Socio-economic characteristics of the defaulter-borrowers: A comparative study of select banks in Mizoram

In this paper an attempt to identify the socio-economic characteristics of the borrowers who failed in repayment of the loans borrowed by them form the banks. All such borrowers were the micro entrepreneurs in a tribal economy of Mizoram, a small state of India's North East. Out of 25 commercial banks operating in Mizoram, three banks were selected as sample for the present study. They are: State Bank of India (SBI), Mizoram Rural Bank (MRB) and Mizoram Cooperative Bank (MCAB). Further, the defaulter-borrower survey was conducted covering a sample of 300 micro-entrepreneurs (100 respondents from each of three select banks). All the micro-entrepreneurs under the study were literates. Interestingly, over one-fifth of the respondents were either graduates or post-graduates. The female-entrepreneurs out-number their male counterparts. A vast majority of the entrepreneurs belonged to the middle age. It is observed that the entrepreneurs who do not have strong financial background find it difficult to repay their loans especially when they face low business performance. Further, most of the entrepreneurs were not having high non-business family income. The banks should be extra-cautious while selecting the genuine entrepreneurs who are in need of financial support. The details of socio-economic profile of their existing borrowers, including those who failed in repayment of the loans, and the details of existing borrowers which are readily available with the Credit Bureau of India Limited (CIBIL) as per know your client

(KYC) norms would enable the banks in selection of the genuine beneficiaries under the priority sector loans.