SHGs and Linkage with Co-Operatives in Maharashtra:A Spatio-Temporal Analysis

Growth of Self-Help Groups (SHGs) helps in prosperity of members but quality concerns put pressure on banks in terms of high and rising Non-performing Assets (NPAs). About nine per cent of NPAs at all-India and 25% in Maharashtra co-operatives, suggest the need for assessing status of SHGs and their linkage with District Central Co-operative Banks ( DCCBs) in Maharashtra. Variation over space and time with regard to credit flow, stock and non-performing assets suggested the need for disaggregate analysis. About 85% of the savings of SHGs was used for internal lending and balance (15%) was in bank accounts. Regression analysis indicated that NPAs had negative effect on credit flow across districts, although savings as expected had positive effect. Early warning signals for DCCBs included stagnancy in physical and financial parameters including rising NPAs. DCCBs' initiatives included concessional credit, guiding groups with lower rating, marketing arrangements for SHGs' products, intensive monitoring, amongst others. Lessons learnt from initiatives need to be documented as part of 'Way Forward' besides undertaking disaggregate analysis as well as rigorous monitoring to have early warning signals, selectivity in repeat loans, promotion of Joint Liability Groups (JLGs) within SHGs and quality improvement through continuous capacity building of stakeholders.