Group Lending Scheme Operating through Primary Agricultural Credit Society: A Critical Assessment

This paper examines a group lending-based microfinance program operating through the Primary Agricultural Credit Society to improve the economic condition of rural participants in two blocks of Hooghly district in West Bengal.

The study applies difference-in-difference and first difference method with the help of longitudinal data to minimize the possibility of selection bias in sampling. Results of the field survey indicate that the microfinance program has had no significant impact in terms of improvement in outcome variables among member households despite low interest rates, high repayment rates within groups and small size of self-help groups. Findings include:

• Very few marginal farmers have taken credit from their respective groups for agricultural purposes;
• Microfinance program failed due to lack of skill-based training programs for group members and lack of marketing facilities to promote and sell their products.

The study, however, found that members are now better protected against the exorbitant rates that professional money lenders charge.