1
(Draft for discussion only)
Microfinance and the Cooperatives:
Can the Poor Gain from Their Coming Together ?
H.S. Shylendra
Institute of Rural Management Anand (IRMA)
Paper presented at the
Third National Seminar On
Microfinance: Issues and Challenges
Organized by
Centre for Microfinance Research
Bankers’ Institute of Rural Development (BIRD)
Lucknow
On
2nd
and 3rd
December 2011
At
Bankers’ Institute of Rural Development (BIRD)
Sector “H”, L.D.A. Colony
Kanpur Road, Lucknow
2
Microfinance and the Cooperatives:
Can the Poor Gain from Their Coming Together ?
H.S. Shylendra1
Institute of Rural Management Anand (IRMA)
Introduction
Formal co-operatives for meeting the credit needs of the rural households including the poor
are now is existence for more than a century in India. The worsening debt conditions of the
farmers had forced the colonial rulers to explore creation of the credit cooperatives through
enactment of a legislation in 1904. While these cooperatives have traversed a long distance since
then, but their goal of reaching the poor has remained largely elusive till now. The challenge of
meeting the credit needs of the poor and other weaker sections by the cooperatives has been a
major debating issue since their emergence. Linking cooperatives with the phenomenon of
microfinance is the latest among a series of policy measures taken in making co-operatives
pro-poor and equitable in their working. The rapid growth of microfinance, notwithstanding the
several controversies, has evoked responses from varied quarters to tap its potential for
overcoming the challenges involved in reaching out to the poor. Just as women empowerment
groups have evinced interest in adopting the group based microfinance for espousing their
cause, a section of the cooperative advocates have argued for internalizing microfinance
methods by cooperatives to become more inclusive.
Given the limited success achieved in the past in reforming the cooperatives for poor, a lot of
hopes have been raised over the linkage being promoted between the cooperatives and the
microfinance. On the eve of the United Nation’s International Day of Cooperatives on July 2
2005, the UN Secretary-General observed (The Cooperator 2005): „…. both cooperatives and
microfinance, when used and managed appropriately, can help give those most in need the
power to improve their lives. Cooperatives have a long history of providing financial services to
poor and low-income people. Cooperative banks and credit unions were initially established to
reduce poverty and high indebtedness among small-scale farmers and craftsmen in urban and
rural areas. Cooperatives continue to serve this mission today- often by providing affordable
and equitable access to microfinance services‟.
It would be worthwhile examining this issue of linkage in a greater detail as the problem of
indebtedness with its attendant implications for inclusion and poverty alleviation continues to be
a major challenge (GOI 2007). The present paper makes an attempt to identify and discuss
relevant issues and emerging experiences and outcomes of adoption of microfinance by credit
cooperatives in India.
Before we elaborate on the structure of the paper, it would be useful to explicate by way of
clarification on the meaning of the terms microfinance, cooperatives and the poor used here.
Microfinance, we mean here essentially the system and practice of providing financial services to
1 I am thankful to Dr Gyanendra Mani of CFMR, BIRD for the invitation, and his comments on the preliminary draft.
The references in the paper are incomplete and to be finalised. Usual disclaimers apply.
3
poor / women through the use of group and other such innovative methods by formal agencies.
Microfinance in this sense is identified with various group based savings and credit programmes
as evolved prominently since 1970s in countries like Bangladesh, and replicated subsequently
elsewhere including India. In the India context, microfinance has emerged broadly in two forms
or models viz., the Self help Group (SHG)-Bank Linkage programme (SBLP) promoted by
National Bank for Agriculture and Rural Development (NABARD) since 1992, and the Non-
government organisations (NGO)/Microfinance Institutions (MFI)model. Under SBLP, the
formal financial institutions including cooperatives provide savings and credit services to the
poor through informal groups linked to them. In the later model, NGOs and other forms of MFIs
provide these services directly to the poor mobilized through informal groups. In a way, it is the
NGOs which pioneered and scaled-up the group method of lending to the poor. Cooperatives,
we mean primarily here the credit cooperatives established under the conventional cooperative
legislations passed initially by the British government in 1904/12 and repealed by various
provincial acts after independence. Broadly such cooperatives fall under two structures – the
three-tier short term credit structure and the single/two-tier long term structure. The co-operative
also include those established under new parallel liberal acts enacted by some of the states since
1990s. Our focus here will be largely on the credit cooperatives established under the
conventional acts, though the role of new generation cooperatives is not fully ignored. Between
the two models of microfinance, again though the primary focus is on capturing the experience
of cooperatives under SBLP model, the role of NGO/MFI model is explored to the extent
relevant in understanding linkage under discussion.
Poor we mean here the socially and economically backward and disadvantaged groups.
Economically, these groups may include the landless labourers, tenants, share croppers, small
and marginal farmers, artisans and other petty producers. Socially such groups may include
households from scheduled castes, scheduled tribes, most backward castes and minorities.
There may be lot of overlaps between these social and economic groups. In terms of gender, the
focus is on women from these groups given their social and economic disadvantages. The basic
and common characteristic of these groups is that they may lack clear rights to land and assets,
may be remote in their location, and socially discriminated. All these poses difficulty for them
in obtaining credit and other services from formal institutions like cooperatives. Their social
position also may come in the way of their participation in the affairs of the cooperatives leading
to discrimination. The microfinance movement has mainly targeted such category of households
in its coverage.
1. Cooperatives and the Poor
Even before we look at the role of cooperatives in experimenting with new microfinance
methods, let us look at some of past arguments and experiences relating to the cooperatives in
reaching out to the poor. Both in theory and practice, there have been divergent views about the
role of cooperatives in serving the poor. In a socialist system cooperatives are perceived as
instruments which can help in the transformation of the society into a socialistic form ending
inequality and exploitation (Khostov 1975). Cooperatives because of their emphasis on abolition
of private property and group approach to enterprise are considered compatible with the
socialistic goal. In a capitalist system, the role of cooperatives is more instrumental in serving
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primarily the interest of the diverse members- poor or well-off, to help realize their economic
objectives related to production or consumption. The cooperatives may also play a balancing
role by trying to correct the excesses of private enterprises. In a mixed economy, cooperatives
are visualized to help serve the welfarist objectives of the state in terms of poverty alleviation
and empowerment of the poor (Parthasarthy 1991). Thus, in socialist and mixed economies the
cooperatives are seen as agencies for attaining larger goals of development with a focus on poor
and vulnerable groups. Given such a context, there are arguments especially in the mixed
economies like ours that cooperatives must have a clear focus on the poor as they are a welfarist
organization. Some even hold the view that it is not possible to conceive of cooperatives which
are not drawn from the poor (Parthasarthy 1975), and if needed cooperatives having sole focus
on poor may be created.
Given the expectation that cooperatives have to proactively reach out to the poor, there are
skeptics who argue that cooperatives may not be able to do justice to the cause due to certain
fundamental dilemmas they face (Lele 1981). These dilemmas pertain to addressing the trade-
off involved between the goals of growth and equity and decentralization and equity. While the
former dilemma largely relates to the constraint of attaining efficiency in serving the poor whose
needs are small and pose challenge in achieving cost-effective delivery of services. The later
dilemma emerges in the context of the elite capture of the cooperatives bypassing the poor in
taking any advantage of the benefits. Given the strong nature of these dilemmas and in the
absence of necessary pre-requisites to overcome them, conventional cooperatives may fail to
deliver for the poor. Under such circumstances, even if cooperatives have to be promoted it
would be better if these cooperatives either have a strong paternalistic approach or be small and
simple in their form and size to bring in cohesiveness. However, such skeptical views are
countered by others who argue that cooperatives may still succeed and reach out to the poor if
they get the support and guidance of progressive leadership in the context of overriding private
interests. Cooperatives hence may need a renewed attention to play the poverty alleviation role
(Hulme and Montgomery 1995). Similarly, others have argued for a strong role for cooperatives
in poverty reduction and social empowerment provided these cooperatives adopt lesson
emerging from the past failures and try to be more homogenous and participatory in their
working (Agarwal 2010). Thus, there is a renewed argument for promoting cooperatives to
address challenges of poverty and inequality and that cooperatives learn from the experiences
gained over a century of their existence. Hence, cooperatives continue to get the support from
varied quarters for their revival given their relevance. There are efforts to rejuvenate
cooperatives in India and elsewhere. The rejuvenation measures, among others, include creation
of a more liberal legal frameworks so as to enable cooperatives to assume new forms and
capabilities, recapitalization of weak ones, encouraging diversification by cooperatives,
professionalization, and adoption of new technology and other innovations to give the needed
edge to be more efficient. The 11th
five year plan has identified revitalization of cooperatives
and adoption of group approach as a vehicle for fostering agriculture development involving
small and marginal farmers and other vulnerable groups.
Credit Cooperatives and the Poor: Credit cooperatives were the earliest of the formal
cooperatives established in India by the colonial rulers. These cooperatives were modelled on
the German Raiffeisen system to help farmers free themselves from the clutches of
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moneylenders. The primary objective of the act passed in 1904 was `encouragement of
individual thrift and mutual cooperation among the members, with a view to the utilization of
their combined credit, by the aid of intimate knowledge of one another’s needs and capacities
and of the pressure of the local public opinion’ (Ibbetson 1975: 103). These primary cooperatives
in rural areas were essentially meant for small men and were expected to work based on the
bonds of these people adhering to the principle of unlimited liability, mutual confidence and
mutual cooperation. Personal rather than material or tangible security was supposed to be the
basis of lending (ibid).
Subsequent to enactment of the Cooperative Societies Act in 1904, the credit cooperatives grew
fairly rapidly. The Britishers took proactive steps to spread the cooperatives in different parts of
the country. However, despite the rapid growth of the cooperatives their progress in terms of
coverage of poor was found to be unsatisfactory. An assessment of the working cooperatives in
the Madras Presidency concluded that the cooperatives suffered due to excessive control and
elite influence resulting in large scale exclusion of the poor (Robert Jr. 1983). Even the principle
of unlimited liability could not come to the rescue of the cooperatives as it proved to be elusory
in addressing cooperative insolvency. The bias of cooperatives against poor thus has been a
challenge since their inception. This situation did not change even after independence.
Cooperatives despite being the sole agencies were found to be both inadequate and ineffective in
addressing the problem indebtedness of rural households in general and the poor in particular.
The report of the All-India Rural Credit Survey Committee (RBI 1954) brought out explicitly
the failure of cooperatives in catering to the needs of the small farmers (as hardly 1.9% of small
cultivators has been covered by the cooperatives) and the inequality in the distribution of
institutional credit.
The major conclusions of the Committee are worth quoting here: “Perhaps the most startling
revelation of the Survey has been the utter insignificance of the volume of the credit supplied to the
cultivator by the Co-operative movement… Co-operative agricultural credit… is in quantitative terms
little more than three per cent of the borrowings of the cultivator… what reaches the medium and small
cultivator from the co-operative institutions is a mere fraction of the little that co-operatives provide.….
The development of co-operative credit movement in India has been inadequate in three respects. There
are large parts of the country which it has not hitherto covered. … there are large parts of agricultural
population which still remain outside its membership, and even if attention is confined to those who are
members of co-operative credit societies, the large bulk of their credit requirements is met from sources
other than co-operatives.” The Committee argued that “there is no real alternative to some form of co-
operative association at the all important rural base of agricultural credit … even at levels higher than
the base, there is eventually no alternative more suitable than a co-operative form of credit
organization”.2
The Committee came out with the famous conclusion `Cooperation has failed, but cooperation
must succeed’. The Committee identified security based lending as against personal credit based
on character and repaying capacity as the primary reason for the bias of the cooperatives against
poor. The Committee while in general suggested an integrated scheme for strengthening
cooperatives with active state support, specifically it argued for shift in the emphasis of lending
from land to productive capacity and effective supervision. The Committee also highlighted the
2 as quoted in RBI (1985)
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relevance of the formation of group or association of borrowers based on joint responsibility for
the benefit of both borrowers and the lender.
Many subsequent assessments brought out the continued failure of cooperatives to overcome
their bias against the poor. The All-India Rural Credit Review Committee (AIRCRC) (1969)
concluded that small farmers continue to be handicapped with cooperatives due to exclusion
from membership, insistence on land security and restriction on loan size to tenants, which can
aggravate the situation of inequality especially in the context of new agricultural technology.
The National Commission on Agriculture (NCA) in one of its interim reports (GOI 1971)
argued that formal agencies like cooperative and commercial banks lacked a clear understanding
in dealing with the poor. It even said, „Although the cooperatives were till recently the only source of
institutional credit that could and should have helped people in the agriculture sector to reach the stage
of a viable production, a large number of small and marginal farmers and agricultural labourers have
had no chance even to enter them. „In a way, so far, the cooperative system has not succeeded in securing
the needs of the small and marginal farmers – not to speak of the agricultural labourers – to any
significant extent.‟(Ibid p.16)
Thus the various official assessments were almost unanimous about the failure of cooperatives
in working with the poor. The findings of the official agencies were collaborated by many
independent studies (Kumar 2007). These studies observed that cooperatives- both in short-term
and long term structure, have neither been able to reduce the dependence on informal sources
nor able to adequately cover the landless and other weaker sections. Land based credit policy,
focus on agriculture and production loans, control by elite and other vested interests not keen to
bring in poor are identified by these authors as the reasons as to why the co-operatives have not
been able to reach out to the poor. As a result of this glaring evidence of the continued
domination of cooperatives by the rich and better-off, there were calls to reforms the
cooperatives in favour of the poor. While some argued for creation of separate structure of
cooperative institutions for the poor, others suggested measures like credit rationing by the
existing cooperatives in favour of the small borrowers. Recommendation for creation of
Farmers’ Service Societies (FSS) with a focus on small farmers by NCA, Small Farmers’
Development Agency (SFDA) by AIRCRC, and Large Sized Adivasi Multipurpose Cooperative
Societies (LAMPS) with a exclusive focus on tribals by the Bawa Committee were some of the
pro-poor institutional arrangements suggested to reform the cooperatives. However, viability
considerations came in the way of creation of such exclusive institutions for small farmers and
poor.
Based on the recommendations of the AIRCRC the government created SFDA and MFAL as
developmental agencies which would identify viable small and marginal farmers and agricultural
labourers and help channelise flow of credit from cooperatives and other formal agencies for
pursuing productivity enhancing schemes. In order to ration credit in favour of the poor, RBI
fixed a share of 40 per cent of the funds of cooperatives to be devoted to small farmers.
Refinance to cooperatives was made conditional upon meeting the target fixed for the small
farmers (RBI 1975) The state governments also came with many incentive based measures to
encourage cooperatives to become more inclusive in their working. Universal membership drive
was launched by many state governments which provided subsidy or concession loan to enable
poor to subscribe to the share capital of the cooperatives. Contributions were made to bad debt
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reserves to encourage cooperatives to take risk in lending proactively to the poor. Reservations
were made for weaker sections to be on the governing committee of cooperatives to reduce elite
control of cooperatives as well as help poor participate in the management of cooperatives. An
attempt was made even to amalgamate primary credit cooperatives to make them become viable.
However, many of these measures did not result in any significant change in the working of
cooperatives towards of poor as corroborated by many assessments. An RBI Committee which
assessed the working of credit cooperatives in Maharashtra argued that despite earmarking of
funds for weaker sections, there was inadequate and poor efforts by the cooperatives in enlarging
the coverage of weaker sections. Bose (1980) in his assessment of cooperatives in West Bengal
argued that despite several efforts to bring in weaker sections, a very large section remained
outside the purview of cooperatives. Neither the quota of funds nor the universal membership
have yielded positive results. Bose attributed this to reasons like control of cooperatives by
landed peasantry, poor management and corruption, strong resistance of elite against inclusion of
poor and weak implementation by government of these measures. Bose even argued that poor
themselves neither have the keenness to join the cooperatives nor have the faith in cooperatives.
About SFDA and MFAL, the studies revealed that these agencies could not make much of a
difference in reorienting cooperatives. These agencies not only had a limited coverage but also
focused on farmers who were more productive and better-off and ignored the weaker sections
who had been neglected by the cooperatives. Thus, the attempts to reform the cooperatives in
favour of the poor did not yield the desired results.
But the effort of the State to make formal agencies including cooperatives respond to the needs
of the poor continued. Two or three initiatives worth mentioning here are the creation of
Regional Rural Banks (RRBs) and launch of the Integrated Rural Development Programme
(IRDP). Given the continued failure of the institutional agencies like cooperatives and
commercial banks, the Government of India decided to create RRBs in 1975 as a via media
between the local cooperatives and the professionally managed commercial banks. RRBs were
created as a small man’s bank to exclusively cater to the needs of the weaker sections. There
was large scale expansion of RRBs in the country during 1980s reaching out to many remote
rural areas.
IRDP as a credit based poverty alleviation programme targeting the poor was launched in 1977
and covered nearly 54 million poor till 1999. The focus of IRDP was helping the identified poor
by the state agencies to get access to easy and collateral free credit from the formal agencies at
reasonable terms for variety of income generating activities. Cooperatives were also roped in the
implementation of IRDP giving them an opportunity to overcome their past failure in reaching
out to the poor. While creation of RRBs to an extent eased the pressure on cooperatives but as
such did not make any dent on the nature of working of cooperatives. RRBs themselves also
suffered in their attempt to serve the weaker sections exclusive. Neither their policies nor their
methods were innovative enough to deepen the access of the poor (Shylendra 1996). About the
impact of IRDP on the cooperatives in changing their orientation towards the poor, studies
revealed several constraints faced by the cooperatives in this regard. Cooperatives despite
having a much wider network had only a limited share in the coverage of IRDP households.
Cooperatives had managed to cover only about 17 percent of the vast number of poor households
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brought under IRDP by 1992-94 (Ahmed 1996). Moreover, cooperatives did not tune their
practices to accommodate these newly inducted poor. Complicated loan procedures, share capital
requirements increasing the burden on poor, and unfamiliarity of cooperatives with non-farm
sector lending resulted in poor response of cooperatives to serve the developmental credit needs
of the poor. Apart from these peculiarities of cooperatives in dealing with the IRDP households,
IRDP failed in general to become a programme which can ensure sustained access to institutional
credit for the poor.
In a way IRDP was one of the last programmes with welfarist approach to reform the formal
agencies including cooperatives. With the changed policy environment, the nature of policy
initiatives meant for reforming cooperatives also underwent changes. These newer policies were
more liberal and based on market principles. Two major strategies that could be identified are
the encouragement given to cooperatives to become more business-oriented through
professionalisation and diversification, and the promotion of microfinance among cooperatives.
The financial liberalization launched since early 1990s eventually was extended to include
cooperatives also. The financial institutions including cooperatives are expected to follow
prudential business practices aided by conducive regulatory framework and liberalized interest
rates. Through more market friendly and competitive practices, cooperatives are expected to
revive themselves as well as work towards deepening the outreach of poor. This is based on the
neo-classical theoretical argument of reducing control over functioning of financial institutions
and allowing them work based on response of market forces. The thrust is on financial prudence
and viability to survive and scale up. Adoption of business development plans and
diversification are some of the specific initiatives under the new approach to revive cooperatives
especially for the poor. The second important initiative is the promotion of microfinance among
formal agencies including cooperatives. Microfinance being innovative in its methods to include
poor and an apparently a viable proposition is considered to be a best bet in terms of really
making cooperatives to reach out to the poor.
In the next section we highlight along with the rationale and experience of adoption of
microfinance by cooperatives in India.
2. Co-operatives and Microfinance
Microfinance in the way defined earlier is the more recent of the various efforts made to reform
the cooperatives. The linkage visualized and being attempted between the cooperatives and
microfinance in fact has twin goals unlike other measures attempted in the past. While the
primary goal is to make the cooperatives more inclusive, the secondary goal is to improve the
economic and business prospects of the cooperatives in their revival attempt. The linkage is
being even referred to as a `win-win’ proposition for cooperatives and poor.
How is the linkage expected to work both for the cooperatives and the poor simultaneously?
Microfinance uses unconventional methods to mobilize poor and provide access to them to
credit, savings and insurance. The group method adopted by microfinance has been found
helpful to overcome the basic problem of collateral faced by the formal agencies and poor.
Through principles of mutual cooperation, joint liability and peer monitoring coupled with their
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informal nature, small size and homogeneity of membership groups provide access to credit
services to the poor in the absence of a physical collateral. Microfinance interventions all over
have used group method to provide access to poor in a relatively successful manner. The same
principles of groups help ensure better recovery, reduce risk and cost of intermediation for the
lenders. The conventional cooperatives as evolved in India during 20th
century resorted to land
based lending as they could not break the collateral barrier. The linkage through informal groups
is expected to help the cooperatives to reach out to the poor by overcoming the fundamental
problem of collateral. Hence cooperatives like NGOs and other MFIs can include poor in their
working. Essentially, it is the institutional economics logic where in through adaptive behaviour
and newer forms of institutions the problems of market failures are overcome (Shylendra et all
2009).
As microfinance in a sense is a proven method, it is hoped that cooperatives can finally succeed
in the effort they have been making since their emergence to reach out to the poor. The other
advantage is the business prospects involved in promoting microfinance. Microfinance methods
have the potential to help cooperatives scale-up their coverage of poor relatively easily
bringing good dividends in terms of increased lending and assured recovery. Microfinance
groups can also bring savings to cooperatives as savings are an essential component of
microfinance methods. Moreover, microfinance interventions have the relative freedom to charge
viable interest rates on lending reducing the element of cross subsidization for the poor. Thus,
the linkage is argued to be both a social and bankable proposition for any formal agency. This is
the essential rationale advocated by NABARD in its promotion of SBLP with the formal
financial institutions including the cooperatives.
As highlighted earlier, in the Indian context microfinance has emerged under two broad models-
SBLP and NGO/MFI models. The issue of linkage of cooperatives with microfinance is relevant
in both the context. While in the case of SBLP the linkage is seen between SHGs and the
conventional cooperatives, in the NGO/MFI model it is seen in working of cooperatives
including the newer types established under the self-reliant cooperative legislations as MFIs.
While apparently the linkage between the cooperatives and microfinance is a promising
proposition but there are several challenges and contradictions for a successful outcome. Though
microfinance methods have certain strengths, they go with several limitations both at the
conceptual and operational level. It is argued that microfinance is more a neo-liberal
phenomenon and may not be suited for welfarist goals of inclusion, poverty alleviation and
empowerment. Being neo-liberal as such it may bring several pitfalls in the efforts to achieve the
above goals. There are several studies which have now captured in this regard the limitation of
microfinance from diverse experiences. Though the advocates of cooperatives have claimed that
cooperatives/ credit unions have been the original microfinancial institutions and harbingers of
microfinance, even then the cooperatives cannot escape from the major constraints and
limitations faced by the newer methods of microfinance including as a neo-liberal phenomenon.
At the same time, given that cooperatives have a potential to bring balance in addressing various
developmental contradictions, they may in fact be able to alleviate the negative consequences of
microfinance for their members.
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Let us briefly look at some of the challenges of microfinance methods for the conventional
cooperatives like primary agricultural credit societies (PACS) in India. Microfinance groups like
the SHGs need considerable resources for their emergence and sustenance. In the absence such
social intermediation process, group may not emerge uniformly both in quality and quantity. The
large variations one can see in the spread of SHGs across India is attributable to variations in the
availability of agencies necessary to promote SHGs. Social intermediation is essential as groups
have to be promoted in such a way as to internalize some of the essential principles of informal
mutual cooperation, peer monitoring and joint liability. Formal institutions like cooperatives
may not be able to promote such groups on a large scale unless supported by suitable and
competent agencies.
In principle, this should not have been a difficult proposition for cooperatives, as the
cooperatives promoted in India are supposed to have been modeled on Raiffeisen system having
many of the essential principles required for SHGs including the unlimited liability concept.
However, the cooperatives which really emerged during British period are of the modified type
violating many of the principles Raiffeisen system. In the post-independence period, the
cooperatives further deviated from the original Raiffeissen conception including the principle of
unlimited liability. Though in principle SHGs are compatible with the original conception of
credit cooperatives, in reality there is a mismatch. Therefore, both in the formation SHGs and in
their working cooperatives may face many contradictions posing difficulties for their actual
integration in a meaningful way. Like for example, while a formal cooperative works on the
basis of limited liability, an SHG is supposed to adopt the principle of unlimited liability.
Similarly, a cooperative is a member-owned organization with ability of democratic governance
and accountability. But an SHG is a informal body whose members may not be able to exercise
the same rights as that of a original member unless provide for legally.
Besides, cooperatives are no longer the sole agencies in the field of rural credit in the country.
The field is dominated by commercial banks and regional rural banks which have many other
strengths than cooperatives. Cooperatives which have lost their pre-eminent position now have
to compete with other formal agencies which are also keen to scale up their microfinance
interventions given the perceived benefits. Cooperatives may have to show or provide added
benefits to the microfinance groups capitalizing on their original strengths of local feel and
democratic governance.
The experiment of linking microfinance with the formal agencies is nearly two decades old in the
India context. What has emerged out of the experience and how far cooperatives have succeeded
in this almost last ditch effort to deliver on the equity is the moot question. This is what is
examined in the next two sections before arriving at some possible inferences and conclusions.
3. Cooperatives and Microfinance: A Review of Empirical Literature
This section makes an attempt to capture through a review available literature the experience of
the cooperatives in adopting the microfinance methods and the major outcomes observed
thereof. The review covers here both the conventional cooperatives as well as those based on
thrift and self-reliant approach.
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Several studies have tried to look at the overall performance of cooperatives under SBLP and
the some of the constraints faced by them. Sundar and Asokan (2004) in their study on the
performance of cooperatives in financing SHGs found that there are wide variations in the
performance of cooperatives under SBLP. The southern states have covered bulk of the SHGs
both in terms of number and disbursement, though certain states in other regions have shown
relatively better performance. Given the potential of SHGs, the authors argued that cooperative
banks and their officials have to take proactive steps in identifying and linking SHGs. Sen (2006)
assessing the governance of cooperatives as microfinance institutions argued that cooperatives
have generally played a significant role in providing financial services to the poor. The
cooperative however have lagged behind commercial banks under SBLP. The author found that
the poor performance as such is not due to the weakness of organizational network as
cooperatives have a good rural network. The author identified inadequacies in financial and
governance areas as the major causes of the poor performance. The author suggested that for
cooperative to succeed as microfinancial institutions they should strengthen their governance
through professional management, higher transparency, and autonomy. Pramod (2006) in his
assessment of SBLP experience argued that while cooperatives may be encouraged to participate
in SBLP, however the financial and human resource strengths of the cooperative need to be
carefully assessed. Any blanket expansion of SBLP by cooperatives may not be desirable.
Prasad (2006) exploring the changes required for internalization of microfinance by cooperatives
argued that there is a need for awareness creation among cooperatives. The SHGs need to be
given a separate entity status by cooperative through amendment to the extent of cooperative
laws. The bye-laws of cooperatively have to be amended to clearly specify the status, rights and
responsibilities of SHGs. Tripathy (2008) in his analysis of microfinance by cooperatives argued
that the SBLP model reached the cooperative very late resulting in its slow progress. The model
got boost only after the recommendation by a Taskforce in 1999 and with state governments
amending their cooperative acts to include SHGs. SHGs are compatible with cooperatives and
have also got business potential. As the model has shown positive outcomes, the author argued
for cooperatives to aggressively pursue the linkage.
In a prominent all-India level assessment based on empirical data from DCCBs, Harper, Berkhof
and Ramakrishna (2005) have tried to look at the role of SBLP in reforming the cooperatives.
The authors argued that as SBLP holds certain pros and cons for both the SHGs and the
cooperatives and it has to be approached cautiously by both the parties. The authors found that
the SBLP as such reached the cooperatives late as compared to other financial institutions. There
were wide variations observed in the spread of SBLP across different states even among
cooperatives. A few states like West Bengal had done exceedingly well in the linkage due to the
political support given to the cooperatives. The training and exposure of the top management
also had played a role in the initiatives taken by the cooperatives. The study did not find any
correlation between the strength of a DCCB and the extent of SHG linkage. However,
successful DCCBs under SBLP have tried to link more and more SHGs directly with PACS.
The choice of the SHPIs/SHGs, extent of decentralization adopted by the DCCBs, type of
services and membership offered to SHGs were some of the factors found influencing the direct
linkage of SHGs with PACS. NGOs were found to be the prominent SHPIs in the linkage of
SHGs with cooperatives themselves playing a limited role with a few exceptions. All the state
12
governments have put in place the needed legal framework to enable the linkage of SHGs. An
overwhelming proportion of cooperatives had offered only a nominal membership to the SHGs.
Overall, inadequate appreciation of the market potential of SHGs was found to be the key factor
in the low level of linkage by cooperatives under SBLP.
In terms of services, the cooperatives had largely offered term loan facilities to the SHGs and as
such had not placed any restriction on the use of savings by SHGs. However, the authors found
the savings with cooperatives as a risky proposition for SHGs. Given the very low share of SHG
business in the total portfolio, the impact of SBLP on the profitability of cooperatives was found
to be small and unclear. At the same time, SHGs had brought good deposits to PACS in few
cases. The loan recovery of SHGs was also found to be good. The study argued for a key
supportive role by NABARD to help both the cooperatives and the SHGs to gain from the
linkage, and for giving choice to SHGs to decide whether DCCB or PACS should be their bank.
The macro level studies thus indicate the cooperatives at large have not been able to fully tap the
potential of SBLP for reviving their business position. The general skewed spread of SBLP has
also affected the linkage by cooperatives. The late reach of SBLP to cooperatives coupled with
lack of legal clarity on the position of SHGs, and poor governance and business abilities of
cooperatives have come in the way of widespread adoption of SBLP by cooperatives. The
linkage model with the cooperatives varies across DCCBs, with many of the DCCBs on their
own directly dealing with SHGs for savings and credit leaving only an indirect/limited role for
PACS. Again in terms of membership, most cooperatives have offered only a nominal
membership to SHGs reducing the members of SHGs to a position of only a nominal
stakeholders. Moreover, despite SHGs showing promising performance in terms of savings and
repayment, the overall business position of cooperatives remains unaffected.
There are several case studies on DCCBs trying capture their specific experience. The
pioneering effort of the Bidar DCCB has been assessed by quite a few studies. Sibal and Dave
(2003) in their study had observed that the linkage has brought new vigor to PACS in Bidar. The
savings of SHGs accounted for 38 percent of the loan outstanding of the PACS. The SHG
linkage was found to be viable both for the bank and for the PACS. The PACS as a result have
become active as well profitable. Kulkarni (2003) found that PACS in Bidar have been able to
assimilate SHGs very well in their functioning. There was high level of awareness among the
staff about the SBLP. The study also observed that PACS under SBLP besides acting as SHPIs
have become very active in their day to day working. Interestingly, the cooperatives also
perceived SHGs as vehicles of social development. The rapid expansion of SHGs and coverage
of poor was attributable to motivation received from NGOs, training, and leadership
commitments of the DCCB.
Mohanty (2008) based on his case study of the Bidar DCCB argued that cooperatives can
effectively include the poor in their working through SBLP. The DCCB along with PACS had
credit linked nearly 78 per cent of the SHGs formed in the district. The linkage has been
attempted both with the branches of DCCB and with the village level PACS. The DCCB had
adopted a multiple models of SHG promotion with about 40 per cent of SHGs being promoted
directly by DCCB/PACS themselves. The DCCB also had taken the help of NGOs and
13
government department for this purpose. The active participation of DCCB has been facilitated
by the leadership which evinced keen interest in SBLP and internalized in its day to day
working. The internalization of SBLP was enabled through collaboration with NGOs, creation
of a separate micro-credit cell and appointment of staff for implementation of the programme.
The DCCB’s initiatives were also facilitated by the state government’s legal amendment
enabling SHGs to be linked to the formal cooperatives as nominal members and the financial
support provided by NABARD for promotional activities. The study found that there was an
active involvement of PACS which besides acting as SHPIs monitored locally the working of
the SHGs. The SHGs have brought significant level of savings to the PACS with 90 per cent of
total the savings of PACS being accounted by the savings of SHGs. However for lending PACS
has merely acted as agents of the DCCB by getting a commission for lending and recovering on
behalf of DCCB. The author concluded that the Bidar model has shown a potential for
strengthening the PACS especially when the implementation of SBLP is eventually handed over
to PACS as envisaged by DCCB.
A few studies have also tried to look at the experience of other DCCBs and PACS.
Puyalvannan (2003) in his study of SBLP of cooperative banks in Pudukottai and Trichy districts
of Tamil Nadu observed that primary cooperatives in these two districts have been able to link
significant proportion of SHGs formed in the district. The cooperative banks have taken the help
of NGOs and women development corporation in the formation of SHGs. However, the
provision of services to the SHGs by the cooperatives have suffered due to lengthy linkage
process adopted by the cooperatives. While the SHGs are linked to primary cooperatives, the
loans are sanctioned by the DCCB causing undue delay. The author argued for streamlining of
the linkage process by the cooperatives through higher commitment and less bureaucratic loan
process. Sundhararaman and Malaikolunthu (2004) in their study on the working of SHGs of
DCCB in Tiruchirapalli district observed that the DCCB’s involvement is facilitated by the
creation of a separate women development cell which has responsibility for mobilizing women
and arranging training for SHG formation. The DCCB has even formed SHGs under SGSY.
The DCCB has been able to issue large number of loans to SHGs with highly encouraging
recovery performance.
Santhanam (2008) in his study of the working of Chandrapur DCCB in Maharashtra observed
that DCCB has succeed in forming and providing linkage to a large number of SHGs mainly due
to its proactive collaboration with the government agencies. The DCCB in collaboration with
department of Women and Child Development took the help of widely spread Anganwadi
Workers (AWWs) in forming SHGs. The DCCB involving PACS also carried out a campaign to
form SHGs proactively. Over 12,200 SHGs could be formed by the DCCB of which about 60
per cent were formal by the AWWS. The study concluded that through convergence of efforts
SBLP could be initiated by DCCB. However, certain concerns have been raised by the study
with regard the quality aspects SHGs given the constraints faced by AWWs in terms of their
incentives and accountability. Mishra (2008) in her study of the experience of PACS in West
Bengal with special reference to Purulia district observed that SBLP is a potential mechanism for
cooperatives to expand their outreach and business. The model has worked relatively successful
in West Bengal especially in creating linkage for remotely located SHGs in a convenient and a
cost effective way. However, the author found several limitations coming in the way of effective
14
linkage. There is lack of clarity on the ownership issue given the nature of membership of
SHGs, PACS are also found to be suffering due to poor regulation and management resulting in
liquidity crunch in meeting the needs of SHGs. Overall, the integration was found to be weak
between SHGs and PACS. Another assessment of SHGs linked to cooperatives in West Bengal
(BS 2010) observed that SHGs in West Bengal are being encouraged to keep their savings as
term deposits leading to increase in small savings with PACS. The cooperatives do not permit
SHGs to withdraw and recycle their savings.
The case studies of DCCBs bring out several interesting issues in terms of both the strengths and
weaknesses of SHG linkage by cooperatives. Many of these cooperatives have been able to link
fairly a large number of SHGs through their proactive efforts. Besides acting on their own as
SHPIs, they have taken help from NGOs and government agencies for large scale SHG linkage.
Every effort has been made for internization of microfinance concept through training of leaders
and staff in collaboration with NGOs, and creation of separate cells for promoting and
implementing SBLP. At least in their area of working these cooperatives have been able to
widen the coverage of poor even in remote villages through the SHG linkage. In terms of
providing savings and credit facilities, the cooperatives have largely followed the norm adopted
in general under SBLP. The linkage wherever has reached certain threshold level has proved to
be viable for the cooperatives. Moreover, the inclusion of SHGs has made PACS become more
active in their working.
Several weaknesses have been identified by these case studies. The PACS are largely playing
agency role with DCCBs having a major control over the programme especially in terms of
lending activities. Bureaucratic delays and liquidity constraints also have come in the way of
smooth delivery of loan services to SHGs. Given the extensive coverage of SHGs achieved, the
quality of SHGs also has been an issue in these cases. Moreover, with assignment of nominal
membership, the issue of ownership to SHG members has not been adequately addressed by the
cooperatives.
The role of conventional co-operatives apart, there are few studies which have tried to look at
the experience of other type of cooperatives like thrift societies, urban cooperative banks
(UCBs) and the newly created self reliant cooperatives. These cooperatives have also tried to
reach out to the poor using microfinance methods in their own way outside the SBLP.
Even before the group concept had emerged some of the urban cooperatives had made their own
attempt to provide access to the urban poor. The Sewa Bank (Sri Mahila 1981) in Ahmedabad
had tried to reach out to the poor through field staff who would identify the needy and mobilize
them for purpose of savings and credit purpose. The members were encouraged to save and the
bank would provide loan for economic purposes. Similar type of approach was observed by
Harper (1998) in his case study of an urban cooperative bank in Orissa. The Sewa Bank had
subsequently adopted SHG model to reach out to the poor in rural areas with the help of the
Sewa NGO (Shylendra 2003). The SHGs dealt with the bank for savings and credit purpose
through their federations formed at district level. The formation of SHGs had helped SEWA
bank to extend its reach outreach in rural areas and in turn help the poor to access services from
a cooperative bank. Anandgopal and Selvaraju (2010) in their study of the micro-credit
15
operations of urban cooperative banks in the Coimbatore district of Tamil Nadu observed that the
UCBs have tried to reach out to the poor directly without any groups. The UCBs provided small
loans based on personal security. However, the members found the loan to be highly inadequate
and microcredit formed only a very small (0.17 per cent) of the total lending by these banks.
The authors advocated adoption of SHGs by UCBs for expansion of the microcredit programme.
Formation of thrift cooperatives was another major approach adopted in helping the poor meet
their savings and credit needs. Thrift based cooperatives have been formed both under the
conventional and the new self-reliant cooperative legislations. These cooperative have tried use
both group and other methods to reach out to the poor. Dwarki, Narayanasamy and Ramesh
(1996) in their assessment about the possibility of creating self-help credit cooperatives, argued
that the conventional cooperatives have failed in reaching the poor. There is no alternative but to
use SHGs for this cause. SHG cooperatives or federations can be formed for the purpose of large
coverage of poor. Krishnamurthy (1996) in study on the working of a thrift and credit
cooperative (TCS) in Adilabad district of Andhra Pradesh found that the cooperative has largely
covered low income group people. The TCS had adopted group mechanism for enrolment of
members. While the savings were made individually, loans were sanctioned through group
consent. Loans were lent in 1:3 ratio of savings. The groups were supposed to help in loan
recovery through joint responsibility. The TCS was able to achieve good loan recovery. The
author attributed the emergence of TCSs due to the failure of cooperatives. However, the
progress of TCS has been slow despite a new liberal legislation due to negative attitude of the
cooperative department towards such cooperatives. Elsewhere, Hulme and Montgomery (1995)
in their assessment of the working of thrift and credit societies (TCS) in Sri Lanka had found that
the cooperatives promoted by the Sanasa movement to be more inclusive as poorer people were
either able to join the existing cooperatives or could established new ones. The inclusion of the
poor has been facilitated by the progressive approach of the Sanasa movement. The TCS being
democratic were not captured by the local elites. The local and as well as national level
leadership had played a positive role in the observed outcomes leading to the conclusion that
self-interest behaviour need not be an axiomatic pattern. The authors argued that using market
mechanism over state patronage may help cooperatives to remain aloof from elite capture.
Assessing their own experience in promoting thrift cooperatives in Andhra Pradesh (AP), the
Cooperative Development Foundation (CDF 1999, 2000) concluded that women have a different
needs and hence need their own cooperatives. The women cooperative formed by CDF include
members from various sections without any focus on any particular targeting group. The thrust
of these cooperatives was on making the entire local economy vibrant for poverty alleviation.
These cooperatives are federated at local level and relied largely on local savings for their
working. The loans were lent to various purposes without any tangible collateral based on the
savings held by the individual members. Further, the assessment concluded that these
cooperatives were able to emerge as viable and autonomous member-based organizations aided
by the new liberal law enacted for such cooperatives in the state.
Sahu and Das (2007) have tried to examine the experience of the new self-reliant cooperatives in
promoting microfinance in Orissa. The study observed that the mutually aided cooperatives have
been trying to mediate their functioning through the mechanism of SHGs despite having
16
individuals as primary members. These cooperatives have emerged through the integration or
federation of SHGs promoted by NGOs. The cooperatives have tried to tap the potential of
groups for joint liability and peer monitoring. The cooperatives were found working based on
the savings of the members mobilizing significant level of own funds. The loans were generally
linked to the level of savings made by a member. The cooperatives have fairly a high proportion
of members who are borrower members. Because of the involvement of NGOs these
cooperatives have been able to target largely socially disadvantaged groups like SC/ST and
OBCs. However, due to reliance on own funds, the cooperatives have not been able to meet the
credit demand of the members adequately. At the same time, the group leader were found taking
advantage of their position in accessing loans. Mishra (2008) in her case study of a mutually
aided cooperative society (MACS) in AP observed that the MACS with its structure in the form
of a multi-tier federation of SHGs had shown the ability to reach the poor in remote areas with a
focus on Dalits. The MACS had worked in a decentralized and autonomous way and was able
to stand-up to the competition from even the SBLP in meeting the needs of the members. The
MACS was still found to be weak and needed multi-dimensional capacity building for its
sustainability as a member owned institution.
The experience of UCB’s thrift and self-reliant cooperatives suggest that even these cooperatives
have made effort to bring in poor with varied outcomes. Some of the UCBs though did try
directly to reach out to the poor but were found wanting on both the depth and width of the
access. Hence, some of them have tried to adopt group method more recently to replicate the
microfinance experience. As far as thrift and self-reliant cooperatives, the findings reveal that
there is a concerted effort to focus on poor and women, especially where the promoting NGOs
have taken such interest. Many of them have tried to work with group method to take advantage
of its strengths of peer monitoring and better loan recovery. Unlike the PACS/DCCBs, these
cooperatives have tried to ensure full membership and ownership to the target group. As regards
to provision of services, there is a clear focus on savings, both to mobilize resources as well as to
leverage it for lending and recovery. While such an approach has enabled them to attain self-
reliance in terms of resources and governance, but it has also posed constraints in adequately
meeting the credit needs of the members.
4. Cooperatives and SBLP : The Emerging Scenario
In this section we look at the all-India and state-wise details of the progress of SBLP model of
microfinance focusing on the cooperatives. As highlighted earlier, SBLP is promoted by
NABARD since 1992 with the aim of widening the access to credit by poor through linking
informal SHGs with the formal financial institutions. We analyse here both general progress of
SBLP as well as the extent of involvement of cooperative to gauge the role being played by the
cooperatives in the spread of SBLP.
17
Table 1: Progress of SHG-Bank Linkage Programme (All-India) (March End)
(No. in Lakhs)
Particulars 2010 2007 2002
1 No. of SHGs savings linked 69.53 41.61 NA
2 No. of SHGs credit linked 48.51 28.95 4.62
3 Estimated HHs covered (lakh)* 973.45 582.50 (64.61)
4 % of women SHGs (% of 1) 76.40 78.62 90.00
5 % of SHGs Credit Linked 69.76 69.57 -
6 % of SGSY SHGs 24.36 22.98 NA
7 Total savings (Rs.crores) 6199 3513 NA
8 Total loan outstanding (Rs.crores) 28,038 12,366 1026
9 Average savings per SHG (Rs) 8,915 8469 NA
10 Average loan outstanding per SHG
(Rs.)
57,795 42724 22,240
11 Savings: credit Ratio (9:10) 1:6.5 1:5.1 -
12 Average loan outstanding per member
(Rs.)
4,128 3052 1,216
13 Average savings per member (Rs.) 632 605 -
14 % of NPA 2.94 - - Source: NABARD, Status of Micro Finance in India 2009-10.
* Estimated by the author taking 14 as the average size of a SHG
Table 1 presents the progress of SBLP at all-India level from 2002 onwards. By 2010 about
69.53 lakh SHGs had been linked to various financial institutions with an estimated coverage of
97.35 million households in the country. In terms of the social composition, the women SHGs
account for about 76.40 per cent of the total SHGs. The proportion of women SHGs has been
declining since 2002 as more and more SHGs for men are being formed. Of the total SHGs
linked, about 24.4 per cent of them have been formed under Swarnjayanti Gram Swarozgar
Yojana (SGSY), a flagship credit based self-employment scheme of the Government of India
being implemented since 1999. In terms of savings and credit linkage, the SHGs in all have
mobilized a savings of nearly Rs. 6200 crores at the all-India level. On average, an SHG has
mobilized a savings of Rs. 8915 with each member saving a per capita amount of Rs. 632.
In terms of credit linkage, nearly 70 per cent of the total SHGs have been able to obtain credit
from financial institutions. The total outstanding loan of the SHGs as of March, 2010 came to
Rs. 28,038 crores. On an average, the outstanding loan per SHG and per member comes to Rs.
57,795 and Rs. 4,128 respectively indicating relatively smaller size of the loan borrowed by the
SHGs and their members. While at the all-India level, the savings to credit ratio comes to 1:4.5,
at the average SHG level the ratio is 1:6.5 indicating that the credit linked SHGs are accessing
credit in excess of the 1:4 ratio recommended as the minimum norm for lending by NABARD.
While at all-India level, the overall progress of SBLP looks fairly impressive, a major concern
that has been identified since long is the wide variations seen across states and regions in the
18
spread of SBLP. Though more recently the disparities have reduced, but still the southern states
which are also relatively better-off in terms of socio-economic development, account for bulk of
the SHGs linked, savings mobilized and loan accessed under SBLP (see appendix Tables A1, A2
and A3). NABARD has been taking few steps to reduce the skewed growth by trying to
promoting SBLP in backward and needy states in a pro-active way. The nature of spread of
SBLP reflect a paradox wherein an intervention for inclusive development shows a skewed
spread in favour of developed regions with a potential to aggravate the existing inequalities in
parameters like financial inclusion.
Let us now analyse the extent of involvement of cooperatives under SBLP and their relative
performance. In terms of involvement of cooperatives, the NABRD data is reported at the
DCCB level. This does not really help us in understanding the role being actually played by
lower level cooperatives like PACS. In the case of cooperatives, the SBLP is being implemented
in a mixed way. While in some cases it is the DCCBs which are the primary agencies involved in
linkage of SHGs for savings and credit, in few cases both DCCBs and PACS are involved in the
implementation. The NABARD data is an aggregation of both type of practices seen in the case
of cooperatives.
Table 2: Details of SHG Linakge by Cooperatives(All-India)
Particulars March 2010
1 No. of SHGs savings linked (lakh) 10.79
2 No. of SHGs linked under SGSY(lakh) 1.43 (13.28%)
3 No. of SHGs credit linked 5.10 (47.27%)
4 Estimated number of HHs covered (million) 15.11
5 Total savings (Rs. crores) 1225
6 Total loan outstanding (Rs. crore) 1729
7 Average loan outstand per SHG (Rs.) 33,894
8 Average savings per SHG (Rs.) 11,352
9 Savings:Credit Ratio (7:8) 1:3
10 % of NPA 3.88
9 No. of DCCB participating / reporting >318 Source: Same as in Table 1
* Figures in brackets are % to 1.
Table 2 presents some all-India level details of SBLP for the cooperatives. Overall, about 10.79
lakh SHGs have been linked to the cooperatives which account for about 15.5 per cent of the
total SHGs linked in the country by March, 2010. An estimated 15.11 million households have
been covered by the cooperatives under the linkage. Further, about 1.43 lakh SHGs linked to the
cooperatives have been formed under the SGSY. The SHGs of SGSY account for about 13.25
percent of the total SHGs linked to the cooperatives as against 24.4 per cent linked to all
financial institutions. The possible reasons could be same as those identified earlier for the poor
performance of the cooperatives under IRDP.
In terms of savings and credit linkage, the SHGs linked to cooperatives have mobilized a total
savings of Rs 1225 crores by March 2010. The average savings of SHGs under cooperatives
19
comes to Rs. 11,352, which is relatively higher than the average savings of all SHGs in the
country3. The per capital savings comes to about Rs. 811 as compared to all-India per capita
savings of Rs. 632. In terms of credit linkage, the proportion of SHGs linked for borrowing
comes to 47.27 per cent in the case of cooperatives which is much lower than the proportion of
69.8 per cent seen in the case of all financial institutions. While the total outstanding loan of
SHGs of cooperatives amounted to Rs. 1,729 crore by March 2010, the SHGs linked to
cooperatives are having a much lower average loan amount outstanding (Rs. 33,894) as
compared to SHGs of all financial institutions put together. Thus, the SHGs of cooperatives are
found to be showing relatively weaker performance in terms of credit linkage under SBLP.
The relative progress and position of cooperatives under SBLP vis-à-vis other financial
institutions is presented in Table 3. Commercial banks(CBs) are now the leading agencies under
SBLP. The commercial banks account for majority of the SHGs linked both for savings and
credit. The cooperatives though have managed to increase their involvement and share under
SBLP, overall they have the lowest proportion of SHGs linked. The cooperatives accounted for
15.5 per cent of SHGs linked for savings and only 10.5 per cent of SHGs linked for credit as of
March, 2010. While in terms of total savings the cooperatives have a share of about 19.8 per
cent, their share in total outstanding loan accounted for about only 6.2 per cent. The share in the
outstanding loan has been consistently declining for cooperatives over the years.
Table 3: Progress in Institution-wise Share in SHG Linkage(All-India)
(No. in Lakhs) (Amt. in Rs. Crores)
SHGs Savings Linked
FIs
No. of SHGs (%) Amount of Savings (%)
2010 2007 2002 2010 2007 2002
1 Coops 15.5 16.4 na 19.8 13.2 na
2 RRBs 26.2 28.4 na 21.0 32.9 na
3 CBs 58.3 51.1 na 59.3 53.9 na
Total 100.0
(69.53)
100.0
(41.68)
na 100.0
(6199)
100.0
(3513)
na
SHGs Credit Linked
No. of SHGs (%) Loan Amount Outstanding (%)
1 Coops. 10.5 9.4 7.9 6.2 6.50 7.7
2 RRBs 22.8 25.2 37.5 21.9 22.7 33.7
3 CBs 66.7 65.4 54.5 71.9 70.8 58.6
Total 100.0
(48.51)
100.0
(28.95)
100.0
(4.62)
100.0
(28,038)
100.0
(12,367)
100.0
(1,026) * Figures in brackets are actual figures for no. of SHGs and amount.
Thus, at all-India level the cooperatives are playing more of a supplementary role under SBLP
with commercial banks and RRBs having the major share in the linkage both in terms of number
3 One may have to read this carefully as data on savings for cooperatives shows a sudden increase in 2010 over
2009.
20
of SHGs linked and their volume of business. How far cooperatives hence would be able to
achieve the twin objectives (social and banking) is a moot question. Even though cooperatives
have a much wider network of branches/outlets, they have overall lagged behind other financial
institutions in tapping the potential under SBLP.
NABARD had visualized three forms or models of linkage under SBLP. In the first model of
SBLP the financial institutions themselves are expected to promote and link SHGs directly for
savings and credit. In the second model of SBLP, the financial institutions can take the help of
variety of self-help promoting institutions called as SHPIs for formation and linkage of SHGs.
Under the third model, financial institutions would lend to NGOs/MFIs which in turn would
promote and finance SHGs involving a kind of indirect linkage with the financial institutions.
As formation and nurturing of SHGs is a crucial step, NABARD came up with the idea of
supporting SHPIs which would help in undertaking this crucial role. Though recent data is not
available with regard to model-wise spread of SBLP, the data for 2007 indicated that bulk of the
SHG linkage (75 per cent) has taken place under the second model of SBLP wherein SHPIs like
NGOs and government agencies play the key role in the linkage. Financial institutions including
cooperatives had accounted for 17 per cent of SHGs linked in the country. Thus, financial
institutions have preferred largely the financial intermediation over social intermediation role.
NABARD has been providing grant support to RRBs and DCCBs to emerge as SHPIs. A large
number of DCCBs received grant support to promote SHGs under SBLP. By March, 2010,
about 102 DCCBs were involved as SHPIs in implementing ongoing projects for SHG
promotion. However, overall the cooperative banks by March, 2010 have promoted 44,618
SHGs (as against the target of 59,105) which accounted for about 4.13 per cent of the SHGs
linked to cooperatives. Thus, like other financial institutions cooperative banks have largely
tried to rely on other SHPIs for formation of SHGs.
Given that cooperatives have a varied spread across states, it would be worthwhile to examine
the extent of participation or involvement of cooperatives across different states/regions under
SBLP.
The state-wise performance of cooperatives under SBLP may be seen from appendix tables A1
to A3. In terms of the relative share, it may be seen that states which have a relatively higher
share in the total SBLP linkage are also the states which have a higher share in the total SHGs
linked to cooperatives; the exception however is being Andhra Pradesh. Maharashtra, West
Bengal, Karnataka, Tamil Nadu and Orissa are the prominent states which have linked large
number of SHGs under cooperatives. Kerala and Rajasthan are other prominent states. This is
true both in the case of SHGs linked for savings (Table A2) and credit (Table A3). Overall,
region-wise share of SHGs linked to cooperatives is broadly similar to region-wise share seen in
the case of all financial institutions, except for western region. In other words, regions which
have a prominent share in the total SBLP show similar trend in the case of linkage of SHGs with
cooperatives. Western region however shows a much higher share in the case of SHGs linked to
cooperatives as compared to its share in the SHGs linked to all financial institutions. This is
primarily due to Maharashtra which shows a considerably higher share under SHGs linked to
cooperatives (24.83 per cent and 16.32 per cent) both with respect to savings and credit. It may
be therefore inferred here that performance of different states with regard to linkage of SHGs to
21
cooperatives seems to have been influenced largely by their performance under overall SBLP.
The overall trend and factors at work in a state seem to have enabled/disabled cooperatives with
regard to their participation under SBLP. Thus, the paradoxical trend noted earlier in terms of
the relationship between the socio-economic development of a state and its performance under
SBLP continues largely even in the case cooperatives. Incidentally, in those states which do not
have a prominent share in the total SHGs linked under cooperatives, a large portion of SHGs
linked to cooperatives are under SGSY (Table A2) highlighting the lack of initiatives by
cooperatives in these states for linkage outside the SGSY.
Another key dimension that may be taken note of in respect of state-wise performance under
SBLP is the share of cooperatives in the total SHGs linked to different financial institutions.
This may be in appendix Tables A2 and A3 which provide data with regard to SHGs linked to
savings and credit. As mentioned earlier, at all-India level it is the commercial banks which are
the leading institutions in terms of SHG linkage and cooperative have overall a small share in the
total linkage. The scenario is largely same even when seen across different states both for
savings and credit linkage (Table A2 and A3). Some of the states where cooperatives have a
relatively significant share in the SHGs linked to all financial institution are HP, Rajasthan, West
Bengal, Uttarakhand, Maharashtra and Karnataka. Even in these states the bulk of the linkage is
accounted by other financial institutions except in the case of HP for SHGs credit linked. Thus,
across most states, commercial banks and RRBs are the prominent institutions for linkage under
SBLP with cooperatives playing largely a supplementary role.
Having examined the relative share and contribution of cooperatives under SBLP, it would be
useful to look at the contribution of SBLP to the working cooperatives in meeting the savings
and credit needs of the SHGs and their members, and in tapping the potential of business
involved in the linkage.
At all-India level, the SHGs of cooperatives have a higher average savings than the SHGs of all
financial institutions. The same pattern can be seen across many states (Table A2), which
indicates that SHGs of cooperatives seems to have mobilized relatively higher level of savings
than SHGs linked to other financial institutions. In terms of credit linkage, at the all-India level
it could be seen that a higher proportion (69.8 per cent) of SHGs linked to all financial
institutions have been able to obtain credit as compared to SHGs linked to cooperatives (47.3
per cent). The same pattern can be seen across all prominent states under SBLP (Table A3)
indicating a higher level of credit accessibility of SHGs linked to other financial institutions than
cooperatives. Another indicator of credit linkage is the savings to credit ratio. At the all-India
level, the ratio for 2010 worked out to 1:3 for cooperatives as compared to 1:6.5 for all financial
institutions. Similar trend could be observed from the NABARD data across most of the states
(NABARD 2010) indicating a much higher ability of SHGs to leverage credit based on saving in
case of other financial institutions as compared to cooperatives. Thus, cooperatives while are
able to mobilize relatively higher level of savings from SHGs but have not been able to meet the
credit needs of SHGs in a similar vein. This is reflective of the constraints of cooperatives either
in terms of fund availability or procedural and other constraints to extend credit facilities to the
SHGs on lines similar to other financial institutions.
22
How far SHGs can help cooperatives in terms of their business has been an important question in
the linkage programme. In order to examine this at the macro level, we have looked at the
relative position of SBLP in the overall business levels of PACS. The attempt is more to identify
the indicative scenario as the data available for both the cooperatives and SBLP are not fully
consistent and accurate. Moreover, for data on cooperatives we have focused on the PACS level
performance whereas SBLP data on cooperatives is available at the DCCB level aggregating
both the DCCB and PACS position.
Table 4: Progress of PACS in recent years (All-India)
Particulars 2000-01 2004-05 2009-10
1 No. of PACS 98,843 1,08,779 94,647
No. of Villages Covered (%) - - 96.24 %
2 Total members (in 000) 99,918 1,27,406 1,26,419
3 % of SC members 13.62 24.27 20.63
4 % of ST members 8.49 9.26 8.32
5 Total Borrowers
(% to 2)
46,533
(46.57 %)
45,070
(35.37%)
59,800
(47.30%)
5 Total Deposits (Rs. in Lakhs) 13,48,107 18,97,604 35,28,607
6 Total Loan outstanding
(Rs. in Lakhs)
34,52,233 48,78,546 76,47,983
7 % of Loan Overdues 34.90 33.59 41.39%
8 % of PACS in Profit - 73.28% 43.25% NAFSCOB: Performance of PACS (2009-10).
Many of the recent assessments on cooperatives have brought out the continued weakness of
primary cooperatives both in terms of their governance and financial position. Table 4 reveals
several of the major problems ailing the primary cooperatives. The primary cooperatives
consisting of PACS, FSS and LAMPS though have a network covering over 96 per cent of the
villages, their depth of operations leaves much to be desired. The borrowing membership
constitutes only less than half of the total membership. This is despite an increase seen in the
membership of PACS more recently. While the total volume of deposit and loan have increased
in absolute terms, the financial soundness continues to be of a concern (when seen in terms of
loan overdues, profit and viability) for a significant proportion of PACS. The concern is
compounded by the fact that the above position is seen even after two major financial revival
initiatives implemented recently by way of waiver of bad debts and recapitalization of short-term
cooperatives in the country. The role for microfinance in boosting the financial conditions of
primary cooperatives hence would be of a tall order.
The macro level potential of SBLP in affecting the business prospects of PACS may be seen in
Table A5. At all-India level, the average number of SHGs linked to a PACS comes to 11.4.
Across states this varies from about 1.15 SHGs in Punjab to 59 SHGs in Puducherry. Even in
prominent states like West Bengal (21), Karnataka (34), Maharashtra (13) and Tamil Nadu (29)
the average number of SHGs linked to PACS is also not very high. Even at the DCCB level
except in the case of few prominent states, the average level of SHGs linked is very low. Among
23
the states for which the data is available (Table A6), while the all-India level average is 3405 per
DCCB, it varied from mere 74 in UP to 9007 in West Bengal. Across states, about 46 per cent of
the reporting DCCBs have less than 1000 SHGs linked to them. Put together, less than 23 per
cent of DCCBs have more than 5000 SHGs linked, with only about 9 per cent of DCCBs having
more than 10,000 SHGs linked to them. Again bulk of these DCCBs with higher level of SHG
linkage is found in only a few states prominent in terms of their involvement. With the SHG
formation reaching some sort of a saturation in many states, the potential for further increasing
the coverage of SHGs by cooperatives hence remains a challenging task.
In terms of some of the business parameters, as can be seen from Table A5, the SHGs have
increased the membership of PACS by an estimated 1.51 crore which constitutes about 10.76 per
cent of the total PACS members including the SHG membership. This is assuming that SHG
members have been admitted as primary members of the cooperatives. The level of increase is
significant in the sense that bulk of this membership is women and belong to poorer sections of
rural households. The linkage to that extent has made the membership of PACS more inclusive
of women and poor.
However, the impact of this additional coverage of poor households on PACS’ business through
SHGs is not very significant at least at macro level (Table A5). The savings of SHGs accounted
for about 2.72 per cent of the total savings mobilized by PACS. The loan outstanding of SHGs
accounted for 2.26 per cent of total loan outstanding for PACS. Given that the proportion of
credit linked SHGs is less than half of the total SHGs linked, the impact on credit business is
relatively weaker. However, in some of the states where the linkage of SHGs with cooperatives
is more prominent, like West Bengal, Uttarakhand, Rajasthan and Tamil Nadu, SBLP accounts
for relatively a considerable share in PACS’ membership, savings and lending. Also in smaller
states like Tripura, Manipur, and Puducherry, where possibly the non-SHG business was weak,
the SBLP apparently has added significant level of business with potential to make a difference
on the financial condition of PACS.
Thus, while the overall impact on SBLP appears insignificant on the business position of
cooperatives but in states where there is relatively intensive effort by the cooperatives for
linkage SBLP seems to be showing a better potential for a positive impact.
5. Conclusion
There has been a long drawn effort since their emergence to reform the cooperatives to give the
needed focus on the poor. The past results have not yield the expected results. The attempt to
marry microfinance with the cooperatives has to be seen both in the historical and the emerging
context. The linkage is supposed to be a `win-win’ situation both for the cooperatives and the
poor, with poor able to get access to a formal source and the cooperatives tapping the business
potential involved in the coverage. The analysis based on the emerging experience suggests that
the above twin goals of the linkage have not been attained in the way they have been visualized.
Despite a few noteworthy efforts by the cooperatives in some of the states, the overall results and
outcomes of the linkage leave much to be desired especially given the enormity of the continued
challenge of attaining financial inclusion.
24
Both the conventional and newer types of cooperatives are found involved in promoting
microfinance. The effort of the conventional cooperatives is to be seen largely under the
NABARD promoted SBLP. Even after nearly two decades of SBLP’s implementation, the
cooperatives are found playing only a supplementary role in it with other financial institutions
being able to overtake the cooperatives. There are also wide variations seen across the states in
the involvement of cooperatives. The paradox of inequality in the spread of SBLP is seen even
when seen from the angle of the involvement cooperatives. Several factors have come in the
way of the cooperatives’ effective participation under SBLP. While the other financial
institutions– CBs and RRBs, have been able to considerably increase their participation through
proactive involvement, the cooperatives in general have been found wanting in showing similar
type of involvement. Lack of appreciation of the potential involved under SBLP and inadequate
professional and other abilities to pursue a programme of SBLP type are some of the constraints
faced by the cooperatives. Simultaneously, the apparent delay both in promoting SBLP among
the cooperatives and in creating a suitable legal environment has also made cooperatives to be
lax in taking the needed initiatives. However, there have been some proactive efforts by states
governments and by some cooperatives to promote SBLP. Creation of needed legal framework,
efforts by cooperatives to collaborate with NGOs and GOs to draw upon their strengths, and
relevant policies to internalize the implementation of SBLP are some of the measures which
have contributed for these relative success stories.
In terms of the impact of adoption, cooperatives which have made intensive efforts have been
able to reap few benefits out of the SHG linkage. The operations of microfinance have as such
been found viable by these cooperatives. The linkage has brought in significant savings
especially at the primary cooperatives level. The SBLP has also energized many of these
cooperatives. However, at the macro level given the limited involvement of cooperatives under
SBLP the scope for boosting the overall business and financial conditions of cooperatives has
been of limited nature. Further, the general saturation reached in the formation of SHGs the
scope for cooperatives to further increase their involvement appears to be limited and
challenging. In terms of the gains for the poor, the results are not fully satisfactory. Apart from
the concern expressed in terms of the safety of savings of the SHGs with the cooperatives, there
are certain restrictions have been faced by the SHGs in fully utilizing their savings. About to
access to credit, the performance of cooperatives has been found to poor as compared to other
financial institutions. On all key parameters like proportion of SHGs credit linked, the ratio of
saving to credit, and the average loan outstanding, the SHGs of cooperatives show low levels of
achievement indicating the constraints being faced by the SHGs linked to cooperatives in
obtaining adequate credit services. That apart, the real integration of SHGs with cooperatives
also has been found to be of a challenge. In most cases, it is the DCCBs which have been found
mainly controlling/implementing the programme leaving only limited scope and role for PACS
to really taken advantage of SBLP. Moreover, the poor have remained at the periphery with the
cooperatives offering them only a nominal membership. So much for any empowerment of
SHGs visualized through such a linkage.
25
Despite all the limitations observed, it would be worthwhile to pursue the linkage between the
cooperatives further. The aim should be to both consolidate the efforts as well as to overcome the
constraints faced. Some of the proactive steps taken by cooperative as identified need to
supported for replication by other cooperatives. Every effort has to be made to internalize the
microfinance by the cooperatives. A clear clarity both in the legal and social sense to be brought
about for fullfledged integration of SHGs and their members with the cooperatives. PACS
should be really take over the SBLP from the DCCBs as the need for revival of cooperatives is
much more important at the primary level. At the same time, while cooperatives may see
microfinance both as a viable and a social proposition, but any effort to tap microfinance to
revive the business of the cooperatives will be of tall order imposing unnecessary burden both
on the SHGs and their members. Such goal may also bring in the contradiction faced by many
MFIs in this regard. While SHGs may help activate the cooperatives but cooperatives in
general may to have to look beyond microfinance for their overall rejuvenation. The self-reliant
cooperatives also have to be supported through relevant policies given their success in reaching
out to the poor.
---o---
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28
APPENDIX
Table A1: Major State-wise Details of SHGs Linked under SBLP by Co-operatives and
All Financial Institutions(FIs) (Amount in Rs. Lakhs)
State/
Region
SHGs Linked to
Cooperatives for
Savings
SHGs Linked to
All FIs for Savings
Bank Loan
Outstanding of
SHGs Linked to
Cooperatives
Bank Loan
Outstanding of SHGs
Linked to All FIs
No. of
SHGs
Savings
Amt.
No. of
SHGs
Savings
Amt.
No. of
SHGs
Loan
Amt.
No. of
SHGs
Loan
Amt
Haryana 3532 235 36762 10763 444 546 15802 15507
HP 16614 641 50182 3491 15083 3274 27209 10597
Punjab 4604 305 45005 3645 2019 695 10045 6708
Rajasthan 55498 3345 213295 14255 27426 9243 96206 46329
Northern 80666 6060 351801 34207 45317 13913 152491 81513
Assam 20018 1060 218352 7360 11841 4373 100422 49123
Meghalaya 2346 35 11787 360 112 147 3191 1340
Tripura 4273 101 31349 336 1709 923 14580 9687
Arunachal 207 16 6418 165 192 179 3203 1068
Manipur 1135 20 10831 219 NA NA 4452 1879
N-E 29774 1489 292188 12167 13917 5668 133785 67348
Bihar NA NA 140824 8540 NA NA 82215 55777
Jharkhand NA NA 79424 7422 NA NA 63741 29075
Orissa 68990 6998 503172 36474 28693 9580 372646 151608
W. Bengal 171140 14641 647059 9487 123424 14481 507782 132693
Eastern 243382 21724 1374242 112015 152873 24289 1027570 369491
Chattisgarh 20375 752 113982 7578 4452 326 52588 19906
MP 19595 970 178226 10151 13269 5008 76928 44513
Uttarkhand 11514 4272 43997 7170 4933 2881 30049 18233
UP 2444 230 429760 26464 4665 3022 338357 163588
Central 53928 6224 765965 51364 27319 11237 497922 246240
Gujarat 27337 9780 168180 32190 3298 1426 69286 14162
Maharashtra 268069 26696 770695 56828 83273 16440 384765 120331
Western 297383 36724 945620 92667 87719 18991 457476 136948
AP 26613 1919 1448216 125529 18436 15298 1471284 1173954
Karnataka 158173 27177 534588 62705 56696 17386 300738 205530
Kerala 53585 4424 394197 37556 21977 12264 257760 101531
Tamil Nadu 132881 16595 826710 90373 84522 51739 538867 405943
Puducherry 3080 208 19723 1287 1337 2115 13463 15331
Southern 374332 50322 3223434 317451 182968 98801 2582112 1902288
Grand Total 1079465 122544 6953250 619871 510113 172899 4851356 2803828
Source: NABARD, Status of Micro Finance in India 2009-10.
29
Table A2: Some Details of SHGs Linked to Co-operatives for Savings (March 2010)
State/
Region
% of SHGs Linked to
Cooperatives for
Savings to Total SHGs
linked to All FIs
Statewise Share (%)
of SHGs linked to
Cooperatives
Statewise Share
(%) SHGs linked
to All FIs for
Savings
% of SHGs linked
to Cooperatives
Under SGSY
No. of
SHGs
Savings
Amt.
No. of
SHGs
Savings
Amt.
No. of
SHGs
Savings
Amt.
No. of
SHGs
Savings
Amt.
Haryana 9.61 2.18 0.33 0.19 0.53 1.74 51.30 55.46
HP 33.11 18.37 1.54 0.52 0.72 0.56 12.45 26.14
Punjab 10.23 8.36 0.43 0.25 0.65 0.59 10.38 21.60
Rajasthan 26.02 23.47 5.14 2.73 3.07 2.30 4.51 7.12
Northern 22.93 17.72 7.47 4.95 5.06 5.52 9.02 35.25
Assam 9.17 14.40 1.85 0.86 3.14 1.19
Meghalaya 19.90 9.63 0.22 0.03 0.17 0.06 58.06 35.27
Tripura 13.63 30.01 0.40 0.08 0.45 0.05 31.85 16.21
Arunachal 3.23 9.42 0.02 0.01 0.09 0.03 45.89 47.84
Manipur 10.48 9.21 0.11 0.02 0.16 0.04
N-E 10.19 12.24 2.76 1.22 4.20 1.96 13.12 5.88
Bihar NA NA NA NA 2.03 1.38 NA NA
Jharkhand NA NA NA NA 1.14 1.20 NA NA
Orissa 13.71 19.19 6.39 5.71 7.24 5.88 4.56 16.76
W. Bengal 26.45 154.33 15.85 11.95 9.31 1.53
Eastern 17.71 19.39 22.55 17.73 19.76 18.07 1.35 5.41
Chattisgarh 17.88 9.92 1.89 0.61 1.64 1.22 0.15 0.64
MP 10.99 9.56 1.82 0.79 2.56 1.64 43.85 43.49
Uttarkhand 26.17 59.58 1.07 3.49 0.63 1.16 52.70 90.69
UP 0.57 0.87 0.23 0.19 6.18 4.27 63.30 45.13
Central 7.04 12.12 5.00 5.08 11.02 8.29 30.11 70.77
Gujarat 16.25 30.38 2.53 7.98 2.42 5.19 14.82 2.67
Maharashtra 34.78 46.98 24.83 21.78 11.08 9.17 14.04 8.74
Western 31.45 39.63 27.55 29.97 13.60 14.95 14.02 7.07
AP 1.84 1.53 2.47 1.57 20.83 20.25 7.87 0.29
Karnataka 29.59 43.34 14.65 22.18 7.69 10.12 4.05 8.19
Kerala 13.59 11.78 4.96 3.61 5.67 6.06 3.95 9.23
Tamil Nadu 16.07 18.36 12.31 13.54 11.89 14.58 45.02 37.19
Puducherry 15.62 16.13 0.29 0.17 0.28 0.21 17.27 25.81
Southern 11.61 15.85 34.68 41.06 46.36 51.21 18.96 17.62
Grand Total 15.52 19.77 100.00 100.00 100.00 100.00 13.28 15.72
Source: NABARD, Status of Micro Finance in India 2009-10.
30
Table A3: Details of SHGs Credit linked to Cooperatives (March2010)
State/
Region
Share (%) of
SHGs Linked to
Cooperatives in
Total Loan
Outstanding of
SHGs of All FIs
Statewise Share
(%) of SHGs
Linked to
Cooperatives in
Total Loan
Outstanding of
SHGs of All FIs
Statewise Share
(%) of all FIs in
Total Loan
Outstanding
under SBLP
% of SHGs Credit
Linked under
SBLP
No. of
SHGs
Loan
Amt.
No. of
SHGs
Loan
Amt.
No. of
SHGs
Loan
Amt.
Coops All FIs
Haryana 2.81 3.52 0.09 0.32 0.33 0.55 12.57 42.98
HP 55.43 30.90 2.96 1.89 0.56 0.38 90.78 54.22
Punjab 20.10 10.37 0.40 0.40 0.21 0.24 43.85 22.32
Rajasthan 28.51 19.95 5.38 5.35 1.98 1.65 49.42 45.10
Northern 29.72 17.07 8.88 8.05 3.14 2.91 56.18 43.35
Assam 11.79 8.90 2.32 2.53 2.07 1.75 59.15 45.99
Meghalaya 3.51 10.95 0.02 0.08 0.07 0.05 4.77 27.07
Tripura 11.72 9.53 0.34 0.53 0.30 0.35 40.00
46.51
Arunachal 5.99 16.75 0.04 0.10 0.07 0.04 92.75 49.91
Manipur NA NA - - 0.09 0.07 - -
N-E 10.40 8.42 2.73 3.28 2.76 2.40 46.74 45.79
Bihar NA NA NA NA 1.69 1.99 NA NA
Jharkhand NA NA NA NA 1.31 1.04 NA NA
Orissa 7.70 6.32 5.62 5.54 7.68 5.41 41.59 74.06
W. Bengal 24.31 10.91 24.20 8.38 10.47 4.73 72.12 78.48
Eastern 14.88 6.57 29.97 14.05 21.18 13.18 62.81 74.77
Chattisgarh 8.47 1.64 0.87 0.19 1.08 0.71 21.85 46.14
MP 17.25 11.25 2.60 2.90 1.59 1.59 67.72 43.16
Uttarakhand 16.42 15.80 0.97 1.67 0.62 0.65 42.84 68.30
UP 1.38 1.85 0.91 1.75 6.97 5.83 - 78.73
Central 5.49 4.56 5.36 6.50 10.26 8.78 50.66 65.01
Gujarat 4.76 10.07 0.65 0.82 1.43 0.51 12.06 41.20
Maharashtra 21.64 13.66 16.32 9.51 7.93 4.29 31.06 49.92
Western 19.17 13.87 17.20 10.98 9.43 4.88 29.50 48.38
AP 1.25 1.30 3.61 8.85 30.33 41.87 69.27 101.59
Karnataka 18.85 8.46 11.11 10.06 6.20 7.33 35.84 56.26
Kerala 8.53 12.08 4.31 7.09 5.31 3.62 41.01 65.39
Tamil Nadu 15.69 12.75 16.57 29.92 11.11 14.48 63.61 65.18
Puducherry 9.93 13.79 0.26 1.22 0.28 0.55 43.41 68.26
Southern 7.09 5.19 35.87 57.14 53.22 67.85 48.88 88.10
Grand Total 10.51 6.17 100.00 100.00 100.00 100.00 47.26 69.77
31
Table A4: Some Basic Details of PACS by states and region
States/
Region
No of
PACS
% of
Viable
PACS
Members(000) % of
Borrow-
ing
Members
Total
Deposits
(Rs. Lakh)
Loan
Outstand
-ing (Rs.
Lakh)
Total SC ST
Haryana 628 100 2970 567 - 56.80 37095 483280
HP 2097 21.13 1068 288 41 11.70 119097 3442
Punjab 3990 80.35 2664 406 - 65.46 90806 443193
Rajasthan 5127 87.60 4427 873.3 777.79 50.46 31008 303761
Northern 12607 71.73 11273 2169.63 840.69 51.36 278125 1237389
Assam 766 92.56 3034 415.58 487.34 2.70 0 594
Meghalaya 179 94.41 94 8.57 85.49 5.30 268 1026
Tripura 268 97.01 373 62.76 130.05 15.82 441 2045
Arunachal 33 33.33 19 19.34 - 0 0 -
Manipur 204 95.59 117 22 38 84.61 65 -
N-E 3583 57.27 3695 529.63 769.37 6.63 7193 4780.5
Bihar 8463 0.00 9637 0 0 2.19 6672 43248
Jharkhand 208 28.85 121 38.12 20.13 18.16 1268 1385
Orissa 3565 81.71 16166 10922.16 1962.57 36.52 238150 346719
W. Bengal 8026 50.74 17229 2242.88 2399.62 49.02 130123 179470
Eastern 20308 34.88 43163 13203.16 4382.32 33.79 376258 571111
Chattisgarh 1213 92.09 1745 248.89 591.98 50.41 25003 61257
MP 4633 72.80 4924 639.67 801 48.72 50378 251294
Uttarakhand 679 67.89 866 171 62 26.44 27571 34754
UP 8929 79.68 2748 2230 117 39.22 6820 163176
Central 15454 78.08 10283 3289.56 1571.98 44.59 109772 510481
Gujarat 7763 64.76 2861 316.02 406.72 48.29 24121 393860
Maharashtra 21240 62.73 13668 739 747 21.21 10041 965743
Western 29082 63.30 16611 1055.02 1153.72 25.77 34162 1359603
AP 2721 79.49 12405 2162.02 896.02 37.70 115337 457585
Karnataka 4694 62.76 7479 845.97 466.33 22.35 161761 407156
Kerala 1608 82.34 12735 1272.91 200.57 151.25 2090705 2240548
Tamil Nadu 4522 43.17 9016 1510.52 234.09 50.55 344997 852897
Puducherry 52 44.23 155 43 - 34.19 7002 3279
Southern 13597 61.84 41790 5834.42 1797.01 72.32 2719802 3961465
All-India 94647 69.25 126419 26081.88 10514.89 47.30 3528607 7647983
Source: NAFCOB 2010
32
Table A5: Relative Share of SHG business to Total PACS Business (March 2010)
State/
Region
Average No.
of SHGs per
PACS
Total
Estimated
SHG
Members*
% of SHG
members to
Total PACS
members*
% Share of
SHG Savings to
PACS’ Savings
% Share of
SHG Loans to
PACS’ Loan
Outstanding
Haryana 5.62 49448 1.64 0.63 0.11
HP 7.92 232596 18.12 0.54 95.13
Punjab 1.15 64456 2.37 0.34 0.16
Rajasthan 10.82 776972 15.09 10.79 3.04
Northern 6.40 1129324 9.17 2.18 1.12
Assam 26.13 280252 8.51 736.12
Meghalaya 13.11 32844 26.37 12.94 14.30
Tripura 15.94 59822 13.97 22.88 45.16
Arunachal 6.27 2898 13.15 - -
Manipur 5.56 15890 12.06 30.95 -
N-E 8.31 416836 10.21 20.71 118.56
Bihar - - - - -
Jharkhand - - - - -
Orissa 19.35 965860 5.66 2.94 2.76
W. Bengal 21.32 2395960 12.32 11.25 8.07
Eastern 11.98 3407348 9.32 5.77 4.25
Chattisgarh 16.80 285250 14.19 3.01 0.53
MP 4.23 274330 5.30 1.93 1.99
Uttarkhand 16.96 161196 15.87 15.49 8.29
UP 0.27 34216 1.23 3.38 1.85
Central 3.49 754992 6.87 5.67 2.20
Gujarat 3.52 382718 11.90 - 0.36
Maharashtra 12.62 3752966 21.88 - 1.70
Western 10.23 4163362 20.33 - 1.40
AP 9.78 372582 2.92 1.66 3.34
Karnataka 33.70 2214422 23.22 16.80 4.27
Kerala 33.32 750190 5.59 0.21 0.55
Tamil Nadu 29.39 1860334 17.32 4.81 6.07
Puducherry 59.23 43120 22.11 2.97 64.49
Southern 27.53 5240648 11.23 1.85 2.49
Grand Total 11.41 15112510 10.76 2.72 2.26
* Total membership of SHGs estimated by taking an average of 14 members per SHG. Total
members of PACS includes estimated total of SHG members.
33
Table A6: State-wise Distribution of DCCBs by Number of SHGs linked (2010)
States
No. of
DCCBs
Reporting
Average
SHGs per
DCCB
DCCBs by No. of SHGs Linked
1000 1000-3000 3000-5000 >5000 >10000
Haryana 17 208 16 1 0
HP 3 5538
1 2
Punjab 20 230 20
J& K 3 139 3
Rajasthan 29 1914 5 19 4 1
Orissa 17 4058 2 7 3 4 1
West Bengal 19 9007 1 6 1 4 7
Chattisgarh 6 3396 1 2 2 1
MP 28 700 23 3 2
Uttarkhand 12 960 10 1 1
UP 33 74 33
Gujarat 17 1608 11 2 3 1
Maharashtra 30 8936 1 5 6 9 9
AP 17 1565 9 4 3 1
Karnataka 21 7532 1 3 4 8 5
Kerala 14 3828 3 5 1 4 1
Tamil Nadu 21 6328 3 3 3 7 5
Total 307 3405 142 61 34 42 28
% (100.0) - 46.25 19.87 11.07 13.68 9.12