SHG-Bank linkage programme - a study in Thrissur district

Abstract

Self Help Groups have been recognized by the policy makers as an effective tool for accomplishing the distributional objectives of monetary policy. The SHG model with bank lending to groups of poor women without collateral has become an accepted part of rural finance. With over 11 million poor households accessing banking services including micro credit through their 29,24,973 SHGs, the SHG-Bank Linkage Programme led by NABARD in India claims to be the largest and fastest growing micro finance programme in the world. The study entitled “SHG – Bank Linkage Programme: A study in Thrissur District” has been undertaken with the objectives of analyzing the level and pattern of utilization of bank finance by the Self Help Group and their members under the SHG- Bank Linkage Programme; to identify the constraints, if any, in the SHG – Bank Linkage Programme: and to make a bank-wise and spatial comparison of the SHG- Bank linkage Programme. Both primary and secondary data have been used for the study. Primary data have been collected from 30 SHGs and 90 members from the three models of SHGs functioning in Thrissur district. Percentages, averages, T- test, Shannon Weaver Diversity Index and ANOVA have been used for the analysis of the data collected. The study has revealed that the average loan amount per member / household is as high as Rs. 15100/- in the case of the SHGs selected, while the national average is only Rs. 2025/-. There is cent per cent utilization of loans of banks by the SHGs and their members. In aggregate, more than 50 per cent of the loans enjoyed by SHG members are utilized for consumption purposes. But when a comparison of the SHGs under different models are considered, it is seen that two – third of the loans of SHGs which are promoted and financed by banks are given for income generating purposes. The least share for income generating activities is from the members of SHGs which are promoted by NGOs. A tendency among SHGs to lend their funds at high rate of interest to outsiders was noticed. This would further bring down the involvement of members in income generating activities in the future. The development of caste and community based sub groups within the SHGs is an undesirable development which has been noticed during the study. The problem of decreasing productive activities was noted, which in future might lead to low repayments. Kendall’s Co-efficient of Concordance has proved that there is perfect agreement among the fifteen banks that ranked the twelve constraints of SHG – Bank Linkage Programme. There is a positive growth in the SHG-Bank linkage programme in the entire six regions taken under consideration. The trend in the physical and financial performance of SHG-Bank linkage programme is positive in all the regions except the central region where adequate up scaling measures are taken by NABARD. Shannon Weaver Diversity Index computed for loan per SHG under the different regions revealed that there was an increased tendency for a uniform disbursal of the loan amount over the three models. The study has brought out the increasing significance of this informal system of financing to bring the poor and unbankable within the reach of a formal banking system. Efforts from the promoters, banks, NABARD and other agencies involved in the promotion and development of SHGs can definitely take our Self Help Groups and their member beneficiaries to still further heights in the future.