BORROWERS PREFERENCE TOWARDS DAILY COLLECTION FINANCE – A STUDY WITH SPECIAL REFERENCE TO KURALKUTTAI VILLAGE

Financial Management

International Conference on Research avenues in Social Science

Daily collection finance unless registered will be an unauthorized source of financing. The daily collection finance isdepended upon by poor people prone to some drawbacks in formal financial system. The daily collection finance however is not a risk free finance offered to poor. The present work has been carried out with the objective of finding out the reasons for preferring daily collection finance as a mode of borrowing, factors influencing selection of daily collection financiers and level of satisfaction of borrowers towards daily collection finance.The study on borrower’s preference towards daily collection finance is based on the data provided by the respondents through a structured questionnaire covering preference, factors influencing selection of daily collection financiers and level of satisfaction of borrowers. The study observes individual level awareness, opinion, satisfaction and attitude on daily collection finance.All the borrowers belonging to the Kuralkuttai village on the basis of daily collection finance represented the sampling frame.A sample of 125 respondents was approached for the study adopting random sampling technique.The daily collection finance is not a risk free finance offered to poor. The risks involved relates to payment of high interest rate compared to the interest rate charged by the formal financial system. The benefits and convenience of daily collection finance in terms of need for collaterals, easy access, simplified procedural formalities and availability in short notice were attractive aspects for borrowers particularly in the rural environment. Borrowers preferdaily collection finance due to tolerable risk, simplified procedure, nearness in the location of lender and convenience in repayment. The government can take efforts to regulate interest rate applicable to informal sector. Petty shop owners and farmers highly prefer to depend on daily collection finance. Daily collection finance was highly preferred to meet short term needs particularly unproductivity purposes.

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