Repayment Performance of Self-Help Groups in Uttar Pradesh: An Empirical Investigation

Abstract

This paper aims to study the determinants of repayment performance of self-help groups in India’s Uttar Pradesh state, which has one of the highest numbers of defaulting self-help groups. The study is based on primary data collected in 2017 through a field survey covering 300 members across 100 self-help groups from the rural areas of Sultanpur and Faizabad districts. The survey reveals an overall repayment rate of about 55% with better pay-back performance seen among members of old self-help groups. The results, computed with the help of the Tobit model, show that factors such as group maturity (age of the group), ratio of family workers to household size and household income are negatively associated with the incidence of delinquency while peer group pressure and social ties associate positively with delays and overdues.