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INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) ISSN 0976-6502 (Print) ISSN 0976-6510 (Online) Volume 7, Issue 2, February (2016), pp. 134-141 http://www.iaeme.com/ijm/index.asp Journal Impact Factor (2016): 8.1920 (Calculated by GISI) www.jifactor.com A STUDY IJM ©IAEME IMPACT OF MICRO FINANCE THROUGH SELF HELP GROUPS IN PUDUKOTTAI DISTRICT Dr. R. Khader Mohideen Head, Department of Management, Jamal Mohamed College (Autonomous) Tiruchirappali-620 020 S. Amirthavalli Research Scholar, Department of Commerce, Jamal Mohamed College (Autonomous) Tiruchirappali-620 020 ABSTRACT Micro finance programmes targeting women empowerment have been a welcome initiative. It is recognized and accepted as one of the new development paradigms for alleviating poverty through social and economic empowerment of poor, with special emphasis on empowering women. Providing micro credit to rural women through an organized setup will make them enterprising. SHGs are a viable organized set up to disburse micro credits to rural women for the purpose of encouraging them to enter into entrepreneurial activities. Key words: Microfinance, Self Help Groups. Cite this Article: Dr. R. Khader Mohideen and S. Amirthavalli. Impact of Micro Finance through Self Help Groups in Pudukottai District. International Journal of Management, 7(2), 2016, pp. 134-141. http://www.iaeme.com/IJM/index.asp 1. INTRODUCTION Micro Finance is the provision of financial services to low income clients who traditionally lack access to banking and related services. It helps in reaching out to the vulnerable segments of the society like women, SC, ST which are outside the purview of formal lending institutions. It is a form of financial development that has primarily focused on alleviating poverty through providing financial services which help poor to take up income generating activities and secondly it focuses on women empowerment through enhancement of their socio-economic status. Micro Finance Schemes in India are growing rapidly and receiving increasing attention from the financial institutions, non-governmental organizations (NGOs) and the Government, as an instrument that can transform lives of the poor. Micro finance is considered as a development tool to alleviate poverty in Asian, African and South American countries. Microfinance gives quick and tangible results to the poor people, especially women. Microfinance, when extended to people, especially women, in rural areas coupled with supporting activities like training, raw material supply, marketing of products leads to investment in micro enterprises, women may become entrepreneurs, generate main or additional income to the 134 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication family, poverty is reduced and development takes place and the women get the self confidence to go for enterprising activities with social, economic, and political empowerment and with her increased knowledge and awareness, development takes place. When the groups of people join as a group and are provided with empowerment which would lead to social and economic development in a holistic and sustainable manner. India’s development planning has always aimed at removing inequalities in the process of development, recognizing that women lag behind due to several socio economic, cultural and political factors and the five year plans have been paying attention to women’s welfare, female education, and their access to resources and empowerment. From the 6th five year plan, women were recognized as a separate target group and govt. efforts are focused to raise their social, economic and political status at par with men. The field or microfinance made significant progress as a movement in our country, with the active support of RBI, NABARD, SIDBI, and NGOs microfinance emerged as a giant. The concept of Self Help Groups is not ultimately a micro credit projects, but an empowerment process. The Self Help Group and Microfinance are aimed at empowering poor women which help the family to come out of poverty. 2. SELF HELP GROUP A self help group is defined as a small economically homogenous and affinity group of rural poor, voluntary formed to save and mutually agree to contribute to a member as per group decisions. 3. REVIEW OF LITERATURE The study of Gunindra Nath Sarmah and Diganta Kumar Das (2012) concludes that microfinance is playing a significant role in alleviating poverty and rural development. Since women are the sole family care taker, proper emphasis should be given to the rural women and for empowering the rural women, finance is required. Microfinance to the rural SHGs is a way to raise the income level and improve the living standards of the rural women. The Self Help Groups have proved the way for economic independence of rural women. Prasada Rao and Raavi Radhika (2011) in their study concluded that SHG based micro finance has now developed deep roots in many parts of the country. Micro finance has been established firmly but the peoples mindsets are the biggest road block in the success of an innovation. They suggested that since micro finance has been instrumental in empowering women, more effort should be put for women’s development through microfinance. As most of the beneficiaries in rural areas are illiterates, the banks may organize training and development programmes for motivation of the beneficiaries. 4. SIGNIFICANCE OF THE STUDY The Pudukottai district has poor industrial infrastructure. It is suffering with frequent power failure. Unfavorable monsoon is responsible for intrinsic agriculture activities especially in rural areas. So the self help groups are alternate optimal scheme for Pudukottai District to solve its backwardness. That is why, the study is conducted in this area. Self help group is to build capacity to disadvantageous women in order to enable them to cross social and economic barriers and there by facilitates their full development. Hence, provision of micro finance to women self help groups of the district would certainly pave way to women empowerment in the district. Besides majority of people are residing in rural areas with higher rate of unemployment and marginal illiteracy level compared with other districts. Therefore, a study is necessary to probe into the impact of provision of microfinance under Mahalir Thittam, Swarna Jayanthi Gram Swarozgar Yojana,Youth Skill training to Self Help Groups functioning in Pudukottai District. 5. OBJECTIVES OF THE STUDY The major objectives of the study are: 1. 2. 3. To highlight the socio economic conditions of members of Women Self Help Groups in Pudukottai District. To assess the ability of self help groups in Mobilization of Savings. To bring out the problems faced by Self Help Groups functioning in Pudukottai District. 135 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication 4. 5. To study the performance of Self Help Groups in procuring Micro finance Services to their members in Pudukottai District. To analyze the impact of Socio-economic and Demographic factors on the perception of members towards functioning of Micro Finance Schemes. 6. SAMPLE DESIGN The study has been carried out among the members of Self Help Group functioning in Pudukottai district. The first Fifty Self Help Groups which have been repaying their installments regularly in the district were selected for this study. The data were collected by distributing structured questionnaire consisting of 63 queries to 450 members on the basis of disproportionate stratified random sampling. However, the valid response turned out to be 350 on account of incomplete responses, yielding a response rate of 78% respondents. The complete responses obtained from 350 sample respondents were considered for the study. They were asked to give opinion on Micro Finance through self help groups and other independent variables on a five-point scale ranging from ‘Strongly Disagree to Strongly Agree. The analysis was conducted using Statistical Package for Social Sciences (SPSS) version 16.0. The population size of total Self Help Group members in Pudukottai district was 1,10,022 belonging to 9,129 SHGs functioning in the district. Making use of the Sample Size Calculator (Right size) Software, the required Sample Size was calculated as 340 with Confidence level of 99% and confidence interval of ±7%. The researcher has used a Sample Size of 350, which is higher than the calculation made through sample size calculator and therefore it is feasible. 7. DATA COLLECTION A structured interview schedule was prepared by the researcher as explained earlier and used for collecting data from the rural SHG women members who are assisted by the micro finance through self help groups. The secondary information regarding the working of micro finance were gathered from the web sites, journals, books, Mahalir Tittam office, DRDA of the Collectorate and the like. 8. TOOLS USED FOR ANALYSIS Percentage analysis and Correlation were used. 9. LIMITATIONS The data were collected from the members of the Self Help Groups in Pudukottai district. So the findings of the study may not be suited for other districts. The researcher experienced lack of cooperation from the respondents at the time of data collection. There may be possibility of bias in the information provided by the respondents. So the findings may be suffered from the biased information given by the respondents. The survey was conducted only with members of the women self help groups in Pudukottai district Hence the result of the study may not be fit for self help groups formed by men in Pudukottai district. Prominent micro finance schemes namely Swarna Jayanthi Swarogar Yojana, Mahalir Tittam, Economic Assistance and Revolving Fund alone were considered for assessing the economic and social empowerment of women in the District. 10. SCOPE OF THIS STUDY In this article the results of the research relating to motivation and reasons, loans and repayments, nature of repayments and microfinance problems only are presented and interpreted. 136 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication Table 1 Motivation and reasons of self-help group members Reasons & Sources Category Frequency Percentage Family members 47 13 Friends& relatives 143 41 Neighbours 57 16 Other SHGs in the locality 103 29 Total 350 100.0 To support family’s income 88 25 To develop social status 17 5 Reasons for joining To improve saving level 49 14 SHGs For getting loan on low rate of interest 95 27 Poverty alleviation 101 29 Total 350 100.0 SHG 119 34 NGO’S 32 9 Government Agencies 191 55 Moneylenders 8 2 Total 350 100.0 Small size traders 65 17 Agriculture labour 28 8 Low income people 255 73 Middle income people 2 1 Total 350 100.0 Source of motivation Source of microfinance Beneficiaries through microfinance 137 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication Table 2 Loans and repayments of self-help group members Loans & Repayments Purpose of loan Difficulties faced Source of repayment Repayment of internal loan Category Frequency Percentage Business 65 19 Repayment of old loans 96 27 Medical treatment 26 7 Education 36 10 Domestic expenses 127 36 Total 350 100.0 More time is consumed 33 9 More legal Formalities 173 50 Delay in sanction of loan 71 20 Less motivation from the bank staff 73 21 Total 350 100.0 By working overtime 34 10 By borrowing from money lenders 2 1 By borrowing from relatives 11 3 Through regular income 297 85 By other means 6 2 Total 350 100.0 Regular 332 95 Irregular 6 2 Overdue 12 3 Total 350 100.0 138 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication Table 3 Nature of repayments of self-help group members Nature of Repayments Category Frequency Percentage Weekly 84 24 Monthly 266 76 Total 350 100.0 Fully repaid 140 40 Being repaying 209 60 Not yet started 1 0 Total 350 100.0 High household expenses 230 66 Business loss 57 16 Other members failed to repay the loan 55 16 Any other reason 8 2 Total Extended the period without penalty Extended the period with penal interest 350 100.0 7 2 343 98 Total 350 100.0 Easy 74 21 Normal 246 70 Difficult 30 9 Total 350 100.0 Installment period Status of repayment Main reasons for default in repayment loans Action Formalities and procedure 139 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication Table 4 Inter-correlation between perception of SHG members and microfinance problems Factors Perceptions Financial problems Social problems Economic problems Personal problems 1 Perceptions Financial problems Social problems Economic problems Personal problems Total (N) 0.346** 0.390** 0.427** 0.476** 350 1 0.026* 0.051* 0.069* 350 1 0.054** 0.011* 350 1 0.087* 350 1 350 ** Correlation is significant at the 0.01 level (2-tailed), p≤0.01).; N=330 * Correlation is significant at the 0.05 level (2-tailed, p≤0.05). The correlation matrix presented in above table shows the relationship between perception and the independent variables financial problems, social problems, economic problems and personal problems. The dependent variable perception had a strong and significant positive relation to all the independent variables under study. The independent variable financial problems had significant and positive relationship with perceptions at 1% level. (r=0.346, p<0.01).The results of the same table shows that there was significant and positive relationship between perception and social problems( r=0.390, p<0.01). Economic problems had a significant and positive relationship (r=0.427, p<0.01) with perception at 1% level. Similarly personal problems also had significant and positive relationship with perception at 1% level (r=0.476, p<0.01).Hence, it is observed that microfinance problems had significant and positive impact upon perception of respondents at 1% level. 11. FINDINGS  It is observed from above table that friends and relatives acted as a great source of motivation in respect of 41% of respondents.  Poverty alleviation happened to be a dominant reason amongst 29% of respondents which motivated them for joining in SHGs.  A majority i.e. 55% of the respondents viewed that Government Agencies were the source of microfinance.   In terms of 73% of the respondents belonged to low income category.   Most of the (i.e 50%) respondents revealed that legal formalities are more.      As high as 95% of the respondents paid the internal loans regularly. It could be inferred that as high as 36% of the respondents used the funds of microfinance for meeting out their family expenses. A maximum of 85% of respondents repaid the installments out of regular income earned from their SHGs activities. It could be understood that 76% of the respondents repaid the loans by monthly installments. As much as 60% of respondents were still repaying their loans (partially settled) Majority (i.e. 66%) of defaults were due to heavy family expenses. In respect of 98% of respondents the loan period was extended with penal interest. 140 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016) International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 6510(Online), Volume 7, Issue 2, February (2016), pp. 134-141 © IAEME Publication  As many as 70% of respondents opined that the formalities are normal and 21% of them viewed the formalities as easy.  It is observed that microfinance problems had significant and positive impact upon perception of respondents at 1% level. REFERANCES [1] Sanjay Kanti Das , “Socio-Economic Empowerment of Women through SHG-Banking Linkage Programme: A Boon for Development”,International Journal of Management & Business Studies, Vol.2, Issue 1, January – March, pp.39-46. [2] Aggarwal Vijender, Aggarwal Rachna and Khanna Parul ,“ Micro Finance and Risk Management for Poor in India”, Research Journal of Recent Sciences, Vol. 1, No.2, February, pp.104-107. [3] [4] [5] WWW.SHODAGANGA INFLIPNET.IN Womens development office in pudukkottai district Prabandhan: Indian journal on management, vol:5 no:7, july,2012 141 Dr. R. Khader Mohideen and S. Amirthavalli, “Impact of Micro Finance through Self Help Groups in Pudukottai District” – (ICAM 2016)