Role of Self Help Groups Financial Institutions for Inclusive Growth and Development in Latur district

Role of Self Help Groups Financial Institutions for Inclusive Growth and Development in Latur district

 Department of commerce

Mahatma Basweshwar College

Research Fellow : Archana Ashok Lakhadive

Email:lakhadivearchana123@gmail.com

Contact No: 9552439121

=====================================================================

Abstract:  The government of India define, decide ,analyze and control differential rate of interest, Lead Bank Scheme, issue of General credit card and Kisan credit card and so on help to overcome financial hassle to get credit from formal institutions. Social and economic justice provided only with the inclusion. Inclusion is measured or undertaken by the Government of Maharashtra and India, and also Reserve bank of India together to mitigate the problem of financial exclusion leads development of all sections of people. In this direction emergence of Self Help Groups(SHGs) and then SHG- Bank Linkage Programme help extensively to strengthen the poor specially women folk. SHGs play a vital role to improve the socio-economic condition of women folk by developing thrift habit and providing micro finance in times of need and also encouraging micro entrepreneurs. Beyond the banking, Indian Government , financial inclusion is provided and supported by SGH. Hence SGH Groups is a key driver for inclusive growth. Owing to difficulties in accessing formal sources of credit, poor individuals and small and macro enterprise usually rely on their personal savings or internal sources to invest in health, education, housing, and entrepreneurial activities to make use of growth opportunities. In this paper we will review the role being played by the “selp Help Groups of Latur District” in explicitly creating productive economic opportunities for the poor and the vulnerable sections of the society. Thus, aiding Inclusive growth.

KEY WORDS: Inclusive Growth, Financial Institutions, India, Poverty

INTRODUCTION

            Introduction “Gaon Bade To Desh Bade” is the dictum of National Bank for Agriculture and Rural Development(NABARD) which is very true for a Latur District. India whose 70% population resides in 6,38,345 villages and 24 crore poor are engaged in microenterprises. As highlighted by the Nobel Peace Award Laureate and former Russian President Mr. Mikhail Gorbachev, the imperatives for a better future are—“peace, fighting poverty, promoting global social justice and common wealth and protecting environment”. These words indicate towards social banking. The credit needs of the rural masses in general and rural poor in particular are met via rural financial markets consisting commission agents, Moneylenders and landlords etc. At this juncture Microfinance has been proposed as a possible solution for the maximum outreach and alleviation of poverty in the rural poor especially the disadvantageous sections of the society namely women, small and marginal farmers, and landless farmers.

International Fund for Agricultural Development(IFAD) has one of its strategic objective in contributing to the goal of rural poverty mitigation is to provide financial and related non- financial services in rural areas the world over. In 1992 NABARD launched a scheme to organize poor people into a group of 10-20 persons and linking that group with the banks. The scheme was broadly a replica of Bangladesh Grameen Bank. Under this scheme poor, preferably the women are organized in SHGs with the help of Banks, NGOs, Panchayat members and banks financing these SHGs were made eligible for concessional refinance by NABARD.

SHGs are believed to be the vehicle for women empowerment and poverty alleviation. According to the Planning Commission of India SHG is a self-governed, peer controlled small and informal association of the poor, from socio-economically homogeneous families who are organised around savings and credit activities. Members of SHGs meet weekly or monthly and discuss common problems and share information to come at a solution. Group members make effort to change their economic and social problem through mutual assistance.

The financial requirement is one of the basic needs of the poorer section of the society for socioeconomic development. Microfinance to Self Help Groups (SHGs) may be considered as a vital option for meeting the financial needs of those poorer sections of the society. Microfinance is the form of financial development that has its primary aim to alleviate the poverty. Governments, donors and NGOs around the world responded enthusiastically with plans and promised to work together towards the realization of these goals. The present research paper is an attempt to study the role of Micro-Finance and Self-Help-Groups (SHGs) for the socio-economic and political development of poor people living in the rural and DUSHKAL affected areas in Latur district of Maharashtra.

OBJECTIVES OF THE STUDY

·         To highlight the role of Self-Help Groups in financial inclusion in Latur District in Maharastra.

·         To study the financial inclusion performance of banks in India.

·         To study the effectiveness and the efficiency of the functioning of SHG.

·         To study the impact of SHG on financial inclusion in Latur District in Maharastra state.

·         To know the special benefits obtained by the members from the banks ans SHG.

Hypothesis

·         To know the relation between interest rate and collection of dues.

·         There is no relation between interest rate and collection of dues.

·         There is relation between interest rate and collection of dues.

METHODOLOGY

The area selected for the study is Latur district of Maharastra State. An empirical study was conducted with 200 members, to test the hypotheses of the study.

Random Sampling method

Adopting Random Sampling method, Primary data was collected through Sample Survey method, for which structured questionnaire and interview method was used. After joining SHGs the increase in bank accounts, increase in avail of credit, percentage of repayment are used as parameters of financial inclusion. Percentage, and paired T test are the methods adopted to check the results of the collected data.

Result and discussion.

Observed Frequency

Factors		Highly			Moderately			Highily				Moderately			Total
		satisfied			satisfied			dissatisfied				dissatisfied
Interest rate		25			20			0				0			45
Collection of dues		28			16			0				0			44
Total		53			36			0				0			89
				Expected Frequency
Factors		Highly			Moderately			Highily				Moderately			Total
		satisfied			satisfied			dissatisfied				dissatisfied
Interest rate		25.5			15.5			0				0			41
Collection of dues		28.5			16			0				0			44.5
Total		54			31.5			0				0			85.5
	Factors		Level of			Degree of				Table Value			Calculated
			significance			freedom							Value
	Relation between
	interest rate and			5%			3				7.81			8.32
	collection of dues

Result: The table value of degree of freedom 3 @ 5% level of significance is 7.81. Hence the calculated value 8.32 is above the table value 7.81. Hence we reject the null hypothesis and accept alternative hypothesis that there is relation between interest rates and collection of dues.

Major Findings

·         SHG bank linkage programme witnessed a decline in no-frill accounts by registering 50.12% in financial inclusive growth.

·         SHG members in Latur District reflect a diverse membership covering different social and economic categories, including the poor.

·         Recovery of loans by SHG is excellent without any default. Other loans issued to the members are also rapid without any delay. Only 4% of the loans were found to be over due at the group‟s level.

Section 2

Finding of the Study:

The working of SHG has benefited the members in various ways.

1)      Impact on Employment:

The linkage between poverty and unemployment is as good as the two sides of the same coin. The SHG impact in terms of employment is clear in the following table.

Table No-1: Impact on Employment

Sr. No.	Nature of work	Before	%	After	%
1.	Only House work	17	37.0	9	19.6
2.	Milk business	1	2.2	2	4.3
3.	lady tailor	5	10.9	7	15.2
4.	Shopkeeper	1	2.2	4	8.7
5.	Agricultural Labour	1	2.2	1	2.2
6.	Making a Broom	3	6.5	1	2.2
7.	Floor Mill	1	2.2	3	6.5
8.	Other	9	19.6	1	2.2
9.	Milk Business & Lady tailor	1	2.2	9	19.6
10.	Milk Business & Agri. Labour	2	4.3	1	2.2
11.	Milk Business & Agri. Business	2	4.3	2	4.3
12.	Milk Business & Chili cutting Machine	1	2.2	2	4.3
13.	Milk Business & Other	1	2.2	1	2.2
14.	milk Business, lady tailer & Agri. Business	1	2.2	3	6.5
	Total	46	100.0	46	100.0

Source : Compiled by the researcher

We can draw following conclusions from the above table:

1)      The percentage of females spending their time in house work has been reduced from 37 % to 19 % indicating that they are finding gainful employment after joining the  SHG.

2)      The activities where the employment has increased are Milk business, lady tailor Shopkeeper and Floor Mill indicating the fact that more absorption is found in jobs with small skill which are more suitable for females with low skill.

3)      The proportion of employment with multiple activities is also significant. It shows that the females are adopting the job which suits their needs.

2)      Impact on Level of Income:

The more visible positive impact of impact of SHG is observed in the form of increase in level of income after joining the SHG group. Our observation on the basis of sample is presented below.

Table No-2: SHGs Member’s Income Position

S.N.	Income of SHGs Member	Income Before SHGs	%	Income After SHGs	%
1.	No income	17	17	9	19.6
2.	1 to 10000	15	32.6	16	34.8
3.	10000 to 20000	7	15.2	8	17.4
4.	20000 to 30000	4	8.7	4	8.7
5.	30000 to 40000	3	6.5	4	8.7
6.	40000 to 50000	-	-	2	4.3
7.	50000 to 60000	-	-	1	2.2
8.	60000 to 70000	-	-	1	2.2
9.	100000 to 200000	-	-	1	2.2
	Total	46	100.0	46	100.0
	Mean	8245		16899
	Variance	118634852.1739		518795564.2512
	Minimum	1800		2000
	Maximum	36000		1200000

                  Source:- Primary data

We observe following changes in the income of the SHG participants as result of joining the SHG group.

1)      The average income of the respondents was Rs 8245 which increase to 16899 indicating an increase of 105 % during the period of 5 years. It gives growth of 21 % increase in income.

2)      The increase in lowest bottom is only from 1800 to 2000 showing very small change in income but if we consider the top income category it is observed that the income jumped from 36000 to 1200000.

3)      The gap in the income of the SHG members have widened during the period under study as reflected in increase in the variance.

4)      The members of SHG were benefited positively in terms of finding better opportunity of income. But the activities in which they have joined have benefited differently due to their skill, initial capital and knowledge about the opportunities.

3)      Impact on Saving:

The increase in saving is one important healthy indicator of economic prosperity. The change in level of savings before joining the SHG and after joining the SHG is noteworthy feature to study the impact of SHG. In the following table the monthly savings of the respondent are presented.

Table No-3: SHG Member’s Monthly Savings

Sr. No.	Monthly Saving of SHGs	Before joining	%	After joining	%
1.	No Saving	40	87.0	0	0
2.	30	0	0	1	2.2
3.	40	2	4.3	2	4.3
4.	50	0	0	9	19.6
5.	80	0	0	1	2.2
6.	100	0	0	3	6.5
7.	120	0	0	2	4.3
8.	160	2	4.3	1	2.2
9.	200	2	4.3	24	52.2
10.	400	0	0	3	6.5
	Total	46	100.0	46	100.0
	Mean	17.39		159.56
	Variance	2677.4879		8582.0290
	Minimum	.00		30.00
	Maximum	200.00		400.00

               Source: Primary Data.

The increase in income if followed by an increase in savings results in sustainable increase in standard of living both at macro level and micro level. The experience of the SHG in terms of increase in savings is presented in the above table. Following conclusions can be derived on the basis of it.

1 The average savings of the people stood at Rs .17.39 which increased to Rs.159.56. This implies that the savings of the SHG members increased by more than nine times or by 917 %.

2) The variance in the savings has also increased during the period under study. This shows an increase in inequality in the savings of the members.

3) The increase in savings of the members is attributed to the strong will of the members for their economic betterment and institutional requirement as the bank finances the SHG on the basis of the funds generated by SHG.

4)      Deployment of Savings:

The deployment of savings or the portfolio of savings of the SHG members affects the safety, profitability and liquidity of the savings. Following changes are observed for the SHG members regarding their deployment of savings.

Table No-4 : Deployment of Savings

Sr. No.	Destination of savings	Number of SHGs (After)	%	Number of SHGs (Before)	%
1.	No saving	0	0	28	60.9
2.	SHGs	14	30.4	0	0.0
3.	Pathsantha	2	4.3	1	2.2
4.	Others	1	2.2	1	2.2
5.	Bank, SHGs	14	30.4	1	2.2
6.	SHGs, Pathsantha	1	2.2	3	6.5
7.	SHGs, Post	1	2.2	5	10.9
8.	SHGs, Pathsantha & Post	1	2.2	1	2.2
9.	Bank, Bhishi & SHGs	2	4.3	1	2.2
10.	Bank, SHGs & Pathsantha	3	6.5	2	4.3
11.	Bank, SHG & Post	2	4.3	1	2.2
12.	Bhishi, SHGs & Pathsantha	1	2.2	1	2.2
13.	SHGs, Pathsantha & Post	2	4.3	1	2.2
14.	Bank, Bhishi, SHGs, Pathsantha & Post	1	2.2	0	0.0
15.	Bank, Bhishi, SHGs, Pathsantha & others	1	2.2	0	0.0
	Total	46	100.0	46	100.0

Source:- Primary data

The deployment of savings before joining the SHG and after joining the shg is presented in the table no 13.

1)      The most important change due to SHG is that the proportion of zero saving families was 61 % which brought to zero indicating  the fact that the saving habit was cultivated due to SHG.

2)       The local patsanstha or cooperative banks were the places where the members were keeping their savings before joining SHG. But now these savings are placed with SHG.

3)      The SHG helped in increasing the savings and channelised them in institutional set up.

5)      Impact on Borrowing:

The poor families struggling with poverty are compelled to borrow from various sources. As the institutional sources are not available they are compelled to borrow from non institutional source. In the following table the borrowing pattern of the SHG members before joining to SHG and after joining SHG is presented.

Table 5: Sources of Borrowing Of SHG’s Member

Sr. No.	Name the Loan Giver	Loan taker of SHGs before	%	Loan taker of SHGs after	%
1.	No loan	25	54.3	0	0
2.	Moneylender	7	15.2	0	0
3.	Jewelry	1	2.2	0	0
4.	Relativest	1	2.2	0	0
5.	Pathsantha	3	6.5	0	0
6.	Bank	2	4.3	0	0
7.	Bhishi	3	6.5	0	0
8.	PMYR	3	6.5	0	0
9.	Jewelry & relatives	1	2.2	0	0
10.	Bank Through SHGs	0	0	46	100
	Total	46	100.0	46	100.0

Source:- Primary data

The change in borrowing pattern is reflected in the table no 14. We come to following observations-

1) The poverty of SHG members deprived them to borrow and improve their economic standards as t is reflected in zero borrowing of 25 % members before joining the SHG.

2) The major source for borrowing during economic crisis was money lenders as 15 % members were borrowing from this source before joining the SHG.

3) The other informal sources were relatives, Patsanstha, and Bhishi.

4) The joining of SHG has replaced the informal sources of borrowing and the share of borrowing through SHG increased to 100 %.

6) Impact on Standard of Living:

The improvement in income due to gainful employment is reflected I increase in use of modern instruments such as use of cooking gas, cooker, TV, phone, cycle motorcycle in the family. These changes can be seen as physical indicator of improvement in the standard of living of the SHG members. It is presented in the following table.

Table No-6: Improvement is Standard Living

Sr. No.	Name of Modern Instruments	Qty. of SHGs Members	%
1	3	4	8.70
2	4	4	8.70
3	5	4	8.70
4	6	11	23.91
5	7	19	41.30
6	8 above	4	8.70
	Total	46	100

                        Source:- Primary data

  Note:- 1=Gas, 2= Mixer, 3=Kukar, 4=Iron, 5=T.V., 6=Phone, 7=Fan, 8=others

                                    (Cycle, Motor Cycle, Computer, Sewing Machine, etc.)

It is evident from the above table that the SHG members are using modern instruments in increasing number as their income permits. The additional income is in the hands of women which is the major factor for this positive change. The SHG members have improved their standard of living by enjoying the modern amenities.

7) Impact on status in family:

The SHG movement has not only resulted in improvement in economic standard of the poor families but more importantly it has resulted increase in social status of the families on various parameters. These changes are presented in the following table.

Table No-7: Classification of Changing living of

 Standard Before & After

Sr. No.	Answer of SHGs member	Frequency of SHGs Members	%
1	Yes	39	84.8
2	No	7	15.2
3	No answer	7	15.2
4	working in house	2	4.3
5	develop in house	1	2.2
6	occupation increases	1	2.2
7	standard living increases	1	2.2
8	others	12	26.1
9	Two Answer	7	15.2
10	Three Answer	1	2.2
11	Four Answer	5	10.8
12	Five Answer	6	13.1
	Six Answer	2	4.3
	Seven Answer	1	2.2
	Total	46	100.0

                       Source:- Primary data

Note:-1=Working  in house, 2=Develop in house, 3=Beer habit less, 4=occupation increase, 5=standard living, 6=Use out of house, 7=No out of house, 8= others(Standing our foot, I am making self-support, Understand to Bank transactions  I advice our SHGs member, Education benefit, go to out of house, helps to women, collect the all women, due to SHGs increase in Women recognised, increase economic help, House expenditure both thinking, Own money expend own, Social in understand & identity , Others need i understand, learn speak to other man, use education, children learn, gold, silver & cloth purchase, house build, social knowledge getting, understand of clean & health, get a speech chance, time to time house manage, )

It is observed from the table no 7 that 85 % members have experienced increase in standard of living after joining the SHG. These social improvements are in the form of getting self employment and utilizing their spare time in productive way, providing education to their kids, pleasure of self reliant economic life, expressing views even with male participants whom are not possible to quantify but have immense impact on improving quality of life.

  

8) Impact in participation in Social life:

The benefits of SHG movement to the members have resulted not only at individual level but at the social level also. The process of economic liberalization has improved the level of income and so also their economic status and participation in social life. It is presented in the following table.

Table No-8: Social Participation of SHG members

S.N.	Institutional membership	Frequency	Percent
1.	No Membership of other institute	13	28.3
2.	Membership of Grampanchayat	1	2.2
3.	Membership of Panchayat Samiti	1	2.2
4.	Pathsantha	19	41.3
5.	Membership of Dairy	2	4.3
6.	Women Mandal	4	8.7
7.	Membership of Institute	5	10.9
8.	Four Institute Member	1	2.2
	Total	46	100.0

             Source:- Primary data

After joining the SHG the participation of women members extended to the membership of other institutes. In this regard we observed following trends.

1)      The participation in local government bodies such as village panchayat. From the sample members 28 % members have not befitted in terms of participation in other institutes. But 68 % members have got opportunity to participate in other institutes.

2)      The joining in local government bodies is a remarkable benefit as it influences the status and moral of the other women.

 The increase in institutional participation helps the women to play an active and decisive role.

 

Prof. Archana Lakhadive