www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 Performance of Self Help Groups in Hoshiarpur District of Punjab, India: An Empirical Analysis Dr. Munish Kapila 1 Mrs. Harjot Kaur Abstract: Microfinance is a crucial tool for the development of women particularly in rural areas. In India, SHG-bank linkage model, one of the leading models of microfinance has supported over 103 million poor households in the past two decades. However, performance of SHGs in Punjab is undocumented. The objective of this study was to study the performance of SHGs in Punjab. To accomplish this primary data were sourced from 51 SHGs. The study found that some indicators like time taken for loan disbursement, regularity in attendance during meetings, group homogeneity, and utilization of common fund, procedure of decision making and performance of repayment of loan were major contributors in overall performance of SHGs. In addition, more attentions is required for other indicators such as adequacy of training to members, self-employment generation, frequency of meetings, awareness of rules and regulations, maintenance of books and group stability for improving the performance of SHGs in Punjab. The study also found that as the group becomes older its overall performance improves. The study recommends need to provide informal education, more training, and guidance for marketing of goods produced to improve the performance of the self help groups in Punjab. KEYWORDS: Self help group, Performance indicators, Microfinance INTRODUCTION Microfinance is a crucial tool for the development of women particularly in rural areas. In India, SHG-bank linkage model, one of the leading models of microfinance has supported over 103 million poor households in the past two decades. Under this programme women are organized in to small groups of 10-0 members to extend credit facilities. Today, SHGs in India are providing a platforms for poor women to work together to solve their common problems beside financial accessibility (Keshava, Mehta, & Gill, 010). These Groups provide an opportunity for the rural women to improve their economic and social status. Beside this, it carries a number of other benefits for women, including more awareness of reproductive health programmes as well as reducing gender based discrimination. A large numbers of researches show that joining SHGs have resulted in increase in income, employment and empowerment level of women. However, performance of SHGs in Punjab remains unclear and undocumented. Against this background information, the study determined performance of women owned SHGs within Punjab. The resultants information is useful for program managers, field staff NGO personnel and researchers. The remainder of this paper covers a section on review of literature; need for study, objectives of the study, hypothesis, data and methodology, results and discussions, as well as concluding remarks. REVIEW OF LITERATURE SHGs play a crucial role in household development by providing opportunity for women start some income generating activity and contribute in their family income. In India, self-help groups are organized both by 1 Assistant Professor, GNIMT, Ludhiana PGT Commerce, Police DAV Public School,Ludhiana 347 Dr. Munish Kapila, Mrs. Harjot Kaur
www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 governmental and non-governmental organizations (NGOs). The banks provide them financial help by extending loan and Government and NGOs facilitate by organizing and training them. (Bhagwati, 006)stated that the micro- credit advanced through the mechanism of self-help groups linked to bank credit was associated with higher level of loan recoveries than through any other mechanism. (khandker, 003) in his study on impact of microfinance on poverty in Bangladesh found that the poverty rate of BRAC members fell by around 15 per cent for moderate poor and 5 per cent for ultra poor. He is of the opinion that rate of poverty declines with the duration of membership and with cumulative loan size. (Jayaraman & Puhazhendhi, 1999) found that the share of loan for non-productive purposes is reduced from 76 per cent in new groups to 43 per cent in the stabilized groups and the share of loan for productive purposes has increased from 4 per cent in new groups to 57 per cent in stabilized groups. Further, 43 per cent of the households state an increase in the net income of about 0.57 times during the post formation stage of the groups and noticed additional employment generated through informal group lending worked out to 17 days per member. In addition to the above he found that the negative factors, which deterred the performance of the groups, were lack of effective leadership, less involvement of non-governmental organizations and consumption-oriented loans. (DAS, 01) is of the opinion that SHGs are growing in quantity and its performance is deteriorating. His study based on 9 indicators suggested that performance of SHGs should not be compromised with quantity. (Gonzalez 011) conducted a study on Is microfinance growing too fast during the period 000 to 008. The data was collected from 81 MFIs. The result showed that with the passage of time microfinance loan grow 34% in same time period. (Sarangi, 007) found that on the one hand, many of the very poor households were excluded from the programme, and on the other, the gains from participation of the programme were mostly observed for the better-off section of households, particularly those with high per capita income or the large Land holders. He found that credit to serve as a sole instrument of poverty alleviation did not seem to be plausible, without other corroborative mechanisms that help in increasing the potential of credit use by the poor or the small farmer. (Randhawa & Mann, 007) in a study about the functional aspects of SHGs in Punjab pointed that majority of the SHGs were performing badly in terms of capacity building of members. Therefore, future focus of SHG must be on capacity building and skill up gradation of rural women. Although a number of studies were conducted on microfinance and SHGs, its real impact is still debatable. Moreover, in Punjab the performance of SHG model of microfinance has not attracted as much empirical investigation, notwithstanding the fact that microfinance through SHGs have been operational in the state for close to 15 years. OBJECTIVES OF THE STUDY The study is conducted with the following specific objectives: 1. To study the performance of SHGs. To study the impact of group maturity on its performance. HYPOTHESIS In the light of the above objectives following null hypothesis were framed: H 01 = There is no impact of tenure of SHG on its performance. NEED FOR STUDY SHGs are seen as micro-banks serving its members as it provides low-cost retailing options through externalization of the transaction cost of financial intermediaries. However, it is increasingly becoming evident that only one-third to one-half of SHG member avail loan from external funds. Moreover, NABARD report shows that in Punjab the actual number of SHGs has declined from 45,005 in 009-10 to 37,343 in 011-1. Thus the organizational sustainability of SHGs needs some research. This study is a modest attempt in this regard. 348 Dr. Munish Kapila, Mrs. Harjot Kaur
www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 DATA AND METHEDOLOGY The study used cross-sectional survey design with both qualitative and quantitative approaches. The quantitative approach gathered numerical and quantifiable data. The qualitative approach extracted information based on observations and opinions. The study population consisted of SHGs operating with department of women and child development, Punjab. Primary data were collected from total 51 SHGs in hoshiarpur district. Multi-Stage Random Sampling Method was used for selecting sample of SHGs who were engaged for interviews between October, 01 to April, 013.The performance of SHGs was analyzed using 15 indicators which were shortlisted after referring NABARD guide for SHGs. Each of the above indicators was ranked after calculating mean and standard deviation. Kruskal Wallis Test or H-test technique has been used to study the impact of tenure on the performance of SHGs in the study area. Following formula has been used used to carry out this test: Where 1 R1 H test N( N 1) n1 R n Rk... n n 1, n... n k is the number of observation in each sample. n n n N = 1... k R 1, R and so on are the Rank sum Degree of Freedom = k-1 k 3( N 1) RESULTS AND DISCUSSIONS Year of Formation of SHGs The study covered 51 SHGs, each represented by group leader and the leader provided the detailed information about the group. Out of total 51 SHGs the majority, 3 SHGs (45.1 %) were formed before the year 006; 0(39. per cent) were formed between 006 to 009 while 8 (15.68%) SHGs were formed after 009 as shown in table: 1. Table:1-Year of Formation of SHGs Year of Formation Number Percent After 009 8 15.69 006 to 009 0 39. Before 006 3 45.1 Total 51 100 Source: field survey INDICATORS FOR PERFORMANCE OF SHGS The information collected about the performance of the group has been based upon 15 indicators. Here, group leader was asked to rate the performance of the group with a score from 1 to 5. The responses of the group leader for every indicator have been quantified and were ranked after calculating their mean value and standard deviation. The summary of results of performance of SHGs based upon 15 indicators is presented in 349 Dr. Munish Kapila, Mrs. Harjot Kaur
www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 the table.the results shows that higher mean value indicators such as time taken for loan disbursement, regularity in attendance during meetings, group homogeneity, utilization of common fund, procedure of decision making and performance of repayment of loan were major contributors towards the performance of SHGs. It has also been observed that few other important indicators such adequacy of training to members, self-employment generated through SHGs, frequency of meetings, awareness of rules and regulations, level of maintenance of books and group stability obtained lower ranks compared to other indicators. This indicates that although there is cohesiveness in the group and loans are repaid in time still more attention is required to generate self-employment for maximum members in the group. Training is an important factor which besides creating awareness also motivates rural women to start some income generating activity (IGA).The lower rank to adequacy of training indicates need for conducting training programmes more frequently. Table: Indicators of Performance of SHGs S.No Indicators of Performance Sum Mean Punjab (N=51) Std. Deviation Rank 1 Frequency of Meetings 167 3.7.53 10 Attendance during Meetings 5 4.41.698 3 3 Procedure of Decision Making 14 4.0.87 5 4 Awareness of Rules and Regulation 163 3.0 1.114 1 5 Level of Maintenance of Books 164 3..986 11 6 Adequacy of Training for Members 13.59 1.099 15 7 Group Stability 160 3.14 1.414 13 8 Group Conflicts 199 3.90.500 7 9 Homogeneity within the Group 6 4.43.671 10 Increase in Rate of Savings 198 3.88.95 8 11 Utilization of Common Fund 08 4.08 1.055 6 1 Loan Disbursement Time 37 4.65.483 1 13 Performance of Repayment of Loan 16 4.4.651 4 14 Productive Loan to Total Loan 184 3.61 1.150 9 15 Self-Employment Generated through SHG 15.98 1.175 14 Impact of Tenure on Performance of SHGs It was important to check as whether tenure affects the performance of SHGs. The finding of such analysis may help the policy makers to know as whether the performance of SHG improves as the group becomes older. In this context, attempt has been made to study the impact of age of group on its performance. In order to test as whether the age of the group impacts its performance null hypotheses; There is no significant difference in performance among different SHGs and the age of the group was tested. The results of kruskall wallis in the table shows that the mean rank of overall score of all the indicators has been more for the older groups. Also, the chi value (45.93) is significant at 5 percent level which indicates that performance of SHGs improves when the group becomes older. This indicates that as the group becomes old, members know each other better which directly influences the performance of the group by reducing conflicts and helping in collective decision making. Further, in older groups more members were using loan for productive purposes as compared to the newer groups which depicts that after joining SHG most of the women use loan for their 350 Dr. Munish Kapila, Mrs. Harjot Kaur
www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 immediate consumption needs and once these needs were fulfilled they were in position to use loan for productive purpose. Moreover, it has been more likely that the members of the older have attended training programmes and attending these programmes would have helped them to become more competent to start some income generating activities. Individual indicator-wise the mean ranks of procedure of decision on financial transactions, awareness of rules and regulation, level of maintenance of books, adequacy of training to members, group conflicts, share of productive loan to the total loan, and self-employment through SHGs were more for the older groups which signifies that as the group becomes older its performance improves on above indicators. Further, procedure of decision on financial transactions, awareness of rules and regulation, level of maintenance of books, adequacy of training to members, group stability, group conflicts, share of productive loan to the total loan, and self-employment through SHGs are significant at 5 percent level and indicator of frequency of meeting is significant at 10 percent which means that there is significant impact age of group on performance of SHGs on above mentioned indicators. S. No Table 3 The Mean Ranks in Respect of Tenure of SHGs and Performance Scores Obtained by the Various Indicators Indicators Below 3 Years 351 Dr. Munish Kapila, Mrs. Harjot Kaur Mean Ranks 3 Years to 6 Years Punjab (N=106) Above 6 Years Chi-value 1 Frequency of Meetings 6.13 30.10.39 5.8 0.07 Attendance during Meetings 3.38 0.45 8.61 6.16 0.05 3 4 5 6 Procedure of Decision Making Awareness of Rules and Regulation Level of Maintenance of Books Adequacy of Training for Members 8.00 7.65 30.83 6.75 6.75 3.04 9.38 7.08 30.85 5.00 4.43 34.67 17.00 0.00 18.73 0.00 13.90 0.00 6.01 0.00 7 Group Stability 35.94 3.73 4.5 4.56 0.10 8 Group Conflicts 5.00 8.50 31.13 33.19 0.00 9 Homogeneity within the Group 17.75 6.50 8.43 3.88 0.14 10 Increase in Rate of Savings 17.00 6.40 8.78 4.65 0.10 11 Utilization of Common Fund 34.06 6.78.5 4.17 0.1 1 Loan Disbursement Time 5.44 4.80 7.4 0.44 0.80 13 14 15 Performance of Repayment of Loan Productive Loan to Total Loan Self-Employment Generated through SHG 7.13 6.3 5.41 9.13 1.48 35.80 10.44 8.48 9.6 0.11 0.95 3.80 0.00 11.3 0.00 Overall 10.81 4.94 4.78 34.39 3.66 Level of Significance
www.ijetmas.com April 017, Volume 5, Issue 4, ISSN 349-4476 CONCLUSION The study covering 51 SHGs with the objective to assess the performance of SHGs in Punjab revealed that majority of SHGs are more than three year old. The summary of results of performance of SHGs based upon 15 indicators revealed that there are some issues related to performance of SHGs which needs attention. On one hand, indicators like time taken for loan disbursement, regularity in attendance during meetings, group homogeneity, utilization of common fund, procedure of decision making and performance of repayment of loan were major contributors towards the performance of SHGs. On the other hand, two important indicators i.e. adequacy of training to members, self-employment generated through SHGs needs attention. The study points that the SHG model has provided greater access to microcredit for poor women and now future focus of SHG must be on generating self-employment. The findings of the study also show that tenure of the group have a significant influence on its performance. This indicates that SHG become sustainable only after it exists for at least three years. A major reason is that the amount of initial loan is too small for all members to start some IGAs and sometime it is not even sufficient for meeting their consumption needs. But as the group becomes older the size of their loan through internal lending increases and now this may be used to start some income generating activity. Further, the performance of groups would improve significantly with proper mentoring and providing training and improving education levels of members. The study therefore suggests that by providing more training and increasing the loan size the performance of SHGs in Punjab can improve. REFERENCES: Akinsanm. (005). Working Under Constraint: Women, Poverty And Productivity. Women And Environments International 17-18.. Das, S. K. (01). Performance And Performance Of Some Selected Self Help Groups In Assam. Asian Journal Of Research In Business Economics And Management, (4), 6-44. Fernandez, A.P. (007) History And Spread Of The Self-Help Affinity Group Movement In India; The Role Played By IFAD, Occasional Papers 3, Rome: IFAD. Gonzalez, Adrian (010). Is Microfinance Growing Too Fast? MIX Data Brief No 5. Washington D.C. Keshava, Mehta, A. K., & Gill, H. K. (010). Management Of Economic Activity In Women Self-Help Groups. Indian Research Journal Of Extention Education, 10 (1), 58-60. Khander, Shahidur R. 003. Micro-Finance And Poverty: Evidence Using Panel Data From Bangladesh. Policy Research Working Paper No. WPS 945. Washington, D.C.: World Bank. NABARD. (01). Status Of Microfinance In India 011-1. Mumbai Puhazhendhi, V.; Jayaraman, B. (1999). Increasing Women's Participation And Employment Generation Among Rural Poor. Vol. 54, 3, P. 87-95 Randhawa, V., & Mann, S. K. (007). Structure And Functioning Of Self Help Groups In Punjab. Indian Journal Of Agricultural Research, 41 (3), 157-163. Sarangi, Niranjan (007), Microfinance And The Rural Poor: Impact Assessment Based On Fieldwork In Madhya Pradesh, India, Paper Presented In Conference On Sustainable Development & Livelihoods, Delhi School Of Economics, Delhi,6-8 February. Subramanian, S. (010). A Study On Self Help Groups In Tirunelveli District. Thesis Submitted To The Manonmaniam Sundaranar University. BOOKS: Sachs, J. (005). The End Of Poverty. England: The Penguin Press. Yunus, M. (007). Creating World Without Poverty, Social Business And The Future Of Capitalism. United States Of America: Perseus Books Group. NABARD-A Handbook for SHGs 35 Dr. Munish Kapila, Mrs. Harjot Kaur