Problems faced by microcredit borrowers in joint liability groups (JLGS): Empirical evidence of NBFC-MFIS in Uttarakhand

Abstract

Microcredit is proved to be an effective tool for socio-economic development of its borrowers. In the past various models took shape in developing nations and made credit/loan available at the doorstep of the borrowers. The framework for delivering credit is called credit delivery model. Joint Liability Groups (JLGs) were widely adopted by various microfinance institutions in providing credit to the borrower groups. Many studies talked about the success of JLGs but very little literature was available on the problems faced by borrowers in JLGs. Data collected from Haridwar district is used to study the problems faced by borrowers in JLGs. Relation between Group association and problems faced by borrowers was also studied. The findings show that the major problems which borrowers faced include-strict repayment schedule, Non repayment/late repayment of loan, lack of loan information, peer pressure among group members etc. There also exist a relationship between group association and problems faced by borrowers.