RR Singh
Contd from previous issue
Many of the trainees formed groups and successes fully executed large Govt. orders serving the general public. Over 12,000 trainees got settled in this period commencing their own entrepreneurial journey.
Trainings by RSETIs are for self-employment where desirous trainees are extended Bank credit to establish their own ventures. About 50% of the RSETI trained candidates starting their self-employment ventures get credit linked by the Banks. To probe the facts about whether all the desirous candidates are getting Bank loan, how is the Bankers attitude towards RSETI trained candidates and whether there is any repayment behaviour change seen in RSETI trained candidates….?
The National Academy of RUDSETI, Bengaluru conducted a study on Credit Linkage and loan repayment behaviour of Rural Self Employment Training Institute (RSETI) RSETI trained candidates. The study was conducted for the trainees from the States of Andhra Pradesh, Orissa, Bihar and UP. The report of the Study was submitted to the Ministry of Rural Development, Govt. of India who has since published the same. The modalities, coverage and the gist of findings of the study are as below:
1) Coverage of study: A team of 4 Assistant Controllers of Assessment and Certification vertical of National Academy of RUDSETI, Bengaluru undertook the study:
1.1 Period of Study: June-July 2020
1.2 No of trainees Covered : 189
1.3 No of RSETIs : 8 from 4 States
1.4 No of Bank Branches : 80
State wise distribution of trainees contacted
2) Areas probed:
2.1 Role of RSETIs in facilitating Credit Linkage to its trained candidates
2.2 Response of Banks in extending credit to the RSETI trainees
2.3 Quantum of loan given to the RSETI trainees in general
2.4 Repayment behaviour of RSETI trained candidates vs repayment behaviour of non-RSETI Bank borrowers
Findings
I) Role of RSETIs in facilitating Credit Linkage to its trained candidates; It was found that RSETIs after training are helping their trained candidates in preparing the project reports, contacting the Bank Managers. They are also counselling the trainees on various Bank formalities of availing the loan.
II) Response of Banks in extending credit to the RSETI trainees; It was observed that the success rate of loan sanctions in case of RSETI trained candidates are far than the loan sanctioned to non-trainees. More than 2/3rd of loan RSETI trainee loan applications get sanctioned by the Banks. This exemplify that the trainees applications are complete with all the required reports and Bank formalities.
Reasons for the rejection of loan applications in case of 15% of the candidates were also studied so that during future trainings these shortcomings are overcome. The common reasons cited for loan rejections are:
* Non-compliance of Bank formalities by the trainees
* Proposal not financially feasible to banks
* Trainees having lower credit score (CIBIL)
* Non submission of required documents (KYC)
* Limited scope of marketing in proposed activity
* Single bachelor women are discouraged
* Routine copy and paste proposals
* A family member of the trainee is Bank defaulter
III) Repayment behaviour of RSETI trained candidates’ vis-a-vis Repayment behaviour of non-RSETI Bank borrowers
It was found that around 90% of the loans given to the RSETI trainees are regular in repayment. In some cases delay in repayment has been attributed to the current ongoing COVID-19 disruptions in the business. As these loans are for setting up first generation micro-enterprise ventures, these can be taken as a good repayment.
Repayment status of RSETI trainee-loans
The Bankers were also asked as to how they rate the repayment behaviour of RSETI trained candidates’ with that of non-RSETI Bank borrowers. 78% of them accepted that the repayment in case of RSETI trained candidate loans is better than those of non-RSETI trained Bank borrowers.
“Whether repayment of RSETI trained candidates is better than repayment of non-RSETI trained Bank borrowers”
In summary, it can be concluded that the training at RSETI is able to build-up the capabilities of trainees in absorbing Bank credit and also the confidence of Bankers in lending them. This emanates from the fact of higher percentage of RSETI trainee credit proposals getting sanctioned and better recovery percentage in loans given to RSETI trained candidates than non-trained Bank borrowers.
However, there is a need to further build up on this tri-party association between the RSETIs, the Trainees and the Banks to upscale the overall activity. RSETIs need to augment their extent of intervention and facilitation in building the capabilities of its trainees. Banks need to appreciate the vitality of adequate and timely credit to these nano-enterprises. They should visualize the potential business these enterprises hold of migrating upscale from nano to Small, Medium and Large businesses. Trainees, the ultimate beneficiaries also to remember that it is in their own interest to properly utilize the Bank Credit and then promptly repay so as to maintain the confidence of the lenders in them. This not only will benefit them but also the future trainees who will reap the benefits of a positive RSETI-Trainee-Bank triage.
Learnings from the study and future roadmap:
Encouraged that Bankers have enhanced faith in Bank ability of the RSETI trained candidates, RSETIs to endeavour maintaining high quality of training. Aim should be to churn out potential customers for the Banks so that the basic aim of sponsoring Banks remains achieved. However, areas where the study has found weaknesses need to be strengthened. RSETIs to improve its post training supports like helping the candidates prepare Project Reports and proper utilisation of Bank loans so as to ensure prompt repayments. Adequate sensitisation of Bank Managers on various RSETI programmes also need to be done.
(The writer is Director General, National Academy of RUDSETI, Malleshwaram, Bangalore. E-mail:
[email protected])