Women Empowerment through Microfinance- An Empirical Study of Women Self Help Groups in Tumkur District, Karnataka

 

Dr. Santosh Rupa

 

Associate Professor- Finance, Prin. L.N. Welingkar Institute of Management Development and Research, 102/103, Electronic City Phase1, Next to Telephone Exchange, Hosur Road, Bengaluru- 560100

 

ABSTRACT:

In India, despite seven decades of independence and six decades of planned economic development, the achievement in the sphere of women empowerment still remains a challenge.  At present, self-help Groups are playing a vital role in this direction. The participation of women in these groups is contributing to the significant impact on their social and economic empowerment. The current paper is undertaken to study the extent of women empowerment in Tumkur District, Karnataka. The information required for the study has been obtained from both primary and secondary sources. Stratified Sampling method has been used. Percentage Analysis, simple average and weighted average, Garrett Ranking Scale and ANOVA and Confirmatory Factor Analysis are also used to draw conclusions. The results of the study revealed that the asset position and standard of living of rural poor improved significantly after the micro credit utilisation.

 

 

 

INTRODUCTION:

Today, the SHG movement is increasingly accepted as an innovation in the field of rural credit in many developing countries including India to help the rural poor. It is considered a vehicle to reach the disadvantaged and marginalized section, which in the normal course cannot avail of credit facility from the banks^.4

 

Grameena Bank of Bangladesh which was founded by Mohammed Yunus in the year 1975 gave birth to the concept of Self Help Groups.

 

These groups became very successful in providing financial services to the poor without any collateral in an economically viable manner^.8.

 

As per NABARD (National Bank for Agriculture and Rural development) Self Help Groups consists of 20 or less homogeneous group of members who voluntarily come together to address their mutual concerns. The savings of the members are accumulated and used to provide loans to the members. This practice imbibes in them a sense of financial discipline which include regular savings habit, identifying priorities, prompt repayments and book keeping which in turn improves their credit worthiness.  SHGs are acting as gateways in promoting women entrepreneurshing in rural areas and leading them to economic, social and political empowerment.⁷

 

NABARD has played a significant role in promoting SHGs in India since 1986. However, the program has witnessed some light only after the linkage of Self Help Groups(SHGs) with banks. (Nair,2005).  The linkage has helped in successfully eliminating the transaction costs in providing credit to the rural poor, since SHGs not only operate based on principles like mutual trust, joint liability, need based collateral free loans, peer pressure, regular savings, Capacity building and women empowerment but also share some of the functions of the bank like appraisal and recovery of loans.²

 

After commercial banks received a notice from RBI in the year 1991, a pilot project was initiated to link SHGs with banks which was then called as Indian model. Later in 1990’s NABARD has named it SHG Bank Linkage Model. Primarily, there are 3 models in SHG bank linkages. ¹²

 

Firstly, Self Help Groups supported and promoted by banks, where, banks promote and support the groups by providing financial support. Secondly, Self Help Groups financed by banks but promoted by NGOS, in this model, NGOS promote and support groups training and loans to the groups which are financed by Banks. Most of the SHGs come under this category. Finally, Self Help Groups promoted and financed by NGOs promoted by NGO, where NGOs take the responsibility of both promoting and financing these affinity groups.⁸

 

Most of these groups in southern India are promoted by NGOs.  MYRADA (Mysore Resettlement and development Agency) has initiated several SHGS in southern states like Karnataka, Andhra Pradesh and TamilNadu. Karnataka stands second in term of outreach and coverage of microfinance which includes SHG as well as Grameena model. Microcredit facilities are available in the districts of the state, though the level of penetration varies. The Association of Karnataka MFIs (AKMI) has successfully worked towards promoting and encouraging Microfinance all over the state.¹⁷

 

However, if not utilized properly micro credit can push the beneficiaries into vicious circle of debt and can have negative impact on their empowerment. Therefore, the current study is undertaken to study the impact of credit utilization on the empowerment of the members.  The term empowerment is not a new concept since it can be associated with the terms like Self Confidence, Self-strength, control, awakening, decision making and mobilization. Empowerment can be defined as ‘increasing both the capacity of individuals or groups to make purposeful choices and their capacity to transform these choices into desired actions and outcomes’.⁴

The empowerment achieved by the members to a large extent depends on the purpose of availing credit which maybe meeting the household expenses, self-employment or for improving the standard of living or future planning. The perception of members about benefits realized after joining SHGs also differs. The status of members before and after availing microcredit differs depending upon their occupation, income, expenditure pattern, methods and purpose of saving. Therefore, the current study which is done to analyse the impact of credit utilization on the empowerment and satisfaction of the members is relevant to the policy makers, banks, self- help groups and future researchers. The findings of the study will help in the betterment of SHGs in this region.

 

LITERATURE REVIEW:

In the study entitled “The Guinea Rural Enterprise Development Project”, Creve et al. (1995) analysed the impact of micro credit on the income and overall well-being of the members. It has been concluded that the income of the members increased after availing micro credit but there is minimum impact on the asset position.

Karl (1995) studied the role of SHGs of women on decision-making and concluded that SHGS played a significant role in enhancing technical, managerial, administrative, planning and analytical capabilities of local women.

 

Lalitha Shivakumar (1995) pointed out that the sustainable economic development can be achieved only through Self Help Groups. SHGs encourage members to develop savings habit which in turn would boost the economic progress of the nation.

 

In the study entitled “A Study on Women Self-Help Groups in Andhra Pradesh”, by Mohana Rao (2000) concluded that SHGs showed a positive impact on the households of the members in respect of building of self-confidence and social development skill and formation and social empowerment of members.

 

RESEARCH GAP:

Researchers like Karl (1995), Rao (2000) in their studies concluded that SHGs played a positive role in enhancing the decision-making capacity of women and proved that SHGs have positive impact on social empowerment. Jai Anand (2000) in this study mentioned that members used micro-credit effectively for expansion/modification and they reaped maximum benefit. In some cases, the failure of group activity has led to a financial crisis and imbalance for all the members, while it is not complex in individual activities. It is observed that a few women dominated the group. Creve et al. (1995) proved that microcredit has positive impact on enterprise income and no impact on assets and children’s education at household level.

 

 

A number of studies earlier explored the impact of microcredit utilization on the empowerment of members. The literature on these concepts dominated the economic impact and most of the researchers like Sankaran (2009), Hugar (2008), Begam (2008), Rajendran (2012) mentioned in their research that further scope for research exists in this area to study and validate variables like socio economic status of respondents, purpose of availing microcredit, ability to handle grievances and management aspects and their impact on empowerment and satisfaction of the members after joining self-help groups.

 

The current study is undertaken to study the effective credit utilization and the level of empowerment of women in Tumkur district of Karnataka. Karnataka is the top three states in the country in the SHGs-BLP.  With many initiatives for furthering the growth of SHGs movement, Women and Child Development Department of Karnataka and Non-Governmental Organizations (NGOs) are playing an important role in their promotion of SHGs in the state.  These initiatives have transformed their lives, through the organized operations of SHGs in the State. 

 

OBJECTIVES OF THE STUDY

This study focused to identify the microcredit utilization among Self-help Group members. In tune with this, the following specific objectives have been framed. 

1.      To evaluate the spread of microcredit in the area with reference to socio-economic and demographic features.

2.      To study the impact of microcredit in generation of additional income, employment and mobilization of borrowing among SHGs in Tumkur District.

3.      To find out the level of improvement in the status, pattern of savings and asset position of the SHG members before and after utilizing microcredit.

4.      To recommend suitable suggestions based on the findings of the study.

 

MATERIAL AND METHODS:

For the purpose of this study predominantly primary data has been used. SHG members considered as samples are gathered for conducting the opinion survey, helped to provide information related to financial inclusion through micro-credit after joining SHG.  The instrument is the set of questions prepared taking into consideration the financial utilization of micro-credit by the members of SHG in Tumkur District. The major source of the data used to carry out the analysis is primary data. In order to fulfil the objectives, set out a sample study was undertaken by the use of well-framed interview schedule and got them duly filled in. The first step in the collection of primary data is to identifying the sample SHG members in the 10 taluks of Tumkur District.  Classifying the geographical areas in Tumkur District the samples were selected randomly from Tumkur district and analysed using relevant data analysis tools.From the list of taluks, almost all the areas have been selected with a view to make an intensive study. Using Multi Stage Sampling Technique, firstly out of total 9549 SHGs 3% i.e 290 Women Self-help Groups have been selected for the study. In the second stage, 720 Self-help Group Members were chosen from total 3600 members which is 20% of the total. Members from each taluk are classified based on their strength as above 15 members group and below 15 members group. In below 15 groups 2 members and above 15 groups 3 members are selected. The secondary data has been gathered from the publications and reports, various other unpublished reports of various other non-governmental organizations, unpublished research reports, doctoral thesis of various institutions, books, journal articles, etc.

 

RESULTS AND DISCUSSION:

Table 1 presents the demographics of SHG members in Tumkur district.It is evident from the table 1 that most (68.75%) of the respondents are living in rural areas.  More than half (55.97%) of the respondents belong to the age between 31 and 40 years, 22.64% of the respondents belong to the age above 40 years and the remaining 21.39% of the respondents belong to the age up to 30 years. Majority (90.69%) of the respondents are Hindus, 6.94% of the respondents are Christians and the remaining 2.36% of the respondents are Muslims. It is evident that majority (72.78%) of the respondents are in Backward community, 20% of the respondents are in Most Backward Community and the remaining 7.22% of the respondents are Scheduled caste / Scheduled tribes.  It is understood that majority (82.64%) of the respondents are married, 13.19% of the respondents are unmarried and the remaining 4.17% of the respondents are widowed.  Most (65.97%) of the respondents are having children in the age below 18 years (Minor), 16.25% of the respondents are not having children, 10.14% of the respondents are having children in the age above 18 years (Major), 3.89% of the respondents are having children in the age between 6 and 11 years and the remaining 3.75% of the respondents are having kids below the age of 5 years. Majority (81.39%) of the respondents are living in joint family and 18.61% of the respondents are living in nuclear family. Majority (77.64%) of the respondents are having medium-size family (3 to 6 members), while 15% of the respondents are having small-size family (1 to 3 members) and the remaining 7.36% of the respondents are having large-size family (above 6 members).  Maximum (29.03%) of the respondents do not have any formal qualification but are capable enough to sign, while 23.47% of the respondents are qualified upto XII standard, 19.58% of the respondents are illiterates, 19.31% of the respondents are qualified upto V standard and the remaining 8.61% of the respondents are having other qualifications (Technical education, graduation, etc.). Majority (80.97%) of the respondent’s husband are the head of their family, while 9.86% of the respondents indicated that their father as the head of their family, 6.53% of the respondents opined self as the head of their family and the remaining 2.64% of the respondents affirmed that their son as their head of their family. Most (58.75%) of the respondents indicated that their husband is the decision maker of the family, 25.28% of the respondents indicated self as the decision maker and the remaining 15.97% of the respondents opined both husband and wife (self) as the decision makers of their family.

 

The table 2 reveals the level of satisfaction of SHG members based on SHG activities such as obtaining credit from agencies, loan amount sanctioned, repayment of the credit, rates charged and the approach of the bank / MF in processing the loan.  Ranking of the respondents were ascertained based on their opinion based on the activities.

 

Table 1: Demographics of the SHG Members in Tumkur District

Sl. No.	Demographics	Respondents (720 Nos.)	Percentage (100%)
01.	Area of Residence
	Urban	225	31.25
	Rural	495	68.75
02.	Age
	Upto 30	154	21.39
	31 to 40	403	55.97
	Above 40	163	22.64
03.	Religion
	Hindu	653	90.69
	Muslim	17	2.36
	Christian	50	6.94
04.	Community
	MBC	144	20.00
	BC	524	72.78
	SC	52	7.22
05.	Marital Status
	Unmarried	95	13.19
	Married	595	82.64
	Widowed	30	4.17
06.	Number of Children
	None	117	16.25
	Minor < 18	475	65.97
	Major > 18	73	10.14
	Children (6 to 11)	28	3.89
	Kids (0 - 5)	27	3.75
07.	Type of Family
	Joint	586	81.39
	Nuclear	134	18.61
08.	Size of the Family
	1-3 members	108	15.00
	4-5 Members	559	77.64
	6-9 Members	53	7.36
09	Educational Qualification
	Illiterate	141	19.58
	Can Sign	209	29.03
	Upto V Std.	139	19.31
	Upto XII Std.	169	23.47
	Others (Technical education, Graduates, etc.)	62	8.61
10.	Head of the family
	Father	71	9.86
	Husband	583	80.97
	Son	19	2.64
	Self	47	6.53
11.	Decision maker of the family
	Self	182	25.28
	Husband	423	58.75
	Both	115	15.97

Source : Primary Data

 

It is clear from the analysis that the opinion of the members based of the various SHG activities that were satisfying them and the level has been ranked viz. first position (4.356) was obtained towards the level of satisfaction with the loan amount sanctioned to the members, followed by the second position (3.865) achieved towards comfort with the repayment of the credit availed, third position (3.846) towards the  rates charged by the credit agencies for the credit availed, fourth position towards the satisfaction with the processing of getting credit from the credit agencies and finally, least mean (3.664) was achieved towards the approach of the bank / MFI in the process of getting loan through SHG.

 

Table 2: Rank Showing the Level of Satisfaction based on SHG Activities

 

Table 3: Rank showing Purpose of Availing Microcredit

SA=Strongly Agree, A=Agree, N=Neutral, DA=Disagree, SDA=Strongly Disagree

Source : Primary Data

 

 

Table 3 reveals the purpose of availing microcredit by the members that are to meet the household or family expenses, for doing self-business, for repayment of existing loans from others, for the purpose of future planning, for personal purposes, for agricultural purpose and finally, for improving the standard of living which are ranked based on the opinion of the respondents.

 

Table 4 represents Analysis of Variance to find the significant difference, if any, among the members in respect to factors such as awareness, number of group members, experience, period of joining, position, reasons for joining, motivation, financing, frequency of meeting, attendance and type of benefit realized through SHG.

 

The analysis of variance between the SHG Information and the purpose of availing the microcredit reveals that there is significant difference between Number of Group members, F=3.999, Sig.0.000, Experience, F=1.847, Sig.0.009, Frequency of Meeting, F=4.305, Sig..000, which  is found to be significant at 1% level and there is significant difference in Period of joining SHG, F=1.733, Sig.0.018 and Awareness, F=1.778, Sig.0.014 and the purpose of availing the microcredit is found to be significant at 5% levels.  Therefore, the null hypothesis is rejected. Whereas there is no significant difference in Position of the members in the SHG, F=1.364, Sig.0.119, Reasons for joining SHG, F=1.376, Sig.0.113, Motivation to join SHG, F=1.419, Sig.0.092, Financing, F=1.420, Sig.0.092, Type of Benefit realized, F=1.260, Sig..186 and finally, Attendance during the meeting conducted by the SHG groups, F=0.745, Sig.0.800 which is not significant either at 1% or 5% levels.  Hence, the null hypothesis is accepted.

 

Income Status before and after Joining SHG:

SHG members tend to increase their income and mostly relieved from the pestering problem of debt to a comfortable extent.  The level of income generation before and after joining SHG are categorized for analysis that is shown in the following table 5.

 

Basic intention of SHG is to improve the economic status of the members through engaging in income generation activities. Hence, the category of income is classified as less than Rs.3000 to more than Rs.7000.  35% of the respondents had realized larger amount of income (24.22%) having income less than Rs.3000, which had increased before joining SHG from Rs.2452.08 to Rs.3046.03 after joining SHG. While, 5.6% of the respondents had realized 20.63% of raise in income was found on an average among respondents realizing more than Rs.7000 category i.e. from s.7593.75 to Rs. 9164.38 before and after joining SHG respectively.

 

Table 4: Analysis of Variance of SHG Information and Purpose of Availing Micro Credit Through SHG

SHG Information			Sum of Squares	df	Mean Square	F	Sig.
Awareness		Between Groups	20.460	23	.890	1.778*	.014
		Within Groups	348.206	696	.500
		Total	368.665	719
No. of group members		Between Groups	.809	23	.035	3.999**	.000
		Within Groups	6.123	696	.009
		Total	6.932	719
Experience		Between Groups	26.537	23	1.154	1.847**	.009
		Within Groups	434.708	696	.625
		Total	461.244	719
Period of joining		Between Groups	32.658	23	1.420	1.733*	.018
		Within Groups	570.274	696	.819
		Total	602.932	719
Position		Between Groups	5.038	23	.219	1.364	.119
		Within Groups	111.762	696	.161
		Total	116.800	719
Reasons		Between Groups	40.504	23	1.761	1.376	.113
		Within Groups	890.683	696	1.280
		Total	931.188	719
Motivation	Between Groups		66.034	23	2.871	1.419	.092
	Within Groups		1407.854	696	2.023
	Total		1473.888	719
Financing	Between Groups		16.307	23	.709	1.420	.092
	Within Groups		347.458	696	.499
	Total		363.765	719
Frequency of meeting	Between Groups		41.098	23	1.787	4.305**	.000
	Within Groups		288.902	696	.415
	Total		330.000	719
Attendance	Between Groups		9.110	23	.396	.745	.800
	Within Groups		369.890	696	.531
	Total		379.000	719
Type of Benefit	Between Groups		54.354	23	2.363	1.260	.186
	Within Groups		1304.911	696	1.875
	Total		1359.265	719

Source : Computed          ** Significant at 1% level       *Significant at 5% level

 

Table 5 : Income Status Of The Respondents Before And After Joining SHG

Source : Primary Data

 

 

49.6% of the respondents realized 18.53% of raise in income among the respondents having income between Rs.3000 and Rs. 5000, with their mean income ranging from Rs.3723.53 to 4413.52.  Finally, 9.9% of the respondents realized 17.67% of raise in income was found among respondents having income between Rs.5000 and Rs.7000 whose mean ranging between Rs.5903.87 and Rs.6947.18 and the change in percentage was found to be the least in this category.

 

Expenditure on Attributes Before and After availing Microcredit

Poverty and unemployment are twin evils faced by many of the developing nations today.  In the past decade the number of women living under poverty has increased inconsistently to the number of men living under poverty.  The sources of expenditure and level of poverty elimination after availing microcredit among the SHG members were analyzed and presented below in the  table 6.

 

 

Table 6 : Variation in Average Expenditure on Attributes Before and After Availing Microcredit

Sl. No.	Variables	Categories	(Before & After Joining SHG) Expenses (Rs.)
			Less than Rs.1000	Rs.1000 to 2000	Rs.2000 to 3000	More than Rs.3000
1.	Food	Respondents & (%)	193 (26.81)	328 (45.56)	138(19.17)	61(8.47)
		Before	281.17	628.57	1548.7	2670
		After	404.75	746.71	1730	3057.5
		Total Increase in Percentage	43.95	18.79	11.71	14.51
2.	Clothing	Respondents & (%)	312(43.33)	242(33.61)	91(12.64)	75(10.42)
		Before	265.45	664.17	1606.25	2670
		After	305.15	766.5	1817.5	3057.5
		Total Increase in Percentage	14.95	15.41	13.15	14.51
3.	Rent	Respondents & (%)	318(44.17)	182(25.28)	78(10.83)	142(19.72)
		Before	289.55	647.65	1482.14	3061.49
		After	357.73	841.62	1637.14	3977.66
		Total Increase in Percentage	23.55	29.95	10.46	29.93
4.	Education	Respondents & (%)	168(23.33)	230(31.94)	199(27.64)	123(17.08)
		Before	235.97	683.61	1503.75	3166.67
		After	342.1	856.31	1595	4166.67
		Total Increase in Percentage	44.98	25.26	6.07	31.58
5.	Fuel/ Lighting	Respondents & (%)	296(41.11)	156(21.67)	176(24.44)	92(12.78)
		Before	255.48	759.26	1435	2428.57
		After	361.19	865.93	1540	3428.57
		Total Increase in Percentage	41.38	14.05	7.32	41.18
6.	Medical	Respondents & (%)	270(37.50)	159(22.08)	162(22.50)	129(17.92)
		Before	263.91	732.91	1591.67	2566.67
		After	392.17	859.24	1683.33	3455.56
		Total Increase in Percentage	48.6	17.24	5.76	34.63
7.	Religious and Social Expenses	Respondents & (%)	324(45.00)	215(29.86)	136(18.89)	45(6.25)
		Before	284	694.74	1561.46	2610
		After	405.53	859.21	1656.25	3510
		Total Increase in Percentage	42.79	23.67	6.07	34.48
8.	Others (Emergencies, etc.)	Respondents & (%)	228(31.67)	142(19.72)	170(23.61)	180(25.00)
		Before	250	712.5	1375	3428.57
		After	405	890.63	1475	4428.57
		Total Increase in Percentage	62	25	7.27	29.17

Source : Computed from Primary Data;      Note : Figures in parenthesis represents percentage

 

 

The above table shows that 43.95% increase was found from less than Rs.1000 per month among 193 respondents (26.81%) towards food expenditure after availing microcredit and least increase (11.71%) was found from Rs.2000 to Rs.3000 among 138 respondents (19.17%).  It is clear that 15.41% increase was found from Rs.1000 to Rs.2000 per month among 242 respondents (33.61%) based on expenditure towards clothing after availing microcredit and least increase (13.15%) was found from Rs.2000 to Rs. 3000 among 91 respondents (12.64%) towards clothing expenses.  It is understood that 29.95% increase was found from Rs.1000 to Rs 2000 per month among 182 respondents (25.28%) based on expenditure towards Rent after availing microcredit and least increase (10.46%) was found from Rs.2000 to Rs. 3000 among 78 respondents (10.83%) towards Rent expenses.  It is evident that 44.98% increase was found from less than Rs.1000 per month among 168 respondents (23.33%) based on expenditure towards Education after availing microcredit and the least increase (6.07%) was found from Rs.2000 to Rs.3000 among 199 respondents (27.64%) towards Educational expenses after joining SHG. 

 

It is understood that 41.38% increase was found from less than Rs.1000 per month among 296 respondents (41.11%) based on expenditure towards fuel / lighting after availing microcredit and the least increase (7.32%) was found from Rs.2000 to Rs.3000 among 176 respondents (24.44%) towards Fuel / Lighting expenses after joining SHG.  It is clear that 48.60% increase was found from less than Rs.1000 per month among 270 respondents (37.5%) based on medical expenditure after availing microcredit and the least increase (5.76%) was found from Rs.2000 to Rs.3000 among 162 respondents (22.50%) towards Medical expenses after joining SHG.  It is clear that 42.79% increase was found from less than Rs.1000 per month among 324 respondents (45%) based on Religious and Social expenditure after availing microcredit and the least increase (6.07%) was found from Rs.2000 to Rs.3000 among 136respondents (18.89%) towards Religious and Social expenses after joining SHG.  It is observed that 62% increase was found from less than Rs.1000 per month among 228 respondents (31.67%) based on Other expenses (Emergencies, etc.) after availing microcredit and the least increase (7.27%) was found from Rs.2000 to Rs.3000 among 170 respondents (23.61%) towards other expenses after joining SHG. 

 

Asset Position:

In this study, the researcher had observed that out of 720 respondents who have participated in the microcredit activities toward income generation were able to improve their asset position.  The asset position based on different categories were presented in the Table 7.

 

Table 7: Asset Position of the SHG Members Before and After Joining SHG

Source : Computed from Primary Data

 

 

The study reveals that there is a definite improvement with respect to usage of cooking devices before and after joining SHG as well as availing microcredit.  20.48% of increase in usage of LPG cooking device found among the respondents in which some were using Kerosene and Wood for their cooking activities. With regard to Home Appliances it is evident that there is 182.32% increase in usage of Refrigerator after availing credit facilities, 130.42% increase in usage of Television, followed by 95.79 increase in usage of Grinder, 27.14% of increase in washing machine, 34.03% increase in usage of mixer and finally, 15.12% increase in usage of Radio after joining SHG and availing microcredit. With regard to Vehicles it is understood that there is 170% increase in usage of Car / Van / Tractor after availing credit facilities followed by, 148.57% increase in Motor Cycle and finally, 7.39% increase in usage of Bicycle after joining SHG and availing microcredit. With respect to purchase of other assets it is clear that there is 173.91% increase found in purchase of Dry Land, followed by, 250.25% increase in Deposits, 66.1% increase in House Plot, 32% increase in Jewel and finally, 28.41% increase in purchase of Wet Land after joining SHG and availing microcredit. It is observed that there is 85% increase found in rearing of cow / buffalo, followed by, 33.58% increase in poultry rearing, and finally, 30.43% increase in goat or sheep rearing after joining SHG and availing microcredit.

 

It is understood that there is a definite improvement found among the SHG members after joining SHG and availing microcredit based on the household asset position viz. Cooking Devices, Home Appliances, Vehicles, Other Assets and Live Stock.

 

Method of Savings:

Habit of savings is another important aspect of financial inclusion.  It is generally reported that after financial inclusion through SHG, the savings habit among the respondents has been changed in an increasing trend.  The impact of financial inclusion through SHG on the level of savings under various categories towards generation of income is presented in the Table 8.  The increment in savings of the respondents after financial inclusion is measured with different attributes.  It is also compared to find the difference among respondent’s savings habits before and after joining SHG and realizing the financial inclusion.

 

Table 8 : Method of Savings : Before and After Joining SHG

Source : Primary Data

 

 

It is clearly understood from the above table that the maximum (283.33%) of increase in percentage was found among 276 SHG members (38.33%) after joining SHG, whereas 127.5% of increase in percentage was found in the investment with Non-Banking Financial Companies, 81.63% of increase is found by the respondent’s savings in post office, 71.7% in SHGs, 70.69% in private lending, 46.1% in chit funds and the remaining 27.34% deposited their savings in Cooperative society.

 

It is evident that the respondents attained savings habits in various categories towards their self-improvement and social enhancement after enjoying the microcredit facility and after joining SHG.

 

Purpose of Savings: Garrett Ranking Method:

The table 9 reveals that the first rank towards purpose of savings was achieved by Food security with the Garrett mean of 57.60, followed by second position towards social security / empowerment, third position towards self-respect, fourth position emergencies, fifth position towards medical expenses, sixth position towards others (marriage, festivals, etc.) seventh position towards education and finally, least ranking (40.30) was towards agricultural and asset building. From Table 10, It is clear that the first rank towards purpose of savings was achieved by Food security with the Garrett mean and finally, least ranking (40.30) was towards agricultural and asset building.

 

Table 9: Garrett Ranking Showing the Purpose of Savings

Purpose of Savings	Rank-1	Rank-2	Rank-3	Rank-4	Rank-5	Rank-6	Rank-7	Rank-8
Food Security	111	130	225	53	62	79	15	45
Empowerment	110	113	98	95	59	200	14	31
Education	14	33	80	96	109	106	65	217
Medical Expenses	67	124	75	120	103	107	96	28
Emergencies	138	120	100	29	87	50	117	79
Agricultural and Asset Building	81	34	28	34	104	18	232	189
Self Respect	158	128	65	56	119	75	11	108
Others(Marriage, Festivals, etc.)	41	38	49	237	77	85	170	23

 

Table 10 : Garrett Ranking Showing the Purpose of Savings

Source: Computed from Primary Data

 

 

The above table reveals that the first rank towards purpose of savings was achieved by Food security with the Garrett mean of 57.60, followed by second position towards social security / empowerment, third position towards self-respect, fourth position emergencies, fifth position towards medical expenses, sixth position towards others (marriage, festivals, etc.) seventh position towards education and finally, least ranking (40.30) was towards agricultural and asset building. It is clear that the first rank towards purpose of savings was achieved by Food security with the Garrett mean and finally, least ranking (40.30) was towards agricultural and asset building.

 

Confirmatory Factor Analysis:

Development after Financial Inclusion:

CFA allows the researcher to test the hypothesis that a relationship between the observed variables and their underlying latent construct(s) exists. The researcher uses knowledge of the theory, empirical research, or both, postulates the relationship pattern a priori and then tests the hypothesis statistically.  Here in this study the priori taken for analysis are three sub-dimensions deciding the development of the SHG members after financial inclusion in which the first dimension Awareness about Self-help Group activities (A1), followed by, Microcredit Details –Savings (MC1) and finally, Change in the Social Aspects (C1).  For the convenience of presenting the model in the diagrammatic format the sub-dimensions are made with abbreviated words such as A1, MC1 and C1. The detailing of the variables that have five factors of each sub-dimensions are explained hereunder.

 

A1: Awareness about Self-Help Group Activities:

The first dimension i.e. Awareness about Self-Help group activities (A1) which are A1: I Know the Details about Self-help group activities, A2: I know the procedure to join a self-help group, A3:, I have full knowledge about savings through SHG, A4 :, I have full knowledge about bookkeeping and maintaining accounts and finally, A5 :, Self-help group

 

MC1: Microcredit Details –Savings:

The second dimension i.e. Details related to Microcredit Savings (MC1) having five variables viz. MC1: I know that the saving act as a buffer during emergencies, MC2: I regularly do personal savings for meeting out emergency and unexpected expenses, MC3:, I do regular savings for my old age, MC4:, I use savings for children’s education and finally,  MC5:, I use savings for carrying on some economic activity.

 

C1 : Change in the Social Aspects:

The third dimension of the model i.e. Change in the Social Aspects (C1) having five more variables viz. S1 :, Only after joining the group I  have more confidence to face any problem, S2 :, Only after joining the group I am more confident to face any financial crisis, S3 :, Only after joining the group I take decisions on matters relating to building of house, children’s education, buying household articles, S4 :, Only after joining the group I feel that my family members treat me well and finally, S5 :, Only after joining the group my ability to help others increased.

 

 

Table 11: Regression Weights of Awareness, Microcredit and Change In Social Aspects

 

 

The above table shows the regression coefficient of the variables and it is observed that the critical ratio of all the variables found to be high and it is significant at 1 per cent level.  Out of the selected variables after elimination of some variable which was found to have low loading the other variables revealed maximum significance based on the perception of the respondents towards Social And Economical Aspects such as Awareness, Microcredit And Change in Social Aspects by the self-help group members with the help of three dimensions in the confirmatory factor analysis condensed after modification indices the SEM model was finalized. The model fit summary explains the fitness in the statistical point of view which are as follows:

 

Table 12 : Covariances of Awareness, Microcredit and Change In Social Aspects

			Estimate	S.E.	C.R.	P
A1	<-->	C1	-.009	.016	-.587	.558
MC1	<-->	C1	.191	.025	7.687	***
A1	<-->	MC1	-.017	.019	-.882	.378

 

It is found that there is a significant covariance between the dimensions of social and economic status of the SHG members operating in Tumkur District taken for the study shows that the covariance was highly found among Microcredit Utilisation and Change in Social aspects which reveals that the opinion, awareness and utilization of microcredit was found to be significant at 1% level is proved through the CR at 7.687.  Whereas there is no significant covariance found between Awareness (A1) and Change in Credit Utilisation which shows that the CR = -0.587 (Sig.0.558), while there is no significant covariance between Awareness (A1) and Micro Credit Savings (MC1) that shows the CR -0.882 (Sig.0.378).

 

It is observed from the above table that the model fit summary for three dimensional model in which the first dimension reveals the level of awareness about self-help group activities among the women SHGs in Tumkur having five variables, followed by the second dimension Microcredit Savings having five more variables in which after conducting modification indices, one variable was removed from the dimension and finally, another five variables indicating change in the social aspects which also shows the results after modification one variable was eliminated from the dimension to derive the goodness of fit of the model which shows the social and economical development among women members in Tumkur District after financial inclusion and utilization of microcredit.  The result of the confirmatory factor analysis taking individually as well as the overall standardized model is provided in the standardized model.  To improve the fitness index certain error terms were covaried (shown in standardized model) to achieve best fit of the statistical results.

 

Root Mean Square Error of Approximation (RMSEA) : 0.08 or less is often considered acceptable (Browne & Cudeck,1993. Comparative Fit Index : CFI value of 0.90 or greater (Hu & Bentler, 1999). Normed Fit Index (NFI) used to measure model fit  above 0.90 are considered acceptable (Bentler & Bonett, 1980).  The RMSEA, CFI, NFI and RMR are four good indices to verify that a model is adequate.

 

Table  : Model Summary of Awareness, Microcredit and Change In Social Aspects

 

It is observed that the fit indices based on the social and economic status of the respondents based on financial inclusion reveals that the microcredit utilisation has increased their level of awareness which is proved through CFA shows the particular dimension results as CMIN = 7.696, CMIN/DF = 2.565, CFI = 0.995, NFI=0.993 and RMSEA 0.047 shows excellent fit and proves the microcredit utilisation among SHGs in Tumkur has definitely improved the level of awareness in their SHG activities.  Followed by, the microcredit savings shows that the CMIN = 3.242, CMIN/DF=3.242, CFI=0.995, NFI = 0.993 and the RMSEA = 0.056 shows acceptable fit and proves the microcredit utilisation among SHGs in Tumkur has also improved their microcredit savings habits and finally, the level of change in their social aspects shows CMIN = 15.580, CMIN/DF=3.895, CFI=0.979, NFI=0.972 and RMSEA=0.063 which affirms that there is a change in their social aspects after microcredit utilisation.  The overall model summary shows that the CMIN = 122.866, CMIN/DF = 2.118, CFI = 0.972, NFI=0.948 and RMSEA 0.039 concludes that the model is best fit and the results of the analysis confirms the same through confirmatory factor analysis taking all the three dimensions that has significant impact towards the perception of the SHG members after microcredit utilisation had improved their standards based on awareness in the SHG activities, savings through microcredit and finally change in their social aspects.

 

CONCLUSION AND RECOMMENDATION:

The study concludes that micro credit utilisation has contributed to the empowerment of the Self Help Group members. These groups definitely have potential to expedite the process of economic development. It is observed from the above study that the asset position, income and savings of the members improved significantly after joining the groups leading to socio- economic upheaval in the society. Though most of the respondents expressed positive perception towards the benefits realised and the amount of loan sanctioned, some concerns were raised regarding the approach of the banks and delay in processing loans. Policy changes should be initiated to ensure more flexibility at the grass root level in order to ensure quick and timely processing of loans. The Self Help groups in the study area are mainly for women. Similar groups may be initiated for men also since real development of the nation is possible through the progress of both men and women.

 

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Received on 26.09.2017       Modified on 22.10.2017

Accepted on 05.12.2017      © A&V Publication all right reserved