QUALITY ISSUES IN THE MICROFINANCE SECTOR IN RAJASTHAN
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Transcript of QUALITY ISSUES IN THE MICROFINANCE SECTOR IN RAJASTHAN
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QUALITY ISSUES IN THE MICROFINANCE SECTOR
IN RAJASTHAN
Joint Study Of
APMAS, Hyderabad & CmF, Jaipur
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OBJECTIVES OF THE STUDY
• the quality issues of SHGs, SHG federations, promoters and bank linkages
• Issues constraining improvement in quality, growth and spatial distribution
• Capacity building needs of different stakeholders
• Current sources of technical services• Possible strategies for addressing the
identified gaps and the role of CmF therein.
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DISTRICT-WISE SAMPLE COVERAGE
Item\ District Bha Bil Dun Jal Bik Tot
• Blocks 3 3 3 3 3 15
• Habitations 15 18 19 19 18 89
• SHGs 38 41 42 42 39 202
• FGDs 3 3 3 2 3 14
• District-Officials 2 4 4 2 4 16
• Block-Official 5 5 6 5 6 27
• Bank Branches 6 6 6 6 6 30
• NGOs 2 1 2 1 2 8
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SHPI-WISE SAMPLE SHGS
• DWCD promoted SHGs are in Bhilwara, Dungarpur and Jalor
• Most of NGO promoted SHGs are in Bharatpur and Bikaner
• Most of DRDA promoted groups in Jalor
SHPI wise distribution of Sample
DCWD, 61%
NGOs, 33%
DRDA, 6%
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Development Profile of the Sample Districts
Indicator Bha Bil Dun Jal Bik
Rank of HDI 15 25 32 29 6
Rank of GRDI 7 23 27 21 3
Rural Poverty Ratio % 9.7 9.8 43.3 11.9 11.3
Rural BPL % 18.4 34.7 71.3 37.5 36.8
Per Capita Income 1991-92 3976 4391 2735 3825 4399
% of Farm Sector in DDP avg of 1987-88 to 1991-92
51.5 48.2 47 59.8 36.9
Female literacy rate-(R) 39.62 26.09 28.17 25.88 28.83
PROFILE OF SAMPLE DISTRICTS
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LIMITATIONS OF THE STUDY
• Purposive selection of three districts• Coverage of only active/ functional groups• Selection of proportionately more no. of
SHGs promoted by NGOs• Federations are found only in Dungarpur
which formed very recently. Hence, not focused
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PROFILE OF THE SHG MEMBERS• BC–37%, ST – 26%, SC–22%, Oth-15%
• 13% are widowed and divorced women
• Over 80% of the members are illiterate includes neo-literates also -36%
• Both APL and BPL are equally represented
• 51% are living in Kuchcha houses
• Non-farm labour–34%,agriculture–26%, Agri. Labour-16% are the primary occupation of many members
• Majority are marginal farmers- 60% followed by landless- 20%
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PROFILE OF THE SHGS
• 12- avg. size of the SHG-2416/202; New members-78/29; replacements-22/13; dropouts-155/53
• Mixed caste groups are more (63%) than mono-caste groups (37%)
• More no. of SHGs are BC (42%) followed by SC (25%) and ST (22%)
• Majority of the SHGs are less than 4 years (64%)• Among the districts, > 4 year old groups are more
in Bilwara (50%)• 6 SHGs in Dungarpur have membership in
Federations
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INFRASTRUCTURE: Distance
• 3 km -Avg. distance to bus point; lowest in Bilwara (1km) and longest in Bharatpur (4 km)
• 22 km –Avg distance to Block Hq; shortest in Bharatpur (15 km) and longest in Bikaner (27 km)
• 7 –km Avg. distance to bank; shortest in Bharatpur (5 km) longest in Dungarpur (10 km)
• 11% groups have banks within village – Jalore and Bhilwara more fortunate
• 38% have banks less than 5 km. Bikaner and Jalore are dominant
• 25% SHGs between 5-10 km. Bharatpur and Dungarpur; 25% over 10 km. Dungarpur
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Bank linkages in Sample districts on 31st March 2005
District Total SHG linked
Amt. in Rs. million
Avg loan size in Rs.
Avg loan size of ICDS in Rs.
Bharatpur 3114 65.69 21,095 12,524
Bhilwara 4635 66.42 14,330 13,887
Bikaner 1635 28.36 17,346 5,464
Dungarpur 1319 66.95 50,758 31,595
Jalor 229 4.97 21,703 22,768
Rajasthan 60,006 1,414.04 23,565 19,680
India 1,618,456 68,984.60 42,624 --
SHG BANK LINKAGE SCENARIO
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BANK LINKAGE SCENARIO…
• Increase in Bank Linkages in Rajasthan is mush faster compared to national level
• Average Loan size in the state is significantly lower than that of national figures
• Average loan size of DWCD promoted groups is significantly less than state average and that of all SHGs in the district
• Wide Inter-district variations in loan size
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SHPI-INPUTS TO SHGsSHPI INPUTS TO SHGs
72.3
24.8
5.4 13
.4
1.5
0.5 4.0
3.0
37.1
37.1
1.5
1 2 3 4 5 6 7 8 9 10 11
Aspects
per
cen
tag
es
• About 70% of the SHGs received orientation of 1-2 days on SHG concept from their promoters
• Less percentage of (15%) SHGs trained on book-keeping and self management
• Few SHGs trained on micro-enterprise and skill development trainings
• NGOs provided more inputs to SHGs compared to DWCD and DRDA,
1 Concept of SHG
2 Group processes
3 Self Management
4 Bookkeeping
5 Govt. programs
6 Federation concept
7 Skill based training
8 Micro-enterprises
9 Health
10 Nutrition
11 Gender
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SAVINGS
• Rs. 41 avg. savings per month per member; double in Bharatpur compared to Dungarpur
• Avg. amt. of Savings per month per member is less in DWCD promoted SHGs-Rs. 38 compared to NGO -Rs. 43 and DRDA-Rs. 64
• Rs. 13,508 avg. cum. Savings; highest in Bharatpur- Rs. 16,082; lowest in Bikaner- Rs. 10,660
• Avg. cum. Savings and age of the SHGs are positively correlated except 6+ year old SHGs
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SAVINGS…• 17 SHGs have distributed their savings; 13
are mixed SHGs; 12 are 4 + years old SHGs
• 22% of SHGs have changed their monthly thrift-increased (21%) decreased (1%) ; 50% of the groups are between 4-6 year old
• Many ST-36% and BC-28% SHGs have increased their monthly thrift amount
• Collection of savings- mainly in meetings-58% followed by door to door, leader’s house
• Over 75% of the SHGs leaders collecting monthly savings
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MEETINGS
• 90% of the SHGs have the norm of monthly meetings
• Three-fourth of SHGs conducting meetings at leaders house; other in community place
• 67% of SHGs conducted 6 meetings during the last 12 months; remaining between 1 to 5 meetings
• 16%-no meetings during the last 12 month; Double in Jalore (24%) and Bikaner (23%) compared to other
• 41% of SHGs- meeting at after noon, 20% at convenience, 16% in the morning
• 40% of SHG meetings in Bilwara take place at night.
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LENDING PROCEDURES• NB lending is predomint-68%, ED is only-13%, both-
16%; no lending in 3% of the SHGs
• 90% of the SHGs loan repayment period is < 1 year
• Two-third are monthly instalments; remaining are convenience-20%, half yearly-7%, bimonthly, quarterly-3%, and yearly-2%
• 87% of the SHGs lent to their own members; more SHGs lent to non-members in Bilwara-20% and Dungarpur-10%
• Interest rate: Rs. 0.70-3 to SHG; Rs.1-2 to Non-SHG
• No collateral surety; in few case promissory notes
• 8% of the SHGs collected penalties (Rs. 4-10)
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LOAN EQUITY & REPAYMENTS
• Rs. 28,624- disbursed as loan by each SHG• 57%- SHG members have loans currently• 7- average no. of loans in a SHG• 55% of the SHGs have over dues > 3 months• 94% of the loan amount is outstanding• 18% of the loan outstanding is arrears• On an average 4 members defaulted in SHGNote: loan data for the last one year Jan 05-Dec 05
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LOAN PORTFOLIO AT RISKPortfolio at Risk
37
25
6
26
11
2
35
23
10
26
10
2
36
25
5
3933
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PAR > 90 days PAR > 180 days PAR > 365 days
Avg
. Per
cent
age
of P
AR
Bha Bil Dun Jal Bik Tot
• Of the 202 SHGs, 13%-SHGs no schedule for repayment; in 3% SHGs no loans disbursed during that year
• 64%-SHGs made prepayments; High in Bikaner-67% less in Jalore-59%
• 33%- avg. recovery rate; highest in Bilwara-70%; lowest in Bharatpur 47%;
• Avg. recovery rate is more in Govt.-64% than NGO-60%• 59% of SHG have PAR > 90 days, 39% SHGs have PAR > 180
days, and 15% of the SHGs have PAR >365 days.
PERCENTAGE OF PAR BY SHPI
30
17
6
37
24
405
10152025303540
PAR > 90 days PAR > 180 days PAR > 365 days
PERIOD OF PAR
AV
G. %
OF
PA
R
Govt NGO
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BOOK-KEEPING
Type of Books
District (Fig. in %)
TotBha Bil Dun Jal Bik
Transaction sheet 3 7 5 3 3
Savings ledger 58 35 21 40 18 34
Loan ledger 39 35 17 40 20 30
Minutes Book 66 48 17 60 45 47
Receipts - 3 12 5 - 4
All in one book 37 50 82 45 60 56
No vouchers in any SHGs in any district
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BOOKS OF ACCOUNTS• 56% of the SHGs have all accounts in one book;
about one-third have MB, savings & loan ledgers• Over 60% of the SHGs, records maintained by
SHPI followed by SHG office bearers-25%• However, in Bharatpur more percentage of SHG
office bearers are maintaining the books• Nearly 50% of the SHGs keeping their records at
President’s house followed by SHPI staff-28%• Nearly 50% of the SHGs issued Individual Pass-
Books to its members• Pass-Books are with members in majority cases;
in few cases with president, secretary and SHPI
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SHG NORMS & PRACTICE
• 42% groups have norms for savings collection but only 15% are practicing
• 37% groups have norms for loan repayment but only 12% are practicing
• 31% groups have norms for attendance but only 9% are practicing
• Few groups have norms in Jalore but no practice; Very few groups in Bikaner have norms and all of them practice.
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GRADING OF SHGSGrading of SHGs
1640 33 24 35 30
68
5040 50
43 50
16 1026 26 23 20
0%
20%
40%
60%
80%
100%
Districts
'C'
'B'
'A'
SHPI-Wise Grading of SHGs
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42
31 30
49
33
5550
24 25
1320
DWCD DRDA NGO Total
SHPIs
Per
cen
tag
es 'A'
'B'
'C'
• 30% - A grade, 50%- B grade and 20%- C grade• A-Grade-Highest Bilwara 40%; lowest-Bharatpur-16%• B-Grade-Highest-Bharatpur-68%; lowest-Dungarpur-42%• C-Grade-highest-Dungarpur-26%; lowest-Bilwara-10%• Age and quality of SHGs are negatively correlated • % of ‘C’ grade groups is almost 3 times in mono-caste groups
compared to mixed caste groups; where as 15% of ‘B’ grade groups are more in mixed groups compared to mono-caste
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SHG BANK LINKAGE STATUS
• 27% of SHGs bank linked for credit; 35%- CBs, 17%- RRBs and 29%-Coop
• Rs. 37,870 - avg. loan size; Rs.45,200 - CBs, Rs.30,100 - RRBs and Rs.13,500 -Coop
• % of NPA is 0.16%; 0.23% - CBs and no NPA in RRBs and Coops; Only one branch out of 30 has one NPA
• 3.73% - is the over due; 0.74%- C, 11.15%- RRBs and 0.19%- Coop
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BANK LINKAGE • 73% sample SHGs are credit linked to bank
• More % of ‘A’ grade and less % of ‘B’ and ‘C” grade in bank linked groups compared to non-bank linked
• Rs. 46,162 avg. loan size; largest-Bharatpur Rs. 46,162; smallest-Bikaner Rs. 21,147.
• 19- avg. no. of instalments and loan ; highest-Bilwara-37; lowest-Bikaner-17
• Rs. 16,060- avg. loan amount repaid; largest-Bilwara Rs. 22,725; lowest-Bikaner-7,247.
• Rs. 26,831- (58%)avg loan outstanding; highest-Bharatpur Rs. 39,413; lowest-Bikaner Rs. 13,327
• Rs. 56,218- avg. Cum. Amount of loans; > double in Bilwara compared to Bikaner (Rs. 32,019)
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REASONS FOR DELAYED PAYMENT
Reasons for delayed or irregular payment• Non-availability of work and drought 69%;Ill-health
17%; migration 13%
Action against defaulters• Repeated visits to groups-57%; and no action-12%
Reasons for small size of loan/ no repeat loan• Bankers not interested 19%; small size of loan
15%; limited purpose 19%; surplus with group 13% only in Bharatpur
• Earlier loan not cleared 16% only in Bharatpur and 13% only in Bhilwara
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ISSUES IN SHGs• Group formation - Lack faith on others- 20%
and mobilization of poor-17%
• Bank Transactions–long distance 2%, illiteracy 5% and no cooperation from banks 7%
• Meetings – less attendance 11%, no agenda 2% and unsuitable timings 4%
• Savings – irregular savings 9% and unable to save 12%
• Lending–no internal lending 3%, difficulties in the collection of savings & loan instalments 4%
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ISSUES IN SHGS…
• External loans – less volume of loan 4%, more time taking & repeated visits 6%
• Grants – for few groups 3%, repeated visits 1%• Book-keeping – no proper set of books 9% and no
training on book-keeping 11%.• Trainings – no trainings 8%, centralized trainings
11%, not interested in training 4% and no training on livelihoods and micro-enterprise
• Monitoring – No/ less monitoring and supervision • Others – men involvement in making decisions
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ISSUES: BANKERS PERSPECTIVE
• Low quality of groups
• Illiteracy of members
• Difficulties in meeting the targets due to absence of quality groups
• Low volume of loan
• Feels that promotion of SHGs is not the business of banks
• Not enough staff to promote SHGs
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ISSUES: SHPI PERSPECTIVE• Difficult to mobilize BPL members• BPL groups interested in SGSY linkage but not in
general linkage• Need for capacity building at all levels• Multiple tasks (especially in DRDA not able to
focus on SHGs)• Lack of financial support for NGOs• Incentives for a limited period to NGOs • Sustainability of SHGs in absence of NGO (SHPI)
support is a question• Training for Primary stakeholders in livelihoods • Low education levels of Anganwadi workers (de-
facto leader of SHGs in majority of cases)
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DECISION MAKINGPerson Decision on the issue
Leaders Bank transactions-80%; cash in hand-76%; meetings-37%; SHG expen.-38%; external loans-30%; membership-24%
Members Norms- setting-47%; reinforcement-62%; meetings-42%; default mechanism-52%
SHPI Norms setting-48%; membership-47%; norms reinforcement / relaxation-20%; external loans-42%; ext. loan sanctioning
Family members
Personal affairs-90%; decision on political issues-93%
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SHGS IN DEVELOPMENT
• Less participation of SHGs in social issues-anti-child labor-1%, TLC-8%,anti-arrack movement-3%
• 11% of SHGs focused on Girl-child education
• Many SHGs participated in health related activities across districts-ICDS activities-39%- PP, FP, AIDS
• Very few SHGs participated in income and employ- generation related activities-FFW, MM, PDS, WS
• SHGs of Bharatpur and Bilwara were more involved in socio-economic issues compared to other districts
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IMPACT OF SHGS
1 Household income increased
2 Employment Generation
3 Credit is easily available
4 Access to formal institutions
5 Access to pro-poor programmes
6 Free from money-lenders
7 Indebted due to credits
8 Habit of savings
9 More expenditure on food
10 Health status improved
11 Independent life
12 Education levels improved
13 Self-confidence
14 Decision Making power
15 Representation in other groups
16 Leadership qualities
17 Group solidarity
IMPACT OF SHGs
36 3169
3816
424
9821
3444
3363 59
2447
58
54 5728
3756
4886
160
5442 57
29 3261
43 27
9 113
25 28
10 101
18 12 14 9 7 915 10 15
0%
10%
20%
30%
40%50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
PERC
ENTA
GE
Yes No Can't Say
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IMPACT OF SHGS
• Results are mixed• Positive – • - Access to institutional credit and development
of saving habit.• - Some members taken up income generation
activities• Negative – • - Loans are too small to take up income
generation activities• - Negative - Drought
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Impact - Social
• Majority of Primary stakeholders and secondary stakeholders confirm positive impact of women empowerment.
• Women coming out of their houses
• Interacting with officers and others
• Bondage among members is developing