Is Group Lending a Collateral for Informal Credit?

This article explores how participation in microfinance programs affects informal credit conditions. Using data on the rural credit market of Andhra Pradesh, I provide evidence that group lending participants obtain lower interest rates from the informal credit market. This result can be explained by two main factors. On the one hand, due to joint liability, group lending clients have high incentives to monitor each other, which implies a reduction in the agency costs for moneylenders. On the other hand, as microfinance borrowers are required to invest the credit in income generating activities, they face a lower default risk. Taken together, these two mechanisms may explain why microcredit borrowers are perceived as less risky by informal lenders. Overall, the findings suggest that moneylenders benefit from the duality in the market, thus providing empirical support to recent theoretical research hypothesizing that there is a complementarity relationship between formal and informal credit suppliers.

The Impact of Joint Liability Group Lending on Lowering the Risk of Farmer and Agriculture Crowdfunding in Indonesia

Research on agriculture crowdfunding in developing countries is still limited. The crowdfunding platform offers uncollateralised loans to farmers. Therefore, they apply joint liability group lending to lower the default risk. However, from farmer’s point of view, joint liability causes higher risk since every group member bears his/her own risk and that of all other group members. Thus, the purpose of this article is to analyse how joint liability may lower the risk of both farmer and agriculture crowdfunding in Indonesia. A deductive qualitative research design with case study approach is used in this article. A series of in-depth interviews were conducted with one agriculture crowdfunding platform and two farmer groups. Data analysis was conducted by using pattern matching technique. The findings of this article are as follows: joint liability may lower the default risk of crowdfunding platform because the farmer groups are self-selected. The leader of the farmer group plays an important role in monitoring the members, and he may apply social sanction to the defaulting member. By implementing joint liability group lending, crowdfunding platform can provide extension services such as price certainty through contract farming, field agent monitoring and non-cash credit disbursement. These extension services help to lower the farmer’s risk.

Growth Analysis of Joint Liability Groups (JLGs) in India - With Special Reference to Tamil Nadu

Joint Liability Groups (JLGs) has been a noteworthy developmental mechanism in microfinance group-lending model advancing towards uplifting materialistic collateral-less and unbanked poor society in the direction of self-sustainability through easing access to formal financial services with a proposal for self-employment which remained to be pursued as their dream for so long. The present study seeks to document expansionary trend in JLGs and to identify major benefits, constraints and suggestions of JLG member-beneficiaries with purview of supporting further development towards promoting and financing more JLGs in India. Aim: The present study attempts to document the trend in growth of JLGs supported by National Bank for Agriculture and Rural Development (NABARD) in India and to identify major benefits, constraints and suggestions in functioning of JLGs through Bank-Business Corporate (BC) linkage model among its member-beneficiaries which would serve researchers and policy makers to arrive at appropriate measures to expedite advancement in expansion and magnification of trend of JLGs in India. Design of Study: The study employed secondary data from annual publication of NABARD “Status of Micro Finance in India” for 2011-12 to 2019-20 for JLG trend analysis. Following purposive sampling, 3 blocks of Namakkal district were studied during August 2021, purposively selecting Bank-Business Corporate (BC) linkage model and randomly selecting well-experienced 30 member-beneficiary groups. Methodology: The study adopted Compound Annual Growth Rate (CAGR) for JLG trend analysis and Garrett’s ranking procedure to prioritize major benefits, constraints and suggestions of JLG members. Findings: Overall growth rate of India stands at 44.86% in terms of number of JLGs promoted and 60.73% in terms of quantum of JLG loan disbursed. Northern region excels growing at the rate of 62.53% in the former category while Western region exhibits expeditious rate of growth (75.19%) in the latter. Tamil Nadu leads the lane in terms of cumulative quantum of credit disbursed ranking second to Bihar in terms of cumulative number of JLGs promoted in India. Orissa manifests rapid growth among leading five states in both categories cumulatively. With women empowerment socially and economically, easy access to formal credit and better repayment as major benefits of JLG participation, hiking initial loan amount, aiding in identification of microenterprise, training and capacity building in related fields, introducing technological innovation on demand-side and linkage to product marketing and brand promotion on supply side were suggested areas of concern towards encouraging massive promotion of JLGs..

A NOTE ON “TACIT UNIVERSAL PARTNERSHIPS”: CLARITY AT LAST: EX-PARTNER CAN GET SLICE OF THE PIE

There is no assumption of marriage in South African law in consequence of cohabitation regardless of the duration of the relationship. Our law does not give automatic rights to partners in a cohabitation relationship. If one of the parties dies without leaving a will for instance, the domestic partner is not legally entitled to inherit or to claim maintenance from the deceased’s estate. An aggrieved party would have to go to court to show that the parties were partners in a “universal partnership” and that the one party owes something to the other. The question that often arises is whether any mechanisms exist for the division of assets accumulated in a cohabitation situation on separation of the parties. If parties have cohabited and they can prove that a tacit universal partnership exists between them, all property of such apartnership is deemed to be jointly owned by the parties and debts are the joint liability of the parties. The issue as to whether a tacit universal partnership extends beyond commercial undertakings and whether the contribution by each party must be confined to profit-making has been the subject of much debate by our courts but has finally been decided by the court in the cases of Ponelat v Schrepfer (2012 (1) SA 206 (SCA)) and Butters v Mncora (181/2011) [2012] ZASCA 29 (28 March 2012)).

Penetration of farm mechanization services through FPOs: rural dynamics-based business modelling

Farm mechanisation although one among the essential input to raise the agriculture productivity, but individual owning of agricultural machinery by resource constrained small and marginal farmers who constitute around 85% of operated land holdings in India is uneconomical. Hence, innovative arrangements such as custom hiring centres’ (CHCs) are being encouraged through farm aggregation models like cooperative farming, Joint Liability Groups (JLG), Farmer Producer Organizations (FPOs) to get access to farm machinery services at affordable prices and promote mechanization of operations on small farms. With this background, the present study is taken upto assess the feasibility for the establishment of FPO owned and operated model custom hiring centre (CHC) in Nimmanapalle mandal of chittoor district of Andhra Pradesh state and formulate suitable business strategies for ensuring viability of the unit. The sample size of the study was 120 farmers. The major crops grown in the study area are tomato, paddy and groundnut and the market potential for farm machinery is estimated at Rs. 269.73 lakhs. The SWOT analysis conducted indicated the opportunity for establishment of CHC due to inadequate farm machinery services, labour shortages and farmers habituated to hiring services. The financial assessment for the proposed unit over a five year period showed that the unit is worth investing as reflected by positive NPV of 6.56 lakhs at 12% discount rate, BCR of 1.05 and IRR of 17.27%. The debt service coverage ratios of greater than two from second year onwards and annual increase of positive cash accruals signifies the unit strength in meeting the debt obligations. The unit if established shall have long term social benefits that includes increase in input use efficiency of farm resources due to timeliness of operations, productivity, yields, income levels in addition to creation of employment in non-farm sector.

Liability of The Holding Company for Unlawful Actions In Group Companies

Economic development in Indonesia has progressed significantly from year to year, so has the development of national companies either in the form of a single company, joint venture, or group company in the form of PT, CV and so on. The development referred by this research is the development of group companies consisting of holding companies and subsidiary companies where the leadership system of the group company is centralized so that it has the potential to arise an abuse of authority from the holding company, one of which is illegal acts arising from the legal relationship between the holding company and its subsidiary within the group company. This can be seen in the case decision of the Supreme Court of the Republic of Indonesia No.89 PK/Pdt/2010 between PT. Effem Food, Inc and PT. Effem Indonesia against PT. Smak Snak regarding violations of distribution activity. The purpose of this study was to determine the form of liability from the holding company to the subsidiary in the event of an illegal act in the group company based on the decision of the Supreme Court of the Republic of Indonesia No. 89 PK/Pdt/2010. Based on the Judge's assessment and consideration of the evidence of losses suffered by the plaintiff, namely PT. Smak Snak, against the bad faith of the defendants, namely PT. Effem Food, Inc. and PT. Effem Indonesia, causing the panel of judges to place joint liability on PT. Effem Food, Inc. and PT. Effem Indonesia for their illegal actions as the holding company against PT. Smak Snak as a subsidiary. This decision is a manifestation of the application of piercing the corporate veil to the holding company and its subsidiary due to the ownership of PT. Effem Food, Inc. over 90% shares of PT. Effem Indonesia, regarding to this case, PT. Effem Food, Inc. acting as the holding company of PT. Effem Indonesia which exercises to control over the operational activities of its subsidiary. This research is a normative research with a conceptual and statutory approach

THE IMPACT OF IMPLEMENTATION OF A JOINT LIABILITY SYSTEM ON MEMBER BEHAVIOR

This study analyzes the impact of the consistent implementation of a joint liability system in cooperative life. This research uses descriptive qualitative research methods using in- depth interview techniques which are then carried out by open coding to find patterns and theories related to the results of the interviews. As said by Miles & Huberman (1992: 19) there are three stages that must be done in analyzing qualitative research data, namely (1) data reduction; (2) exposure data (data display); and (3) drawing conclusions and verification (conclusion drawing / verifying). The results of the analysis of this study that have been carried out, explain that cooperative members who implement and obey the rules that exist in joint liability cooperatives unconsciously have an impact on their behavior changes, they have discipline and a high sense of solidarity towards other members.