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Performance
of SHG - Bank Linkage Programme : A Regional Analysis |
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| Paper Id :
19170 Submission Date :
2024-08-06 Acceptance Date :
2024-08-15 Publication Date :
2024-08-17
This is an open-access research paper/article distributed under the terms of the Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. DOI:10.5281/zenodo.13348854 For verification of this paper, please visit on
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| Abstract |
Even today, many people in our country are living below
the poverty line. Regulary,Efforts are being made to bring this deprived class
into the mainstream through microfinance. Through these, people are being
empowered by income generation, financial assistance, skill development etc. so
that they can fulfill their basic necessities and contribute to the development
of the society. One such effort is the SHG-Bank Linkage Program started by
NABARD in the year 1992. Through this, people's dependence on informal sources
of credit was reduced and loans were provided to them by the bank so that they could
get rid of the never-ending loans from informal sources. This program has
brought positive results in the field of women empowerment in society as well
as in financial independency. In this study, region-wise analysis of the
performance of SHGs in terms of savings, loan disbursement and outstanding loan
amount has been done. The analysis is based on the data published in the report
“Status of Microfinance Programme in India” released annually by NABARD. The
period from 2013-14 to 2022-23 has been considered for the study. In this study,mean, standard deviation,
coefficient of variation and compound annual growth rate have been calculated
for analysis. One way ANOVA has been used to check the statistical
significance. After analysis, it has come out that the effect of SHG-Bank
Linkage Program is different in all regions. And this difference is in the
context of savings, loan disbursed and outstanding loan. |
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| Keywords | Self Help Group, Microfinance, SHG- Bank Linkage, Progress Report, Poverty Eradication, Rural Development, Growth of SHG. | ||||||
| Introduction | Microfinance has been widely accepted as a means of
eradicate poverty. Self Help Group (SHG)
programme has also emerged as an important step under micro finance. In the
year 1984, the concept of SHGs came up based on the Grameen Bank model of Prof.
Mohd. Yunus. Self Help Group (SHG) plays
an important role in many important issues affecting the poor society. SHG is a
group of 10-25 members. Its members are generally people from similar social
and economic backgrounds who voluntarily make small investments. When needed,
members take loans from SHGs from their collective savings and from banks.
Collective pressure of group works for
repayment of the loan. SHGs provide collateral free loans which play a very
important role in protecting members from informal sources of loans. Apart from
this, the group also regularly makes efforts for skill development of the
members. Apart from savings and loans, SHGs provide a platform to its members
that helps people to come together and take important steps collectively on
issues of health and socio-economic importance. They can solve their issues and
problems through self-help and community action. They help their members in
self-employment through savings and loan activities. SHG-Bank Linkage Programme is working as an effective
mechanism for the poor and deprived people. This programme was started in the
year 1992 with 500 groups to link the groups with formal financial sources. Due
to its effectiveness, this programme has become one of the important
microfinance programmes in the world with a large customer base. By conducting
regular group meetings, collecting savings regularly, providing loans, repaying
loans on time and maintaining the accounts of the groups regularly, these
groups are progressing towards regular development. Thus, the groups have
emerged as good customers of the bank. Various organisations are also playing
an important role as promoting organisations of the groups. They help in
organising, nurturing the self-help groups and enabling credit linkage with
banks. As most of the groups are exclusively women groups, the programme also
promotes women empowerment in the country. NABARD has strengthened the
implementation of SHGs through various policies. NABARD also provides refinance
assistance to banks for providing finance to the SHGs. The success of microfinance depends on the quality of the
SHGs and its smooth functioning. This is why SHGs are considered the core
element of microfinance. Some of the basic working principles and functions of
SHG are:
According to the report of the SHG, the bank linkage programme started with 500 SHGs to eradicate poverty by providing financial assistance. SHGs are supported and trained by NGOs, banks and institutions that promoting self-help groups. Apart from these, SHGs, which are working as the most prominent model of microfinance in India, are also promoted by Regional Rural Banks, State Governments and MFIs. They provide both group and individual loans. SHGs are also emerging as community platforms from where women can play an active role in women-centric issues. This develops self-confidence in them, so that they can take action against domestic violence, dowry harassment, abuse of women. The aim of the Millennium Development Goals is to eliminate poverty, improve education and health, protect the environment, and enhance other aspects of human welfare. The role of SHGs are also emerging in this regard. Various studies have discussed the positive changes that came in the lives of rural poor women after joining SHGs. |
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| Objective of study | To analyse the extent of Self Help Group Bank
Linkage Programme across all regions of India. |
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| Review of Literature | S. Ravi and
Dr. Vikkraman (2012) examined in a research study that Banks and
other institutions that support self-help groups are financial aid or
micro-loan providers for those people who are really economically backward in
the society. Increasing number of poor women in our country are taking
advantage of many new opportunities for their livelihood by joining self-help
groups. And they remain active as group members by saving regularly. Due to
their participation, managerial skills and literacy level of the members
improve. Self-help groups have proved to be effective for the poor and weaker
sections of the society. J. Shirisha, K. Uma Devi & S.
Suchiritha Devi (2021) concluded in their research the impact
of SHGs on improving economic health, skill development and empowerment of
households. Positive impact of rural development can be seen through Self Help
Groups. SHGs have been used by governments, NGOs and others across the world to
empower poor and backward people and enable them to fulfil their basic needs.
In our country thousands of poor and marginalized population are getting
benefited with various livelihood opportunities through Self Help Groups.
Paul
Anand,Swati Saxena & Rolando Gozalez (2019) investigated
in their study that SHG has shown that self-help group can be used to improve
many levels of poverty alleviation and empowerment. Self-help-group program is
not only a microfinance program but it also increases awareness along with
skill development, health and nutrition education. The results have also been
seen in the improvement in the standard of living of the self-help group
members. Sonali Chouhan & Neeta
Maheshwari explore in her research study that Self Help Groups have become a successful
system because of the key stakeholders, and as per the statistics more than 85%
of Self Help Groups are run by them, they are playing a vital role in the
development of society at large. Financial inclusion and bank linkage
programmes make it possible to reach the services at the grassroot level. Which
eliminates the informal sources of lenders. Positive changes are being brought
in the society through Self Help Groups. And it is also being confirmed that if
women are given opportunities for economic development, then they can join the
mainstream. Purna Chandra Parida and Anushree Sinha find out in their study that the performance and sustainability of three different types of SHGs and concludes that women SHGs are performing better than other types of SHGs. There are several reasons for this result. Women SHGs are functioning well by maintaining books of accounts, conducting savings and holding meetings regularly. |
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| Methodology | For this study, secondary data has been used.
This is mainly based on the report "Status of Micro Finance Program in
India" that released by NABARD every year. For this study, the reports of
the last ten years (2013-14 to 2022-23) have been analyzed. In this study, Mean, Standard Deviation, Co-Variance and
ANOVA have been used for the analysis. The data is also collected from various
sources like newspapers, magazines, websites, etc. |
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| Analysis | Progress of SHGs savings with banks region wise for the period (2013-14 to 2022-23) Table 1.1 shows the savings of SHGs deposited with banks from 2013-14 to 2022-23. This table shows the data of both number of SHGs and saving amount. As per the data shown in the table, the total CAGR growth rate for the last 10 years is 6.08% in number of SHGs and 19.52% in saving amount. Apart from this, analysis also shows that the northern region has the lowest CAGR for saving amount at 15.78% and the eastern region has the highest CAGR at 27.57%. The first part of the table shows the compound growth rate of number of SHGs. According to which the eastern region has the highest growth rate of 10.34% and the southern region has the lowest CAGR of 1.12%. From this, it can be concluded that the eastern region is working more efficiently in reference of savings with banks. Analysis of variance (ANOVA) was used to find out whether the difference is statistically significant or not. As per the ANOVA results in Table 1.2, the value of F is greater than the critical value of F for both savings amount and no. of SHGs links with savings with banks. The significance level is kept at 5%. As per the result, the null hypotheses for both number of SHGs and amount of savings are rejected. From this, it can be concluded that the performance of all the regions is different in terms of savings.
Table 2.1 shows the total loans disbursed to the SHGs by the banks during the study period of ten years . It shows both the number of SHGs and the amount of loans. As per the calculation of CAGR done here, the highest rate in terms of number of SHGs is of neastern region with 22.53% and lowest rate is of Southern region with 7.96%. The rate of neastern region is higher than the national average of 12.13% and that of Southern region is much lower. The second part of the table shows the growth in terms of amount of loan disbursed. Here again, the rate of neastern region was highest with 37.68% and the lowest rate is of Southern region with 16.53%. The combined rate of all the regions for the study period was 19.71%. ANOVA has been used for statistical significance of loan disbursement in all regions. As per Table 2.1, the value of F is greater than the critical value of F for 5% level of significance. Based on this, null hypothesis is rejected for both loan disbursed amount and no. of SHGs related to Loan disbursed amount . This shows that all regions have performed differently in terms of loan disbursement.
Table 3.1 shows the amount of loan outstanding and no. of SHGs related to these outstanding loans region wise for the period 2013-14 to 2022-23. It is evident from the table that the rate of outstanding loans has decreased in Northern region with negative CAGR whereas the number of SHGs with outstanding loans has increased in Eastern region with CAGR 9.3%. The CAGR of all regions in number of SHGs related to outstanding loans across the country is 5.18%. Further, CAGR in terms of outstanding loan amount is lowest in Central region with 6.6% and highest in Eastern with 23.24%. The combined CAGR of all regions for outstanding loan amount is 15.92%.When analysis done by using ANOVA to test the statistical significance it shows that the calculated values of F for both the number of SHGS as well as the amount of outstanding loans of these groups are greater than the critical value of F. The null hypothesis is rejected at the level of significance at 5%. Thus, it can be concluded that all the regions performed differently in terms of outstanding loans.
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| Conclusion |
In the national interest , the main goal of policy makers is to removing inequalities. Inequalities exist in the country in various geographical, socio-economic forms. Special attention is given by policy makers to the economic inequalities so that social and livelihood opportunities can be provided to all the people. In this way, continuous efforts are being made by the government to remove regional inequalities. So that the nation can develop along with balanced regional development. This research paper has found that positive results have come out in terms of savings, loan disbursement and loan outstanding through the SHG-BLP program. Its analysis results show that positive trend is seen in the context of SHGs related to saving amount in the 10-year study period. Apart from this, positive trends have also come out in terms of loan distribution. Finally, CAGR also shows positive trend in terms of outstanding loan. Region wise performance is different in terms of all three aspects. Thus, using ANOVA test, it has also been found that there are significant differences in terms of these three aspects in different regions. Thus, SHG-Bank program has shown different performance region wise in the field of microfinance but it is taking people towards economic prosperity by providing them financial assistance. |
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| References |
Reports
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