Utilization of institutional microfinance by beneficiaries – A study in Sivasagar district of Assam

Microfinance is an approach of economic development that involves providing financial services, through institutions, to low-income people, where the market fails to provide appropriate services. In present scenario this is found to be an effective instrument for lifting the poor above the level of poverty by providing them self- employment opportunities and making them credit worthy. In India Micro finance programme was formally initiated by National Bank for Agriculture and Rural Development (NABARD) in 1992, Like India, in Assam also during past years, (since 2001) the sector has witnessed a sharp growth with the emergence of a number of Micro Finance Institutions (MFIs) that are providing financial and non-financial support to the poor in an effort to lift them out of poverty. But many times it has been seen that beneficiaries are not utilizing micro finance loan for income generation, rather they utilize in non productive work. Sometimes beneficiaries do not have control in utilizing loan, in such case whether beneficiaries could managed repayment? Whether beneficiaries are actually benefited? Whether services of MFI's are satisfactory? Considering these points the present research has been conducted with the objectives: 1. To study socio economic profile of beneficiaries. 2. To study quantum of loan availed, their utilization and repayment by the beneficiaries. 3. To access level of satisfaction of beneficiaries towards micro finance services of MFI’s. One hundred and twenty numbers of total beneficiaries have been selected from Sivsagar district of Assam by adopting multi stage samplings techniques. Findings of the data depicts that beneficiaries in the study area came to know about institutional micro finance mostly from MFI representatives working in their area and other sources like advertisement in TV/Radio/Newspapers, Posters, Hoardings etc. Beneficiaries association with multiple MFI's found among highest percentage of beneficiaries in study area. Only 30.0 percent of the beneficiaries utilized the loan amount by themselves. Utilization of micro finance loan by husband and other family member along with beneficiaries found among majority of beneficiaries household. Moreover loan utilization was found mostly in traditional activities like livestock, petty business, agriculture etc. Study also revealed that diversifications of loan amount to unproductive purpose are common in study area. Regarding repayment of loan it was found that 62.6 percent of the beneficiaries were found as defaulter due to various reasons and more prominent reasons are improper use of loan and insufficient income. From KMO and Bartlett's Test, it is found that some factor had positive influenced on repayment of institutional micro finance loan, example: microfinance loan helps in rejuvenate and expansion of old petty business , MFI improved overall socio economic status of a family etc. whereas some factor had negatively influenced on repayment status of institutional micro finance loan like: diversified micro finance loan for unproductive purpose, frequency of loan repayment is not comfortable etc. Beneficiaries perception towards institutional microfinance programme revealed that micro finance program is helping more in personal development than economic and social development. Overall satisfaction level was found medium among beneficiaries in study area. From the study it can be concluded that though emergence of microfinance service is for economic empowerment of women by involving themselves in some income generating activity but in study area most of the loan are utilized by other members of the family. As a result their involvement in economic activity was very poor but burden of repayment lies on them. Default of loan repayment is mainly associated with diversification of loan for unproductive purpose. Moreover, during the study period Covid-19 pandemic has badly affected many beneficiaries income generating activities, as a result many people became defaulter of loan during this period. Lastly, for revival of rural economy and empowerment of the rural poor specially women, recipient also needs to understand purpose of microfinance and utilize loan in a more productive way so that the magnitude of return will be more than existing condition.