Evaluation of Micro Finance Intervention Programmes and Strategies Deployed on the Rural Poor by New Age Banks: Cases of States of Kerala and Tamiluadu in India

Abstract

This study investigated the extent to which consumers of microfinance services perceive that there is a relationship between the type of financial services they receive and the principles that govern socially responsible practices. Specifically, the study investigated the extent to which managers and consumers of selected microfinance institution and new age banks in India perceived the financial services provided in the context of well known corporate social responsibility (CSR) principles. To achieve this, the study utilised a mixed method approach and design involving quantitative and qualitative techniques. In so doing, the study conjointly drew on selected CSR theoretical frames including Legitimacy theory, Stakeholder Theory and Attribution Theory to gauge managers’ and consumers’ evaluations. Specifically, it was expected that by pursuing a series of nominated objectives, this frame would help assess managers’ and consumers’ reactions to and perceptions of financial services as socially responsible entities as well as selected financial services, in the context of corporate social responsibility (CSR) principles. Managers and consumers views on CSR were collected using interviews and surveys involving the validated Lundstrom and Lammont (1976) instrument. The data was then subjected to appropriate quantitative and qualitative techniques to ascertain levels of (non) significance in the relationship between microfinance institutions’ CSR related initiatives and the managers’ and consumers’ CSR evaluations. The findings reveal that the consumers of microfinance under the CSR banner do not believe in the sustainability of the initiatives and they do not have much hope that these programmes will actually lift them sufficiently above the poverty line. The study also finds that managers of new age banks and microfinance institutions feel that much more could be done in making these programmes sustainable. However both the managers and consumers are generally satisfied by the CSR initiatives of MFIs, including glocalisation. Interestingly there is no real correlation between CSR initiatives and repurchase intentions among consumers. Finally, and based on the findings, the study offers, important managerial implications as to the utility of corporate social responsibility principles in the maintenance of sustainable business practices and consumer satisfaction.