009-10 2718.1 165.72 315.64 240.67 1636.00 194.17 2010-11 3298.65 201.11 173.24 132.09 2771.57 328.95 2011-12 1618.17 98.66 211.9 161.57 1848.28 219.37 2012-13 1956.11 119.26 222.63 169.75 2977.65 353.41 2013-14 1445.71 88.14 145.71 111.10 1469.20 174.38 2014-15 3420.69 208.55 142.34 108.53 497.00 58.99 2015-16 4249.12 259.06 67.79 51.69 1082.00 128.42 2016-17 4883.6 297.74 39.55 30.16 925.13 109.80 Source of Variation SS Df MS F P-value F crit Between Groups 68762535.47 2 34381268 1.420521 0.259073 3.354131 Within Groups 653488576 27 24203281 Total 722251111.5 29 The value of statistics shows that there is a significant difference between the amount of loan disbursed to SHGs by Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is no significant difference between the amount of loan disbursed to SHGs by Commercial, Cooperative and Regional Rural in Haryana is rejected Table - 5 shows the number of SHGs having loans Outstanding with Commercial, Cooperative and Regional Rural in Haryana during the period under study. The number of SHGs having loans outstanding with banks increased by 74.41 percent, 2086.78 percent and decreased by 79.28 percent in Commercial, Cooperative and Regional Rural respectively Table-5 Number of SHGs Having Loans Outstanding With Bank in Haryana Regional Rural Year Commercial Cooperative 2007-08 9002 100.00 295 100.00 1670 100.00 2008-09 12849 142.73 424 143.73 2039 122.10 2009-10 11407 126.72 444 150.51 3951 236.59 2010-11 11108 123.39 665 225.42 7596 454.85 2011-12 13335 148.13 615 208.47 7483 448.08 2012-13 13452 149.43 665 225.42 9177 549.52 2013-14 12870 142.97 905 306.78 6881 412.04 2014-15 12957 143.93 723 245.08 5901 353.35 2015-16 11894 132.13 770 261.02 6248 374.13 2016-17 15700 174.41 6451 2186.78 346 20.72 Source of Variation SS Df MS F P-value F crit Between Groups 653336081.3 2 326668041 64.0446139 5.63065E-11 3.354130829 Within Groups 137717078.1 27 5100632.52 Total 791053159.4 29 http://indusedu.org Page 134
The value of statistics shows that there is no significant difference between the numbers of SHGs having loans outstanding with Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is no significant difference between the numbers of SHGs having loans outstanding with Commercial, Cooperative and Regional Rural in Haryana is accepted. Table 6 shows the amount of loan outstanding to SHGs by Commercial, Cooperative and Regional Rural in Haryana during the period under study. The amount of loan outstanding to SHGs by banks increased by 9.63 percent, 1778.40 percent and decreased by 88.48 percent in Commercial, Cooperative and Regional Rural respectively. Table-6 Amount of Loans Outstanding to SHGs by Bank in Haryana (Amount Rs. Lakhs) Year Commercial Cooperative Regional Rural 2007-08 8812.75 100.00 347.21 100.00 1582.11 100.00 2008-09 9772.86 110.89 463.51 133.50 2178 137.66 2009-10 10499.83 119.14 545.87 157.22 4461.74 282.01 2010-11 11191.41 126.99 738.87 212.80 7896.52 499.11 2011-12 12653.72 143.58 595.88 171.62 7325.41 463.02 2012-13 14526.87 164.84 604.2 174.02 11266.34 712.11 2013-14 15323.09 173.87 770.45 221.90 7932.42 501.38 2014-15 15421.64 174.99 519.28 149.56 6700.00 423.49 2015-16 13076.82 148.39 589.07 169.66 6847.00 432.78 2016-17 9661.24 109.63 6521.98 1878.40 182.20 11.52 Source of Variation SS Df MS F P-value F crit Between Groups 603307164.2 2 301653582.1 42.16878 4.94024E-09 3.354131 Within Groups 193144002.3 27 7153481.568 Total 796451166.5 29 The value of statistics shows that there is no significant difference between the amount of loan outstanding to SHGs by Commercial, Cooperative and Regional Rural. Therefore null hypothesis i.e. there is no significant difference between the amount of loan outstanding to SHGs by Commercial, Cooperative and Regional Rural in Haryana is accepted. V. CONCLUSIONS To sum up, in case of savings, number of SHGs having savings with Cooperative increased by 290.40 percent followed by 65.71 percent and 62.01 percent in Regional Rural Bank and Commercial respectively, whereas the amount of savings of SHGs Increased by 526.71 percent in Cooperative followed by 213.33 percent and 80.74 percent in Commercial and Regional Rural during the period under study. In case of loan disbursement, number of SHGs availed loan from Commercial increased by 200.27 percent in Commercial and decreased by 38.50 percent and 21.58 percent in Cooperative and Regional Rural, whereas the amount of loans disbursed to SHGs increased by 197.74 percent followed by 9.80 percent in Regional Rural and decreased by 69.84 percent in Cooperative during the period under study. In case of Loans outstanding, the number of SHGs having loan outstanding with Cooperative increased by 2086.78 percent in Commercial banks followed by 74.41 percent in Commercial and decreased by 79.28 percent in Regional Rural whereas amount of Loans outstanding to SHGs increased by 1778.40 percent in Cooperative followed by 9.63 percent in Commercial and decreased by 88.48 percent in Regional Rural during the period under study. http://indusedu.org Page 135
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