Loan Repayment Dynamics of Self-help Groups in India

Silu Muduli and Manu Sharma
Additional contact information
Silu Muduli: Silu Muduli (corresponding author) is with the Department of Economic and Policy Research, Reserve Bank of India, Mumbai, Maharashtra, India.
Manu Sharma: Manu Sharma is with the Department of Economic and Policy Research, Reserve Bank of India, Mumbai, Maharashtra, India. E-mail: manusharma@rbi.org.in

Margin: The Journal of Applied Economic Research, 2022, vol. 16, issue 2, 183-202

Abstract: The overall ratio of non-performing assets (NPAs) to total advances (the NPA ratio) extended to self-help groups (SHGs) has historically remained below 8 per cent in India. However, in the central, northern, and north-eastern regions of India, this ratio is relatively high and has remained above 15 per cent since 2015–2016. Using state-level data, the study identifies SHG-specific and state-specific factors that might be responsible for higher NPAs ratios. It also examines whether higher NPAs constrain access to future credit. Spatial analysis confirms the existence of geographical clustering of NPAs in the northern and central regions of the country. SHGs with lower outstanding loans and lower savings are more likely to default, the relationship being stronger in states with higher NPAs. The article finds that states with higher SHGs densities, per capita incomes, and road and railway connectivity, and lower infant mortality rates have lower NPAs in their SHGs. SHGs with lower savings and higher NPAs operating in states with lower per capita incomes and banking penetration face difficulties accessing fresh credits. JEL Codes: G21 , O18, R51

Keywords: Self-help groups; Non-performing assets; Bank credit (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/09738010221074593 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:mareco:v:16:y:2022:i:2:p:183-202

DOI: 10.1177/09738010221074593

Access Statistics for this article

More articles in Margin: The Journal of Applied Economic Research from National Council of Applied Economic Research
Bibliographic data for series maintained by SAGE Publications ().