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AN INSIGHT INTO SELF HELP GROUPS

BY,

RICHI KAUR SALUJA

09BSHYD0660

INDIAN BANK

A REPORT SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENTS OF

MBA PROGRAM OF

IBS HYDERABAD

DISTRIBUTION LIST:

MR.D.SATISH (FACULTY GUIDE)

MR.S.R.VEERARAGHAVAN (COMPANY GUIDE)

DATE OF SUBMISSION:

15.05.2010

An Insight Into Self Help Groups

[i]

AUTHORIZATION

This report is submitted as partial fulfillment of the requirement of MBA Program IBS Hyderabad.


[ii]

ACKNOWLEDGMENTS

The success behind the completion of any good job is the support and the joint team effort of a

number of people. There are many persons, whose help & cooperation, this project would not

have been possible. While submitting the project in printed form, I would take this opportunity to

thank everyone who has supported me during the project.

Firstly, my sincere gratitude to Mr. Lakshmi Narayan, Chief Manager who has allowed me to

undertake the project on Urban Microfinance and my Company Guide, Mr. S.R.

Veeraraghavan, Branch Manager, Dharavi, who has supported and helped me at every point

throughout the tenure of the project. He has played a pivotal role in the successful completion of

this project.

Secondly , I would like to thank Mr. D. Satish, Faculty Member, ICFAI Business School, for his

continuous interaction and support. One remarkable quality of Prof. Satish which has helped me

to do justice to the work assigned to me is his quest for excellence. He guided me all the way

from the beginning till the end by giving me his valuable inputs, whenever I required them.

I would also like to thank Mrs. Ashmita Pati, Assistant Branch Manager, Dharavi, Mr. Ashok

Mohite, Area Coordinator, Brihan Mumbai Municipal Corporation who have always been

supportive throughout the project and have encouraged me in going ahead with the mission at

hand.

Lastly, I would like to thank all those who have interacted with me to make this field survey a

success.


[iii]

ABSTRACT The project “An Insight into Self Help Groups” provides an in-depth understanding of SHGs

presently being financed by Indian Bank at Dharavi. The project deals with the examination of

various SHG-Linkage models being used between the SHGs and the Formal Financial

Agencies.

The purpose of the study is to obtain a comprehensive knowledge of the performance of SHGs in

Dharavi area with special importance to the income generating activities undertaken, benefits

derived by the members, the difficulties encountered as well as the outreach of the initiative

taken by Indian Bank to include the otherwise considered un-bankable poor into the banking

system. This paper examines the SHG operating model, the loan processing scheme for SHGs,

the state of SHGs today and how they need to be supported in going forward. All the members of

SHGs selected formed the main respondents. This study explores various questions, based on

field research in Dharavi presenting a reality check of 'what is really happening'.

We began our research by gaining knowledge of the SHG-Bank linkage by interacting with the

company officials and doing a thorough review of the text related to the same. After that

interaction with the SHG members via semi-structured interviews and focus group discussions

had been done. We wanted to be able to quantify, but at the same time, be exploratory and open-

ended in our approach and therefore, Focus Group Discussions combined with review of

records and individual interviews were carried out with each of the sample SHGs. After the

process of data collection via interviews and focus group discussions was over, in order to cross-

check for different experiences and perceptions, we reviewed the available group records.

The Dharavi branch of Indian Bank has been working successfully since its inception with a

repayment rate of 100%. We were interested in the understanding the various shades of this

initiative and therefore we have had detailed discussions with the help of Structured

questionnaires with the Company officials, the Area Coordinator and the Community

Organizers to develop this case study. Sharing of the preliminary findings with Indian bank

functionaries, the Branch Manager Mr. S.R. Veeraraghavan and Mrs. Ashmita Pati to check the

veracity of the conclusions drawn was done.


TABLE OF CONTENTS

AUTHORIZATION ........................................................................................................................... I

ACKNOWLEDGMENTS ................................................................................................................ II

ABSTRACT ...................................................................................................................................... III

INTRODUCTION............................................................................................................................. 1

ABOUT DHARAVI................................................................................................................................................ 1

ABOUT INDIAN BANK ......................................................................................................................................... 2

ABOUT THE PROJECT .......................................................................................................................................... 5

OBJECTIVE OF THE PROJECT .................................................................................................. 6

VALUE ADDITION TO THE ORGANIZATION ..................................................................... 6

STEPS SHOWING THE WORK DONE .................................................................................... 7

SELECTION OF SHGS, APPROACH AND METHODOLOGY ........................................... 8

REPORT FORMAT ...................................................................................................................... 10

LIMITATIONS ............................................................................................................................... 10

MICROFINANCE .......................................................................................................................... 11

A BRIEF HISTORY OF MICROFINANCE IN INDIA ................................................................................................... 11

LITERATURE REVIEW ............................................................................................................. 14

SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY) .......................................... 21

UNDERSTANDING SELF HELP GROUPS ........................................................................... 23


STRUCTURE OF SHG .......................................................................................................................................... 23

SHG BANK‐LINKAGE .......................................................................................................................................... 24

PRINCIPLES ....................................................................................................................................................... 25

FEATURES OF SELF HELP GROUPS ...................................................................................................................... 26

HOW SELF‐HELP GROUPS WORK ....................................................................................................................... 28

HOW DO SELF HELP GROUPs SAVE (BACHAT GAT) ............................................................................................. 29

PURPOSE OF GETTING LOAN ............................................................................................................................. 30

LOAN PROCESSING……………….. ........................................................................................... 31

SELF HELP GROUPS ‐BANK LINKAGE MODELS. .................................................................................................... 33

COMPARATIVE ANALYSIS OF MICRO‐FINANCE SERVICES OFFERED TO THE POOR ............................................... 35

IMPACT OF THE INITIATIVE BY THE BANK: ......................................................................................................... 36

INTERVIEW QUESTIONS ........................................................................................................ 38

EVALUATION SHEET FOR SHGS .......................................................................................... 41

OM SAI MAHILA UTPADAK GAT .......................................................................................... 45

KEY ACTIVITIES ......................................................................................................................... 49

CAPACITY BUILDING OF SHG MEMBERS ........................................................................ 50

SHG TRAINING .................................................................................................................................................. 50

IMPACT OF SHGS ON SWAROZGARIS ............................................................................... 52

ROLE AND PERCEPTION OF KEY STAKEHOLDERS .................................................... 54

BANKERS .......................................................................................................................................................... 54

AREA COORDINATOR & COMMUNITY ORGANISERS .......................................................................................... 56


RECOMMENDATIONS .............................................................................................................. 57

CONCLUSION ............................................................................................................................... 61

APPENDIX ..................................................................................................................................... 63

REFERENCES ............................................................................................................................... 73

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2

ABOUT INDIAN BANK Financial inclusion is aimed at providing banking / financial services to all people in a fair,

transparent and equitable manner at affordable cost. The unbanked public is largely cut off from

the Banking products/services. It is the endeavor of the Bank to provide the basic banking

facility of Savings Bank accounts to all the unbanked. Towards this initiative the Bank has taken

the lead and evolved two different models i.e. Rural and Urban Financial Inclusion Model to take

care of the requirement of the people in rural and urban areas which differ from each other.

Rural Financial Inclusion Model:

Indian Bank as SLBC, convener in the Union Territory of Pondicherry (UTP), for the first time

in the Country launched a National Pilot Project on Financial Inclusion in 2006 under Rural

model involving all banks operating in UTP with the aim of providing at least one Bank account

to each household.

Urban Financial Inclusion Model:

There is a general feeling that Financial Inclusion is not necessary in Urban & Metro Centers. In

reality, large numbers of persons in urban centers are not having banking facility and financial

exclusion is very common particularly in respect of the migrated labor who moved into the

urban/metro centers in search of jobs. Most of them do not have bank accounts and knowledge

of banking facilities. Hence they send money to their family members through informal sources

such as friends, relatives etc or carry cash whenever they visit their native place.

The situation was not different in Dharavi (Mumbai) Asia’s largest slum, in the country's

commercial capital. Indian Bank had launched financial inclusion in Dharavi, to fulfill banking

requirement of the people in this area following its successful implementation in Pondicherry

UT. In fact, for Indian Bank, the poor, who are otherwise considered to be un-bankable, are

certainly reliable and bankable.

Before launching the project, discussions were held with Senior officials of NGOs (Nirman)

operating in Dharavi and Community leaders to assess the needs of the migrant workers in

Dharavi in keeping their savings safe and using the amount when they need it. Reserve Bank of

India has also evinced keen interest in ensuring that the Banking products/facilities are provided


3

to the inhabitants of the area. RBI officials, Smt. Usha Thorat and Sri. Kaza Sudhakar had been

extremely supportive for the success of the pilot project.

Under the inspiring and dynamic leadership of Dr. K.C.Chakrabarty, then Chairman and

Managing Director and Shri M.S.Sundara Rajan, then Executive Director, Indian Bank, the pilot

project was launched in September 2006 with the immediate objective of enabling thousands of

migrant workers from Tirunelveli to have access to Banking and Technology. Efforts are to

extend all financial and social security products and services for the people.

Mass campaigns were conducted with teams of officers and staff from nearby branches viz.,

Sion, Mahim, King’s Circle for taking up households survey and simultaneous opening of ‘no

frills’ accounts at convenient centres such as Sundara Vinayagar Temple, Adi Dravida Sangham,

St. Anthonys Church, etc.

Door-to-door ‘account opening camps’ at select locations was done by officers .In all cases,

ATM card applications were obtained to issue ATM cards subsequently so that the migrant

workers could draw cash from Bank’s ATMs at Mumbai or at their native place or elsewhere. As

a result of the campaign, over 7000 persons in Dharavi were provided with Banking facility and

the process is being continued. ATM cards were issued to over 3000 account holders. Under the

financial inclusion project, eligible persons are being provide with overdraft facility in their

saving account up to Rs. 5000, General Credit Cards up to Rs. 25000 to micro entrepreneurs and

Life insurance and Health insurance at minimal premium rates.

THE FIRST COMMERCIAL BANK’S BRANCH TO FUNCTION IN DHARAVI

Simultaneously, the Bank took the initiative for obtaining a license to open a branch in the slum

area. The Bank’s effort has succeeded with the permission of RBI, which has resulted in opening

of the branch with CBS and ATM facility in Dharavi. Indian Bank is the first scheduled

commercial Bank branch located in this largest slum area meeting the long felt need of the

people.

With the implementation of the Financial Inclusion project in Dharavi, the migrant workers from

Tirunelveli and other villages from Tamil Nadu are benefited as they have been provided with

easy money transfer facility. Besides, the account holders have been issued ATM cards, which


4

can be used for withdrawing the amount from their account using the wide ATM network

established.

Laying strong emphasis on life, disability and health cover for the vulnerable section, the bank

provides two new micro-insurance schemes namely Janashree Bima Yojana for members of

the groups such as SHGs, etc., in association with Life Insurance Corporation to provide life and

disability cover and Universal Health Care Policy (UHCP), a mediclaim insurance scheme in

association with United India Insurance Company Ltd (UIIC) aimed at below poverty line (BPL)

families. The premium payable is low and affordable and the policy benefits are very attractive

and come handy in unforeseen circumstances such as death, accident, sickness, etc.

The Bank is in the process of issuing smart cards to the no-frill account holders of Dharavi in

association with M/s Financial Information and Operations Network Ltd.(FINO),Mumbai, which

will enable them to do banking transaction at their

doorsteps through the Bank’s mobile banking officer. Enrollment for more than 149 cards is

over. These smart cards embedded with a chip can act as customer identity tokens using the

finger print as bio-password and an e-pass book for storing transaction data. This e-inclusion will

help in achieving the Bank’s mission namely “Taking Technology to the Common Man”.


5

ABOUT THE PROJECT

SHGs are seen to confer many benefits, both economic and social. Although the SHGs can be

formed for any development activity, for the financial institutions to use them as a conduit for

banking activities, the SHGs should be practicing thrift and credit and be familiar to money

management. SHGs enable members to grow their savings and to access the credit which banks

are increasingly willing to lend.

But there are also some questions. How effective are the groups in managing their financial

transactions? Are the groups sustainable? Do they help in mobilizing women to take social

action? Who is really benefiting? Do the poorest benefit, do they not join at all or if they do join,

are they more likely to drop out?

This study explores such questions, based on field research in Dharavi presenting a reality

check of 'what is really happening'. While microcredit is used as a viable tool in fighting

poverty, more than half of the poor individuals choose not to participate for various reasons.

And, therefore, the question whether microcredit is really able to improve the conditions of the

poor is worthy of research such as the one being undertaken in this study.

The study encompasses many parameters like outreach, meetings, leadership, savings by the

group, literacy level of members, group membership, recoveries, awareness level of the

members, etc. and based on these the SHGs with whom interaction had been done have been

evaluated to come up with the one to be granted repeat loan by the bank.

The opinion of Branch Manager of the bank and officials who were directly in contact with the

SHG women with regard to the choice of group / individual mode of financing was obtained

through a structured questionnaire. The reasons for the success of the model employed at the

Dharavi branch of Indian Bank (reported to have a repayment rate of 100%) were uncovered by

having detailed discussions with the key bank officials.


6

OBJECTIVE OF THE PROJECT

The main objective of the study is to obtain a comprehensive knowledge of the

performance of SHGs, find out the social and economic benefits and the downsides of

SHGs being financed by Indian Bank. The aim is partly to find out what is really

happening at group level. It is also to try and look at what can be done, exploring

factors that contribute to positive and negative outcomes, and to consider what can be

done to optimize the benefits or to avoid or mitigate the downsides. To examine the various SHG-linkage models being used between the SHGs and the

Formal Financial Agencies. To find the model being employed and the reasons for 100% repayment rate at the

Dharavi branch of the bank.

VALUE ADDITION TO THE ORGANIZATION

The project would help Indian Bank in a number of ways:

They can use the details obtained of the SHGs and approach them to spread awareness

and involvement in microcredit.

The bank’s burden of assessing the SHGs in order to sanction them repeat loans would be

considerably reduced.

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8

SELECTION OF SHGS, APPROACH AND METHODOLOGY

A random sampling technique was used to select SHGs. The study approach is depicted

diagrammatically in below mentioned figure. The study employed a combination of qualitative

methods and the data collected both from primary and secondary sources.

METHODOLOGY

The sections in the pages overleaf describe the methodology for each key task that was

undertaken to meet the requirements of the assignment.

1. Meeting with the officials of Indian Bank

In the inception phase, a meeting was held with the key officials of the bank. In this

meeting, we discussed about the requirements for the assignment, the work plan, the

expected deliverables and the associated timelines, reporting schedules, etc and finalized

the same.

2. Training

A thorough briefing of the expectations that the project should fulfill was conducted by

the Branch Manager at Dharavi.

3. Secondary Research

Secondary data was collected from the Reports and administrative guidelines of the bank.

Apart from these, books, journals, seminar papers, websites, etc. also formed the sources

for the collection of secondary data for the study. The necessary primary and secondary

data in respect of this study were also collected from the functionaries at various levels.

4. Development of Survey Tool

Based on secondary research and interaction with key officials, the following data

collection tools were developed :

• Semi-Structured Interviews conducted with SHG women in Dharavi, PrabhaDevi ,

Elphinsston Road, etc.( questionnaire is given in Annex B)


9

• Unstructured Interview Schedules were used to elicit information from the Indian Bank

officials.

5. Familiarization Visits

Preliminary field visits to Dharavi with an objective to assess the SHG situation and pilot

test data collection formats. Based on the inputs from various respondents, data collection

formats were revised.

6. Primary Research

The primary data were collected by personal interviews with key respondents. The data

collected with the help of schedules were separately compiled for every information

sought on various aspects of SHGs functioning, activities undertaken, results produced,

opinions held, etc. The opinion of Branch Manager of the bank and officials who were

directly in contact with the SHG women with regard to the choice of group / individual

mode of financing was obtained through a structured questionnaire. Sharing of the

preliminary findings with Indian bank functionaries, the Branch Manager Mr. S.R.

Veeraraghavan and Mrs. Ashmita Pati to check the veracity of the conclusions drawn

was done.

The Respondents for the study were:

• Branch Manager, Dharavi, Mr. S. R. Veeraraghavan

• Assistant Branch Manager, Dharavi, Mrs. Ashmita Pati

• Area Coordinator, Mr. Ashok Mohite

• Community Organisers, Mrs. Ranjana Manohar Katke and Mrs. Rekha Devkar

• SHG women


10

7. Data Analysis

After the survey was completed, the data was carefully scrutinized and the results were

tabulated to evaluate the performance of the 15 SHGs and eventually find out the best

amongst them.

REPORT FORMAT

The report is structured as:

Overview of the project, the objectives, approach and methodology of the study ,

literature review and limitations.

Overview of the concept of Self Help Group (SHGs) and Developmental Paradigm

Field Survey on Swarozgaris and the evaluation of SHGs

Self Help Groups: Paradigm of Success.

The stakeholder analysis

The impact of SHGs on Swarozgaris

Recommendations for improving the scheme.

Conclusion

LIMITATIONS

The major limitations for the study are as follows:

Respondents to the survey are mainly residents of Dharavi area and the study findings

and recommendation given are based on the limited coverage of 15 SHGs, therefore the

analysis may not be representative of the entire poor population of India.

There are many acclaimed benefits of the SHG programme that are yet to be examined

empirically.

Lack of accurate information from the members of the SHGs.

Time constraint is another limitation to the study.


11

MICROFINANCE

Microfinance is defined as any activity that includes the provision of financial services such as

credit, savings, and insurance to low income individuals which fall just above the nationally

defined poverty line, and poor individuals which fall below that poverty line, with the goal of

creating social value. The creation of social value includes poverty alleviation and the broader

impact of improving livelihood opportunities through the provision of capital for

micro enterprise, and insurance and savings for risk mitigation and consumption smoothing.

According to International Labor Organization (ILO), “Microfinance is an economic

development approach that involves providing financial services through institutions to

low income clients”. A large variety of actors provide microfinance in India, using a range of

microfinance delivery methods. Since the founding of the Grameen Bank in Bangladesh,

various actors have endeavored to provide access to financial services to the poor in creative

ways. Governments have piloted national programs, NGOs have undertaken the activity of

raising donor funds for on-lending, and some banks have partnered with public organizations or

made small inroads themselves in providing such services. This has resulted in a rather broad

definition of microfinance as any activity that targets poor and low-income individuals for the

provision of financial services. The range of activities undertaken in microfinance include

group lending, individual lending, the provision of savings and insurance, capacity building,

and agricultural business development services. Whatever the form of activity however, the

overarching goal that unifies all actors in the provision of microfinance is the creation of social

value.

A BRIEF HISTORY OF MICROFINANCE IN INDIA The post-nationalization period in the banking sector, witnessed a substantial amount of

resources being earmarked towards meeting the credit needs of the poor. There were several

objectives for the bank nationalization strategy including expanding the outreach of financial

services to neglected sectors. As a result of this strategy, the banking network underwent an

expansion phase without comparables in the world. Credit came to be recognized as a remedy

for many of the ills of the poverty. There spawned several pro-poor financial services, supported

by both the State and Central governments, which included credit packages and programs

customized to the perceived needs of the poor. While the objectives were laudable and


12

substantial progress was achieved, credit flow to the poor, and especially to poor women,

remained low. This led to initiatives that were institution driven that attempted to converge the

existing strengths of rural banking infrastructure and leverage this to better serve the poor. The

pioneering efforts at this were made by National Bank for Agriculture and Rural Development

(NABARD), which was given the tasks of framing appropriate policy for rural credit, provision

of technical assistance backed liquidity support to banks, supervision of rural credit institutions

and other development initiatives.

In the early 1980s, the Government of India launched the Integrated Rural Development Program

(IRDP), a large poverty alleviation credit program, which provided government subsidized credit

through banks to the poor. It was aimed that the poor would be able to use the inexpensive credit

to finance themselves over the poverty line.

Also during this time, NABARD conducted a series of research studies independently and in

association with MYRADA, a leading non-governmental organization (NGO) from Southern

India, which showed that despite having a wide network of rural bank branches servicing the

rural poor, a very large number of the poorest of the poor continued to remain outside the fold of

the formal banking system. These studies also showed that the existing banking policies, systems

and procedures, and deposit and loan products were perhaps not well suited to meet the most

immediate needs of the poor. It also appeared that what the poor really needed was better access

to these services and products, rather than cheap subsidized credit. Against this background, a

need was felt for alternative policies, systems and procedures, savings and loan products, other

complementary services, and new delivery mechanisms, which would fulfill the requirements of

the poorest, especially of the women members of such households. The emphasis, therefore, was

on improving the access of the poor to microfinance rather than just micro-credit.

Based on the studies mentioned above, NABARD developed the Self Help Group [SHG] bank

linkage approach as the core strategy that could be used by the banking system in India for

increasing their outreach to the poor. The strategy involved forming SHGs of the poor,

encouraging them to pool their thrift regularly and using the pooled thrift to make small interest

bearing loans to members, and in the process learning the nuances of financial discipline. Bank

credit to such SHGs followed. NABARD saw the promotion and bank linking of SHGs not


13

merely as a credit programme but as part of an overall arrangement for providing financial

services to the poor in a sustainable manner leading to empowerment of the members of these

SHGs.

The past 25 years has seen a variety of microfinance programs promoted by the government and

NGOs. Some of these programs have failed, and the learning experience from them have been

used to develop more effective ways of providing financial services. These programs vary from

regional rural banks with a social mandate to MFIs. In 1999, the GoI merged various credit

programs together, refined them and launched a new programme called Swaranjayanti Gram

Swarazagar Yojana (SGSY). The mandate of SGSY is to continue to provide subsidized credit

to the poor through the banking sector to generate self-employment through a self-help group

approach and the program has grown to an enormous size.

MFIs have also become popular throughout India as one form of financial intermediary to the

poor. MFIs exist in many forms including co-operatives, Grameen-like initiatives and private

sector MFIs. Thrift co-operatives have formed organically and have also been promoted by

regional state organizations like the Cooperative Development Foundation (CDF) in Andhra

Pradesh. Private sector MFIs include NGOs that act as financial services provider for the poor

and include other support services but are not technically a bank as they do not take deposits. .

Today, Self-Help Groups and MFIs are the two dominant form of microfinance in India. This

report focuses on the aspects of the Self Help Groups as an effective means to provide financial

services to the poor.


14

LITERATURE REVIEW A thorough Secondary data analysis was undertaken in order to plan the survey. The previously

conducted researches on related topics provided us with the guidelines for further course of

action. For the secondary data, we used various journals and websites.

SLUMDOGS REALITY

In this paper the author has drawn a parallel on the life in Dharavi to that reflected in the movie

“Slumdog Millionaire”. The author says that the film's depiction of the legendary Dharavi, which

is home to some one million people, is that of a feral wasteland, with little evidence of order,

community or compassion (Sengupta Mitu,2009).Other than the children, the “slumdogs”. no-

one is even remotely well intentioned in the film, eventually arguing that Dharavi teems with

dynamism and creativity, and is a hub of entrepreneurial activity, in industries such as garment

manufacturing, embroidery, pottery, and leather, plastics and food processing. The author argues

that Dharavi's lanes are lined with cell-phone retailers and cybercafés, and according to surveys

by Microsoft Research India, the slum's residents exhibit a remarkably high absorption of new

technologies.

The author has also put-forth the role of many cooperative societies which work together with

grassroots associations to provide residents with essential services such as basic healthcare,

schooling and waste disposal, and tackle difficult issues such as child abuse and violence against

women. The author has lastly commented on the “Dharavi Redevelopment Project” which

proposes to convert the slums into blocks of residential and commercial high rises, taking the

stand that the project may destroy thousands of livelihoods by rendering unviable countless

household-centered businesses and criticizing the government for integrating its "problem-

population" into modern, middle-class Mumbai.


15

INCOME GENERATING ACTIVITIES OF WOMEN SELF HELP GROUPS OF

DHARWAD DISTRICT OF KARNATAKA: An Insight

The study was conducted in Dharwad, Kalghatagi and Kundgol taluk of Dharwad district

of Karnataka during 2005,covering 12 women SHGs(Malshet K.K. et al ,2009). This study is

divided in two parts. The purpose of the first part of the study was to obtain a comprehensive

knowledge on the participation of women Self Help Groups of Dharwad district of Karnataka in

various Income Generating Activities. In this study, performance of the SHGs was referred to the

economic activities undertaken by the members and activities undertaken by the group as a

whole for the benefit of its members. Primary data in the study was obtained from the founder,

promoters of SHGs, middle and grass root level personnel of NGOs and members of self-help

groups. Semi-structured interviews were used to interview all the SHG members. To interview

the spokespersons of the groups, structured interviews were used, and open-ended questions

were used for the middle and grass root levels personnel of the NGO. Data collected from the

SHG members were completed and analyzed. The observations from the study were that the

income per month of SHG members had a positive relation with respect to the factors like Age,

Family size and land holding, TV, Radio, Education level of the members. The most common

income generating activity found was raising of paddy nursery.

The purpose of the next part was to obtain a comprehensive knowledge of the performance of

SHGs with special importance to the procedure followed in the formation activities undertaken,

benefits derived by the members, the difficulties encountered as well as their suggestions and

socio-economic profile of members. All the members of SHGs and grass root level workers of

NGOs were interviewed. The observations from the study were that the majority of the members

of the SHGs were motivated by themselves, because they understood that the SHGs is a good

means to save. The correlation tests applied for the independent variables with income per month

as the dependent variable revealed that there is positive significant relationship between

education and income per month, also mass media participation with income per month.

Misunderstanding amongst SHG members, difficulty in diversification of the activities, lack of

space for storage of materials, difficulties experienced in marketing prepared products and

frequent powers cuts were some of the problems reported by SHGs members.


16

SUSTAINABILITY OF MICROFINANCE SELF HELP GROUPS IN INDIA

The major form of microfinance in India is that based on women’s Self Help Groups (SHGs),

which are small groups of 10-20 members(Nair Ajai,2005). The small size of the SHGs and

thereby, the limited resources – both financial and human – they have access to, make most

SHGs dependent on the promoter agencies that have developed these groups for several essential

services. This paper explores the merits and constraints of federations of SHGs that provide

services to the SHGs for which they were dependent on the promoter agencies. The SHG

federations being studied are Sri Padmavathy Mahila Abyudaya Sangam (SPMS), Kurinji

Vattara Kalanjiam (KVK), Sanghamitra Mandala Mahila Samakhya (SMMS), Sri Viswabharthi

Association of Women Thrift Cooperatives (SVAWTC). These federations provide the broadest

range of services of significant value to the SHGs. The main objective of the study is to explore

the potential of SHG federations in making SHGs financially and organizationally sustainable,

and to recommend strategies to strengthen them.

The author has described the services provided by the primary organizations and the federations

which help the SHGs gain economies of scale, obtain value-added services, reduce transaction

costs, and enhance empowerment, thereby contributing to organizational sustainability of the

SHGs. The author has identified the internal(like governance, staffing, accountability to SHGs)

and external(like Capacity of Promoter Agencies , Inadequate Knowledge Base on SHG

Federations, the extent of the services provided by them, or the amount of financial resources

handled by them) issues and challenges related to the sustainability and promotion of SHG

federations.

The findings of this study suggest that federations could help SHGs become institutionally and

financially sustainable because they provide the economies of scale that reduce transaction costs

and make the provision of various services viable. However, their sustainability is constrained by

several factors – both internal, related to the federations themselves and external, related to the

other stakeholders. The paper concludes by recommending some actions to address these

constraints.


17

LINKING BANKS AND(FINANCIAL) SELF HELP GROUPS IN INDIA-An

Assessment

In this paper, the author has described the role of NABARD in developing the SHG-Bank

linkage approach as the core strategy to be used by the banking system in India for in increasing

their outreach to the poor (Kroop Edward & Suran B.S.,2002). The author has also provided an

in-depth text on how NABARD has taken the initiative of testing the strategic concept of SHGs

in Indian conditions and implementing the linking of SHGs to banks (Linkage Banking

Programme started in 1992). NABARD as Linkage Banking programme initiator and prime

mover has developed a detailed strategy for SHG-Banking promotion with the purpose to

include, address and familiarize NGOs, Bankers, Government officials, Volunteers, etc. with the

programme. The author has further argued that SHG-lending is organization-based and therefore,

facilitating agencies were given support by NABARD to assist in establishing SHGs and to cover

the costs involved. The author has also talked about the Vikas Volunteer Vahini (VVV)

Programme to include Farmers’ Clubs sponsored by bank branches. The author has argued that

in SHG-Banking, the central assumption underlying this banking by the people is the firm belief

that the SHGs of the poor are reliable partners in handling bank funds.

The author has explained the role of SHGs as financial intermediaries in the villages, further

stating that SHG is a social design in which people participate by making themselves socially

and economically accountable to each other. SHG-Banking is an ideal combination of the formal

banking sector’s “banking with the poor” and “banking by the people” through informal SHGs.

Credit is a catalyst. It comes and goes but leaves behind some changes.

The author has noticed that to increase the number of SHGs who start to make voluntary thrift on

a regular basis is the most essential strategic variable in the Linkage Banking. The author has

then identified the operational aspects of SHG Banking and the significance of MFI or Non-

Government Microfinance Sector(NGMS),the achievements in SHG-Banking, the acceptance of

SHG-Banking by the Formal Banking System in India, the reasons why SHG-Banking has

achieved good results and the risks in SHG Banking. Lastly, the author has said that an

evaluation of the experience of those SHGs which have not been a success should be undertaken

to learn from potential failures in the group formation process.


18

SELF-HELP GROUPS: A KEYSTONE OF MICROFINANCE IN INDIA

This paper examines the SHG operating model, the state of SHGs today, their impact on civil

society (on aspects like politics, social harmony, social justice, livelihoods, etc.) and how they

need to be supported in going forward(Reddy C.S & Manak Sandeep,2005). An analysis of how

the Government, NGOs, Banks and others including the private sector can work together to help

answer the needs to SHGs in an effective manner has been done. The report focuses on the

aspects of the SHG as an effective means to provide financial services to the poor.

The research paper has shown that the financial management of SHGs is average or weak ,

eventually stating that it is vitally important that both government and NGOs work to bear all the

costs of interventions to make them sustainable otherwise the SHGs will be overburdened and

destined to failure. The author has also stated the key areas of SHG financial management that

need to be improved such as internal controls, accounting, organizational efficiency, etc. The

author argues that if the government were to enact policy that would regulate the quality of

SHGs and tied this to their eligibility for SHG Bank Linkage, then this would help bring about a

more measured and responsible growth to the movement.

The author concludes by stating that there is a need for a well developed third party rating

system for SHG federations before they are linked with financial institutions to act as an

intermediary as they handle large volume of funds from the bank linkage and also undertake

savings from their members and that there is a need for establishing a computerized MIS for

SHGs and SHG federations to monitor their performance on a regular basis.


19

SELF HELP GROUPS AS FINANCIAL INTERMEDIARIES IN INDIA

This study, which has been undertaken for Sa-Dhan, New Delhi on behalf of ICCO and Cordaid,

supplements studies undertaken by I/C Consult on the self-help group (SHG) landscape in India

(Tankha Ajay,2002). It analyses the role and development of SHGs in financial intermediation

in rural India. The study is based on the experiences of seven leading NGOs involved in the

formation of SHGs and interviews with chief executives and staff of a dozen other major NGOs/

projects promoting SHGs. The study addresses three main issues:

• Efficiency wherein the average cost of SHG promotion both with and without emphasis on

social and political empowerment has been talked about. Also, the caused to the average

promotion costs due to the credit plus approach has been discussed.

• Effectiveness wherein the results of assessment studies of the effects and impact of SHG

Promotion and the results of monitoring indicators of impact has been described.

• Sustainability wherein the kind of sustainability or phase out strategy employed by NGOs is

explained.

The study seeks to achieve an understanding of “best practice” in SHG development in India and

to help direct donor funds for microfinance.


20

MICRO-CREDIT PROGRAMME THROUGH SHGs ENSURES SILENT

REVOLUTION IN KEELA MULLAIKUDI PANCHAYAT OF TIRUVERUMBUR

UNION

The major objective of the study is to analyse the micro credit programme operation through

SHGs and to find out the socio – economic conditions of the members with special reference to

Keela Mullaikudi Panchayat of Tiruverumbur Union, Tiruchirappalli District(Xavier Joseph &

Jerome V,2008). Keela Mullaikudi Panchayat of Tiruverumbur Union is a rural area where

programmes are launched to promote economic and social development. The study explores the

operation of micro credit programme and how it influences the rural people and the SHGs to plan

for future target with better organization and effective utilization of resources through SHGs.

The investigator has collected primary data age, family size, educational qualifications,

occupation, income of the respondents with the help of the questionnaire by personal interview.

The researcher aimed to collect the views and opinions of the respondents in order to understand

the appropriateness of ceiling of loan sanctioned, validity of terms of loan, the feasibility of

repaying the loan and interest on loan as well as the standard of operation and general

performance of SHGs.

The study reveals that micro-credit programmes through SHGs are innovative, progressive and

productive and that it brings socio-economic development, undoubtedly. The author has

concluded by saying that SHGs have instilled faith among women to work in vision for their

economic emancipation.


21

SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY)

SHORT DESCRIPTION OF THE SCHEME

Swarnajayanti Gram Swarozgar Yojana(SGSY) is a self-employment scheme. This scheme was

introduced on 1 April, 1999. The principal

aim of this scheme is to bring Below Poverty

Line families to Above Poverty Line status

within three years. It is rooted in the belief

that the rural poor in India have competencies

and, given the right support can be successful

producers of valuable goods/services. SGSY

is conceived as a holistic programme of

micro-enterprises covering all aspects of self-

employment viz. organisation of the rural

poor into self-help groups (SHGs) and their

capacity building, planning of activity

clusters, infrastructure build up, technology,

credit and marketing. One of the most

important components of the SGSY is the

scaling up of micro enterprises in a group

formed of women belonging to below poverty

line families. This component is titled

“Development of Women & Children in Urban Areas” wherein group activities of women

can be sponsored for loan in which fifty percent of the project cost can be given as subsidy as per

the Government of India.

Initially groups are formed with 10 or 15 persons belonging to the BPL families. This group is

called a Self Help Group (SHG) and the individual members of the group Swarozgaris. There is

provision under the scheme to involve local NGOs to help the District Rural Development Cell

in forming such groups.


22

The funds received by the DRDC are kept in a savings bank accounts. The DRDC can open their

account with branches of the principal participating banks in the field. The funds deposited in the

saving account earn interest at the usual rates till the amount is given as loans to the Swarozgaris.

In the first six months the group members are taught to save money i.e. they have to build up a

corpus fund by saving a certain amount every week/month. These savings are kept in a local or

field bank. After six months, the groups are evaluated by a team where the Project Director, a

member of the Block Development Office and a representative of the bank are present. If they

pass the evaluation test they are given Grade I status. At this stage they are paid Rs. 10,000 as a

revolving fund. Individual members can borrow from this money either for business purposes or

for personal consumption. They do not have to pay any interest. They are also given Rs. 15,000

as loan by the bank, which is called the cash credit or matching corpus fund.

After completion of one year, according to performance and again going through an evaluation

process, the group gets Grade II status. After a group gets Grade II status they get credit cum

subsidy facilities. This stage is called bank credit linkage. Subsidy under SGSY is uniform at

30% of the project cost, subject to a maximum of Rs. 10,000. For groups of Swarozgaris (SHGs)

the subsidy is 50%.


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UNDERSTANDING SELF HELP GROUPS

STRUCTURE OF SHG

A SHG is a group of about 20 people (usually women) from a homogeneous class, who come

together for addressing their common problems. They are encouraged to make voluntary thrift on

a regular basis. They use this pooled resource to make small interest bearing loans to their

members. The process helps them imbibe the essentials of financial intermediation including

prioritization of needs, setting terms and conditions and accounts keeping. This gradually builds

financial discipline & credit history for themselves, as the money involved in the lending

operations is their own hard earned money saved over time with great difficulty. This is ‘warm

money.’ They also learn to handle resources of a size that is much beyond their individual

capacities. The SHG members begin to appreciate that resources are limited and have a cost.

This process creates an ethic that focuses on savings first. Once the groups show this mature

financial behavior, banks are encouraged to make loans to the SHG in certain multiples of the

accumulated savings of the SHG. This is ‘cold money’. The bank loans are given without any

collateral and at market interest rates. Banks find it easier to lend money to the groups as the

members have developed a credit history. ‘Cold (outside) money’ gets added to the own ‘warm

money’ in the hands of the groups, which have become structures, which are able to enforce

credit discipline among the members. The members have experienced the benefits of credit

discipline by being able to save & borrow regularly without many hassles. The groups continue

to decide the terms of loans to their own members. The peer pressure ensures timely repayments

& replaces the “collateral” for the bank loans. While men very often leave the village to work

outside, makes it difficult to form groups and to meet regularly. They usually end up in heated

discussions and find it much more difficult to come to acceptable decisions regarding fund

allocation among the members. They face the problem of sustainability to a greater degree than

women groups.


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SHG BANKLINKAGE

A most notable milestone in the SHG movement was when NABARD launched the pilot phase

of the SHG Bank Linkage programme in February 1992. This was the first instance of mature

SHGs that were directly financed by a commercial bank. The informal thrift and credit groups of

poor were recognized as bankable clients. Soon after, the RBI advised commercial banks to

consider lending to SHGs as part of their rural credit operations thus creating SHG Bank

Linkage.

The linking of SHGs with the financial sector was good for both sides. The banks were able to

tap into a large market, namely the low-income households, transactions costs were low and

repayment rates were high. The SHGs were able to scale up their operations with more financing

and they had access to more credit products. SHGs formed on the initiative of the Banking

System (by bank staff or agents) have the overwhelming objective to help SHGs get access to

banking (saving and credit) services to improve the economic condition of their members and to

wean them away from moneylenders. They may be called financial SHGs.

Linked not only to banks but also to wider development programmes, SHGs are seen to confer

many benefits, both economic and social. SHGs enable women to grow their savings and to

access the credit which banks are increasingly willing to lend. SHGs can also be community

platforms from which women become active in various areas, stand for local election or take

action to address social or community issues (the abuse of women, alcohol, the dowry system,

schools, water supply).


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PRINCIPLES

The concept of SHG is based on the following principles:

Self-help supplemented with mutual help can be a powerful vehicle for the poor in their

socio-economic development;

Participative financial services management is more responsive and efficient;

Poor need not only credit support, but also savings and other services;

Poor can save and are bankable and SHGs as clients, result in wider outreach, lower

transaction cost and much lower risk costs for the banks;

Creation of a common fund by contributing small savings on a regular basis;

Flexible democratic system of working;

Loaning is done mainly on trust with a bare documentation and without any security;

Amounts loaned are small, frequent and for short duration;

Defaults are rare mainly due to group pressure.


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FEATURES OF SELF HELP GROUPS

The basic concept remaining precisely the same, some additional features and working resilience

have been incorporated in the SHGs for making the concept still more user-friendly and for

achieving the avowed objectives of the SHG concept in its true spirit. The notable features are:

Features of SHGs Strategy

Conceived as a holistic programme of self‐employment. It covers all the aspects of self‐employment of the poor, viz. organizing them in SHGs, their capacity building of key activities, planning of activity clusters, infrastructure build‐up, technology and marketing support.

SHG Formation Specifically SHG members from BPL families with some exception for a few marginal APL families if acceptable to the BPL members of the group.

Group size of 10‐20 persons, with the exception of disabled persons where the number of members vary from 5 to 20.

Special focus on the formation of exclusive women Self‐Help Groups. 50% of the groups formed in each block should be exclusively for women.

SHGs are normally formed by NGOs, Community‐based Coordinators, or a team of dedicated functionaries of the government.

Income Generating Activities(IGAs) SGSY Committee identifies about 8‐10 key activities for the groups to choose some of them as the sustainable income‐generating activity for themselves.

Primarily, single income‐generating activity by the group is given preference under group loan. Group, however, may go for multiple activities also under group loaning. Thus, IGAs are taken by the SHG members as a group activity.

The focus is on the development of activity cluster to facilitate forward and backward linkages to the IGAs.


27

Promotional Support (i) Financial Support (ii) Group Formation and Nurturing

Support

Revolving Fund Assistance(RFA) is provided to groups equal to their group corpus within the prescribed limit.

Back‐end subsidy to the extent of 30% to 50% of the project cost is provided to individual beneficiary, and 50% of the project cost of the group level activity is provided within the prescribed limits.

Financial Assistance is provided to NGOs for promotion and development of SHGs.

Capacity Building Support Fund support is made available to organize training of beneficiaries in group processes and skill development.

Infrastructure Building Support There is planned focus on infrastructure build‐up, technology and marketing support to make self‐employment activity economically sustainable.


28

HOW SELFHELP GROUPS WORK

The rules and regulations of SHGs vary according to the preferences of the members and those

facilitating their formation. A common characteristic of the groups is that they meet regularly

(typically once per fortnight or once per month) to collect the savings from members, decide to

which member to give a loan, discuss joint activities (such as training, running of a communal

business, etc.), and to mitigate any conflicts that might arise. Most SHGs have an elected

President, a vice-president, a treasurer, and sometimes other office holders.

Most SHGs start without any external financial capital by saving regular contributions by the

members. These contributions can be very small (e.g. 50 Rs per month). After a period of

consistent savings (e.g. 6 months to one year) the SHGs start to give loans from savings in the

form of small internal loans for micro enterprise activities and consumption. Only those SHGs

that have utilized their own funds well are assisted with external funds through linkages with

banks and other financial intermediaries.

Bank gives loans to SHGs either as "matching loans" (whereas the loan amount is proportionate

to the group's savings) or as fixed amounts, depending on the group's record of repayment,

recommendations by group facilitators, etc.


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HOW DO SELF HELP GROUPs SAVE (BACHAT GAT)

Among the poor households, the capacity for saving is remarkable and testifies their skill in

efficient utilization of resources and also their ability of setting aside thrift even at extreme low

income levels. The savings account of the group is opened at the Bank forging a future

relationship with the banker. The newly established groups do not start with a loan from the

bank. They start as savers’ groups with regular monthly small savings targets. The savings are

collected during the regular meetings and entered into individual passbooks and the group

passbook. Each member saves identical amount (approximately Rs. 50 to Rs. 100). This

contractual saving system has been introduced by every group visited in the field with the aim to

start developing a basic financial discipline and to build-up an own capital stock as an internal

resource base and to become eligible for a bank loan.

The group aggregates the small individual saving and borrowing requirements of its members,

and the bank needs only to maintain one account for the group as a single entity. The banker

assesses the competence and integrity of the group as a micro-bank, but once he has done this he

does not concern himself with the individual loans made by the group to its members, or the uses

to which these loans are put. He treats the group as a single customer, whose total business and

transactions are probably similar in amount to the average for his normal customers, because

they represent the combined banking business of some twenty ‘micro-customers’. Any bank

branch can have a small or a large number of such accounts, without having to change its

methods of operation.


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PURPOSE OF GETTING LOAN

All the members get loan for different purposes. The various purposes for which loans obtained

by the respondents are to start business, to educate their children, to meet medical expenses, to

meet marriage expenses, to maintain house expenses, to redeem other loans and to meet festival

expenses.

It paves the way for the empowerment of women and builds confidence in them to stand on their

own feet. The banks provide assistance for various entrepreneurial activities such as setting up

small shops, vegetables shops, tailoring units, charcoal making units, dairies etc.,Besides

focusing on entrepreneurial development and empowering women, SHGs concentrate on all-

round development of the beneficiaries. The concept of SHG moulds women as responsible

citizens of the country achieving social and economic status.

The SHG is a viable alternative to achieve the objectives of urban development and specially

women empowerment. Through the SHG, the micro credit is disbursed to women for the

purposes of making them enterprising women and encouraging them to enter entrepreneurial

activities. The group rotates the money to the needy members for various purposes at a specified

interest rate. As the repayment is cent percent and the recycling is fast, the savings amount

increases rapidly owing to the accumulation of income from interest. The savings habit helps the

members to escape from the clutches of money lenders.


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LOAN PROCESSING Step 1

The Community Organizer identifies the members who are in need of loans in each monthly group meeting. Priority is given to the members or loan basing on regular savings, repayment behavior, purpose of loan, attendance in meeting. Duly filled in application in the prescribed format along with the credit demand of the clients, description of the purpose for which the clients need loans and a signed resolution of the group is collected by the Community Organizer in the weekly meeting and forwarded to the Area Coordinator.

Step 2 The Area Coordinator along with the Community Organizer scrutinizes the filled in application form based on the status of internal lending in the group, prospective loanees’ savings with the group, repayment capacity of the client, amount of loan, purpose of loan. Incase the Area Coordinator finds the need of loan and the submitted documents are not proper or appropriate, he/she can reject the loan application. After ensuring that all the required documents are there along with the loan application, he/she forwards the same to the Assistant Branch Manager. The Community Organizer/ Area Coordinator does not have any authority to assure a loan to any of the groups.

Step 3 The Assistant Branch Manager or other bank officials make visits to all the groups, appraise them and if satisfied, make a loan proposal and forward it to the Branch Manager for his approval.

Step 4 The applications are assessed by the Branch Manager to authenticate the information. If he finds them genuine, he approves the loans.

Step 5 All the necessary documents are filled at the borrower’s level and the loan is disbursed to the respective borrowing SHG by cheque. Most importantly, before disbursing a loan to the group, the bank ensures keeping of all the


32

required information of all the clients of a group.

Step 6 A computer generated repayment schedule is prepared in mutual agreement of both the parties (group & Indian Bank).

Step 7 Repayment starts after one month of disbursal of loan.


33

SELF HELP GROUPS BANK LINKAGE MODELS

There are three models of linkage of banks with SHGs and NGOs:

MODEL - 1:

In this model, the bank itself acts as a Self Help Group Promoting Institution (SHPI). It takes

initiatives in forming the groups, nurtures them over a period of time and then provides credit to

them after satisfying itself about their maturity to absorb credit.

MODEL -2:

In this model, groups are formed by NGOs (in most of the cases) or by government agencies.

The groups are nurtured and trained by these agencies. The bank then provides credit directly to

the SHGs, after observing their operations and maturity to absorb credit. While the bank provides

loans to the groups directly, the facilitating agencies continue their interactions with the SHGs.

Most linkage experiences begin with this model with NGOs playing a major role. This model has

also been popular and more acceptable to banks, as some of the difficult functions of social

dynamics are externalized.

BANK

BRANCH

SHG

NGO

Fig. Model adopted by Indian Bank


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MODEL - 3:

Banks finance to Microfinance Institutions for lending to the SHGs. The bank is the lender and

the MFI acts as an agent for handling items of work relating to credit monitoring, supervision

and recovery. In other words, the MFI acts as an agent and takes care of all relationships with the

people. This model is based on the ability of the MFIs to get close to the poor clients while

relying on the financial strength of the bank to safeguard the deposits. The model has the

potential to significantly increase the amount of funding that MFIs can leverage.

BANK

MFI

SHGs


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COMPARATIVE ANALYSIS OF MICROFINANCE SERVICES OFFERED TO THE POOR

Source: R. Arunachalam - Alternative Technologies in the Indian Micro- finance Industry

The number of SHGs linked to Indian bank has increased to 183301 as on March 31, 2009. This

translates into an estimated 2.5 million very poor families brought within the fold of formal

banking services. More than 90 percent of groups linked with banks are exclusive women groups

with savings of 1841.6 lakhs. Cumulative disbursement of bank loans to the SHGs stands at

Rs. 1056.4 crore.


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IMPACT OF THE INITIATIVE BY THE BANK:

The Dharavi branch of Indian Bank which was inaugurated in 2007 has emerged as a powerful

and vibrant movement spread over the length and breadth of this area. As on 30.04.2010 there

are 725 SHGs under this branch of Indian Bank.

Because of the sustained activities under Indian Bank and BMC like SHG formation, training

and skill development, there has been perceptible changes in the social status of women in

general and women of Dharavi in particular. The SHG movement has brought about the

following:

DIRECT EFFECTS OF SHG BANKING include :

Excellent credit culture, with SHG members fully observing their loan obligations.

An increase in the bank’s overall repayment rate, due to the influence of the SHG

women members

Increased overall vibrancy in branch business, due to the economic activities of SHGs

in the villages, very much welcomed by the branches where “large underutilized

capacities” exist

Substantial decrease in the reliance on moneylenders, many of whom have reportedly

gone out of business, while the remaining ones have tended to lower their interest rate.

The spreading of thrift among members and non-members, resulting in improvement in

self-reliance and self-financing.

Propagation of financial management skills

Their self confidence has been raised to a great extent and there is a sense of economic

security now.

Increased awareness among poor women about the various welfare schemes of the

Government

Asset creation among SHG members Decision Making


37

INDIRECT EFFECTS OF SHG BANKING include:

Increase in school enrolment

Better health, family planning, support for government programmes

Income-generating activities undertaken by SHG members

Access to credit by non-members (at 3% interest per month, compared to 2% to members

and 5% charged by moneylenders).

Gaining entrepreneurial experience

Earlier they were confined to the boundaries of their houses only but now they come out

of their houses for monthly meetings and this has made them vocal; during our focused

group discussion we saw 95% of the members raising some issues or another.

Preparing the ground for direct microenterprise promotion

Social benefits are reportedly many, attributed to a significant degree to the vibrancy of

the SHG movement and its supporters

Improved communication skills

SHGs functioning as alternate conflict resolution mechanism

Empowerment of women in community development programmes and civic affairs

Improved women literacy

Increase in school enrolment

Improved sanitation and access to drinking water.


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INTERVIEW QUESTIONS

AREAS OF ENQUIRY NUMBER PERCENTAGE AGE Young(19-30 years) Middle(31-50 years) Old(Above 50)

EDUCATION Illiterate Primary School Middle School High School

INCOME Annual Income

Upto 10,000 10,000-20,000 21,000-30000 31,000-40,000

Monthly Income

Upto 200 201-300 301-400 401-500

Income Generating ACTIVITY UNDERTAKEN by the SHG Members

• Activity Undertaken Eateries Groceries

• Reasons for choosing the activity Familiarity of women with the activity Easy mastering skills involved Raw materials easily available

Constraints faced by SHG Members Not getting adequate quantity of raw materials at the

right time Lack of space for storage of materials Difficulties in sale of prepared products Misunderstandings amongst SHG members Not getting adequate credit Maintenance of accounts Difficulties in diversification of activities


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OUTREACH:

Membership:

How many women have joined ? Exclusion: reasons for not joining? Dropouts: how many drop out ? and why? Number of years of operation.

MAIN ACTIVITY:

What are the main activities undertaken by the group members? Why were these activities chosen:

- familiarity of women with the activity - easy mastering skills involved - low input cost - easy availability of raw materials

MEETINGS:

How many times in a month are the meetings held? What is the average attendance in the meetings? Are the members punctual? Do all the members actively participate in the meetings?

LEADERSHIP:

Whether the leaders have been elected and rotated? Whether there is a conscious attempt to groom other members to take up leadership?

RECOVERIES:

What is the pattern of loan repayment & what happens in case of default(if any)? Number of external borrowings since group formation?

SAVINGS:

Are they saving regularly? Is there an increase in the saving amount?


40

AWARENESS LEVEL OF MEMBERS:

What is the awareness level of the group members about the groups’ activities-loan amount, savings amount, bank loan details, etc.

Do they feel the benefits? If yes, what kind?

GROUP MEMBERS:

Family linkages within SHGs. Homogeneity by caste of SHG members. Schooling of SHG members.

LOAN AMOUNT and OTHER CONSTRAINTS:

Is there equal distribution of bank loan? Is the loan size adequate? What are the constraints faced by them?


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EVALUATION SHEET FOR SHGs Evaluation Parameters Variables Weightage

Group Size a. Less than 10 members

b. 10-15 members

c. 15- 20 members

5

8

10

Number of years of operation a. 1-3 years

b. 4-5 years

c. More than 5 years

5

8

10

Meetings I. Monthly

a. 1 meeting

b. 2-3 meetings

c. 4 meetings

II. Regularity

a. Irregular

b. Regular

III. Timings

a. Afternoon

b. Morning

c. Evening

d. Night of after 7pm

5

8

10

5

10

3

5

8

10

Average attendance a. Less than 50%

b. 50%-70%

c. 70%-90%

d. More than 90%

3

5

8

10

Participation a. Low

b. Medium

c. High

3

5

10


42

Loan Recovery a. Nil recovery since no loan was

given for more than 6 months

b. Dues recovered less than 70%

c. Dues covered 70% to 90%

d. Dues recovered more than 90%

3

5

8

10

Savings Amount saved

a. 50/-

b. 100/-

c. 150/-

Frequency in a month

a. Once

b. 2 times

c. 3 times

d. 4 times

Regularity

a. Irregular

b. Regular

Intra lending rate

a. Nil

b. More than 36%

c. 24%-36%

d. Depending upon the purpose

Utilization of the loan Amount

e. No utilization

f. Partial utilization

g. Full utilization

5

8

10

3

5

8

10

5

10

0

5

8

10

0

5

10


43

Awareness level a. Low

b. Medium

c. High

3

5

10

Homogeneity by caste a. Homogenous

b. Mixed group

8

10

Family linkages a. Yes

b. No

8

10

Education level a. Less than 20% having functional

literacy

b. 20%-50%

c. More than 50%

3

5

10

Documentation (Maintenance,

upkeep, Custody, etc.)

a. Bad

b. Medium

c. Good

3

5

10

Accumulated savings a. Less than 2000/-

b. Rs. 2000/- to Rs. 3000/-

c. Rs. 3000/- to Rs. 5000/-

d. More than Rs. 5000/-

3

5

8

10

Records maintained

(Each record maintained gets 1

point)

a. Attendance register

b. Minutes book

c. Loan ledger

d. Savings ledger

e. Cash book

f. General ledger

g. Bank pass book for the group

h. Receipts voucher file

i. Payments voucher file

j. Visitors book

1

1

1

1

1

1

1

1

1

1


44

Evaluation.xlsx


45

The SHG which has received the maximum marks in the evaluation process is:

OM SAI MAHILA UTPADAK GAT no. of women-10

AREAS OF ENQUIRY NUMBER OF WOMEN AGE Young(19-30 years) Middle(31-50 years) Old(Above 50)

4 6 -

EDUCATION Illiterate Primary School Middle School High School

- 3 6 1

INCOME Annual Income

Upto 10,000 10,000-20,000 21,000-30000 31,000-40,000

Monthly Income

Upto 200 201-300 301-400 401-500

- 2 7 1 1 1 2 6

Income Generating ACTIVITIES UNDERTAKEN by the SHG Members(more than one)

• Activities Undertaken Manufacturing of toys. Catering Tiffin Service Buying and selling of sarees from Surat Buying and selling of towels Broom making Buying of grains in bulk and selling them, gaining the

margin • Reasons for choosing the activity

Familiarity of women with the activity Raw materials easily available

5 3 2 2 4 6 6 7 3


46

OUTREACH:

Formed in 2005 comprising of 10 women members There have been 2 dropouts since its formation, reasons for the dropouts being a death

and an operation after which she quit from the SHG. This group has been operational since 5 years and therefore, it can be said that the

members of this SHG are quite compatible with each other.

These women earlier had their accounts at Bank Of Baroda but didn’t receive the loan amount

even after 3 years, as against Indian bank which sanctioned the loan amount in just 10 months.

A sum of Rs. 10,000/- only had been provided as revolving fund by the government after six

months of formation of the SHG.

MAIN ACTIVITIES:

Manufacturing of toys. Catering Tiffin Service Buying and selling of sarees from Surat Buying and selling of towels Broom making Buying of grains in bulk and selling them, gaining the margin.

These activities were chosen by the members due to the familiarity of women with the activity and easy availability of raw materials.

These women had been given training by “Savita Bai Phule Sanstha” on:

File making,

Broom making,

Parlor work,

Basic computer training, and

Cooking


47

MEETINGS:

Meetings of the group take place once in a month before the 15th day of the month. The group members are reported to have an average of more than 90% attendance in

the meetings, members being punctual and actively participating in the group discussions.

LEADERSHIP:

The President of this group is Mrs. Kavita Savant. She had been elected by the group members at the inception of the group formation.

Since the group members share a good relation amongst themselves, they feel that there have been conscious attempts to groom other members to take up leadership.

There has been no rotation of the positions of President, Secretary and Treasurer since the group formation.

RECOVERIES:

An amount of 4400 is deposited every month in the bank as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the repayment of the loan amount till date.

No external borrowings have taken place since the group formation as the members feel that high amount of interest rates are being charged by moneylenders.

SAVINGS:

Apart from the repayment of the loan amount, the members save Rs. 100 per month and there has been no increase in this amount since the inception of the group.

AWARENESS LEVEL OF MEMBERS:

The members have full awareness about the groups’ activities-loan amount, savings amount, bank loan details, etc.

The benefits felt by them are as follows: Increase collective savings which help them during contingencies Feeling of being secure in a group Interest obtained on the savings Able to meet contingencies. Increase in assets Social Empowerment


48

GROUP MEMBERS:

There is no family linkage within the SHG There is homogeneity by caste of the SHG members, all members being Hindu (sub-

castes are different). 30% of the SHG members have primary education, 60% have education till middle

school and 10% have schooling till high school.

LOAN AMOUNT and CONSTRAINTS:

There has been equal distribution of bank loan among the members. The members feel that the loan amount is adequate as they get free training in various

activities which helps them in enhancement of their skills.

The group members are happy with the SGSY scheme launched by GOI for the betterment of

families living below the poverty line.

An Insigh

KEY ACFunding

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skill up

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ready ma

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The SHG

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are :

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ht Into Self

CTIVITIESdiverse acti

mental suppo

gradation a

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arket for the

elp women c

G movemen

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ul ventures a

elling of re

BrihanMumb

Working as C

Buying of gra

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erfumes

Running Dep

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elling dairy

elling fruits

Making drink

Tailoring

Employed in

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Help Group

S ivities aims

ort which in

and establish

the process

ure and the l

products. T

cross the po

nt has led to

in multifario

among the m

eady made

bai Municipa

Community O

ains and oil i

teries like va

incense st

partmental st

e

products

ks like cocum

old age hom

ather goods

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to identify

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The potential

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Organizer in

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49

few select a

ket survey, c

orward and

by the viab

ces, the aptit

l to generate

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ad economic

mic activities

aken by SHG

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ear at “Aad

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omplete rang

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done

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50

CAPACITY BUILDING OF SHG MEMBERS

All the swarozgaris are provided an opportunity to better their practical, serviceable and

entrepreneurial skills through one or two days orientation programme. In this basic orientation

training, the beneficiaries are familiarized with the goals, responsibilities, and aspects of book

keeping.

SHG members interviewed to collect data for this study were also asked questions to collect

information about the training programmes they underwent during the last one-year.

The data reported clearly points out that the highest priority was accorded to the training

programme for technology education (Income Generating Activity related) and SHG awareness

creation. Next in priority was the training on book-keeping which was organized.

SHG TRAINING

The processes of group formation and training are critical stages for stability of the group.

Training includes teaching rules and regulations governing bank procedures and administrative

requirements, maintenance of book of accounts, rules for internal lending and repayment of

loans, keeping the group fund intact (trust is essential in relations with the bank and among

group members), knowing in detail the responsibilities of the President, Secretary and Treasurer

of the group, the potential of own savings or learning to write one’s signature. Community

organizers do this job during 4 to 5 visits to a newly formed group. Book keeping is usually

given to a knowledgeable and trustworthy person.

ENTREPRENEURSHIP DEVELOPMENT TRAINING : ED training is conducted by Savita Bai Phule Sanstha to expose the SHG women to various

business opportunities and to motivate them to start economic activities. Training related to the

following has been given :

File making,

Broom making,

Parlor work,


Cooking.


51

SKILL UPGRADATION TRAINING PROGRAMME :

BrihanMumbai Municipal Corporation has taken the initiative to provide skill training to SHG

women so as to enable them to start their own income generating activities. The duration of the

training and the cost depends on the nature of the trade selected by the members.

AWARENESS PROGRAMME : Akshara Organisation conducts “Barefoot Counselling” for the SHG women wherein women

are given lessons to enhance their knowledge on womens’ right. It is a BrihanMumbai Municipal

Corporation initiative.


52

IMPACT OF SHGS ON SWAROZGARIS

Self-employment is a significant step to have sustained incomes and remove the shackles of

poverty. During the study, adequate attention was given to cover various aspects of the program

and understand the impact of the support on the slated objectives. Detailed information was

collected on the income generating activities being undertaken by the groups and analysis done

on the benefits percolated. The contribution of the scheme in creating sensitivity towards health

and hygiene, fostering entrepreneurial skills, etc was also analyzed. The concern of the group for

livelihood security was inferred from their behaviours like taking interest in planning and

initiating income-generating activities, inter-loaning and taking interest in the outreach activities

and securing bank credits, etc. Primary data as well as the secondary information has been used

to measure the programme performance and its impact.

The findings, inferences and results of the survey based on the results of questionnaire canvassed

among the group members and on the interviews and discussions held are as follows:

Incremental employment: Various economic activities have been pursued by the

groups. Activity wise analysis of incremental employment and income suggests that the

women involved in activities like selling eateries which require lesser amount of forward

and backward linkages have been more successful. The activities requiring more linkages

and service inputs have not been successful to that extent.

Impact on Poverty: The assistance under SGSY was found to have enabled the SHG

women enhance their earnings. However, these incremental levels of income are largely

due to the low level of earning prior to interventions under SHG. As such a small

increase in income has resulted in a significant rise in the group income. The

employment activity taken up by some SHG women ranged from 8 days to 11 mandays

per month.

Occupational Preference: These women have taken low risk loans to support their

activities. Though service sector is a more attractive source of employment and income,

in the urban areas, it was not actively pursued by them.

License: Licenses have not been granted to these women by the Municipal Corporation.

The concept is at its infancy and has to be properly nourished

An Insigh

W

re

re

It

ac

su

th

w

re

w

su

g

F

in

an

on

In

en

cr

T

em

w

In

S

T

T

A

ht Into Self

Workload: T

educe the en

eproducers

t was hoped

ctivities

ufficiently p

hem to earn

with less ph

epeatedly p

workload. Th

upplementar

ive up any o

Financial Sta

n access cred

nnum depen

n better nutr

ncrease in

nvironment,

rime against

The involvem

mpowermen

within the fam

ncrease in t

HG member

The social an

There are imp

Access to cre

Help Group

The purpose

normous wor

and produc

d that the new

would b

productive f

n better in

hysical labou

ointed out

his was mai

ry work, but

of their earlie

atus: The fi

dit. Addition

nding on the

rition of Chil

awareness

campaign a

t girls and w

ment of the

nt, as witne

mily, their co

he assets ow

rs' family pr

nd economic

provements i

edit has enab

ps

Emplo

e behind the

rkload that p

ers.

w

be

for

comes

ur. Instead,

by the wo

inly because

the new act

er tasks.

nancial statu

nal family in

income gen

ldren and on

levels abo

against erad

omen, untou

poor in the

essed by the

ommunicatio

wned by them

oblems as w

status has im

in school en

bled women t

53

oyment Le

e idea of rev

poor women

in the int

omen how j

e joining th

ivities could

us of househ

ncomes to m

nerating activ

n the health c

ut the soci

dication of s

uchables, Aid

SHGs had

e improvem

on skills and

m.

well as social

mproved.

nrolment, atte

to undertake

eadership Quality E

vamping po

especially c

terviews wi

joining the

he SHGs had

d not generat

holds had im

members rang

vities. Increa

care.

ety led to

social evils l

ds and suppo

significantl

ment in their

d their other

l problems af

endance, san

e income gen

Empowerment

or people's

carry in their

ith the bene

SHGs had

d provided

te enough in

mproved due

ge from Rs.

ase in incom

o planting t

like dowry,

ort to widow

y contribute

r confidence

behavioural

ffect their SH

nitation facil

nerating activ

Decision Making

activities w

r multiple rol

eficiaries, it

d increased

them with

ncome for the

e to improve

1000 to 300

me has been

trees, conse

child marri

ws and destit

ed to their s

e, their treat

changes.

HG activitie

lities, etc.

vites.

was to

les as

t was

their

some

em to

ement

0 per

spent

rving

iages,

ute.

social

tment

es.


54

ROLE AND PERCEPTION OF KEY STAKEHOLDERS For successful implementation of the concept of SHGs, clarity and a common platform in the

perception of all the stakeholders is required. The important stakeholders in the program are

Bankers, Area Coordinators, Community Organisers and NGO. It is clearly spelt out in the

programme guidelines what each stakeholder at every stage of the program has to do. In

establishing the micro enterprises, the emphasis has to be on the identification of key activities.

The following were the some of the important observations regarding the role and perception of

various stakeholders involved in the programme implementation:

BANKERS Close association of bankers at all stages of programme implementation right from identification

of key activities, selection of SHGs and planning for all the elements of key activities, post credit

monitoring and loan recovery is important for the success of the SHG concept. The bankers in

the study region had a positive perception regarding programme implementation.

BRANCH MANAGER

His interest, attitude and level of commitment critically decided the degree of success of the

programme. The programme design and the guidelines had given this functionary the authority,

discretion and financial resources to operationalise his decisions.

The discussions with him in the study suggested that only some of them were able to play this

role successfully in respect of a few activities, particularly in planning for infrastructure, forward

and backward linkages. His leadership has played a decisive role in the key activity

development and building its viability. His expertise, capabilities and aptitude made all the

difference in the success of the programme. His capacities to build market infrastructure,

integrate / network with other public programmes for market development, workout partnerships

with public / private institutions, provide access to technology proved to be pivotal to the

programme.


55

The findings based on the unstructured interviews held with the bank officials are as follows:

The problems of the members of SHG's were solved by the proper guidance of the NGO

in the study area.

Accounts are properly maintained and audited and the system of collecting money is

good, that is, the problems of the members in the SHGs are solved by the effective

functioning of the SHGs in the study area.

SHGs promote a sense of oneness. Women empowerment is possible through SHGs and

it creates a sense of confidence, that is, women empowerment has been created with the

help of SHG's in the study area.

SHGs function in a democratic manner and transparency in SHG functioning is

maintained.

Adequate facilities for savings are provided and the rate of interest (12.5% p.a.) is

reasonable.

Bank procedures are easy to follow and adequate funds are available from Bank.

The average value of the household assets, which includes consumer durables and the

like has increased in the post-SHG stage. The housing conditions have generally

improved with a shift in the ownership from Kuchha to Pucca houses.

Almost all the members had developed the savings habit in the post-SHG situation

Self Help Groups enhance the equality status of women as participants, as decision

makers and as beneficiaries in the economic, social and cultural spheres of life. Self help

groups encourage women to take an active part in the socioeconomic progress of the

nation.

The SHGs collectively ensure prompt repayment of the bank loans. The SHG have thus

provided access to credit for the urban poor. The transaction costs are low, because of

the constant and effective supervision, the proper utilization of the loans and the

repayments of the loans.


56

AREA COORDINATOR & COMMUNITY ORGANISERS

It was heartening to note that the Area Coordinator felt they had adequate flexibility, discretion

and access to fund support to implement the programme. The area coordinator felt that bankers’

cooperation was absolutely necessary for the successful programme implementation. The

synopsis of the interaction with the area coordinator is given below:

The hallmark of the SHGs promoted by BMC and the primary reason for their success is

the systematic training provided to SHG members, which leads to qualitative changes in

their attitude and behaviour.

The most critical learning is that even uneducated women can take up higher

responsibility, when one gives the right autonomy and environment to them. The

existence of such a large number of SHGs at Indian Bank is a great proof, in which belief

in business and leadership acumen of the women was given a priority in formal training.

The sense of ownership among the SHG members is an important factor in its success.

This has helped them in achieving efficiency in operations and reaching a scale with

uncompromising quality. The labour intensive and familiar nature of the activity chosen

has led to the success of the initiative. The diversification into new activities is a well

thought out decision wherein the skill set of the people is taken into consideration. The

thrusting of activity to people through and capacity building can have chances of failure

though.

The critical aspect of catering to the market demand and tapping the same is evident.

Since it is necessary that the market for products should be identified first so that a

continuous cycle of production and sale is maintained, the required support is given by

them. This helps in building confidence in the beneficiaries to engage themselves in a

sustained manner. Large scale operation also requires establishment of forward and

backward linkages for easy and smooth operations.


57

RECOMMENDATIONS

Distance Learning:

In the study it has been reported that the members of the Groups were not fully literate

and were not able to read and write. The handicap of literacy is a hurdle for achieving

many desired results. For example, they are unable to follow the accounts maintained by

the group and hence remain ignorant about the amount pooled individually and in the

group, and are be unable to draft an application to represent their case. It is therefore

essential to provide them education through especially designed modules e.g. through

distance education that are directly useful as a member of SHG.

On the face of it, Distance Education appears per se a ‘women friendly’ form of

acquiring education and formal qualifications. There are two characteristics which are

generally seen to render this mode of learning especially suitable for women, by making

distance education compatible with other spheres of life. First, there is no attendance

requirement, Second, at the same time, there is a high degree of flexibility in learning

schedules and time management. These characteristics have three distinct and undisputed

advantages for the distant student. Since, the distance-teaching curriculum is designed for

independent study if can well fit with family commitments and living at home. Learning

material should be sent to the women at their home or workplace, they can learn while

they earn and the NGO may provide them the required tuition wherever they desire.

Group based strategies: At this stage they do not need school or university certificate,

Diploma or degrees. They need improvement in their professional skills and solving their

day-to-day problems in the working and functioning of SHGs. They should be explained

the advantage of group based strategies in poverty alleviation. It is important to explain

that she is not alone and that such problems are being faced universally. Only by self-help

they may fight against their misfortune and improve upon the fate of their family and

children.


58

All these problems, opportunities and chances can be explained to women through a short

duration training module delivered at their doorstep or work place. At the initial stage

certain problems and resistance from the participants may be faced if some extra time and

money is demanded. It is therefore suggested that the benefits should be linked with the

Distance learning modules and subsidies should be in the form of distance education

and not cash.

Differential Rate of Interest: It has been observed in several research studies that

women do experience a double day, as they return to work combined with their domestic

roles. The Policy planners must think to integrate the economic benefits with education. I

suggest the Differential Rate of Interest (DIR) for women doing any Course through

Open schools or any other mode of Open and Flexible learning.

Self Help Study Groups: A UNICEF study (1998) on Violence against women in South

East Asia concluded that compulsory schooling for all girls would be a long-term

measure to reduce violence against women by providing them qualifications as the basis

for getting a job which in turn will enable them to earn their own income and improve

their status. Thus the SHGs should in-fact also be converted into Self Help Study Groups

that will give them not only enhanced income but also enhanced esteem and self

confidence to do something meaningful for the society as a whole. They should realize

that they are not isolated and unproductive but an important wheel for the smooth running

of the society. The economic incentives and effective NGOs participation will definitely

make the women empowerment a reality. All this demands some extra time and money.

A top-down approach: Policy makers need to appreciate the fact that, the poor do

intensely use the limited knowledge and experience at their command. If their lives are to

be changed significantly, then outside agencies have to bring in substantial inputs of a

kind that they want but cannot get. For this it is important to find out what they do know

and have. It is only then that schemes can be devised that can give right inputs in right

quantities. Jobs, not micro credit, is the solution.


59

At present, the gestation period of the SHGs to get through the grading process and avail

the loan for economic activity is almost one year. It has been reported that some SHGs

have not got loan from the bank even after more than one year of its formation and group

activities. Therefore, the grading exercise should be given to an independent agency to

reduce time.

Motivation training for income-generating activities and technological training for

capacity building should be organized by competent agencies with greater seriousness,

and, therefore, identification of good training institutions/ master trainers and developing

a system for evaluation of training conducted by them should be done by the NGO.

Women of dharavi are poor not because they do not work, but because they work on low

productivity work. So, to improve their condition, they should be given:

– Thorough analysis of market opportunities to find out what production is to be

encouraged in each area.

– The skills required for activities to generate those products; these are to be modern

professionally imparted skills.

– Technical expertise to acquire the required tools.

There must be lot more publicity given among the potential beneficiaries about the

scheme and its contents as well as the authorities in charge and their responsibilities. That

way the targeted population can seek help. For this extensive use should be made of all

forms of media and particularly of the visual media.

Generating awareness about the schemes and its benefits so that the aim that people’s

quality of life after joining the SHGs significantly improve and they are not overburdened

with poorly remunerated extra work is achieved.

For empowerment of women it is essential that the attitudes and perceptions of organizers

be radically changed. Women must be seen not just as reproducers and home makers and

supplementary earners but as productive members of the economy and society

Wherever the group is not cohesive, interpersonal differences should be removed through

counseling and organizing special training programmes for them.


60

Training programmes on

– Health education

– Formal education for school going, school dropout children and

– Awareness about prevalent social evils should be given adequate priority

The NGOs should actively help the SHGs in both backward and forward linkages and

provide them market support in particular.

The subsidy provided under the SGSY programme should be discontinued and the

amount should be spent on creating market support to the SHGs for their Income

Generating Activities, products and also provide some sort of reward to the successful

SHGs as an incentive for good work.


61

CONCLUSION

The women led SHG's have successfully demonstrated that they could mobilize and manage

thrift, better appraise their own credit needs and enforce financial self discipline among them.

The present research study of women self-help groups has revealed that these women groups had

gained confidence among them and had mostly brought about the attitudinal changes and had

transformed their social outlook among its members. The self-help groups in this area have

emerged as a new paradigm for eradicating poverty. These groups have enhanced the equality

status of the women folk as participants, decision-makers and beneficiaries in the democratic,

economic, social and cultural spheres of their lives and sensitized the women members to take a

very active part in the socio-economic progress. Their ingenuity in the endeavour to survive

appears inexhaustible. Common to them is the competence to make a living from it.

Some valuable lessons can be drawn from the experience of this successful Microfinance

operation. First of all, the poor repay their loans and are willing to pay for higher interest rates

provided that access to credit is provided. The solidarity group pressure and sequential lending

provide strong repayment motivation and produce extremely low default rates. Secondly, the

poor save and hence microfinance should provide both savings and loan facilities. These two

findings imply that banking on the poor is a profitable business. However, attaining financial

viability and sustainability is the major institutional challenge. In order to be sustainable,

microfinance lending should be grounded on market principles because large scale lending

cannot be accomplished through subsidies.

Poor people are reliable and honorable. They are aware, the only way to combat their problem of

poverty and dependence is by acting together as a group. Their ideas centre around the most

rational use of money and on the collective production of goods and services. The most preferred

input is credit. Credit is a catalyst. It comes and goes but leaves behind some changes

Women empowerment aims is possible only when a woman has increased access to economic

resources, more involvement through social relationships and participation, more self-motivation

and confidence, and more say in the family matters. Women should be willing to take additional

effort for building a mind set which is suitable for their overall empowerment. It is a gradual and

consistent process which requires the support of many in one way or other.


62

A major conclusion is that this financial scheme is a unique contribution to microfinance. The

SHGs are not “used” by banks to channel a bulk loan to several poor people in a “single-size-

fits-all” kind of methodology with all members benefiting equally. This was the predominant

retail delivery system at the start up phase in which Microcredit has been delivered to groups in

different countries. In SHG-Banking, the central assumption underlying this banking by the

people is the firm belief that the SHGs of the poor are reliable partners in handling bank funds,

they will always pay back their loans and they are much more creative in allocating the loan fund

among their members than any outside agency because they know the character and capacity of

every person very intimately. Therefore, full autonomy is given to them by the Bank to decide,

to which member a loan is given and how to make it best fit for them (“tailor made”) in terms of

purpose, amount, duration, size of installments, interest rates etc.

The good performance of the SHG-Banking Programme at Indian Bank is due to its strategy to

mobilize underused capacities of the target group. At last I would conclude by saying that

“SHG-Banking is an ideal combination of the formal banking sector’s “banking with the

poor” and “banking by the poor” .


63

APPENDIX

Interview Templates


64

SIDDHIVINAYAK MAHILA BACHAT GAT

The group was formed in 2004 comprising of 10 women. There have been two dropouts since

the inception, reasons a death and a transfer to village. The President and cashier of this group

are Ms. Madhura Tukaram Patil and Mrs. Sushma Birje respectively. They had been elected by

the group members at the inception of the group formation. There has been no rotation of the

positions of President, Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG

including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank

as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the

repayment of the loan amount till date. Apart from the repayment of the loan amount, the

members save Rs. 150 per month and there has been no increase in this amount since the

inception of the group.Five members of this SHG also deposit Rs. 20 in Patthpeedi every day.

The SHG women feel that the loan amount is inadequate and that they would require a larger

amount of loan for expansion of their activities.

ACTIVITIES:

The major activities undertaken by this group are :

Preparation and selling of eateries-snacks.

Catering

Tailoring

Employed in Old Age Home

30% of the SHG members have primary education, 40% have education till middle school and

30% have schooling till high school. The income per month of 80% of the group members

reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of space for storage, and difficulty

in diversification of activities and that though the loan amount has been granted to them, no

license for undertaking any activity has been granted to them by the Brihanmumbai Municipal

Corporation.


65

SWAYAM MAHILA BACHAT GAT

The group was formed in 2009 comprising of 10 women. There have been no dropouts since the

inception. The President of this group is Ms. Shweta Goutam Pawar. She had been elected by

the group members at the inception of the group formation. There has been no rotation of the







inception of the group.

ACTIVITIES:


Food Supply at Kindergarten school

Supply of ladies inner garments

Supply of ladies nightwear

The main reasons for choosing these activities have been the familiarity of women with the

activities ,easy availability of raw materials and easy mastering skills involved.




Majority of the members have reported to face the constraint of difficulty in sale of products

due to lack of marketing and not getting adequate quantity of raw materials at the right time.


66

UNNATI MAHILA BACHAT GAT

The group was formed in 2007 comprising of 15 women. The President, Secretary and Cashier

of this group are Mrs. Ranjana Manohar Katke, Mrs. Shubhangi Patil and Mrs. Sumitra

respectively. They had been elected by the group members at the inception of the group

formation. There has been no rotation of the positions of President, Secretary and Treasurer

since the group formation.






inception of the group. The SHG women feel that the loan amount is highly inadequate and that

they need a loan of Rs. 25,000 per member to start and sustain their respective businesses.

ACTIVITIES:


Making of Leather Belts.

Catering

Making of Leather bags


activities and easy availability of raw materials. Also these activities can be undertaken even

from home.




Majority of the members have reported to face the constraint of space for storage of the raw

materials, and difficulty in diversification of activities .The group members are satisfied with the

SGSY scheme launched by GOI for the betterment of families living below the poverty line.


67

JUDAANI MAHILA BACHAT GAT

The group was formed in 2007 comprising of 15 women. The President of this group is Mrs.

Alka. She had been elected by the group members at the inception of the group formation. There

has been no rotation of the positions of President, Secretary and Treasurer since the group

formation.






inception of the group. The women of this group feel that the loan amount is inadequate and that

they would require a loan of atleast Rs. 50,000 in order to start a concrete activity.

ACTIVITY:

The major activity undertaken by this group is:

Buying of grains and oil in bulk from Vashi and selling them at Dharavi, gaining a

margin of Rs. 2 per kg.


activities and easy availability of raw materials.




Majority of the members have reported to face the constraint of space for storage, and

inadequacy of credit.




68

SUVIDHA MAHILA BACHAT GAT

The group was formed in 1996 comprising of 10 women. There have been three dropouts since

the inception. The President of this group is Mrs. Naina Bhanishirge. She is a Community

Organizer for a NGO and had been elected by the group members at the inception of the group

formation. There has been no rotation of the positions of President, Secretary and Treasurer

since the group formation.





members used to save Rs. 50 per member per month, now save Rs. 100 per month. The SHG

women feel that the loan amount is inadequate and that they would require a larger amount of

loan for expansion of their activities.

ACTIVITIES:


Selling of eateries like idli, puri bhaji, chapatti,etc.

Catering

Tailoring





reportedly lies within the range of 400-500. The group was provided training masala

making,etc.

Majority of the members have reported to face the constraint of space for storage, and difficulty

in sale of prepared products as the orders for catering are irregular.


69

OM SAI MAHILA BACHAT GAT

The group was formed in 2005 comprising of 10 women. There have been two dropouts since

the inception. The President of this group is Mrs. Kavita Savant. She had been elected by the

group members at the inception of the group formation. There has been no rotation of the







inception of the group.

These women earlier had their accounts at Bank Of Baroda but didn’t receive the loan amount

even after 3 years, as against Indian bank which sanctioned the loan amount in just 10 months.

A sum of Rs. 10,000/- only had been provided as revolving fund by the government after six

months of formation of the SHG.

The members feel that the loan amount is adequate as they get free training in various activities

which helps them in enhancement of their skills.

ACTIVITIES:


Tiffin service.

Catering during diwali

Buying and selling of towels thereby gaining margins

Buying of grains in bulk and selling them, gaining the margin.


activities and easy availability of raw materials and low input costs.


70




These women had been given training by “Savita Bai Phule Sanstha”

File making,

Broom making,

Parlor work,


Cooking.

Majority of the members have reported to face the constraint of space for storage of the grains

they buy for selling in the Dharavi area.




71

SWAMI SAMARTH MAHILA BACHAT GAT


inception. The President, secretary and cashier of this group are Mrs. Suhasini Ambolkar, Mrs.

Sulochana and Mrs. Reshma respectively. They had been elected by the group members at the

inception of the group formation. There has been no rotation of the positions of President,

Secretary and Treasurer since the group formation.






inception of the group. The SHG women feel that the loan amount is inadequate and that they

should be granted Rs. 25,000 individually so that they could start their own business.

ACTIVITIES:


Making Cloth Bags.

Making Perfumes.

Making Incense sticks

Sewing

The main reasons for choosing these activities have been the easy mastering skills involved for

these activities and that they could be made at home, even in small quantities.




Majority of the members have reported to face the constraint of credit inadequacy.


72

LAKSHMI MAHILA BACHAT GAT


inception of the group in 2005. The President, Secretary and Treasurer of this group are Mrs.

Ranjana Pawar, Mrs. Suhasini and Mrs. Suparna Kadam. They had been elected by the group

members at the inception of the group formation. There has been no rotation of the positions of

President, Secretary and Treasurer since the group formation.






inception of the group. The SHG women feel that the loan amount is inadequate and that they

would require a larger amount of loan for expansion of their tiffin business in particular.


Selling articles outside temples.

Making incense sticks.

Tiffin service.






Majority of the members have reported to face the difficulty in the sale of their products.




73

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sattur taluk of virudhunagar district , Journal for bloomers of research, pp. 4-5.

SEIBEL HANS & DAVE HARISHKUMAR,2002, Commercial aspects of self-help

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REDDY ANUPPALLE, 2008, Self-help groups in India - a catalyst for women economic

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LAKSHMANAN S., 2008. Expanding access to urban poor through microsate branches,

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Documents

An Insight Into Self Help Groups