Credit flow management in micro finance - an economic analysis
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Date
2007
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Publisher
UAS, Dharwad
Abstract
Across the countries, it has been recognized that micro finance could be a useful tool
in building up the capacities of the poor, in management of sustainable self employment
activities. The deliveries of micro finance through different models have their own impact on
beneficiaries.
Therefore the study was under taken to assess the growth and pattern, terms and cost
of borrowing, portfolio of lending, cost and return structure, loan recovery and problems
faced by the target groups. The primary data with respect to purpose wise portfolio lending,
cost and returns of activities, recovery and problems faced in microfinance activities were
collected from the target groups for the year 2005-06 with the help of pre-tested
questionnaire. Secondary data with respect to SHG linkage, amount lent, overdue and
numbers of families assisted were collected from the year1993-94 to 2005-06.
The result showed that the compound growth rate of number of SHGs linked to the
bank loan in Karnataka was increased at the rate of 26.29 per cent and 15.98 per cent in
Dharwad district. Similarly growth in bank loan given to SHGs was 33.93 per cent and 13.45
per cent per annum respectively. The RRBs cover 66.24 per cent SHGs provided and 97.03
per cent bank loan and availed about 76.86 per cent refinance. The credit delivery through
NGO accounts for higher cost that is 42.5 rupees per borrower per Rs 100 borrowed at the
first time. Among the portfolio, Dairy activity stands first (29.17 per cent) in total amount
lent by the micro finance providers. An overdue was more in Regional Rural Bank model and
low in NGO model of credit delivery. The contribution to overdue as indicated by regression
coefficients was more in model-II (RRBs). However, coefficient of amount borrowed, cost of
production and cost of borrowing found to be positive and significant. The gross returns
showed negative and significant.