MICROFINANCE PROBLEMS AND PROSPECTS AMONG SELF-HELP GROUP MEMBERS IN COIMBATORE, TAMIL NADU

Abstract

Microfinance plays an important role in promoting financial inclusion, savings, credit access and livelihood development among economically disadvantaged communities through Self-Help Groups (SHGs). However, its effectiveness is influenced by members’ socio-economic characteristics, participation and challenges in accessing and utilising financial services. Against this background, the present study examines the problems and prospects of microfinance among SHG members in Coimbatore, Tamil Nadu, South India. The study is based on primary data collected through a structured questionnaire from 774 SHG members. The questionnaire covered socio-economic characteristics, SHG involvement, reasons for joining SHGs and microfinance-related problems. Ten SHG involvement statements were measured using a five-point Likert scale, while descriptive statistics, chi-square, Kruskal–Wallis and Garrett’s ranking techniques were employed for analysis. The findings indicate that financial freedom was the leading reason for joining SHGs, recording a mean score of 6.11, followed by healthier saving spirit (6.09) and interaction opportunities (5.88). Among the major constraints, lack of confidence in repayment ranked first with a mean score of 6.26, followed by lack of guidance (5.89) and family discouragement (5.75). Other constraints included loan-sanction delays, intermediaries’ commissions, poor loan utilisation, documentation requirements, difficulty accessing authorities and limited awareness. The study demonstrates that although SHG-based microfinance creates important financial and social opportunities, its effectiveness is constrained by repayment concerns, inadequate guidance and institutional barriers. The findings emphasise the need for timely credit delivery, financial literacy, simplified procedures and continuous institutional support to strengthen sustainable microfinance participation.