Determinants of Participation of Women in Self-Help Groups (SGHs) and Credit Delivery from Formal and Informal Sources to BPL Households in Odisha

The study examines the determinants of credit delivery from formal and informal sources to women households who belong to below poverty line (BPL) in Ganjam district of Odisha, apart from analysing determinants of participation of women in self-help groups (SHGs) to avail credit, and identifying the factors influencing loans borrowed by BPL households. The study showed that majority of the households received loans from formal sources for agricultural purposes. However, a lower proportion of SHG members availed insurance services due to their low income. The results of logistic estimates clearly showed that factors such as age, education, number of children of the respondents, status as head of the household, sources of income, caste, informal debt, distance of banks, migration, economic status of households, etc. played a crucial role in determining women’s participation in SHGs to borrow credit. The households also borrowed loans from different informal sources. The reasons for borrowing from informal sources included lack of collateral, faster delivery of credit, easy access without any bank account. Further, the estimated odds ratios with respect to variables like age and marital status of the head of households, caste, location of bank and membership of SHGs also had significant effect on households to avail credit from informal sources. It is to be noted that aside from credit there are numerous other factors that determine the high economic status of households like number of adults living in the house, availability of employment, income of the head of the households, etc. Nevertheless, the credit is the basic lubricant that helps people to live with dignity. The micro finance organisations provide small credit through group approach, which not only helps the financially excluded people in rural areas but also create a ray of hope for better future. This may not be possible in the short period but in the long term, it would definitely help to fulfill their basic requirements in the sustainable manner. The availability of credit is the one end of the spectrum, the other end being extension of training to the clients, availability of raw material and easy access to local markets so as to sell their product at reasonable prices. These facilities will help the clients to get sufficient profit, which in turn would be helpful for the long run survival of their micro enterprisers. Micro finance is not a panacea for poverty reduction, which needs both complementary supply-side and demand-side factors. Supply-side factors such as good infrastructure, entrepreneurial skills, etc. are needed to make micro-enterprises more productive.