Chapter IV DEVELOPMENT OF SELF-HELP GROUPS IN …shodhganga.inflibnet.ac.in/bitstream/10603/8124/11/11_chapter 4.pdf · 85 4.0 Introduction The movement of Self-help groups (SHGs)

Chapter IV

DEVELOPMENT OF SELF-HELP GROUPS IN INDIA AND ANDHRA

PRADESH

85

4.0 Introduction

The movement of Self-help groups (SHGs) as the most effective tools

for financial inclusion was started some thirty years ago with NGOs

promoting self help groups. This has evolved into a national movement with

the proactive role of the state governments gaining recognition from all the

major stakeholders. This Chapter analyzes the growth and development of

SHGs in the country and in Andhra Pradesh.

4.1 Concept of Self-help Groups

The concept of SHG services the principle, ‘by the women, of the

women and for the women’. Self-help groups are voluntary associations of

people with common interests formed to achieve collective social and

economic goals. Such groups are organised for mutual help and benefit. It is

formed democratically without any political affiliations. They may comprise

of 15–20 women and/or men, although they generally consist exclusively of

women members. In India, more than 90 per cent groups are formed by

women. is done at micro or group level. The initial operations of SHGs start

with collecting savings from members. These groups inculcate the habit of

thrift among the members. By collecting small saving huge amount can be

raised. These groups advance loans to the needy members. The total funds

owned by the group are thus circulated in the form of loan among the

members.

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The identification, formation, and nurturing of groups is carried out

by NGOs, other development agencies or banks with the promoters

inculcating habit of thrift among members. Once the groups are trained and

strengthened, they are linked to nearby banks, usually within six months of

formation. Banks provide collateral-free credit in increasing proportion to

the group’s accumulated savings. All the initiatives such as selection of

borrowers for availing credit, identification of activity, unit cost volume of

loan, management of finance and procedures for repayment are undertaken

by the poor at the group level. Briefly, SHGs can be stated ‘as a plan by the

people, of the people for the people. It reflects the real people’s participation

in the process of development at micro level.

4.2 Genesis of SHGs in India

Over the decades of planned development, the shift of emphasis of

women’s programmes from purely welfare oriented approach to a more

pragmatic and development oriented one has recognized woman as a

productive worker and contributor to the economy. The formal financial

institutions have failed to perform their role of supplying institutional credit

to the women folk in our country for undertaking the income generating

activities. As a result, a large segment of poverty stricken people and

particularly the women who constitute a significant number still remain

outside need for the emergence of a new institution to tackle the situation.

The origin of SHG is from the brain child of Gramin Bank of

Bangladesh, which was found by the economist, Prof. Mohammed Yunus of

Chittagong University in the Year 1975, to provide micro-finance to rural

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women. In Bangladesh, micro-finance has been established as a most

powerful instrument to tackle poverty.

The SHGs in India were formed by Mysore Resettlement and

Development Agency (MYRADA), a NGO in 1985 due to breakdown of the

large cooperatives organized by MYRADA. By 1986–87, there were nearly

300 SHGs in MYRADA’s projects. MYRADA then approached NABARD for

an action research project on self-help groups which funded the research.

Within the same timeline, Asian and Pacific Regional Agricultural Credit

Association (APRACA) weighed options and agreed on further action for

effectively increasing credit access for the poor. In India, NABARD and a

member of APRACA, carried out an elaborate study which gave useful

insights into the dynamics of group organization, saving potential and

repayment ethics of the poor. Encouraged by the results of the study and

action research project of MYRADA, NABARD, in consultation with the

Reserve Bank of India (RBI), Commercial Banks and NGOs, launched a pilot

project in 1991–92 for linking of SHGs with banks. Thus, the micro finance

activity is the result of NABARD’S work that started in February 1992

through an initial pilot project promoting 500 SHGs. RBI had advised

Commercial Banks in July 1991 to extend finance to SHGs as per NABARD

guidelines. Subsequently, the linkage project was extended to RRBs and

Cooperatives.

The Self-Help Group movement became a silent revolution within a

short span in the rural credit delivery system in many parts of the world. It

has been documented that nearly 53 developing countries including India,

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have taken up this on a large scale. The Government of India is supporting

the SHG movement.

The main object of National Policy for Empowerment of Women

(NPEW), 2001 is economic empowerment of women. The policy aims at

enhancing supply of credit to the women through SHGs.

4.3 Objectives of Self-help groups (SHGs)

Self-help groups form with certain objectives such as to inculcate the

habit of saving and banking bait among the rural women; to build up trust

and confidence between the rural women and the bankers; to develop group

activity so that various welfare and developmental programmes can be

implemented in a better way with the participation of these women groups;

and to achieve women and child welfare programme goals by actively

involving these women groups in Universal Immunization Programme, small

family norm, Universal Elementary Education, etc.

4.4 Formation of Self-Help Groups

Formation of SHGs begins with an assessment of members strength.

People are motivated to collect information on initiatives they have taken in

the past to resolve problems and to initiate collective or group action.

Information on income and borrowings and seasonality on the availability

and use of natural resources and skills and markets on people’s perception

of poverty and its causes of the various social groups in society, their

mutual independence should also be collected.

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The SHGs form the focal point of all the micro level activities

systematic facilitation is needed at each and every step in the formation of a

sustainable SHG. To develop SHGs in a sustainable manner, there are four

important stages in the process of promotion of SHGs.

4.4.1 Forming Stage

This is the first stage during which the Non-Governmental

Organizations (NGOs) explain the concept of self-help groups. After listening

to this concept, women usually say that they are prepared to form a group.

They give their names but it is observed that there exists an innate fear and

anxiety. Some come forward to give their contribution on the same day and

some others after two or three meetings. It takes one week to 3 months time

between their first meeting and first lending. The group is trained to

maintain their accounts. Each member gets her pass-book from the group

for her ready reference. The members choose a name to identify their group.

Group initiation is the first and fundamental stage in the formation of a

sustainable SHG the activities in this stage have to be undertaken in a

planned and sequential manner.

4.4.2 Storming Stage

In this stage, a lot of queries arise in the minds of the members of the

Self-Help groups. The hidden anxiety and fear flare up. The conflict between

the individual interest and group interest happen to flash. The members

tend to argue with the organizers that their savings will have to be

distributed to them after a said period of one year or so. When the members

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are told the self-help group is a continuous process, some of them may

withdraw their membership claiming or their contributions.

This is a crucial stage for NGOs that the members are clearly

educated that the self-help group has been organized not like a chit fund

group which will be wound up after a said period, sharing their savings and

profits. The members are appraised that the group’s growth is a continuous

process which can run not only all through their lives but even by

generations if they wish. Any problem will have to be solved only through

the decisions of the members themselves and not by the organizers. In this

stage the group members are ensured that everyone is the owner of the

group and not a nominee by the NGO or any outsider. The members have

their sole authority to decide as to what to make as by-laws, whom to select

as members, how much to contribute, how much to lend to each individual,

how to settle the account if any untoward incident happens to any

individual, what welfare activities are to be undertaken for the village, how

they can avail credit from banks and facilities from the Government how to

make the credit and lending systems accountable to each member of the

group and also the financing institutions, etc.

4.4.3 Worming Stage

In this stage, members want to internalize the concept of self-help

groups. In the process of discussions in the group meetings, interaction’s

contributions, savings and lending’s, a mutual trust is being built and

established among the members. Once the sense of being together is

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enjoyed by the group they tend to speak good about the groups to others.

Group morale and group dynamics are found emerging. Collective decision

making gains prominence.

4.4.4 Performing Stage

Both the task and the maintenance functions of the group are clearly

realized by the members of the group at this stage. Saving, lending and

recovery activities go on smoothly with a sense of implied responsibility on

the part of the members. They approach the Bankers for further credit

assistance. They discuss about their family as well as village problems.

Social obligations of the group are found articulated. They widen their

hopes and thoughts that the group can surely be a tool for achieving socio-

economic development through income generation and empowerment

through collective action. At this stage the group matures to function on its

own.

The borrowers repay the banks loan properly. They remit the loan

dues to the Group Leader at group meetings and the Group Leader repay the

same to the bank. The group undertakes the responsibility of delivering

noncredit services such as literacy, health and environmental issues. The

concept of SHG moulds women as responsible citizens of the country

achieving social and economic status.

4.5 Empowerment through SHGs

Self-help groups (SHGs) is as an instrument to change the conditions

of women socially and economically. Once socio-economic experiment is

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achieved it would have implication on the overall development of women.

SHGs enable economic, social, political and psychological empowerment of

women.

4.5.1 Economic Empowerment

The economic contribution of women has been found to be related to

her role and status in the society. The Self-help groups provide economic

benefits to the women by providing income generating activities. Economic

independence facilitates in bringing about sexual equality and increase in

women’s income translates more directly into family well being.

4.5.2 Social Empowerment

Self-help Groups improve the equality of status of women as

participants, decision-makers and beneficiaries in the social, democratic,

economic and cultural spheres of life. SHGs ensure the equality of status of

women as participants, decision-makers and beneficiaries in the democratic,

economic, social and cultural spheres of life.

4.5.3 Political Empowerment

SHGs as active, articulate and organized citizenry act on a range of

issues, holding the Panchayats accountable in terms of the use, production

and distribution of public resources for the common public good. SHGs

enable women to develop their communication skills to speak at the Grama

Sabha, public meetings, etc. An SHG functions through its regular

meetings, where members perform transactional activities and discuss over

different related issues. Social mobilization through SHGs is inevitable for

political empowerment.

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4.5.4 Psychological Empowerment

Self-help groups enhance the equality of women as participants,

decision-makers and beneficiaries in the democratic, economic, social and

cultural spheres of life. The SHGs inculcate a great confidence in the minds

of rural women to success in their day-to-day life.

4.6 Different Models of Self-help Group Credit Linkage

Two models of microfinance involving credit linkage with banks are

SHG-Bank Linkage Model and MFI – Bank Linkage Model.

4.6.1 SHG - Bank Linkage Model

This model involves the SHGs financed directly by the banks viz.,

Commercial Banks (Public Sector and Private Sector), Regional Rural Banks

and Cooperative Banks. The SHG-bank linkage programme is now

considered by the banking system as a commercial proposition, with

advantages of lower transaction costs and higher coverage of rural clientele

by the bank branches.

4.6.2 MFI - Bank Linkage Model

This model covers financing of Micro Finance Institutions (MFIs) by

banking agencies for lending to SHGs and other small borrowers

4.7 SHG - Bank Linkage Programme

The SHG - Bank Linkage Programme is a major plank of the strategy

for delivering financial services to the poor in a sustainable manner since its

inception in the early 1990s and has made rapid strides exhibiting

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considerable democratic functioning and group dynamism. The SHG-Bank

linkage model is the indigenous model of micro-credit evolved in India and

has been widely acclaimed as a successful model.

NABARD has launched the pilot phase of the SHG Bank Linkage

programme in February 1992. SHG-bank linkage gathered momentum in

the country and credit linkage during 1999-2000 was more than twice the

cumulative performance of bank in credit-linking of SHGs as on 31st March

1999.

The progress of the linkage programme in India is encouraging due to

the active involvement of over 700 NGOs, 7,500 branches of 266 banks,

policy support from Government of India and Reserve Bank of India,

increased participation from the state governments, as also the development

policy initiatives and capacity building of partner agencies by NABARD.

Commercial banks (public), regional rural banks, co-operative banks, Small

Industries Development Bank of India and some of the foreign as well as

private banks are the participating banks.

4.7.1 Different Models of Self-help Group - Bank Linkage

On the basis of the modes of formation and nurturing, SHGs are

basically categorized into three models, mentioned as follows:

4.7.1.1 Model I: SHGs formed and financed by banks

In this model, the bank itself acts as a Self-Help Group Promoting

Institution (SHPI). Banks themselves take up the work of forming the

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groups, nurturing them over a period time, opening their saving accounts

and providing loans to them after satisfying itself about their maturity to

absorb credit.

Formation, nurturing Credit

Savings

4.7.1.2 Model II: SHGs formed by formal agencies other than banks, but directly financed by banks

In this model, groups are formed by facilitating agencies like NGOs,

government agencies, or other community-based organizations. They

facilitate organizing, forming and nurturing of groups and train them in

thrift and credit management. Banks give loans directly to these SHGs. A

large number of NGOs are actively participating under this model and also

the State governments through their development agencies like the DRDA,

DWDA and some of the centrally sponsored social sector missions are

involving. Among the three models, this model is popular.

Formation, nurturing, monitoring

Savings

Credit

Banks

SHGs

NGOs, Vas, IRVs,

FCs

Banks

SHGs

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4.7.1.3 Model III: SHGs financed by banks through NGOs and other agencies as financial intermediaries.

In some parts of the county, banks are not in a position to even

finance SHGs promoted and nurtured by other agencies due to various

reasons. In order to overcome the constraints of formal banking system, the

NGOs are encouraged to approach a suitable bank for bulk loan assistance.

This, in turn, is used by the NGO for lending to the SHGs. Thus, the NGOs

act as both facilitators and Micro Finance Intermediaries (MFIs) in such

cases. Banks finance these federations who in turn finance their member

SHGs. Other agencies like NBFCs are also coming up to take up this role.

Formation, nurturing, monitoring

Credit Savings

Credit

NABARD provides refinance support to banks under the linkage

project. As per operational guidelines of NABARD, bank sanction savings-

linked loans to SHGs (varying from a saving to loan ratio of 1:1 to 1:4). The

present interest rate structure stipulated by NABARD at different levels

under the SHG-Bank Linkage Programme is given below:

(i). NABARD to Banks (Refinance) : 6.5%

(ii). Banks to SHGs : 12.0%

NGOs, Federatio

ns

Banks

SHGs

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(iii).Banks to NGOs/Voluntary Agencies : 10.5%

(iv). NGO/Voluntary Agencies to SHGs : 12.0%

(v). SHG to members : As decided by the SHG

4.8 Progress of SHGs in India

During the last decade, India had recorded a tremendous growth of

SHGs. Growth of SHGs in India during the last decade is shown in Figure–

4.1. As per the reports of the NABARD, about 97 million families have

covered under SHGs upto 31st March 2010. Total number of SHGs savings

linked with banks are 69.53 lakh, out of which 53.10 lakh are exclusive

women SHGs and 16.94 lakh are SGSY SHGs. During 2009-2010, 15.87

lakhs are credit linked SHGs, of which 12.94 lakh are exclusive women

SHGs and 2.67 lakh are SGSY SHGs. Total number of credit linked SHGs

having loans outstanding as on 31 March 2010 are 48.51 lakh, of which

38.98 lakh are exclusive Women SHGs and 12.45 lakh are SGSY SHGs.

Regarding savings amount of SHGs, it is reported that total savings

amount of SHGs with banks as on 31 March 2010 are Rs.6198.71 crore, out

of which Rs.4498.66 crore are savings of exclusive Women SHGs and

Rs.1292.62 crore are savings of SGSY SHGs. As regards loans disbursed to

and outstanding against SHGs, it is mentioned that total amount of loans

disbursed to SHGs during 2009-10 are Rs.14453.30 crore, out of total loans

disbursed to Women SHGs are Rs.12429.37 crore and to SGSY SHGs are

Rs.2198.00 crore. Total amount of loans outstanding against SHGs as on

31 March 2010 are Rs.28038.28 crore, out which loans of Women SHGs are

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Rs.23030.36 crore and out of total loans outstanding against SGSY SHGs

are Rs.6251.08 crore. Average loan amount outstanding per SHG as on

March 2010 is Rs.57795 and average loan amount outstanding per member

as on 31 March 2010 is Rs.4128.

Figure – 4.1

GROWTH OF SHGs IN INDIA

Source: NABARD, Mumbai

69,53,250

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4.8.1 State – wise outreach of SHGs

The State-wise number of SHGs having savings with banks as on 31st

March 2010 is provided in Table – 4.1. As on 31st March 2010, a total of

69,53,250 SHGs have saving bank accounts with the banking sector with

outstanding savings of Rs. 6198.71 crore. The state of Andhra Pradesh

accounted for the largest number of SHGs as on 31st March 2010 (20.83 per

cent of total number of SHGs in the country), followed by Tamil Nadu (11.89

per cent), Maharashtra (11.08 per cent), West Bengal (9.31 per cent),

Karnataka (7.69 per cent), Odissa (7.24 per cent) and Kerala (5.67 per cent).

It is less than one per cent in some of the States like Arunachal Pradesh,

Goa, Haryana, Himachal Pradesh, Jammu & Kashmir, Manipur, Meghalaya,

Mizoram, Nagaland, New Delhi, Punjab, Sikkim, Uttarakhand, Andaman &

Nikobar Islands (UT) and Puducherry (UT). This shows the regional

inequalities in the spread of SHGs in the country.

Regarding amount of savings of SHGs as on 31st March 2010, it is

found from the table that the State of Andhra Pradesh registered largest

percentage of savings (20.25 per cent of total amount of savings in the

country), followed by Tamil Nadu (14.58 per cent), Karnataka (10.12 per

cent), West Bengal (9.60 per cent), Maharashtra (9.17 per cent), Kerala (6.06

per cent), Odissa (5.88 per cent), Gujarat (5.19 per cent) and Uttar Pradesh

(4.27 per cent). More than ten States in the country registered less than one

percentage of the total savings of the country.

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Table – 4.1

TABLE SHOWING STATE-WISE SPREAD OF THE SHG-BANK LINKAGE PROGRAMME -SAVINGS OF SHGs WITH BANKS AS ON 31ST MARCH

2010 (Amount Rs. Lakh)

State

As on 31st March 2010 % to total

No. of SHGs

Savings Amount

Rs.

No. of SHGs

Savings Amount

Andhra Pradesh 1448216 125528.98 20.83 20.25 Arunachal Pradesh 6418 164.89 0.09 0.03 Assam 218352 7359.94 3.14 1.19 Bihar 140824 8539.57 2.03 1.38 Chattisgarh 113982 7578.06 1.64 1.22 Goa 6745 3649.31 0.10 0.59 Gujarat 168180 32190.15 2.42 5.19 Haryana 36762 10762.55 0.53 1.74 Himachal Pradesh 50182 3490.9 0.72 0.56 Jammu & Kashmir 4366 1818.83 0.06 0.29 Jharkhand 79424 7421.81 1.14 1.20 Karnataka 534588 62705.32 7.69 10.12 Kerala 394197 37556.32 5.67 6.06 Madhya Pradesh 178226 10151.07 2.56 1.64 Maharashtra 770695 56828.02 11.08 9.17 Manipur 10831 218.56 0.16 0.04 Meghalaya 11787 360.25 0.17 0.06 Mizoram 5097 251.40 0.07 0.04 Nagaland 5926 334.37 0.09 0.05 New Delhi 2191 234.85 0.03 0.04 Odissa 503172 36473.5 7.24 5.88 Punjab 45005 3645.1 0.65 0.59 Rajasthan 213295 14255.08 3.07 2.30 Sikkim 2428 141.98 0.03 0.02 Tamil Nadu 826710 90373.26 11.89 14.58 Tripura 31349 3335.70 0.45 0.54 Uttar Pradesh 429760 26464.03 6.18 4.27 Uttarkhand 43997 7170.41 0.63 1.16 West Bengal 647059 59486.85 9.31 9.60 A & N Islands 3763 92.87 0.05 0.01 Puducherry 19723 1286.96 0.28 0.21

Total 6953250 619870.89 100.00 100.00

Source: Status of Microfinance in India 2009-10: A NABARD publication

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4.8.2 Regional spread of SHGs

Region-wise spread and savings of SHGs with Banks as on 31st March

2010 is given in Table – 4.2. It is evident from the table that the southern

region occupied lion’s share of spread of SHGs (46.36 per cent). Out of

69,53,250 SHGs in the country, 3223434 are in the southern region. As

against this, eastern region accounts for 19.76 per cent of the total SHGs in

the country, followed by 13.60 per cent in Western region and 11.02 per

cent in Central region. The northern and northern-eastern region accounts

for less than 10 per cent of the total SHGs in the country.

An analysis of savings amount of SHGs with banks region-wise reveals

that out of Rs.619870.89 lakhs of savings in the Country as on 31st March

2010, Rs.317450.84 lakhs of savings are from the southern region (51.21

per cent). At the next level, eastern region accounts for 18.07 per cent of the

total savings of the country, followed by 14.95 per cent in Western region,

8.29 per cent in Central region and 5.52 per cent in Northern region. As

against this, northern eastern region accounts for only 1.96 per cent of the

total savings of the SHGs with banks in the country.

It is concluded that there are regional inequalities in the country

regarding number of SHGs and amount of savings with banks by the SHGs.

Southern region records highest percentage, while northern region records

lowest percentage in this regard. This shows the backwardness of the

woman in the northern region of the country.

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Table – 4.2

REGION-WISE SPREAD OF THE SHG-BANK LINKAGE PROGRAMME - SAVINGS OF SHGs WITH BANKS AS ON 31ST MARCH 2010

(Amount Rs. Lakh)

Sl.

No. Region

Total

No. of SHGs Saving Amount

Rs.

1. Northern 351801

(5.06)

34207.31

(5.52)

2. Northern-eastern 292188

(4.20)

12167.09

(1.96)

3. Eastern 1374242

(19.76)

112014.60

(18.07)

4. Central 765965

(11.02)

51363.57

(8.29)

5. Western 945620

(13.60)

92667.48

(14.95)

6. Southern 3223434

(46.36)

317450.84

(51.21)

Total 6953250

(100.00)

619870.89

(100.00)


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4.8.3 Growth rate of SHGs

The data on growth rate of SHGs linked with banks during the last

two years, i.e., during 2008-2009 and 2009-2010 is presented in Table –

4.3. It is evident from the table that the annual growth rate is 14 per cent in

terms of number of Self-help groups linked with banks from 2008-09 to

2009-10. In terms of total amount of savings, annual growth rate is 12 per

cent.

It is interesting to note that Jammu and Kashmir state has recorded

highest growth rate in terms of number of SHGs (85.87 per cent). At the

next level, Gujarat state has registered highest growth rate in terms of

number of SHGs during 2008-2009 and 2009-2010 (60.10 per cent),

followed by Jharkhand (59.64 per cent), A & N Islands (51.86 per cent),

Sikkim (38.58 per cent), Tripura (37.43 per cent), Uttarkhand (28.26 per

cent), Meghalaya (22.46 per cent), Mizoram (20.50 per cent), Karnataka

(16.88 per cent), Tamil Nadu, & Puducherry (15.94 per cent), Punjab (14.94

per cent), Manipur (14.32 per cent), Odissa (13.85 per cent), Maharashtra

(12.46 per cent), Rajasthan (10.81 per cent). As against this, Nagaland state

has recorded negative growth rate. Annual growth rate is less than 10 per

cent in case of Kerala, Uttar Pradesh, New Delhi, West Bengal and Madhya

Pradesh states in terms of number of SHGs linked with SHGs.

With regard to savings amount, Jammu and Kashmir state bags

highest growth rate (590.76 per cent), followed by Gujarat, Goa, Haryana,

Jharkhand, Uttarkhand and Nagaland States more than 100 per cent.

While Maharashtra and West Bengal states has registered negative growth

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Table – 4.3

TABLE SHOWING GROWTH RATE OF STATE-WISE SPREAD OF THE SHG-BANK LINKAGE PROGRAMME - SAVINGS OF SHGs WITH BANKS

DURING 2008-2009 AND 2009-2010 (Amount Rs. Lakh)

State

As on 31st March 2009

As on 31st March 2010

Growth rate in

No. of SHGs

Savings Amount

Rs.

No. of SHGs

Savings Amount

Rs.

No. of

SHGs

Savings Amount

Andhra Pradesh 1280900 119192.63 1448216 125528.98 13.06 5.32

Arunachal Pradesh 5148 93.63 6418 164.89 24.67 76.11 Assam 180996 6296.92 218352 7359.94 20.64 16.88 Bihar 130005 6788.41 140824 8539.57 8.32 25.80

Chattisgarh 112982 4986.58 113982 7578.06 0.89 51.97 Goa 5892 827.18 6745 3649.31 14.48 341.17

Gujarat 105046 6276.00 168180 32190.15 60.10 412.91 Haryana 33257 2547.93 36762 10762.55 10.54 322.40

Himachal Pradesh 41744 2988.89 50182 3490.9 20.21 16.80 Jammu & Kashmir 2349 263.31 4366 1818.83 85.87 590.76

Jharkhand 49753 2550.96 79424 7421.81 59.64 190.94 Karnataka 457389 56686.54 534588 62705.32 16.88 10.62

Kerala 358863 23241.84 394197 37556.32 9.85 61.59 Madhya Pradesh 173725 7191.54 178226 10151.07 2.59 41.15

Maharashtra 685324 59325.22 770695 56828.02 12.46 -4.21 Manipur 9474 191.78 10831 218.56 14.32 13.96

Meghalaya 9625 327.69 11787 360.25 22.46 9.94 Mizoram 4230 184.63 5097 251.40 20.50 36.16 Nagaland 6057 157.65 5926 334.37 -2.16 112.10 New Delhi 2014 184.08 2191 234.85 8.79 27.58

Odissa 441960 26948.71 503172 36473.5 13.85 35.34 Punjab 39155 2882.22 45005 3645.1 14.94 26.47

Rajasthan 192479 13837.49 213295 14255.08 10.81 3.02 Sikkim 1752 99.05 2428 141.98 38.58 43.34

Tamil Nadu & Puducherry

730092 57731.09 846433 91660.22 15.94 58.77

Tripura 22811 2858.82 31349 3335.70 37.43 16.68 Uttar Pradesh 391906 23960.57 429760 26464.03 9.66 10.45 Uttarkhand 34302 2540.52 43997 7170.41 28.26 182.24 West Bengal 609439 123327.63 647059 59486.85 6.17 -51.77

A & N Islands 2478 72.32 3763 92.87 51.86 28.42 Total 6121147 554561.83 6953250 619870.89 13.59 11.78

Source: (1). Status of Microfinance in India 2008-09: A NABARD publication

(2). Status of Microfinance in India 2009-10: A NABARD publication

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rate in terms of savings. Assam, Himachal Pradesh, Tripura, Manipur,

Karnataka, Uttar Pradesh, Meghalaya, Andhra Pradesh and Rajasthan

states has registered growth rate of less than 25 per cent.

4.8.4 Distribution of SHGs agency-wise

The SHG-Bank linkage programme bank-wise position is provided in

Table – 4.4. As on 31st March 2010, a total of 69.53 lakh SHGs were having

saving bank accounts with the banking sector as against 61.21 lakh SHGs

as on 31 March 2009, thereby showing a growth rate of 13.6 per cent.

Further, it is evident from the table that the share of commercial banks in

the aggregate number of SHGs as on 31st March 2010 stands at the highest

level with 58.3 per cent, followed by Regional Rural Banks (RRBs) (26.2 per

cent) and Co-operative banks (15.5 per cent).

As regards annual growth rate in the number of SHGs, it is found that

annual growth rate is highest in co-operative banks, while it is lowest in

Regional Rural Banks. It is obvious from the fact that total number of SHGs

financed by co-operative banks increased sharply from 9,43,050 at end-

March 2009 to 10,79,465 by end-March 2010, reflecting significant interest

being evinced by many co-operative banks. The number of SHGs linked

with Commercial banks as on 31.3.2009 has increased from 35,49,509 to

40,52,915 by 31.3.2010 showing a growth rate of 14.2 per cent. As against

this, number of SHGs linked with RRBs as on 31.3.2009 has increased from

16,28,588 to 10,79,465 showing a growth rate of 11.8 per cent.

106

Table – 4.4

TABLE SHOWING BANK-WISE NUMBER OF SHGs HAVING SAVINGS WITH BANKS

Agency No. of SHGs

% of Share

Commercial banks (Public & Private Sector)

31.3.2009 3549509 58.0

31.3.2010 4052915 58.3

% growth 14.2

Regional Rural Banks 31.3.2009 1628588 26.6

31.3.2010 1820870 26.2

% growth 11.8

Cooperative Banks 31.3.2009 943050 15.4

31.3.2010 1079465 15.5

% growth 14.5

Total 31.3.2009 6121147 100.0

31.3.2010 6953250 100.0

% growth 13.6


107

4.8.5 Savings of SHGs with Banks

The agency-wise savings of SHGs with banks as on 31 March 2009

and 31 March 2010 are given in Table – 4.5. As on 31st March 2010, total

SHG’s savings with banks amounts to Rs. 6198.71 crore as against Rs.

5545.62 crore savings as on 31 March 2009, thereby showing a growth rate

of 11.8 per cent.

Agency-wise, it is observed that commercial banks have maintained

good progress in financing SHGs as their share increased from 50.0 per cent

in 2008-09 to 59.3 per cent in 2009-10. The share of co-operative banks in

SHG-bank linkage increased from 14.1 per cent to 19.8 per cent over the

period, while that of RRBs declined to 21.0 per cent from 35.9 per cent.

Regarding growth rate during 2008-2009 and 2009-2010, it is found that

co-operative banks recorded highest growth rate over the period in terms of

savings amount, while Regional Rural Banks recorded negative growth rate.

In other words, the growth rate of savings is 56.5 per cent in case of co-

operative banks, 32.5 per cent in case of commercial banks and -34.7 per

cent (negative) in case of regional rural banks.

As regards savings per SHG, it is found that the amount of savings per

SHG has declined from Rs.9060/- by the end March 2009 to Rs.8915/- by

the end March 2010. In case of savings per SHG also, RRBs recorded

negative growth rate, while the growth rates are 36.7 per cent and 16.0 per

cent in case of co-operative banks and commercial banks respectively.

108

Table – 4.5

SAVINGS OF SHGs WITH BANKS – AGENCY-WISE POSITION

(Rs. in Crore)

Agency Position

as on

Total SHG’s savings with the banks as on 31 March

2009/2010 Per SHG savings (Rupees)

Amount Per cent

share

Commercial banks (Public & Private Sector)

31.3.2009 2772.99 50.0 7812

31.3.2010 3673.89 59.3 9065

% growth 32.5 16.0

Regional Rural Banks

31.3.2009 1989.75 35.9 12218

31.3.2010 1299.37 21.0 7136

% growth (34.7) (41.6)

Cooperative Banks 31.3.2009 782.88 14.1 8302

31.3.2010 1225.44 19.8 11352

% growth 56.5 36.7

Total 31.3.2009 5545.62 100.0 9060

31.3.2010 6198.71 100.0 8915

% growth 11.8 (1.6)


109

4.8.6 Bank loans Disbursed to SHGs

The agency-wise details of loans disbursed by banks to SHGs during

the years 2008- 09 and 2009-10 are provided in Table 4.6. It is evident from

the table that Bank loans disbursed to 15.87 lakh SHGs, including repeat

loan to the existing SHGs during the year 2009-10 aggregated to Rs.

14453.30 crore, registering a decline of 1.4 per cent of SHGs, but an

increase of 17.9 percent, as compared to Rs. 12253.51 crore during 2008-

09. Out of Rs. 14453.30 crore loan disbursed during the year 2009-2010,

67.7 per cent of the amount were disbursed by commercial banks, 23.1 per

cent by RRBs and 9.3 per cent by Co-operative Banks. It is interesting to

note that bank loans disbursed to SHGs by commercial banks and RRBs

during the last two years registered a negative growth rate, while co-

operative banks recorded positive growth rate.

Loan disbursed per SHG has risen from Rs.76128/- during 2008-

2009 to Rs.91083/- during 2009-2010 registering a growth rate of 19.6 per

cent. The growth rate is 24.7 per cent in case of commercial banks, 12.3 per

cent in case of RRBs and 15.0 per cent in case of Co-operative banks. It is

also observed from the table that Commercial banks are disbursing highest

amount of loan per SHG, i.e., Rs.1,00,050/- per SHG during 2009-210,

while RRBs disburses Rs.88461/- and Co-operative banks disburses

Rs.57629/-.

110

Table – 4.6

BANK LOANS DISBURSED TO SHGs – AGENCY WISE POSITION

(Rs. in crore)

Agency During the

year

Total loans disbursed by banks to SHGs during the year Per SHG

loan disbursed (Rupees)

No. of SHGs

Per cent Share

Amount Per cent Share

Commercial Banks (Public & Private Limited)

2008-09 1004587 62.4 8060.53 65.8 80237

2009-10 977521 61.6 9780.18 67.7 100050

% of growth (2.7) 21.3 24.7


2008-09 405569 25.2 3193.49 26.1 78741

2009-10 376797 23.7 3333.20 23.1 88461

% of growth (7.1) 4.4 12.3

Cooperative banks

2008-09 199430 12.4 999.49 8.2 50117

2009-10 232504 14.7 1339.92 9.3 57629

% of growth 16.6 34.1 15.0

Total 2008-09 1609586 100.0 12253.51 100.0 76128

2009-10 1586822 100.0 14453.30 100.0 91083

% of growth (1.4) 17.9 19.6


111

4.8.7 Bank loans outstanding against SHGs

The agency-wise position of outstanding bank loans to SHGs for the

years 2008-09 and 2009-10 are depicted in Table 4.7. It is obvious from the

table that 48.51 lakh SHGs had outstanding bank loans amounting to

Rs.28,038.28 crore as on 31st March 2010 as against 42.24 lakh SHGs with

bank loans of Rs.22,679.85 crore as on 31 March 2009, representing a

growth of 14.8 per cent in number of SHGs and 23.6 per cent in bank loans

outstanding against SHGs.

It is also revealed from the table that out of 4851356 lakhs SHGs,

66.7 per cent of SHGs were outstanding bank loans to Commercial banks,

followed by 22.8 per cent to RRBs and 10.5 per cent to Co-operative banks.

Further, it is delineated from the table that out of total outstanding bank

loan amount, 71.9 per cent is of commercial banks, 21.9 per cent is of RRBs

and 6.2 per cent is of Cooperative banks. Growth rate in terms of

outstanding loan amount during the last two years is more in case of

cooperative banks as compared to commercial banks and RRBs.

The average loan outstanding per SHG amounted to Rs.57,795/- as

on 31.3.2010, while it is Rs. 53689/- as on 31.3.2009. It is also observed

that the average loan outstanding per SHG to commercial banks is

Rs.62,289/- as on 31.3.2010, followed by Rs.55,658/- to RRBs and

Rs.33894/- to Co-operative banks.

112

Table – 4.7

BANK LOAN OUTSTANDING AGAINST SHGs – AGENCY-WISE POSITION

(Rs. in crore)

Agency Position

as on

Total Bank loan outstanding against SHGs

Per SHG-Bank loan

outstanding (Rupees) No. of SHGs

% Share

Amount %

Share

Commercial Banks (Public & Private Limited)

31.3.2009 2831374 67.1 16149.43 71.2 57037

31.3.2010 3237263 66.7 20164.71 71.9 62289

% growth 14.3 24.9 9.2


31.3.2009 977834 23.1 5224.42 23.0 53428

31.3.2010 1103980 22.8 6144.58 21.9 55658

% growth 14.3 17.6 4.2

Cooperative banks

31.3.2009 415130 9.8 1306.00 5.8 31460

31.3.2010 510113 10.5 1728.99 6.2 33894

% growth 22.9 32.4 7.7

Total 31.3.2009 4224338 100.0 22679.85 100.0 53689

31.3.2010 4851356 100.0 28038.28 100. 57795

% growth 14.8 23.6 7.6


113

4.9 Self-help groups in Andhra Pradesh

Historically, there is a concentration of SHGs in Southern States

particularly in Andhra Pradesh mainly on account of proactive role played

by the State Governments. The SHG movement took a firm root in the State

with the implementation of World Bank assisted poverty reduction project,

Indira Kranti Patham (IKP), a scaled up versions of the SAPAP model with

more focus on livelihood component. The project aims to build strong

institutions of the rural poor and enhance their livelihood opportunities so

that the vulnerability of poor is reduced. IKP consists of two projects, viz.,

Andhra Pradesh District Poverty Initiatives Project (APDPIP) and Andhra

Pradesh Rural Poverty Reduction Project (APRPRP).

The state of Andhra Pradesh has been the focus of attention on the

world map primarily due to its pro-active government and significant strides

made by its SHGs. SHGs are playing an important role in optimization of

natural and human resources through people’s participation. The

government of Andhra Pradesh has taken up Women’s Empowerment as one

of the main strategies to tackle socio-economic poverty. SHG movement

through savings has been taken up as mass movement by women, a path

chosen by them to shape their destiny for the better. Development agenda

of the state in the last few years of placing the people especially women in

the forefront has enabled the formation of large number of self-help groups

through out State where women are saving one rupee per a day. The state

114

government is making efforts to assist SHGs by providing revolving fund

under various programmes.

Right from the beginning, NGO’s in Andhra Pradesh are working for

the cause of women and are involving in facilitating the formation of self-

help groups and efforts for their sustenance. NGOs are working in close

coordination with DRDA’s in training and capacity building, skill

development training programmes, building self-help group centered

organizations, etc.

4.9.1 Self-help groups (SHG) movement in Andhra Pradesh

Self-help groups (SHGs) gained prominence as informal institutions of

women for poverty eradication and as an efficient delivery mechanism of the

state aid, in Andhra Pradesh. In addition to DWCRA groups, NGOs, large

scale poverty eradication programmes like Velugu, APUSP and APRLP have

been promoting SHGs and their federations in large numbers. The number

of SHGs linked to banks for credit is increasing each year exponentially and

the ‘SHG-Bank linkage’ demonstrated the potential to become a profitable

business for banks.

SHGs have been initiated by NGOs in late 1980s in Andhra Pradesh.

The women’s savings and credit movement in Andhra Pradesh can be said to

have really began in 1995, in Nellore district as “Podupulakshmi” movement

post anti-liquor campaign by women. This led to large-scale promotion of

SHGs in every district of AP. The Podupulakshmi movement started with the

slogan of “save a rupee a day”. Almost all the groups across the State began

115

monthly individual savings of Rs. 30 with each DWCRA group consisting of

15 women. By 2000, DWCRA became a flagship program of Government of

AP to implement all its poverty reduction programs. State Government

introduced schemes like Deepam (subsidized gas connections for DWCRA

women) and State funded Revolving Fund, in addition to the Central

Government Schemes. Several thousands of groups were formed instantly to

access various Government Schemes. To give further impetus to the DWCRA

movement, the State Government established a separate department called

“Women Empowerment & Self Employment” under the Rural Development

Department to focus on promoting DWCRA groups, increase bank linkage

and to promote micro enterprises.

4.9.2 SHG- Bank Linkage Programme in AP

SHG-Bank Linkage Programme (SBL programme) was started initially

with the support of NABARD in 1992. The SBL programme gathered

momentum after RBI made the programme a part of normal lending activity

of the banks under priority sector from April 1996.

4.9.2.1 Savings of SHGs with Banks

In Andhra Pradesh, self help movement through savings has been

taken up as a mass movement by women. Bank-wise details of SHG-Bank

linkage scheme regarding savings in Andhra Pradesh is given in Table – 4.8.

Out of 14,48,216 groups having savings accounts with the banks in the

State, around 71 per cent of the groups are promoted by commercial banks,

about 27 per cent of the groups are promoted by Regional Rural Banks and

nearly 2 per cent of the groups are promoted by co-operatives.

116

It is found from the table that total amount of savings are

Rs.125528.98 lakhs as on 31st March 2010, out of which 77.6 per cent are

from Commercial Banks, 20.8 per cent are from Regional Rural Banks and

the rest 1.5 per cent are from Co-operative Banks.

Table – 4.8

TABLE SHOWING SAVINGS OF SHGs WITH BANKS IN ANDHRA PRADESH AS ON 31ST MARCH 2010

(Amount Rs. in lakh)

Agency No. of SHGs Saving amount

Commercial Banks 1025638

(70.8)

97455.56

(77.6)

Regional Rural Bank 395965

(27.3)

26154.09

(20.8)

Cooperative bank 26613

(1.8)

1919.33

(1.5)

Total 1448216

(100.0)

125528.98

(100.0)

Note: Figures in the parentheses indicate percentages to the total.


117

4.9.2.2 Bank loans disbursed

The data on bank loans disbursed to the SHGs during 2009-2010 in

Andhra Pradesh is depicted in Table – 4.9. It is obvious from the table that

bank loans are disbursed to 5,64,089 SHGs in the State during 2009-2010.

Out of 5,64,089 SHGs, loans are disbursed to 71.2 per cent of the SHGs by

Commercial banks, followed by 26.9 per cent by Regional Rural Banks and 2

per cent by Co-operative banks. Total bank loan amount disbursed to the

SHGs in the State during 2009-2010 is Rs.670664.32 lakhs, of which 72.9

per cent are by Commercial Banks, 25.3 are by Regional Rural Banks and

1.8 per cent are by Cooperative banks.

4.9.2.3 Bank loans outstanding against SHGs

The data on bank loans outstanding against SHGs in the State as on

31st March 2010 is provided in Table - 4.10. It is striking to note that

14,71,284 SHGs in the State have outstanding loans to the banks as on 31st

March 2010, of which 72.2 per cent of SHGs to the commercial banks, 26.5

per cent are to RRBs and 1.3 per cent to Co-operative banks. Total amount

outstanding to the banks by SHGs in the State as on amounts to Rs.

11,73,953.62 lakhs. Out of the total amount outstanding, 74 per cent is of

Commercial banks, 24.7 per cent is of RRBs and 1.3 per cent is of Co-

operative banks.

118

Table – 4.9

TABLE SHOWING BANK LOANS DISBURSED TO THE SHGs DURING THE YEAR 2009-2010 IN ANDHRA PRADESH


Bank No. of SHGs Loan amount


(71.2)

488671.31

(72.9)


(26.9)

170001.97

(25.3)


(2.0)

11991.04

(1.8)

Total 564089

(100.0)

670664.32

(100.0)


Source: NABARD, Mumbai, Status of Micro Finance in India 2009-2010

119

Table – 4.10

TABLE SHOWING BANK LOANS OUTSTANDING AGAINST SHGs AS ON 31st MARCH 2010 IN ANDHRA PRADESH


Bank No. of SHGs Amount of loan

outstanding


(72.2)

868646.25

(74.0)


(26.5)

290009.69

(24.7)


(1.3)

15297.68

(1.3)

Total 1471284

(100.0)

1173953.62

(100.0)



120

The income generating activities taken up by the SHGs and access to

the banks and financial institutions attracted the attention of not only other

States but at international level also. Many dignitaries from other states and

other countries visited Andhra Pradesh and praised the SHG movement and

implementation of SHG-Bank Linkage program in Andhra Pradesh. The

other State governments are also taking the practice as a model and are

sending teams to study the implementation of the program with an aim to

implement in the same way in their states.

4.10 Problems of functioning of the SHGs in the country

SHGs are important tools of micro financing. Over the years SHGs

have achieved tremendous progress in bringing about social and economic

upliftment in the life of its members. However, despite the spread and

success of SHGs, they suffer from various drawbacks. The main objective of

SHGs is reduction of poverty. Inspite of provision of credit to a large no of

poor people, not many have successfully come above the poverty line. In

fact, SHGs and micro-credit cannot bring about solution to the complex

problem of poverty.

Many SHGs suffer from poor management and poor internal control

systems. Roles and responsibilities of members and office bearers are not

clearly defined. In some cases, cash flows also have been managed

inappropriately. Most SHGs are dominated by few well-off, educated

members who get re-elected several times. Over dependence on leaders is a

problem associated with all successful SHGs. Lack of education and skills

121

among members is the root cause of the problem. SHGs are informal

organizations and hence there is governance system. This may be due to

lack of experience or lack of experience or lack of capacity to review

functions or comply with legal regulations. SHGs are governed by various

regulations of different entities. This makes formation and functioning of

SHGs difficult.

The SHG program has been predominant in the states of Andhra

Pradesh, Tamil Nadu, West Bengal, Karnataka, and Uttar Pradesh. 40 per

cent of credit linkages were established only in the state of Andhra Pradesh.

The North Eastern states need to be focused upon.

While the policy support for lending to SHGs has been unequivocal,

such support for organizational sustainability of the groups has not been

clear. The minimal promotional funding for group formation and linkage

with banks has resulted in lack of institutional support mechanism for the

large number of groups. Several studies have indicated that many SHGs

have inadequate and poor record keeping practices and repayment rates are

falling.

The SHGs required several on-going services which they cannot

procure individually from the market. Several incidents of dropouts from

groups are observed. The drop-out rates of very poor is about 11 per cent

and that of others is about 7 per cent. Inability to make regular saving

deposits is the major cause of dropouts.

122

While NABARD set the direction for the SHG-bank linkage programme

and has taken industry level initiatives to ground the programme, there has

been very little direction setting for the ongoing support services to SHGs.

Similarly, in those states where the SHG-bank linkage programme has been

well established, the number of groups linked per branch has increased to

such an extent that it is making the monitoring and supervision of groups

difficult, resulting in falling recovery rates.

Overall, the apathy of bankers towards adopting a business

development approach to SHG lending is leading to the disintegration of

groups, with SHG members turning to other sources including MFIs for

financial services etc., in several states. Apart from the investment in

forming and nurturing a SHG going waste, the members lose an opportunity

to access savings services. Delays in loan processing by banks means that

even repeat loans to well performing groups materialize with a gap of 3 to 6

months. With the change in branch staff the gap is usually larger.

The staff is inadequate in bank branches. Target oriented approach

has been adopted for bank linkage in the state. Stakeholders are having

high expectations on bankers in addition to area specific problems of banks.

NGOs are playing vital role in SHG promotion. NGOs are constrained with

conditional grants and there is limited funding available for NGO to promote

and sustain SHGs. Uncertainty exists at ground level due to lack of role

clarity among various stakeholders. Role confusion is hindering the

coordinated effort among various stakeholders. New business models for

123

enhancing rural livelihoods are being created with information and

communication technology.

Government recognition and mainstreaming of the initiative has often

been perceived as an indicator of success, but such recognition has been a

double-edged sword. On the one hand, it provided the thrust required to

expand rapidly; on the other, it has become vulnerable to government

management patterns: target-oriented quick group formation, predetermined

criteria for identifying beneficiaries and forming groups without assessing

affinity among the members, and the tendency to further separate each

caste or community for group formation, especially for subsidy distribution.

Since the major drive to promote SHGs, through the means of thrift

and credit, was with the goal of improving financial services to poor, their

function was largely viewed as financial provision and management. This

tended to minimize the major role they have played (or have the potential to

play) in empowerment of poor and improving the livelihoods of poor and

marginalized.

Summary Development is a long process. It has through pass through deferent

stages. In the first stage, women should be trained to look into the situation

from deferent perspectives and recognize the power relations that

perspectives their oppression. At this stage, the women share their feelings

and experience with one another and build a common vision and mission. In

the second stage, the women try to change the situation by bringing about a

change in the gender and social relations on the third stage, the process of

124

empowerment makes them more mature to realize the importance of

collective action.

To be concluded, this Chapter has presented concept of SHGs, genesis

of SHGs, formation of SHGs, progress of SHGs in India, progress of SHGs in

Andhra Pradesh and problems confronting by the SHGs.

* * *

125

References

1. Zubair Meenai (2003), ‘Empowering Rural Women – An Approach to Empowering Women through Credit-based Self-help Groups’, Aakar Books, Delhi.

2. Ritu Jain, R.K., Kushawaha and Srivastava, A.K., (2003), “Socio-economic Impact through Self-help groups ”, Yojana, Vol.47, No.7, July, p.11.

3. Ajai Nair (2005), ‘Sustainability of Microfinance Self-help groups in India: Would Federating Help?’, World Bank Policy Research Working Paper, 3516, February.

4. Sreeramulu, G., (2006), ‘Empowerment of Women through Self-Help Group’, Kalpaz Publications, Delhi.

5. Suguna, B., (2006), ‘Empowerment of Rural Women through Self-help Groups’, Discovery Publishing House, New Delhi.

6. Jerinabi, U., (2006), ‘Micro Credit Management by Women’s Self-Help Groups’, Discovery Publishing House, New Delhi.

7. APMAS, 2007: SHG Federations in India: A Status Report, APMAS, Hyderabad, India.

8. Narasimha Raju, A.V., (2007), “Self-help groups and Women Empowerment”, in Lakshmipathi Raju eds., ‘Women Empowerment – Challenges & Strategires’, Regal Publications, New Delhi.

9. Boraian, M.P., (2008), ‘Empowerment of Rural Women: The Deterrents and Determinants’, Concept Publishing Company, New Delhi.

10. Christabell, P.J., (2009), ‘Women Empowerment through Capacity Building – The Role of Microfinance’, Concept Publishing Company, New Delhi.

11. NABARD, Status of Micro Finance in India during 2008-2009, Mumbai.

12. NABARD, Status of Micro Finance in India during 2009-2010, Mumbai.

13. Usharani, K, (2008), ‘Marketing Strategies and Financial Viability of Self-help groups ’, Sarup & Sons Publications, New Delhi.

14. Government of Andhra Pradesh (2009-2010), ‘Socio-economic Survey Report’, Hyderabad.

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