PERFORMANCE OF SHG-BANK LINKAGE PROGRAMME IN NORTH EASTERN STATES OF INDIA: A COMPARATIVE ANALYSIS Dr. NITASHREE BARMAN 1 Dr. KINGSHUK ADHIKARI 2 1 Guest Faculty, Department of Commerce, Cachar College, Silchar, Cachar, Assam-788001 2 Assistant Professor, Department of Commerce, Assam University (A Central University) Silchar, ABSTRACT Cachar, Assam-788011 The rationale behind introducing microfinance in India is poverty alleviation by means of delivering proper financial services to the marginalised segments of the society. The underprivileged section of the society could not access to the Indian formal financial system for their credit needs because the banks and other financial institutions used to provide financial services to the upper and middle strata of the society. The indifferent attitude of the financial institutions of India towards the economically challenged section of the society has practically forced to take birth of microfinance. Microfinance can empower the poor so that they can move on from relying on hand-outs to being self sufficient and seeing their incomes grow. Over the years, SHG-Bank Linkage Programme (SBLP) has emerged as a most positive form of microfinance in India. The existing literatures on SBLP claims that the programme of NABARD is remarkable as it is the largest micro-financing programme in the world and it is moving towards the right direction. It has become the common vehicle in the development process as it has outstanding trickle down effects on the socio-economic empowerment of the poor. The present paper makes an attempt to analyse the performance of the SHG-Bank Linkage Programme in the states of North Eastern Region (NER) of India. Keywords: Microfinance, SHG-Bank Linkage Programme, North Eastern Region INTRODUCTION The development of financial services has started with the nationalization of fourteen major private banks in 1969. Later on with the establishment of Regional Rural Banks (RRBs) in 1975 and nationalization of six more private banks in 1980 has shown new direction towards credit delivery mechanism system in the country. However, the banking network, established to meet the needs of the rural sector in general and the poor in particular, has not proved to be successful (Sinha, 2009). Thus, deficiencies of the banking services to the poor through Government-sponsored programme lead to the search for an alternative mechanism, which would ensure a better credit delivery system for the poor. Microfinance has evolved over the past quarter century across India. Microfinance has proven to be an effective and powerful tool for poverty reduction (Reddy & Manak, 2005). Self Help Group (SHG) is become the common vehicle of development process, meeting all development programmes. Self Help Groups are usually informal groups of poor people having similar socio-economic background and who have come together to realise some common goals based on the principles of self help and collective responsibility (Shylendra, 2008). At present, the most important mode of microfinance is the SHG-Bank Linkage Programme. The rise of SHGs with Bank Linkage Programme has made a dominant form of microfinance in India. In 1992, NABARD launched SHG Bank Linkage Programme, envisaging synthesis of formal financial system and informal sector has become a movement throughout the country. Thus, the SHG-Bank Linkage Programme has an importance in empowering as well as inculcating the habit of depositing savings by the members of www.icmrr.org 31 icmrrjournal@gmail.com
SHGs and thus reducing poverty, the main motto behind introducing the programme, through providing credit facility to the SHGs at a subsidised cost to assist financially their group business. Having this backdrop, the present paper attempts to analyse the performance of the SHG-Bank Linkage Programme in the context of North-Eastern states of India. North Eastern Region of India is comprised of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura. The region is economically backward, characterized by low rate of growth and predominance of agriculture as the main source of livelihood, which creates disguised unemployment problem. Thus, the evaluation of the performance of SHG Bank Linkage Programme in the region has its own significance. LITERATURE REVIEW Puhazhendhi (2000) observed that progress of the SHG-bank linkage program in Tamil Nadu was by and large satisfactory. Bansal (2001) found that performance of SHGs-Bank linkage program in India is rapidly expanding its outreach under the pioneering initiative of NABARD. Commercial banks were in predominant position in those states where poverty incidences were low, while RRBs were dominant in poorer states. Das (2003) concluded that micro- credit-shg model got tremendous attention in recent years. The phenomenal growth of SHGs indicates that the weaker sections of the society are also capable to sharpen their micro-entrepreneurial skills with the help of their own savings and additional bank credit, as needed which claims that micro-credit-shg integrations could be away out for overall rural development. Selvachandra (2004) found that SHG bank linkage programme is boon to the poor and for bank a via media to reach the outreach in large numbers in the processes of economic development. Vanishree (2012) assessed the progress of the SHG-Bank Linkage Programme in India, where banking institutions faced different challenges in financing to SHGs. However, the programme has positive impact on social and economic livelihood of the people in rural areas. Sundaram (2012) concluded that SHG-Bank linkage programme has been able to improve socio-economic condition of the members of the SHG. Ghosh (2012) found that loans used for productive purposes and the regularity in repayment of bank loans increased along with the decrement of the dependency on moneylenders as well as the incidence of poverty among SHG households after the linkage programme. Thus, the study claimed that SHG-Bank linkage programme has significantly improved the rural poor s access to formal financial services and has positive impact on the socio-economic conditions of SHG households. Chary & Swvvasi (2013) reviewed the progress of SHG Bank Linkage programme in India with reference to loan outstanding against SHGs where Commercial Banks have the majority share of loan outstanding against SHGs followed by Regional Rural Banks and Co-operative Banks during the study period. Kumar & Golait (2009) found that SHG-Bank linkage programme was successful in Southern region of India but failed to achieve its goal in economically backward states of the country. Further, studies made by Borbora (2011) and Roy (2011) observed that growth of SHG-Bank Linkage programme in North Eastern Region of India was uneven and share of this region in disbursing bank loan to SHGs was lowest among all other regions of India. OBJECTIVES OF THE STUDY 1. To study the performance of SHG- Bank Linkage programme in North Eastern Region vis-a-vis India. 2. To analyse the performance of SHG- Bank Linkage Programme on selected counts in North Eastern states of India. www.icmrr.org 32 icmrrjournal@gmail.com
HYPOTHESES OF THE STUDY H 01 : The performance of SHG Bank linkage programme of individual states of North Eastern Region does not differ with the average performance of the region in terms of per SHG savings, loan disbursement, loan outstanding and non-performing assets. H 02 : There is no significant difference across the North Eastern states in terms of per SHG savings, loan disbursement, loan outstanding and non-performing assets. DATA AND METHODOLOGY The present study is quantitative in nature and based on secondary data. The study is being confined to the SHG-Bank Linkage Programme under micro finance and eight states of North-East India. The relevant secondary data for the period of four years i.e. from 2009-10 to 2012-13, have been collected from the Status of Microfinance in India prepared by NABARD for relevant years. The performance evaluation of SHGs-Bank Linkage programme in North- Eastern states is based on four parameters, such as, per SHG savings, per SHG loan disbursed, per SHG loan outstanding and per SHG non-performing assets. Further, basic descriptive statistics, such as, mean and coefficients of variation as well as Compound Annual Growth Rate () have been used. ANOVA has been employed to test the significance of difference across the North Eastern states on selected parameters. RESULTS AND DISCUSSION Table 1 shows per SHG performance of SHG-Bank Linkage Programme in North Eastern Region vis-a-vis India during 2009-2012. The average per SHG savings of NER was 4094 with coefficient of variation of 1.92 percent whereas in India the same was 9444 with coefficient of variation of 13.59 percent. The highest amount of per SHG savings of 4164 deposited in 2009 and it started declining afterwards registering a negative compound annual growth rate of 1.19 percent. During the study period, the banks operating in the NER disbursed average per SHG amount of 74996 with the coefficient of variation of 17.53 percent. The highest amount of per SHG loan of 88483 disbursed in 2011 while lowest of 58243in 2009 having compound annual growth rate of 7.13 percent. Table1: Per SHG performance of SHG - Bank Linkage Programme in North Eastern Region vis-a-vis India (Figures in ) North Eastern Region (NER) India Year Loan Loan Savings Disbursed Outstanding NPA Savings Loan Loan Disbursed Outstanding NPA 2009/10 4164 58243 50340 2776 8915 91083 57795 82304 2010/11 4035 81654 46344 3903 9403 121623 65224 147411 2011/12 4159 88483 62307 3220 8230 144046 83455 221273 2012/13 4017 71606 55461 4750 11230 168757 88455 278693 Mean 4094 74996 53613 3662 9444 131377 73732 182420 1.92 17.53 12.86 23.50 13.59 25.16 19.77 46.97-1.19 7.13 3.28 19.61 8.00 22.82 15.24 50.16 www.icmrr.org 33 icmrrjournal@gmail.com
About loan outstanding, average per SHG outstanding amount comprised of 71.49 percent of average per SHG disbursement. The highest per SHG loan outstanding of NER was 62307 in 2011while in case of India highest of 278693 was in 2012/13. Further, average per SHG NPA in NER was 3662 whereas in case of India the same was 73732 with coefficient of variation of 23.50 percent and 50.16 percent respectively. Moreover, compound annual growth rate of per SHG Non Performing Assets (NPA) of NER is 19.61 percent while it is 50.16 percent in case of all India. Table 2: Per SHG Savings under SHG - Bank Linkage Programme (Figures in ) States 2009/10 2010/11 2011/12 2012/13 Mean A. Pradesh 2569 2632 2228 8188 3904 73.29 47.17 Assam 3371 3344 3560 3966 3560 8.06 5.57 Manipur 2018 2331 1726 1859 1984 13.14-2.70 Meghalaya 3056 3531 2943 5387 3729 30.41 20.80 Mizoram 4932 3879 11513 19641 9991 72.72 58.51 Nagaland 5642 3679 3496 2192 3752 37.93-27.03 Sikkim 5848 6010 4924 2252 4759 36.53-27.25 Tripura 10641 9895 9929 2101 8142 49.64-41.77 Note: Figures in parentheses indicate p value of t statistic t-values -0.132 (0.899) -3.586 * (0.012) -15.506 * (.000) -0.641 (0.545) 1.623 (0.156) -0.479 (0.649) 0.764 (0.474) 2.003 (0.092) * indicates significant at the 0.05 level (2-tailed) Table 2 reveals per SHG savings in North Eastern states for the period of four years i.e. from 2009-10 to 2012-13. During the study period, on an average Mizoram has comparatively highest per SHG savings of 9991 registering highest compound annual growth of 58.51 percent while it is lowest in case of Manipur with the amount of 1984 having negative growth rate of 2.70 percent. About the consistency in per SHG savings deposit, it is highest in case of Assam with lowest coefficient of variation (8.06 percent) while the same is lowest in case of Arunachal Pradesh with highest coefficient of variation (73.29 percent). The results of hypotheses testing show that per SHG savings of all the states except Mizoram, Sikkim and Tripura is lesser than the North Eastern Region. However, the difference is significant only in case of Assam and Manipur. Table 3 analyses per SHG loan disbursement in North Eastern states for the period of four years i.e. from 2009-10 to 2012-13. During the study period, on an average, Tripura disbursed comparatively highest amount of per SHG loan of 126753 while the same is lowest in case of Manipur ( 57971). With respect to consistency in disbursement, it is the highest in case of Manipur with lowest coefficient of variation (12.57 percent) while lowest is observed in case of Arunachal Pradesh with highest coefficient of variation (57.09 percent). www.icmrr.org 34 icmrrjournal@gmail.com
Table 3: Per SHG Loan disbursed under SHG -Bank Linkage Programme (Figures in ) States 2009/10 2010/11 2011/12 2012/13 Mean A. Pradesh 34617 47323 121508 118554 80501 57.09 50.73 Assam 50114 78077 66925 63990 64777 17.76 8.49 Manipur 55974 48771 65560 61578 57971 12.57 3.23 Meghalaya 46659 68181 70799 115590 75307 38.44 35.31 Mizoram 111959 68314 120035 152101 113102 30.53 10.75 Nagaland 105776 79108 72075 122406 94841 24.69 4.99 Sikkim 58391 52722 106995 59228 69334 36.45 0.48 Tripura 115611 113649 121614 156139 126753 15.69 10.54 Note: Figures in parentheses indicate p value of t statistic t-values 0.230 (0.826) -1.170 (0.286) -2.266 (0.064) 0.020 (0.985) 2.063 (0.085) 1.478 (0.190) -0.398 (0.705) 4.343 * (0.005) * indicates significant at the 0.05 level (2-tailed) The of per SHG loan disbursement is the highest in case of Arunachal Pradesh with the growth rate of 50.73 percent while Sikkim has lowest growth rate of 0.48 percent. Moreover, per SHG disbursement of all the states except Assam, Manipur and Sikkim and Tripura is greater than the North Eastern Region. However, the difference is significant in case of Tripura only. Table 4 shows state wise analysis of per SHG loan outstanding in North Eastern states for the period of four years i.e. from 2009-10 to 2012-13. During the study period, on an average, per SHG loan outstanding is the highest in Mizoram and lowest in Sikkim. About the consistency, it is highest in case of Assam with lowest coefficient of variation (7.14 percent) while lowest is observed in case of Arunachal Pradesh with highest coefficient of variation (56.22 percent). The analysis shows that the growth rate (43.67 percent) of Arunachal Pradesh was highest and on the other hand, Mizoram showed lowest growth performance with negative growth rate of 13.02 percent. www.icmrr.org 35 icmrrjournal@gmail.com
Table 4: Per SHG Loan Outstanding under SHG -Bank Linkage Programme (Figures in ) States 2009/10 2010/11 2011/12 2012/13 Mean A. Pradesh 33359 30576 80645 98923 60876 56.22 43.67 Assam 48917 46125 53495 53384 50480 7.14 2.96 Manipur 42196 44655 39611 45580 43011 6.23 2.60 Meghalaya 41988 43509 54287 74141 53481 27.71 20.87 Mizoram 110916 199514 167997 72988 137854 41.13-13.02 Nagaland 34234 43818 65036 73882 54243 33.85 29.23 Sikkim 29562 40394 47180 43342 40120 18.86 13.60 Tripura 66442 49595 100571 81618 74557 29.14 7.10 Note: Figures in parentheses indicate p value of t statistic t-values 0.416 (0.692) -0.806 (0.451) -2.867 * (0.029) -0.016 (0.988) 2.950 * (0.026) 0.064 (0.951) -2.636 * (0.039) 1.838 (0.116) * indicates significant at the 0.05 level (2-tailed) The results of hypotheses testing show that per SHG loan outstanding for four states, namely, Assam Manipur, Meghalaya and Sikkim is lesser and in case of remaining states, it is greater than the average of North Eastern Region. However, the difference is significant only in case of Manipur, Mizoram and Sikkim. Table 5 provides per SHG non-performing assets in North Eastern states for the period of four years i.e. from 2009-10 to 2012-13. During the study period, on an average, Mizoram is troubled with comparatively highest amount of per SHG NPA of 30547 while Tripura performed under the SHG -BLP along with lowest per SHG NPA amount of 1783. About the consistency, it is the highest in case of Assam with lowest coefficient of variation (28.05 percent) while the same is the lowest in case of Mizoram with highest coefficient of variation (160.42 percent). The state wise growth performance of the programme reveals that the is the highest in Tripura with 122.33 percent while there is a negative growth rate in Mizoram and Arunachal Pradesh. www.icmrr.org 36 icmrrjournal@gmail.com
(Figures in ) INTERCONTINENTAL JOURNAL OF FINANCE RESEARCH REVIEW Table 5: Per SHG Non-performing Assets under SHG - Bank Linkage Programme States 2009/10 2010/11 2011/12 2012/13 Mean A. Pradesh 11687 1989 13100 10694 9368 53.56-2.92 Assam 2586 3832 2456 4334 3302 28.05 18.78 Manipur 5482 7772 8209 16206 9417 49.71 43.52 Meghalaya 4264 3684 17956 6027 7983 84.22 12.23 Mizoram 8638 103859 8603 1087 30547 160.42-49.89 Nagaland 2307 6249 7985 10583 6781 51.23 66.16 Sikkim 2503 12613 7362 4268 6687 66.28 19.47 Tripura 293 1071 2549 3220 1783 75.09 122.33 Note: Figures in parentheses indicate p value of t statistic t-values 2.242 (0.066) -0.570 (0.589) 2.418 (0.051) 1.275 (0.249) 1.097 (0.315) 1.743 (0.132) 1.340 (0.229) -2.360 (0.056) The result of hypothesis testing shows that per SHG non-performing asset of all the states except Assam and Tripura is greater than the region as a whole. However, with respect to this particular parameter, there exists no significant difference between the values of individual states and the average value of the North Eastern Region as a whole. Table 6: Results of Analysis of Variance (ANOVA) Parameters F value p- value Results Per SHG Savings 2.7482 0.0302 Significant Per SHG Loan disbursement 3.1932 0.0155 Significant Per SHG Loan outstanding 5.8053 0.0005 Significant Per SHG Non-performing Assets 1.0100 0.4489 Insignificant Source: Computed Note: Level of Significance (α) is.05(2-tailed) Table 6 shows that the variation in the performance of SHG- Bank Linkage Programme across the North Eastern states in terms of per SHG Savings, Loan disbursement, Loan outstanding is statistically significant as the p value of the respective parameters is less than the α value i.e. 0.05. In other words, there exists statistically significant difference across the states with respect to these three selected parameters. Such result indicates that per SHG performance of the programme in the respective states is unparallel. Moreover, in terms of degree of dissimilarity of the performance, it is greatest in case of per SHG loan outstanding which is evident from the lowest p value of 0.0005 followed by per SHG loan disbursement (p= 0.0155) and per SHG savings (p= 0.0302). About per www.icmrr.org 37 icmrrjournal@gmail.com
SHG Non-Performing Assets the variation in the performance across the states of NER is not significant as the p value is greater than the level of significance (α). The result implies that the burden of having per SHG Non-Performing Assets is by and large parallel across the states. CONCLUSION The main objective of the present paper is to assess the performance of SHG- Bank Linkage programme in North Eastern states of India. The growth performance of the programme in the region in terms of per SHG saving and loan disbursement is not satisfactory compared to all India level whereas opposite is the result in case of per SHG loan outstanding and Non-Performing Assets. The results of two-tailed t test conclude that per SHG savings of all the states except Mizoram, Sikkim and Tripura is lesser than the region but the difference is significant only in case of Assam and Manipur. About per SHG disbursement, all the states except Assam, Manipur and Sikkim and Tripura are having greater amount than the region but the difference is significant in case of Tripura only. In case of per SHG loan outstanding, four states namely, Assam Manipur, Meghalaya and Sikkim are having lesser amount than the region and the difference is significant only in case of Manipur, Mizoram and Sikkim. In regard to per SHG Non-Performing Assets, all the states except Assam and Tripura are having greater amount than the region. Unlike the results of previous testing, in this particular parameter, the performance of SHG Bank linkage programme of individual states of North Eastern Region does not differ with the average performance of the region. Finally, it is observed that there is no significant difference across the states of NER in terms of all the selected parameters except per SHG Non-Performing Assets. Thus, the result implies that the recovery performance of all the states of the region is similar to a considerable extent. REFERENCES Bansal, H. (2001), SHG-Bank Linkage Programme in India: An Overview. Journal of Microfinance, Vol.5, No.1. Borbora, S. (2011), Commercial Banking and SHG-Bank Linkage Programme: A Review with Special Reference to North Eastern Region, in A.K. Agarwal and B. Singh (eds.), Understanding India s North East, Guwahati, DVS Publishers. Chary, S.N., and Savvasi, S. (2013), SHGs Bank-Linkage Programme - A Study of Loans outstanding of Banks against SHGs, International Journal of Business and Management Invention, Vol. 2, No. 1. Das, S. (2003), Self Help Groups and Micro-Credit: Synergy Integration, Kurukshetra, August. Kumar, P. and Golait, R. (2009), Bank Penetration and SHG-Bank Linkage Programme: A Critique, Reserve Bank of India. NABARD, Status of Micro Finance in India (2009-10 to 2012-13), Mumbai Puhazhendhi, V. (2000), Evaluation study of Self Help Groups in Tamil Nadu, National Bank for Agriculture and Rural Development, Mumbai. Reddy, C.S. and Manak, S. (2005), Self-Help-Groups: A Keystone of Microfinance in India S & Social Security, Mahila Abhivruddhi Society, Andhra Pradesh (APMAS), Hyderabad. www.icmrr.org 38 icmrrjournal@gmail.com
Roy, A. (2011), SHG Movement and the Development of Northeastern Region of India, A.K. Agarwal and B. Singh (eds.), Understanding India s North East, Guwahati, DVS Publishers. Selvachandra, M. (2004), Microfinance through Self Help Groups, Kisan World, Vol. 31, No. 11. Shylendra, H.S. (2009), Role of Self Help Groups, Yojana, January. Sinha, F. (2009), States of Microfinance in India. Institute of Microfinance, Retrieve from www.inm.org.bd/publication/state_of_micro/india.pdf Sundaram, A. (2012), Impact of Self-Help Group in Socio-Economic Development of India, IOSR Journal of Humanities and Social Science, Vol. 5, No.1. Vanishree. (2012), An Insight into the SHG-Bank Linkage Programme, VSRD International Journal of Business & Management Research, Vol. 2, No.7. www.icmrr.org 39 icmrrjournal@gmail.com