Impact of micro finance through self- help groups in Malappuram district

Abstract

Micro finance is about provisioning of thrift, credit and other financial services and products of very small amounts to the poor for enhancing them to raise their income levels and to improve their living standards. The present study entitled "Impact of Micro finance through self-help groups in Malappuram district" was undertaken with an objective of (i) to assess the socio-economic impact of self- help groups on beneficiaries and (ii) to identify thc factors that• determine the effective functioning of self-help groups. Primary data collected with the help of a structured schedule from 200 sample households in 30 SHG's functioning in 11 Grama Panchayats in Nilambur block of Malappuram district formed the basis for the study. The impact of the programme was assessed by comparing the pre-SHG and post-SHG situations. Group effectiveness index was computed for each group for identifying the factors determining the effective functioning of the groups. The economic impact of SHGs on beneficiaries could be visible III terms of increased savings habit, increased accessibility to credit, increased contribution to household income, acquisition of household assets, increased control over financial resources, and increased income and employment generation. The study revealed that SHGs places a lot of emphasis in developing savings habit among the . members. It is also worth to note that SHGs have emerged as the major sources of credit for its members. As much as 93 percent of them had availed credit from the group. The number of respondents who availed

ii bank credit also increased from 2.5 percent in the pre-SHG period to 24 percent in the post SHG period. An examination of number of sources of household income in the pre- and post-SHG period showed an increase in number of sources of income for many of the households. The number of households reporting only single source of Income declined from 57.5 percent to 32 percent in the post SHG period, whereas the number of households reporting two and three sources increased from 27.5 percent and 11 percent to 44.5 percent and 19.5 percent respectively. Members acquired a wide variety of assets with the help of programme loan. Fourty nine percent of members acquired income generation assets including livestock, sewing machine and other work related implements. The respondent's control over household financial resources is reflected from their involvement in decision making with respect to savings, credit and income generation activities. The study revealed that the involvement of the members in SHG significantly contributed their ability to control these financial resources. It was also observed that as many as 35.5 percent of the respondents had constructed new latrine, repaired their house (9 percent), constructed new house (8.5 percent). As many as 47 percent of the respondents had started their own income generation activities. It is significant to note that majority of the respondents being housewives are able to make use of their idle time more productively and thereby supplementing their household income. The social impact of the programme was visible in terms of the members' increased role in household decision making increased self-confidence, increased ability to deal with adversities and their

ill involvement in community activities. The members generally reported a higher level of involvement in their household decisions which IS reflected from their role in common household decisions such as purchase of food items, household investments, children's education, marnage etc. The study also indicated that involvement in SHGs significantly improved their level of self-confidence, which is reflected from their contribution to household, contribution to community and their free interaction with others. It is particular to note that the association of the members with SHGs equiped them to deal with certain types of adversities. In addition the group activities also helped in developing a greater sense of solidarity, closeness and will to shoulder responsibilities among the group members. The group effectiveness index showed high values indicating the effective functioning of the groups. The relationship between the various components with group effectiveness index revealed that all the components except understanding of scheme objectives and transparency exhibited strong and significant relationship with group effectiveness. The regression analysis carried out for the purpose of identifying the most influencing factors showed that group interaction, autonomy, equity, accountability and transparency mostly influenced the group effectiveness. The findings of the study revealed that the SHG as institutional arrangement could positively contribute to the social and economic dev.elopment of the poor.