“A STUDY ON FINANCIAL INCLUSION OF 

STREET VENDORS: WITH SPECIAL REFERENCE TO TIRUCHIRAPPALLI DISTRICT”.

BYG.REKA ,  M.com.,M.Phil.,MBA.,M.phil.,

Assistant ProfessorDepartment of CommerceJamal Mohamed College

INTRODUCTION • Many issues related to street vendors have

been addressed in the past. Issues which are related to public space utilisation, granting them business licences so that they are no more called “unlawful encroachers”, “nuisances and objects causing visual pollution” and the like have often been studied and deliberated. However the issues surrounding the nature of credit transactions and financial inclusion for street vendors have never been discussed at length in the recent past. This study will therefore be a benchmark study in its own right.

STREET VENDORS

• “Street vendors means a person engaged in vending of articles, goods, wares, food items or merchandise of everyday use or offering services to the general public, in a street, lane, side walk, footpath, pavements, public park or any other public place or private area, from a temporary build up structures or by moving from place to place and includes hawker, peddler, squatter and all other synonymous Terms which may be local or region specific.” (The Street Vendors( Protection Of Livelihood And Regulation Of Street Vending) Act,2014 ) .

FINANCIAL INCLUSION

•   According  to  Chakraborty  (2011), Financial inclusion is the process of ensuring access to appropriate financial products and services needed by all sections of society including vulnerable groups such as weaker sections and low income groups at an affordable cost in a fair and transparent manner by mainstream institutional players.

NEED OF FINANCIAL INCLUSION According to the United Nations the main goals of inclusive finance are as

follows: • Access at a reasonable cost of all households and enterprises to the range

of financial services for which they are “bankable,” including savings, short and long-term credit, leasing and factoring, mortgages, insurance, pensions, payments, local money transfers and international remittances.

• Sound institutions, guided by appropriate internal management systems, industry performance standards, and performance monitoring by the market, as well as by sound prudential regulation where required

• Financial and institutional sustainability as a means of providing access to financial services over time

• Multiple providers of financial services, wherever feasible, so as to bring cost-effective and a wide variety of alternatives to customers (which could include any number of combinations of sound private, non-profit and public providers).

OBJECTIVES OF THE STUDY

The objectives of the present study are:• To understand the concept of financial inclusion. • To Overview the socio-economic background of

the street vendors. • To Document the current status of financial

inclusion of street vendors. • Identify the policy constraints and drivers to the

better adoption of financial services appropriate to the needs of the street vendors.

STATEMENT OF THE PROBLEM 

• Financial inclusion is an integral part of inclusive and sustainable growth process of an economy. Proper access to finance at an affordable cost to all the section of the society is a key requisite to economic growth. In a developing country like India, a large segment of the society, particularly, low income people have very little access to formal financial sector. Thus, the poor people go to informal sources of credit for their financial needs even though it’s costly. When the street vendors approach the banks they are confronted with various problems. This study is concerned with the financial inclusion of street vendors in Tiruchirappalli district.

LIMITATIONS OF THE STUDY The study suffers from the following limitations: • Time was a major constraint for the project. • Interaction with respondents was also limited

because of their busy work.• The sampling is done based on the available street

vendors physically verified by the researcher where there is no availability of proper records.

• The street vendors don’t have a permanent place or shop to sell their products. They are virtually pushed to the every nook and corner of the town. Their constant mobility makes the data collection a difficult process.

METHODOLOGY OF THE STUDY:

To carry out the present study, the methodologies that have been adopted are stated as follows: i)Type of  Research  The present study is descriptive in nature as it aims at describing the status of

street vendors on the accessibility of banking services in Tiruchirappalli city. Descriptive research methods are pretty much as they sound- they describe situations. They do not make accurate predictions, and they do not determine cause and effect.

ii) Sampling A sample size of 175 is taken and responses are collected in a structured schedule

questionnaire. Researcher has adopted convenience sampling for determining the sample The schedule questionnaire consist of 25 questions.

iii)Collection Of Data 

Primary data were collected from 175 street vendors from Tiruchirappalli city. The secondary data have been collected from the annual report, periodicals, journals, magazines, text books, news papers and websites so on.

iv)Data Processing  After completing the collection of data by the researcher prepared for the purpose of classifying the data, lastly classification tables were prepared for further

analysis and interpretation of data.  v)Research Gap  Although, lot of studies has been carried out in the area of financial inclusion,

few studies have been carried out in the street vendors. Therefore, the present study is an attempt to contribute to the financial inclusion of street vendors.

vi)Tools Used For The Analysis The data collected through questionnaire has been tabulated and analyzed by using

the following techniques • Simple Percentage analysis • F-Test• Correlation • ANOVA • M.S. excel

NATURE OF THE VENDORS AND GENDER-WISE CROSS TABULATION

TYPES OF THE

OCCUPATIONSGENDER TOTAL

MALE FEMALE

Cooked foods 25(18) 07(20) 32(18)

Vegetables & Flower 48(34) 11(32) 59(34)

Fruits 13(9) 02(6) 15(8)

Electronic items 12(9) - 12(7)

Households utensils

and stationary

39(28) 03(9) 42(24)

Garments - 05(15) 5(3)

Lather items 02(1) 01(3) 3(2)

Food 02(1) 05(15) 7(4)

TOTAL 141 34 175

Financial accessibility of street vendors depends on the volume of trade and types of the product they sold. Street vending profession is heterogeneity in character and this study considers only 8 types of the occupations. Interestingly, the data shows that Most of the vendors (34 per cent) are vegetable and flower vendors because this occupation requires very low investment as compared to other activities. It is also calculated (not shown) that the profit margin from vegetables, fruits, and cooked food is high compared to that from other products, not taking into account the implicit labor costs .

 PRINCIPAL AMOUNT OF BORROWING AND GENDER-WISE CROSS TABULATION

BORROWING GENDER TOTAL

MALE FEMALE

100-5000 13(9) 11(32) 24(14)

5001-10000 97(69) 16(47) 113(65)

10001-20000 15(11) 03(9) 18(10)

20001-30000 10(7) 02(6) 12(7)

30001- 50000 04(3) 01(3) 05(3)

Above 50000 02(1) 01(3) 03(1)

TOTAL 141(81) 34 (19) 175(100)

Of the total 175 vendors in the sample set, 65 per cent borrowed Rs 5001-10000 and 14 per cent borrowed Rs100-5000. Above Rs 50000 were borrowed by one per cent of the total vendors. In the sample set, as reiterated earlier, 34 comprise female vendors of 47 per cent borrow principal amounts between Rs 5001 - Rs10000, followed by 32 per cent who borrow in the Rs 100-5000 and lowest percentage of female vendors borrow in the Rs 30001-50000 and above 50000 range.

SOURCE OF CREDIT AND GENDER-WISE CROSS TABULATION

TYPES OF THE

SOURCES

SOURCES OF

CREDITGENDER TOTAL

MALE FEMALE

Formal sources Bank 10(7) 12(35) 22(13)

Co-operative 05(5) 03(9) 08(5)

NGO 02(1) - 02(1)

Trade union 03(2) - 03(1)

Informal sources Moneylender 79(56) 07(21) 86(49)

Wholesaler 16(11) 03(9) 19(11)

friends 17(12) - 17(10)

Relatives 09(6) 09(26) 18(10)

TOTAL 141(81) 34(19) 175(100)

• Of the total vendors, for 49 per cent the main source of credit is the money lenders. 13 per cent for the bank and 11 per cent from wholesaler , following friends and relatives are 10 per cent.Cooperatives and NGO come next at 5 per cent and 1 per cent.

vii) Hypotheses  Of  The Study Hypothesis – 1H0: There is no significant difference between the different gender and net income per monthH1: There is a significant difference between the different gender and net income per month

ANOVA

Source of Variation SS df MS F P-value F crit

Between Groups 1326.125 1 1326.125 5.256317 0.061718 5.987378

Within Groups 1513.75 6 252.2917

Total 2839.875 7        

INFERENCE: Applying ANNOVA test corresponding F-value and

its p-values were obtained. F-value was 0 and p-value was 1.

  F-value was 5. 256317 and p-value was 0.061718.

As p-value in above table was more than 0.05, above null hypothesis was accepted and concluded that there  is  no  significant  difference  between  the different gender and net income per month.

Hypothesis – 2H0: There is no significant difference between the different Religious Groups and nature of business H1: There is a significant difference between the different Religious Groups and nature of business

ANOVA

Source of Variation SS df MS F P-value F crit

Between Groups 0 1 0 0 1 18.51282

Within Groups 789 2 394.5

Total 789 3

INFERENCE: Applying ANNOVA test corresponding F-

value and its p-values were obtained. F-value was 0 and p-value was 1.

As p-value in above table was more than 0.05, above null hypothesis was accepted and concluded that there is no difference between the different Religious Groups and nature of business

Hypothesis – 3H0: There is no significant difference between duration of hours of work per a day and amount of earning H1: There is a significant difference between duration of hours of work per a day and amount of earning

F-Test Two-Sample for Variances

  Hours Amount of earning per day

Mean 35 27.5Variance 842 989.9Observations 5 6df 4 5F 0.850591P(F<=f) one-tail 0.450308F Critical one-tail 0.159845  

F-Test Two-Sample for VariancesINFERENCE: If F> F critical one- tail we rejected 

the null hypothesis. This in the case, 0.850591 >0.159845. Therefore we reject the null hypothesis. Hence There  is  a  significant difference between duration of hours of work per a day and 

MAJOR FINDINGS On the basis of the foregoing discussion and observations the following

inferences are drawn:• Majority of 81 percent of the Respondents are male members in

society. This study shows that street vending is a male-dominated occupation.

• A major portion of the vendors (nearly 45 per cent) belonged to the age group 26-35 years.

• Of the 175 vendors in the present study, nearly 45 per cent are completely illiterate.

• In totality, 04 per cent of the total Respondents are physically challenged vendors.

• Interestingly, the data shows that Most of the vendors (34 per cent) are vegetable and flower vendors because this occupation requires very low investment as compared to other activities.

• Out of 175 respondents 13 per cent of the vendors are engaged in seasonal nature of business.

• Vendors spend above 15 hours a day vending, sometimes to the detriment of their health. About 49 per cent spend 8 to 12 hours daily, followed by 20 per cent who spend 5-8 hours daily.

• The range of male vendors’ monthly income is much higher than female.

• The major concentration is found in the expenditure range Rs 9001-12000 (55 per cent).

• The amount of investment of the vendors in the study revealed that 67 per cent of the vendors had invested Rs 2501- 5000 in their businesses.

• Of the total 175 vendors in the sample set, 65 per cent borrowed Rs 5001-10000 and 14 per cent borrowed Rs100-5000.

• Of the total vendors, for 49 per cent the main source of credit is the money lenders.

• 55 per cent of the sample set takes loans for business activities.

• The linkages between the money lender and the vendor get established through a variety of channels. Nearly 53 per cent of the vendors say that their fellow vendors had been the link.

• The greatest number of vendors the total vendors (33 per cent) claim to 58 have there is no fixed number for taking loan in a year.

CONCLUSION  

It is an undeniable fact that the informal sector contributes significantly towards national output (60 per cent of the GDP; NSSO 2004-05) and employment. Turning a blind eye to this sector would work to the detriment of our country’s development. Street vending offers a means of livelihood to a huge section of the urban poor and is an important segment of the urban informal sector. The Government of India estimates that 10 million persons obtain their livelihood from this occupation. However, if this number is added to the number of dependents in vendor families including those to whom money is remitted money the number of persons dependent on this occupation would triple. Aiding the expansion of their scale of operations, encouraging them to be entrepreneurial and at the same time regulating their activities through rehabilitation and access to cheap formal credit would be a step forward towards the financial inclusion of street vendors. There is an urgent need to turn all these discussions and deliberations into practice.

RECOMMENDATIONS Banks The banks need to conduct skill development programmes, training programmes, organise

workshops for the uneducated urban poor as how to utilise the available fund in a proper way minimum wastage. A separate department should work towards educating them by providing free advice and consultation as to how they should go about with formal procedures and documentation involved in bank loans. The microfinance departments of the concerned bank should have all these facilities.

Civic Authority                               Only in one or two cities have they started official census of the vendors, no data is

available till now on the actual number of vendors, issue of licenses, photo identity cards where ever getting undertaken is proceeding at a very slow pace. After all these issues are over, the issue of credit accessibility will be taken up. It means another 5-6 years of usurious capital for the vendors.

Trade Unions              They can play a very important role in securing credit availability for vendors. Unions in

Kolkata and Patna have been fighting pitched battles against evictions and securing right to public space utilisation for street vendors. They will soon take up the issue of formal credit accessibility.