research & advocacy,apmas title of the study competition among the microfinance institutions and...
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Research & Advocacy,APMASResearch & Advocacy,APMAS
TITLE OF THE STUDYTITLE OF THE STUDY
COMPETITION AMONG THE COMPETITION AMONG THE MICROFINANCE INSTITUTIONS MICROFINANCE INSTITUTIONS
AND ITS IMPLICATIONSAND ITS IMPLICATIONS
Research & Advocacy,APMASResearch & Advocacy,APMAS
RESEARCH QUESTIONSRESEARCH QUESTIONS
What is the percentage of PoPs in SHGs?What is the percentage of PoPs in SHGs?
What is the loan appraisal methodology?What is the loan appraisal methodology?
What is the relationship between loan size, What is the relationship between loan size, utilization, multiple loans/multiple doses, utilization, multiple loans/multiple doses, livelihoods and loan repayment?livelihoods and loan repayment?
What is the rate of defaulting? And reasons for What is the rate of defaulting? And reasons for it?it?
What extent banks are catering the financial What extent banks are catering the financial needs of SHGs?needs of SHGs?
Research & Advocacy,APMASResearch & Advocacy,APMAS
RESEARCH QUESTIONS…RESEARCH QUESTIONS…
What is the role of mediators in SHG bank What is the role of mediators in SHG bank linkagelinkage
What is the scope, nature, and size of payments What is the scope, nature, and size of payments and services?and services?
What extent other micro finance institutions What extent other micro finance institutions influence SHG Bank linkage?influence SHG Bank linkage?
What is the perceptional gap between banks and What is the perceptional gap between banks and SHGs on SHG bank linkage?SHGs on SHG bank linkage?
What is the impact of SHG-Bank linkage on the What is the impact of SHG-Bank linkage on the lives of the people?lives of the people?
Research & Advocacy,APMASResearch & Advocacy,APMAS
OBJECTIVES OF THE STUDYOBJECTIVES OF THE STUDY To understand the quality of SHGs after bank-To understand the quality of SHGs after bank-
linkage;linkage; To understand the coverage of SHG Bank linkage in To understand the coverage of SHG Bank linkage in
a branch;a branch; To under the rate of default and the percentage of To under the rate of default and the percentage of
over dues;over dues; To understand the financial resources/ agencies To understand the financial resources/ agencies
other than banks to groups and their influence on other than banks to groups and their influence on SHGs and SHG-Bank Linkage; SHGs and SHG-Bank Linkage;
To identify various needs of the groups and the To identify various needs of the groups and the strategies for meeting the needs; andstrategies for meeting the needs; and
To understand the impact of SHG-Bank Linkage on To understand the impact of SHG-Bank Linkage on the socio-economic life of the group membersthe socio-economic life of the group members
Research & Advocacy,APMASResearch & Advocacy,APMAS
DATADATA NATURE OF DATANATURE OF DATA
Qualitative /Quantitative Qualitative /Quantitative Primary /Secondary Primary /Secondary
SOURCES FOR DATASOURCES FOR DATA Banks/SHGs/DRDA/Velugu and NGOsBanks/SHGs/DRDA/Velugu and NGOs
DATA COLLECTION TOOLSDATA COLLECTION TOOLS Interview SchedulesInterview Schedules
SHGsSHGs Banks/Branch ManagersBanks/Branch Managers NGOsNGOs
Research & Advocacy,APMASResearch & Advocacy,APMAS
SAMPLING SAMPLING UNIVERSEUNIVERSE
SHGs linked to Andhra Bank in APSHGs linked to Andhra Bank in AP
REGIONSREGIONS All the 3 Regions in AP-Coastal , Rayalaseema and TelanganaAll the 3 Regions in AP-Coastal , Rayalaseema and Telangana
DISTRICTS (3 -one from each region)DISTRICTS (3 -one from each region) Stratified Sampling TechniqueStratified Sampling Technique 3 Districts- Guntur, Ananthapur and Karimnagar3 Districts- Guntur, Ananthapur and Karimnagar No. of Linkages and Defaults in the branchNo. of Linkages and Defaults in the branch District in which AB is Lead BankDistrict in which AB is Lead Bank District in which Andhra Bank is not a Lead BankDistrict in which Andhra Bank is not a Lead Bank Excluded the districts from the sample where APMAS has conducted Excluded the districts from the sample where APMAS has conducted
a study on SHG Bank Linkage in A.P. in the pasta study on SHG Bank Linkage in A.P. in the past
Research & Advocacy,APMASResearch & Advocacy,APMAS
SAMPLING….. SAMPLING….. BRANCHES IN THE DISTRICT(5) (3 X 5=15)BRANCHES IN THE DISTRICT(5) (3 X 5=15)
Stratified Random Sampling methodStratified Random Sampling method Regions within the district and developmentRegions within the district and development No. of linkagesNo. of linkages No. of default SHGsNo. of default SHGs MFIs located in that area-NGOs, MACSMFIs located in that area-NGOs, MACS
SHGs IN THE BRANCH (15)(15 x 7 =105)SHGs IN THE BRANCH (15)(15 x 7 =105) Purposive samplingPurposive sampling Period and amount of overduePeriod and amount of overdue No. of groups having over dueNo. of groups having over due No. of groups linked to other MFIsNo. of groups linked to other MFIs
Research & Advocacy,APMASResearch & Advocacy,APMAS
SCENARIO OF COMPETITION WORLDWIDESCENARIO OF COMPETITION WORLDWIDE
BANGLADESHBANGLADESH
Intense competitionIntense competition Interest rates have reduced Interest rates have reduced MFIs are slowly beginning to offer larger, MFIs are slowly beginning to offer larger,
individual-based “enterprise loans”individual-based “enterprise loans” 32.1 % of loans have fallen overdue for 32.1 % of loans have fallen overdue for
more than 2 yearsmore than 2 years
Research & Advocacy,APMASResearch & Advocacy,APMAS
EASTEAST AFRICAAFRICA Earlier stage of competitionEarlier stage of competition Uganda and Kenya : Saturated and Uganda and Kenya : Saturated and
intense competitionintense competition Presence of Multiple membership Presence of Multiple membership Diversified product offerings :Diversified product offerings :
Savings servicesSavings services group-based loansgroup-based loans salary-based loanssalary-based loans
Research & Advocacy,APMASResearch & Advocacy,APMAS
CENTRAL AMERICACENTRAL AMERICA In NicaraguaIn Nicaragua , , MFIs enjoyed a virtual monopoly MFIs enjoyed a virtual monopoly Reduced interest rates on its larger loans from Reduced interest rates on its larger loans from
3%to 2.5% per month 3%to 2.5% per month Larger loans at a wealthier, more lucrative Larger loans at a wealthier, more lucrative
segment of the marketsegment of the market Increased loan sizeIncreased loan size Asymmetric information ,multiple membership has Asymmetric information ,multiple membership has
created much problems - database maintained on created much problems - database maintained on internet about multiple borrowersinternet about multiple borrowers
Coordination among MFIs to maintain credit Coordination among MFIs to maintain credit bureaubureau
Research & Advocacy,APMASResearch & Advocacy,APMAS
INDIAINDIA
More supply drivenMore supply driven Unregulated with low outreach Unregulated with low outreach Inadequate flow of funds Inadequate flow of funds Limited and standard range of products Limited and standard range of products Lack business orientation Lack business orientation No formal product promotion systemNo formal product promotion system
Research & Advocacy,APMASResearch & Advocacy,APMAS
ANDHRA PRADESHANDHRA PRADESH Finest practices in micro finance Finest practices in micro finance Competition in pocketsCompetition in pockets Monopolistic market to large extent Monopolistic market to large extent Ad-hoc competition management strategy Ad-hoc competition management strategy Players in Andhra PradeshPlayers in Andhra Pradesh
Care (CASHE project), BASIX, Spandana, share and Care (CASHE project), BASIX, Spandana, share and SKS SKS
SERPSERP Commercial banks, SIDBI, and RRBs Commercial banks, SIDBI, and RRBs RMK, FWWB : bulk lending & capacity building RMK, FWWB : bulk lending & capacity building Thrift cooperatives : CDFThrift cooperatives : CDF
Research & Advocacy,APMASResearch & Advocacy,APMAS
SOCIAL CATEGORIES OF THE SHG MEMBERSSOCIAL CATEGORIES OF THE SHG MEMBERS
FIGURE SHOWING SOCIAL CATEGORIES OF SHG
SOCIAL CATEGORY
MIOCBCSCST
PE
RC
EN
TA
GE
50
40
30
20
10
0 3
38
24
32
3
Research & Advocacy,APMASResearch & Advocacy,APMAS
LITERACY LEVELSLITERACY LEVELSLITERACY LEVELS AMONG THE SHG MEMBERS
40.8
25.3
15.8
7.8 9.3
1.00.0
10.0
20.0
30.0
40.0
50.0
ILLITRATES
NEOLITERATES
PRIMARY
UPPER PRIMARY
HIGH SCHOOL
COLLEGE
PDSPDSWhite cards -72%,Pink cards - 8 %White cards -72%,Pink cards - 8 %
Research & Advocacy,APMASResearch & Advocacy,APMAS
PRIMARY OCCUPATION OF THEPRIMARY OCCUPATION OF THE SHG MEMBERS SHG MEMBERS
DIFFFERENT OCCUPATIONS AMONG THE SHG MEMBERS
22.2
4.90.8 2.3
12.7
0.87.0
49.4
0.0
10.0
20.0
30.0
40.0
50.0
60.0
AGRICULTURE AG. LABOUR DAIRY CASTE OCCUPATION
SEASONAL BUSINESS PETTY BUSINESS PVT./GOVT.JOB OTHERS
Research & Advocacy,APMASResearch & Advocacy,APMAS
GRADING OF SHGsGRADING OF SHGs
A, 12
B, 35C, 52
Research & Advocacy,APMASResearch & Advocacy,APMAS
More than 1/3More than 1/3rdrd SHGs have distributed their SHGs have distributed their savingssavings
Received Rs.1,740 from distributed savingsReceived Rs.1,740 from distributed savings Reasons Reasons
The bankers adjust the old loans (such as crop The bankers adjust the old loans (such as crop loans, individual loans, etc) taken by the family loans, individual loans, etc) taken by the family membersmembers
Increased internal defaultersIncreased internal defaulters Few others withdrew for internal lending Few others withdrew for internal lending
Nearly 88% of the SHG do need based Nearly 88% of the SHG do need based lending from the savingslending from the savings
Average bank balance of the SHG : Rs.2,370.Average bank balance of the SHG : Rs.2,370.
SAVINGSSAVINGS
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INTERNAL LENDING,SAVINGS- DEFAULTING INTERNAL LENDING,SAVINGS- DEFAULTING
67% of the borrowed loan from the savings are 67% of the borrowed loan from the savings are outstandingoutstanding
Avg. 5.7 members borrowed loan from savingsAvg. 5.7 members borrowed loan from savings
Avg. 4.5 members are defaulted to SHGsAvg. 4.5 members are defaulted to SHGs
Avg. savings borrowed per group: Rs.16,250Avg. savings borrowed per group: Rs.16,250
Avg. savings outstanding : Rs.10,940Avg. savings outstanding : Rs.10,940
Research & Advocacy,APMASResearch & Advocacy,APMAS
PERCENTAGE OF SHGs PERCENTAGE OF SHGs LINKED TO BANKLINKED TO BANKPercentage of SHGs Linked to Bank
61%
39% No. of SHGs BankLinked
No. of SHGs notBank Linked
Research & Advocacy,APMASResearch & Advocacy,APMAS
PERCENTAGE OF 1PERCENTAGE OF 1STST AND AND REPEAT LINKAGESREPEAT LINKAGES
Percentage of 1st and Repeat Linkages
52
Repeat Linkage, 48
Research & Advocacy,APMASResearch & Advocacy,APMAS
RATE OF DEFAULTRATE OF DEFAULT Kuchinipudi has maximum proportion (49.33 Kuchinipudi has maximum proportion (49.33
percent) of groups overdue and amount of loan percent) of groups overdue and amount of loan overdue (8.82 percent)overdue (8.82 percent)
In spite of having less number of SHGs, (compared In spite of having less number of SHGs, (compared to other mandals) have more default rate to other mandals) have more default rate
Kolluru, Phirangipuram and Vinukonda have Kolluru, Phirangipuram and Vinukonda have sizeable MFI activity sizeable MFI activity
The SHG shows more tendencies to default when The SHG shows more tendencies to default when the socio economic conditions are deficientthe socio economic conditions are deficient
Sustainability of relationship of the group and bank Sustainability of relationship of the group and bank is decreasing.is decreasing.
Research & Advocacy,APMASResearch & Advocacy,APMAS
LOAN STATUSLOAN STATUS Avg. amount of loan borrowed Rs.28,550Avg. amount of loan borrowed Rs.28,550 Avg. amount of loan repaid Rs. 9,590Avg. amount of loan repaid Rs. 9,590 Avg. amount of loan over due Rs.18,680Avg. amount of loan over due Rs.18,680 Avg. amt of loan outstanding Rs. 20,150Avg. amt of loan outstanding Rs. 20,150 Avg. period of default : 13.4 monthsAvg. period of default : 13.4 months Avg. loan per member :Rs. 2,510Avg. loan per member :Rs. 2,510 Nearly 8 out of the 9 borrowed have defaultedNearly 8 out of the 9 borrowed have defaulted 11 out of 34 SHG have multiple membership11 out of 34 SHG have multiple membership Older groups are defaulting-54monthsOlder groups are defaulting-54months
Research & Advocacy,APMASResearch & Advocacy,APMAS
LOAN SIZELOAN SIZE Lower caste find the loan size to be Lower caste find the loan size to be
adequateadequate Quantum of loan was inadequate for 77% Quantum of loan was inadequate for 77%
of OC groupsof OC groups Loan size found inadequate by 72 % Loan size found inadequate by 72 %
SHGs borrowed loans from MFIsSHGs borrowed loans from MFIs 45% of SHGs with MFIs members 45% of SHGs with MFIs members
received loan size between Rs.8,000-received loan size between Rs.8,000-16,000 only16,000 only
Research & Advocacy,APMASResearch & Advocacy,APMAS
SOCIAL CATEGORIES OF THE SHG-MFI MEMBERSSOCIAL CATEGORIES OF THE SHG-MFI MEMBERS
3
10
3
15
0
2
4
6
8
10
12
14
16
ST SC BC OC
Research & Advocacy,APMASResearch & Advocacy,APMAS
PRIMARY OCCUPATION OF THE SHG-MFI PRIMARY OCCUPATION OF THE SHG-MFI MEMBERSMEMBERS
More number of petty business and agri.laborMore number of petty business and agri.labor
11
4
10
1 1
02468
1012
Research & Advocacy,APMASResearch & Advocacy,APMAS
CONTD…CONTD…
They are not Landless laborThey are not Landless labor Owns a houseOwns a house Self employed with a minimum income of Self employed with a minimum income of
Rs.1500 or household income of Rs.2500 Rs.1500 or household income of Rs.2500 per monthper month
Research & Advocacy,APMASResearch & Advocacy,APMAS
RELATIONSHIP WITH MFISRELATIONSHIP WITH MFIS Avg. no. of MFI members in SHG –2.8Avg. no. of MFI members in SHG –2.8 Period of association with MFI :20.18 monthsPeriod of association with MFI :20.18 months Less savings in SHGs where 5-6 MFI membership Less savings in SHGs where 5-6 MFI membership Leader and active member are the potential Leader and active member are the potential
candidates for MFIscandidates for MFIs Leader centered groupsLeader centered groups 63.64 % of C- grade SHG have multiple membership63.64 % of C- grade SHG have multiple membership 8 out of the 11 SHGs have more than 7 defaulters of 8 out of the 11 SHGs have more than 7 defaulters of
the current loan taken from bankthe current loan taken from bank Nearly half of the SHG maintain less than Rs.1000 Nearly half of the SHG maintain less than Rs.1000
bank balancebank balance Most of the 11 SHGs have borrowed fresh loans Most of the 11 SHGs have borrowed fresh loans
Research & Advocacy,APMASResearch & Advocacy,APMAS
Relationship between MFI members and SHG Relationship between MFI members and SHG defaultersdefaulters
AVG. NO. OF MEMBERS IN SHG
11.38
AVG. NO. IN MFI 2.8
AVG. NO.OF DEFAULTERS TO BANK
8.13
NO. OF MFI MEMBERS DEFAULTERS TO SHG
20 out of 31 (64 %)
AMOUNT DEFAULTING TO SHG
Rs.65700 (n= 11 SHGs)
NO. OF SHG LEADERS IN THE MFI
23 out of 31 (74.19%)
Research & Advocacy,APMASResearch & Advocacy,APMAS
REASONS FOR PREFERING MFISREASONS FOR PREFERING MFIS
MORE THAN 80 % OF THE GROUPS MORE THAN 80 % OF THE GROUPS Individual loanIndividual loan Adequate loan size and timely loanAdequate loan size and timely loan Multiple loansMultiple loans Less voluntary savingsLess voluntary savings Procedures- take less time and moneyProcedures- take less time and money Loan at doorstepLoan at doorstep Less hassle of books of accountsLess hassle of books of accounts Transparency in transactionsTransparency in transactions
Research & Advocacy,APMASResearch & Advocacy,APMAS
OPINION ON MFIsOPINION ON MFIs
High interest ratesHigh interest rates Weekly installmentsWeekly installments Strict monitoringStrict monitoring Zero tolerance to defaultZero tolerance to default Attitude of the staff Attitude of the staff
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IMPACT IMPACT
SHGSHG Credit easily availableCredit easily available Free from moneylendersFree from moneylenders Education levels Education levels
improvedimproved Self confidenceSelf confidence Leadership Leadership
SHG-MFISHG-MFI More improvement in More improvement in
income levelincome level Access to pro poor Access to pro poor
programmeprogramme More employment More employment
generationgeneration IndebtednessIndebtedness Leadership Leadership Group solidarityGroup solidarity
Research & Advocacy,APMASResearch & Advocacy,APMAS
IMPLICATION OF COMPETITIONIMPLICATION OF COMPETITION
Increase in overall outreach Increase in overall outreach Increased efficiency and new products catering Increased efficiency and new products catering
to clients needsto clients needs Prices have decreasedPrices have decreased Loan size improvedLoan size improved Repayment schedule made convenient to Repayment schedule made convenient to
borrowersborrowers Compulsory savings decreasedCompulsory savings decreased Planned promotion strategy and strategic Planned promotion strategy and strategic
placement of servicesplacement of services
Research & Advocacy,APMASResearch & Advocacy,APMAS
CHALLENGESCHALLENGES
Retaining customersRetaining customers Retaining motivated staffRetaining motivated staff Handling multiple membership and defaultHandling multiple membership and default Improving operational efficiencyImproving operational efficiency Organizational and financial sustainabilityOrganizational and financial sustainability Credit discipline Credit discipline Mobilize savings-given the existing Mobilize savings-given the existing
regulations regulations
Research & Advocacy,APMASResearch & Advocacy,APMAS
SUGGESTIONSSUGGESTIONS
Proper grounding of SHG principles by training Proper grounding of SHG principles by training the membersthe members
Retaining the SHG members in drought hit area Retaining the SHG members in drought hit area by providing livelihood activityby providing livelihood activity
More repeat linkages for branches were less More repeat linkages for branches were less eligible groups are presenteligible groups are present
Monitoring system of the banks to be Monitoring system of the banks to be strengthened strengthened
Fix a day per week for transactions of SHGs Fix a day per week for transactions of SHGs only only in the bank in the bank
Research & Advocacy,APMASResearch & Advocacy,APMAS
Thank youThank you