Role of Informal Micro-Finance System (Fund association) in the Apatani Society

Abstract

Arunachal Pradesh, it is one of the most backward tribal states in India and its economy is predominantly agrarian and majority of the population lives in rural areas with minimal or no presence of banking and financial institutions. Till March 2015, the state has 170 commercial bank branches only. It may be noted that the concentration of banks is mostly in urban areas. Much of the rural people are hardly accessed to banking services in the state. Due to such situation in banking sector, many informal systems of financial organisation have been formed by the indigenous tribal people of the state not only to overcome the time of distress but also for creation of employment, education of children, health and social assets etc., among the rural poor since early 60s. It may be mentioned that the instances of formation of informal financial organisation in the form of fund associations or informal microfinance system have been observed especially among the Apatani tribe.These fund associations /groups are organized based on clan, lineage, sex (brother and sister’s groups) and common interest. The groups may vary from 5 members to 100 members. They collect their subscription on regular intervals, monthly, half yearly, annually or once/twice in lifetime.

The basic purpose of formation of such group corpus is to provide money to the members at the time of necessities such as education expenses, medical expenses, and expenses related to customs and rituals etc. The other purpose is to lend the fund at interest, which may vary from association to association, the present rate of interest varies from 3 percent to 5 percent per month. Henceforth, these fund association /informal micro finance system plays a significant role in the socio -economic life of the Apatani tribe.