Economic analysis of credit and repayment capacity in women self-help groups and cooperatives in Tamil Nadu, India

A study was conducted in Tamil Nadu to assess the impact of self-help groups and cooperatives on poorer sections of the rural populations through analyzing cost of credit and recovery performance of loans received by SHGs and PACB beneficiaries, finding out causes of defaults in repayment of loans by the beneficiaries of SHGs and cooperatives and suggesting suitable policy measures. All the beneficiaries of cooperatives availed more than Rs 6,000 as loan while only 15.56 per cent of the SHG beneficiaries were able to borrow a similar amount. Among SHGs, 86.66 per cent of the beneficiaries were regular repayers of loan whereas in cooperative societies only 40.00 per cent of the beneficiaries were regular repayers and the rest were irregular in repay. Majority of the members of PACB availing loans were willful defaulters. The debt asset ratio, educational level of the beneficiaries and membership of SHGs significantly influenced the overdue position. The beneficiaries of SHGs incurred only interest charges for obtaining the loans while the beneficiaries of cooperatives incurred expenses on traveling, documentation, unaccounted payment and loss due to interest on these capitals. It was recommended that subsidies can be routed through SHGs to minimize the cost of credit. Policy measures can be initiated for promoting the SHGs credit to help the weaker sections.