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Determinants of NPLs of Self-Help Group-Bank Linkage Program in India: Empirical Evidences and Policy Implications

Determinants of NPLs of Self-Help Group-Bank Linkage Program in India: Empirical Evidences and... This article examines the major factors influencing the non-performing loans (NPLs) of the Self-Help Group-Bank Linkage Program (SHG-BLP) in India at both macro- and micro-levels. A panel regression analysis of the state-level data shows that the total outstanding loan amount, average loan size per SHG and poverty rate exert positive impacts, whereas gross state domestic product has a negative effect on gross non-performing loans (GNPLs). Analysis of primary data indicated a higher incidence of loan default by SHG members. Logit regression analysis employed on primary data suggests that the loan default by SHG members is positively associated with age and experience because of higher family responsibility and lesser incentive to repay the loan. On the other hand, self-employment, levels of income and savings show negative relations with loan default. Self-employed SHG members and those who make some savings are less likely to default on loans. Similarly, higher-income groups show less chance to default on loans. An analysis of the perceptions of the SHG members reveals that poor economic conditions, non-cooperation among members, social and medical expenses, and expectations of loan waiver from the government are the main reasons for loan defaults. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Asia-Pacific Journal of Rural Development SAGE

Determinants of NPLs of Self-Help Group-Bank Linkage Program in India: Empirical Evidences and Policy Implications

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Publisher
SAGE
Copyright
© 2022 Centre on Integrated Rural Development for Asia and the Pacific
ISSN
1018-5291
eISSN
2074-0131
DOI
10.1177/10185291221114682
Publisher site
See Article on Publisher Site

Abstract

This article examines the major factors influencing the non-performing loans (NPLs) of the Self-Help Group-Bank Linkage Program (SHG-BLP) in India at both macro- and micro-levels. A panel regression analysis of the state-level data shows that the total outstanding loan amount, average loan size per SHG and poverty rate exert positive impacts, whereas gross state domestic product has a negative effect on gross non-performing loans (GNPLs). Analysis of primary data indicated a higher incidence of loan default by SHG members. Logit regression analysis employed on primary data suggests that the loan default by SHG members is positively associated with age and experience because of higher family responsibility and lesser incentive to repay the loan. On the other hand, self-employment, levels of income and savings show negative relations with loan default. Self-employed SHG members and those who make some savings are less likely to default on loans. Similarly, higher-income groups show less chance to default on loans. An analysis of the perceptions of the SHG members reveals that poor economic conditions, non-cooperation among members, social and medical expenses, and expectations of loan waiver from the government are the main reasons for loan defaults.

Journal

Asia-Pacific Journal of Rural Development – SAGE

Published: Jun 1, 2022

Keywords: Self-Help Group-Bank Linkage Program; determinants of NPL; bad loans; logit regression; India

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