Self
Help groups
Definition by International network for
mutual self-health centre “SHG or self
help support is a process where people who share common experience, situation
or problem can offer each other a unique perspective which is not available for
those who had not shared these experiences, Thus SHG are run by group members
& for group members”.
·
SHG are groups of people who meet
regularly for discussing common issues and look for solution for the same.
·
A very important contextual dimension of
SHG in India is their role in micro-financing & microcredit because self
help groups focus on understanding the importance of saving through mutual
participation.
·
They manage credit for benefit of
members and also they themselves also provide credit.
Self-Help Groups are informal
associations of people who choose to come together to find ways to improve
their living conditions. They help to build Social Capital among the poor,
especially women. The most important functions of a Self-Help Groups are
·
To encourage and motivate its members to
save
·
To persuade them to make a collective
plan for generation of additional income
·
To act as a conduit for formal banking
services to reach them.
Such groups work as a collective
guarantee system for members who propose to borrow from organized sources.
Consequently, Self-Help Groups have emerged as the most effective mechanism for
delivery of micro-finance services to the poor. The range of financial services
may include products such as deposits, loans, money transfer and insurance.
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SHG – A CONCEPT
An SHG is a group of about 10 to 20
people 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. T he process helps them imbibe the essentials of financial
intermediation, including prioritization of needs, setting terms and
conditions and accounts keeping. T his gradually builds financial discipline
in all of them. T hey 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. Once the groups show this mature
financial behaviour, banks are encouraged to make loans to the SHG in certain
multiples of the accumulated savings of the SHG. T he 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. T he
groups continue to decide the terms of loans to their own members. Since the
groups’ own accumulated savings are part of the aggregate loans made by the
group to its members, peer pressure ensures timely repayment and replaces the
‘collateral’ for the bank loans. A part from financial help in the time of
need the group provides social security to its members.
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Moreover
SHG are based on principles of:
a) Empowerment
b) Inclusion
& shared responsibility
c) Non-hierarchical
decision-making
d) Effort
is built on mutual trust and mutual support.
e) Every
individual is equal and responsible.
f)
Decision is based on the principles of
consensus.
g) Saving
is foundation on which to build the group for collective action.
The overall goals of SHG is to have a
holistic approach to people’s economic social & cultural means. Their values include –
(a)
Cooperative self organization
(b)
Non-bureaucratic & non-exploitative mutual self help
methods
(c)
Social support by each to all members to
all & by all members to each.
(d)
Free services to enhance education &
political inclusion of members.
Characteristics
of SHGs
The important characteristics of self
help groups are as follows:
1. They
usually create a common fund by contributing their small savings on a regular
basis.
2. The
groups evolve a flexible system of operations often with the help of the
non-governmental organization (NG0s) and manage their common pooled resource in
a democratic manner.
3. Groups
consider loan requests periodical meetings, with competing claims on limited
resources being settled by consensus regarding greater needs.
4. Loaning is mainly on the basis of mutual need
and trust with minimum documentation and without any tangible security.
5. The
amounts loaned are small, frequent and for short duration.
6. Rates
of interest vary from group to group depending upon the purpose of loans and
are often higher than those of banks but lower than those of moneylenders.
7. At
periodical meetings, besides collecting money, emerging rural, social and
economic issues are discussed.
8. Defaulters
are rare due to group pressure and intimate knowledge of the end use of the
credit as also the borrower's economic resources.
Needs
for SHGs are as under:-
1
To mobilize the resources of the
individual members for their collective economic development.
2
To uplift the living conditions of the
poor. To create a habit of savings, utilization of local resources.
3
To mobilize individual skills for
group's interest.
4
To create awareness about right.
5
To assist the members financial at the time
of need. Entrepreneurship development.
6
To identify problems, analyzing and
finding solutions in the groups.
7
To act as a media for socio-economic
development of village.
8
To develop linkage with institution of
NGOs.
9
To organize training for skill development.
10 To
help in recovery of loans.
11 To
gain mutual understanding, develop trust and self-confidence.
12 To
build up teamwork.
13 To
develop leadership qualities.
14 To
use it as an effective delivery channel for rural credit.
Functions of SHGs:-
The important functions of SHG are the
following:-
i)
Enabling members to become self-reliant
and self-dependent.
ii)
Providing a forum for members for
discussing their social and economic problems.
iii)
Enhancing the social status of members
by virtue of their being members of the group.
iv)
Providing a platform for Members for
exchange of idea.
v)
Developing and encouraging the decision
making capacity of members.
vi)
Fostering a spirit of mutual help and
cooperation among members.
vii)
Instilling in members a sense of
strength and confidence which they need for solving their problems.
viii)
Providing organizational strength to
members.
ix)
Providing literacy and imagining general
awareness among members, and
x)
Promoting numerically and equipping the
poor with basic skills required for understanding monetary transactions.
Thus the SHGs function on the principle
of the five 'p's.
i)
Propagator
of voluntarism
ii)
Fractioned
of mutual help
iii)
Provider
of timely emergency loan
iv)
Promoter
of thrift and savings, and
v)
Purveyor
of credit
Benefits
of participating in SHGs
SHG
are based on the international concept of convergent community action. In India
typically SHG are in the form of small voluntary organization of people
generally 10-15 in no., & more popular in village & smaller town.
They
bring people together & create a platform for common experience for mutual
AID, support & education. More specifically the benefits from SHGs are :
1) Learning
new information & strategy for confronting key prob.
2) Finding
support for others
3) The
opportunity to help others
4) Feeling
empowered & more self-confident in coping with challenges
5) Working
as collectives & getting advantage of strength of a collective
Evolution
of the SHG movement in India:
·
The first organized initiative in this
direction was taken in Gujarat in 1954 when the Textile Labour Association
(TLA) of Ahmadabad formed its women's wing to organise the women belonging to
households of mill workers in order to train them in primary skills like
sewing, knitting embroidery, typesetting and stenography etc.
·
In 1972, it was given a more systematized
structure when Self Employed Women's Association (SEWA) was formed as a Trade
Union under the leadership of Ela Bhatt.
·
She organized women workers such as
hawkers, vendors, home based operators like weavers, potters, papad / agarbatti
makers, manual labourers, service providers and small producers like cattle
rearers, salt workers, gum collectors, cooks and vendors with the primary objective
of
·
(a) Increasing their income and assets;
·
(b) Enhancing their food and nutritional
standards; and
·
(c) Increasing their organizational and
leadership strength.
·
The overall intention was to organize
women for full employment.
·
In order to broaden their access to
market and technical inputs, these primary associations were encouraged to form
federations like the Gujarat State Mahila SEWA Cooperative Federation,
Banaskantha DWCRA, Mahila SEWA Association etc.
·
Currently, SEWA has a membership
strength of 9,66,139(2008) which is predominantly urban.
·
In the 1980s, MYRADA (Mysore Resettlement and
·
Development Agency) — a Karnataka based
non-governmental organization, promoted several locally formed groups to enable
the members to secure credit collectively and use it along with their own
savings for activities which could provide them economically gainful
employment.
·
Major experiments in small group
formation at the local level were initiated in Tamil Nadu and Kerala about two
decades ago through the Tamil Nadu Women in Agriculture Programme (TANWA) 1986,
Participatory Poverty Reduction Programme of Kerala, (Kudumbashree) 1995 and
Tamil Nadu Women's Development Project (TNWDP) 1989.
·
These initiatives gave a firm footing to
SHG movement in these states.
·
Today, around 44% of the total
Bank-linked SHGs of the country are in the four southern States of Andhra
Pradesh, Tamil Nadu, Karnataka and Kerala.
·
The positive experience gained from the
above programmes has led to the very strong consensus that the twin concepts of
·
(a) small group organisation and
·
(b) self-management are potent tools for
economic and social empowerment of the rural poor.
·
Efforts have been made almost in all
parts of the country to adopt this model as a necessary component of the
poverty alleviation programmes.
·
Forming small groups and linking them to
bank branches for credit delivery has been the most important feature of the
growth of the SHG movement in our country.
·
The SHG-Bank linkage programme was
started as a test project in 1989 when NABARD, the Apex Rural Development Bank
in the country, sanctioned Rs.10.0 lakhs to MYRADA as seed money assistance for
forming credit management groups.
·
In the same year, the Ministry of Rural
Development provided financial support to PRADAN to establish Self-Help Groups
in some rural pockets of Rajasthan.
·
On the basis of these experiences, a
full-fledged project involving a partnership among SHGs, Banks and NGOs was
launched by NABARD in 1992.
·
In 1995, acting on the report of a
working group, the RBI streamlined the credit delivery procedure by issuing a
set of guidelines to Commercial Banks.
·
It enabled SHGs to open Bank Accounts based on
a simple inter-se agreement.
·
The scheme was further strengthened by a
standing commitment given by NABARD to provide refinance and promotional
support to Banks for credit disbursement under the SHG — Bank linkage
programme.
·
NABARD's corporate mission was to make
available microfinance services to 20 million poor households, or one-third of
the poor in the country, by the end of 2008.
·
In the initial years, the progress in
the programme was a slow; only 33000 groups could be credit linked during the
period 1992-99.
·
But, thereafter, the programme grew
rapidly and the number of SHGs financed increased from 82000 in 1999-2000 to
more than 6.20 lakhs in 2005-06 and 6.87 lakhs in 2006-07.
·
As of March 2011, with almost 5 million
SHGs representing 70 million poor households and a bank loan outstanding of `
306 billion, it has, over the last 20 years, become the largest programme in
the world providing financial services to the poor.
·
Cumulatively, 33 million poor households
in the country have been able to secure access to micro-finance from the formal
banking system.
Self
Help Group-2
The
SHG-Bank Linkage Programme was given a renewed thrust with the launch of SHG-2.
The focus of SHG-2 would be on voluntary savings, cash credit as a preferred
mode of lending, scope for multiple borrowings by SHG members in keeping with
repaying capacity, avenues to meet higher credit requirements for livelihood
creation, SHG Federations as non-financial intermediary, rating and audit of
SHGs as part of risk mitigation system and strengthening monitoring mechanisms.
(As a follow-up read up on the success
stories particularly the Kudumbashree programme of Kerala in ARC 2 Report 09
Social Capital Page 80-81)
Typology of SHGs
1.
Pre-existing groups:
• RO SCAs/ASCAs identified by banks and accessing bank loans
2. Promoted
by NGOs/NGO-MFIs:
•
With support from international and national and donor agencies
• With
grant support from NABARD and government sources
3. Promoted
by banks:
• By
bank staff
• By
farmer’s clubs
• By
individual rural volunteers and agents
4. Promoted
by District Rural Development Agency (DRDA)/government departments and
agencies/local governments:
• By
women development departments through ICDS functionaries
• By
other government departments, e.g., animal husbandry, forests, tribal affairs
• Under
SGSY by DRDA s in different states
• By
project management under mega programme of government (with or without
multilateral agency support)
• By
municipalities and panchayats
5.
Promoted by existing SHGs and their federations
•
Self-promoted ‘copy cat’ SHGs formed by SHG members themselves
• By
individual agents, paid for by the groups
What other Agencies
are involved in the SHG movement?
·
Apart from NABARD, there are four other
major organisations in the public sector which too provide loans to financial
intermediaries for onward lending to SHGs. They are
(a) Small Industries Development Bank of India
(SIDBI),
(b) RashtriyaMahilaKosh (RMK),
(c) Housing and Urban Development
Corporation (HUDCO) and
(d) then, there are public sector/other
commercial banks which are free to take up any lending as per their policy and
RBI guidelines.
Rashtriya
Mahila Kosh:
·
The Rashtriya Mahila Kosh was set up by
the Government of India in March 1993 as an Autonomous Body registered under
Societies Registration Act, 1860 under the Department (now Ministry) of Women
and Child Development.
·
The objective was to facilitate credit
support to poor women for their socio-economic upliftment.lt was felt that the
credit needs of poor women, especially those in the unorganized sector, were
not adequately addressed by the formal financial institutions of the country.
·
Thus RMK was established to provide
loans in a quasi-formal credit delivery mechanism, which is client-friendly,
has simple and minimal procedure, disburses quickly and repeatedly, has
flexible repayment schedules, links thrifts and savings with credit and has
relatively low transaction costs both for the borrower and the lender.
·
The Kosh lends with a unique credit delivery
model "RMK — NGO-SHG- Beneficiaries".
·
The support is extended through NGO's,
Women Development Corporations, State Government agencies like DRDA's, Dairy
Federations, and Municipal Councils etc.
SIDBI:
·
Small Industries Development Bank of
India (SIDBI) launched its micro finance programme on a pilot basis in 1994
using the NGO / MFI model of credit delivery wherein such institutions were
used as financial intermediaries for delivering credit to the poor and
unreached, mainly women.
·
Learning from the experience of the
pilot phase, SIDBI reoriented and up scaled its micro finance programme in
1999.
·
A specialised department viz. 'SIDBI
Foundation for Micro Credit' (SFMC) was set up with the mission to create a
national network of strong, viable and sustainable Micro Finance Institutions
(MFIs) from the informal and formal financial sectors.
·
SFMC serves as an apex wholesaler for
micro finance in India providing a complete range of financial and
non-financial services to the MFIs so as to facilitate their development into
financially sustainable entities, besides developing a network of service
providers and advocating for appropriate policy framework for the sector.
·
SFMC is implementing the National Micro
Finance Support Programme (NMFSP).
·
The overall goal of NMFSP is to bring about
substantial poverty elimination and reduced vulnerability in India amongst
users of micro-finance services, particularly women.
Private
Initiatives:
·
Though, government efforts have played a
major role in advancing the SHG movement in the country, there have been a
large number of voluntary organisations (NGOs) which too have facilitated and
assisted SHGs in organizing savings and credit in different parts of India.
·
SEWA in Ahmedabad, MYRADA in Karnataka,
Nav Bharat Jagriti Kendra and Ramakrishna Mission in Jharkhand, and ADITHI in
Bihar are some of the names which took the lead in promoting Self-Help Groups
(mostly of women) around income generation activities using local skills.
·
From organizing villagers into groups
which could work on viable activities, to making a project and securing funds
(own contribution or through a tie-up with the financial institution), these
VOs have worked with involvement and dedication.
·
PRADAN (Professional Assistance for
Development Action), DHAN Foundation, ASSEFA (Association of SarvaSeva Farms,
MALAR (Mahalir Association for Literacy, Awareness and Rights), SKS, Janodaya,
Cohesion Foundation and Jan ChetnaSansthan are some of the other major
non-governmental institutions which are promoting and nurturing a large number
of SHGs of poor people, mostly women into effective organisations which could
leverage credit from formal sources, and develop local resources and skills to
increase productivity and income.
·
It is thus, due to the combined efforts
of the government and these private voluntary agencies that the SHGs have come
to occupy a place of prominence in the socio-economic fabric of rural India.
What
has been the impact of SHGs on rural life?
·
A random impact evaluation study
covering 560 members of 223 SHGs linked to Banks located in 11 States was
carried out by NABARD. A three year period was selected for this study. The
results of this survey released in 2000 indicated that
·
58% of the households covered under SHGs
reported an increase in assets;
·
the average value of assets per
household increased by 72% from Rs.6,843 to Rs.11,793;
·
majority of the members developed
savings habit against 23% earlier;
·
there was a threefold increase in
savings and a doubling of borrowings per household;
·
the share of consumption loan in the
borrowing went down from 50% to 25%;
·
70% of the loans taken in post-SHG
period went towards income generation ventures;
·
employment expanded by 18%;
·
the average net income per household
before joining a SHG was Rs.20,177 which rose by 33% to 26,889; and
about 41.5% of the household studied
were below their state specific poverty line in the pre-SHG enrolment stage; it
came down to 22%.
·
Participation in group activity
significantly contributed to improvement of self-confidence among the members.
In general, group members and particularly women became more vocal and
assertive on social and family issues.
·
The structure of the SHG is meant to
provide mutual support to the participants in saving money, preparing a common
plan for additional income generation and opening bank accounts that would help
them in developing credit relationship with a lending institution.
·
It ultimately supports them in setting up
micro-enterprises e.g. personalised business ventures like tailoring, grocery,
and tool repair shops.
·
It promotes the concept of group
accountability ensuring that the loans are paid back.
·
It provides a platform to the community where
the members can discuss and resolve important issues of mutual concern.
·
While some of the SHGs have been
initiated by the local communities themselves, many of them have come through
the help of a mentor Body (either government or an NGO) which provided initial
information and guidance to them.
·
Such support often consists of training
people on how to manage Bank accounts, how to assess small business potential
of the local markets and how to upgrade their skills. In the end, it creates a
local team of resource persons.
·
Group formation becomes a convenient
vehicle for credit delivery in rural areas. Commercial Banks and other
institutions which are otherwise not receptive to the demands of marginalized
individuals, start considering such groups as their potential customers.
·
Overall such Joint-Liability Groups
expand the outreach of the micro-finance programme in an effective way,
reaching out to the excluded segments e.g. landless, sharecroppers, small and
marginal farmers, women, SCs/STs etc.
·
The majority of Self-Help Groups
comprise of women members. There is evidence in this country as well as
elsewhere that formation of Self-Help Groups has a multiplier effect in
improving women's status in society as well as in the family.
·
Their active involvement in micro-finance and
related entrepreneurial activities not only leads to improvement in their
socio-economic condition but also enhances their self-esteem.
·
Women in a group environment become more
articulate in voicing their concerns and a change occurs in their
self-perception.
·
They start to see themselves not only as
beneficiaries but also as clients / informed citizens seeking better services.
·
On the home front, their new found
awareness and the confidence generated out of their entrepreneurial skills make
them more confident vis-a-vis their men folk.
·
The SHG programme has contributed to a
reduced dependency on informal money lenders and other non-institutional
sources.
·
It has enabled the participating households
to spend more on education than non- client households. Families participating
in the programme have reported better school attendance and lower drop-out
rates.
·
The financial institution attained
through SHGs has led to reduced child mortality, improved maternal health and
the ability of the poor to combat disease through better nut on, housing and
health — especially among women and children.
But
the SHG movement has certain weaknesses as well:
·
contrary to the vision for SHG development,
members of a group do not come necessarily from the poorest families;
·
the SHG model has led to definite social
empowerment of the poor but whether the economic gains are adequate to bring a
qualitative change in their life is a matter of debate;
·
Many of the activities undertaken by the
SHGs are still based on primitive skills related mostly to primary sector
enterprises. With poor value addition per worker and prevalence of subsistence
level wages, such activities often do not lead to any substantial increase in the
income of group members.
·
There is lack of qualified resource
personnel in the rural areas who could help in skill upgradation/acquisition of
new skills by group members.
Role
of SHG in women’s development:
·
The deviation of Indian women is now
recognized as the biggest source of enrichment of countries deviation. In this
context, empowering women presupposes a dynamic and democratic change in a way
women perceive & way they feel. To empower women a very important step is
to facilitate their economic importance & in this regard emergence of SHG
is a welcome change with tremendous impact.
SHGs
allows not just an economic upliftment of women but also has potential to bring
about a see the change in empowering women and on in social mobilization of
women for creating awareness & ambition among them for their legal &
political right. Thus they have tremendous potential of tapping either to utilized
power of this valuable resources called women power.
In
more specific terms the SHGs have following objectives in the context of
women’s deviation & empowerment –
1. Credit
& economic security: This done through
Promoted the habit of voluntary saving
developing confidence of mutual self help by enabling small loans through
collective saving of members without need of pleading the jewellery/ other
assets.
Aiming
at total abolition of exploitative interest rates & oppressive procedure.
Developing an in house capacity of managing a mini book with ledger and
pass-book for the members.
2. Women’s
entrepreneurship development: SHG motivate women to increase their income
generation potential through various kind of activities. E.g. Through self
employment in the form of handicraft /village or Kutir Industries e.g. Lijjat Papar. Also SHG create good
marketing outlet so as to ensure marketing of product created by members.
3. Women’s
leadership deviation: starting at very small scale SHG provide opportunity to
take leadership role. This provides leadership to women so that they can
develop self confidence & their true potential can be utilized. They also
encourage women to take part in the political process & to eventually take
over the village level administration. Thus SHGs allow the cultivation of homemade
women leaders at the village & block level.
4. Social
empowerment: through SHGs various steps have taken to:
·
Promote elementary education
·
Enrolment & retention of girls in
school
·
Promotion of Balwadi & crèches so
that women can persue their occupation freely
·
Women’s polytechniques &
multipurpose vocational training institutions have been set up through the
influence created by SHGs
·
Moreover SHG helps in creating movements
against dowry & superstitions & can promote small family norms &
overall sensitivity for gender in society.
Another
dimension of social encouraging women to get familiar with various issues
concerning them by making visit different organization like bank, schools
vocational training institute etc.
Thus
it is increasingly being seen that self health groups lay a platform from where
women can have excess to a higher level participation in the Gram Sabhas, Block
level federation, block level co-coordinating committees & eventually to
Zila-Parishad. As a result SHG have emerged not only as mechanism for economic
independence & empowerment but also social & political inclusion &
empowerment. In this context the Yavatmal dist. of MH have been sited as a very
important success story in India & has even impressed organization like
UNDP & UNICEF with their empowering efforts towards the cause of women.
Yowatmal
case study:
A small
beginning was made in Yawatmal district in 2000-01 by dist rural development
agency DRDA to setup SHG as women’s empowerment program with support of UNICEF
& NGOs at present there are more than 2500 SHG in about 500 villages of
this dist which played an important role in political, social & economic
empowerment of women.
Initially
this SHG were referred to as thrift and credit groups as their main in revolved
around creating regular saving as a habit so that women could become
financially independent & could be saved from exploitative credit system
however gradually Yawatmal SHM kept expanding its role & has made a
tremendous contribution in the following manner –
1. SHG
started having linkages with gram panchayat & started taking part in local
decision making processes through the working of Gram Sabha. As a result SHG
were able to metamorphise themselves into an empowerment group rather than just
saving groups.
2. The
SHG created the concepts of collectives or women’s whereby they would provide a
unified identity under SHG banner. Thus women who could have taught for their
rights individually, could now gain the strength collectively & started
seeking political rights.
3. SHG
started raising women’s concern regarding some topics of community interest
like –
-
Village sanitation
-
1º health & cleanliness
-
1º education
Unicef
has acknowledged in this context how the Yawatmal SHG resulted in better
monitoring of schools & making the schools child centred SHG took it upon
themselves to monitor the schools so that it could ensure that teachers come on
time & resources meant for children are actually passed on to children.
This improved the school environment & education became child centric.
The
Yawatmal experience has shown how women’s collectives can truly empower them by
inducing confidence, by organization economic stability & providing a
platform for higher leadership roles.
To
meet Yawatmal successful story a widely replicated and generic experience. The
government is taking proactive steps to recognize & encourage SHGs by
providing them financial as well as technical assistance.
What
then are the key issues facing SHGs today?
·
Though, during a short span of fifteen
years the SHG movement has recorded remarkable progress much still remains to
be done.
·
The movement shows steep territorial
variations. Many areas of the country lack adequate banking structure.
·
Urban and semi-urban areas, to a large extent,
stand excluded from this mode of credit delivery.
·
Further growth of this movement faces threat
from inadequacy of skills in the rural areas. And finally the pace of the
movement needs to be accelerated. The following eight issues of this sector
deserve priority attention:
1. Maintaining the participatory character: We
saw the cooperative sector became a springboard for political aspirants. Though
the SHG movement is relatively new, government interventions and subsidies have
already started showing negative results. The patronage and subsidies provided
to the SHGs by government and the Panchayats often lead to their
politicization. Therefore, due care must be taken to ensure that government
initiatives do not erode the fundamental principles of self-help and
empowerment of the poor.
2. Need to expand the
SHG movement to States such as Bihar, Uttar Pradesh, Madhya Pradesh, Orissa,
Rajasthan and in the North-East (where the SHG movement and micro-finance
entrepreneurship is weak): Overall 73% of the farmer household (in rural areas)
have no access to any formal source of credit. In March, 2001, 71% of the total
linked SHGs of the country were in just four States of the southern region viz.
Andhra Pradesh, Karnataka, Kerala and Tamil Nadu. The figure went down to 58%
in 2005, 54% in 2006 and to 44% in 2007. But even the current figure is a cause
of concern when one talks of financial inclusion for the whole country.
3. Need to extend
small group organisations (SHGs) to peri-urban and urban areas:
According
to the 2001 census, 314.54 million persons changed their place of residence
(vis-a-vis the situation in the 1991 census) within the country and out of this
29.90 million or 9% changed their place of residence in search of better
prospects elsewhere. Since issue of any form of identity card is invariably
linked with the possession of an immovable property, such migrant workers do
not have any formal document to prove their domicile in the city. But the
overall economic and social well-being of the city is closely linked with the
condition of this section of the city dwellers. In the absence of any
documentary proof, it appears that this class of people do not have access to
organised financial services. As per the existing statutory provisions,
NABARD's mandate is to provide micro-finance facilities only to rural and
semi-urban areas. Branches of the mainstream Banks too, though, equipped with
manpower and technology, are not keen to service this sector. Even money
lenders are reluctant to lend to them. The net result is that this segment of
the urban population e.g. pavement sellers, street hawkers, construction
workers etc. remains financially excluded.
4. Mode of SHG development and financial
intermediation: Establishing stable linkage between a SHG and a
local financial institution is one of the key elements of the SHG movement.
Currently, four distinct models of financial intermediation are in operation in
various parts of the country namely:
·
SHG-Bank linkage promoted by a mentor
institute
·
SHG-Bank direct linkage
·
SHG-Mentor Institution linkage; and
·
SHG-Federation model
Since
the borrowing SHGs consist mainly of low income members who cannot afford to
miss even a day's wages, a hassle-free transaction with a Bank which is ready
to come to their doorsteps with appropriate credit products is of great value
to them. The SHG — Bank Linkage Model with a mentor SHPT in tow (Model I above)
would be the most appropriate one for delivery of financial services to the
SHGs.
5. Self-Help Groups and Regional Rural
Banks: As on 1st April, 2007, out of a total of 622
districts in the country, 535 have a network of Regional Rural Banks; the rest
87 districts have no RRB presence. These branches have been created by the Regional
Rural Banks Act, 1976 primarily for providing institutional credit to the
marginalized sector of the rural economy (small, marginal farmers, landless
labour and rural artisans). The extension of the RRB network to the remaining
87 districts would considerably speed up the process of inclusive banking and
help in extending micro- finance to local SHGs.
6. Issues of sustainability: The
institutional sustainability and the quality of operations of the SHGs are
matters of considerable debate. It is generally held that only a minority of
the Self-Help Groups are able to raise themselves from a level of micro-finance
to that of micro-entrepreneurship. Neither do such Bank linkages lead to
sanction of larger individual loans under the Bank's normal lending programmes.
The ultimate objective of such a tie-up is to impart financial strength to the
SHGs so that they can enter into a stable relationship with the local financial
institutions - without any external support. Even after many years of
existence, by and large, SHGs are heavily dependent on their promoter NGOs or
government agencies
7. Financial assistance to SHPIs and other
support institutions: Forty-five per cent of the total
numbers of women SHGs of the country are located in Andhra Pradesh. This
enviable position of the State is primarily due to the initiative shown by
promoter NGOs often known as Self-Help Promoting Institutions (SHPIs) / mentor
organisations. If the SHG movement is to spread across the entire country,
there is need to provide major incentives to SHPIs / promoter NGOs. Currently,
the financial support to SHPIs comes from the Micro Finance Development and
Equity Fund (MFDEF) of NABARD. It is limited to an amount of Rs.1500 per SHG
(formed and activated). To attract more and more SHPIs to the rural areas, this
quantum of support needs to be revised.
8. Role of Micro-Finance Institutions: Micro-credit
is defined as provision of thrift, credit, and other financial services (such
as deposits, loans, payment services, money transfer, insurance and related
products) of very small amounts to the poor in rural, semi-urban and urban
areas for enabling them to raise their income levels and improve living
standards. Micro-finance institutions are those which provide such micro-credit
facilities. Micro-credit is an instrument of both social as well as economic
policy. It opens up integral development processes such as use of financial and
technical resources, basic services and training opportunities to the
unprivileged. Access to savings, credit, money- transfer, payment, and
insurance can help poor people take control of their financial life. It also
empowers them to make critical choices about investing in business, sending
children to school, improving health care of the family, covering the cost of
key social obligations and unforeseen situations. But the most important of
all, an access to finance generates self- esteem among them.
Mode of SHG
Development and Financial Intermediation
·
Currently,
four distinct models of financial
intermediation
are in operation in various parts of the country namely;
1.
SHG-Bank linkage promoted by a mentor institute
2.
SHG-Bank direct linkage
3.
SHG-Mentor Institution linkage; and
4.
SHG-Federation model
Sakhi Samiti and Saheli Samiti – Case study
Sakhi Samiti a two-tier SHG federation was promoted by
PRADAN in A lwar district
of R ajasthan to improve women’s access to government
schemes and enable them
to meet emergency financial and/or credit services. A fter
about 10 years PRADAN withdrew its support to the federation. Sakhi Samiti
provides non-financial services along with limited financial services. Sakhi Samiti runs
with the revenue generated
from the SHGs in terms of providing non-financial services such
as facilitating
bank linkage, bookkeeping and also lending from an
associated fund called Sakhi
Suvidha to tide over the period of waiting for bank linkage
but the sources are
insufficient to meet the cost of the operation and hence
subsidized from various
sources (Ghate, 2007). PRADAN adopted the same strategy for
Saheli Samiti a
federation of SHGs promoted under the D istrict P overty I
nitiative P roject (DPIP)
programme of the G overnment of R ajasthan. Saheli Samiti
used to promote
new SHGs and provide institutional development support to
SHGs and clusters,
microcredit from its corpus provided by PRADAN , artificial
insemination to improve
the livestock quality on fee basis, and bookkeeping and MI S
to member SHGs
through ‘computer munshi’ software. I t also facilitated SHG
linkage, training on
livelihood enhancement and promotion, linking members/SHGs
with the corporate
sector/mainstream institutions and other need-based services
on fee basis. However, due to difficulties in getting bank loans, the
members have not been showing
interest in either the SHGs or their federation.
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