Group Composition and Management. Group Saving Management. Group Loan Management. Group Sustainability and Socio-Economic Impact

Transcription

1 CHAPTER 4 PROFILE OF SELFHELP GROUPS I MAIPUR Introduction Group Composition and Management Group Saving Management Group Loan Management Group Sustainability and SocioEconomic Impact Satisfaction Level of s Summary of Findings Conclusion 0

2 4.. ITRODUCTIO SelfHelp Group () is considered as building block for microfmance. Therefore, it was considered very important for the study of understanding how an was formed and fiinctioned. Before extending any credit facilities by banks, s have to be assessed in terms of Group dynamics like cohesion, vibrancy, goaloriented action, participation of members, democratic decision and collective leadership. This chapter briefly describes about the summary profiles of 0 sample s promoted by sample GOMFIs. Primary data were collected through structured interview schedule and focus group discussion with group members. Information about the group loan, repayment, savings etc was also cross verified with the records maintained by their respective GOs. During the field survey, all the books and records maintained by the group were also referred for better understanding of group functioning. In this chapter, profile of groups are described in four broad categories i.e. group composition and management, loan management, saving management and group self reliance and social impact. Table 4.: Model wise distribution of s sample Model Out of 0 numbers of sample groups under the study, 45 per cent of sample groups were under Model and model respectively. Whereas groups under Model were only 0 per cent of total sample groups under the study. It revealed that model was most popular model in the state of Manipur whereas model was relatively very new and least known to many of GOMFIs.

3 Table:4.: District wisedistribution of s sample District Hill or Valley Bishenpur Valley 0.0 Chandel Hill 5.0 Churachanpur Hill 0.0 Imphal East Valley 4. Imphal West Valley 8. Senapati Hill 5.0 Tamenglong Hill. Thoubal Valley Ukhrul Hill It was found that sample groups were concentrated mostly in valley areas i.e. Thoubal districts (5 per cent), Imphal East (. per cent) and Imphal West district (.0 per cent) whereas proportion of sample groups from hilly districts was relatively very low (less than 0 per cent from each hilly districts). Therefore, s movement appeared to be more popular in valley areas than hilly areas mainly because of higher population density and presence of many GOs in the valley areas. 4.. GROUP COMPOSITIO AD MAAGEMET Size of the group, homogeneity of group members, age profile and business activities of group members, leadership style, conduct of group meetings are some of the important parameters for smooth fiinction of s. Structure, conduct and performance of sample s are discussed under Group composition and management.

4 4... Group size Size of the group generally represents the number of members in the group. Size of the group is considered one of the important criteria for smooth functioning of the group. Size of the group should not be too small or too big, it should be of reasonable size for smooth functioning in the long run. ormally, groups consist of 50 members under model in India. The average size of sample groups under model was 5 members whereas average size of sample groups under model and model were and members. Thus, the average size of group was comparatively small in model than that of model and model. This was mainly because of restriction of 5 members per group in model. A center was made of such 8 number of groups where group meetings were held regularly. Table 4.: Model wise avg. size of the Group Size of Group =< II The above frequency table shows that about 4.7 per cent of sample group had 05 members, whereas 0 per cent of group had 50 members. It is indicated that majority (.7 per cent) of the sample group had more than 0 members in each group Relationship between size of groups and group performance It was considered relevant for the study to analyze the impact of size of groups and performance of the group. For, the purpose of the performance of the group means

5 the overall rating score of the s measured using ABARD credit rating tool. Details of measurement and analysis of performance rating score is discussed separately in Chapter7. Table 4.4: Size of group vs performance of s Size of Group =< umber of s 9 8 Performance of s Average per ote: number of sample s = Fig.4.: Size of vs Performance of s 80n «70 S 0 ( c 0 o 0 S ^^ '...,...^^54.88 '" =< Size of Therefore, a hypothesis testing was formulated to examine the whether there is any relationship between size of groups and overall performance of the groups. The finding of hypothesis testing is enumerated as below. Hypothesis testing: ull hypothesis (Ho): There is no significant relationship between size of group and overall performance (rating score) of groups. 4

6 Alternative Hypothesis (Ha): There is significant relationship between size of group and overall performance (rating score) of groups. Pearson's coefficient of correlation (r) 0.4 Sig. (tailed) 0.000* Test Result of SPSS tool. * Significant at 0.0 level Correlation analysis was used to test the above hypothesis. Since, pearson's coefficient is 0.4 (negative) and is significant at 0.0 level, null hypothesis is rejected and alternative hypothesis is accepted. Thus, it can be concluded that there was significant negative relationship between size of group and overall performance of group. It implied that performance of group decreased with increase in size of group Group homogeneity Group homogeneity generally refers to similarity of socioeconomic background of the group members. Groups are formed considering the homogeneity of the members in terms of same locality, same caste, same business activity, same standard of living, etc. Homogenous groups are expected to function for more cohesive way with better coordination among the members. Homogeneity in same caste and proximity of stay (same locality) were the major criterion (98. per cent) for forming the groups followed by standard of living (5.7 per cent) and same activity (5 per cent). It was found that groups formed under model were comparatively more homogenous than groups formed under mixed model and model. This was mainly due to smaller group size and strict norms for group formation. Group homogeneity in terms of business activity, economic and social status is relatively weak in and model. 5

7 Table 4.5: Homogeneity»f Group Members Group Homogeneity () () () (0) Same Caste Same locality Same business Same economic/ social status Gender composition Out of 0nos of groups under the study, it was found that 58 (9.7 per cent) were women groups whereas only groups (. per cent) were man groups. It was found that majority of groups promoted by the samplegomfis were women groups. Microfmance programme was generally targeted to women groups as they were considered more discipline and sincere as compared to men groups. Table 4.: Gender composition of sample groups. Gender Female Male Further analysis revealed that and model had men groups whereas model did not have any men groups indicating 00 per cent focus only to women groups.

8 4..5. Age of groups Majority (5 per cent) of groups were relatively newly formed i.e. years old. The average age of sample groups was years old. Further, it was found that 9.0 per cent of the sample groups were below 5 years old. Only about 8.4 per cent of the sample groups were above 5 years old. Thus, majority of the groups under the study were comparatively new and yet to reach its maturity level. Table:4.7: umber of years (age) of groups Years Frequency Cumulative yrs.. yrs yrs yrs Above 5 yrs Relationship between age of groups and performance of groups It was considered pertinent for the study to examine the age of groups and performance of the group as performance of the group generally increased with the gain of experience over the years. In order to examine whether there was any significant relationship between age of the group and performance of the group, a hypothesis testing was done using Pearson's correlation analysis. The finding of the hypothesis testing is presented below.

9 Table 4.8 : Age of groups vs performance of groups Years lyrs yrs 4 yrs 45 yrs Above 5 yrs Average per umber of s Performance of groups Fig. 4. : Age of Group vs Performance of Group 0.» 58 a. 5 er. J 54 o 8 5 i 50 i«t. Q ^ ^! yrs ^^ V^. yrs 4yrs 45yrs.4 ^ 5.77 Above 5yrs Age of Groups Hypothesis testing: ull hypothesis (Ho): There is no significant relationship between age of group and overall performance (rating score) of groups. Alternative hypothesis (Ha): There is significant relationship between age of group and overall performance (rating score) of groups. 8

10 Pearson's coefficient of correlation (r) 0.95 Sig. (tailed) 0.0* Test Result of SPSS tool. *Significant at 0.05 level It is observed from the above that Pearson's coefficient of correlation is 0.95 (positive) and is found significant at 0.05 level. Hence, the null hypothesis is rejected and alternative hypothesis is accepted. Therefore, it can be concluded that there was significant positive relationship between the age of group and performance of the group. It is implied that performance of the group increased with the age profile of group Age of group members The average age of the group members was 5. years old and majority of members in the group were 040 years old. The average age of group members under model, model and model were 8 years,.85 years and.85 years respectively. Therefore, groups consisted of comparatively older members as compare with other two models. Table 4.9: Avg. Age of Group Members Avg. age of Group Members 00years years years Above 50 years

11 4..8. Education level of group members It was found that majority of the group members had educational qualification below 0th standard. Members under model had relatively higher educational qualification than that of mixed and model. Table 4.0: Avg. education level of sample Group Members Avg. education level of Group Members Illiterate.70.7 Below Matriculate Matriculate Secondary Graduate Above Graduate Income level of group members About 9. per cent of the sample groups were having average monthly income ranging from Rs.lOOO to Rs Only a few groups about.7 per cent was from higher income level above Rs.5000/ per month. Table 4.: Avg. Income level of samp e Group Members Avg. Monthly Income of Group Members o/ /o Rs.l000Rs Rs.500Rs Above Rs

12 Therefore, majority of sample groups were from monthly income level from Rs.000Rs.5000/ Location of groups Out of the 0number of sample groups under study, it was found that 0 per cent of the sample groups were from rural area, 5 per cent of the sample groups were from semiurban and 5 per cent of the sample groups were from urban. Among the three models, s model had highest numbers of groups from rural areas indicating more focus in rural areas as compared to other two models. Table 4.: Location of the sample Groups Location Rural SemiUrban Urban Business activity of groups The primary objective of the microfinance programme is to provide necessary financial services to the group members for taking up income generating activities which will enhance their living standard. Therefore, it encourages the group members to take up income generating activities for sustaining the microfinance programme in the long run.

13 Table 4.: Business Activities of Group Business Activities of Groups Food stall and restaurants Handicraft Activities(niat, bags, wood craft,etc) Handloom and Embroidery Livestock farming(dairy, piggery, poultry etc) Retail shops(pan, grocery, garments, etc) Tiny Industry(food items, agargabti sticks, soap) Vendors and trader (vegetable, fruits, etc) The study revealed that majority of the groups were engaged in weaving and embroidery (40 per cent), followed by handicraft activities and livestock (.0 per cent each). Further, it was also reported that loan availed by the groups were mainly used for funding the income generating activities Objective of groups Majority of the groups were formed with the main objective to take up economic and social development activities and to inculcate the saving habits and also to avail of need based loans. Only a few (. per cent) responded that groups were formed with main intension to avail grant or subsidies from Govemment/GOs. Table 4.4: Objectives of Group Formation Main objectives of Group formation To take up economic and social development activities To inculcate the saving habits and raised need based loans To avail grant or subsidies from Govt/GOs os of Respondents (out of 0)

14 Therefore, it can be concluded that most of the groups were formed in true spirit for taking up various socioeconomic activities with the help of GOs. Most of the group members were aware about the aim and objectives of the group Support received from GO During the initial period of group formation, various supports and helps are needed from promoting agencies (GOs) for overall grooming of group. Training and capacity building of groups are very essential part of microfmance programme. Table 4.5: Support received from the GO Type of support received from GOMFls Record keeping and accountings Income generating activities Credit and saving Management Information and general awareness Leadership and Group Management Marketing Support Taking up social activities os of Respondents (out of 0) Therefore, various supports received by the members from their respective GOMFIs were studied. It was revealed that most of groups received training and support in record keeping, accounting, income generating activities and credit and saving management. Most of the training programmes were focused on record keeping and accounting (9.7 per cent), followed by credit and saving management (.7 per cent) and income generating activities (0 per cent). However, majority of the groups did not get adequate support in marketing support and social activities.

15 4..4. Frequency of group meeting Groups have to function in a democratic manner. Regular meeting of group members is one of the activities of the groups that ensure effective participation of members. In these meetings, they undertake financial transactions of both collection of savings and disbursement of loans. Meetings are also an occasion for the members to discuss their common problems and other issues that need to be sorted out through the intervention of the group or other members. The group decides the periodicity of the meetings i.e., weekly, fortnightly or monthly. They also decide on the time of the meeting. Decision on time and periodicity helps in regular conduct of meetings. The regularity in the holding of the meeting and the attendance during meeting gives an indication about groups functioning. Table 4.(a): Frequency of Group Meeting Frequency of Group Meeting Weekly Monthly Quarterly Meeting on monthly basis were observed to be the common phenomena (8.0 per cent) followed by weekly meeting (5 per cent) and quarterly meeting (.7 per cent). Further, weekly meetings were commonly practiced by groups under Model whereas monthly meetings were generally followed by groups under and Model Relationship between frequency of meeting and performance of group Since group meeting is one of the essential elements for performing various financial and nonfinancial transactions, it has some impact on the group 4

16 performance. It was considered necessary for the study to examine the impact of meeting frequency on the performance of group. Table 4.(b): Frequency of Meeting and Group's Performance Frequency of Meeting Avg. Rating score of group Monthly 5.8 Quarterly Weekly It is seen from the above table, that performance of group is relatively found better for the groups having weekly meeting than groups having monthly or quarterly meeting. Further, AOVA analysis reveals that there significance difference in performance of groups having weekly meetings and Monthly or Quarterly meetings. In order to test the relationship between frequency of meeting and performance of group, hypothesis testing was done and the result of the test is presented below. Hypothesis testing: ull hypothesis (Ho): There is no significant relationship between frequency of meeting and performance of group. Alternative Hypothesis (Ha): There is significant relationship between frequency of meeting and performance of group. Pearson's coefficient correlation (r) Sig. (tailed) " Test Result of SPSS tool. *Significant at 0.0 level 5

17 Pearson's correlation analysis was used to test the above hypothesis. It is observed from the above that Pearson's coefficient of correlation (r) is 0.84 and is significant 0.0 level. Hence, null hypothesis is rejected and alternative hypothesis is accepted. Therefore, it can be concluded that there was significant positive corelationship between fiequency of group's meeting and group's performance. Table 4.7(a): AOVA test for Frequency of meeting and performance of groups Sum of Squares df Mean Square F Sig. Between Groups * Within Groups Result of SPSS, AOVA test *Significant at 0.0 level Table 4.7.(b): Multiple comparisons: Tukey HSD Meeting Frequency (I) (J) Mean Difference (IJ) Std. Error Sig. 95 Confidence Interval Lower Upper Bound Bound Weekly Monthly 8.40* Quarterly 0.99* Monthly Weekly 8.40* Quarterly Quarterly Weekly 0.99* Monthly * The mean difference is significant at the.05 level. However, there is no significant difference in.performance of groups having monthly meetings and quarterly meetings. Regular conduct of meetings helps in better imderstanding among the group members and increases group cohesiveness. Thus, yield better group performance in the long run.

18 4... Regularity of group meeting Regular conduct of group meeting is very important for smooth functioning of groups as most of the financial transactions are generally done in the group meetings. Moreover, it enhances the better cooperation among the group members for solving various problems. Table 4.8: Regularity of Group MeetingModel wise Regularity of Group Meeting" Irregular Some what regular Regular Conduct of group meetings was observed to be irregular in only.0 percent of the sample groups. These groups did not meet regularly nor did they follow democratic norms. A major reason for irregular meetings was scant attendance, reasons being reported were (i) preoccupation with household activities, (ii) Perceiving group meeting as wastage of time, (iii) difficulty in adhere to fixed time schedule and (iv) inconvenience in date and time. This resulted in loss of cohesion in the group and could later on end up in disintegration. However, a few groups were observed to be particular in collecting their savings, recoveries and disbursing loans in an informal manner (collecting from door to door). " Regularity of meeting is measured in terms of percentage of number of meetings held in the last months. Regular means above 80 of meetings conducted, some what regular (5080 per cent), Irregular less than 50 of meetings conducted. Regularity of meetings are verified and checked with the attendance register maintained by the groups. 7

19 Table 4.9: Regularity of Group MeetingHillA^alley Regularity of Group Meeting Hill dist. ' Valley Dist. Irregular Some what regular Regular Meeting on weekly basis under model was observed to be more regular than meeting conducted on monthly basis under and Model. Further analysis revealed that group meeting was found comparatively more regular in valley districts than in hilly districts. It was also observed that meetings were not conducted regularly by groups located at distance place where follow up and monitoring by GO were difficult. Most of the group meetings were held at the residence of the member's residence or in a common place like panchayat office, village community halls, etc Attendance of members in group meetings Compulsory attendance of members in the meetings is one of the prerequisites for the smooth fianctioning of group. It is one of the indicators that ensure the active participation of members in the business of the group in a democratic manner. Groups with poor attendance rate indicate lack of cohesiveness among the members and may lead to disintegration of the groups in the future. 8

20 Attendance of Group Meeting Less than Above 90 Table 4.0: Attendance rate of Group Meeting The study revealed that the level of attendance was more than 90 per cent in case of about 0 per cent of sample groups and it was less than 70 percent in about.0 per cent of sample groups. About.70 per cent of the sample groups had average attendance rate more than 70 per cent during the last six months. The study also revealed that model had higher member's attendance rate in the group meeting as compared to groups following model and model. Higher percentage of attendance in model was mainly because of imposing penalty or fine for late attendance or absence in the meetings. About 7 per cent of groups imposed penalty or fine for late attendance or absenteeism in the meetings. However, there were provisions in almost all groups of weaving the penalty or fine for genuine reasons like sickness, urgency of works, etc. Attendance of Group Meeting Less than Above 90 Table 4. : Attendance of Group MeetingHillA'^alley Hill dist Valley Dist ' Attendance of group meeting is taken the average of attendance rate for the last months. 9

21 Further analysis revealed that about 47 per cent of sample groups in hilly districts had attendance rate more than 70 per cent whereas about.7 per cent of sample groups in valley districts had attendance rate more than 70 per cent. Thus, relatively poor attendance was observed in hilly areas than that of valley areas. This was mainly because of thin population density and lack of proper monitoring by GO Compliance of group's norms and disciplines by the members Group norms and discipline to be followed by the group members are generally formulated in the meeting resolution books. Group's norms and disciplines generally refer to group membership, selection of group leader, conduct of meetings, financial transactions, etc. All the members of the group have to follow mutually agreed norms and discipline defined by the group. About 5 per cent of the sample groups responded that majority of members followed group norms and group discipline to some extend whereas only 0 per cent of sample groups followed group norms and discipline very strictly. Table 4.: Compliance of the Group's norms and discipline Compliance of Group's norms and discipline Hardly followed (< 50 of members in a group) Followed to some extend (5080 of members) Very strictly followed (> 80 of members) It was also found that most of groups of model followed group's norms very strictly due to close monitoring and weekly meetings. Whereas, compliance of 40

22 group norms and discipline was found comparatively weak in case of and model due to poor monitoring by GO Governance and style of functioning of groups For smooth functioning of the group, members are generally encouraged to take decision in democratic way with the active participation of majority of member. The study revealed that most of groups under model functioned in a more democratic and transparent ways as majority of members participated in the decision making of the group. In case of and model, decisions were taken by a few dominant members or by group leaders. Governance and style of functioning of Group Table 4.: Governance and style > of functioning of Group Decisions were taken by, majority members Decisions were taken by a few dominant members Decisions were taken mostly by group leader loo.q It was also observed that most of the homogeneous groups having same socioeconomic status generally followed the democratic style of decision making process which was found suitable for them Leadership style of the groups Group leader plays an important role for cocoordinating among group members and smooth conduct of various activities of the group. Group leader are generally elected democratically and rotated periodically. 4

23 It was found that about 7.70 per cent of the sample groups elected their leaders in democratic ways by majority of group members. However, most of the elected leaders were not rotated periodically. Only 5 per cent of sample groups responded that leaders were elected democratically and were also rotated periodically after expiry of their tenures. Table 4.4: Leadership Style of Group Leadership style of Group < 5HG Leadership is always cornered by a few members Leaders are elected democratically but not rotated Leaders are elected democratically and rotated periodically Most of the group leaders were elected democratically and were also rotated periodically in Model whereas group leaders were elected democratically but not rotated periodically in case of groups following and model. This indicated that groups under and model were dominated by a few members only Continuity of members in the group Continuity of the members means the same members remain in the group for longer period of time. It is the reflection of overall satisfaction level of members being associated in the group. It also indicates the cohesiveness and dynamics of the 4

24 group. Therefore, continuity of same members in the group is very important for the growth and sustainability of the group. Table 4.5: Continuity of Members in Group Continuity of Members in Group Member change but number of members in the group same umber of members decreased Same number of member with same members About 4.0 per cent of the sample groups had same number of members and same members since the formation of group. imiber of members was decreased in case of about.70 per cent of sample groups under the study. Decreased in membership was mainly on account of drop out of members from the group. About 0 per cent of sample groups had same number of members but different members. Continuity of members in the group was more in case of model than and model mainly due to smaller group size (only 5 members in a group) and more rigid system being followed by model Awareness level of group members The awareness level of members helps in healthy functioning of the group and resolution of conflicts within the group. About 8.0 per cent of the sample groups responded that all their members were aware about the group norms and rules. Group norms and rules were known to majority of the members in case of about 55 per cent of the sample groups. Awareness level was found very poor among.70 per cent of the sample groups. 4

25 Awareness Level of Group Members ot Known to many members Known to a few members Known to most member Known to all members Table 4.: Awareness Level of Group Members It was found that awareness level of group members about group bye laws and rules was comparatively higher in case of Model than that of & model due to smaller group size and more frequency of group meetings. Moreover, awareness level was found relatively more among the older groups than newly formed groups Member's dropout rate Drop out of members from the group has serious impact on the microfmance programme as it disturbs the equilibrium of group. Therefore, it was considered relevant for the study to understand the dropout rate and its reasons for better understanding of group dynamics. Model umber of mem in sample groups 0 Table 4.: Drop out rate tiers umber of drop members 0 out of drop out members

26 It was found that the average dropout rate of the sample groups was about 0.0 per cent. Highest dropout rate was observed in the groups following and model. Dropout rate was nil in case of groups following model. Further analysis revealed that the main reasons for dropout were voluntary retired/resign from the group (4.7 per cent) followed by, change of location (8. per cent), followed by marriage (.7 per cent). It was also observed that drop out rate was relatively higher in the groups having lesser degree of homogeneity and cohesiveness. Moreover, there was a high chance of drop out in case of unmarried women members than the married women members. Therefore, some of the GOs encouraged only married woman to be member of the group. Table 4.8: Reasons for drop out Reasons for drop out Expel from the Group Voluntary retired/resign from the group Jumped to other groups Death/Illness Marriage Business Failure Change of Location umber of Respondents (out of 0) The study also revealed that drop out due to expel from the group, death, illness and business failure was found less than 5 per cent of sample groups Members graduated from the group Graduated members are those members who have volimtarily retired from the group to establish their own micro enterprise without the support of the group. Older and experienced members are generally graduated to micro entrepreneurs who can access to bank's credit directly without the support of groul49p. 45

27 Table 4.9: Graduated Members Model nos of members in sample groups umber of Graduated Members of graduated members It was observed that number of graduated members was found to be more in case of model (. per cent), followed by model (0.8 per cent) and model (0.59 per cent). Therefore, proper grooming and capacity building of the group members were considered very important to help the members graduating from the group level to micro entrepreneurial level at the later stage Maintenance of books and records by groups Whether group is maintaining the basic books that will give details of its functioning and accounts of the group is an important criterion for assessing the group. The books should give the details of number of meetings held, decisions taken in the meetings, amount of savings of the members and credit availed, the total savings of the group and repayments. Maintenance of Books and Records Minutes of the meetings Table 4.0: Maintenance of Books and Records () 00 5 () 9.59 () "Z" (0) 9.7 Attendance register Cash Book Loan Register Saving Register Bank Passbook

28 It was found that most of the groups maintained meeting resolution book, meeting attendance register, bank pass book, loan register and saving register. Only a few of groups maintained cash book. It was also found that groups following model did not maintain loan register, saving register as it was maintained by their supporting GOMFIs Quality of books and records maintained by groups It was observed that about.70 per cent of sample group did not maintain the records properly and about 4.70 per cent of sample group did not maintain in details and not updated. Only.70 per cent of sample groups maintained their records properly. Table 4.: Quality of books and records maintenance Quality of books and records maintenance Poorly maintain Maintain but not in details Maintain details with The quality of books and records by the groups of model was found relatively better than that of and model. This was mainly because of proper training and close monitoring by the GOs. 4.. GROUP'S SAVIG MAAGEMET Saving or thrift was one of the main products in the microfmance programme. The amount of savings per member during a given period usually varies across the groups depending on their capacity to save and age of the group. The group normally decides on the amount of savings as also its periodicity. Therefore it was 47

29 considered important for tlie study to examine the group's saving management, such as whether the saving, as decided upon, was regularly made, how the defaults were dealt with and whether the system was modified as per the requirements of the members. The findings of the study about Group's Saving Management related to types of saving, saving frequency, average saving per member, method of saving collection, regularity of savings, etc. are presented in the following sections Types of group's savings Group member's saving is generally of two types; one is compulsory saving and other one voluntary saving. Compulsory saving is mandatory saving of fixed amount required by each and every members of the group to mobilize the group fund which is generally kept either with the banks or GOMFIs. Volimtary saving on other hand is not mandatory for the members. In voluntary saving, amount and frequency of saving are not fixed. Individual members can decide the saving amount and frequency depending on one's wishes and capability. This member's saving is also generally used as collateral security by banks or MFIs against the credit given to them. Table 4.: Types of Group Savings Types of Group Savings Compulsory savings Voluntary savings Both Compulsory and voluntary savings It was found that out of total sample groups, about 78. per cent groups had compulsory savings and only 0 per cent of groups had voluntary savings. The study further reveals that there was no voluntary savings in case of model 48

30 as most of the savings are link with loan and maintained by the supporting GOMFIs Frequency of group's saving It was found that majority of the savings were made only monthly basis in case of and model due to monthly group meeting. However, the saving frequency was weekly basis in case of groups following Model as they followed weekly meeting. This showed that frequency of saving was related to frequency of meeting. Table 4.: Saving Frequency Saving Frequency Monthly Weekly Savings mobilization by group members Average monthly saving per member varied from Rs. 0 to Rs. 80. Average monthly member's saving under model, model and model were Rs.48./, Rs..89/ and Rs..0/ respectively. Older groups had higher member's saving as compared to newer groups mainly because of increase in member's income over the period of time. Savings were generally mobilized in the group meetings. Group saving fund was also used for internal lending to each members in some group formed under model. 49

31 Table 4.4: Avg. Savings per group (Amount in Rs.) Model umber of s Avg. savings per member per month Avg. total saving mobilized per group Avg. saving outstanding per group Average per The average saving outstanding of the sample groups was Rs.,409/ per group as on Mar007. Groups under Model had highest average saving outstanding of Rs. 0,007/ followed by model with Rs. 89/ and Model with Rs.7005/. Higher saving outstanding in case of and model was mainly due to larger nimiber of members Method of saving collection The study revealed that most of the savings were collected during the group meeting. Only 0 per cent of respondents deposited group savings directly to Bank or GOs and 8. per cent of respondents say group's saving was collected directly from member's house by their respective group leaders. Table 4.5: Method of saving collection Method of saving collection Deposit to GO/Bank Group Meeting House to House

32 4..5. Management of group's saving On question asked about the management of their group saving fund, it was reported that majority (85 per cent) of sample groups kept their group savings with their bank account. About 8.7 per cent of sample groups used their group saving for internal lending among their group members. In case of model, most of the groups kept their group saving with their promoting GOMFIs. Since, most of the GOMFIs were not legally permitted to mobilized savings, they did not provide the saving services directly. Indirectly, they assisted in opening saving account with the banks. However, some GOMFIs mobilized saving from the groups indirectly or disguise form as security deposit against their loan. Table 4.: Management of Group Savings Management of Group Savings () () () (0) Keep with the Group Deposited to GO MFI Deposited to Bank Lend to Group members Lend to otiiers Regularity of group's saving It was found that group's saving was comparatively found to be very regular in case of groups following Model because of their weekly collection. Saving mobilisation was found some what irregular in case of and model due to larger size of group and monthly collection. 5

33 Table 4.7: Regularity of group's saving Regularity of Member's saving Very regular Some what regular GROUP'S LOA MAAGEMET Credit is the core element of microfinance programme. Success of the microfinance programme depends largely on loan management by the group. Therefore, it is important for Banks and MFIs to assess the credit function of the group before extending any financial assistance. The credit fianction of the group includes decision making process of selecting eligible members for loan, assessing credit requirement of individual members, the system of monitoring the credit, the repayment performance of members and incidence of defaults besides the effectiveness to deal with such defaults, peer pressure, etc. For the purpose of study, group's loan management was examined using important parameters like terms of loan cycle, loan amount, loan repayment frequency, interest rate, enforcement for regular repayment and loan repayment period. The findings of the study on group's loan management are discussed in the following sections Loan cycle Loan cycle is the number of times loan availed by the same group. Repeat loans are generally given to the groups having good record of loan repayment. Thus, it measures the efficiency of loan management by group. 5

34 Table 4.8: Loan cycle of GroupModel wise Loan cycle of Group '' loan "'' loan "" loan "' loan '" loan It was found that about majority (. per cent) of the sample groups had availed loan more than twice. About 0 per cent of sample groups had availed loan four times whereas only.70 per cent of sample groups had availed loan five times. Further analysis revealed that majority of groups following had higher loan cycle (4 times) than other two models mainly because of shorter loan tenures and older age profile of groups Relationship bet^veen loan cycle and age of the group The study revealed that the average loan cycle for newly formed groups ( years) old groups was whereas average loan cycle for older groups (more than 5 years) was.4. Therefore, it is indicated that there was some relationship between loan cycle and age profile of the group. Table 4.9 : Loan cycle of GroupAge wise Age of the Groups of Avg. Loan cycle lyrs yrs 4yrs 45yrs Above 5yrs

35 Fig. 4 : Age of Group vs Avg. loan cycle 4 n.5 o O.5 i!.5 ^ 0.5 ^ 0 ^ < r ^ yrs yrs 4yrs 45yrs Age of Groups.4 Above 5yrs To confirm the above findings, hypothesis testing was done using Pearson's correlation analysis and the result of hypothesis testing is illustrated below. Hypothesis testing: ull Hypothesis: There is no significant relationship between loan cycle and age of the group. Alternative Hypothesis: There is significant relationship between loan cycle and age of the group. Pearson's coefficient of Correlation (r) 0. Sig. (taiied) 0.00* Test Result of SPSS tool. *Significant at 0.0 level It is observed from the above table that Pearson's coefficient of correlation (r) is 0. and is significant at 0.0 level. Hence, the above null hypothesis is rejected and alternative hypothesis is accepted. Therefore, it can be concluded that there was 54

36 significant relationship between loan cycle and age of group. It is implied that older groups had more number of loan cycle than newer groups Loan availed of by the Group The average loan outstanding of the sample groups as on Mar007 was found at Rs.,848/ per group. Loan amount varied from Rs. 0,000/ per group to a maximum of Rs.,95,000/ per group. Groups under model and Model had comparatively higher average loan outstanding of Rs.,50/ and Rs.,0/ respectively. Whereas, the groups under model had average loan outstanding of Rs.,/. Table 4.40: Model wise avg. loan size per group (Amount in Rs.) Model umber of s Avg. size of loan availed by the Group Avg. Loan outstanding per Group as on Average per From the above table, it can be concluded that average loan outstanding per group was comparatively more in case of and model as compared to Model. This was mainly because of comparatively bigger size of the group under and Model (05 members) as compared to size of group (only 5 members) under model Relationship between avg. loan size and age of the group It is common trend that loan size per group generally increases with the age of the group. Thus, it was considered pertinent for the study to understand the relationship between avg. loan size per group and age profile of the group in the microfinance programme. 55

37 The study revealed that comparatively newer group of (lyears) had average loan size of about Rs. 7,500/ per group whereas older groups (more than 4 years) had average loan size of about Rs.,74 per group. It is suggested that older groups had availed bigger loan amount than newer groups because of repeat assistance based on the pass repayment record of older groups. Table 4.4: Age vs. Avg. loan size per group (Amount in Rs.) Age Profile of the Group yrs yrs 4 yrs 45 yrs Above 5 yrs umber ofs Avg. size of loan availed by the Group Avg. Loan outstanding per Group as on Average per Hypothesis testing was carried out to examine the significant relationship between the average size of loan and age of the groups. The finding of the hypothesis testing is described below. Hypothesis testing: ull hypothesis (Ho): There is no significant relationship between average loan size and age of the group. Alternative hypothesis (Ha): There is significant relationship between average loan size and age of the group. Pearson Correlation (r).4 Sig. (tailed).008* Test Result of SPSS tool. * Significant at 0.0 level 5

38 Since, coefficient of correlation (r) is 0.4 (positive) and is found significant at 0.0 level, null hypothesis is rejected and alternative hypothesis is accepted. Therefore, it is concluded that there was significant relationship between average loan amount and age of group. From this analysis, it is verified that loan amount was increased with the increasing age of groups Relationship between average loan size and size of the group The study revealed that the average size of loan availed for smaller groups of less than 5 members was Rs., whereas the average loan size for bigger groups of 50 members was Rs. 57,58. Similarly, the average loan outstanding for smaller groups was Rs.,5 and Rs. 8,57 for bigger groups. It is indicated that there was some relationship between loan amount per group and the size of the group. Table 4.4: Size of Group and Avg. loan size (Amount in Rs.) Size of Group (os of members per group) umber of s Avg. size of loan availed by the Group Avg. Loan outstanding Per Group as on =< Average per In order to examine the above relationship, hypothesis testing was carried out and result of the test is shovra below. Hypothesis testing: ull Hypothesis: There is no significant relationship between average loan size and size of the group (number of members in the group). Alternative Hypothesis: There is significant relationship between average loan size and size of the group (number of members in the group). 57

39 Pearson's coefficient of Correlation (r). Sig. (tailed).8 Test Result of SPSS tool. Pearson correlation analysis was used to test the above mentioned hypothesis. It is found that Pearson's coefficient of correlation (r) is 0. (positive) and is not significant at 0.05 level. Hence, null hypothesis is accepted and alternative hypothesis is rejected. Therefore, it is concluded that there was no significant positive relationship between average loan amount and size of the group. It was also found that most of the GOMFIs decided the size of the loan mainly on the age of group, past record, repayment history, group's savings and capacity of the group members Loan Repayment Frequency Majority (80 per cent) of the sample groups had loan repayment frequency on monthly. About 5 per cent of the sample groups had loan repayment frequency on weekly basis and only about 5 per cent of the sample groups repaid their loan on weekly basis. Table 4. 4: Loan Repayment Frequency Loan Repayment Frequency Weekly Monthly Quarterly All the groups following model had weekly loan repayment frequency because of their weekly meeting. But most of groups under Model and 58

40 model followed monthly loan repayment system as most of them followed monthly group meeting Regularity of loan repayment The study revealed that loan repayment of groups under Model was relatively more regular as compared to that of other two models mainly because of weekly repayment, more strict financial discipline and close monitoring by the GO. Table 4.44: Loan Repayment Frequency Loan Repayment Frequency Regular (Above 80) Some what regular (080) Irregular (Less than 0) Interest rate It was found that average monthly interest rate charged to the Groups was.08 per cent. Average annual interest rate charged by the GOMFIs was flat rate of 4.0 per cent,. per cent and.9 per cent for model, and model respectively. Higher interest rate in case of mixed model was due to higher cost of operating expenses due to individual lending. 59

41 Table 4.45: Avg. Interest Rate charged by GO Model umber of s ( & Individual) Average per Avg, Interest Rate () per annum Enforcement for regular repayment The study revealed that for making regular repayment of loan most the groups used peer pressure and late fine. There was no evidence of strict enforcement such as expel from the group and mortgage of assets in the event of default. Further analysis revealed that peer pressure was relatively more in case of and model for ensuring regular repayment of loan. Table 4.4: Enforcement for regular repayment Enforcement for regular repayment of loan Late Fine Expel from the Group Peer Pressure Mortgage of assets umber of Respondents (out of 0) Loan repayment period Majority of the groups under and model had loan repayment period months whereas majority of groups under model had loan repayment period of 8 months. Therefore, the loan repayment period was comparatively longer for Model mainly because of bigger loan size. 0

42 Table 4.47: Loan Repayment Period Loan Repayment Period 8months months Internal lending within group members It was found that about 8.7 per cent of the groups had internal lending within the members out of total group saving fund. Internal lending was found highest (9.0 per cent) in model and followed by (85.9 per cent ) model and model (50 per cent). Interest rate charged to the member was about.5 per cent per month. Table: 4.48: Internal lending within the Members Model umber of s umber of internal lending groups Avg. Interest rate charged to member ( per month) Method of distribution of loan It was revealed that 5.7 per cent of groups distributed loan to group members based on preference or priority. About 8. per cent of sample groups distributed loan to members based on rotation whereas only 5 per cent of sample groups distributed loan on lottery basis.