A Study on the Status and Working of Micro Finance in Durg District of Chhattisgarh State

 

Pooja Devi Sinha¹, Dr. Mahesh Shrivastava²

 

¹Research Scholar, Pt. Ravishankar Shukla University, Raipur C.G.

²Assistant Professor, Digvijay College, Rajnandgaon, C.G.

 

ABSTRACT:

Micro-Finance is emerging as a powerful instrument for poverty alleviation in the new economy. In India, micro- finance is dominated by Self Help Groups (SHGs) - Banks Linkage Programme, aimed at providing a cost effective mechanism for providing financial services to the 'unreached poor'. Based on the philosophy of peer pressure and group savings as collateral substitute, the SHG Programme has been successful in not only designing financial products meeting peculiar needs of the rural poor, but also in strengthening collective self-help capacities of the poor at the local level, leading to their empowerment. The study aims at identifying the origin and concept of micro finance, features and role of micro finance in India, reviewing the progress and weakness followed by suggestions for making micro finance as an effective instrument of poverty alleviation, women empowerment and rural development in India. In India, the institutions which provides microfinance services includes:-NABARD, Small Industries Development Bank of India SIDBI), Rashtriya Mahila Kosh, Commercial Banks, Regional Rural Banks, Cooperative Banks and Non Banking Financial Companies (NBFCs).

 

 

 

INTRODUCTION:

The Self-Help Group (SHG)-Bank Linkage Programme continued to be the main micro-finance model by which the formal banking system reaches the micro entrepreneurs. Launched in 1992 as a pilot project, it has since proved its efficacy as a mainstream programme for banking by the poor who mainly comprise the marginal farmers, landless laborers, artisans and craftsmen and others engaged in small business like hawking and vending in the rural areas.

 

The informal thrift and credit groups of poor came to be recognized as bank clients under the Pilot phase. The Pilot phase was followed by setting up of a Working Group on NGOs and SHGs by the Reserve Bank of India in 1994, which came out with wide ranging recommendations on internalization of the SHG concept as a potential intervention tool in the area of banking with the poor. The Reserve Bank of India accepted most of the major recommendations and advised the banks to consider lending to the SHGs as part of their mainstream rural credit operations. The main advantages of Programme are timely repayment of loans to banks, reduction in transaction costs both to the poor and the banks, doorstep saving and credit facility for poor and exploitation of the untapped business potential of the rural areas.

“Micro credit is based on the premise that the poor have skills which remain unutilized or underutilized. It is definitely not the lack of skills which make poor people poor, charity is not the answer to poverty. It only helps poverty to continue. It creates dependency and takes away the individual’s initiative to break through the wall of poverty.” ¹

 

Mohommad Yunus:

Microfinance refers to the small-scale financial services including both credits and deposits provided to people who farm or fish or herd; operate small or micro enterprises where goods are produced, recycled, repaired, and traded; provide services; work for wages or commissions; gain income from renting out small amounts of land, vehicles, draft animals, or machinery or tools; in both rural and urban areas. Microfinance is not just about giving micro credit to the poor rather it is an economic development tool whose objective is to assist poor to work their way out of poverty. It covers a wide range of services like credit, savings, insurance, remittance and also non-financial services like training, counseling etc. The term, micro-credit was replaced with a broader coverage than microfinance. It is a set of financial activities provided to the poor masses basically incorporating loans, savings and deposits, insurance, transfer services, etc. to enable them to utilize their meager resources and entrepreneurial skills including abilities to the fuller extent so as to improve the economic conditions and shield themselves against risks. Hence, micro-credit is a part of microfinance. NABARD has defined microfinance as “Microfinance is the provision of thrift and other financial services and products of very small amount to the poor in rural, semi-urban and urban provided to customers to meet their financial needs; with only qualification that (1) transaction value is small and (2) customers are poor”.² Microfinance, therefore, is an emerging discipline in today's financial world. Indeed, it is a weapon in the hands of marginalized poor people to fight a war against poverty. The multi-facts of microfinance, thus, reflect acknowledging that saving services will help to improve well-being of the poor in general and of women in particular.

Micro finance is a novel approach to banking with poor and it attempts to combine lower transactions cost and high degree of repayments. It is essentially because of the large involvement of the potential beneficiaries of rural credit in the credit delivery mechanism. Micro finance refers to the provision of small savings, credit and insurance services to the lowest, socially and economically disadvantaged segments of the society. Otherwise, micro finance is a financial service of small quantity provided by the financial institutions to the poor and they include savings, credit, insurance, leasing and any type of financial service with the condition that the transaction value is small and customers are the poor.

 

In India, the micro finance institutions fall under two broad sectors, namely, the financial sector and non financial sector. Commercial banks, regional rural banks and cooperative banks constitute the financial sector. Three major organizational forms are  observed in the non financial sector, namely, not-for- profit micro finance institutions which includes the NGOs, Trusts and certain forms of companies, mutual benefit micro finance institutions which includes state credit cooperatives, national credit cooperatives, and mutually aided cooperatives and for profit micro finance  institutions which includes non banking financial companies.

 

OBJECTIVES OF STUDY:

The objectives of study are as follows:-

1) To find out the status and working of micro finance.

2) To find out activities and working capital of scheduled commercial bank.

3) To suggest some measures on the basis of findings of the study.

 

Table – 1. Advances of Schedules Commercial Bank in Primary Sector in Durg District (in rupees lakh)         

Source :- Lead Bank Office

RESEARCH METHODOLOGY:

The present study will be based on secondary data collection. Data related to micro finance during the period under review is collected mainly from Zila Sankhyiki Pustak 2013 – 14.

 

Table no. 1 shows that all the three scheduled commercial banks provide capital to the primary sector in the year 2009-10 to 2013-14. Scheduled bank and Regional Rural banks capital increases in the year 2009-10 to 2013-14. But as compare to 2009-10 cooperative banks fund decreases in the year 2013-14. In the year 2009-10 cooperative provides capital to 14.25% as compare to the year 2013-14 27.58%. It can be seen in Graph no.1

 

Table 2 Advances of Scheduled Commercial Bank in Agriculture Sector in Durg District (in rupees lakh)

Source :- Lead Bank Officer

 

Table – 3. Advances of Scheduled Commercial Bank in Small, Medium and Cottage Industry in Durg District (in rupees lakh)

Source:- Lead Bank Officer

 

In this table Scheduled commercial banks provide less capital continuously in the year   2009-10 to 2013-14. While Cooperative banks capital increases to the agriculture sector in the above 2 years 2009-10 to 2011-12 but after that their capital goes down. Lastly Regional Rural banks capital increases in the year 2009-10 to 2012-13 but, in the year 2013-14 their capital slightly decreases from 19.24% to 19.10%. It can be seen in Graph no.2.

In table no. 3 Scheduled commercial bank advances their capital to the small and cottage industry. All the three Scheduled commercial bank advances more and more capital in the year 2009-10 to 2013-14. It means that Government advances more capital to the bank for the development of these sectors. It can be seen in Graph no.3

 

 

Table – 4. Advances of Scheduled Commercial Bank in Weaker Section in Durg District (in rupees lakh)

Source:- Lead Bank Office

 

In the above table Scheduled commercial bank advances capital in weaker section of the society. Scheduled bank advances less and less capital to this sector in the above five years. While Cooperative banks advances more capital in the year 2009-10 to 2010-11 but after these two years they decreases their capital 5.93% in 2011-12 and 9.28% in the year 2012-13. But in the year 2013-14 their capital has become increases 32.80%. Lastly Regional Rural Bank advances less and less capital in the above five years.. But in the year 2013-14 their capital has become increases 32.80%. Lastly Regional Rural Bank advances less and less capital in the above five years. This can be explained with graph 4.

 

In the table 5 Scheduled commercial bank advances capital to women's welfare. Women's welfare is a very important task of government. Scheduled bank advances less and less capital in the above five years. While Cooperative bank advances capital to these sectors but, in the year 2012-13 they provide no capital to this sector. Lastly Regional Rural banks capital increases up to the year 2010-11 but, after that their capital goes down and again in the year 2013-14 their capital goes up. It can be seen in Graph 5.

 

Table – 5  Advances of Scheduled Commercial Bank in Women’s Welfare in Durg District (in rupees lakh)

Source:- Lead Bank Officer

 

 

CONCLUSION:

The present study is based on the conclusion that the scheduled commercial banks give more capital to the primary, agriculture and small and cottage industry as compare to the weaker sections of the society and women’s welfare. While cooperative bank provide capital to every sectors except primary sectors in the last five years 2009-2014. Cooperative banks distribute larger share of their capital to the weaker sections of the society and women’s welfare. While the Regional Rural Bank provides less capital to the weaker sections of the society and women’s welfare as compare to all other sectors. So, we conclude that all the scheduled commercial banks distribute their fund to the various sectors of the durg district according to their preferences from the year 2009-2014.

 

SUGGESTIONS:

According to the conclusion we suggest some measures for those sectors where the scheduled commercial bank provides less capital. Government provides more capital to these banks because through these banks only  people get benifittted directly. Micro finance institution expenditure their fund to every sectors but in some sectors they give less weightage. Scheduled banks provide less capital to the women’s welfare and primary sectors. Women empowerment is very impotant task of every government so that every bank give special focus to these sector for providing them more capital, with the help of these capital we uplift women’s education, funds provide for nirbhaya kendra for their protection. Banks increase their fund to the weaker sections of the society, expenditure their capital for providing them sanitation facility, better education facility, job oppoutunities, providing them proper food and nutrition. Cooperative bank provide larger share to every sectors but they spend less fund in the primary sectors . They have to increase their fund in these sector because large numbers of population depends upon these sectors. These are the measures why the scheduled commercial banks provide more capital to these sectors,with the help of these capital only upliftment is possible.

 

REFERENCES :

1.       Mohommad Yunus, "Expanding Micro Credit Outreach to Reach the Millenium Development Goals", International seminar on Attaching Poverty with Micro Credit, Dhaka, Bangladesh, January 2003.

2.       Lekshmi R., Kulsheshta and Archana Gupta, “A study of microfinance in India-Delivery system and impact analysis with special emphasis to women upliftment”, Sajosps 3, No.1, December 2002, p.105.

3.       ABN AMRO (2007)," Presentation regarding community engagement and Microfinance Initiatives in India", held on 6 of july, Amesterdam.

4.       Ananth, B (2005), "Finance Microfinance- the ICICI Bank partnership model. Small Enterprise Development". Vol. 16, pp. 57-65.

5.       Claire Cain Miller, F. (2006 Nov.10)." Microcerdit: Why India is falling". Retrieved June 2009, 23, from http:// www.rediff.com/Microcredit why India is falling.htm.

6.       Ghatem, P. (2006)." Microfinance in India: A State of the sector report" 2006.[ cited at 13 Aug, 2007] http://www.microfinancegateway.org/content/article of detail/36347

7.       M-Crisil (2002). "Microfinance rating: Risk assessment of Bank Dagang Bali". WashingtonDC: Consultative Grown Assist the Poorest, Available at www.cgap.org.

8.       Sriram, R.S. (June 2003) "Microfinance: An Introduction IIMB Mannagement" Review, 52-53.

 

 

Received on 19.08.2017       Modified on 15.09.2017

Accepted on 21.09.2017      © A&V Publication all right reserved