Manipur has come up with its own financing system to take care of the eventualities of day to day life. Efforts are being made to establish a linkage between these non-formal sectors with formal banking practice.

A Marup (Friend of friends) as this group is known is an age old traditional institution. These groups have become a way of life in the state and have transformed into an enterprise employing thousands of people in the state.

A study funded by National Bank for Agriculture and Rural Development (NABARD) on Marups which comprise 40 in the valley and 10 in the hill areas for 3 years (2005 – 07) reveal a fluctuating growth ranging from 16.66 percent in 2006-07 to 33.33% in 2005-06.  The year 2007-08 witnessed a growth rate of 20%.

Dr. N. Mohendro Singh, who is a member of Manipur’s planning board and Dean of Social Sciences Manipur University conducted the study. He remarked, “Marups are there in all walks of life. It is difficult to estimate the amount of money and number of people involved with Marups as almost each locality has this in different forms.”

The reason for the robust growth of Marups is attributed to large unbanked areas and low credit-deposit ratio. Sources in NABARD explained, “We have already supported some studies, however we will initiate studies in the traditional institutions in different areas of the region and will see how the penetration level of this institutions is. This institution differs from one area to another. We will also see how this can be linked with formal financial system.”

The possibility of better linkage between Marups and banking institutions is reinforced by the fact that 34 % of Marups report their bank accounts. Distribution of bank accounts reflect marked preferences for co-operative banks where 66.66% of accounts are opened, followed by State Bank of India with 19.04% while only 9.52 percent of accounts are found in the United Bank of India. Punjab National Bank has the lowest number of accounts with only 4.76%

Dr. Singh explained that the management of some Marups, after assessment of demand for consumer durables, enters into an agreement with the commercial establishments to supply a particular item at a rate agreed upon for a specific period.  The Marups allow reliable members to buy the consumer durables on credit. In this case Marups act as the intermediary between production unit / business establishment and final consumers.

The rate of contribution, most acceptable and popular is `100 which accounts for 40%, followed by `50 accounting for 16%. Around 88.88 % of contributions of Marups are accounted for by monthly contribution. The weekly contributions account for only 7.40%. The most popular model of benefit is ‘benefit by turn’. The collection at a particular rate during a definite time frame is made available by rotation.

Lending within members accounts for 58 % while those lending to both members and non-members account for 32.25 %. Marup lending only to non-members accounts for 9.67 %. Almost 90% of Marups investigated insist of ‘promissory note’ supported by ‘blank cheques’ signed by the person concerned. Dr. Singh observed that the care with which the credit is managed by Marups is perhaps the principal factor for recovery of 80%.

Small groups of two or three led by the Secretary who acts as Managing Director, carry on the routine activities. Demand for credit is reasonably high. The interest rates are between 2% and 5% per month (i.e. from 24% to 60% per annum). However such a high rate does not impact demand much. The study pointed out that 34.78 percent of Marups charge a rate of 60 % per annum while 31.25% of Marups allow borrowing at the rate of 3% per month (i.e. `36 per annum). Such high rates do not deter the repayment, recovery is high at 90%.

Due to inter-membership control, enough transparency, regularity of open interaction and presentation of statement of accounts and status reports keep members informed and inspired. The borrowers feel humiliated in the event of a default. This is a fine tradition of Marups.

On an overage 3 persons are employed on a full time basis in one Marup. This is the second line of employment. Marups have acquired field experience of micro-finance as Local Community Based Organisations (CBOs). There is a suggestion to groom them into business correspondents of banks. Imphal - based Institute of Cooperative Management (ICM) Director Kh. Somorendro Singh feels that this institution will further grow in Manipur. “Savings is a matter of habit for the people here. The institution has stood the test of time. In times to come it will further evolve as an economic entity.”

Union Finance Minister, Pranab Mukerjee during a conference of the Eastern India Finance Ministers recently observed that the Government of India is keen to expand and strengthen the branch network of banks in eastern states, particularly in the Northeastern states. Out of 69 unbanked blocks in the region, 27 blocks were covered with banking services. The remaining 42 unbanked blocks are in the states of Arunachal Pradesh, Manipur and Nagaland. He stated, “I would urge the banks to extend the banking services to these remaining blocks also by March 31, 2012. The Government has also directed that in the under banked districts, the banks shall open a regular brick and mortar branch in habitations with population of 5000 and above. In the Northeastern region, 47 districts do not have a Clearing House and 8 districts do not have a Currency Chest.” According to the finance ministry, the Government is pursuing measures to ensure that all the districts of the North East region have at least one Currency Chest and Clearing House each in all the districts. Mukerjee added, “I am happy to note that eleven Clearing Houses will be operationalised by March, 2012 of which 5 will be in the North East states. Similarly, three Currency Chests will be established by March, 2012, of which one will be in Assam. However, the Government will ensure that the currency requirement of all the districts in the North East region is adequately met.”