Potential of Joint Liability Groups (JLGs) for the Sustainability of Dairy Industry: Case of three Co-operatives in Kerala

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..

In the microfinance group-lending model, Joint Liability Groups (JLGs) have been a notable developmental mechanism that has advanced 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 that has long been pursued as their dream. The current study aims to promote future development towards promoting and financing more JLGs in India by documenting the expansionary trend in JLGs and identifying important benefits, restrictions, and suggestions of JLG member-beneficiaries. The study employed purposive sampling, 3 blocks of Shivamogga district were studied during August & September 2024, purposively selecting Bank-Business Corporate (BC) linkage model and randomly selecting well-experienced 30-member beneficiary groups and Garrett’s ranking procedure to prioritize major benefits, constraints and suggestions of JLG members. The findings of the study 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.

The study titled “Invisible Labour, Tangible Gains: The Economic Value of Imputed Labour in Women’s Joint Liability Groups" examines the profitability of group farming through Joint Liability Groups, with specific focus on labour productivity. As JLGs, primarily formed by women interested in farming, engage in collective agricultural activities, the study investigates the role of imputed labour—unpaid contributions from group members—and its direct impact on economic outcomes. By employing the Cost A method for examining the production cost and calculating total revenue based on market prices and cultivated quantities of paddy, banana, and vegetables, the study provides a comprehensive financial assessment. Using multi-stage stratified random sampling, data was gathered from 170 JLGs, and statistical analyses, including ANOVA and post hoc tests, confirm that the dedication of group members through imputed labour significantly enhances profitability. The findings highlight the crucial role of imputed labour in the success of farming, offering valuable insights for policy-making and strategies to improve agricultural sustainability and economic viability of women farmers.

To overcome the obstacles such as small landholdings, high cost of labour, shortage of credit, and modest mechanisation, collective farming initiatives like joint liability groups were launched in Kerala. Earlier research on joint liability groups in the agricultural arena of Kerala has rarely examined the effects of joint liability groups (JLGs) on the improvement of paddy cultivation. To find out the effect of JLGs, the present study has collected primary data from the Thrissur district of Kerala. The primary survey was conducted from January 2025 to April 2025. Statistical tools such as analysis of variance (ANOVA) and post-hoc tests were used to analyse the data. The findings indicated that operations of joint liability groups are effective in improving the production of paddy, reducing labour cost, and improving the marketing facilities of paddy cultivation in Thrissur district. The study recommends that the state government should support the joint liability groups to endure and triumph in paddy cultivation

According to the latest research done by the World Bank, India is home to almost one third of the world’s poor (surviving on an equivalent of one dollar a day). Though many central government and state government poverty alleviation programs are currently active in India, microfinance plays a major contributor to financial inclusion. In the past few decades it has helped out remarkably in eradicating poverty. Reports show that people who have taken microfinance have been able to increase their income and hence the standard of living. Microfinance is not just about giving micro credit to the poor rather it is an economic development tool whose objective is to assist poor to work their way out of poverty. It covers a wide range of services like credit, savings, insurance, remittance and also non-financial services like training, counseling etc. Microfinance institutions serve as a supplement to banks and in some sense a better one too. The main two forms of group-based credit are Self-Help Group (SHG) & Joint Liability Group (JLG).This paper discusses all about the Joint Liability Groups.

This study examines the impact of Joint Liability Group (JLG) farming on the economic and social empowerment of women farmers in Palakkad district, Kerala.Primary data were collected from 340 women farmers selected from 170 JLGs across five blocks, namely Mannarkad, Nemmara, Kuzhalmannam, Palakkad, and Sreekrishnapuram.The study assessed changes in income and social empowerment before and after joining JLG farming.A Social Empowerment Index was constructed using a methodology similar to the UNDP approach for calculating the Human Development Index (HDI), with index values ranging from 0 to 1.A paired-sample t-test was employed to examine the statistical significance of changes in empowerment levels.The results reveal a 36% rise in average monthly income along with improved economic security among the most vulnerable farmers.The group participation led to a modest improvement in income distribution among farmers.The Social Empowerment Index reflects significant improvements in social empowerment from a low level to a moderate level after JLG participation.The paired-sample t-test confirmed that the improvement in social empowerment was statistically significant.The study underscores the importance of promoting group-based farming initiatives as a strategy for inclusive rural development.

JLGs (Joint Liability Groups) help to enhance village economies by providing local jobs, livelihoods, and income, as well as eliminating poverty and creating an inclusive economy. JLG is an informal group of four to ten persons who share a common socioeconomic background, reside in the same neighbourhood, and engage in similar activities. To begin earning a living, all participants agree and take out a loan in groups. JLG’s are formed with the support of FPOs, Kudumbashree, KVKs (Krishi Vikas Kendras), ATMA (Agriculture Technology Management Agency), and local nationalised and cooperative banks. In this study, I investigated the various models of JLG’s and their techniques, the extensive participation of women in all aspects of agricultural and allied activities as well as the obstacles they have in selling their products, generating money and other sources of income, and how group formation empowers women.

The poor and unorganized women artisans lack the physical collateral, and banks are wary to lend to them due to informational asymmetry regarding their creditworthiness. Social capital in a joint liability group enables the members to borrow from the banks. Due to the joint liability and dynamic incentive of higher credit limits, the members peer monitors each other to ensure access to finance. The research study aims to discuss the role of peer mechanisms in ensuring the success of lending to the poor and marginalized through self-help groups (SHGs) or joint liability groups. Since there is no study that discusses the impact of peer mechanisms on lending through SHGs, this study, for the first time, provides a conceptual framework for peer mechanism and their role in ensuring the sustainability of joint liability groups. This study uses the social constructivist paradigm and the grounded theory method to explain how the peer mechanism that comprises peer selection, peer monitoring and peer enforcement helps to improve the repayment rates under the SHGs linkage program. The data for the study are collected using 25 semi-structured interviews with the members of the SHGs and the heads of the self-help-promoting institutions. The analysis of data highlights that in a group social exchange, social control, social cohesion, sustainability, and social welfare, which emerged as categories after the open coding, are the main sources of peer mechanism. Further focused coding highlighted that mainly network relations, trust, and norms enable sustainability in the SHGs.

Purpose The research aimed at explaining women microcredit repayment delay when loans are not granted on any joint liability group nor any other scheme based on social capital or financial collateral. Design/methodology/approach Previous research showed that greater female autonomy is associated with bearing fewer children and the former could be correlated to a higher loan repayment rate because of social and financial benefits for the household. Female autonomy proxied through the number of children and its square is regressed on the number of weeks of repayment delay in an OLS model as well as in a multilogit model that identifies borrowers according to their credit status (regular, delayed, and delinquent). Findings We found that more autonomous women, those bearing less than four children, repay credit more promptly and are less likely to switch into the delinquent credit status. Research limitations/implications Economic variables need to be complemented with some specific characteristics of the borrower, as they have a role in explaining women’s repayment delay. Originality/value The research provides an alternate explanation about why women repay loans when a microcredit institution does not rely on a lending methodology based on joint liability groups.

In this chapter, the relationship between risk-taking behaviour and innovation in the entrepreneurial ventures of women in joint liability groups (JLGs) is analysed. Through the findings of a survey of JLGs facilitated by Integrated Development Centre, a non-governmental organization (NGO) in Kerala, this study sheds light on the boundaries that exist in the choices that women can make. It was found that women’s choice of ventures, despite their willingness to engage in economic activity, is limited by personal, familial, social and economic factors. The major findings of the study throw light on the relationship between risk-taking behaviour of women entrepreneurs and innovation in entrepreneurship, the glass ceiling effect on women’s choices for entrepreneurship and the problem of women operating in an unequal space in the family and society. The author concludes that in the absence of true decision-making ability, self-identity is not able to reach its fullest potential, which in turn hinders empowerment.

Microfinance stands out as a crucial financial inclusion mechanism, addressing the needs of individuals who find themselves excluded from the formal financial system. By breaking down barriers, microfinance ensures that even the most excluded individuals have the opportunity to benefit from a range of financial services, fostering economic empowerment and inclusion. The present study examines the role of microfinance on rural development through Joint Liability Groups (JLGs) with special reference to Kerala. The study also examined the trend of loans distributed to the southern region of India through JLGs for the last five years. The study used a descriptive research design and collected data from 385 beneficiaries through a purposive sampling method. The study revealed that microfinance has a positive influence on the rural development of Kerala. The researcher identified five predictors such as social development, economic development, financial development, employment generation and financial inclusion and dependent variable is rural development. The result shows that 99.6% attributed to microfinance on rural development in Kerala.

Research methodology The data and information for this case study were derived from a combination of primary and secondary sources. Primary data was gathered through interviews with the company’s founder and its customers. Initially, two semi-structured personal interviews with the founder were conducted on 17th and 18th October 2024 to establish a foundational understanding. These were followed by two structured interviews on 21st March 2025 and 19th August 2025, designed to address any remaining gaps. Customer insights were obtained through semi-structured interviews with micro, small and medium enterprise borrowers on 14th and 15th October 2024, along with structured interviews with 30 individual customers. Secondary data, including financial statements, was accessed from the Prowess database (Link to the cited article.) on 10th August 2025. To ensure the reliability of the results, a triangulation process was used by systematically comparing the data collected from these primary and secondary sources. This method of cross-verification helped validate the findings. Furthermore, all information was anonymised as needed to prevent conflicts of interest, thereby enhancing classroom discussions and learning. Case overview/synopsis Abhik Mitra from Patna’s middle class worked as a professional, while his key goal was to help disadvantaged sections of society. His vision for financial inclusion prompted him to pursue his dreams after witnessing that local artisans failed to receive help from corporate lending and their ongoing financial struggles. 2016 marked the establishment of the Kanak Kuber Microfinance Association (KKMFA) by Mitra after injecting INR 7.5m through a trust-based Joint Liability Group (JLG) to lend small amounts to rural borrowers. Mitra’s approach to personalized lending brought immediate success to the KKMFA, which led to new investments, resulting in new business locations in Bihar and West Bengal. Through his resilience, strategic digital payment innovation and chatbot-assisted service development, Mitra restored stability to his organization during the severe challenges brought on by the COVID-19 pandemic. After the pandemic, the KKMFA encountered an altered business environment since the year ending in March 2023. Small borrowers in rural areas abandoned the JLG loan structures because they migrated toward conducting their own independent activities. An increasing number of predatory lenders with unsustainable practices has intensified competition in the microfinance sector, leading to shrinking profit margins. As a result, Mitra faced growing pressure from financiers and customer segments to rethink his primary focus on a sustainable JLG model rooted in trust and responsible finance. Should the KKMFA uphold its trusted, community-based JLG model to ensure sustainable and responsible finance, or should Mitra respond more practically to market pressures by additionally piloting a technology-driven individual lending model with competitive rates? However, this risks higher defaults and could compromise Kuber’s mission of responsible and sustainable financial inclusion. Complexity academic level This case is appropriate for a postgraduate-level program in strategic management, strategic finance, microfinance and entrepreneurship. In these courses, students can learn to interpret possible strategies by analyzing financial statements and aligning them with cost-benefit analysis, stakeholder theory and social capital theory. This case study deals with the practical dilemma of adopting a new business model that uses technology to minimize the risk of delinquency, optimize profits, enhance value for stakeholders and build social capital for low-income groups. Details about the country, banking situation and microfinance in India are included to make the case relevant to a larger audience.

In recent years microfinance has been recognised as one of the policy mechanisms to achieve the goal of financial inclusion. Different lending models have been appropriated in microfinance sector to provide micro-loans to microfinance borrowers and their likely socio-economic impact on microfinance borrowers varies across different lending models. In case of microfinance, credit contracts between lenders and borrowers are designed in such a manner that borrowers’ initial loans are smaller but increases with each loan cycle over a period of time, termed as progressive lending.2 The present study using primary data collected from Mirzapur district in Uttar Pradesh attempts to explore the determinants/variables that explain progressive loan demand by microfinance borrowers in self-help groups (SHGs) and joint liability groups (JLGs). Using logit model, the paper concludes that in both SHGs and JLGs, longer association with microfinance groups helps in availing progressive loans from SHGs/microfinance institutions (MFIs) followed by loans procured from other sources also compel microfinance borrowers to demand larger loans from MFIs primarily for paying loan instalments. In addition to this income, size of group, number of dependents in household and asset endowment characteristics of SHG/JLG members also affect progressive loan demand by SHG/JLG members.

This investigation aims to analyze the impact of the joint liability model on the sharia cooperatives’ performance in Indonesia. The respondents are several group lending members of sharia cooperatives in Java, the center of sharia cooperatives in Indonesia. This study utilized the purposive sampling method to select samples conducted in April 2021. Data collection was carried out by distributing online and offline questionnaires to several sharia cooperatives utilizing the joint liability model. Data from 98 respondents were further analyzed by PLS-SEM analysis. The results unveiled that joint liability, which was influenced by indicators of trusts, norms, and networks, had a positive and significant effect on sharia cooperatives’ performance as measured by members’ satisfaction and loyalty. Thus, sharia cooperatives can take advantage of and maintain the joint liability model based on trusts, norms, and networks. The rationale is that the joint liability application has followed cooperative principles: the principle of kinship and cooperation. In addition, such a model has proven to increase the loyalty and satisfaction of sharia cooperative members.

A little skin in the game: Reducing moral hazard in joint liability lending through a mandatory collateral requirement