Determinants of Loan Repayment Behaviour: An Exploratory Study among PMEGP Beneficiaries of MSME in Kerala

Abstract

The MSME sector is a highly dynamic factor for providing employment opportunities in all over the world. In contrast with large enterprises in cities, this sector has less expensive capital and helps in the industrial development of deprived regions. These corporations participated in the process of manufacturing, processing etc. So MSME can be called as Backbone of the country. Credit is important source for entrepreneurs to start business. The Government introduced central sector schemes for providing credit facility and promoting MSME sector. PMEGP is one of important credit programme and scheme for providing employment opportunities through the establishment of micro enterprises. The bank and other financial institutions provide loan to MSME entrepreneurs through this scheme. The loan repayment capacity is an important factor and financial institutions face many problems related to delay in loan repayment. There are many determinants affected their loan repayment. So this research aims to explore which parameters influence borrowers' repayment behavior with regard to socio economic characteristics and loan repayment characteristics. For the purpose of study 165 respondents are selected and a well structured questionnaire is distributed and data analysed with the help statistical tools Chi square, mean, standard deviation Garret ranking method. The results are found out that delay in sanctioning of loan and repayment period is an important determinant and socio economic profile and factors are statistically significant.