1
Centre for Micro Finance at IFMR Research
Access to Finance in Rural Andhra Pradesh, 2009
Doug Johnson and Sushmita Meka
The Survey
First survey of household access to finance which:
– includes information on microfinance– is representative of an entire state’s (Andhra
Pradesh) rural population– discloses data publicly
Objective
We wanted to learn more about:
– The state of financial inclusion in rural areas– The number of people reached by various types
of financial service providers.– The demographic and economic characteristics
of the clients of various financial service providers (as well as the unbanked).
Methodology
Survey details:– 8 districts (randomly selected from 22 districts
of AP)– 64 villages (randomly selected from these 8
districts)– 1920 households (randomly selected from the
64 villages)
Survey conducted in June to November 2009 using a rigorous random sampling methodology
BORROWING
5
Indebtedness by Source
6
Share of Total Loan Outstanding by Source
7
Usage of Loan Money by Lender Type
8
Bank SHG MFI Informal
Buy agricultural inputs 58% 19% 13% 20%Consumption 27% 50% 32% 25%Repay old debt 15% 20% 25% 7%Health 11% 19% 11% 25%Home improvement 10% 13% 22% 14%Start New Business 2% 2% 3% 1%Marriage 4% 2% 5% 12%Other festival 1% 4% 4% 5%Education 4% 6% 4% 5%Purchase stock for existing business 3% 4% 10% 3%
Buy livestock 3% 6% 6% 2%Purchase land 1% 1% 1% 1%
Multiple Borrowing
9
.0718
.0994
.1228.1285 .1264
.1207
.1035
.0749
.0588
.0317
.0193 .0177
.0094 .0073.00265.2e-04.001 .0016 .0021
0.0
5.1
.15
Sh
are
of H
ouse
ho
lds
0 5 10 15 20Total Number of Loans
Source: A2F, 2009
Share of Households with Multiple Loans from a Given Source
10
Multiple Borrowing by Active Clients of a Given Source
11
Multiple Borrowing
• Multiple borrowing also prevalent among the better off (represented by higher PPI scores)
• Many cases of multiple borrowing appear to be driven by an inability to obtain sufficient credit from a single source– A large share of households with multiple loans
outstanding took two or more loans in the same month for the same purpose indicating that they are unable to fulfill their credit needs from one single source
12
Share of Total Outstanding from MFI Loans
13
SAVINGS
14
Share of Rural AP Households with a Savings Account by Bank Type
Share of Households with a Savings Account
Share of Households with a Savings Account (excluding 0 and Rs 50 balance accts)*
Private Sector Bank 1% 1 %
Public Sector Bank 41 % 36 %
Regional Rural Bank 14 % 13 %
Cooperative Bank 14 % 12 %
Post Office 42 % 11 %
Any of the above 78% 61 %
Stated Reasons for Opening Savings Account
18
Thank you
Districts Selected for Surveying
19
DistrictShare of poor
from NSSOPoverty Stratum MFI penetration MFI stratum Adjusted MFI Stratum
Final Stratum
Selected for Surveying?
Medak 9.3 Not so poor 11.3 High penetration High penetration 1 YES
Nalgonda 5.4 Not so poor 14.5 High penetration High penetration 1 YES
East Godavari 3.3 Not so poor 12.5 High penetration High penetration 1 NO
West Godavari 4.4 Not so poor 12.3 High penetration High penetration 1 NO
Krishna 2.8 Not so poor 18.7 High penetration High penetration 1 NA
Guntur 3.9 Not so poor 13.2 High penetration High penetration 1 NO
Vizianagaram 4.7 Not so poor 4.7 Low penetration Low penetration 2 YES
Cuddapah 5.4 Not so poor 9.9 High penetration Low penetration 2 YES
Karimnagar 7.2 Not so poor 5.5 Low penetration Low penetration 2 NO
Warangal 0.9 Not so poor 6.1 Low penetration Low penetration 2 NO
Srikakulam 6.0 Not so poor 4.4 Low penetration Low penetration 2 NO
Nizamabad 23.1 Poor 9.1 High penetration High penetration 3 YES
Visakhapatnam 18.9 Poor 10.6 High penetration High penetration 3 YES
Khammam 13.1 Poor 10.1 High penetration High penetration 3 NO
Nellore 14.1 Poor 10.9 High penetration High penetration 3 NO
Kurnool 24.6 Poor 8.6 Low penetration High penetration 3 NO
Mahbubnagar 11.8 Poor 2.9 Low penetration Low penetration 4 YES
Prakasam 9.9 Poor 7.7 Low penetration Low penetration 4 YES
Adilabad 26.1 Poor 4.0 Low penetration Low penetration 4 NO
Rangareddi 10.9 Poor 6.0 Low penetration Low penetration 4 NO
Anantapur 20.2 Poor 4.1 Low penetration Low penetration 4 NO
Chittoor 15.9 Poor 8.4 Low penetration Low penetration 4 NO