MICRO FINANCIAL PROBLEMS OF SELF HELP GROUPS IN NAMAKKAL DISTRICT, *Sasikumar. P TAMILNADU ** Dr. Natarajan. G * PH.D Research Scholar, Department of Business Administration, Annamalai University **Assistant Professor, Department of Business Administration, [DDE WING], Annamalai University. TAMILNADU-608002 ABSTRACT Self help groups (SHGs) are necessary to overcome exploitation, create confidence for the economic selfreliance of rural people, particularly among women. These study aim of the present papers is the financial problems and constraints faced by women SHG members in Namakkal district. The causes of the problems may arise from within the family, bank or their own organization self help group or spring from out of the external environment and their community. The study has used 8 key variables that affect the performance of micro- finance and tries to analyze the chief variables among them that financial problems and act as a constraint to the effective functioning of the SHG. The researcher collected responses from 50 women respondents from two blocks in Namakkal district. Lack of government support, Existence of lengthy procedures to avail loan, Inability bank staff, lack of awareness about the availability of financial supports, lack of witness, Lack of banker co-operation, Inadequate loan amount, Delay in getting the loans followed by marketing of products emerged as the financial problems and constraints to the from SHGs. The paper provides the framework of the financial problems and constraints and also the approaches of how the members manage them. This study Anova, chi-square test, regression and average method is used as statistical tools for analyzing the data and testing the hypothesis. This study find out that the Self help group member s loans should depend on member capacities, not on targets or merely the fact of repayment of a previous loan. It is concluded that women are now participating in all productive activities and are at par with men. SHG members savings are increased to the desirable extent which automatically increase the purchasing power and increase in standard of living and cleared that gender strategies in micro finance not only focus on increasing women s access to savings, solving the problems and credit and also organizing self help groups. KEY WORDS: Microfinance, Microcredit, Financial problems, Savings, Self Help Group, Anova, Chi-suqare. Page 54
INTRODUCTION Self Help Groups is a path breaking initiative that can change the lives of millions of poor Indians. However, the government should concentrate of regulating the formation process to ensure better financial viability within the group. In our country, usually the poor people in time of their emergency run to the door of the landlords and money lenders to fulfill their credit needs and this comes usually at a very high interest. In India, it is too difficult to find a financial institution to meet such requirements. To meet the emergency need the Self Help Groups (SHG) evolved. Members of the SHGs started savings as the prime work and this savings of the members opened the way for different income generating activities. In no time SHGs flourished in the development sector as a major tool for bringing economic development of the poor people particularly among the women folk. Government of India through the state Governments are bank must arrange financial assistance to carry out manufacturing and trading activities, arranging marketing facilities while the Governments will procure the product of SHGs, arrange for enhancing the capacity of women in terms of leadership quality and arranging for the management of SHGs by themselves so as to have administrative capacity as a social movement with government support. SHGs become more or less a part and parcel of the society. CHALLENGES FACING SELF HELP GROUPS Self Help Groups (SHGs) have contributed in enhancing women economic empowerment some gaps were noted during the literature review. Some of capacity gaps facing SHG include both the internal factors which are within their control and also the external factors which are beyond their control (van Kempen, 2009).The most common internal factors are the management and the technical skills. The management skills include lack of governance structure, strategic plan, financial management policy, constitution, and poor monitoring and evaluation tools. The technical skills include poor marketing skills, accounting skills and financial planning skills. Some of the external factors include lack of control over policies making such as to gap exploitative markets, enable them have access to good roads, friendly bank lending rates. The greatest absurdity is that most government officials who make these policies are thousands of miles away continually shaping new solution to problems they have never experienced for the people whom they have never consulted and thus some of the policy developed to alleviate the poor does not work (Durning & Institute, 1989). The growing competition there is a need to Self Help Groups (SHG) members with technical skills such as marketing, and financial planning to stand the test of time (Das, 2012). Self Help Group (SHG) has proved to be a good grass root approach to poverty eradication by the community. Most government and NGOs have notice this approach, and wants to override in these structures without undergoing necessary restructuring and re-orientation to suit the structure. For example some NGOs who want to supplement the group loan through aid end up burdening the group with a lot of paper work such as proposal, budget, work plans, prior approval of aid without building their capacity to on those areas. This may lead to delay which may not much community priorities. REVIEW OF LITERATURE Sivakaumar and Prabhakaran (2012) have stated that SHG in certain multiples of the accumulated savings of the SHG. The main objectives of self help groups to faced by the financial problem in Namakkal district. It is found that financial problems faced by the SHGs member are long procedure, lack of capital, unnecessary documentation, credit policies that can gradually ruin their business, inadequate financial assistance, lack of credit support by the financial institutions, lack of support from officials, high Page 55
interest rate, lack of refinance facility, and waste of time, energy and money in getting the assistance. Other problems are also faced by the members are lack of training, non cooperation among member, animator s domination, improper maintenance of account, interference of outsider, lack of proper infrastructure, lack of interest among the members, lack of suitable leadership, lack of knowledge of the market and potential profitability, employment of too many relatives, setting prices arbitrarily, lack of husband and family member support. This study primary data were collected from questionnaire through the respondents. The Self help group member s loans should depend on member capacities, not on targets or merely the fact of repayment of a previous loan. It is concluded that women are now participating in all productive activities and are at par with men. SHG members savings are increased to the desirable extent which automatically increase the purchasing power and increase in standard of living and cleared that gender strategies in micro finance not only focus on increasing women s access to savings and credit and also organizing self help groups. Sanjay kanti Das (2012) have evaluated that the Self Help Groups (SHGs) under the programme have become a vehicle to pursue diverse developmental agendas and even for the profit motive. The main objectives of self help groups identify the financial problems of SHGs in the study area and access the problems of Difficulty to approach the authorities for getting loan, Poor response of authorities, Delay in sanctioning the loans, Inadequate loan amount, Lack of administrative Experience, Lack of Cooperation among members, Repayment of loan SHG members in the study area. The present study differs from earlier studies as it covers twenty eight quality parameters to evaluate the quality of SHGs based on survey of literature. The research design and methodology devised in this paper is being presented which has been designed keeping in mind the focused objectives and with the aim of acquiring accurate and authentic data. This study both judgment and convenience sampling methods data has been collected from both primary and secondary sources. SHGs are randomly selected from selected revenue villages out of which researchers could collect 150 (50 SHGs from each block) useful filled questionnaires from the selected Development Blocks. These study statistical tools used for percentage analysis. It concluded that the study e quality of groups is quite low in the selected Development Blocks compare to other blocks or states. Strict random selection of sample could be one of the reasons overall environment in the block/district and popular perceptions about the status of SHG movement in the state appears to be aptly reflected by the grades of the groups. Loganathan and Ashoken (2006) noted that the home grown SHG model helps in addressing problems like poverty education and women empowerment. NABARD found that SHGs can be a tool for providing loan to the unbankable section of the society. It started on experiment with MYRADA on SHG lending. Soon, it launched a programme to SHGs with the banks in 1992. This was the first instance where the informal thrift and credit groups of the poor where recognized as bankable clients. Sankaran (2009) made an attempt to analyze the trends and problems of rural women entrepreneurs in India. The Study highlighted to conceptual aspects of trends and problems of rural women entrepreneurs in India. It concluded that women have creative ability, easy adaptability and ability to cope with setbacks. OBJECTIVE OF THE STUDY To analyze the financial problems faced by the members of self help group To suggest suitable measures for the development, improvement and identify the self help group in Namakkal district. Page 56
STATEMENT OF PROBLEMS Micro finance is miserably getting downfall due to the problems regarding lack of deployment strategy, institutional support, lack of promptness among the borrowers etc. The phenomenon (Chandasekhar and Jayati Ghosh, 2012) of micro finance group lending, whereby borrowers are clubbed into small groups whose members typically received sequential loans, has been seen as the fundamental innovation that allows micro finance institutions to service clients without collateral, who would otherwise be excluded not only because of the risk of default in general but the cause of the difficulties and high transaction costs involved in sorting more and less reliable borrowers. What this effectively means is that all the costs and risks of the lending process are transferred from lenders to borrowers. So the joint responsibility condition, combined with the sequential payments that function as a sorting mechanism, allows banks to avoid the problem of choosing more risky clients even through the bank remains as ignorant as ever about the safe and risk conditions of borrowers. Proponents argue that this process of voluntary self-selection among borrowers allows price discrimination whereby riskier groups pay higher rates, so that safer borrowers no longer have to bear the burden of riskier ones. It is observed that the micro finance activities are mainly offered by formal financial institutions with the help of SHGs. As a result, micro finance programme is growing in those areas where there is incredible growth of formal financial institutions. METHODOLOGY The study is analytical based on collection of data from both primary and secondary sources. Primary data is collected from well structured questionnaire; Secondary data is obtained from various published and unpublished records, books, journals and information given by the Mahalir thittam office Namakkal district. Multi stage purposive and random sampling has been adopted for the present study. At the first stage all the five taluks have been selected for the study. 10 women self help groups (WSHGs) established in not less than 1year have been randomly selected from each taluk. 5 respondents who are member of the group for at least one year and taken at least one loan have been randomly selected from each group. Thus 50 respondents are selected for the present study. ANALYTICAL FRAMEWORK The present study is concerned with the financial problem of self help group members in Namakkal district. RESPONDENTS BAESD ON AGE S.NO Age No.of respondents Percentage (%) 1 Below 25 10 20 2 26-35 12 24 3 36-45 17 34 4 Above 45 11 22 Total 50 100 Source: Primary Data computed Page 57
The above table reveals that 20% of the respondents are below 25, 24% of the Respondents 26-35, 34% of the respondents 36-45, and remaining 22% of the respondents above 25. So majority of the respondents are 36-45 years. RESPONDENTS BAESD ON RESIDENTIAL AREA S.NO Residential Area No.of respondents Percentage (%) 1 Rural 38 76 2 Urban 12 24 3 Total 50 100 Source: Primary Data computed The above table shows that 76% of the respondents are rural area, and remaining 24% of the respondent s urban area. So majority of the respondents are rural areas. RESPONDENTS BAESD ON EDUCATIONAL QUALIFICATION S.NO Educational Qualification No.of respondents Percentage (%) 1 Illiterate 12 24 2 Primary education 11 22 3 Up to SSLC 14 28 4 H.sc 10 20 5 Degree 3 6 Total 50 100 Source: Primary Data computed From the above table explain that 24% of the respondents are Illiterate, 22% of the Respondents are primary education, 28% of the respondents are Up to SSLC, 20% of the respondents are H.sc, and remaining 6% of the respondents are Degree. So majority of the respondents are Up to SSLC. RESPONDENTS BAESD ON FAMILY SIZE S.NO Family size No.of respondents Percentage (%) 1 1-2 13 26 2 3-4 10 20 3 5-6 18 36 4 7 and above 9 18 Total 50 100 Source: Primary Data computed The above table proves that 26% of the respondents are 1-2 family size, 20% of the Respondents are 3-4 family size, 36% of the respondents 5-6 family size, and remaining 18% of the respondents 7 and above. So majority of the respondents are 5-6 family size. Page 58
MONTHLY INCOME OF THE FAMILY THROUGH SHG S.NO Family size No.of respondents Percentage (%) 1 Below 5000 4 8 2 Rs.5001-10000 21 42 3 Rs.10001-15000 15 30 4 Rs.15001-20000 8 16 5 Above 20000 2 4 Total 50 100 Source: Primary Data computed The above table proves that 8% of the respondents are below 5000, 42% of the Respondents are Rs.5001-10000, 30% of the respondents Rs.10001-15000, 16% of the respondents Rs.15001-20000 and remaining 4% of the respondents above 20000. So majority of the respondents are 5001-10000. Age and Financial problem Regression Table: Un standardized Standardized Coefficients Coefficients Adjusted R Model t F Std. Square B Beta Error (Constant) 2.386.397 6.014 1 Financial 0.053* -.010.116.158.105.733 problems Dependent Variable: Age; Source: Primary data; Computed spss;*. The mean difference is significant at the 0.05 level. It results are shown in table 1 as an outcome of regression model conceptualized. From the results, it can be inferred that the F value of 0.053 is found to be significant at 5 percent level and hence, the hypothesis 1 is rejected. Further, the adjusted R square value of -.010 from the table-1 indicates that significant. Also, the t values of 6.014,.733 corresponding to all the dimensions of financial problems acceptance are found to be having significant effects on the model conceived. Financial problem and Demographic variables Variables Educational qualification Monthly income of the family through ANOVA Sources of Sum of df Mean Variables Squares Square Between Groups 1.213 2.607 Within Groups 91.367 47 1.944 Total 92.580 49 Between Groups 1.062 2.531 Within Groups 46.158 47.982 Total 47.220 49 F Sig. 0.312 0.733 0.541 0.586 Page 59
SHG Family Size Between Groups 4.758 2 2.379 Within Groups 43.242 47.920 Total 48.000 49 Occupation Between Groups 2.383 2 1.192 Within Groups 107.617 47 2.290 Total 110.000 49 Multiple Comparisons Dependent (I) financial (J) financial Mean Variable problems problems Difference Educational qualification Std. Error 2.586 0.086 0.520 0.598 Sig. (I-J) Low Medium.500.636 0.436 High.233.476 0.626 Medium Low -.500.636 0.436 High -.267.555 0.633 High Low -.233.476 0.626 Medium.267.555 0.633 Monthly income Low Medium.292.452 0.522 of the family High.350.338 0.306 through SHG Medium Low -.292.452 0.522 High.058.394 0.883 High Low -.350.338 0.306 Medium -.058.394 0.883 Family Size Low Medium.375.438 0.396 High -.433.328 0.192 Medium Low -.375.438 0.396 High -.808 *.382 0.040 High Low.433.328 0.192 Medium.808 *.382 0.040 Occupation Low Medium -.250.691 0.719 High.317.517 0.543 Medium Low.250.691 0.719 High.567.602 0.351 High Low -.317.517 0.543 Medium -.567.602 0.351 Source: Primary data; Computed SPSS;*. The mean difference is significant at the 0.05 level. Interpretation Ho: There is no significant difference between financial problems with respect to demographic profiles. From the above table inferred that, all the obtained factors values are non significant educational qualification (0.733), Monthly income (0.586), Family size (0.086), and occupation (0.598). Since, the obtained P-value is greater than 0.05. Hence the stated null hypothesis is accepted. So, that the alternative hypothesis is rejected. So, there is no significant difference in the financial problems about the educational Page 60
qualification, Monthly income, Family size, and Occupation on the basis of their select different categories of self help groups. So, there is significant difference in the financial problems towards on the basis of self help groups. All the dimensions of not accepted were categorized into three groups such as Low, Medium and High for identifying the variations of self help group. This result clearly shows that there exist significant variations in the financial problem among three levels of self help group. Hence, financial problem between demographic profiles such as low, medium and high not significant. In order to identify the exact variations between different groups considered on each level of the four dimensions of financial problem, multiple comparisons was made with LSD method and its results are provided along with table 1, were the variations in financial problems are noted as follows. Financial problems Low Medium High Total Below 5000 4 3 12 19 Rs.5001-10000 5 3 15 23 Monthly Expenditure of the family Rs.10001-15000 0 1 2 3 15001-20000 1 1 1 3 Above 20000 2 0 0 2 Total 12 8 30 50 Chi-Square Tests Value Df Asymp. Sig. (2-sided) Pearson Chi-Square 9.047 a 8 Significant at 5% level N of Valid Cases 50 12 cells (80.0%) have expected count less than 5. The minimum expected count is.32. Interpretation: Ho: There is no significant difference between financial problems with respect to age groups The kind of association that exist between financial problem and their age group was defined in the hypothesis 3 taken up and its results are shown in table 3 as an outcome of Chi-Square analysis and corresponding cross tabulation. From the results shown, it can be inferred that the Chi-square value of 9.047 with 8 degree of freedom has been found to be significant at 5 percent level. Hence, the hypothesis is rejected and this establishes significant levels of association between financial problem and their age groups. Self help group members and their different levels of association can be identified between medium & high levels of financial problems and medium & good. More specifically 65 percent employees highlighted with shaded pattern (12+8+30) in the cells are categorized as the self help group members. Page 61
FINDINGS From the results, it can be inferred that the F value of 0.053 is found to be significant at 5 percent level and hence, the hypothesis 1 is rejected. Further, the adjusted R square value of -.010 from the table-1 indicates that significant. This result clearly shows that there exist significant variations in the financial problem among three levels of self help group. Financial problem between demographic profiles such as low, medium and high not significant. In order to identify the exact variations between different groups considered on each level of the four dimensions of financial problem, multiple comparisons was made with LSD method and its results are provided along with table 2, were the variations in financial problems are noted as follows. From the results shown, it can be inferred that the Chi-square value of 9.047 with 8 degree of freedom has been found to be significant at 5 percent level. Hence, the hypothesis is rejected and this establishes significant levels of association between financial problem and their age groups. SUGGESTIONS Self help group both government and non-governmental funding agencies provide financial assistance to the self help groups. Since the self help group admit members who are financially weaker the funding agencies should advance adequate amount of loans without taking in to account. The bank managers should be motivated or trained and they should feel comfortable in financing SHGs and they should ensure timely and adequate finance to the SHG members. Delay in sanction of loans is a major problem in addition to insufficient capital. Simplification of banking procedures, access credit, etc. will encourage the poor to bank with the formal sector. The groups engaged in the micro financial problems that arise in the field-stronger NGOs are able to interact with banks better and provide solutions. These difficulties in securing the linking and sustaining the linkage over successive cycles of funding increase the borrowers, transaction costs. Microfinance cells which are to be established must fund time to analyze the reasons for these problems and design solutions that work seamlessly in the field. CONCLUSIONS It is concluded that delay in getting loans, marketing of products and non availability of raw materials are the major problems being faced by the respondents and the respondents in the older SHGs experienced more problems than the members belonging to the recently formed groups. It is the right time for the NGOs and stake holders in rural development to take effective steps to sort out the problems to ensure the sustainability of the SHG movement. The members could effectively build enterprises as a source of their employment and income, financial resources and government should take necessary actions given by the solutions and avoid for problems to the self help groups. Page 62
REFERENCES: 1. Sanjay kanti Das (2012) Ground realities of Self help group bank linkage programme: An Empirical analysis, International Journal of Research in Social Sciences, Volume 2, Issue 2, May 2012, p.p 464-479 http://www.ijmra.us 2. Sivakaumar Vand Prabhakaran G(2012) Review on Financial Prospects and Problems of Women s Self Help Groups (SHGs) with Special Reference to Dharmapuri District, Tamilnadu. Indian journal of applied research, Volume.1, Issue.12, September 2012, pp.141-144. 3. Krishnaveni V and Haridas (2013) Self help groups: Problems and solutions, SELP Journal of Social Science, Vol.4, and Issue. 14 Jan - March 2013, pp.56-59 4. Lakshmi.R and Vadivalagan G (2011) Impact of self help groups on empowerment of women: A study in Dharmapuri district, Tamilnadu, Journal of management and sciences, volume no.1, issue 2, pp. 43-54. 5. Rajendran Kand Raya R.P (2011) Micro- finance: Problems and Constraints in Vellore District, Tamil Nadu, India, J Economics, Vol.2, Issue.2 2011, pp.109-114. 6. Anbuoli (2013) A study on recent trends and problems in using micro finance services in India, International Journal of Management Research and Development, Volume 3, Number 1, Jan - March (2013), pp.74-84. Page 63