JLGs Sharing Liabilities Creating Assets

Discussing the efficiency of joint liability groups as a mechanism for financing poor

This report provides a collection of case studies from numerous villages in India and documents the changes that have been brought about in the lives of joint liability group (JLG) members through the group mode of financing. The report states that JLGs enable members of the group to avail credit without collateral, purely on the strength of peer partnership, and at the same time provides members with the flexibility to pursue their individual dreams. It also creates a win-win situation for other stakeholders including banks who are able to tap a good loan portfolio through this mechanism. Key findings highlighted in the report include:

  • Working in a cohesive group rather than alone helps achieve better results;
  • Positive attitude of a bank towards a JLG has a demonstrative effect on others;
  • Training provided to JLG members can help JLGs become a sustainable venture;
  • Peer pressure works very well as a form of collateral;
  • JLG members are able to generate better incomes with access to credit;
  • Successful JLGs can become trainers for others;
  • Thrift can play an important role in building mutual trust and confidence;
  • JLG financing reduces transaction costs which can be relatively large for borrowers who take only small loans.

About this Publication

By Micro Credit Innovations Department