An Analysis of Non-Performing Assets and Recovery Performance of Self Help Group Bank Linkage ProgrammeUnique Preference to North Eastern Region of India

Abstract

Access to financial markets is important for poor people. Like all economic agents, low-income households and microenterprise can benefit from credit, saving and insurance services. But financial markets, because of their special features, often serve poor people badly, since poor people often have insufficient traditional forms of collateral such as physical assets to offer. But the case of informal financial institutions is different as they have greater alternatives to accept as collaterals such as labor of the borrowers. Thus the poor generally excluded from the formal financial institutions and have to depend on informal sector. Microfinance is gathering impetus to become a significant strength in India. The Self Help Group model with bank lending to groups of poor women without collateral has become an accepted part of rural finance. In spite of being successful, there are still disparities in the program in its level of progress across different parts of the country, including the north east India (NER). The SHGs-BLP was concentrated among the southern states (SR) and its performance was not satisfactory among the NE states. The SR achieved higher amount of saving balance of SHGs with banks in comparison with NER. Similarly, the amount of loan disbursed to SHGs by banks was also higher in SR. Thus naturally one point come to mind is that, does amount of NPAs is lower and recovery performance is satisfactory in NER compare to SR. In this paper we analyzed the NPAs and recovery performance of SHGs in SR and NER of India. The researcher studied the same by taking four years data of NABARD. We found that although amount of saving balance of SHGs with banks and amount of loan disbursed to SHGs by banks was lower in NER in compare with SR, but the share of NPAs to total loans outstanding was higher and percentage of recovery to demand of total SHGs was lower in NER. In recent times there has been an improvement of situation of NPAs and recovery rate in NER. However this enhancement was not comparable with SR of India. Consequently, one point come to mind is that, does because of higher NPAs and lower recovery rate, SHGs-BLP had not achieved reasonable achievement in NER of India.