INTRODUCTION:

Micro finance is emerging as a powerful instrument for poverty alleviation in the under developed countries. Micro finance institutions generally work through joint liability credit contract. Borrowers linked by joint liability credit contract, have to repay the debt of any one of the group members she (he) belongs who fails to repay.

So, in case of default by some members, the other members have to make up the deficit. Hence joint liability induces the borrowers to monitor each other. In absence of collateral, group lending with joint liability can help the poor to get credit. It is operated through forming self-help group mostly among the rural married women. This self-help group is actually a small voluntary association of individuals preferably from the same socio-economic background. Here members come together for the purpose of solving their common problems through mutual help. Joint liability provides an incentive to group members to use local information to monitor each other, and to force fellow members to choose less risky projects and higher levels of effort at their income generating activities. This can automatically reduce the moral hazard problem. It is argued that group lending with joint liability also lowers transaction costs, due to which small loan can be offered. NABARD has piloted Joint Liability Groups (JLGs) program during 2004-05 in eight states of the country with the help of 13 RRBs through the mechanism of joint liability approach. The JLGs promoted in 2004-05 are 285 with bank finance of Rs. 4.48 crores and to 488 JLGs with bank loan of Rs. 6.79 crores in 2005-06.

The purpose of joint liability loans is to provide small groups with loans that are gradually larger and supplied at cheap interest rates. These loans are designed to be used for successive loans, provided that all of the borrower-guarantors repay the total amount without leaving behind even a single defaulter. If any of these conditions are not met, subsequent loans will be denied. In the context of joint liability loans, peer monitoring and pressure are two processes that enable repayment to be accelerated and run behind schedule. On the other hand, the latter relates to the practice of imposing sanctions on fellow borrowers in the event that they do not adhere to the principles that have been agreed upon, while the former is concerned with monitoring the conduct of peers.

During the 2014-2015 academic year, the improvised scheme included features that contributed to the formation of JLGs through the cluster approach, the promotion of JLGs both outside and within SHGs, and the BCs/BFs model of launching and financing JLGs.

REVIEW OF LITERATURE:

Abhinand (2018) an analytical study was conducted to determine the extent to which members of Joint Liability Groups are cohesive with one another and have a sustainable means of subsistence in the districts of Alappuzha and Kollam in Kerala. Using a straightforward random sample method, a total of two hundred members of the JLG were chosen. The Chi-square test, analysis of variance (ANOVA), Karl Pearson's correlation, regression analysis, and descriptive analysis were utilised in order to examine the data that was gathered. According to the findings of the study, there is a considerable connection between the degree of group cohesiveness and the degree to which members of the JLG are empowered. One of the most significant challenges that the members have encountered is the lack of land that is available. The study suggested that the government should provide new training programs to the members of the Joint Liability Group, as well as facilitate loan and financial schemes by clubbing the Joint Liability Group with financial institutions such as the Economic and Social Assistance Fund (ESAF), cooperative societies, Agricultural and Rural Development Banks, and so on. Additionally, the government should assist the members in locating markets in which they can sell their products.

Devi and Mondel (2014) did a study on the women who are members of Joint Liability Groups (JLGs) in rural regions in the Bishnupur district of Manipur with the purpose of determining the extent to which JLGS has been successful in terms of generating money and empowering its members. With the assistance of microfinance provided by ORI Microfinance Ltd., it was discovered that the majority of women have been able to increase their income. Following their participation in the program, a few of them have even launched independent businesses. A significant contribution was being made by the JLGPI towards the empowerment of rural women and the improvement of their standard of living.

Krishnan (2012) has stated that the adaptable method that Kudumbashree took in group farming had resulted in a decrease in the amount of non-institutional borrowing and an increase in the effective rate of capital for agriculture. The challenges that the groups encountered were those that were associated with limited land tenure and financial agreements that were for nothing.

Sajesh (2013), an empirical study was carried out among women JLGs who were participating in collective farming as part of the Kudumbashree program in Kerala. An evaluation of the perceived success of collective farming in terms of resource management, technological advancement, extension, marketing, and capacity building was the purpose of the study. An appreciable improvement was seen in each and every one of the variables that were investigated. In light of this, it was determined that JLG have the capacity to solve the numerous challenges that are encountered by small farmers on an individual basis. It was discovered that the level of education, social engagement, economic incentive, group dynamics, functional linkages, and support from the institution that promotes JLGs are the most important elements that influence the effectiveness of farming groups in agriculture.

OBJECTIVES OF STUDY:

· To explore the benefits and constraints that are associated with availing of JLG loans from the perspective of JLG member beneficiaries.

· To provide suggestions for promoting more JLGs.

RESEARCH METHODOLOGY:

Every research is based on a standardized sequence, which determines the way in which it is conducted & finalized. The research is in the following sequence.

Data collection:

The study uses both primary and secondary sources and is analytical. The use of a field survey technique allowed for the direct collection of information from the women members. The main data for this study was gathered between the August 2024 to September 2024.

Secondary information is gathered for this purpose from a variety of published and unpublished records, books, journals, and material provided by the Shivamogga development authorities' office.

Sampling Design:

For this investigation, Purposive sampling, 3 blocks of Shivamogga district were studied during August 2024, purposively selecting Bank-Business Corporate (BC) linkage model and randomly selecting well-experienced 30-member beneficiary groups with 120 members.

Data Methodology:

To analyse the data in a way that was understandable, average and percentage analysis was done. The Garret ranking method was employed to determine the motivations behind joining the self-help group. To ascertain the link between the observed variables, factor analysis was utilized.

The ranks given by them were quantified using the Garrett Ranking Technique (Garrett, 1969) using the following formula:

Percent Position = ∑ [(Rij -0.5)/Nj] × 100 …. (1)

J=1

Where, Rij = Rank given for the ith items by jth individual, and

Nj = Number of items ranked by jth individual.

Sampling area

The current study was carried out in Karnataka's Shivamogga district.

RESULT AND DISCUSSIONS:

Table1. Socio-economic characteristics of JLG member-respondents

Sl. No.	Category	Frequency (N=120)	Percentage
I	Age
1	Below 30 years	24	20.00
2	31 to 40 years	55	45.83
3	41 to 50 years	27	22.50
4	Above 50 years	14	11.67
II	Educational Status
1	Illiterate	32	26.67
2	Primary Education	21	17.50
3	Secondary Education	45	37.50
4	Higher Secondary Education	17	14.17
5	Graduate	6	5.00
6	Post Graduate	1	0.83
III	Family Size
1	Less than 4	38	31.67
2	4-6	79	65.83
3	Above 6	3	2.50

Interpretation:

In Shivamogga district, sample JLGs included 100% women respondents as Belstar BC concentrates on promoting only women JLGs of which average age of respondents stood at 38 years, majority of respondents falling into 31 to 40 years category. Respondents were mostly educated till Secondary grade and found mostly to be backgrounded with 4-6 membered households

Table 2. Primary income source of respondent households

Sl. No.	Primary Income Source	Number of households	%
1	Non-Farm Income	52	43.34
2	Off-farm Income	39	32.5
3	Small business	15	12.5
4	On-Farm Income	14	11.67
Total		120	100.00

Interpretation:

The majority of member households that have chosen to apply for a JLG loan are dependent on non-farm income, which accounts for 43.34 percent of their total income. This income is derived equally from employment as drivers, which includes drivers of lorries, automobiles, milk vans, and passenger buses, as well as drivers of other types of vehicles, which includes drivers of power looms, sanitary workers, brick workers, grill workers, tile workers, and welding workers. The second largest group consisted of agricultural labourers who earned money from off-farm sources (32.5%), followed by households that owned small businesses and earned income from petty shops (12.5%).

Table 3: Monthly household incomes of respondent households

Sl. No	Monthly HH Income (Rs.)	Number of households	%
1	less than 10000	5	4.17
2	10000-20000	52	43.33
3	21000-30000	38	31.67
4	31000-40000	19	15.83
5	41000 & above	6	5
Total		120	100.00

Interpretation:

With the average monthly income of member homes standing at Rs. 22,869, the majority of respondent households (43.33 percent) fall within the range of Rs. 10,000 to 20,000 per month, followed by the income category of Rs. 21000 to 30,000 per month.

Table 4: Pattern of Utilization of respondents.

Sl. No.	Pattern of Utilization	Number of respondent’s	Percentage
1	Expansion of existing enterprise	65	54.17
2	Diversion from Investment	37	30.83
3	Initiation of New enterprise	18	15
Total		120	100

Interpretation:

The majority of sample borrowers were interested in investing Joint Liability loans in the expansion of existing businesses, which included livestock, agriculture, and small businesses. This was accomplished through the purchase of inputs such as goats and milk cattle, planting stocks and fertilisers for flowering crops, groceries for petty shops, tea stalls, and meat shops, among other things.

Table 5: Respondents’ benefits after participation in JLGs

Sl. No.	Benefits of joining JLG	Percentage	Rank
1	Women empowerment	69.90	I
2	Easy grant of loan at low RI	57.14	II
3	Improved repayment performance	56.92	III
4	Improved socio-economic status	34.66	IV
5	Group support in risk sharing and liability sharing	33.39	V

Interpretation:

A significant number of borrowers placed an emphasis on women's empowerment, which may be broken down into two categories: social empowerment and economic empowerment. On the one hand, the former was proved in terms of self-confidence as an earner, decision-making competence on personal, business, and societal terms, and security from mandatory savings to support the family. On the other hand, the latter was demonstrated in terms of financial uplift and freedom for productive investment. Despite the fact that they did not have any collateral, the second majority of respondents reported that they had an easier time gaining access to formal credit. On the other hand, respondents who were close to the second majority chose to have better repayment performance through group liability as their benefit from attending JLGs. One area of worry, on the other hand, is the little group support that is provided to individual borrowers in order to facilitate risk sharing in the context of new entrepreneurial endeavours.

Table 6: Constraints face by Respondents in functioning of JLGs

Sl. No.	Constraints in functioning of JLGs	Percentage	Rank
1	Lack of adequacy of funds	73.23	I
2	Lack of individual entrepreneurial skills and knowledge	52.97	II
3	Difficulty in microenterprise identification	52.52	III
4	Lack of entrepreneurial attitude	51.53	IV
5	Lack of knowledge on pricing	49.49	V
6	Lack of marketing/supply chain facilities	48.93	VI
7	Lack of appropriate technology/equipment	48.62	VII
8	Group support in individual risk taking	47.98	VIII

Interpretation:

The majority of respondents stated that the loan amount that was sanctioned during the first loan cycle (about Rs.20,000- 30,000 per borrower) was insufficient to kick start a new business venture. This was due to the fact that approximately 95% of the borrowers were seen to have no existing business. However, the closer majority of respondents claimed that their most significant limitation was a constrained idea on selecting demand-based microenterprises. The second majority of respondents ranked the limitation of their abilities and knowledge about entrepreneurship as their most important restraint. When it came to establishing a group-based business, the third set of individual majority experienced difficulties because to the absence of an entrepreneurial mindset among the other members of a JLG. For example, there is a lack of knowledge about product pricing, it is difficult to identify marketing and supply-chain facilities for products, there is a lack of credit to provide necessary equipment and technological innovation, and there is a significant amount of resistance from members of the group who choose to avoid investing in "unknown" or "unfamiliar" ventures. This makes it difficult for individual entrepreneurs within the group to enter start-ups and unestablished brands, which would otherwise be beneficial for marketing products that are jointly produced by groups in the same region.

Table 7. Respondents’ Expectations/Suggestions for promoting more JLGs

Sl. No.	Expectations/Suggestions	Percentage	Rank
1	Increase in loan amount	76.65	I
2	Aid in Venture identification	61.74	II
3	Linkage & promotion of marketing	55.38	III
4	Training and capacity building	49.17	IV
5	Aid in availing inputs	44.80	V
6	Reduction in RI	33.59	VI
7	Improved repayment schedule	27.63	VII

Interpretation:

Majority of sample JLG members requested a hike in initial loan amount sanctioned to at least about Rs.50,000/borrower which could serve in investing in livestock like purchasing a milch cattle as an alternate and additional source of household income. Second majority of respondents suggested for an initial support in microenterprise identification stating that credit availed would otherwise be spent on household consumption seeking short-run benefits rather be invested in profitable enterprises for long-run convincing returns. Also, respondents prioritized support for marketing produce much greater than aid for availing factors of production. Training and capacity building in fields like tailoring, processing of fruits and vegetables were fourth importantly ranked suggestions among others. Surprisingly, respondents recorded least priority towards reducing rate of interest or improvement in repayment schedule stating that they were quite comfortable with current loan design.

CONCLUSION:

It is important to highlight that member of the group provide little support to capable individual borrowers for the purpose of investing in start-ups. This is due to the fact that they are not aware of the benefits of being an entrepreneur and are not prepared to take risks on their own. Surprisingly, respondents prioritised improvements related to the demands of entrepreneurship over those that were pertinent to the design of loans, such as lowering interest rates or improving repayment procedures. In point of fact, 98 percent of borrowers disclosed that they kept their JLG loan after paying off loans obtained from other sources because they found the process of repaying their JLG loan to be simple and comfortable.

It has been stated that involvement in JLGs has resulted in significant benefits, including the empowerment of women on a social and economic level, easier access to formal finance, and improved repayment arrangements. Demand-side suggestions for advancement in the promotion of JLGs included increasing the initial loan amount sanctioned per JLG borrower, assisting in the identification of demand-based microenterprises, providing training and capacity building opportunities for JLG members in relevant fields, and introducing them to technological innovations related to the field. When it came to the supply side, aspects such as connectivity to product marketing and promotion of branding were anticipated to be causes of concern in order to break new ground in JLG finance in India.

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Received on 29.10.2024 Revised on 07.12.2024

Accepted on 06.01.2025 Published on 17.03.2025

Available online from March 26, 2025

Asian Journal of Management. 2025;16(1):61-65.

DOI: 10.52711/2321-5763.2025.00010

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