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7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
TITLE OF THE STUDY
COMPETITION AMONG THE
MICROFINANCE INSTITUTIONSAND ITS IMPLICATIONS
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
RESEARCH QUESTIONS
What is the percentage of PoPs in SHGs?
What is the loan appraisal methodology?
What is the relationship between loan size,utilization, multiple loans/multiple doses,livelihoods and loan repayment?
What is the rate of defaulting? And reasons for
it? What extent banks are catering the financial
needs of SHGs?
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Research & Advocacy,APMAS
RESEARCH QUESTIONS
What is the role of mediators in SHG banklinkage
What is the scope, nature, and size of payments
and services? What extent other micro finance institutions
influence SHG Bank linkage?
What is the perceptional gap between banks
and SHGs on SHG bank linkage? What is the impact of SHG-Bank linkage on the
lives of the people?
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Research & Advocacy,APMAS
OBJECTIVES OF THE STUDY
To understand the quality of SHGs after bank-
linkage; To understand the coverage of SHG Bank linkage in
a branch;
To under the rate of default and the percentage of
over dues; To understand the financial resources/ agencies
other than banks to groups and their influence onSHGs and SHG-Bank Linkage;
To identify various needs of the groups and thestrategies for meeting the needs; and
To understand the impact of SHG-Bank Linkage onthe socio-economic life of the group members
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Research & Advocacy,APMAS
DATA NATURE OF DATA
Qualitative /Quantitative Primary /Secondary
SOURCES FOR DATA Banks/SHGs/DRDA/Velugu and NGOs
DATA COLLECTION TOOLS Interview Schedules
SHGs
Banks/Branch Managers NGOs
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Research & Advocacy,APMAS
SAMPLING UNIVERSE
SHGs linked to Andhra Bank in AP
REGIONS
All the 3 Regions in AP-Coastal , Rayalaseema and Telangana
DISTRICTS (3 -one from each region)
Stratified Sampling Technique
3 Districts- Guntur, Ananthapur and Karimnagar
No. of Linkages and Defaults in the branch
District in which AB is Lead Bank
District in which Andhra Bank is not a Lead Bank Excluded the districts from the sample where APMAS has
conducted a study on SHG Bank Linkage in A.P. in the past
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
SAMPLING..
BRANCHES IN THE DISTRICT(5) (3 X 5=15) Stratified Random Sampling method
Regions within the district and development
No. of linkages
No. of default SHGs MFIs located in that area-NGOs, MACS
SHGs IN THE BRANCH (15)(15 x 7 =105) Purposive sampling
Period and amount of overdue No. of groups having over due
No. of groups linked to other MFIs
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Research & Advocacy,APMAS
SCENARIO OF COMPETITION WORLDWIDE
BANGLADESH
Intense competition
Interest rates have reduced
MFIs are slowly beginning to offer larger,individual-based enterpriseloans
32.1 % of loans have fallen overdue for
more than 2 years
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Research & Advocacy,APMAS
EASTAFRICA
Earlier stage of competition Uganda and Kenya : Saturated and
intense competition
Presence of Multiple membership Diversified product offerings :
Savings services
group-based loans
salary-based loans
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Research & Advocacy,APMAS
CENTRAL AMERICA
In Nicaragua , MFIs enjoyed a virtual monopoly Reduced interest rates on its larger loans from
3%to 2.5% per month
Larger loans at a wealthier, more lucrativesegment of the market
Increased loan size
Asymmetric information ,multiple membership hascreated much problems - database maintained oninternet about multiple borrowers
Coordination among MFIs to maintain creditbureau
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Research & Advocacy,APMAS
INDIA
More supply driven
Unregulated with low outreach
Inadequate flow of funds
Limited and standard range of products
Lack business orientation
No formal product promotion system
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Research & Advocacy,APMAS
ANDHRA PRADESH
Finest practices in micro finance Competition in pockets
Monopolistic market to large extent
Ad-hoc competition management strategy
Players in Andhra Pradesh Care (CASHE project), BASIX, Spandana, share
and SKS
SERP
Commercial banks, SIDBI, and RRBs
RMK, FWWB : bulk lending & capacity building
Thrift cooperatives : CDF
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Research & Advocacy,APMAS
SOCIAL CATEGORIES OF THE SHG MEMBERS
FIGURE SHOWING SOCIAL CATEGORIES OF SHG
SOCIAL CATEGORY
MIOCBCSCST
50
40
30
20
10
0 3
38
24
32
3
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Research & Advocacy,APMAS
LITERACY LEVELS
LITERACY LEVELS AMONG THE SHG MEMBERS
40.8
25.3
15.8
7.8 9.3
1.0
0.0
10.0
20.0
30.0
40.0
50.0
ILLITRATES
NEOLITERATES
PRIMARY
UPPER PRIMARY
HIGH SCHOOL
COLLEGE
PDSWhite cards -72%,Pink cards - 8 %
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
PRIMARY OCCUPATION OF THESHG MEMBERS
DIFFFERENT OCCUPATIONS AMONG THE SHG MEMBERS
22.2
4.90.8 2.3
12.7
0.8
7.0
49.4
0.0
10.0
20.030.0
40.0
50.0
60.0
AGRICULTURE AG. LABOUR DAIRY CASTE OCCUPATION
SEASONAL BUSINESS PETTY BUSINESS PVT./GOVT.JOB OTHERS
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
GRADING OF SHGs
A, 12
B, 35C, 52
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
More than 1/3rd SHGs have distributed their
savings Received Rs.1,740 from distributed savings
Reasons The bankers adjust the old loans (such as crop
loans, individual loans, etc) taken by the familymembers
Increased internal defaulters
Few others withdrew for internal lending
Nearly 88% of the SHG do need basedlending from the savings
Average bank balance of the SHG : Rs.2,370.
SAVINGS
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
INTERNAL LENDING,SAVINGS- DEFAULTING
67% of the borrowed loan from the savings areoutstanding
Avg. 5.7 members borrowed loan from savings
Avg. 4.5 members are defaulted to SHGs
Avg. savings borrowed per group: Rs.16,250
Avg. savings outstanding : Rs.10,940
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
PERCENTAGE OF SHGsLINKED TO BANK
Percentage of SHGs Linked to Bank
61%
39% No. of SHGs Bank
Linked
No. of SHGs not
Bank Linked
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Research & Advocacy,APMAS
PERCENTAGE OF 1ST ANDREPEAT LINKAGES
Percentage of 1st and Repeat Linkages
52
RepeatLinkage, 48
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Research & Advocacy,APMAS
RATE OF DEFAULT
Kuchinipudi has maximum proportion (49.33percent) of groups overdue and amount ofloan overdue (8.82 percent)
In spite of having less number of SHGs,(compared to other mandals) have moredefault rate
Kolluru, Phirangipuram and Vinukonda havesizeable MFI activity
The SHG shows more tendencies to defaultwhen the socio economic conditions aredeficient
Sustainability of relationship of the group and
bank is decreasing.
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
LOAN STATUS
Avg. amount of loan borrowed Rs.28,550 Avg. amount of loan repaid Rs. 9,590
Avg. amount of loan over due Rs.18,680
Avg. amt of loan outstanding Rs. 20,150 Avg. period of default : 13.4 months
Avg. loan per member :Rs. 2,510
Nearly 8 out of the 9 borrowed have defaulted
11 out of 34 SHG have multiple membership
Older groups are defaulting-54months
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
LOAN SIZE Lower caste find the loan size to be
adequate
Quantum of loan was inadequate for 77%of OC groups
Loan size found inadequate by 72 %SHGs borrowed loans from MFIs
45% of SHGs with MFIs membersreceived loan size between Rs.8,000-16,000 only
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Research & Advocacy,APMAS
SOCIAL CATEGORIES OF THE SHG-MFI MEMBERS
3
10
3
15
02
4
6
8
10
12
14
16
ST SC BC OC
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Research & Advocacy,APMAS
PRIMARY OCCUPATION OF THE SHG-MFIMEMBERS
More number of petty business and agri.labor
11
4
10
1 1
0
24
6
8
10
12
PETTYBUS
INES
S
MILCHC
ATTLE
AG.LA
BOUR
AGRICU
LTUR
EJOB
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
CONTD
They are not Landless labor
Owns a house
Self employed with a minimum income ofRs.1500 or household income of Rs.2500per month
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Research & Advocacy,APMAS
RELATIONSHIP WITH MFIS Avg. no. of MFI members in SHG 2.8
Period of association with MFI :20.18 months Less savings in SHGs where 5-6 MFI membership
Leader and active member are the potentialcandidates for MFIs
Leader centered groups 63.64 % of C- grade SHG have multiple membership
8 out of the 11 SHGs have more than 7 defaulters ofthe current loan taken from bank
Nearly half of the SHG maintain less than Rs.1000bank balance
Most of the 11 SHGs have borrowed fresh loans
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Research & Advocacy,APMAS
Relationship between MFI members and SHGdefaulters
AVG. NO. OF MEMBERS INSHG
11.38
AVG. NO. IN MFI 2.8
AVG. NO.OF DEFAULTERS TOBANK 8.13
NO. OF MFI MEMBERSDEFAULTERS TO SHG
20 out of 31 (64 %)
AMOUNT DEFAULTING TOSHG Rs.65700 (n= 11 SHGs)
NO. OF SHG LEADERS IN THEMFI
23 out of 31 (74.19%)
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
REASONS FOR PREFERING MFIS
MORE THAN 80 % OF THE GROUPS Individual loan
Adequate loan size and timely loan
Multiple loans Less voluntary savings
Procedures- take less time and money
Loan at doorstep
Less hassle of books of accounts Transparency in transactions
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
OPINION ON MFIs
High interest rates
Weekly installments
Strict monitoring Zero tolerance to default
Attitude of the staff
7/31/2019 Competition Among the Micro Finance Institutions and Its Implications in Guntur District of Andhra Pradesh
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Research & Advocacy,APMAS
IMPACT
SHG
Credit easily available
Free from moneylenders
Education levelsimproved
Self confidence
Leadership
SHG-MFI
More improvement inincome level
Access to pro poorprogramme
More employmentgeneration
Indebtedness Leadership
Group solidarity
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Research & Advocacy,APMAS
IMPLICATION OF COMPETITION
Increase in overall outreach
Increased efficiency and new products cateringto clients needs
Prices have decreased Loan size improved
Repayment schedule made convenient toborrowers
Compulsory savings decreased Planned promotion strategy and strategic
placement of services
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Research & Advocacy,APMAS
CHALLENGES
Retaining customers
Retaining motivated staff
Handling multiple membership and default
Improving operational efficiency
Organizational and financial sustainability
Credit discipline
Mobilize savings-given the existingregulations
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Research & Advocacy,APMAS
SUGGESTIONS
Proper grounding of SHG principles by trainingthe members
Retaining the SHG members in drought hit areaby providing livelihood activity
More repeat linkages for branches were lesseligible groups are present
Monitoring system of the banks to be
strengthened Fix a day per week for transactions of SHGs
only in the bank
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Research & Advocacy APMAS
Thank you