A Regional Analysis of Microfinance Utilisation and Repayment Performance in Jalgaon District

The paper will discuss the use of microfinance and repayment rates in Jalgaon District. The study is based on a mixed-method design, including secondary data review, a structured primary household survey (n = 360 households in 12 villages/wards), and key-informant interviews with local microfinance providers and panchayat / municipal officials to answer the following questions (1) who uses microfinance and why, (2) the determinants of effective utilisation, and (3) the factors that contribute to good or poor repayment performance. Findings reveal that microfinance in Jalgaon is mostly applied in income generating micro-enterprises (42%), agricultural inputs (21%), household consumption and emergencies (20%), and education/health (17%). The performance in repayment is mostly satisfactory (on-time rates 88%), however, there is variability depending on the type of borrower, purpose of loan and access to markets/extension services. Some of the key predictors of good repayment include: stable non-farm income, Self-Help Groups (SHGs), financial literacy, and distance to market/transport nodes. Policy suggestions are given at the end of the paper to enhance the efficiency of utilisation and reduce the risk of default: focused financial literacy, diversification of products (crop-cycle-linked credit), facilitation of digital payments, and enhanced connections between microfinance institutions (MFIs) and local value chains.