SELF-HELP GROUPS IN MAYURAKSHI GRAMIN BANK DOCUMENTATION OF SUCCESSFUL EXPERIENCES, IMPACT AND PERFORMANCE ANALYSIS SHG: POWER TO EMPOWER NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT REGIONAL TRAINING COLLEGE BOLPUR (SANTINIKETAN) 2 SELF-HELP GROUPS IN MAYURAKSHI GRAMIN BANK DOCUMENTATION OF SUCCESS STORY, IMPACT AND PERFORMANCE ANALYSIS VEGETABLE CULTIVATION BY SHG MEMBER NATIONAL BANK FOR AGRICULTURE AND RURAL DEVELOPMENT REGIONAL TRAINING COLLEGE BOLPUR (SANTINIKETAN) 2 3 CONTENTS Foreword Executive Summary 1 Chapter I Introduction 5 Chapter II Objective and Methodology 7 Chapter III Structure, Policies and Performance of the Bank 8 Chapter IV Structure, Policies and Performance of the Branches 16 Chapter V Testing of Hypothesis at Bank Level 29 Chapter VI Group Analysis 34 Chapter VII Analysis of Individual Members 46 Chapter VIII Role of the Branch Managers 50 Chapter IX Major Findings and Possibility of Replication 52 Chapter X A Few Warning Signals 57 3 4 CREDIT LIST Overall Supervision: Shri S G Rathod, Chief General Manager, Human Resource Development Department, Head Office, Mumbai and Micro Credit Innovation Department, Head Office, Mumbai Overall Guidance : Shri U N Biswal, Principal, Regional Training College, NABARD, Bolpur Shri Kalyan Chatterjee, Chairman Mayurakshi Gramin Bank Editing and Review: Shri S M Gangopadhyay, Faculty Member Shri D K Sahoo, Faculty Member Shri B M Patnaik, Faculty Member Shri Bharat Tiwari,Faculty Member Shri P C Padhi, Faculty Member Shri Asoke Chakrabarty, Faculty Member Computer support : Shri P K Mohapatra, Assistant General Manager Analysis and Drafting : Smt. Amita Tripathi, Assistant Manager Field Study : Smt. Amita Tripathi, Assistant Manager Field Level Support : Staff Members of Panchra, Illam Bazar, Mohammad Bazar, Sriniketan Branches of Mayurakshi Gramin Bank 4 5 EXECUTIVE SUMMARY The overall objective of the present study by Regional Training College, National Bank for Agriculture and Rural development (NABARD), Bolpur is to document the success story of the Mayurakshi Gramin Bank in the field of microFinance innovation, to measure Self-help Group as a commercial proposition to the business and profitability of the bank, to measure the impact of SHG on interest rate, lending, recovery, staff of the bank, social benefits accrued and empowerment of the members. The three branches viz., Panchra, Illam Bazar and Mohammad Bazar, 32 SHGs from these branches and 70 individual members from the selected SHGs form samples for the study. The bank is operating in the district of Birbhum with 65 Branches with Rs. 342 crores deposits, Rs.197crores advances, profit of Rs.75 lakh, recovery percent of 80 and per staff business of Rs.1.17 core as on 31 March 2004. The bank started SHG business in the year 1997-98 and in right earnest in the year 2000-01. As on 31 march 2004, the bank has savings and credit linked 2729 and 1113 groups respectively. The total turnover of SHG business was Rs.594.80 lakh (7 percent) of the total turnover of the bank and net SHG interest income contributes 20 percent of the total profitability of the bank. The practice followed in the sample branches in fixing the credit limit for groups, provides ample scope for SHGs to avail bigger amount of credit and to repay regularly. They are following the practice of providing loans to selected SHGs based on their performance/ potential/ requirement than on any fixed formula. For uniformity and more credit off take, they provide credit based on following criterion - four times of corpus fund + previous credit off take by the group. Out of the 2860 total groups linked to the bank as on 31 October 2004, female groups constitute 1676 (61 percent). The male groups constitute 39 percent as against the all India figure of 10 percent. The bank has credit linked some of the SHGs upto 6 times. Around 18 percent of the sample groups have been credit linked more than four times. The average off take of first credit linkage of groups is Rs.15040, Rs.30000 and Rs.15333 and of second credit linkage is Rs.28423, Rs.42833 and Rs.25666 in case of female, male and mixed groups respectively. The Management Information System (MIS) is the sine qua non of successful implementation of any programme. The bank may evolve a proper management information system in a computer environment so that SHG as a profitable business proposition can be internalized. Due to huge business potential of SHG business in future, a separate accounting head for assessing income and expenditure of SHGs may be created. 5 6 Chapter I Introduction The ultimate objective of human society is to provide quality life to a large section of the populace in a shorter span of time through the movement that has universal appeal and acceptance. The first and the foremost condition of any movement is to kindle the flame of self-recognition and self-respect in the hearts of the masses. The movement has a specific objective to be fulfilled with the active involvement of the masses. The movement is pioneered to address a problem, which affects the society at a large scale. The banking sector has tried to provide the quality of life starting from the days of social banking through a series of Government directed or self-propelled schemes. The similarity between a scheme and a movement is that both are pre-contemplated. The concern of the scheme is to complete the task on the part of the formulators and executors within the stipulated period; whereas the existence and relevance of a movement continues till impacts are visible on the part of the society. The initiation of a scheme is never a difficult task; it is the sustainability of the scheme, which causes concern to the formulators. The beginning of a movement is much more difficult and at times seems to be impossible. Once it begins, the sustainability is assured. The key factor is the involvement and feeling of ‘We’ and ‘Ours’ among the masses. The difficulty comes in involving the society and making the people feel that it is their work. For this, every movement requires a pioneer and a group of activists, while every scheme needs formulators and implementing agencies. SHG is a movement. It aims to address the problem of poverty in the society. Its nature is different from other poverty alleviation schemes or programmes. The basic difference is that it emphasizes the need of involvement of the society and community in the development process. Poverty alleviation has been a major concern in India for the policy makers. The nation has witnessed different schemes and programmes for the poverty alleviation. The results of all those schemes have not been that much fruitful. The main reason is the lack of people’s involvement at each stage. The implementing agencies took schemes and programmes as a part of their official duty making them rigid and target oriented. The concept of SHG came as an alternative to the poverty alleviation programmes. The unique feature of SHG is that it inculcates the habit of thrift and banking among the poorest of poor who somehow manage two square meals. This is no less than any charisma. The concept of thrift develops a sense of belongingness among the poor for bank credit, which leads to proper utilization and timely repayment of bank’s money. The appeal and impact of any movement depends more on the demonstration and replication effect. The movement always starts with the participation of persons to be counted on fingers. It is the demonstration and replication effect that converts an effort 6 7 into a mass movement. The same is true in case of SHG also. The movement first started as a pilot project in a few selected areas. It was the success of the pilot project that encouraged the policy makers to spread the concept in each and every part of the country. The theory of replication helped a lot for the success in this field. It is not guided by strict rules and regulations. It expects continuous cultivation and exchange of views, ideas and experiences to flourish and propagate. FRENCH BEANS CULTIVATION BY SHG MEMBER 7 8 Chapter II Objective and Methodology 2.1 Objectives A. Overall Objective: The overall objective of the study is to document the success story of the Mayurakshi Gramin Bank in the field of microFinance innovation, to measure Self-help Group as a commercial banking proposition to the business and profitability of the bank and to assess the degree and extent of social benefits accrued and empowerment of members. B. At micro level the study aims at: i) Documentation of the success story of microFinance in Mayurakshi Gramin Bank ii) Alternative Banking Business for Profitability and, iii) Testing of Hypothesis 1. Impact of SHG on Interest Rate 2. Impact of SHG on Lending and Recovery 3. Impact of SHG on Staff of the Bank 4. Impact of SHG on Other Loans 5. Economic Satisfaction vs. Social Responsibility 6. Inner Satisfaction of the Branch Manager 7. Replication of the success in other branches and banks. 2.2 Methodology The study was devoted to evaluate the macro level policies and strategies of the bank through discussion methodology and secondary data source. Further, three branches were selected for study based on their performance on microFinance and ranking methodology. The profitability and commercial proposition of SHG, and the profitability of SHGs vis- à-vis other loan products in the selected branches were also analyzed. The collection of data and information was through the process of discussion and questionnaire. In order to highlight the excellent performance of some of the Branch Managers in terms of formation and nurturing of SHGs, they were interviewed and asked to fill up the structured questionnaires, which was helpful in assessing their aptitude and inner satisfaction level.