PROJECT REPORT

On
A study on SHG - Self Help group scheme and bank
Linkages program promoted by bank and its effectiveness
Submitted in partial fulfillment for the award of the degree

of

MASTER OF BUSINESS ADMINISTRATION

in

FINANCE
by

SIDDHANT RAKSHIT

Under the guidance of

(Professor)

BENGAL INSTITUTE OF BUSINESS STUDIES

Ballygunge, Kolkata- 700019
 DECLARATION

A study on SHG - Self Help group

I hereby declare that the study entitled “
scheme and bank Linkages program promoted by bank and its
effectiveness “ , is being submitted by me as my final year dissertation project in the
partial fulfillment of the requirement for the award of masters of business administration . The
study is based on secondary sources of data / information .

The material borrowed from similar titles other sources and incorporated in the dissertation has
been duly acknowledged.

The matter embodied in this project report has not been submitted to any other University or
Institution for the award of degree . This project is my original work and it has not been
presented earlier in this manner . This information is purely of academic interest.

Signature: Date:

(Bengal Institute Of Business Studies)

 CERTIFICATE

To whomever it may concern

This is to certify that (Reg no. Of 2020-2021;

Roll no: ) a bonafide student of this college has completed his/her

dissertation as per guidelines. He/she has done this completely on his/her

own and it is an original work and not copied from any resource.

Thanking you.

Yours Truly,

Assistant Professor

Bengal Institute of Business Studies

 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my guide as well as finance faculty

Mrs. Sulakshana Sinha for her valuable mentoring and inputs who gave me the golden
opportunity to do this wonderful project on the topic “A
study on SHG - Self Help
group scheme and bank Linkages program promoted by bank and
its effectiveness “ , which also helped me in doing a lot of research and I came to know
about so many new things I am really thankful to them .

Secondly I would also like to thank my parents and friends who helped me a lot in finishing this
project within the limited time.

I am making this project not only for marks but to also increase my knowledge on gradually
transition of Indian economy in current scenario .

THANKS AGAIN TO ALL WHO HELPED ME

Signature Of Student
 ABSTRACT

Financial inclusion is the delivery of financial services at an affordable cost to the marginalized
groups , by providing them with timely and adequate access to the financial products and
services and it is also a strategy for eradicting the poverty. Through disbursement of funds by
various methods of financial inclusion like self-help groups and microfinance by Banks an
attempt has been made by the Govt. to provide women economic independence & self-
confidence, as well as achieve more respect in their socially defined roles. Micro financing
through Self Help Groups (SHGs) has transferred the real economic power in the hands of
women. SHGs represent a unique approach to financial intermediation or micro-credit. Nearly
70% of Indian population resides in villages and among them 48% are women. SHGs provide
micro-loans to women member which helps them to become self-dependent. SHGs play a vital
role to improve the socio-economic condition of women folk by developing thrift habit and
providing micro finance in times of need and also encouraging micro entrepreneurs. With this
backdrop this study going to make an analysis of the strength of SHGs programme to achieve
financial Inclusion and this study highlighted the role of SHGs in financial inclusion with the
SHGs-Bank Linkage programme. Thus SHGs help the deprived section of people to enter into
formal financial sector and through that social and economic empowerment.

Keywords: SHG, SBLP, Microfinance, NABARD, Savings Linkage, Credit Linkage.

Financial inclusion is the delivery of financial services at an affordable cost to the marginalized
 TABLE OF CONTENT

Sl NO. TOPIC Page no.

1 Declaration
2 Certificate
3 Acknolwedgement
4 Abstract
5 Chapter 1 Introduction 9-10
1.1 Formation of self-help group
1.2 SHG Bank linkage programme
1.3 Working of the programme
6 Chapter 2 Literature Review 11-18
2.1 Abstract
2.2 Introduction
2.3 Special features of SHG
2.4 SHG and NGO support
2.5 Paths of SHG Development: NGO Strategies and
Structures for Intermediation
2.6 Purposes behind promoting SHGs
2.7 Social Banking Experiment and Rural Poor
2.8 SHG Model in India
2.9 SHG Based Microfinance impact on Rural
Economy
2.10 SHG Development in India: An Overview
2.11 Commercial Aspects of SHG Banking in India
2.12 Conclusion
2.13 Jist of conclusion and abstract
2.14 Name of the authors
7 Chapter 3 Research Objective 19
3.1 Objectives of the study
3.2 Hypothesis
8 Chapter 4 Research Methodology 20-23
4.1 Scope of the study
4.2 The Secondary Data Collection
4.3 The Primary Data Collection
 4.4 The Field Survey
4.5 Type of Questionnaires
4.6 Questionnaire Design
4.7 The Data Acquisition stage
4.8 The Data Analysis
4.9 The criteria used for sample selection
4.10 Interviews for case studies
4.11 Secondary Research

9 Chapter 5 Research Analysis 24-45

5.1 District Wise SHGs formed under SGSY and

NABARD

5.2 Sample Design

5.3 Some relevant data regarding the functioning of

the SHGs in West Bengal

5.4 Recovery Status of Employment Generation

Schemes in West Bengal

5.5 Growth of Paschim Banga Gramin Bank Since

Inception

5.6 Year wise Position of SHGs

5.7 Comparative Study on SHG SAVING LINKED

vis-à-vis CREDIT LINKED

5.8 Progress of Self Help groups in West Bengal

5.9 Progress in Savings linked and Credit linked SHG

under National Rural Livelihoods Mission (NRLM)
During the year 2014-15

5.10 Position of SHG Bank (Savings and Credit )

Linked Programme (Bank-wise position from
01.04.2014 to 31.03.2015) 2014-15 NRLM
 5.11 Progress of SBLP

5.12 - Progress in SHG-Bank Linkage Programme

(All India)

5.13 Trends in SHG-Bank Linkage Indicators during

1992/93 – 2009/10

5.14 Agency-wise Distribution of SHGs

5.15 Trend in Agricultural Credit

5.16 Institutional vis-à-vis Non-Institutional

Agricultural Credit

5.17 Financial Assets and Liabilities of Households

5.18 Changes In Expenditure

10 Chapter 6 Limitations and Future Scope 46-47
6.1 Research Problem
6.2 Limitations of the study

11 Chapter 7 Recommendations 48-60

7.1Microfinance
7.2 SHG – Bank Linkage Programme
7.3 Multivariate Impacts Of Microfinance
7.4 Impact at the Individual level
7.5 Impact at the Household level
7.6 Impact at the Social level
7.7 Impact of SBLP
7.8 Major findings of the Study
7.9 Suggestions
7.10 Borrower’s Education

12 Chapter 8 Conclusion 61
13 Chapter 9 References 62-64
 CHAPTER 1
INTRODUCTION

A major effort to provide banking services to the weaker and unorganized sector was the Bank
Self Help Group Linkage Programme that was launched in early 1990s. The programme was
started at the initiatitve of NABARD in 1992 to link the unorganized sector with the formal
banking sector.

1.1 Formation of self-help group:-

Self-help groups are the groups formed by 10-20 commonly women from lower income segment
involved in livelihood activities like making candles, artificial jewellery, pavement vendors,
hawkers, tailoring jobs, retail shops, livestock rearing, etc. Once the group is formed, the
members of the group are encouraged to contribute to a common fund of the group from the
amount conveniently saved out from their earnings. The fund so created by the members are used
to lend internally for meeting their income generation activities and emergent credit needs at
such rate of interest, period of loan and other terms as the group may decide.

1.2 SHG Bank linkage programme:-

Under SBLP, SHGs so formed get linked to banks via NGOs commonly known as Self Help
Promoting Institutions (SHPI), by opening savings account. As per operational guidelines of
NABARD, SHGs may be sanctioned savings linked loans by banks (varying from a saving to
loan ratio of 1:1 to 1:4). Nevertheless, in case of well-developed SHGs, banks may grant loans
beyond the limit of four times the savings as per the discretion of the bank. The limits are
sanctioned by the banks on appraisal of the activities of concerned group in respect of regularity
of meetings, savings, rotation of funds vis-à-vis recovery of money internally lent, income
generation, maintenance of books of accounts, etc. Each bank lending to SHGs will have state
credit plan, district credit plan, block credit plan and branch credit plan as an integral part of the
bank’s corporate credit plan. The lead banks in their respective forum like Block Level Bankers’
Committee (BLBC), District Consultative Committee (DCC), State Level Bankers’ Committee
(SLBC), discuss the problem in all aspects of SHG-bank linkage with the other financial
institutions and monitors branch wise achievement of SHG credit status of each bank.  For SHG-
bank linkage, SLBCs will have a sub-committee consisting members from all banks operating in
the State, RBI, NABARD, CEO of SRLM, representatives of State Rural Development
Department, Secretary-Institutional Finance and Representatives of Development Departments.
The sub- committee meets once in a month with a specific agenda of review, implementation and
monitoring of the SHG-Bank linkage and the issues/ constraints in achievement of the credit
target.
As per the RBI’s latest Priority Sector Lending norms, bank credit to members of SHGs is
eligible for priority sector advance under respective categories viz., Agriculture, Micro, Small
and Medium Enterprises, Social Infrastructure and Others. The interest rate applicable to loans
given by banks to Self Help Groups/member beneficiaries would be left to their discretion.

1.3 Working of the programme :-

Under this programme , banks were allowed to open savings accounts for Self-Help Groups
( SHG ) . SHGs are registered/unregistered entities which usually has a membership of 15 to 20
members from very low income families , usually women . They mobilize savings from
members and uses the pooled funds to give loans to the needy members . Under this programme ,
banks provide loans to the SHGs against group guarantee and the quantum of loan could be
several times the deposits placed by such SHGs with the banks . Banks should consider entire
credit requirements of SHG members , namely :-

(a) Income Generation activities.

(b) Social needs like housing education , marriage , etc.

(c) Debt Swapping

Lending to SHGs should be included by the banks as part of their lending to the weaker
sections . As per the RBI’s latest Priority Sector Lending norms , bank credit to members of
SHGs is eligible for priority sector advance under respective categories viz., Agriculture , Micro
Small and Medium Enterprises , Social Infrastructure and Others .
 CHAPTER 2
LITERATURE REVIEW

2.1 ABSTRACT

Individual saving and investment are important for the economy of a developing country.
Investment is important for the capital formation and growth of economy. India is a rural based
country where 80% of total population is living in rural area. Marginal propensity of saving
(MPS) in rural household is very insignificant. SHG Bank linkage programme pioneered by
NABARD in 1992 with 500 SHG has become a strong tool for improving the saving habit of
rural people specially women. Since 1992 more than 80 lakhs of SHG are linked to various
banks. The self help group of 10-15 women is motivated to save money periodically and
encouraged to put their saving in some income generating activity or other kind of investment.
Bank linkage programme is playing a pivotal role in rural saving and hence their investment. The
present study has been carried out to review the literature on the impact of SHG Bank linkage
programme on rural people’s saving and investment habit.

2.2 INTRODUCTION :-

Since Independence, the Government of India and the Reserve Bank of India (RBI) have made
concerted efforts to provide the poor with access to credit. Despite the phenomenal increase in
the physical outreach of formal credit institution and unwieldy procedures and risk perceptions
of the banks left a gap in serving the credit needs of the rural poor. It is in this context that micro
credit has emerged as the most suitable and practical alternative to the conventional banking in
reaching the hitherto unreached poor population. Related to this at worldwide stage also, since
the late 1970, development policy has increasingly taken recourse to Micro finance to improve
the access to financial services for poor households to deny the consumer credit companies (most
of which are out the market today) which have forced the micro entrepreneurs towards increasing
high debt levels and repayment obligations which they frequently could not fulfill.

At India level in the 1990s a new nationwide microfinance initiative linking banks, NGOs and
informal local groups (self-help groups or SHGs) was started in India. Better known as ‘SHG-
Bank Linkage’, it is expected to become a dominant form of financial access for the rural poor.
A major challenge therefore is to widen access to finance of the rural poor-especially women, a
highly disadvantaged and deprived group to meet their diverse needs (savings, credit, insurance
services) through flexible products at competitive prices.

2.3 Special features of SHG :-

SHG is an organization with fundamental principles like democratic approach and common
decision-making, transparency, self-helping, repayment of loans and group development. The
credibility of the group is dependent on these principles. Not only economical progress but also
an ‘entire development’ is the aim and mutual trust among the members is the credo of SHG.

Empowerment of rural women through self helps groups – An Indian experience 85 The
reference year of the study was 1999-2000. To study the factors of economic and social aspects
such as asset structures, income, social empowerment, behavioural changes etc. were collected
and analyzed to assess the impact.

Another Ex-post evaluation of study of self help groups that was conducted in Karnal, Gurgaon
& Bhiwani districts of Haryana. It was found in this study that the improvement in the
communication was due to increase in awareness and frequent interaction with NGO and
bankers. Aspects of Women Empowerment:-

a ) Self-confidence,

b) Development of decision-making capacity,

c) Position in the family

d) Position in the society

e) Thinking about Views regarding female education and employment,

f) Views regarding Thinking about caste system,

g) Attitude regarding towards assisting own family, village and society in solving, their
problems,

h) Participation in social movements and politics,

i) Awareness about health issues etc.

The negative Impacts of microfinance cited by International Labor Organization are:

i) Increased work loads,

ii) Higher social pressure to ensure loan repayment,

iii) Women employ daughters and daughters-in-law as unpaid employees thereby increasing their

iv) Participation in credit schemes can lead to indebtedness that is, simply because there are
sufficiently profitable income earning activities in which to invest.

In this situation, women up being even more dependent that they were before. Some argue that
micro-finance programmes divert the attention of women from other more effective strategies for
empowerment (Ebdon, 1995). Evidence suggests that, even in financially successful
microfinance programmes, actual contribution to empowerment is often limited (Mayoux, 2001)

2.4 SHGs and NGO support :-

The expert agencies shown that the success of SHG linkage program has linkage with other
auxiliary services of NGOs or Govt., agencies and development programs. The Service Area
branches, in turn, were to fix their own program for lending to the SHGs with a view to enabling
them to get the benefit of catalytic services of NGOs

2.5 Paths of SHG Development: NGO Strategies and

Structures for Intermediation:-

Linking SHG directly to banks is the basic model in which an SHG, promoted by an NGO or
other institution, can access a multiple of its savings in the form of loan funds or a cash credit
limit from the local rural bank. The SHG on lends the funds it accesses from banks to its
members. The SHG –Bank Linkage model provides the cheapest and most direct source of
funds.
SHGs are formed with the assistance of self-help promotion institutions (SHPIs), which include
non-governmental organizations (NGOs), government agencies, banks, cooperatives, and
microfinance institutions. In addition to helping with group formation, SHPIs provide training,
monitoring, and other support services. SHGs Financial Achievements: In contrary the report of
NABARD “Progress of SHG – Bank linkage in India of – 2003 –2004 shows a decrease 4%
(76%(2001) to 72%(2004) in the loans(finance support) to SHGs formed by formal agencies and
NGOs, but directly finance by banks and SHGs financed by banks through NGOs 11% 2001 to
8% (2004).

2.6 Purposes behind promoting SHGs:-

The fundamental aim of promoting SHGs is poverty alleviation and to achieve empowerment of women.
The recent trends show significant changes in the promotional strategies for the SHGs. Financial needs
like banking, saving, insurance etc, getting subsidies, building organizations to gain political power also,
are the purposes behind some of the SHGs. The State Government of Maharashtra has also announced to
promote 5 lakh SHGs in 2005 to 2007.

2.7 Social Banking Experiment and Rural Poor :-

After bank nationalisation in 1969, the Indian government launched an ambitious programme to improve
the access of the rural poor to formal credit and saving opportunities. A key feature of this programme
was bank branch expansion into unbanked rural locations. Between 1969 and 1990, 30000 bank branches
were opened in unbanked locations (Burgess and Pande, 2005).

2.8 SHG Model in India :-

In India three different models of linkage of SHGs to the financial institutions have emerged.
They are:

a. Banks, themselves, form and finance the SHGs.

b. SHGs are formed by NGOs and other agencies but financed by banks.

Banks finance SHGs with NGOs and other agencies as financial intermediaries.

2.9 SHG Based Microfinance impact on Rural Economy :-

 Equitable gains from development on a sustainable basis and ensuring viability of financial
services are key elements in a strategy of poverty reduction by means of credit support to the
poor. As micro-finance is seen to be an approach addressing these concerns effectively,36 The
micro-finance scene in India is dominated by Self Help Groups (SHGs) - Banks linkage program
for over a decade now.

2.10 SHG Development in India: An Overview :-

While the term ‘self-help group’ or SHG can be used to describe a wide range of financial and
non-financial associations, in India it has come to refer to a form of Accumulating Saving and
Credit Association (ASCA) promoted by government agencies, NGOs or banks. These groups
manage and lend their accumulated savings and externally leveraged funds to their members.
SHGs have varied origins, mostly as part of integrated development programmes run by NGOs
with donor support. The major programme involving financial intermediation by SHGs is the
SHG-bank Linkage Programme. This Programme was launched in 1992 by National Bank for
Agriculture and Rural Development (NABARD), the apex bank for rural development in India.

2.11 Commercial Aspects of SHG Banking in India :-

There are two outstanding aspects to NABARD’s Linking Banks and Self-Help Groups: with an
outreach to 500,000 SHGs and a population of 40m rural poor, it is the largest non-directed
micro savings & microcredit programme in the developing world; and its bank lending rates –
fluctuating at market rates around 7% in real terms – are among the lowest. Is it a commercial
proposition for the 17,000 participating bank branches, and perhaps for another 20,000 who
might join the program to reach a population of 100m by 2008( Prof. Dr. Hans Dieter Seibel,
University of Cologne, Germany & Harishkumar R. )

The Study applied average cost analysis, attributing all costs duly to each product; and marginal
cost analysis, in response to the advice of bank managers to ignore personnel costs of SHG
banking because of existing idle capacities. Main performance indicators are non-performing
loans, return on average assets, and operational self-sufficiency. This methodology was applied
to seven units of three banks in October 2002.
 2.12 Conclusion

The study was undertaken to review the role played by SHG Bank Linkage programme on the habit of
rural saving based on the various studies performed in this field. Further few studies also focused on
problems of micro finance institutions. But it is very difficult to trace the studies on management of
microfinance in general and especially savings of SHGs, distribution of micro finance loan, effective
utilization of micro finance loan, problems in obtaining loan and repayment of loan and satisfaction on
implementation of micro finance program have not been analysed so far. SHG Bank linkage programme
designed to empower the downtrodden and especially the women has started tapping the potential of
banking with poor by developing the habit of saving among them. New initiative of NABARD through
digitization of SHG is going to bring the needed momentum to tap the ultimate potential. It has also
provided a much needed support to the poor people by providing them credit facilities at much lower rates
of interest in comparison to the money lenders. The tie ups with NGOs has led to the improvement of the
development of the poor section of the society with easy availability of funds. Hence, the present study
has been undertaken to cover the above research gap in the micro finance sector.

2.13 Jist of conclusion and abstract

From the above conclusion and abstract we can find out that the promotion of SHGs have led to
a drastic improvement in the development of the poor sections of the society . It has also laid
emphasis on women empowerement where 15-20 women are encouraged to save up in order to
make investments in several income generating avenues . It has also started providing easy credit
facilities to the rural sections of the societies by making the availability of funds at cheap
requirements . SHGs are the building blocks of organization of the rural poor .
2.14 Names of the authors

1. Ajay Tankha, (2002) “Self Help Groups as a Financial Intermediaries in India: Cost of
Promotions , Sustainability and Impact Paths of SHG Development” ICCO and Cordaid,
Netherlands

2. Alan Jolis (2007) –“Banker to the Poor”; autobiography of Dr. Muhammad Yunus, Penguin
Pub.

3. Amin, Rai and Topa (2003), Does microcredit reach the poor and vulnerable? Evidence from
northern Bangladesh, Journal of Development Economics

4. Goswami, P.C (1986): “Problems of Rural Sector Development in North- East India”,
Journal of North Eastern Council, Vol.II, No.5, May-June.

5. VPuhazhendhi and K.J.S Satyasai (2000), Micro Finance for Rural People- An Impact
Evaluation, NABARD, Mumbai

6. VPuhazhendhi (2000), Evaluation Study of Self Help Groups in Tamil Nadu, NABARD,
Mumbai

7. VPuhazhendhi & K.L.S. Satyasai (2002) “Empowerment of rural women through self helps
groups – An Indian experience – (National Bank News Review. April – June 2002)

8. Satyasai AGM-MF NABARD, (2002) , “Self Help Group –Bank Linkage Model” NABARD,

9. Sheokand, S. M. (2000). Reorienting banking with the poor: The SHG bank linkage way. In
Publications
 CHAPTER 3
RESEARCH OBJECTIVE

3.1 Objectives of the Study:

* To study the impact of Self Help Group- Bank Linkage Program and its performance
limitations in villages .

* To study the impact of SBLP activities and any other linkage models are existing in the area.

* To study the role of NGOs in the success of SHG linkage model of group activities existing, if
any.

* To study and analyse the reasons for the low success rate of the SBLP model in the areas.

*To study about the SHG based microfinance’s impact on the rural economy.

3.2 HYPOTHESIS:

Null Hypothesis: The SHG active or inactive is independent of which organization supports the
SHG

Alternative Hypothesis: The NGO plays important role in making SHG successful by doing
some activity.
 CHAPTER 4
RESEARCH METHODOLOGY

4.1 Scope of the study :- The aim of my research is to study and compare the growth of self-
help groups through the microfinance bank linkage model. SHG-bank linkage model provide
easy credits and other value added services like savings account and insurance to the poor
section of the population where the banking system helps them to work effectively and
efficiently. It is used to understand the spread of the SHG-bank linkage model in the six regions
that are taken into consideration. My study would help us to understand how these linkage
models would help the poor to survive in their present conditions. Such facilities would make the
poor capable of self-earning, self-business and self-asset. The six variables that are taken into
consideration in this study are total savings of SHGs, savings per SHG, total credit received by
SHGs, average credit received per SHG, total loan outstanding and loan outstanding per SHG.

The study will be based on both primary and secondary data. For the secondary data we may
consult different published reports and bulletins published by different agencies such as RBI
bulletins, NSSO report etc. In the case of primary data we have to collect data by sample survey
method. We have to collect data from the SHG households as well as the bank officials with the
help of suitable questionnaire.

Secondary sources would be used to collect data in this research. The major source would be the
reports issued by NABARD i.e., Status of Microfinance. The various tools that are going to be
used are:

• Tables

• Comparative Statement Analysis

• Scatter Diagram

 Bar Graphs
During the process a detailed study was conducted to understand the genesis Self Help Group-
Bank Linkage model of Microfinance and the factors impacting the empowerment of the rural
poor.

4.2 The Secondary Data Collection:- The survey involved with review of literature and
publications reports of government bodies like RBI, NABARD, Planning Commission, DRDA,
Public Sector Banks, Local Panchayats and the research reports and case studies from various
Microfinance Institutions and NGOs.

4.3 The Primary Data Collection:- Involves required discussions with experts from
Bankers, SHGs, NGOs who has been involved with SHG-Bank Linkage Program, related
activities and with personnel related/non related with SHGBank Linkage using direct interview
methodology, email and questionnaires.

4.4 The Field Survey:- A Pilot study was conducted from where we selected about 18
districts of West Bengal and a few districts from other states as well where both SGSY and
NABARD has led a helping hand in formation of groups from each district. Even a comparative
analysis has been made regarding the recovery status of employment generation schemes in the
year 2015-16 , i.e. how productive has been the undertaking of SHGs and the bank linkage
program. Also a research was conducted with a sample 100 respondents covering all the classes
from SHG-non SHG. A good rapport was first established with the respondents with the help of
senior bankers and academicians already associated with NGOs and SHG activities, especially
from those have deep understanding of the tribal habitability and their livelihood practices. The
questionnaire is designed in such a way to obtain information of socio, economic, and cultural
activities from individuals and no.of accounts and NPAs Bankers. The analysis on data collected
for pilot study was analysed to find out the suitability of the questionnaire and the information
collected. Consequently the questionnaires were modified with consultancy with the experts
from NABARD, Guide and other subject related experts.
4.5 Type of Questionnaires:- To achieve the purpose three different questionnaires for the
study of
1) Individual those not involved in SHG activities or not aware,

2) Those involved in SHG and Bank Linked

3) Banks were prepared.

4.6 Questionnaire Design where questions are pointers and open ended so as to facilitate a
discussion, to understand the issues involved in SHG formation criteria, members socio-
economic background, bankers role in the SBLP operations and its impact on their development.
These tools are targeted to obtain in-depth understanding of the concept of “SHG-Bank Linkage
Program” its operational conditions at sample/targeted area.

4.7 The Data Acquisition stage:- This stage is a combination of collecting data from the
contact points such as NGOs, Local Panchayats, District Collector, Welfare Officers, Lead Bank
Officer of the respective Banks (Bank of India).

4.8 The Data Analysis:- This would involve analyzing the data collected and would also
include ensuing the quality of data as well.

4.9 The criteria used for sample selection:- Though the SHG activity help economic
empowerment of women, the change in their familial and social status and sense of
organizational bonding, the awakening of self confidence and self-respect, social and political
awareness; is a slow process and to achieve it, a member should have sufficient experience of
well established and well run SHG.

Hence the following criteria were used for sample selection(as per NABARD guidelines for
suitable SHGs):

1) The SHG should be 2 to 3 years old.

2) The sample should be representative of the entire district. Hence the study tried to cover more
Talukas & Tahsils from the district.

4.10 Interviews for case studies

Interviews for the case studies were held Ram Krishna Mission Vidyamandira , Howrah, and
individual cases of the members from random taluks in West Bengal like Amdanga , Arambagh ,
Baduria , Kalchini , Kaliganj etc ,Because they are most perfect examples for success and failure
of the SHG Bank Linkage Program. The interviews were conducted at the native place of the
members of SHGs. As the women from SHGs were illiterate and those were literate, could not
write answers; so all the members were interviewed, with the help of the questionnaires.
ii. The sample for this study was 400 SHGs, spread over 3 districts West Bengal namely
Jalpaiguri , Bankura and Coochbehar and a few other ( Including outside West Bengal ) that had
been linked to Commercial & Cooperative banks. The sample would be a random selection of
individual borrowers or members of any group from nearly 14 clusters (villages). The data from
United Bank of India as it is the lead bank of Andhra Pradesh , Union Bank of India, Pen Urban
Cooperative bank and West Bengal State Co-operative Bank. Participants’ Background
Information

iii. A questionnaire was distributed to the selected NGOs to collect data related to their inception,
bank link, age of SHG, saving , bank loan refunds and re-loans. This Information provided
context for the researcher to understand and describe study patterns.

iv. Detailed discussions were held with officials of National Bank for Agriculture and Rural
Development (NABARD), Bank of India (BOI), Union Bank of India (UBI) etc

4.11 Secondary Research: - The secondary data were collected from the Annual Reports
and administrative guidelines of the Ministry of Rural Development, Government of India as
well as from the classified data available with the Offices of the states and SGSY coordinating
departments of the districts of Hooghly , Birbhum and Murshidabad
 CHAPTER 5
RESEARCH ANALYSIS

5.1 District Wise SHGs formed under SGSY and NABARD

TABLE 1 and FIGURE 1 Respectively

Districts No. of groups formed under SGSY No. of groups formed under
NABARD
Murshidabad 7900 16568
Darjeeling 2561 2232
Malda 9173 9546
Uttar Dinajpur 4422 8816
Dakshin 8224 10451
Dinajpur
Birbhum 3312 21701
Hooghly 12572 17606
Purba Medinipur 18695 9853
Paschim 3038 3757
Medinipur
Jalpaiguri 14044 10786
Coochbehar 9130 12181
Nadia 6356 24836
Bankura 6940 12881
Purulia 10046 3938
Burdwan 10514 15672
North 24- 11270 23066
Parghanas
South 24- 8944 20402
Parghanas
Howrah 3243 6380
 30000

25000

20000
No. of groups formed under
15000 SGSY
No. of groups formed under
NABARD
10000

5000

0
0 2 4 6 8 10 12 14 16 18 20

Source: - Annual Report 2015-16, Ministry of Self Help and Self Employment, Government of West
Bengal .

5.2 Sample Design:-

The structured questionnaires were administered to the

following samples:-

TABLE 2

SN. No Organisation Total Sample Targetted Sample Actual Sample

1 SHGs 2500 400 400
>Murshidabad
>Bankura
>Malda
 2 Individuals 7000 4200 3072
3 Bankers , Chairman of 450 124 123
the SHGs

TOTAL 9950 4724 3595

5.3 Some relevant data regarding the functioning of the

SHGs in West Bengal are presented below :-

• Savings of the SHGs under the SGSY: Rs 107 crore (approx.)

• Savings of the SHGs under the NABARD: Rs 97 cr. (approx.)

• No. of SHGs under the SGSY to have passed Grade I: 1,42,490

• No. of SHGS under the SGSY to have passed Grade II: 36,595

• No. of SHGs under the SGSY to have got cash credit loan: 1,15,000

• Amount of such cash credit: Rs 250 crore (approx.)

• No. of SHGs under the NABARD to have got the first input of loan: 1,93,086

• Amount of cash credit for the NABARD-supported SHGs: Rs 395 crore (approx.)

• Refinance amount for the NABARD-supported SHGs repaying first input of loan: Rs 127.43 crore
(approx.)

• No. of SHGs under the State Cooperation Department getting loan: 70,000 (approx.)

• Amount of such loan: Rs 115 crore (approx.) Recovery status of the selected employment-generation
schemes as on March 2016 in comparison to March 2015 is presented below :-

5.4 Recovery Status of Employment Generation Schemes in

West Bengal :- ( Table 3 and figure 2 respectively )
Schemes March 2015 ( Rs in Crores ) March 2016 ( Rs in Crores )
Demand Recovery % Demand Recovery %
PMRY 125 30 24 146 36 24

SJSRY 17 6 35 24 9 38

BKSP 119 60 50 125 59 47

REGP 101 60 59 96 49 51

SCP/TSP 64 32 50 120 56 47

SGSY 37 18 49 36 19 52
(Individua
l)
SGSY 139 99 71 197 136 69
(Gr)

SHG 228 205 90 353 287 81

400

350
March 2015 ( Rs in Crores
) Demand
300
March 2015 ( Rs in Crores
250 ) Recovery
March 2015 ( Rs in Crores
200 )%
March 2016 ( Rs in Crores
150 ) Demand
March 2016 ( Rs in Crores
100 ) Recovery
50 March 2016 ( Rs in Crores
)%
0
0 1 2 3 4 5 6 7 8 9 10

Source:- The above given data has been extracted from the annual report 2015-16 of State Level
Bankers‘ Committee (SLBC)
5.5 Growth of Paschim Banga Gramin Bank Since Inception
:-
Since inception, Paschim Banga Gramin Bank has given thrust on rural credit / microfinance. At
present we are having 52916 nos. savings linked SHGs, out of which 39731 nos. are credit
linked. From the above position it is crystal clear that a large number of SHG cases are likely to
be credit linked in this financial year 2016-17.

Farmers’ Clubs are grass root level associations and have strong links with the local community
having influencing powers. As they emerge from the community itself they also have the
knowledge of the local milieu. It is an important link between bank and local community.

At present our bank is suffering from acute manpower shortage and for that reason some times
branches are not in a position to scout any loan proposal and even credit linking the matured
SHGs. Since our bank has given thrust on rural credit through financing SHGs, JLGs and KCC,
we use to take the help of these Farmers’ Club for disbursement and recovery. It is proven fact
that in order to accelerate credit flow and good recovery there against, micro finance through
Self Help Group is the effective tool of the Bank. For this reason, we have engaged Farmers’
Clubs as Business Facilitator(BF) and give commission at least 0.5% on loan amount of SHGs.

In this backdrop, we have decided that all eligible savings linked A/Cs should be credit linked
and Minimum amount should be Rs.1.50 lac per SHG. We have at least 2000 SHGs who have
taken loan above Rs. 5 lac. These Group members are all women and most of the women are
involved in the Allied Agril activities, “KANTHA STITCH SARI” making and other business
activities also.
We also observed that we are having near about 25000 credit linked Groups, whose age more
than 3 years. Therefore, we can finance 25000 groups at least Rs.3 lac per Group. Last year our
total outstanding advance was Rs.1984crore, out of which SHG advance was Rs. 645.48crore
(33% of gross advance). This year our estimated target to our SHG outstanding advance is Rs.
950crore.

Bank has decided to open individual S.B A/C of all the group members. After this decision,
number of S.B. A/Cs and CASA deposit have been remarkably increased. Our NPA against SHG
finance is below Rs. 5crore(0.77%). As on today our total Branches are 230 spreading over 4
District namely Howrah, Hooghly, Bardhaman and Birbhum.

We are constantly monitoring the groups and holding regular meetings with the members with
missionary zeal for empowerment of rural women and uplifting the standard of living as well as
the education of their children. We are going to undertake a programme of plantation of trees in
our villages with the help of SHGs to render service to the nature as well as to the nation.

5.6 Year wise Position of SHGs is given below:-

TABLE 4

SHG POSITION Amt. in Crore

As on Savings Linked Credit Linked

Year A/C AMT. in crore A/C AMT. in crore

31.03.2013 37878 58.43 25238 145.46

31.03.2014 39872 72.56 31225 250.93

31.03.2015 44447 95.81 34220 403.59

31.03.2016 52916 129.75 39731 645.48

5.7 Comparative Study on SHG SAVING LINKED vis-à-vis

CREDIT LINKED :-
 FIGURE 3

100%
90%
80%
70%
31.03.2016
60%
31.03.2015
50% 31.03.2014
40% 31.03.2013

30%
20%
10%
0%

5.8 PROGRESS OF SELF HELP GROUPS IN WEST

BENGAL (TABLE 5 AND FIGURE 4 RESPECTIVELY)

Progress of Self Help Groups in West Bengal

SR No. Year No. of SHGs Bank Loan ( Rs Refinance by

in lakhs ) NABARD ( Rs in
lakhs )
1 2006-07 131479 39517 10510

2 2007-08 154350 55893 12581

3 2008-09 189065 77974 20694

 4 2009-10 218774 93524 25773

5 2010-11 250098 105857 42883

6 2011-12 280098 128009 50456

7 2012-13 320399 150994 58543

8 2013-14 378589 183898 67765

9 2014-15 408840 200759 93654

10 2015-16 550499 250049 120151

11 2016-17 630098 300048 165731

Average per year 319299 144229 60795

Source – Reports of State Level committee on credit delivery innovations , West Bengal
Progress of Self Help Groups in West Bengal No. of SHGs
5.9 Progress in Savings linked and Credit linked SHG under
National Rural Livelihoods Mission (NRLM) During the
year 2014-15 :-

The positions of Saving and Credit Linked SHGs(NRLM) for the State of West Bengal for 6
years and as on March 2015 are given below:-

TABLE NO. 6

Year Target No. Target No. Achievement Achievement Amt. Rs In

Deposit Link Credit Link Deposit Credit Linked Crore
linked No. No.
2009-2010 150000 150000 117372 152067 615.13

2010-2011 150000 150000 103732 114255 530.72

2011-2012 150000 150000 86839 93425 553.35

2012-2013 150000 150000 126398 108924 674.41

2013-2014 150000 150000 137222 129333 925.91

2014-2015 150000 158000 63384 114041 1026.03

All Banks in the State, Saving linked to 63384 Groups during the year ended March 2015.

Position of SHG Bank (Savings and Credit ) Linked Programme (Bank-wise position from
01.04.2014 to 31.03.2015) 2014-15 NRLM
 FIGURE 5

180000

160000

140000

120000

100000 Amt. Rs In Crore

Achievement Credit Linked No.
80000 Achievement Deposit linked No.
Target No. Credit Link
60000
Target No. Deposit Link

40000

20000

0
2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-
2015

5.10 Position of SHG Bank (Savings and Credit ) Linked

Programme (Bank-wise position from 01.04.2014 to
31.03.2015) 2014-15 NRLM
 TABLE NO. 7

SL. Name Of The Target Target Savings Credit Linked Amt . ( Rs In

No Bank No. No. Credit Linked No. No. Lacs )
Saving Linked
Linked
1 AB 9150 14287 3458 6115 5455.29
2 AND.BK 30 114 13 5 1.19
3 BOB 1550 2236 305 139 99.28
4 BOI 4170 6142 3867 2777 1239.00
5 BOM
6 CB 1600 1456 2044 369 304.30
7 CBI 6200 10365 5844 7823 5941.56
8 CORP.BK 1 5.00
9 DB 400 340 18 18 5.00
10 IB 390 906 2122 1564 1755.50
11 IOB 730 1162 202 202.62

12 OBC 500 437 4 2.00

13 PNB 4400 5497 3392 3034 9187.00
14 P&SB
15 SB 600 1269 545 512 364.00
16 SBI 13230 25000 3732 12909 9321.00
17 UB 1140 1790 1089 2069 1763.54
18 UBI 12250 22654 9241 7642 7126.00
19 UCO 5800 8162 1082 4677 3842.15
20 VB 60 179 77 77 31.55
21 SBol
22 SBoS
23 SBoP
 24 SBoM
25 SBBJ
26 BGVB(UBI) 24330 23217 6099 5949 6524.9
27 PBGB(UCO) 9770 12321 2928 2697 2932.00
28 UBKGB(CBI) 3700 3526 2183 13902 10024.00
29 WBSCARDB 2880 2880 1012.43

30 WB. Co-Op 50000 16940 12465 11988 6514.43

Bank
Total 150000 158000 63348 87353 73653.74

5.11 Progress of SBLP

This section reviews the progress of the programme at the national and regional levels. The
SBLP as a dominant model of microfinance exhibited significant growth in terms of both number
of SHGs financed by banks, bank loan outstanding and refinance assistance.

All India Level :- Below Table 8 and figure 6 report the trends in the number of SHGs
financed by banks, amount of bank loans and refinance at the national level during the period
1992/93 – 2009/10. The programme, beginning with a modest number of 255 SHGs financed by
banks in 1992-93, experienced tremendous growth, as the number of SHGs increased to 149050
in 2000 01 and further to 1586822 of which 81.6 per cent (i.e., 1294476) were exclusively
women SHGs credit linked in 2009- 10. The estimated semi-logarithmic trends (reported in table
9 ) reveal that the number of SHGs financed by banks grew at the rate of 54.1 per cent per
annum during 1992/93 – 2009/10. Table 8 shows that the number of credit linked SHGs have
been growing tremendously since 1998-99. Registering a growth rate of 68.0 per cent per annum
during 1992/93 – 2009/10 (Table 9), the amount of bank loan disbursed to SHGs increased from
Rs 0.29 crore in 1992-93 to Rs 287.89 crore in 2000-01 and further to Rs 14453.30 crore of
which Rs 12429.37 crore (i.e., 86.0 per cent) was disbursed to women SHGs in 2009-10. Out of
the total loans disbursed in 2009-10, SHGs financed under Swarnjayanti Gram Swarojgar Yojana
(SGSY) accounted for 2.67 lakh (16.9 per cent) with bank loan of Rs 2198 crore (15.2 per cent).
In 2009-10, the average bank loan disbursed per SHG was Rs 91083 as against Rs 76129 in
2008-09. The average bank loan outstanding per SHG was Rs 57795 in 2009-10 as against `
53689 in 2008-09. The amount of refinance by banks increased from Rs 0.27 crore in 1992-93 to
Rs 250.61 crore in 2000-01 and further to Rs 3173.56 crore in 2009-10, registering a growth rate
of 57.6 per cent per annum during 1992/93 – 2009/10. It experienced an impressive growth since
2000- 01 (Table 8 and Figure 6). Moreover, as on 31 March 2009-10, the number of savings
linked SHGs stood at 6953250 and total amount of savings at Rs 6198.71 crore, registering an
annual growth rate of 13.6 and 11.8 per cent, respectively over the previous year (NABARD,
2010). The estimated semi-logarithmic trends in the three indicators of the linkage programme
(viz., number of SHGs financed by banks, amount of bank loan, and refinance assistance) during
the period 1992/93 – 2009/ 10 are reported in Table 9. The estimates of the coefficient of trend
(t) provide information about growth rate of the indicators. Annual growth rate of an indicator is
obtained by multiplying the coefficient of t by 100. The estimates display an outstanding
performance of SHG-Bank linkage programme. While the number of SHGs grew at the rate of
54.1 per cent per annum and bank loan at the rate of 68.0 per cent, refinance by banks grew at
the rate of 57.6 per cent per annum during 1992/93 – 2009/10.

5.12 - Progress in SHG-Bank Linkage Programme (All

India) TABLE 8

Year ( End March ) No. of SHGs financed by Bank Loan ( Rupees Refinance Assistance
banks Crores ) ( Rupees Crores )
During The Cumulative During Cumulative During Cumulative
Year The Year The Year
1992-93 255 255 0.29 0.29 0.27 0.27

1993-94 365 620 0.36 0.65 0.19 0.46

1994-95 1502 2122 1.79 2.44 1.67 2.13

1995-96 2635 4757 3.62 6.06 3.53 5.66

1996-97 3841 8598 5.78 11.84 4.99 10.65

1997-98 5719 14317 11.92 23.76 10.74 21.39

1998-99 18678 32995 33.31 57.07 30.70 52.09

1999-00 81710 114775 135.91 192.98 98.04 150.13

2000-01 149050 263825 287.89 480.87 250.61 400.74

2001-02 197653 461478 545.47 1026.34 395.76 796.50

2002-03 255882 717360 1022.33 2048.67 622.30 1418.80

2003-04 361731 1079091 1855.53 3904.20 705.40 2124.20
2004-05 539365 1618456 2994.26 6898.46 967.80 3092.00
 2005-06 620109 2238565 4499.00 13397.46 1067.70 4159.70

2006-07 1105749 3344314 6570.00 19967.50 1292.86 5452.56

2007-08 1227770 4572084 8849.26 28816.70 1615.50 7068.06

2008-09 1609586 6181670 12253.51 41070.20 2620.03 9688.09

2009-10 1586822 7768492 14453.30 55523.50 3173.56 12861.65

Notes : Data for 2009-10 are provisional. Data relate to Commercial Banks, RRBs and
Cooperative Banks. From 2006-07 onwards, data on number of SHGs financed by banks and
bank loans are inclusive of ‘Swarnajayanti Gram Swarozgar Yojana’ (SGSY).
Sources: NABARD (2010); Reserve Bank of India (2010, 2011).

FIGURE 6
9000000

8000000

7000000
No. of SHGs financed by banks
During The Year
6000000 No. of SHGs financed by banks
Cumulative
5000000 Bank Loan ( Rupees Crores )
During The Year
4000000 Bank Loan ( Rupees Crores )
Cumulative
3000000 Refinance Assistance ( Rupees
Crores ) During The Year
Refinance Assistance ( Rupees
2000000
Crores ) Cumulative

1000000

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18

5.13 Trends in SHG-Bank Linkage Indicators during

1992/93 – 2009/10 TABLE 9
Ln (Number of SHGs) = R2 = 0.940
5.81 + 0.541 t;

Ln (Bank Loan) = “1.351 + R2 = 0.966

0.68 t;

Ln (Refinance) = “1.048 + R2 = 0.921

0.576 t;

Notes : The trend lines were estimated using data reported in Table 8 .
t = trend;
Ln = Natural logarithm.

5.14 Agency-wise Distribution of SHGs :

NABARD has been instrumental in promoting and nurturing SHGs by providing financial
support to participating agencies in the SGHBank linkage programme. The participating
agencies include commercial banks, regional rural banks (RRBs), cooperative banks and
NGOs. These agencies have been effectively playing the role of promoting and nurturing
SHGs. Twenty seven public sector commercial banks, 19 foreign and private sector banks, 81
regional rural banks, 318 cooperative banks and one Small Industries Development Bank
of India participated in the linkage programme in 2009-10. The agency-wise distribution of
disbursed and outstanding loans to SHGs during the years 2008-09 and 2009-10 are
reported in Table 10. The data presented in the Table clearly reveal that the commercial banks
have been in the forefront of SHG-Bank linkage programme, followed by RRBs and cooperative
banks. It may be seen from the Table that the commercial banks have had the largest share in the
linkage programme in terms of number of SHGs and the amount of disbursed and outstanding
bank loans to SHGs.

Agency-wise Distribution of Disbursed and Outstanding

Bank Loans to SHGs ( TABLE 10 ) :-

5.15 Trend in Agricultural Credit :-

 In order to understand the impact of policy milestones discussed above on agricultural credit and
its performance with respect to agricultural GDP, the ratio of agricultural credit to agricultural
GDP was computed taking into account the agricultural credit outstanding as well as
disbursement. Accordingly, two line graphs are plotted in the following chart.

The ratio of Agri-Credit outstanding to Agri-GDP jumped from 0.6 per cent in 1950-51 to 9.81
per cent in 1971-72. Post 1972, the ratio shows an upward trend upto 1987- 88 increasing to
21.76 per cent. The impressive achievement of agricultural credit against agricultural GDP
during 1950s-1980s is on account of nationalisation of banks and introduction of RRBs which
expanded the reach of formal credit in the country. However, the reverse trend in the ratio started
from 1990-91 onwards and it fell to 13.34 per cent in 1998-99. Post 1999 the ratio increased
steeply and reached upto 39.55 per cent in 2006-07, which indicates that introduction of KCC
was a big booster for agricultural credit and brought about a sea change in improving the reach
of credit to the farming community. Many of the other policy initiatives started in 2004-05 also
played an important role. In later years, despite a fluctuating trend, it rose to 49.63 per cent in
2015-16 and 51.56 per cent in 2017-18. The chart reveals that the trend of both the agri-credit
outstanding as well as disbursement as percentage of agri-GDP are largely similar except in
certain periods where there is divergence between the two. The reasons could be announcement
of loan waivers which negatively impacted the repayment behavior of the borrowers and also
made the banks averse to fresh lending. Despite this spectacular achievement, the dependence of
agricultural households on non-institutional sources, though reduced to certain extent, has
persisted over the years.
5.16 Institutional vis-à-vis Non-Institutional Agricultural
Credit :-
In the 1950s, the rural agrarian credit needs were traditionally met from the non-institutional
sources largely through the local money-lenders. While the rural farmers had easy access to
finance for their immediate needs, the steep interest rates, coupled with high illiteracy levels and
the subsequent lack of awareness put them into a spiralling debt trap leaving them at the mercy
of the money-lender. The evolution of the institutional structure through various Government
policy interventions changed the scenario, whereby institutional sources, primarily through
commercial banks became the major source for rural credit. The share of institutional credit vis-
à-vis non-institutional credit as per AIDIS 2013 is shown in the chart below. Position for 2015
has been plotted based on NAFIS 2016-17.

According to AIDIS report, non-institutional sources were dominant in 1951, accounting for 90
per cent of the outstanding debt of cultivator households, but their share declined sharply to 37
per cent in 1981. After 1981, the rate of decline slowed down, and the share of non-institutional
sources was 35 per cent in 1991. Thereafter a reversal of this pattern resulted in higher share of
39 per cent in 2002 which again dropped to 36 per cent in 2013. As per NAFIS Report 2016-17,
the share of non-institutional credit in 2015 was 28 per cent. As against this, the share of
institutional credit in agriculture increased from 10.2 per cent in 1951 to 63 per cent in 1981 and
thereafter the share of institutional credit was hovering in the range of 63-65 per cent during
1981 to 2013. As per NAFIS, in 2015 the share of institutional credit was approximately 72 per
cent.

Further, NAFIS Report 2016-17 has revealed that agricultural households avail credit from
sources other than banks such as NBFC/MFI, financial companies, financial corporations,
provident fund, insurance, relatives, friends, moneylenders, landlords, etc. The chart below
shows the distribution of agricultural households according to type of sources of loans.

According to NAFIS, institutional sources were preferred by agricultural households to avail

credit as approximately 61 per cent of them avail credit from them. However, a significant
portion, i.e. approximately 30 per cent of agricultural households still avail credit from non-
institutional sources only which is a cause of concern. There is a need to ascertain the reasons
why 30 per cent are still left out from getting institutional credit. The probable reasons could be
that their credit demand could be for consumption purposes or they could be tenant farmers,
sharecroppers and landless labourers who are not able to offer collateral security to avail
institutional credit, or they are involved in unviable subsistence agriculture or banks don’t find
them credit worthy. As a result, these farmers find it convenient to borrow money from non-
institutional sources due to easy accessibility.

  5.17 Financial Assets and Liabilities of Households:-

The household sector holds its financial assets mainly in the form of currency, deposits,
investments in debt securities, equities, mutual fund units, insurance and pension funds, and
small savings. Liabilities are mostly in the form of loans and borrowings from banks, housing
finance companies (HFCs) and nonbanking financial corporations (NBFCs). Indian households are
generally net savers and suppliers of financial resources for the rest of the economy. However,
net financial assets of the households turned negative (-7.3 per cent of gross domestic product
(GDP)) in the third quarter of 2016-17, reflecting the transitory effects of demonetization . With
subsequent remonetisation, the household sector’s net financial assets turned around and in the
fourth quarter they amounted to 14.8 per cent of GDP. In 2017-18, net financial assets of
households are estimated at 8.3 per cent of GDP in Q2, up from 5.8 per cent of GDP in Q1

5.18 Changes in Expenditure :- Increased levels of employment and incomes

of SHG households are expected to raise their expenditures on various items. The level and
growth rate of annual per household expenditure on food and non-food items are reported .
While the expenditure on food included cereals, pulses, edible oils, vegetables, milk, and milk
products, meat and fish, sugar, gur, and other items, the expenditure on non-food included
clothing,
footwear, consumer durables, pan, beedi & cigarettes, intoxicants, ceremonies, newspaper, travel
and also on education and health.

At the all India level, the share of expenditure separately on four groups of items viz., food, non-
food, education, and health to total expenditure at the base level turned out to be 66.54, 33.46,
3.94 and 4.22 per cent, respectively. More importantly, per household expenditure on each group
of items grew at the rate of more than 5.0 per cent per annum between pre- and post-SHG
periods. The annual compound growth rate of per household expenditure was highest in
education (5.6 per cent), followed by health (5.5 per cent), non-food items (5.4 per cent)
and food items (5.1 per cent). However, there were wide inter-state variations in the base level
and growth rate of expenditure on each group of items. The base level of expenditure on food
varied from Rs 3600 in Uttar Pradesh to Rs 2244 in Karnataka. Its growth rate was highest in
Karnataka (6.8 per cent) and lowest in Odisha (4.1 per cent).

The base level expenditure on non-food varied from Rs 2612 in Andhra Pradesh to Rs 905 in
Odisha. The inter-state variations, measured in terms of CV in the base level and growth rate
of expenditure on education and health were wider than those in expenditures on food and non-
food items. It may also be noted that on an average about 80 per cent of the SHG households
reported an increase in their access to nutrition, children’s education and health care in post-SHG
situation relative topre-SHG situation.
 CHAPTER 6
LIMITATIONS AND FUTURE SCOPE

6.1 Research Problem:- Since independence many Banking reforms have been
undertaken with aim to alleviate poverty and uplift the poor. Post nationalization of the Banking
sector, 1969, we have witnessed a substantial amount of resources being earmarked towards
meeting the credit needs of the poor. Bank nationalization aimed at expanding the outreach of
financial services to neglected sectors. There spawned several pro-poor financial services,
supported by both the state and central governments, which included credit packages and
programs customized to meet the perceived needs of the poor.

The ‘defining event’ in the build-up of financial architecture in India was the nationalization of
major commercial banks. It essentially reflected the national aspiration for rapid and equitable
economic and social development. The aftermath of nationalization witnessed a remarkable
spread of the banking system to the hitherto neglected sectors and regions. Significant progress
was made in terms of coverage of the rural population by formal credit institutions, While the
objectives were laudable and substantial progress was achieved, credit flow to the poor, and
especially to poor women, remained inadequate. 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).

Even with the presence of public sector & cooperative banks and local associations, majority of
people are depending on small and middle level of money lenders. The men & women of most of
villages are practicing seasonal business, daily wage workers in industries and construction
works. Very few are active in small time businesses like selling vegetable, fish, flowers and road
side make shift groceries. However they require a stable income and pride place in the society.
To meet that requirement, they definitely require a financial support from banks and other
sources in the form of loans without collateral and procedural hassle.

In India, among all other models the SHG-Bank Linkage Program model is believed to be a
popular one as reflected by its record of good rate of loan repayment along with regular banking
accessibility. SBLP was conceived to fill the existing gap in the formal financial network and
extending the outreach of banking to the poor. However, the present distribution of the SBLP is
skewed against the poorer regions of the district. Banks may need to be encouraged as facilitators
in extending the SHG movement in the poorer regions, perhaps by introducing a scheme of
performance-linked incentive. Specific funds may be created to address the regional imbalances
in the SBLP. SHGs need to be formed around activities of rural infrastructure such as
construction and renovation of minor irrigation tanks, feeder channels, rural roads, etc. One way
the NABARD and RBI statistics shows regions spread and fiscal strength of the program, Raigad
district shows the irony picture of the under performance either by Bankers, the policies or the
people who could exploit the available easy accessible financial resources to empower their
lives.

There may be hurdles faced by banks in financing the very poor seemed to be the comparatively
high transaction cost in reaching out to a large number of people who required very small doses
of credit at frequent intervals. The same held true of the costs involved in providing savings
facilities to the small, scattered savers in the rural areas. Feelings were mutual among the very
small savers and borrowers in the rural areas as well, as they tended to view banking as an
institutional set up for the elite; even if they tried to reach the bank branch the long distances and
loss of earnings on being away from work while visiting bank branch were hurdles and they were
never sure whether they would get any service or not if they did approach the branch.

6.2 Limitations Of The Study:-

1) The study is based on the information provided by the SHGs, in Jalpaiguri and Bankura, the
result would vary of other districts.

2) The diversity of commerce activities of Coochbehar district and other areas may produce non-
homogeneous opinion.

3) The influence of near vicinity of urban exposure and casual earning opportunities in Howrah
and Purulia districts may vary with the result from other districts. The report has been prepared
based on the data collected from the field and published secondary data.

4) The asset increment and changes in the expenditure of the household sectors may vary due to
economic conditions and also various economic factors may bring a subtle change in the
variations of the income.

5) The agricultural sectors’ data may be different in other sectors of different districts as well.
 CHAPTER 7
RECOMMENDATIONS

The study has examined as explored the impact of micro finance on several variables such as
income, consumption, financial services usage, asset ownership, intra-household and community
decision making skills and opportunities. Broadly, the impact is assessed on the basis of
Personality development, Economic Independence, Political Empowerment, Intellectual
development, Household Empowerment and Social Empowerment. The Multivariate analytical
and impact assessment study will be useful for Micro Finance industry analysts, Banks and other
Non-Banking financial companies, various NGOs, private equity firms and governments. The
impact evaluations will help practitioners to understand, what the best and most beneficial ways
to provide financial services to the under-banked are. Understanding the areas in which micro-
credit has an impact and the reasons why it has an impact will help focus on these areas and
develop appropriate products to maximize the benefits to the clients.

7.1Microfinance
Microfinance has a substantial impact on many dimensions of social and economic development.
It enables borrowers to attain higher household incomes,
increase savings rates, smooth consumption pattern over their lifetime and finally be able to
diversify their sources of income generation. Access to financial services also interprets into
broader social benefits, including improved health, increased educational participation, and
greater gender equality. The role of microfinance is praiseworthy. The informal discussion with
the members of SHGs reaffirms the fact that women are capable of successfully managing the
business too, in addition to family responsibilities. The bankers too are very optimistic in lending
to SHGs since the percentage of NPA to SHG advances are very low. Considering all these facts
it can be stated that the empowerment and development are achieved.

7.2 SHG – Bank Linkage Programme

SHG-Bank Linkages is a bold and a creative initiative taken by the government and NABARD
on the eve of new millennium for poverty eradicating in our country. Certain refinements in the
SHG are imperative to augment its outreach and efficacy. The SHGis set to add a new dimension
to micro-finance concept in India and has every potential to prove pragmatic weapon in fight
against poverty.
In this study, the researcher has presented evidences of the need in the first place, multivariate
impacts and other possibilities for a microfinance industry including the major objective which is
the eradication of poverty through the delivery of a range of micro financial services to the poor
people. This research enables to demonstrate that the industry must rise to the challenge of
expanding the boundaries of microfinance and innovating to develop more effective and more
cost-effective services for the poorest. The results revealed that the impact of SHGs on socio–
economic status of women was found to be significant in providing education to their heirs as
learning many skills themselves, housing facilities, exposure to mass media, occupation, size of
land holding and material possessions etc. The association between the growth of SHGs and the
increase in bank deposit accounts influence the SHGs in their account holding in formal banks.
In the process, there is a positive relationship among SHG membership, bank deposits and
account holding.

It is mutually beneficial for all the parties involved. It is no wonder that Self Help Group shows
the right path to the lakh of young educated and uneducated both rural and urban women to lead
their life. Self Help Group opened the eyes of the young rural women entrepreneur to start their
business almost each and every field which they previously worried to undertake. Self Help
Group registered a good record in the saving habits, Income generation, social status and
standard of living. The problem related to women can be effectively tackled only by bringing
about a social awakening. Self Help Groups were playing a vital role. Thus the formation of
SHGs has led to a number of positive features.

Women Emancipation can be reflected with the promotion of large number of sustainable SHGs.
It can ensure the increased participation of women in SHGs. It can provide conducive
environment in groups where women demand knowledge and information, empowering
themselves to change their lives. It can challenge the oppressive structure of the society. SHGs
enhance not only the national conscience but also enable in achieving Millennium Development
goals.

7.3 Multivariate Impacts Of Microfinance

SHGs promoted by the bank are sound and maturing in a healthy manner. The Micro-Finance
services lead to impact, or changes, at the social, household, and individual levels. The specific
micro finance service being investigated in this study is micro- credit, savings and Insurance.
The use of micro-finance is hypothesized to lead to the impact listed below :-

Microfinance has created considerable trust and expectations among the academics, policy
makers of the government, NGO leaders, donors, investors andother development practitioners in
all over the world. Microfinance has produced positive impact on two vital areas of national
development; alleviation of poverty and women’s empowerment. Products and services of
microfinance are targeted to the poor who make up nearly half of the total population. Focusing
especially on women is another important characteristic of these programs. Women represent
approximately 90 per cent of the total participants enrolled in microfinance programs.

Access to institutional credit provides an array of un-quantifiable benefits to the borrowers.

Improvement in the status of the borrower in the society, relief from the unscrupulous recovery
practices of the private money lenders, secured and assured loans, etc., are a few to mention.
Further, fixed term for repayment stipulated for institutional loans facilitate long term investment
enabling capital formation and thereby enhancing productivity of agriculture and other sectors in
rural areas SHG-Bank Linkages is a bold and a creative initiative taken by the
government and NABARD on the eve of new millennium for poverty eradicating in our country.
Certain refinements in the SHG are imperative to augment its outreach and efficacy. The SHG is
set to add a new dimension to micro-finance concept in India and has every potential to prove
pragmatic weapon in fight against poverty. The study indicates that the SHG programme has a
favourable impact on the living standards of its beneficiaries. It holds better promises for poverty
alleviation and employment generation than the earlier programme due to its structure of easy
credit, savings and peer monitoring. The empirical findings of this study would pave the way for
taking certain policy decisions for strengthening the SHGs and their Microfinance institutional
functions. Indian Micro Finance market is dominated by SHG bank linkage, Post office linkage
and other Micro Finance Institutional Linkages.

7.4 Impact at the Individual level:-

1) Increased self-esteem
2) Greater self-confidence
3) Increases in the control over resources
4) Increases in the household economic portfolio;
5) Increased role in decision-making
6) A better position for future through more proactive behavior
7) Increased incidence of personal savings;
8) Increased ability to negotiate with others
9) Strong women organizations;

7.5 Impact at the Household level

1) More assertive role in domestic sphere
2) Greater diversification in the sources of household income
3) An increase in household assets, including
4) Improvements in housing,
5) Increases in major household appliances, and
6) Increases in micro-enterprise fixed assets;
7) An increase in expenditures on children's education;
8) An increase in expenditures on food, especially among the very poor;
9) An increase in the household's effectiveness in coping with shocks;
10) A higher level of income-generational launching within client households.
11) Greater respect within family
12) Reduction in domestic violence
13) More assertive role in children’s care

This household-level refers to the total (aggregate) value of fixed assets of their houses and their
related position in the house hold activities.
7.6 Impact at the Social level

1) An increase in Social status

2) An increase in Relationship and net working skills
3) An increase in Problem solving skills
4) An increase in Decision making skills/public
5) Greater participation in community affairs
6) Strengthening Strong women Organizations
7) Increased self-reliance
8) Gained new skills
9) Better prices for their products
10) Better buying and selling skills
11) Increased employment opportunities

Government, Banking and related office Staff Support and regular contact with Field Workers is
mostly valued and appreciated by SHG members and is important to provide moral support as
advice and skills.

7.7 Impact of SBLP:-

A number of studies have evaluated the impact of the SHG-Bank linkage programme on the
socio-economic conditions of SHG member households. A study by Puhazhendi and Satyasai
(2000), carried out for NABARD, assessed the impact of micro-finance on the socio-economic
conditions of 560 household members in 223 SHGs selected from 11 states. Comparing the
socio-economic conditions of the households between the pre- and post- SHG periods, they
observed that the average household savings increased by 214 per cent, the average value of
assets per household by 172 per cent, employment by 17 per cent, and the incidence of poverty
among SHG households declined from 42 to 22 per cent. The SBLP also contributed to the
empowerment of women by significantly improving the self-confidence of the participating
women.

Another study by Puhazhendi and Badatya (2002), also carried out for NABARD, evaluated the
impact of SBLP on 115 members in 60 SHGs selected from three States viz., Odisha, Jharkhand
and Chhattisgarh. The reference year of the study was 2001-02. Comparing the socio-economic
conditions of the members between the pre- and post-SHG situations, they found that the average
annual savings per household increased by about 96 per cent, the average value of assets by 30
per cent, the average loan amount by 123 per cent, and the repayment percentage among
the sample households increased from 86.5 to 94.9 per cent. The average net income increased
by 23 per cent, employment days per household by 34 per cent. Fifteen per cent of the SHG
member households living in poverty moved above poverty line, and the social empowerment of
SHG members improved significantly in terms of improved self-confidence, better treatment
from family members, improved communication space for freely talking to others and taking
joint decisions.
A post-evaluation study by NABARD (2009) conducted on 120 members belonging to 40 SHGs
in Wayanad district of Kerala for the reference year 2007-08 also reported positive impacts of
SBLP on the socioeconomic conditions of the SHG households. Saving and borrowing habits of
the members were found to have improved along with a significant shift in the usage of loans
from consumption purposes to income generating purposes during the post-SHG period as
compared with the pre-SHG period. Employment opportunity increased by 2.2 per cent – from
118.13 persondays per household during pre-SHG period to 120.73 persondays per household
during post-SHG period. Average net income and net asset per household increased
substantially, and housing and sanitations conditions improved significantly in the post-SHG
period. Moreover, involvement in SHGs significantly contributed towards improving self
confidence, self-worth and communication skill of the members.

A collaborative study by NABARD and APMAS (2016), based on primary data collected from
109 SHGs from 9 blocks of 4 districts of Assam during 2007-08, revealed that the SBLP yielded
social and economic benefits to a high percentage of the sample SHGs. More than 80 per cent of
the SHGs experienced improvement in savings habit, access to formal credit and its availability;
over 80 per cent of SHGs experienced increase in income, and more than 50 per cent
experienced increase in expenditure on food, education and health; about 75 per cent experienced
decline in family debts, interest burden and dependence on moneylenders; more than 80 per cent
have positive experience about women leadership development and their interaction with
government officials. The results of some micro-level studies [e.g., De and Sarker (2010),
Dhanya and Sivakumar (2010), Kashyap and Kashyap (2010), Kumar (2010), Moyle et al.
(2006)] demonstrated positive impact of SBLP on the socio-economic conditions of SHGs
members

The above mentioned studies were confined to a particular region or state, and do not represent
the all India scenario. We have evaluated the impact of the SBLP on the socioeconomic
conditions of SHG members, utilising data from a comprehensive primary sample survey
conducted by the National Council of Applied Economic Research (NCAER). The NCAER
(2008) survey was carried out for the country as a whole covering a total of 4791 households
from 961 SHGs spread over six sample States from five different regions viz., Andhra Pradesh
and Karnataka (south), Maharashtra (west), Odisha (east), Uttar Pradesh (central) and Assam
(north-east). These States together accounted for 77 per cent of the total credit-linked SHGs as of
March 2002, suggesting that the sample size could be considered as representative of all of India.

The average number of members in the sample SHGs was 13. About 41 per cent of
961 SHGs have been linked for more than five years, and the remaining 59 per cent have
been linked for 3–5 years. The average number of years of bank linkage of SHGs was 5.4 years.
Eighty per cent of the SHGs are all-female, about 10 per cent are all-male and another 10
per cent are mixed. More than 60 per cent of the SHGs are either fully composed of below
poverty line (BPL) families, or with majority of the members from BPL category. In order to
make comparisons among the three types of SBLP models, 58 per cent of households were
selected from table 9, 29 per cent from Model 1, and 13 per cent from table 10 at the all India
level.
7.8 Major findings of the Study:-
We have reviewed the progress of the SHG-Bank linkage programme at the national and regional
levels, and evaluated its impact on the socio-economic conditions of SHG households. The
programme has grown at a tremendous pace during last two decades and emerged as the most
prominent means of delivering micro-finance services to the poor, forging a bridge between the
financially deprived and the formal financial services in India. Commercial banks, regional rural
banks, cooperative banks and NGOs have contributed significantly towards the rapid spread of
the programme. Though the regional spread of the programme has been highly skewed with
highest concentration in the southern region, it has started picking up pace in other regions.

The findings of this study suggest that the SHG-Bank linkage programme has significantly
improved the rural poor’s access to formal financial services and has had a positive impact on the
socio-economic conditions of SHG households. The results show that the average annual net
income, assets and savings of the households increased significantly in post-SHG situation. The
average amount of loans and the regularity in repayment increased, and the dependence on
moneylenders decreased remarkably during post-SHG period. The percentage of loans used for
productive purposes and employment per household increased, and the incidence of poverty
among SHG households declined significantly after the linkage programme. It has also improved
the social empowerment of women members over a period after their joining SHGs. The
programme has been confronted with many challenges, which need to be addressed through
appropriate policies and strategies. Some of them are indicated here:-

(i) Though banks have played significant role in providing financial services to the poor,
appropriate steps have to be taken to widen the coverage, as there are still large sections of the
population in different regions who have no access to formal financial services. The finding of
significant reductions in poverty in the post-SHG period along with the evidence of wide
regional disparities in the spread of SBLP suggests the need for adopting appropriate policies for
intensifying the spread of the programme to the regions where the incidence of poverty is higher.
There is an urgent need to widen the scale and outreach of financial services to different sections
of the population in different regions to achieve the objectives of ‘financial inclusion’ and
regional balance.

(ii) There are also serious concerns over the quality of SHGs, which is reported to have
deteriorated. This is often considered to be due to the lack of emphasis on the quality of SHGs at
the time of very fast growth of the linkage programme. Ensuring the quality of SHGs becomes a
great challenge and it should be properly addressed, because sustainability of the programme
depends crucially on the quality of SHGs.
(iii) Since the launch of SGSY as poverty alleviation programme, there has been a growing
tension between SGSY and SBLP. Since SGSY has an inbuilt subsidy element, it has tended to
attract the linkage group members to come together to form SGSY not for self-help but for
enjoying the benefits of subsidy. Hence, there is an urgent need to resolve the tension between
the two programmes through appropriate policies to refrain the linkage group members from
migrating to SGSY.

(iv) The problem of how to induce the linked SHGs to graduate into viable productive enterprises
becomes a major challenge. Transforming the SHG households into viable productive
microenterprises through micro-credit could be an effective way to ensure their livelihood
security and to reduce poverty. Appropriate training programme, and technical and marketing
support for linked SGHs could be very useful to this end.

1) The percentage of female SHGs in SHG Bank Linkage programme in North and South 24
Parghanas district is marginally over 90%.

2) It reveals that the younger population is more inclined and willing to embrace Micro finance
for their benefits. Micro Finance promises sustainable development given the greater
participation of younger population. Perhaps, it takes 194s some more time and evidence for the
older population to become the beneficiaries of Micro Finance in same proportion as younger
population in North 24 parghanas district.

3) The majority of the SHG members have little or no education. It reflects the hard reality of
literacy level in the area under study. The literacy rate certainly needs improvement. The lack of
education could be one of the important reasons for being hit by the poverty.

4) The majority of the respondents are Hindus in Jalpaiguri district is Hindu dominated region.
The other religions which have their presence are Christians and Muslims.

5) The economic activities and lifestyle vary to an extent based on the religion and the
community they belong to.

6) Majority of the SHG members in South 24 parghanas district belong to backward section of
the society. They are the ones who look up to the government desperately for some help in
comparison to others.

7) Agriculture is the primary economic activity in Birbhum district. The Micro Finance has been
a catalyst so far to help people to provide alternate means of employment with capital, training
and making them less vulnerable to monsoon. The members have taken up small business,
manufacturing and other income generation activities besides agriculture. The members now
have multiple sources of income and achieved diversification in sources of income.

8) The poor are looking for an opportunity to deploy one’s talent i.e. venture out on their own.
All they need is capital and some guidance and assistance. It is one of the important Factors to
join part of SHG.
9) The majority of members have been part of SHG for 3-4 years which shows the positive
aspects of the Micro Finance and its sustenance. The members are willing to continue with the
membership realizing its benefits and potential.

10) The loans are given for reasons like medical expense and education of child which are turned
down by moneylenders as these expenses are not secured (no collateral). Although it is important
to provide loans for income generation activity, it is equally important to lend for personal or
consumption reasons at times.

11) Micro Finance encourages savings among members. More importantly, the numbers shows
that the poor too can save very frequently and regularly provided there is a means for them. It
has brought a sea change towards savings habit of the members.

12) The earning potential and opportunities have improved significantly. The members did
mention that they have more than one source of income after joining SHG. It provides them the
diversification of income.

13) The increase in food expenditure reveals that the members’ family could eat 3 times a day or
one more time than the usual (1 or 2 times) after joining SHG. The increase in food expenditure
is mainly on account of increase in average income per day. Again, the increase in
average income is due to more employment opportunities and income generation avenues
provided by SHG.

14) The increase in Non-food expenditure shows that there is an improvement in other
essentialities of daily life like clothing, children education, housing and sanitation facilities,
repayment of interest and principals of past debts (servicing debts). It is an indication of the
improvement in the standard of living.

15) The significant increase in the percentage of loans at short intervals signifies the necessity of
financial services at short, regular and frequent intervals. There has been a huge demand with
negligible supply, that too from unscrupulous moneylenders who charge exorbitant rates of
interest on unfavorable terms and conditions.

16) The size of the loans availed has become smaller after joining SHG. The members did
mention the fact that they were forced to borrow more than what they need in case the size
happens to be small. It is because the moneylenders insist on minimum size of the transaction. It
made the members to borrow more and spend more.

17) The size of the transaction (financial services) of the members which the formal
banking/financial institutions may not be in a position to provide on account of higher costs,
geographic locations, widely dispersed customers, the timings of these transaction etc and the
micro finance fits very well to the needs and constraints of the members in comparison to the
formal financial institutions with added advantages like technical assistance, monitoring, loan
size, lower interest, convenient repayment schedule, and access to new markets, marketing
support, and bonding as collateral.
18) Considering the limited mobility of women in comparison to men, SHG provides greater
opportunities for women in particular, to engage in income generation activities by providing
financial services at their door step to their convenience. On the other hand, men can move from
one place to another for finance and business. Thus, the economic benefits for men are not as
much as women.

19) Micro finance can benefit all age groups. It encourages all its members regardless of their
age to come and work together to alleviate poverty and become self - reliant and self- sufficient.
The impact is widely felt across all age groups indiscriminately.

20) The educational qualifications are highly regarded in the eyes of society regardless of
dominance in other aspects. It is a key parameter which empowers on societal front like due
recognition, provides opportunity to engage and involve more in community activities. In other
words, it is perceived as kind of license to take part and lead from front.

21) Micro finance gives benefits to members of all religions. It encourages members belong to
all religion to come and work together for mutual interest and collective benefit. In a way, it
promotes communal harmony which eventually aid trade and services.

22) The members of certain communities are hesitant to take up income generation activities
although they are lucrative. They are very conservative. The reasons could be :-

a) deemed as against the principles of community (activities related to tobacco, animal fat,
leather, borrowing money)

b) some activities are confined to certain communities. It is clearly reflected on the economic
front.

23) Micro Finance supports all occupations and helps to improve its efficiency and prospects.
The impact is positive and tangible reflected in the numbers of all occupations. All the
occupations have grown and improved significantly on all Factors of Multivariate impact.

24) The number of years associated with SHG is very critical to the sustainable success of the
members. It improves by leaps and bounds over a period of time.

25) The members have moved ahead to the subsequent categories of food expenditure. In other
words, the food expenditure per month has increased significantly after joining SHG.

26) The members have started availing loans at shorter intervals and durations in comparison to
the loans availed before joining SHG i.e. the members are availing Loans from monthly basis to
Bimonthly and weekly basis.
27) Bank looks at the SHG Linkage Project as a business opportunity and uses it as leverage for
expanding its good clientele base in rural areas [100% repayment of loans under SHG Linkage as
against 50-60% under other individual loans issued].

28) Presence of a good and reputed NGO in the neighborhood has been one of the positive
Factors for promotion of SHGs by the bank.

29) SHG approach has helped in rehabilitating some of the hardcore defaulters.

30) SHGs also became the rescue of uneducated, poor farm workers.

31) The study effectively created awareness and solutions to some extent, among the SHG
members especially women about their social, communal and economic problems as its
solutions.

32) It carries out the common interest in the most efficient and economic way. It is confirmed in
this study that SHG members cross all social, communal and economic barriers with the
effective micro finance system to a greater extent. SHG members get equality of status in
democratic, economic, social cultural spheres of life. SHG activities empower every member to
work together with equal dignity and respect. SHG economic and social activities promoted and
ensured the life of each and every member in a well placed manner.

33) As member come together to form groups, their output in terms of productivity and
remuneration has increased substantially. It becomes easy for them to voice their grievances if
any. Also, it becomes easier for banks to extend financial aid to such group than to a single
individual.

34) These groups are also good stress-busters. In terms of crop failures or other unknown reason,
the groups help the members to unwind and relive their mental stress.

35) SHGs provided effective coping mechanisms and peer pressure acts as the best collateral.

36) It strengthens significantly the socio-economic status of poor by providing technical and
financial services on a continued basis for establishing their identity and self-image.

37) SHGs promoted by the bank are sound and maturing in a healthy manner.

38) It has adopted a joint liability model to deliver micro financial services. In addition to their
joint liability products, the external linkage also offers consumption loans and recently started
offering individual loans with daily repayment.

39) Microfinance improves housing; provide access to safe drinking water and better sanitation
facilities.
40) Access to financial services enabled clients to reduce their vulnerability through smooth
consumption, building assets, and receiving services, self reliance and no dependency on money
lenders.

41) Majority of respondent said that the reasons for the formation of SHG was to empower themselves.

42) Majority of the group were implemented by the NGO's.

43) Most of the respondent has got their nancial assistance from various banks.

44) Majority of the respondent have borrowed term loans because of the easy terms and conditions.

45) All the respondents were satised with co-operation of their family member.

7.9 SUGGESTIONS:-

1) Income generating activities should be introduced.

2) Training regarding the market activities should be improved.

3) Communication and leadership skills should be given much importance to improve the
personality development and Group discussion skill.

4) Groups are to be formed with concrete objectives.

5) SHG members are properly trained and informed before their venture.

6) They lack marketing know-how, and thus finding it difficult to compete with established
market leaders. Government and Self Help Promoting Institutions (SHPI) should take more steps
to market their product. It can help to improve their earnings that may result in better
economic position.

7) Proper guidance and counseling programmes to be arranged in selecting the micro enterprise.
The members can be encouraged to invest in profitable enterprises. Uniform pricing may be
fixed for their products. The banks could help the members to prepare certain statements like
interim profitability; it will help them understand the progress of their enterprises. Such
documentary support will encourage the entrepreneurs towards the corrective steps to control the
expenses thereby increasing the profitability.

8) The Government shall take products and services of SHG in order to encourage and promote
the trade and services of SHG. Moreover, the pricing shall be on better terms and conditions.
9) Good monitoring of loan utilization, loan utilization checks and loan supervision visits must
be taken seriously.

10) Gestation period of six months for any group to be linked with bank for credit is quite a long
period.

11) SHG Bank Linkages provides for only short term loans of 20 months to 30 months. There is
no provision for medium term credit

12) Not give higher credit limit before the borrower’s family background is adequately
investigated, such as:
{i}. size of family
{ii } number of dependents in the family
{iii} earning members in the Family
{iv} details of family business/profession if any
{v} how long they have been residing in the area.
{vi} standard of living etc., It could have avoided the less default rates in SHGs.

13) Monitoring should be to make sure that people are on the path charted out and the members
have the capacity to take the next step

14) Potential members of old groups can be taken to visit the new groups to clarify various
aspects of Self Help Group functioning.

15) Able leaders from a few groups can be motivated to take up promotional and conflict
resolution responsibilities. They can visit problematic /sick groups to explain and resolve various
issues for smooth functioning.

16) Procedures in bank should be minimised.

17) Government should support and strengthen then the opportunities for marking of SHGs product.

18) More awareness program about in the minds of rural poor women.

19) Insurance scheme to SHG member must be introduced.

7.10 Borrower’s Education:-

The SHPIs should have an elaborate system of training the borrowers on a regular basis.
However, banks in India do not have any such system. Whenever banks in India have
introduced such systems, they have been limited to a few areas and branches. . Such systems
have to be installed as a part of the regular functioning of banks if they have to have widespread
impact
1) No financial incentives to SHGs borrowers for prompt repayment of bank credit i.e. loans at
better interest rates should be given to encourage prompt repayment

2) Solution is in Innovation. Technology can be a great enabler in the hands of government and
Micro Finance Institutions to provide better service at low cost with much better controls to
reduce fraud and loss of money. For eg: Web based solutions, PDAs and mobiles, Biometric
cards, RFID (Radio Frequency Identification Device) tags for cattle etc.

3) Health problems were mentioned by SHGs as a major difficulty to cope with and also a
frequent reason to take loans from moneylenders. Therefore, providing health insurance as of
SHG programme could be considered.

4) The micro finance segment has to be integrated with the mainstream rural finance sector
promoting more by appropriate linkages of banks/cooperatives with SHGs.

5) All the members in SHGs may not have the same calibre and expertise. The inefficient
members of the groups should be identified and can impart proper training to them in order to
make them competent.

6) Frequent awareness camps can be organized to create the awareness about the different
schemes of assistance available to the participants in the SHG
 CHAPTER 8
CONCLUSION

To conclude, banks have a large number of outlets, with enabling technology support, the
delivery channels could be enhanced with reduced transaction costs. With the introduction of
core banking solutions, in most of the major banks, there is a huge surplus of available
manpower. This, surplus manpower, needs to be reoriented to take up the challenge of
addressing the needs of the rural masses and bringing them into the banking fold. Banks have an
important role to play and a stake in inclusive banking, as it would be a necessary intermediate
step towards inclusive economic grow In addition, impact evaluations will help practitioners
understand what the best and most beneficial ways to provide financial services to the under-
banked are. Understanding the areas in which micro-credit has an impact and the reasons why it
has an impact will help focus on these areas and develop appropriate products to maximize the
benefits to the clients. Finally, it provides evidence to regulators as to Administrators, Politicians
that microfinance has a strong impact in order to convince them to mainstream microfinance in
the regulated system. Such evidence will also be of importance for "social investors" eager to
invest in projects that have a high social impact. This study is a call to the microfinance
community to apply their expertise and explore the potential of microfinance in all its forms to
impact on the lives of the poorest also. It is a call to give equal weight to the goals of poverty
outreach and impact, rather than letting them be subsumed by the over arching goal of
sustainability. This study will enable a new understanding of the effects of micro credit programs
at the individual level, household level and Social level and the usage of financial services in
particular. This understanding could lead to better financial services product design and to the
development of complementary non-financial services interventions at the household level with
the final aim to maximize the impact of microfinance.
 CHAPTER 9
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