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Proposal for UGC Minor Research Project


Comparative Study of Self Help Group Models with reference to Business Correspondence Model in Empowering the Vulnerable
Submitted to: The Deputy Secretary and Regional Head South Western Regional Office, P.K Block, Gandhinagar BANGALORE

Through: The Director, College Development Council, Mangalore University, Mangalagangothri -574199 Project prepared by: Dr.A.Jaya Kumar Shetty Associate Professor Department of Economics & Rural Development

SDM College (Autonomous), Ujire-574240 From, Dr.A.Jaya Kumar Shetty Associate Professor, Department of Economics & Rural Development SDM College (Autonomous), Ujire-574240 To, The Deputy Secretary and Regional Head South Western Regional Office, P.K Block, Gandhinagar, BANGALORE Through, The Principal, SDM College, Ujire The Director, College Development Council, Mangalore University, Mangalagangothri -574199 Respected Sir, Sub: Submitting the Minor Research Project proposal. I am submitting herewith Minor Research Project proposal titled Comparative Study of Self Help Group Models with reference to Business Correspondence Model in Empowering the Vulnerable. Please do the needful and oblige Thank you Yours Faithfully

Dr.A.Jaya Kumar Shetty Ujire

Annexure - II FORMAT FOR SUBMISSION OF PROPOSAL FOR MINOR RESEARCH PROJECT Part A 1 Broad Subject Area of 2 Specialization 3 Duration 4 Principal Investigator: i) Name ii) Sex iii) Date of birth iv) Qualification Rural Economics Self Help Group Models in achieving financial inclusion 2 years Dr.A.Jaya Kumar Shetty Male 15-03-1963 (Fifteenth March Nineteen Sixty Three) M.A. in Economics from Mangalore University(1985) Ph.D from Karnatak University(1998) v) Designation vi) Address Office: MBA from Punjab Technical University (2008) Associate Professor Associate Professor, Dept of Economics & Rural Development SDM College (Autonomous), Ujire-574240 College Road, Ujire 574 240 Ph: 9448 154001 e-mail: 5 Co Investigator (S) NIL


6 Name of the Institution where the project will be undertaken: Department /College University Department of Economics & Rural Development Sri Dharmasthala Manjunatheshwara College (Autonomous), Ujire Mangalore University, Mangalore Yes

7 Whether the college / institution is approved under

Section 2(f) and section 12(B) of the UGC act? 8 Teaching and Research Experience of the Principal Investigator a) Teaching Experience: b) Research Experience: UG: 25 Years 12 years PG: 02 Years

c) Whether the project has been approved by university for the doctoral degree? If so please indicate i. Date of Registration ii. Name and designation of the supervisor Approved by the University iii. Name of the University where registered Not Applicable Not Applicable Not Applicable

(d) In case the teacher holds a doctoral degree, please indicate: i. Title of the thesis

Yes Impact of incentives on Industrial Development-A case study of Dakshina Kannada 1998 Karnatak University

ii. Year of award of the degree iii. Name of the university

(e) Publication: Details of the publications: No of papers published No of papers accepted for publication No of books published No of books under publication 03 NIL 01 NIL

PERSONAL DETAILS: Research Experience & Publications

Research Ph.D. Title of work/Thesis Impact of incentives on industrial development-a case University Karnataka University


Research Guidance Training

study of Dakshina Kannada District co authored a book titled Economics of Development Article titled Self Help Groups-Empowering the Vulnerable towards sustainable development in the book titled World Trade Organization, published by Serials Publications, 2008. Article titled Group Entrepreneurship: with special reference to SGSY Scheme in Dakshina Kannada District in the book titled Microfinance and Sustainable Livelihood Promotions in India by Excel Books, 2011 Guiding PhD candidates Kannada University Hampi Guided and presently guiding MPhil Kannada University Hampi Attended one Research methodology course and three refresher courses

No 01

Recognized as Research Guide for PhD programme of Hampi Kannada University (Letter dated 14th July 2006 and No: SDMC, HMN-151 dt 3rd August 2006)
Name and address Prakash Rao Lecturer,PPC, Udupi Arun Prakash, Lecturer Vivekananda College Ms.Shashiprabha Mr.Shankar, Mysore Mr.Prakash, Topic Year Problems and Prospects of Vegetable Market with 2006-07 special reference to Udupi District (Submitted) Role of MASS in areca market and rural 2006-07 development (Submitted) Cooperatives-Awarded M Phil Economics of Tobacco Cultivation-A Case Study Awarded MPhil NGO Initiatives-SKDRDP Experiment Awarded MPhil 2006-07 2008-09 2008-09


03 04 05

Details of Seminars, Conferences, Symposia Workshops etc attended During the last five years by Dr.A.Jaya Kumar Shetty
No 01 02 03 04 05 06 07 08 09 Title of the Seminar/ Conference/ Workshop Title of the Paper



Attended National Seminar on Agriculture at Vivekananda College, Puttur from1st April to 3rd April, 2004 Attended Workshop on E-Content Development at CEC, UGC, N.Delhi16th Nov to 27th Nov 2004 at N.Delhi Attended Annual Economics Conference 28th Feb, 2005 at Shirva Floriculture as a bed of Roses Attended State level Seminar on Accounting Standards23rd March, 2005,Ujire Attended State level Seminar on Content Creation for ICT Enabled Teaching-27th to 29th June, 2005-Ujire Attended a Seminar-WTO and Banking 26th July, 2005, Mangalore Attended State Level Seminar on Facets of Information Technology and Knowledge Sharing 21st Dec, 2005-Aikala Attended Mangalore University level Workshop on Question Bank preparation as Resource Person on 8th July, 2006, Mangalore Coordinated Workshop on Development Research Methods for Research Methods in Researchers of Hampi University under HAMANA Research Centre of Economics Ujire3rd August, 2006, Ujire Attended Workshop on Research Methods and Strategies as Resource Research Methods for th th person25 and 26 October, 2006Research Students Ujire Attended State level Seminar on Women Entrepreneurship 16th December, 2006- Bantwal

12 13 14 15 16 17 18


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Attended National Seminar on Bharathiya Heritage 13th to 15th May, 2008,Ujire Attended as Rapporteur at the Two Day International Conference on Future of Arecanut (ICFA) 9th and 10th August, 2008,Mangalore Attended one day UGC sponsored State level Seminar on Implications of SEZ on Agriculture in Karnataka 19th September, 2008, Madanthyar Attended one day workshop on Contributions of Sri Kshethra Dharmasthala 11th October, 2008 Attended Seminar on Temple Administration 19th October, 2008 Attended UGC Sponsored State level Seminar on Agriculture in Karnataka:Issues and Challenges 23rd January, 2009 Attended and Presented a Paper titled at the International Conference on The Micro Finance Better Business Practices for Sustainable Social Change 29th and 30th Promise in Financial December, 2008, at Nitte Inclusion Attended as Organising Committee Member and Presented a Paper in SGSY Model of the National Seminar on Relevance of Information and Communication Empowering the th st Technologies in Agriculture 20 and 21 March ,2009,Ujire Vulnerable-A Case Study -doNew Technologies for Agriculture Attended and presented a paper in the UGC Sponsored Strategies in Good Governance: A Case State level Colloquium On Grassroot Democracy: Status of Study of Bhoomi Online Delivery of Panchayati Raj in Karnataka, organized by Dept of Political Record of Rights, Tenancy and Crops Science, SDM College, Ujire on 15thand 16th January, 2010 to farmers in Karnataka, India Attended, Chaired a Session and presented a paper in the UGC Sponsored Special Economic National Level Seminar on SPECIAL ECONOMIC ZONE ITS SOCIO- Zones and CULTURAL IMPACT IN INDIA, organized by Department of PG Studies in Agriculture in India: Economics & Department of PG Studies in Sociology GOVT. First Grade Some Reflections College, UDUPI-57610627th & 28th November, 2010 Attended and presented a paper in the National Seminar on Group Entrepreneurship: Microfinance and Sustainable Livelihood Promotions in India on with Special Reference to 15-16 December, 2010, organized by the Post Graduate Department SGSY Scheme in of Management Studies and Research Centre Siddaganga Institute Dakshina Kannada of Technology, Tumkur-572 103 District Attended and presented a paper in the International Conference on Redefining the Roles of Business, NGOs and Governments: A Mission for a Better Global Society on 29-30 December, 2010, organized by Justice K S Hegde Institute of Management, Nitte-574110 Coordinated Mangalore University Workshop titled Marching Towards Community for faculty and students of Rural Development optional of colleges of M University organized at SDM College, Ujire on 20th and 21st March, 2011 SHGs and Women Entrepreneurship-A Case Study Coordinator




(i) Project Title: Comparative Study of Self Help Group Models with reference to Business Correspondence Model in Empowering the Vulnerable (ii) Introduction: The Eleventh Five Year Plan aims at inclusive growth and faster reduction of poverty. Micro Finance can contribute immensely to the financial inclusion of the poor without which it will be difficult for them to come out of the vicious cycle of poverty. In order to enable the poor people to access credit, there is a need to strengthen all the available channels of providing credit to the poor such as Self Help Group- Bank Linkage programmes, Micro Finance Institutions , Cooperative Banks, State financial corporations, Regional Rural Banks and Primary Agricultural Credit Societies. While appreciating the need for adequate regulation and standardization of the various processes and practices adopted by the Micro Finance Institutions, the fact that the strength of the micro finance industry lies in its informality and flexibility which should be protected and encouraged. The poor require finance for both production and consumption purposes. Availability of finance, moreover, tilts the employment scenario in favour of selfemployment vis--vis wage employment. An added dimension is the empowerment of women with easier availability of micro-finance to them. There is definitely a need to increase the flow of credit, both for consumption and production, to the rural sector. Self Help Groups (SHGs): Government initiatives during seventies and the Fourth Five Year Plan focused on small and marginal farmers and agricultural labourers. Integrated sustainable income generation activity was promoted under Integrated Rural Development Programme. Inadequacies inherent in running programs focused on individual households called for shift to a group based

approach. In 1996, Reserve Bank of India included financing of SHGs as a main stream activity of banks under the priority sector lending programmes. Models of Micro-Finance in India: There are two main models of micro credit in the country and they are banking model and the MFI model. In the case of the banking model Self Help Groups are formed and financed by banks. In some cases SHGs are formed by formal agencies/NGOs and financed by banks. In the MFI model SHGs are formed and financed by the MFIs that obtain resource support from various channels. In India, majority of mirco credit activity is under the Banking model(NABARDs Bank-SHG Linkage) and 10-15% of the activity is through MFI model. Business Facilitator & Correspondent Models : The Reserve Bank of India, in January 2006 issued an order to ensure greater financial inclusion and increase the outreach of the banking sector, through Business Facilitator Model and Business Correspondent Model. This enabled the commercial banks, including the RRB to use the services of NGOs, SHGs, MFIs and Civil Society Organization as intermediaries to provide financial and banking services through Business Facilitator and Correspondent Model. Under the Business Facilitator Model the intermediaries provide services like (i) identification of borrowers and fitment of activities (ii) collection and preliminary processing of loan applications including verification of primary information/data ; (iii) creating awareness about savings and other products and education and advice on managing money and debt counselling;(iv) processing and submission of applications to banks; (v) promotion and nurturing Self Help Groups/Joint Liability Groups; (vi) post-sanction monitoring ; (vii) monitoring and handholding of Self Help Groups/Joint Liability Groups/ Credit Groups/ others; and (viii) follow-up for recovery. Under the Business Correspondents Model NGOs/MFIs, Cooperative Societies, section 25 companies, registered NBFCs, not accepting Public Deposit

and Post Offices may act as Business /correspondent. In addition to the activities listed under the Business Facilitators Model the scope of activities of the Business Correspondent included (i) disbursal of small value credit, (ii) recovery of principal/collection interest (iii) collection of small value deposits (iv) sale of micro insurance / mutual fund products/pension products/other third party products and (v) receipt and delivery of small value remittances / other payment instruments. At present some of the leading Self Help Group Promoting Agencies also channelize financial services to their clients through BC Model. The purpose of SHG initiatives is to encourage thrift and credit activities for the empowerment of the downtrodden. In this connection a comparative study of various SHG models of empowerment is very relevant and hence this proposed study is undertaken. (iii.) Objectives:

The study in general aims at evaluating the different Self Help Group models with special reference to BC Model adopted by SKDRDP, a leading NGO in Microfinance in Karnataka. The specific objectives of the proposed study are:
1. To study the role of SHGs in facilitating financial inclusion and economic

empowerment of the vulnerable 2. To study the Business Correspondence model adopted by the selected NGO in channelizing formal credit and other facilities through self help groups. 3. To find out the challenges of various models 4. To discover possible solutions 5. To suggest a ideal replicable model for economic empowerment and financial inclusion of the vulnerable sections of the society (iv) Hypothesis:
1. Self Help Groups facilitates the economic empowerment of the vulnerable. 9

2. SHG encourages the habits of thrift and credit management for economic empowerment. 3. Under Business Correspondence model, members of SHGs are better served to facilitate the twin objectives of financial inclusion and economic empowerment. 4. Larger segments of the population can be effectively served if Business Correspondents come forward to form SHGs in the unbanked regions and facilitate thrift and credit activities. (v) Relevance of the Study: Business Correspondent (BC) Model ensures a closer relationship between poor people and the organized financial system. Recognizing this, in 2006, RBI permitted banks to use the services of non-governmental organizations, microfinance institutions, Section 25 companies, and other civil society organizations as Business Correspondents in providing financial and banking services. At present few leading NGOs/MFIs have adopted BC model to extend banking facilities to the deprived sections of the society and bring them into the mainstream of development. Shri Kshethra Dharmasthala Rural Development Project (SKDRDP), recipient of Microfinance India MFI of the Year Award(2010)for large MFIs,set up in 1982 by Dr. D Veerendra Heggade, SKDRDP is a charitable trust engaged in rural development. SKDRDP follows self-help group (SHG) based lending approach, where group members are collectively responsible for repayment of credit extended to individual members of the group. The development activities carried out by SKDRDP has helped generate goodwill among the people and this has, in turn, helped it in building its microfinance portfolio. SKDRDP has introduced several product and process innovations to achieve high efficiency and transparency in its microfinance operations:


Suvidha (convenient) software is used to record SHG lending and SHG record keeping. The integrated technology includes a hand held device which allows SHG members to repay their loans and avail of loans from the nearby local village office branches. The village level data is then integrated with the MIS at the project office (head quarters). Pragathibandhu loan model : SKDRDP has developed a unique process of supporting the small farmers with technology and finance for taking up their farming practices. In this each member is facilitated to prepare a farm development plan which is then consolidated into a SHG plan and finances are given to them. The SHG members take loans for specific crops but pay it back through subsidiary crops on a weekly basis. Thus when their main crops come for harvesting the member is all most free from loan. Thus even if the main crop is damaged or does not yield expected income the farmer will not be burdened with the loan. In our country where lakhs of farmers have committed suicide due to burden of loan, this practice of repaying the loan on a weekly basis has helped them to be burden free. BC Suvidha model: SKDRDP has partnered with SBI in three underserved districts of north Karnataka to bring in much needed credit to the poor in the area by innovating in the business correspondent model of the Reserve Bank of India. In this model SKDRDP has contracted with SBI to promote 30,000 SHGs involving 4,50,000 stakeholders who will be assisted with the micro finance loan of upto Rs. 150.00 crores at the rate of Rs. 50,000/- SHG in the first year and Rs. 400.00 crores at the rate of Rs. 1.5 lakhs per SHG. Policy changes in the lending norms to SHGs has been negotiated with SBI to provide adequate and needy finance. This model also envisages financial inclusion at the door step of the poor by opening village offices known as the customer service point. Started in 2009 this project has become highly successful in a span of 18 months 30,000 SHGs have been promoted and bank has extended a credit of Rs. 91.00 crores. To augment the assistance from the bank SKDRDP has also provided an additional

finance of Rs. 96.00 crores in this area through its own funds. Thus this project has brought in Rs. 187.00 crores as loan funds to SHGs. This will facilitate the SHGs to get the support of the banking system in the long run. Innovative model has been evolved by SKDRDP to link BC and SHG models for empowering the vulnerable and facilitate financial inclusion. Hence it is essential to study the problems and prospects of various models, so that a suitable replicable model can be suggested for ensuring twin objectives of economic empowerment and financial inclusion. (vi.) Research Design and Methodology: The study is empirical in nature though it draws heavily on first hand data. The primary data is collected through structural questionnaires personally administered by the researcher. The data will be collected by participant approach and by interacting with the participants like officials of NGOs, Bankers and SHG members, experts in the field and by referring relevant documents and literature. The study is confined to SKDRDP experiment in Dakshina Kannada and Dharwad districts of Karnataka State where BC model is adopted to channelize banking facilities to the SHG members. (vii.) Year wise Plan of Work: 1st six months 2nd six months 3 six months 4th or last six months (vii.) 9.

Literature survey Questionnaire preparation and primary data collection Compilation, Tabulation and Analysis Rough draft typing, , final printout, and

submission Details of the Collaboration: Not Applicable. Experts in the field shall be contacted.



Items i. Books, Journals including CDs and Software, and papers presented/published at different State / National level Seminars and workshops ii. Equipment iii. Field work and Primary data collection, Literature Survey and visits to institutions and universities in Dharwad, , and Mangalore iv. Contingency a) Printing and binding b) Payment to technical services and experts fees

Amount Required 25,000=00


70,000=00 20,000=00 20,000=00

c) Miscellaneous expenses related to research project 20,000=00 Total 1,55,000=00 Rupees One Lakh Fifty Five Thousand only 10. Whether the teacher has received support for the research project from the UGC under Major/ Minor scheme of support for research or from any agency? If so please indicate: I II Name of the agency from which the assistance was UGC approved Sanction letter No. & date MRP(H)-13/2007(XPlan) under which the assistance was KAMA009/UGC-SWRO III IV approved Amount approved and utilized dated 22-02-2007 Rs 70000

(01-04-2008 to 31-03-2009) Title of the project for which Group Entrepreneurship with assistance was approved the Rural Poor with special reference to SGSY scheme in

Dakshina Kannada District In case the project was completed, Project completed. Findings of whether the work on the project has the project was published in been published the form of article in

Microfinance and Sustainable Livelihood Books VI Promotions in India, published by Excel (ISBN:978-81-7446937-3),2011 If the candidate was working for the doctoral Not Applicable degree, whether the thesis was submitted & accepted by the University for the award of degree. (A summary of the report/thesis in about 1,000 words may please be attached with the application) VII If the project has not been completed, please state Completed the reasons 11. a) Details of the project /Scheme completed or on going with: Completed b) Institutional and Departmental facilities available for the proposed work: I II Equipment Other Infrastructures available: Not required Central Library, computer with internet is available to the researcher in the college

12. Any other information which the investigator may like to give in support of this proposal which may be helpful in evaluating: Researcher is the recognized Research Guide for regular MPhil and Ph.D programmes of Hampi Kannada University. Guided Three MPhil students and two Ph.D candidates have submitted the thesis. Researcher is serving as Chairman of UG Board of Studies in Rural Development of Mangalore University. Researcher is regularly presenting papers in National level seminars.

To certify that:
a. The University/ College is approved under section 2 (f) and 12 (B) of

the UGC act and is fit to receive grants from the UGC. b. General physical facilities, such as furniture / space etc. are available in the department / college. c. I shall abide by the rules governing the scheme in case the assistance is provided to me from the UGC for the above project. d. I shall complete the project with in the stipulated period. If I failed to do so and if the UGC is not satisfied with the progress of the research project, the commission may terminate the project immediately and ask for the refund of the amount received by me. e. The above research project is not funded by any other agency

Signature Principal Investigator (Dr.A.Jaya Kumar Shetty)

Signature Principal (Seal with Signature)