INTRODUCTION:

Over the years microfinance institutions have played a vital role by providing loans and financial services basically to rural and semi-urban areas in India. It provides an opportunity to low income people to uplift their living standards. With the help of microfinance people of rural areas benefitted a lot by starting up something of their own and help the family members. It builds confidence among rural people to do something new as finance is readily available which not the case before (Goyal, 2018). Micro-credit indeed a lifeline for the people to sustain though the interest rates could be higher at times but it is a better option than from the clutches of money lender who takes the undue advantages of the people (Mittal, 2016)

Self-Help Groups (SHGs) is now nearly three decade old. It plays a major role in poverty alleviation in rural areas of the World. It is reported that the SHGs have a role in speeding up country’s economic development. It has now evolved as a movement (Saravaan, 2016). The Self help groups (SHG)-Bank linkage programme has appeared as the largest micro credit programme in the world. The programme is conceived with the objectives of developing supplementary credit delivery services for the unreached poor, building mutual trust between the bankers and the poor and encouraging banking activity both on thrift as well as credit and sustaining a simple and formal mechanism of banking with the poor. The programme has not only been able to reduce transaction costs but also to achieve better loan recovery and mobilize low cost deposits. (Chandran and Sandhya, 2012)

In India, Self Help Groups–Bank linkage programme is implemented by the National Bank for Agriculture and Rural Development (NABARD) in 1992 as a pilot project for promoting 500 SHGs, experienced significant growth over time in terms of coverage and amount of credit to poor people in rural areas. The need for an alternative credit delivery mechanism in the form of SBLP was felt because, despite the phenomenal expansion of the organized banking system, a very large number of the poor continued to remain excluded from the formal banking system. Banks provide financial services to SHGs directly or indirectly through NGOs and other agencies. (Ghosh, 2017).

CONCEPTUAL FRAMEWORK:

Microfinance is defined as the financial support services provided to poor and low income group people so as to help them raise their income and standard of living. (Kumra and Sharma,2018; Baishya and Mahanta,2018). The concept of microfinance was initiated by Professor Muhammad Yunus. He developed the concept of Grameen Bank in Bangladesh for which he received Noble Prize in the year 2006. The Asian Development Bank (2000) defines microfinance as the provision of broad range of services such as savings, deposits, loans, payment services, money transfers and insurance to poor and low income households and their micro-enterprises. This definition of microfinance is not restricted to the below poverty line people but it includes low income households also.

Self-Help-Groups: It is formed by a group of 10-20 members by way of mutual discussions and gives financial assistance to members by accumulating their savings. The key features of SHGs are that it consists of members belonging to the same community or society and having common economic goal. (Rao and Srivastava, 2017; Malakar and Gautam, 2016; Bargal, 2014; Mahanta, 2012)

Self-Help-Groups-Bank Linkage Model: This model is an intermediate approach between the bank and rural people in delivering various financial services. In this model, a group of 10-20 people come together and contribute their savings. This collective savings of the group is being used for giving loans to members for their needs. Once this Self-Help-Groups show matured financial behavior it is linked with formal financial institutions for its better functioning. This model is the most successful model as there are widespread bank branches in the rural region which can work hand-in-hand for delivering of financial services. (Mehta, 2015; Malakar and Gautam, 2016)

REVIEW OF LITERATURE:

The purpose of review of literature is to summarize various conclusions made by various researchers on the related topics and come to a winding up by combining such facts and figures. A few of them are:

Kumar (2018) found that the SHG-Bank Linkage Programme is really helpful to reduce poverty and inequality within all the regions of India. Annapurna (2017) concluded that this programme links the poor people through innovative practices, trust building and people’s participation in the overall development. The study found positive growth in terms of savings by SHGs in all regions of India during the 2010-11 to 2015-16. Outstanding amount of SHGs with banks has observed positive trend across India. The boost in number of SHGs is increasing less compared to growth in outstanding amount of SHGs (Ramakrishna and Harika, 2017). A similar study was conducted by Prasad (2017) in North Eastern Region. According to Roy (2014), Regional Rural Banks had the largest share of 48 percent of SHG savings followed by Commercial Banks 40 percent and Co-operative Banks with only 12 percent SHG savings. The study also highlighted that Commercial Banks had the largest share (i.e. 44 percent) in case of bank loan disbursement compared to 39 percent in Regional Rural Banks and 17 percent in Co-operative Banks in the North-Eastern Region.

The only problem which still resides in Indian Microfinance Sector is the focus given majorly on southern areas or rural areas of the country ignoring urban poor in majority of the plans and policies. Although there are some institutions working towards the upliftment of urban poor but the area still needs a little more attention Srivastava and Sharma (2017). A similar study was conducted by Khan and Rahaman (2007) and found that microfinance played a very crucial role in the improvement of living standard of people.

Malakar and Gautam (2016) opined that SHG-Bank Linkage Programme was playing a vital role in terms of enabling people to identify their own developmental priorities and contributing towards the economic development and social upliftment of economically weaker section of the society

Bargal (2014) found that the slum dwellers were engaged in agriculture, trading business, and industry and daily wages labor before availing micro finance. But after joining micro finance they were engaged in self employment. The study also pointed out that one-third of the respondents were availing micro finance for generating fund and the rest for their socio-economic empowerment

Microfinance institutions were functioning very accurate in south region but the central and north regions of India were in backward position in utilizing the services of microfinance institutions (Radhakrishna, 2012).

RESEARCH GAP:

A number of researches have been carried out on SHG-Bank Linkage Model to alleviate poverty, income generation, improvement of standard of living and gender empowerment among the rural masses of India. However, a least attention has been paid to understand the current status of microfinance through SHGs in North-Eastern States. Therefore, an attempt has been made to highlight the growth of loan disbursement by Public Sector Banks through SHGs in the North Eastern Regions and the disparities among the North-Eastern states in terms of Savings, Loan Disbursement and Loan outstanding.

OBJECTIVE OF THE STUDY:

The present paper has made an attempt to study the followings objectives:

1. To highlight the growth of loan disbursement by public sector banks under micro finance scheme through Self Help Groups (SHGs) in North-Eastern Regions.

2. To examine the inter-state variations among the North-Eastern States of India with regard to savings, loan disbursements, and loan outstanding under microfinance scheme to Self Help Group (SHGs).

RESEARCH METHODOLOGY:

The present study has availed the secondary sources of data only. Data has been collected from the multiple research papers, Journals, various reports of the NABARD and the RBI and websites.

RESULT ANALYSIS:

In this paper an attempt was made to analysis the growth of loan disbursement by Public Sector Banks through SHGs in the North Eastern Regions and the disparities among the North-Eastern states in terms of Savings, Loan Disbursement and Loan outstanding. The findings of the study are as follows:

i). Loan Disbursement by public Sector Banks to SHGs:

The Table-1 portrays an overview of Loan Disbursement by public Sector Banks to SHGs at all India level. For the North-Eastern Region, the loan disbursement has increased from Rs 21969 lakh to Rs.35721 lakh for the period 2015-16 – 2017-18. However, the central region has experienced downfall in terms of loan disbursement to SHGs by Public Sector banks i.e from Rs119067 lakh to 55943 lakh for the same period. The percentage growth of loan disbursement for the 2015-16 to 2016-17 was only 4 percent for all India. During the same period Eastern region registered highest growth followed by north eastern Region whereas central and western region experienced decline. During 2016-17 to 2017-18, the total loan disbursed by SHGs increased by 21.67 percent at all India level. This growth was led by huge growth in the eastern regions (92 percent) followed by north eastern region (25.67 percent).

Table: 1 Region –Wise Loan Disbursement by Public Sector Bank to SHGs

Amount in Lakh

	2015-16		2016-17		2017-18		Percentage Change
Regions	No. of SHGs	Total Loans Disbursed	No. of SHGs	Total Loans Disbursed	No of SHGs	Total Loans Disbursed	2015-16 to 2016-17	2016-17 to 2017-18
North Eastern	26307	21969	28961	28421	35017	35721	29.37	25.69
Northern	38106	48298	46567	57414	51800	54038	18.87	-5.88
Central	84282	119067	82012	67958	69295	55943	-42.92	-17.68
Western	112525	188632	106825	148819	128973	155099	-21.11	4.22
Eastern	412576	349489	497063	473172	720444	908950	35.39	92.10
Southern	1158797	3001235	1136692	3102332	1255603	3508834	3.37	13.10
All India	1832323	3728690	1898120	3878116	2261132	4718587	4.01	21.67

Source: Compiled from NABARD Report 2017-18

Fig-1 shows the Loan disbursement during the period (2015-16 to 2017-18) In NER by Public Sector Banks through SHGs (in lakh)

ii). Savings of SHGs with Public Sector Bank under Micro finance in North –East India:

In North east India there are 485591 numbers of registered SHGS with a total savings of Rs. 32207.59 lakhs (Table-2) with the Public Sector Banks. The SHGs are unevenly distributed all over the region. Assam, the largest state of the region in terms of GDP and population, is home to 375986 SHGs with total savings of Rs. 19466.96 with public sector banks. Tripura holds second position followed by Sikkim, Meghalaya, Arunachal Pradesh, Mizoram and Nagaland. In terms savings per SHG, Sikkim with Rs. 0.34 lakhs, has the highest savings per SHG with public sector banks while Manipur (Rs. 0.02 lakhs) has the lowest savings. Tripura has the second highest savings per SHGs. Table 2, shows the savings of SHGs with Public Sector Bank under Micro finance in North –East India for the period 2017-18.

Table-2 State wise position of savings of SHGs with Public Sector Bank under Micro finance in North –East India for the period 2017-18

STATES	NO. OF SHGs	SAVINGS AMOUNT (in lakh)	SAVINGS PER SHG (in lakh)
Arunachal pradesh	6000	901.5	0.15
Assam	375986	19466.96	0.052
Manipur	16960	410.37	0.02
Meghalaya	11427	1180.42	0.10
Mizoram	8934	684.87	0.08
Nagaland	6533	527.95	0.08
Sikkim	6077	2080.77	0.34
Tripura	53674	6954.75	0.13

Source: Compiled from NABARD Report 2017-18

Fig:2- Savings of SHGs with Public Sector bank for the period 2017-18

iii). Loan disbursement by Public Sector Bank to SHGs in North-Eastern:

Table-3 shows the loan disbursed by Public Sector Banks to SHGs under microfinance in north-eastern India during 2017-18. It has been observed from Table-3 that the highest amount of loan disbursed by Public Sector Banks to SHGs under microfinance lies with Assam with a total disbursement of Rs.30934 lakh. Nagaland stands second position in terms of loan disbursement followed by Mizoram and other North-Eastern states. In case of loan disbursement per SHGs Nagaland has the highest laon disbursement per SHGs. Mizoram has the second highest loan per SHGs.

Table: 3 State-wise positions of Loans disbursed by Public Sector Bank to SHGs in North-Eastern Region for the period 2017-18

STATES	NO. OF SHGs	LOAN AMOUNT (in Lakh)	LOAN PER SHGs (in Lakh)
Arunachal pradesh	119	118.3	0.99
Assam	31029	30934.94	1.00
Manipur	430	366.97	0.85
Meghalaya	387	281.34	0.73
Mizoram	593	1005.93	1.70
Nagaland	727	1397.47	1.92
Sikkim	712	652.86	0.92
Tripura	1020	963.92	0.95

Source: Compiled from NABARD Report 2017-18

iv). Loan outstanding with Public Sector Bank by SHGs under micro finance in NER:

It is evident from Table-4 that the total loan outstanding is the highest in the state of Assam while it is the lowest in the case of Arunachal Pradesh. As far as the loan outstanding per SHG is considered, Nagaland stands first position with Rs.1.44 Lakh per SHG and Tripura with lowest loan outstanding per SHG (Rs 0.36 lakh per SHG).

Table: 4 State wise position of Loan outstanding with Public Sector Bank by SHGs under micro finance in NER for the period 2017-18

STATES	NO. OF SHGs	LOAN O/S AMOUNT (in Lakh)	O/S AMOUNT PER SHG (in Lakh)
ARUNACHAL PRADESH	526	319.23	0.61
ASSAM	100455	67772.01	0.67
MANIPUR	1495	889.56	0.60
MEGHALAYA	1692	941.09	0.56
MIZORAM	1824	2535	1.39
NAGALAND	1285	1850.09	1.44
SIKKIM	3435	2807.21	0.82
TRIPURA	32936	11934.21	0.36

Source: Compiled from NABARD Report 2017-18

CONCLUSION:

Microfinance through SHGs in North-Eastern Region is found to be satisfactory as the loan disbursement has increased from Rs 21969 lakh to Rs.35721 lakh for the period 2015-16 to 2017-18. However, the central region has experienced a downfall in terms loan disbursement to SHGs by Public Sector banks for the same period. The study also found that there is a large variations in terms of the savings of SHGs with the Public Sector Banks within the north eastern states as observed in Table 2 where Assam has the largest savings of SHGs with the Public Sector Banks and Manipur found to be the least savings of SHGs with the Public sector banks.

POLICY IMPLICATIONS:

Microfinance through Self-Help Groups has played a vital role in the North-East Region as it has been observed that the loan disbursement has increased manifold by Public Sector Banks in the region. The paper would be very useful for the Public Sector Banks for analyzing their performance in NER and finding out the loopholes in their operations. The findings of this paper can be utilized by Public Sector Banks to encourage more savings in states like Manipur, Nagaland, Mizoram and Arunachal Pradesh.

LIMITATIONS OF THE STUDY AND SCOPE FOR FUTURE RESEARCH:

The present study is based on data (Reports of NABARD) collected for three years i.e., 2015-16 to 2017-18. The study incorporates the reports of NABARD with regard to NER only.

There is immense scope for further research on microfinance through Self Group Bank Linkage Model. Variations among the North-Eastern Regions in terms of various parameters viz, savings, loan disbursement and loan outstanding, recovery rate of loan disbursed by Public Sector Banks, so there is a scope for further research in finding out the various shortcomings.

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Received on 08.01.2019 Modified on 14.01.2019

Res. J. Humanities and Social Sciences. 2019; 10(2): 314-318.

DOI: 10.5958/2321-5828.2019.00056.1

Self –Help Groups Bank Linkage Programme and Micro- Financing in North –East Region: An Overview

¹Research Scholar, Dept. of Management, NEHU Tura Campus

Self –Help Groups Bank Linkage Programme and Micro- Financing in North –East Region: An Overview

1Research Scholar, Dept. of Management, NEHU Tura Campus

¹Research Scholar, Dept. of Management, NEHU Tura Campus