NATURE AND EXTENT OF MICROFINANCE IN HARYANA

Transcription

1 CHAPTER - 3 NATURE AND EXTENT OF MICROFINANCE IN HARYANA In this chapter, nature, extent and progress of microfinance have been discussed related to our study area of Haryana. To analyze the status and progress of microfinance in Haryana State, it is necessary to first study its status and progress in India that is why the following discussions have been started from the country itself. A small beginning of linking 500 Self Help Groups () to banks in 1992 had now grown up to 8 million by March, 2012 in India. The initiative taken to make the traditional and formal banks to extend financial services to deprived sections through informal blossomed into a massive microfinance initiative. It has been recognized as a decentralized, cost effective and fastest growing microfinance initiative in the world which helped in enabling over 103 million poor household s access to a variety of sustainable financial services from the banking system by joining as members of. The linkage with banks has provided the members the facility of not only pooling their thrift /savings and access to credit from the banking system, but also created a platform through which they could launch a number of livelihood initiatives and also facilitate the empowerment process. 3.1 Three decades of Microfinance in India While the first decade of the program was meant to demonstrate potential of the to organize themselves and to manage their own savings and meet out emergent micro credit needs of the members, the second decade laid emphasis on establishing the replication of the model across the regions, with main focus on resource poor regions of the country. This decade also witnessed greater confidence among the financing banks to adopt the program as a potential business model thereby extending its outreach to the present level. The development planners including the Government of 65

2 India and the State Governments also recognized the real potential of the SHG movement in development of the poor that is why it has been made an essential ingredient of all poverty alleviation programs launched in the country. Even the private sector also started realizing the untapped potential of for deep penetration in the emerging rural markets. The turbulence which was seen in the microfinance sector in the recent past due to the mushrooming growth of Microfinance Institutions (MFIs) and their questionable ways in which they extended their outreach and credit intensification, had little effect on the popularity of SHG-Bank Linkage Program initiated by NABARD. From almost all of the linked to banks at the pilot stage from southern States, their share in the total number of linked shrank to 54 percent by March 2012, while the share of eastern States (especially, West Bengal, Orissa, Bihar) shot up to over 22 percent. The share of the northern States including Haryana is just 7 percent. The third decade of the program promises to be one of maturing the linkage program with livelihoods support, lot more innovations in the product range offered through and path breaking reforms in leveraging technology to improve efficiency while extending its outreach to more geographical regions, especially the most resource poor regions of the country. A number of countries, especially the developing ones and international agencies are turning to India to learn from its experiments with microfinance and to explore possibilities of replication of the model in other parts of the world. 3.2 Progress and Present status of Microfinance in India Nearly 8 million maintaining a balance of over 6550 crore in the savings bank accounts with various banks are estimated to have harnessed savings of over crore of which nearly 70 percent (over crore) goes for internal lending. Over 4.4 million are regularly availing credit facilities from the Banks. During alone, over 1.15 million groups availed loans amounting to crore from banks and together 3.4 million 66

3 groups have loans to the extent of crore outstanding against them with the financing banks as on As the credit availed by the groups along with their internal savings are revolved many times within the group for shorter durations, the multiplier effect makes the process much larger than the basic figures indicate. Detailed analysis of the SHG-Bank Linkage Program across the geographical spread of the country/ State of Haryana and across the financing agencies is being presented in this chapter. An update up to March, 2012 is being presented in the different tables and figures given below: Table 3.1 Progress of Self Help Group-Bank Linkage Program in India (Amount in Rs. Billion) Number of Credit Linked Bank Loan Year During the year Cumulative During the Cumulative year Source: Compiled from NABARD Annual Reports (The reporting of number of credit linked (Cumulative) has been discontinued by NABARD from the year ) 67

4 Figure 3.1 Progress of Self Help Group-Bank Linkage Program in India Above table and figure ( since ) show the progress of Self Help Group-Bank Linkage Program in India since 1992 in respect of number of SHG credit linked and amount of loan given. It is revealed that number of SHG linked increased up to but started decreasing after that. The amount of loan is increasing continuously up to Table 3.2 and Figure 3.2 below presents Savings of and its annual growth rates with Banks as on 31 st March ( to ). Table 3.2 Savings of with Banks as on 31 st March ( to ) Years Annual Growth Rate (%) 68 Amount (Crore Rs.) Annual Growth Rate (%) ,09, ,21, ,53, ,61, ,60, Source: Status of Microfinance in India 2008 to 2012, NABARD

5 Figure 3.2 Annual Growth Rates of and Savings Above table and figure show the savings of with Banks as on 31 st March for the last five years. Growth rate of number of for the last five years is 59 percent and growth rate of savings is 73 percent. There has been a declining trend in growth rates on yearly basis from both in the number of as well as the savings amount which indicate the falling trends in the popularity of the scheme. Table 3.3 and Figure 3.3 depict the amount of bank loan disbursed to with annual growth rates for the last five years: Table 3.3 Bank Loans Disbursed to as on 31 March ( to ) Years Annual Growth Rate (%) Amount ( Crore Rs) Annual Growth Rate (%) ,27,770-8, ,09, , ,86, , ,96, , ,47, , Source: Status of Microfinance in India 2008 to 2012, NABARD 69

6 Figure 3.3 Annual Growth Rates of SHG and Loan Amount Disbursed Above table and figure show the amount of bank loan disbursed to as on 31 st March for the last five years. There has been no increase in the number of financed for the last five years but there is also a declining trend in number of financed in a particular year from onwards. The amount of loan advanced has increased 87 percent in the last five years which shows that amount of loan disbursed per SHG has significantly increased. Table 3.4 depicts the bank loan disbursed to by different banks i.e., Commercial Banks, Regional Rural Banks and Cooperative Banks as on 31 st March for the last five years ( to ). It is revealed that about 60 percent financing under the microfinance has been made by the Commercial Banks whereas rest 40 percent is done by both Regional Rural Banks and Cooperative Banks in which RRBs are having a bigger share. Same position is regarding number of. 70

7 Table 3.4 Loan Disbursement to Bank wise Position Banks Years Commercial Banks (Public & Private Sector) % Share Amount (crore) % Share ,35, , ,04, , ,77, , ,69, , ,00, , Regional Rural Banks ,27, , ,05, , ,76, , ,29, , ,04, , Cooperative Banks ,65, ,99, ,32, , ,96, , ,42, , Total by all Banks ,27, , ,09, , ,86, , ,96, , ,47, , Source: Status of Microfinance in India 2008 to 2012, NABARD Table 3.5 and Figure 3.4 present the loan amount outstanding with with annual growth rates as on 31 st March ( to ) below: 71

8 Table 3.5 Loans Outstanding with as on 31March ( to ) Year Annual Growth Rate (%) Amount ( Crore Rs) Annual Growth Rate (%) ,25,941-16, ,24, , ,51, , ,86, , ,54, , Source: Status of Microfinance in India 2008 to 2012, NABARD Figure 3.4 Growth Rates of the Loan Amount outstanding with Above table and figure show the amount of loan outstanding as on 31st March for the last five years. There is 20 percent increase in the number of and 102 percent increase in the outstanding loan amount which shows that amount of loan outstanding per SHG is increasing for the last five years but there is declining trend in the number of financed after

9 Table 3.6 gives the savings of the with banks (Region wise and Bank wise) as under: Table 3.6 Savings of with Banks (Region-wise/Bank-wise Position) as on 31 March, 2012 (Amount in Lakh) Region Norther n Commercial Banks Saving Amount Regional Rural Banks Saving Amount Cooperative Banks Saving Amount Total of all Banks Saving Amount North Eastern Eastern Central Western Souther n Total Source: Status of Microfinance 2012, NABARD Above table shows that out of having saving account with the various banks, (46 percent) having crore (57 percent) saving amount out of a total of crore belong to southern region of the country which shows almost fifty percent spread in the region. The participation of the northern region is very low as compared to other 73

10 regions of the country. Following Table 3.7 presents the loan disbursement to by Banks (Region-wise/Bank -wise position) as on 31 March, Table 3.7 Loan Disbursed to by Banks (Region-wise/Bank-wise Position) as on 31 March, 2012 (Amount in Lakhs) Region Norther n Commercial Banks Loan Amount RRB Loan Amount Cooperative Banks Loan Amount Total by all Banks Loan Amount North Eastern Eastern Central Western Souther n Total Source: Status of Microfinance 2012, NABARD Above table shows the loan disbursement to by different Banks as on 31 March, It is observed that number of and loan disbursed 74

11 amount is the lowest in the northern region as compared to all regions of the country whereas it is highest in the southern region. Following table gives the loan amount outstanding against as on 31 March,

12 Table 3.8 Bank Loan Amount Outstanding against (Region-wise/Bank-wise) Position as on 31 March, 2012 (Amount in Lakhs) Region Norther n North Eastern Commercial Banks Amount Regional Rural Banks Amount Cooperative Banks Amount Total of all Agency Amount Eastern Central Western Souther n Total Source: Status of Microfinance 2012, NABARD Above table shows the bank loan outstanding against (Regionwise/Bank-wise) position as on 31 March, Maximum amount of loan outstanding is in the southern region and minimum amount in the north eastern region of the country. The above analysis covers the broader components of the microfinance program namely savings, loans disbursed and loan outstanding performance up to March,

13 Table 3.9 gives the progress of (Saving, loans disbursed and loans outstanding) for the last three years separately for all Groups, Groups formed under SGSY and exclusive Women Groups under the SHG-Bank Linkage Program. 77

14 Table 3.9 Overall Progress under SHG-Bank Linkage Program for last three years (Amount in crore /Numbers in lakh) SHG savings with Banks as on 31 st March Loans disbursed to during the year Loans outstanding against as on 31 st March Particulars SHGS Amount SHGS Amount SHGS Amount Total (13.6) (11.8) (7.3) (13.2) (6.7) (-6.7) Of which SGSY Groups % of SGSY Groups to total All women (12.5) (-17.3) (19.4) (40.6) (5.0) (-23.2) (9.18) (1.46) (14.8) (17.8) (3.3) (-3.7) % of women groups Total (-1.4) (17.9) (-24.6) (0.01) (-4) (13.7) Of which SGSY Groups % of SGSY Groups to total All women 2.67 (1.0) 2198 (9.1) 2.41 (-9.9) (12.8) 2.10 (-12.9) (6.6) (5.8) (18.1) (-21.4) (1.6) 9.23 (-9.2) (12.0) % of women groups Total (14.8) (23.6) (-1.3) (11.4) (-9.4) (16.4) Of which SGSY Groups % of SGSY Groups to total All women (27.5) (6.6) (3.4) (25.2) (-5.4) (2.9) (18.9) (23.9) (2.2) (13.4) (-8.4) (16.6) % of women groups Source: Status of Microfinance 2012, NABARD (Figure in parentheses is Annual Growth Rates) Under the SHG-Bank linkage program rural households have now access to regular savings through lakh linked to banks. About 27 percent of these are formed under SGSY the rural poverty alleviation 78

15 program of the Government of India where predominantly households below the poverty line are members. There has been a decline in the amount of savings balance with banks to the extent of 6.7 percent in as compared to the previous year although the number of has shown a growth of 6.7 percent during the year. This decline is almost entirely attributable to the groups formed under SGSY where the decline was to the extent of 23.2 percent. Increasing awareness at the SHG level about the advantage of using the savings for internal loaning is also partly responsible for the decline in saving balance with banks. There is increasing trend in the amount disbursed and amount outstanding under the program. Progress under SGSY since the inception of the scheme on is given in the Table 3.10 and Figure 3.5 given below: Year Table 3.10 Physical Progress under SGSY since inception on formed Women formed Women to total formed (%) passed Grade I passed Grade II taken up economic activities SHG Swarozgari assisted Total Source: Annual Report, , Ministry of Rural Development 79

16 Figure 3.5 Physical Progress under SGSY since Above table and figure presents the progress of microfinance under SGSY in India up to March, 2012 (since the inception of the scheme on ) in respect of formed, women formed, passed in Grade I and II, undertook economic activities and number of swarozgaris assisted. It has been observed that after there is a declining trend in the scheme in terms of the formed, women formed, passed in Grade I and II, undertook economic activities and number of swarozgaris assisted. 3.3 Progress and Present status of Microfinance in Haryana Haryana is one of the small States of India out of the total 28 States. It came into existence on 1 st November, 1966 as a result of bifurcation of the Punjab State. At present the State consists of 21 districts. In comparison to the other States of the country, the penetration of microfinance in the State is very less perhaps due to the fact that it is considered to be one of the developed States of India. The geographical location of Haryana in the national map is given in the following Figure 3.6: 80

17 Figure 3.6 Geographical location of Haryana in the National Map Source: Census of India, 2011 The relative position of Microfinance in Haryana as on March 31, 2012 is given in the following Table 3.11: 81

18 Table 3.11 Relative Position of Microfinance in Haryana as on March 31, 2012 (Amount in crore) Particulars Number of SHG Savings Loan disbursed Outstanding Bank Loans against SHG India Haryana Share of Haryana (%) Source: Status of Microfinance 2012, NABARD It is clear from Table 3.11 that the share of microfinance in Haryana is not even 1 percent of the country in respect of number of, savings, loans disbursed and outstanding loan amount. Comparative position of agency wise participation in SHG-Bank Linkage Program in Haryana as on is given in the Table 3.12 and Figure 3.7 below: Table 3.12 Bank wise participation in SHG - Bank Linkage Program as on March 31, 2012 Banks Haryana India Commercial Banks % Bank Loan (Rs. Crore) % % Bank Loan (Rs. Crore) ,00, , % Regional Rural Banks Cooperative Banks ,04, , ,42, , Total , Source: Status of Microfinance 2012, NABARD 82

19 Figure 3.7 In Haryana, RRBs are playing a major role in disbursement of credit to as 53 percent of the have been formed and 45 percent of credit disbursed by these banks. Commercial banks have less important role in the State as compared to the country s percentage. Cooperative banks have played a very negligible role in the State as compared to the country s percentage. 83

20 Swaranjayanti Gram Swarozgar Yojna (SGSY) was launched in Haryana on 1 st April, 1999 as the main microfinance program. Progress of SHG-Bank Linkage program under SGSY in Haryana is depicted in the various tables and figures given below: Table 3.13 Physical Progress of SHG-Bank Linkage under SGSY in Haryana as on March 31, 2012 (Since inception of the scheme on ) District formed Passed Grade I Passed Grade II SHG that have taken up Eco. Activities Women formed Women taken up Economic Activities Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajhar Jind Kaithal Karnal Kurukshetra M/garh Mewat Palwal Panchkula Panipat Rewari Rohtak Sirsa Sonipat Y/nagar Total Source: Compiled from Monthly Progress Reports of SGSY, Haryana 84

21 Figure 3.8 presents the district wise physical progress under SGSY since inception in respect of the total number of and women below: Figure 3.8 District wise Physical Progress under SGSY in Haryana are formed in Haryana as on March 31, 2012, of which have been passed in Grade I and in Grade II have taken up economic activities formed are of women which comes out to be 62 percent. Kaithal district with 2047 has formed maximum whereas Palwal with 425 has formed minimum in the State. The percentage of women formed is only 62 percent in the State which is less than national figure of 68. Funds utilizations under the program as on March 31, 2012 in the State are given in the Table The table shows that percent of the funds available have been utilized for the program. 85

22 Table 3.14 Funds Utilizations for under SGSY in Haryana as on March 31, 2012 (Plan Year: ) S. No. Particulars Lakhs (Rs.) 1. Allocation of funds Centre State Funds released Total funds available Expenditure % of Expenditure Source: Compiled from Monthly Progress Reports of SGSY, Haryana The expenditure incurred on various items is given in the table below: Table 3.15 Expenditure Incurred under SGSY in Haryana as on March 31, 2012 (Plan Year: ) (Lakhs Rs.) S. No. Expenditure on Amount 1 NGOs/Facilitators Basic Orientation Program Skill development Infrastructure Development Marketing Revolving Fund Subsidy Risk Fund Formation of Federations 0.00 Total Expenditure Source: Compiled from Monthly Progress Reports of SGSY, Haryana The above table shows that very small amount has been spent on 86

23 marketing, NGOs/Facilitators, revolving fund and risk fund where as no amount has been spent on formation of federations which are vital for the success of the microfinance program. It has been provided in the SGSY guidelines that at least 10 percent of the funds should be utilized for training and skill development and 10 percent for revolving fund but the same has not been adhered to in the State. A huge amount of Rs Lakhs (67 percent) has been spent on subsidy. Credit disbursed to in the State is given in the Table 3.16 below: Table 3.16 Credit Disbursed to under SGSY in Haryana as on March 31, 2012 (Plan Year: ) Total Credit Target: (Lakhs Rs.) S. No. Particulars Amount 1 Credit disbursed Subsidy Total investment SC Women Minorities Disabled Subsidy to credit ratio Per family Investment Rs Source: Compiled from Monthly Progress Reports of SGSY, Haryana An amount of lakh has been disbursed in the State against the target of 7130 which comes out to be 123 percent. 55 percent credit has been disbursed to the SC and 93 percent to the women which shows that women are the main beneficiaries under the scheme. Per family investment comes out to be Rs Bank wise credit disbursed to under SGSY for the year is given in following Table 3.17: 87

24 S. No. Table 3.17 Bank -wise Credit Disbursed to under SGSY in Haryana as on March 31, 2012 (Plan Year: ) (Lakhs Rs.) Name of District Commercial Banks Credit Disbursed by Cooperative Bank Regional Rural Bank Other, if any Bank Total by all Banks 1 Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajhar Jind Kaithal Karnal Kurukshetra Mahendergarh Mewat Palwal Panchkula Panipat Rewari Rohtak Sirsa Sonipat Yamunanagar Total Source: Compiled from Monthly Progress Reports of SGSY, Haryana Bank wise credit disbursed to under SGSY for the year is also shown with the help of following Figure 3.9: 88

25 Figure 3.9 Credit Disbursed to by different Banks in Haryana Above table and figure shows that commercial banks are the major providers of credit to in the State as their contribution is 70 percent of the total credit given during the year RRBs have contributed 22 percent and cooperative banks 7 percent only. Maximum credit of lakh has been given in the Sonipat district and minimum of 6.45 lakh in the Gurgaon district. The sector wise physical coverage of members of and individual swarozgaris under SGSY is given in the following Table 3.18 and Figure 3.10: 89

26 Table 3.18 Sector wise Physical Coverage of Members of and Individual Swarozgaris under SGSY in Haryana as on March 31, 2012 (Plan Year: ) (Lakhs Rs.) Primary Sector Secondary Sector S. Name of Tertiar Total No. District Irrigatio n Live Stoc Other s Sub Total Villag e Hand i Handloo m Other s Sub Tota y Sector k Indst. Craft l 1 Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajhar Jind Kaithal Karnal Kurukshetr a M/garh Mewat Palwal Panchkula Panipat Rewari Rohtak Sirsa Sonipat Y/nagar Total

27 3 4 1 Source: Compiled from Monthly Progress Reports of SGSY, Haryana Figure 3.10 Sector wise Physical coverage under SGSY in Haryana In the primary sector maximum members has been financed for the live stock with exception of 20 members for irrigation and 421 for other allied activities. In secondary sector maximum members has been financed for other secondary sector activities such as kariyana and maniari shop etc. with very limited finance for handicraft, handloom and village industry members have been financed in the tertiary sector. It is observed that there is no diversification of activities for financing. Sector wise Total Investment (Subsidy + Credit) to and 91

28 individual swarozgaris is given in the following Table 3.19 and figure 3.11: 92

29 S. No. Table 3.19 Sector wise Total Investment (Subsidy + Credit) disbursement to and Individual Swarozgaris under SGSY in Haryana as on March 31, 2012 (Plan Year: ) (Lakhs Rs.) Name of District Irrigatio n Primary Sector Live Stock Other s Sub Total Village Industri es Secondary Sector Hand i Craft Handloo m Others Sub Total Tertiar y Sector 1 Ambala Bhiwani Faridabad Fatehabad Gurgaon Hisar Jhajhar Total 8 Jind Kaithal Karnal Kurukshet ra M/garh Mewat Palwal Panchkula Panipat Rewari Rohtak Sirsa Sonipat Y/nagar

30 9 Total Source: Compiled from Monthly Progress Reports of SGSY, Haryana Figure 3.11 Sector wise financial coverage under SGSY in Haryana Above table and figure show the sector wise total investment (Subsidy +Credit) disbursement to and individual swarozgaris under SGSY in Haryana as on March 31, It is clear from the table that 80 percent of the total investment under the scheme has been done in the primary sector. The share of the secondary and tertiary sectors together constitute 20 percent of the total investment which means that these sectors are not getting due share in the total investment in the State. From the above discussion it is evident that Haryana is lagging behind in the outreach of the scheme of microfinance. Even within the State some districts are doing well whereas some are lagging behind. Four districts namely Kaithal, Kurukshetra, Hisar and Fatehabad have been selected for the present study because of their past performance and outreach of microfinance 94

31 which required evaluation and is the subject matter of chapter 4. References: 1. Status of Microfinance in India , Nabard Bombay: http : // Website of Ministry of Rural Development, Government of India, 4. Statistical Abstract, Haryana , Government of Haryana