AN EMPIRICAL STUDY ON CLIENT SATISFACTION TOWARDS PRODUCT QUALITY ATTRIBUTES OF GRAMA VIDIYAL MICROFINANCE LIMITED IN TIRUCHIRAPPALLI

690
Dr. N. Shaik Mohamed and A. Mehathab Sheriff. “An Empirical Study on Client Satisfaction towards
Product Quality Attributes of Grama Vidiyal Microfinance Limited in Tiruchirappalli”- (ICAM 2016)
International Journal of Management (IJM)
AN EMPIRICAL STUDY ON CLIENT SATISFACTION TOWARDS
PRODUCT QUALITY ATTRIBUTES OF GRAMA VIDIYAL
MICROFINANCE LIMITED IN TIRUCHIRAPPALLI
Dr. N. Shaik Mohamed
Research Supervisor,
PG & Research Department of Commerce,
Jamal Mohamed College (Autonomous), Tiruchirappalli, Tamil Nadu – 620 020
A. Mehathab Sheriff
Research Scholar & Assistant Professor of Commerce,
Jamal Mohamed College (Autonomous), Tiruchirappalli, Tamil Nadu – 620 020
ABSTRACT
Microfinance means providing financial assistance to poorest of the poor to alleviate
poverty. It seems to be the effective tool to poverty alleviation with its social objectives. Today,
Grama Vidiyal has become one of the largest Microfinance Institutions in India. Grama
Vidiyal Microfinance programme crosses the Rs. 1 billion cumulative loan disbursement
mark.
Today GVMFL serves one million households in 4 states of India utilising the dedicated
services of more than 2800 employees. Thus far, GVMFL had disbursed 18 billion ($398
million) for various income generating activities and the present loan outstanding portfolio is
6 billion ($128million). This indicates the strenuous role played by GVMFL in providing
financial service offerings to the poor households aimed at including them into the financial
purview.
Thus the present study relating to Client Satisfaction towards the Loan attributes of
GVMFL also deserves importance. In this paper the researcher has proposed to analyse the
Client Satisfaction towards the attributes relating to the Groups formed under Grama Vidiyal
Microfinance Limited and the Individual Loans offered to the members by GVMFL.
Key words: Microfinance, Client satisfaction, Product Quality, Group Quality, Empowerment
Cite this Article: Dr. N. Shaik Mohamed and A. Mehathab Sheriff. An Empirical Study on
Client Satisfaction towards Product Quality Attributes of Grama Vidiyal Microfinance
Limited in Tiruchirappalli. International Journal of Management, 7(2), 2016, pp. 690-698.
http://www.iaeme.com/ijm/index.asp
INTRODUCTION
Microfinance is regarded as a tool for socio-economic upliftment in a developing country like India. It
is expected to play a significant role in poverty alleviation and development. Microfinance services are
provided mainly by two models: - Self Help Group - Bank Linkage Programme (SBLP) Model and
INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)
Volume 7, Issue 2, February (2016), pp. 690-698
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© I A E M E

International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 -
6510(Online), Volume 7, Issue 2, February (2016), pp. 690-698 © IAEME Publication
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Micro-Finance Institutions Model (MFI). These both together have about 7 crore clients. There are
numerous MFIs operating in India. Microfinance is typically associated with Joint Liability of Group
members. A Joint Liability Group (JLG) is an informal group of people comprising preferably of 4
to10 individuals coming together to attain a common goal. Essentially the common goal is to access
financial services such as savings, credit and insurance when one talks about Microfinance. ‘Grama
Vidiyal’ emerges from ‘Vidiyal’ as a much more systems-focused organization, based on the Grameen
model of Microfinance by providing credit to members of Joint Liability Groups (JLGs) on a Peer
pressure basis. Today GVMFL serves one million households in 4 states of the country utilising the
dedicated services of more than 2800 employees. Thus far, GVMFL had disbursed `18 billion ($398
million) for various income generating activities and the present loan outstanding portfolio is Rs. 6
billion ($128million).
In this connection, it would be interesting to study the satisfaction of the members of these groups
towards the Product Quality of GVMFL. Hence the present study has been undertaken by the
Researcher.
STATEMENT OF THE PROBLEM:
There are several criticisms attached to the JLGs. In JLG the members are dependent on external
agencies for meeting their requirements. In addition, the groups are formed with joint liability focus on
regimented approach of following strict discipline and forcing member to repay. Moreover very little
time and emphasis are spent on the ensuring quality of the groups. Hence a study on the level of
satisfaction of the members of such JLGs towards the product quality of the MFI would be an
interesting one. So the present study entitled “A Study on Client Satisfaction Towards Product Quality
Attributes of Grama Vidiyal Microfinance Limited in Tiruchirappalli” has been designed to analyse the
satisfaction of the clients of GVMFL towards the Group features and Loan features of GVMFL.
OBJECTIVES OF THE STUDY
Following are the main objectives of the study:
 To study the Socio-Economic background of the Respondent members.
 To study the Satisfaction of the Respondent members towards the Loan Attributes of Grama
Vidiyal Microfinance Limited in the study area.
 To identify the most influential factor in determining the satisfaction of the Respondents.
RESEARCH DESIGN
The Research Design for the present study would be Descriptive and Analytical in nature, executed as
below:
Population
The population for the present study covers all the members of the Joint Liability Groups formed under
Grama Vidiyal Microfinance Limited (GVMFL) in Tiruchirappalli Town. The size of the population
comes up to around 27000 members of GVMFL classified under 7 Branches.
Sample Unit
In this study, a sample unit is referred to as the member of a Joint Liability Group (JLG) organized
under GVMFL in the study area.
Sample Frame
The sample frame for the study comprises 450 sample units
Tools for Analysis
The data has been collected with the use of a structured questionnaire drafted for the purpose. SPSS
16.0 has been applied for analyzing the data collected. Tools used are Simple percentages, CHI-
SQUARE TEST, ANOVA.

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INFERENCES DRAWN FROM DATA ANALYSIS
Personal Profile of the Respondents
 More than One-half of the respondents is aged above 35 years.
 Majority of the respondents belong to the BC Category in Community
 Nearly Three-fourth of the respondents has completed their Primary Education.
 The Major source of Income for the family of most of the Respondents is from Casual Labour
or Salaried Job of Husband or son.
 The Major Expenditure in the family of a majority of the Respondents is on Rent, Education
and Medicine.
 Nearly One-half of the Respondents is able to have a Personal Savings which is less than Rs.
500 per month.
Group Profile of the Respondents
 More than One-half of the Respondents belongs to a Centre consisting of Members ranging
from 16 to 25 members.
 About 95 per cent of the Respondents is a patron Member in GVMFL for more than 3 Years.
 Nearly 45 per cent of the Respondents resides in Semi Urban Areas of Tiruchirappalli.
 About 40 per cent of the Respondents say that the Group Leaders are the major Promoters of
the Group.
 Most of the Respondents confess that they have enrolled their membership primarily for
Credit Purpose and Business Development.
 The Respondents consider Joint Liability/Peer Pressure and Lending Methodology are the
most attractive features of GVMFL in comparison to other MFIs.
 Around 43 per cent of the Respondents charge the Other External Debt Repayments as the
major threat for Member’s Default in Prompt Repayment of Dues to GVMFL.
 About 35 per cent of the Respondents opine that Change of Address as the Major Reason for
Member Turnover in the Group.
Loan Profile of the Respondents
 Nearly 47 per cent of the Respondents are loyal patrons of GVMFL since they have completed
more than 5 loan cycles.
 Most of the Respondents state that they utilize the Loan amount for Business purpose or for
the Productive use of their Husband/Son.
 About 67 per cent of the Respondents say that they repay the loans out of their Savings from
Business Income.
 Majority of about 60 per cent of the Respondents have received an Initial Loan Amount
ranging between Rs. 3,000 and Rs. 12,000
 A wide majority of 93 per cent of the Respondents have received an amount ranging between
Rs. 15,000 and Rs. 25,000 as their Recently Drawn Loan Amount.
PRODUCT QUALITY ATTRIBUTES OF GVMFL
The Product Quality Attributes of GVMFL have been studied under two major heads, namely, Loan
Quality and Group Quality, each comprising of a set of factors to be analysed.

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Testing of data for Reliability and Adequacy have been done using the Cronbach’s Alpha and
KMO and Bartlett’s test. In order to consize and identify the most important factor influencing the
Satisfaction of the Respondents, Principal Component Analysis (Factor Analysis) has been performed.
GROUP QUALITY
Reliability & Data Adequacy Statistics
Reliability Statistics KMO and Bartlett's Test
Cronbach's Alpha
N of
Items
Kaiser-Meyer-Olkin Measure of
Sampling Adequacy
.843
.850 22
Bartlett's Test of
Sphericity
Approx. Chi-Square 3.662E3
Df 210
Sig. .000
Inference
It is inferred from the above table that the data pertaining to factors influencing Group Quality is
Reliable and Adequate.
Factor Analysis
The 22 factors constituting Group Quality have been reduced to 14 factors condensed into four major
factor components using the Principal Component Analysis. Only factors with factor loadings which
are more than 0.7 have been considered. The results of Factor Analysis are depicted below:
COMPONENTS
Awareness of Group
Behaviour/Role
Group Intra
Relationship
Group Conflict Group Patronage Group Formation
FACTOR VALUE FACTOR VALUE FACTOR VALUE FACTOR VALUE FACTOR VALUE
Awareness
of the group
leader's
responsibility
for entire
group
0.801
Encouragement
to Peer
Members on
Their
Achievement
0.807
Cooperation
among the
Members of
the Group
0.752
No/Less
Member
Turnover
From the
Group
0.909
Familiarity
of Group
Members
Before
Joining the
Group
0.779
Awareness
of the
Activities of
Other
Members in
the Group
0.791
Regular
Attendance in
Group
Meetings
0.787
Unity
Among
Members of
the Group
0.743
Convenient
Timing of
Group
Meetings
0.763
Proper
Selection
Process of
Members
Joining the
Group
0.71
Awareness
of the
group's
eligibility to
remove the
defaulting
member
0.772
Systematic
Organisation of
Group
Meetings
0.775
Clear
Explanation
of Rules and
Regulations
while Joining
the Group
0.735
Friendly
Relationship
with peer
Member
0.701

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Inference
It is inferred from the above table that the Least Amount of Member Turnover (0.909) in the Groups of
GVMFL is the Prime factor influencing Group Quality followed by Member’s Encouragement to Peer
Members (0.807), Role of the Group Leader (0.801), and Transparency of Other Member’s Activities
(0.791).
LOAN QUALITY
Cronbach's Alpha N of Items
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy
.755
.695 12
Bartlett's Test of
Sphericity
Df 66
Sig. .000
Inference
It is inferred from the above table that the data pertaining to factors influencing Group Quality is
Reliable and Adequate.
Factor Analysis
The 12 factors constituting Group Quality have been reduced to 7 factors condensed into four major
Inference
It is inferred from the above table that the Convenience in the Period for Repayment of Loan (0.843) of
GVMFL is the Prime factor influencing Loan Quality followed by Ability of the members to Generate
Sufficient Funds for Repayment of Loan (0.816), Continuous Increase in Loan Amount (0.751), and
Prompt Repayment of Weekly Dues by Members (0.734).
COMPONENTS
Loan Utility
Terms of Loan
Disbursement
Loan Repaying
Ability
Source of Loan
Repayment
FACTOR VALUE FACTOR VALUE FACTOR VALUE FACTOR VALUE
Increase in the
Loan Amount
0.751
Convenient
Period for
Repayment of
Loan
0.843
Prompt
Repaymen
t of
Weekly
Dues
0.734
Generation
of
Sufficient
Funds to
Repay
Dues
0.816
Availability of
Loan in Time of
Necessity
0.723
Convenient
Weekly
Repayment
Amount
0.698
Enhancement of
Standard of Living
0.722

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CLIENT SATISFACTION
Cronbach's Alpha N of Items
Kaiser-Meyer-Olkin Measure of Sampling
Adequacy .807
.793 15
Bartlett's Test of
Sphericity
Df 105
Sig. .000
Inference: It is inferred from the above table that the data pertaining to factors influencing Group
Quality is Reliable and Adequate.
Factor Analysis
The 15 factors constituting Group Quality have been reduced to 12 factors condensed into five major
COMPONENTS
Satisfaction Towards
Group And
Empowerment
Economic Status
Loan Disbursements
Satisfaction
Towards Loan Size
And Interest
Share in Household
Income
FACTOR VALUE FACTOR VALUE FACTOR VALUE FACTOR VALUE FACTOR VALUE
Satisfaction
towards
Group
Meetings
0.775
Satisfacti
on
towards
Employm
ent
0.837
Satisfaction
towards
Loan
Duration
0.809
Satisfactio
n towards
Interest on
Loan
0.858
Satisfactio
n towards
Share in
Household
Income
0.911
Satisfaction
towards the
Representativ
e
0.758
Satisfacti
on
towards
Monthly
Income
0.715
Satisfaction
towards
Loan
Disburseme
nts
0.746
Satisfactio
n towards
Loan Size
0.803
Satisfaction
towards the
Field Officer
0.756
Satisfaction
towards the
Social Status
experienced
0.744
Satisfaction
towards the
Financial
Confidence
gained
0.721

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Inference
It is inferred from the above table that the Satisfaction derived in sharing the Household Income
(0.911) is the Prime factor influencing Client Satisfaction of GVMFL followed by the Respondent’s
Satisfaction towards Interest on Loan (0.858), Satisfaction towards the Employment Opportunities
generated through Group Membership (0.837), and Satisfaction towards The Loan Duration (0.809).
STATISTICAL INFERENCES
Chi Square Test
Age and Purpose of Loan
Value df Asymp. Sig. (2-sided)
Pearson Chi-Square .591 4 .964
Likelihood Ratio .586 4 .965
Linear-by-Linear Association .094 1 .760
N of Valid Cases 100
Inference
The Age of the Respondents and the Purpose of getting a Loan are Related to each other.
Age and Overall opinion towards the Center's functioning
Value df
Asymp. Sig. (2-
sided)
Pearson Chi-Square 7.471(a) 8 .487
Likelihood Ratio 5.939 8 .654
Linear-by-Linear Association 2.608 1 .106
N of Valid Cases 100
Inference
The Age of the Respondents and their Overall Satisfaction are Related to each other.
Correlation Analysis
Level of Satisfaction
towards GVMFL
towards Loan
Features
towards the
Representative
towards
Approachability
Pearson Correlation .734(**) .510(**) .518(**)
Sig. (2-tailed) .000 .000 .000
N 100 100 100
** Correlation is significant at the 0.01 level (2-tailed).
Inferences
 There is a significant relationship between the Respondent’s overall satisfaction towards
GVMFL and their Satisfaction towards the Loan Features of GVMFL.
 There is a Significant relationship between the Respondent’s overall satisfaction towards
GVMFL and their Satisfaction towards the Approachability of Field Officers
 There is a significant relationship between the Respondent’s overall satisfaction towards
GVMFL and their Satisfaction towards the Approachability of Field Officers and the
Satisfaction towards the Representative’s Approach.

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ANOVA
Sum of
Squares
Df
Mean
Square
F Sig.
Purpose of loan & Marital
Status
Between Groups .128 2 .064 .274 .761
Within Groups 22.622 97 .233
Total 22.750 99
Overall opinion towards
GVMFL & Community
Between Groups .395 4 .099 .822 .514
Total 11.790 99
Purpose of loan &
Educational Qualification
Between Groups 2.169 6 .362 1.634 .146
Total 22.750 99
Inferences
 The difference in the mean of samples based on Purpose of Loan and the difference in the
mean of samples based on their Marital Status are Significant.
 The difference in the mean of samples based on overall satisfaction towards GVMFL and the
difference in the mean of samples based on their Community are Significant.
 The difference in the mean of samples based on Purpose of Loan and the difference in the
mean of samples based on their Educational Qualification are relatively significant.
CONCLUSION
Microfinance Institutions serve as a supplement to banks and in some sense a better one too.
Microfinance has now become a worldwide movement. It has grown overtime with more and different
types of actors getting involved in its development with new ideas and technologies and with different
types of products and services. A number of organizations with varied size and legal forms offer
microfinance service. The MFI channel is dominated by NBFCs which cover more than 80 percent of
the total loan portfolio through the MFI channel.
In this context, the micro level study conducted to study the Client Satisfaction especially towards
the Product Quality of one of the leading NBFC MFIs, GVMFL proved that the Client base of
microfinance is stronger and they have a SATISFACTORY opinion towards the Product Quality,
which includes both the Loan Attributes and the Group Attributes offered by the MFI. Thus the Impact
of GVMFL has proved to be POSITIVE in the study area. This emphasizes the necessity for
encouraging MFI operations by Policy makers and the Government so as to have an upliftment of the
poor and for a balanced regional development in an economy, which is one of the best remedies for
fighting against any sort of crisis, both at the national and at the international level.
REFERENCES
[1] MIX, 2010a, “Is Microfinance Growing Too Fast?” MIX Data Brief No. 5 (June).
[2] Hermes, N., and R. Lensink, 2007, “The Empirics of Microfinance: What do we know?”
The Economic Journal, No. 117, (February).
[3] Copestake, James, Sonia Bhalotra, and Susan Johnson, 2001, assessing the impact of
microcredit: A Zambian case study, The Journal of Development Studies 37, 81-100.
[4] Khandker, Shahidur R., Hussain A. Samad, and Zahed H. Khan, 1998, Income and
Employment Effects of Micro-Credit Programmes: Village-Level Evidence from
Bangladesh, Journal of Development Studies 35, 96-124.
[5] McKernan, Signe-Mary, 1996, the impact of microcredit programs on self-employment
profits: Do noncredit program aspects matter? The Review of Economics and Statistics
84, 93-115.
[6] www.themix.org

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[7] www.ruralfinance.com
[8] www.cgap.org
[9] www.microfinancegateway.org
[10] www.indianmicrofinance.com
[11] www.theguardian.com
[12]
www.iitk.ac.in

AN EMPIRICAL STUDY ON CLIENT SATISFACTION TOWARDS PRODUCT QUALITY ATTRIBUTES OF GRAMA VIDIYAL MICROFINANCE LIMITED IN TIRUCHIRAPPALLI

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AN EMPIRICAL STUDY ON CLIENT SATISFACTION TOWARDS PRODUCT QUALITY ATTRIBUTES OF GRAMA VIDIYAL MICROFINANCE LIMITED IN TIRUCHIRAPPALLI