CHAPTER- 1

INTRODUCTION

1.1 Introduction of Self-Help.Group

In the World, and especially in the rural area, the concept of group activity
does not exist. For, promoting the welfare of the community members, several
groups have been prepared in our villages and society.
During our upbringing days, we all have heard some beautiful stories such as:

Unity is the strength”

“Self-help is a best help”
“United we stand, divided we fall”
Self-help is a best help"
Since childhood, we are listening to the story of birds getting caught in a net.
The birds get panicked some tried to flying left and some right but they could not
escape one by one. Meanwhile, when their leader ordered them to take flight off
together they flew together in a group with took the net with them and near a pond,
with the help of their friend's Mice birds free from the net and happily flew away.
Apart from this, there is another tale that we have heard and that is breaking a single
stick is easy but when they are combined in form of a bundle then it is very difficult
to break them. Here, the moral of the story that we learn from the United we stand &
unity is strength you are being stronger when you are working in a group
(NABARD).

From the above stated stories and thought process behind those stories, the
concept of SHG has developed "A SHG is a group of persons who are associate
formally or informally to work together to find a way to enhance their living
conditions, meet their needs by mutual bits of help. Moreover, a SHG is a group of
community with similar socio-economic backgrounds and tackles the problem with
collective efforts.

For an agricultural country like India, The idiomatic expression "Gaon Bade
To Desh" is propounded by the ‘National Bank for Agriculture for Rural

1
Development 1982 (NABARD).’ In India, 70 percent of the population occupies
nearly around 6,38,345 villages, and almost more than 1/3 of the total population of
India lives below the poverty line. Based on the world's Bank report it is determined
that India is a country in which around 260 to 290 million people live in a state of
poverty, meanwhile, this number can be pushed upward to approximately 390
million people if we measure the poverty level of Indian people with international
standard of people who are living there life nearly by earning or spending‘less than-
US$1’in a day. It has been estimated that around the world‘approximately 2.5-billion
persons live’their lives in‘poverty-and-India;’almost more than one-third of the total
population live in poverty. A family living in poverty has to bottle with the poverty
every day to earn at least a certain amount of money that can fulfill their basic
psychological needs (food, clothes, and shelter) and provide at least basic educational
needs. The fact of life is that when people get sick they need proper food, shelter, and
medicine to live. Approximately 133 million almost ½ of India's population lives
below poverty line and they mainly reside in three states of India and they are-‘Uttar
Pradesh,-Bihar and-Madhya Pradesh.’Moreover, in India, ¾ percent areas of the rural
areas are recognized as a home for poor people and this has been strengthened due to
continuous increase in the rural and urban differences or inequality. The main cause
of poverty amongst the rustic areas is the poor credit market and formal banking
system, which promote disadvantage to the rural society. Additionally, In India, the
central and state government constructed several programs to mitigate poverty which
are currently active. The approach of such a program has promoted the development
of the Infrastructure especially (education and health care system) for the people live
in the rural areas.Nobel Peace Award Laureate, Mr. Mikhail Gorbachev highlighted
few essentials that are required for a bright future and they are- "peace, fighting
poverty, promoting global social justice. In common this word instigates practice of
social banking which will promote wealth and provide a protective environment". In
general, the credit needs for the rural masses are articulated by conduct a meeting
with the rural financial market that comprises various commission agents, private
money lenders, rich landlords, and many more. But on the other hand, due to terrible
infrastructure in a rural area, the above-mentioned financial institutions are unable to
penetrate the rural market as there is high risk present in the rural financial market
2
and profit margin is also not very attractive in the rural area. To deal with this
problem, the government has come up with a solution of introducing the
microfinance institutes in rural areas because they will provide a wide reach and
penetration in the rural market and this will reduce the poverty in the rural areas up
to some extent. Moreover, this will also help the various underprivileged division of
the society comprising small & medium farmers, women, landless farmers, and many
others. From very grass root level to stimulate economic growth, a long lasting
Microfinance system that is self-sufficient and has the required resources to operate
effectively is needed. Based on the study, it is determined that for developing
countries like India, Micro financing is an effective tool for promoting Social and
Economical gain. In means of poverty alleviation, microfinance is the institute that
provides finance in the form of loans to poor people at a low cost. Over the past few
decades, the sector of Microfinance has grown rapidly. As to accomplish the
National aim of improving the living conditions of poor people, Microfinance is one
of the developmental approaches. Under the laying foundation of the modern Micro
Finance Institutions, Nobel Laureate Mohammad Yunus has created an establishment
of the "Grameen Bank", in Bangladesh in 1976. Currently, a variety of business
models has developed massive rights to exhibiting an enterprise. For economic
development, the credit offered by microfinance is a vital tool to start and expand the
business. Over the world, the policymaker of microfinance confronted that achieving
a balance between urban and rural disparity and comprehensive development is the
main factor of success of the venture. It has been found out that the advantaged
segment of the-society has easy access to the advantage and gain participative
opportunities of economic development of the nation. On the other hand, a long wait
is done by the disadvantaged sections of the society to obtain the advantages of the
economic growth of the country. To attain balanced growth in the economic
mainstream, and access to formal financial services, the engagement of these sections
into the society is vital.

The provision of the Microfinance institute is to provide finance and other

monetary benefits to the low income group of the society because they do not have
enough opportunities to obtain banking and other related services. Micro Finance is

3
not limited to provider small credit or loan to the poor section of the society but also
cover various other kinds of financing and non-financing services like counseling,
providing business training facility, offering microloans, opening savings accounts,
transferring funds, providing insurance services, and many more. This practice of
microfinance would assist the people who are spending their life below or just above
the poverty line and who do not fulfill the criteria needed for regular banking
activities like offering collateral, formal identification, etc, qualify for regular
banking offerings for want of collateral and formal identification. All of these
services are delivered right to the borrower's door, and the repayment plan is flexible.
And over this entire period, the costs have been extremely high, ranging from 10% to
30% annually.

1.2 Micro-finance present position in India

In the year 1969, the institute of micro-finance beings its operation in India
when the nationalize financial institution i.e. Banks acknowledge that one percent of
the revenue of such banks moves towards the micro-firms to support poor people. In
this context, the PM Mrs. Indira Gandhi facilitate visualize the twenty-point plan of
action to fight for the poor people who face poverty. And this facilitated plan of
action is known as "Garibi Hatao". Moreover, Mrs. Gandhi visualizes that providing
a credit facility to the people below at poverty line should be considered a tool for
the transformation of the society in context to encourage empowerment, and social
justice for the poor household in the rustic and-urban areas. In India, under private
ownership, the initiative of the Micro Finance initiative can be detected by Mrs.
Manila a (self-employed leader of the women group; SEWA). This financial
institution was established in 1974 by the enrollment under the cooperative bank of
Ahmadabad a inner city of the state Gujarat. The reason behind to established the
financial institute of SEWA bank is to offering a service of banking to the women
who face poverty while working in a unorganized sector.

Besides that, to provide the extensive services related to the financial, the
plan of action of the NABARD took place in the year 1992 with formed a NGOs
partnership and now by the SHGs the action plan of the NABARD inflorescence into

4
the action plan of the Microfinance. After leading the successful growth of the plan
of action of the micro-finance, cost-effective, and decentralization across the world,
it is determined that more than 103 million poor household people have enjoyed the
benefits and acquire services related to the financing through the system of formal
banking and whereby out of 103 million, 8 million people have become of the self-
assistance group. In the year 1996, the stable growth of the action plan of the micro-
finance promoted towards the core stream of the bank self-help group linkage
solution as an ordinary baking operation of the financial institution with an
acceptance of the widespread.

The NABARD interference that the self-help groups is a kind of an informal

group of people around 20 who are associated with each other to find a solution
mutually to cope with a common issue. Moreover, these people belong to a similar
class and they also uplift to construct optional prudence on a routine basis.
Additionally, to seek attention and pay out the loan amount of their members they
use their resources pool. It is also determined that the process on which the SHGs
work is to first prioritize the needs of the poor people in terms of account keeping,
setting terms, and conditions. The reason behind working on the priority factor is to
develop a habit of financial control among all members. With the habit of financial
control practice, the people of the self-help groups acknowledge managing the
limited resources that are beyond the capacities of the individual or any members.
Additionally, under the framework of the SHGs the member of the group decide the
term of the loan as the loan grant by the bank of the SHGs facilitated unescorted any
market rate of interest and the collateral security. It is also analyzed that the members
of the groups accumulated their saving portion that is being collected from the grant
loan to the members of the groups under the guaranteed made of repayment of loan
on time. (*NABARD, 2001-02)

The framework of the self-help group banking linkage plays a crucial-role in

the upliftment of the economy and the inclusion of the financials in a lower level of
the pyramid. Based on the study, it is determined that the SHG-BLP framework is
come up with believes that enhancing the accessibility of the poor people on
acquiring the services related to the financials would assist to increase the livelihood
5
of the poor people and mitigate poverty. All the significant boundaries like the
number of the saving account under the SHGs, the outstanding amount of the bank
loans, credit disbursed an amount of specific year, along with the outstanding
quantum savings account balances had depicted (in figure 1.1) a healthy growth of
the economy within a last five years. During the year 2018-2019, the expansion in
the count of the SHGs offering the accessibility of the bank loan and institutional
credit paid out was 19.33 percent to 23.6 percent.

6
 Table 1.1

Overall development under Self- Help Group -Bank Linkage action plan (2014-15 to 2018-19)

(Number in Lakh/Amount in Rs. Crore)

Particulars 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019
No. of Amount No. of Amount No. of Amount No. of Amount No. of Amount
SHGs SHGs SHGs SHGs SHGs
Total SHG Nos. 76.97 11059.84 79.03 13691.39 85.77 16114.23 87.44 19592.12 100.14 23324.48
(3.59%) (11.74%) (2.68%) (23.79%) (8.53%) (17.69%) (1.95%) (21.59%) (14.52%) (19.05%)
All women SHGs 66.51 9264.33 67.63 12035.78 73.22 14283.42 73.90 17497.86 85.31 20473.55
(6.38%) (15.61%) (1.68%) (29.92%) (8.26%) (18.67%) (0.94%) (22.51%) (15.44%) (17.01%)
% of Women 86.41 83.77 85.58 87.91 85.36 88.64 84.51 89.31 85.19 87.78
Of which NRLM/SGSY 30.52 4424.03 34.57 6244.97 37.44 7552.70 41.84 10434.03 55.80 12867.18
(34.92%) (78.56%) (13.27%) (41.16%) (8.30%) (20.94%) (11.76%) (38.15%) (33.37%) (23.32%)
% of NRLM/SGSY 39.65 40.00 43.74 45.61 43.65 46.87 47.85 53.26 55.72 55.17
Groups
Of which SJSRY /NULM 4.33 1071.81 4.46 1006.22 5.45 1126.86 4.25 1350.80 4.39 1614.42
Groups (3.00%) (6.12%) (22.42%) (11.99%) (-2.10%) (19.87%) (3.29%) (19.52%)
% of SJSRY/NULM 5.63 9.69 5.64 7.35 6.36 6.99 4.86 6.89 4.38% 6.92%
Groups
Total No. of SHGs 16.26 27582.31 18.32 37286.90 18.98 38781.16 22.61 47185.88 26.98 58317.63
extended loans (19.03%) (14.84%) (12.67%) (35.18%) (3.60%) (4.01%) (19.13%) (21.67%) (19.33%) (23.59%)
All women SHGs 14.48 24419.75 16.29 34411.42 17.16 36103.13 20.75 44558.74 23.65 53254.04
(25.69%) (16.07%) (12.50%) (40.92%) (5.34%) (4.92%) (20.92%) (23.42%) (13.98%) (19.51%)
% of Women Groups 89.05 83.53 88.92 92.29 90.42 93.09 91.78 94.43 87.66 91.32
Of which NRLM/SGSY 6.43 9487.69 8.16 16785.78 8.86 17336.26 12.70 25055.18 16.49 33398.93
(28.45%) (27.26%) (26.91%) (76.92%) (8.58%) (3.28%) (43.41%) (44.52%) (29.84%) (33.30%)
% of NRLM/SGSY 39.54 34.40 44.54 45.02 46.69 44.70 56.20 53.10 61.12 57.27
Groups
Of which NULM/SJSRY 1.05 1871.55 1.11 2620.22 4.06 2685.77 1.06 2424.07 1.29 3419.58
(5.71%) (40.00%) (-4.5%) (2.12%) (0.17%) (-9.41%) (21.70%) (41.07%)
% of NULM/SJSRY 6.46 6.79 6.06 7.03 6.60 6.90 4.71 5.14 4.78 5.86
Groups
Total No. of SHGs linked 44.68 51545.46 46.73 57119.23 48.48 61581.30 50.20 75598.45 50.77 87098.15

7
 (6.46%) (20.06%) (4.59%) (10.81%) (3.74%) (7.81%) (3.55%) (22.76%) (1.14%) (15.21%)
No. of all Women SHGs 38.58 45901.95 40.36 51428.91 42.84 56444.24 45.49 70401.73 44.61 79231.98
linked (13.27%) (26.97%) (4.61%) (12.01%) (6.14%) (9.75%) (6.20%) (24.73%) (-1.93%) (12.54%)
% of Women SHGs 86.35 89.05 86.37 90.04 88.36 91.66 90.62 93.13 87.87 90.97
Of which NRLM/SGSY 18.46 19752.74 21.91 26610.16 24.91 29994.43 27.93 38225.29 32.85 54320.91
(41.24%) (94.08%) (18.69%) (34.72%) (13.69%) (12.72%) (12.13%) (27.44%) (17.62%) (42.11%)
% of NRLM/SGSY 41.32 38.32 46.89 46.59 51.37 48.71 55.63 50.56 64.70 62.37
Groups to Total
Of which NULM/SJSRY 3.18 3462.62 3.13 3979.75 3.18 4133.29 2.90 5350.63 2.25 4110.73
(-1.57%) (14.93%) (1.60%) (3.86%) (-8.58%) (29.45%) (-22.41%) (-23.17)
% of NULM/SJSRY 7.12 6.72 7.00 6.97 6.55 6.71 5.79 7.08 4.43 4.72
Groups to Total

Note:- (Figures in the above table depict the decrease and increase within the last 5 years)
Source:- NABARD status of microfinance reports of various years.

8
 In table 1.1, it was found that the progress of microfinance at the national
level has been studied from 2014 onwards and it was found that the year 2017-18 had
been a challenging year within a time frame of the five years, as the figure of the
self-help group banks saving accounts showed by 1.95%, the year 2018-19 showed a
marginal increase of 14.52% with 100.14 Lakh.As far as the number of loans with a
percentage increase of 58317.63 crores from Rs. 47185.55 crore i.e. approximately
24%.Therefore, the total of the self-help groups' credit associated with the banks has
increased to 50.20 lakh from 50.77 lakh in the previous year. All women SHGs
saving with banks have increased to Rs. 20473.55 from Rs. 174797.86.

Figure-1.1
The trend in the self-help group’s amount of saving accounts held at All India
Banking System
18000
16114
16000
13691
14000
Saving Amount (Rs. in Crore)

12000 11059
9897
10000
8217
8000 7016
6199 6551
6000

4000

2000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Source: Micro-finance Report of the Bharat for the year 2017-18.

“Based on the study of figure 1.1, it is determined that the sum total of the
SHGs saving accounts held by the banking financial institution has been increasing
except for the marginal diminishing in the year 2011-2012. This effect takes place in
cause and effect of decreasing the saving account of the SHGs in the region of the
east. Moreover, as of the year 2016 of the March, the system of the banking held the

9
saving account of the Self-help groups is of sum‘16,114-Crore Rupees‘which
is‘17.7’percent more-than the last year.”

Figure-1.2
The trend in the amount of bank loan payout to all India Self-help groups
45000

40000 38781
37286

35000
Bank Loan Disbursed to SHGs (Rs. in Crore)

30000
27582

25000 24017

20585
20000
16535
14859 14548
15000

10000

5000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Source: The Bharat Microfinance Report 2017-18.

It can be observed from the figure-1.2, during the year, the outstanding bank
loan total of Rupees 38781 Crore was paid out to all India Self-help groups and this
amount indicates that there is increscent in the amount by 4 percent against the
comparison of the previous year. This indicates a positive outlook of providers and
beneficiaries towards this scheme.

10
 Figure-1.3
The trend in the Loan is outstanding in the book of the system of the banks in
the Self-help groups of all India.
70000

61581
60000 57119

51545
50000
Loan Outstanding (Rs. in Crore)

42927
39375
40000
36340

31221
30000 28038

20000

10000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Source: “The Bharat Microfinance Report 2017-18.””

Based on the study of figure 1.3, it is determined that in the year of 2016-
2017, the sum total of the outstanding loan has been rise due to interference of the
viability of the business towards the lending of the self-help banking groups. It is
also analyzed that at the position of all India, the total sum of the outstanding loan
was depicted the proved of the rise of 8 percent towards the comparison of the
previous year.

11
 Figure- 1.4
The trend in the system of the banks' averages per self-help groups
outstanding loan in all India.
140000

127017
122242
120000 115361

102273
100000
Average Outstanding per SHG (Rs.)

88455
83455
80000

65224

60000 57795

40000

20000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Source: The Bharat Microfinance Report 2017-18

It can be observed from Figure-1.4, it is determined that for the year, on

average the sum total of the outstanding loan amount of Rupees 127017 at the
position level of all India. This amount of the sum total depicts that there is risen of 4
percent in the outstanding loan from the last year.

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 Figure – 1.5
Per self-help group, Average savings all India Level
20000
18788

18000 17324
Average Saving SHG (Rs.)

16000
14367
14000 13321

12000 11230

10000 9403
8915
8230
8000

6000

4000

2000

0
2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17

Source: The Bharat Microfinance Report 2017-18.

It is clear from Figure- 1.5 that the average saving per Self- help Group
has risen to Rs. 18788/- at the position of all levels of India in the year of 2017
March, shows an increase of 7.32% in one year. Further, it can be analyzed that
average saving per SHG had been on an increasing path till 2010-11 and decreased in
2011-12 but after that, the growth has been restored in average savings of SHG. It
indicates that the scheme has been successful in saving habits among SHG members.

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 Figure- 1.6
Self-help group State Wise Credit Linkage for the year 2018-2019(%)

Karnataka

Andhra Pradesh

Bihar

Kerala

Tamilnadu

Chhattisgarh

Maharashtra

Haryana

Uttrakhand

Tripura

Madhya Pradesh

Goa

Gujrat

Punjab

Uttar Pradesh

New Delhi

Arunachal Pradesh
0 10 20 30 40 50 60 70

Source: NABARD Status of Microfinance 2018-19.

Based on the study of figure 1.6, it is determined that in the particular years,
the SHG credit linkage was enlarged in the states of the southern regions such as
Kerala, Telangana, Andhra Pradesh, and Karnataka. Moreover, during that specific
year, the credit linkage also increases in some states like Bihar, Jammu and Kashmir,
and West Bengal. On the contrary, it is also interferences that in the state region of
the northern hemisphere like Chhattisgarh, Uttar Pradesh, Rajasthan, Gujarat,
Madhya Pradesh, etc. the low credit linkage leads to a focusing point. Additionally,
in the year 2018-2019, in the northern region states, such as Andhra Pradesh,
14
Madhya Pradesh, Chhattisgarh, Tamil Nadu, Gujarat etc. the several association
groups of the self-help offering a bank loan which was lower than the last year.
Meanwhile, on the-other side, as compared to the last year i.e. 2017-2018 more
number of the bank loan is provided by the self-help groups to the states such as
West Bengal, Kerala, Odisha, Karnataka, Maharashtra, Bihar, and many more in the
period of 2018-2019.

Table 1.2
Self-help groups a micro-finance saving banks performance regions wise/
agency wise Position as on (2018-19) India level (Amount Rs. Lakh)
Sr. Region/ “Commercial-Bank” “Regional-Rural “Cooperative-Bank” Total
No. State Bank”
No. of Saving No. of Savings No. of Savings No. of Saving
SHGs Amount SHGs Amount SHGs Amount SHGs Amount
1 33076 4117.37 17332 1573.57 3855 385.48 54663 6076.42
Haryana

(12.54) (11.65) (11.16) (8.97) (2.97) (4.01) (9.96) (9.72)

2 263661 35317.92 155193 17541.81 129770 9593.09 548624 62452.82

Region Total

2
Region Total (Haryana)
Northern

3 151518 14518.93 338883 24930.87 33068 957.25 523469 40407.05

3
Eastern
North

4 1333239 261901.40 1014739 270146.24 306380 69107.24 2654358 601154.88

Eastern
Region Total Region
Total

5 4671114 74163.37 544872 53788.39 50773 5278.24 1062759 133223.00

Central

6 764029 128310.26 182183 20511.05 442403 56453.84 1388615 20527.15

Western
Region
Total

7 2497353 809811.35 842603 382282.91 496462 97833.99 3836418 1289928.25

Region Total
Southern

GRAND 5476914 1324023.23 3078473 769201.27 1458856 239223.65 10014243 2332448.15

TOTAL (54.69) (30.74) (14.56)

Source: NABARD Status of Microfinance 2018-19.

Based on the study of table 1.2, it is determined that the sum total figures
rupees interference the percentage of the self-help groups saving accounts in seven
Columns, and these seven columns represent the different regions and the different
15
agencies in Haryana for their savings accounts. Commercial banks are the major
contributory at 54.69% level followed by 30.74% linked to RRBs and at least
14.56% linked to co-operative banks. But in Haryana out of the total Northern
Region, the portion of the Commercial banks in linking Self-Help Groups is 12.54%
with a saving of Rs. 4117.37 Lakh followed by RRBs with a share of 11.65%. Co-
Operative Bank's performance however has been disappointing in the state as well.

Table 1.3
Self-help groups a micro-finance saving banks performance level as agency wise
during 2018-19
(Amt. Rs. Lakh)
Sr. Name of Total Savings of SHGs with Banks “Out of Total- “Out of Total- Under “Out of Total-
No. Banks Exclusive Women NRLM/SGSY.” Under
SHGs” NULM/SJSRY”
No. of Savings No. of No. of Savings No. of Savings No. Savings
SHGs Amount Members SHGs Amount SHGs Amount of Amount
SHGs
1 Commercial 5476914 1324023.23 69225789 4557476 1124476.41 016177 739529.70 74931 103585.15
Banks
2 Regional 3078473 769201.27 35768005 2665229 715518.66 094430 485845.07 0790 49351.33
Rural
Banks
3 Cooperative 1458856 239223.65 17374151 1308055 207359.55 69455 61343.55 3402 8505.76
Banks
Total 10014243 2332448.15 122367945 8530760 2047354.62 580062 1286718.32 39123 161442.24

Source : NABARD status of microfinance 2018-19

16
 Figure- 1.7
Total Bank-wise saving based on No. of SHGs

Total Bank-wise savings on the basis of No.

of SHGs
1400000

1200000

1000000

800000

600000

400000

200000

0
Commercial Bank Regional Rural Bank Co-operative Bank

Out of Total - Exclusive Women SHGs (Amt. in Lakhs)

Out of Total- Under NRLM/SGSY
Out of Total - Under NULM/SJSRY
Total Saving of SHGs with Bank as on 31st March 2019

Source : NABARD Microfinance Status 2018-19

It is observed from Table 1.3 and Figure 1.7 that commercial banks are taking
lead in total savings of SHGs-followed by‘Co-operative RRBs’are having the least
share in the total savings of SHGs. The sum total of the savings in Women exclusive
self-help groups out of total savings is also highest in commercial banks. The amount
of Savings in SGSY/NRLM out of total savings is also the second highest in
commercial banks. Hence it may be concluded that commercial banks are performing
well for the spread of this scheme at the national level but the state position is
different.

17
 Table: 1.4
Agency wise position performance under the institute of Micro-finance loans
payout to the SHG in the year of 2018-2019.
Sr. Agency Loan payout to the self- Out of Total- Exclusive Out of Total- Under- Out of Total- Under-
No. Name help group by the banking Women SHGs SGSY/NRLM SJSRY/NULM
system In the year 2018-
2019
No. of Loans No. of Loans No. of Loans No. of Loans
SHGs disbursed SHGs disbursed SHGs disbursed SHGs disbursed
1 Commercial 15,12,907 34,49,246.74 12,23,215 30,53,331.11 8,59,776 18,83,180.21 6,924 1,6,5247.38
Banks
2 Regional 9,40,818 19,55,264.43 9,08,618 18,64,274.77 7,22,826 13,14,967.59 2,379 1,52,692.46
Rural
Banks
3 Cooperative 2,44,675 4,27,251.71 2,33,010 4,07,798.13 66,311 1,41,744.78 547 24,017.33
Banks
Total 26,98,400 58,31,762.88 23,64,843 53,25,404.01 16,48,913 33,39,892.58 28,850 3,41,957.17

Source : NABARD Microfinance report 2018-19

Figure- 1.8
No. of SHGs getting the loans from the banks

Co-oprative Banks
Loan disbursed to SHGs by
bank during the year
Out of total under
Regional Rural Bank NULM/SJSRY
Out of Total under
SGSY/NRLM
Out of Total Execlusive
Commercial Bank women SHGs (Amt. in Lakhs)

0 2000000 4000000

Source: Micro-finance position NABARD in the year 2018-19

Table 1.4 and Figure- 1.8 shows that Commercial-banks have disbursed
maximum amount of loans to SHGs and to Women Exclusive SHGs.

18
1.3 Schemes launched for self help groups
Women SHGs (WSHG) and Swarnjyanti Gram Swarozgar Yojana (SGSY),
two programmes for the development of SHGs, were proposed as a way to support
microfinance initiatives and link rural impoverished women to the mainstream,
which is thought to be a foundation for addressing issues of poverty and women's
empowerment.

1.3.1 Women self.help.groups

The Indian government created the NABARD Association and included a
programme developing and supporting WSHG in 150 of the nation's underdeveloped
districts. Two districts from Haryana, Mewat and Sirsa, are in this list of districts.
The goal of this programme is to increase the reach and significance of Self Help
Promotion Institutes. Expanding SHPI's current position as a banking-facilitator,
tracking and monitoring groups, and ensuring credit repayments to lower NPAs are
the goals of this project. At present, SHPI is meant to assist SHGs in connecting with
banks. There was a perceived need for ongoing assistance from anchor NGOs that
will support and facilitate self-help group credit connection facilities with their
banks. In accordance with this programme, NABARD would give grant support to
this NGO in the amount of Rs. 10,000 over a three-year term each SHG , or until the
group is mature and able to participate in training program and other capacity-
building initiatives undertaken by NGOs.
The following are some of this program's standout:
• In consulation with local authorities, NABARD will select the Anchor
NGOs for this programme.
• The banking institutions will sign an MOU with the NGOs.
• NABARD will be organized a necessary recognition and capacity
enlargement action plan for the stakeholder.
• It will be executed by the branches of the banks who consist of the facility
of CBS.

19
 The chosen NGOs will be eligible for grants of up to Rs. 10,000 per SHG,
dispersed over three years. Under this programme, NGOs will receive a monthly
payment of 5% of the average loan balance as a service charge to cover
administrative, transaction, and risk costs.

1.3.2 Swaranjayanti Gram Swarozgar Yojna

According to the plan of action of the Micro-finance, the Yojna of the

SwaranJayanti Gram Swarozgar began in the year 1999 on the 1st April in the
Haryana.The SwaranJayanti Gram Swarozgar program has been reform as a mission
of the National Rural Livelihood and due to this at present, the program of SGSY is
recognized as “Aajeevika”. Moreover to execute it in a goal mode of the phased
manner the time and targeted are bound to get the delivery outcome.

Table 1.5
In the course time 2018-2019, the growth under the institute of the
Micro-finance- government sector bank loan hand out in 2018-19 region
wise/state- agency wise position
(Amount Rs. Lakh)

Commercial .Banks. RRBs Cooperative. Banks. Total

Sr. Region/ No. of Loans. No. of .Loans .No. of .Loans .No. of .Loans
No. State. SHGs .Disbursed .SHGs .Disbursed .SHGs. .Disbursed .SHGs .Disbursed
.Amount .Amount .Amount Amount
. Haryana 4207 3668.15 1625 2103.95 65 40.56 5897 5812.66
(12.75) (8.63) (8.62) (14.47) (1.58) (0.71) (10.54) (9.27)
1 North 32985 42486.43 18833 14537.97 4104 5639.20 55922 62663.60
2 North 14142 12585.60 12014 15705.44 930 710.17 27086 29001.21
East

3 East 369188 442557.83 432886 644167.99 107301 110353.26 909375 1197079.08

4 Central 52343 40769.55 29665 29097.19 3127 2332.61 85135 72199.35
5 West 87392 133977.63 13897 18644.64 45385 31941.59 146674 184563.86
6 South 956857 2776869.70 433523 1233111.20 83828 276274.88 1474208 4286225.78
Grand 1512907 3449246.74 940818 1955264.43 244675 427251.71 2698400 5831762.88
Total
Source: NABARD Status of microfinance 2018-19.
Table 1.5 shows the loan disbursed by public sectors banks in different
regions by different agencies. RRBs have outperformed commercial and co-operative
banks in Haryana in the total northern region with disbursing loans of Rs. 2103.95
Lakh to 1625 SHGs. However, the table still indicated the skewed spread of SHGs in
20
the southern region with the total number of SHGs stood at a whopping 1474208
with loans disbursal of Rs. 4286225.78 Lakh.

1.4 Micro-finance models in India:

In India, there are four most significant models of Micro-finance are
discussed below:-
First Model: The first model of the micro-finance states that the group or an
individual can borrow the finance straight directly from the banking institution
unescorted any interruption of any NGOs a non-government firm.
Second Model: The second model interference that creditor or the borrower
are facilitated with the finance directly extended by some formal and informal
banking institute or agencies such as commercial banks of the public or private sector
and the institute of the micro-finance such as Non-Government organizations,
Cooperative societies, and the Non-bank financial intermediaries.
Third Model: The model third states that a financing service like a lending
loan can be facilitated by the Micro-financial institute and the Non- Government
organization as a means of the service provider or the agencies of the finance.
Fourth Model: By the Nobel leader Laureate Professor Muhammad Yunus
begins the fourth model in 1976 in Bangladesh. And in the present time, this model
consisting having 2468 branches with the employees 24703 who are serving the
financial lending facilities around 7.37 million people from the 80.257 villages.

1.5 SHGs Meaning:

A ‘self-help group’is a kind of informal group of poor people-who-come-
together to find a solution to the common issues of the life-like to no availability of
other resources other than their hard labor. Moreover, the people of the SHGs group
assist the help each other in a framework of mutual support. These SHGs enable the
poor collectively to identify their priorities and develop mutual support to finding a
solution to the problem that poor people go through in the environment of the social-
economic (Priyadharishint, et.al, 2014)
In the year of 1975, in Bangladesh, the self-help group’s banks were begins
and established as a Grameen Bank by professor Mohammad Yunus, who is the

21
conceptual foundation of the Brainchild of the SHGs. The reason behind to formation
of SHGs is to track the significant problematic factors that moved surround to the
poor people live in rural areas. Moreover, with the execution and begins the
operation of the SHGs the women live in the villages encounter new phases of
empowerment in their life in context to the environment of the social and economic.
Additionally, the concept of self-help group association provides build a assistance
mechanism to-meet up the credit requirement of the poor people by a call up the
savings from the person to person or a group of individuals who were not looking
forward that their savings get also reuse significantly in the resources pool and
activities for promoting assistance to their members (NABARD 2008).

In the context of considering the scenario of the India of the year, 1987 the
term defined by the‘National Bank for the-Agricultural and Rural Devlopment,
1982 (NABARD)’that are formed with the association of the other Indian members
of the‘Asia Pacific Rural Agricultural Credit Association (APRACA).’Moreover,
to facilitate the alternative system of the credit that is regulated by the self-help
groups for the poor people take place by constructing a survey of 40-50 firms of
different scale and who offering several activities in the region and where one of the
agencies that included in the survey process is‘Mysore-Resettlement and-
Development-Agency (MYRADA).’With the NABARD, the action plan of the
research project development for the Self-help groups was begin by the agency
MYRADA in the year 1987. Moreover, to assist the formed SHGs association in the
state of Rajasthan, the Ministry of the rural development facilitated the Purchase
Related Activities Data Access Network (PRADAN) in the year 1987.Later in the
year 1992, the pilot research-project of associate banks with the 500 self-help groups
began in a aim to associate all Self-help groups financially as an intermediary to all
banking institutions in all countries for facilitating credit and saving. Moreover, in
the year 1994, by the RBI of India, the pilot stage was beginning practice to set an up
group of work for the SHGs and Non- Government organizations. This collaboration
of forming a working group suggests several suggestions on the internalization
concept of the self-help groups as this is an effective interruption framework in a
region of the banking system to advance the livelihood status of the poor people. In

22
this context, several core suggestions are accepted by the RBI of India and direct the
financial institution i.e. banks to facilitate the granting of a loan to the SHG as a core
part for promoting credit operations for the people live in the rustic areas. Hence,
there was the emergence of SHGs in the Indian Subcontinent.”

1.6 Nature of Self-Help-Group

Operations Meaning
Conduct routine meeting Self-help-groups are an institute at the local level whose
Mandatory savings goal is to facilitate sustainable development of poor
Management of credit people in the environment of social-economic.
Book Keeping
Features
Development of mutual
funds Homogeneous
Organize program for
SHGs Free of choice in
the community welfare
nature
Training and Awareness
Engagement in the Rotation of
decision process
Leadership
Engagement in local
self-Government Common Interest
Structure
Engagement in the Mutual Self-help
People live in a state of poverty
position of micro-
finance Training at At least 1 or 2 literates Non- Political
Gram Shaba and Block Members 10-20
level. Participatory
Own bye-laws
Group Account opened

23
1.7 Models of the Self-help group
The below diagram interference model of the Self-help groups can be divided
into categories of three:-

Self-Help Groups

First Model Second Model Third Model

Direct Banking Self-Help Groups- linkage Micro-Finance Institute-

Model :- with Banks Model :- Linkage bank Model :-

The association of This model states that SHGs This model states that
the self-help groups are directly financed by institutes of micro-
is to promote government and commercial finance access the loan in
banking finance banks, RRBs, cooperative bulk from the banking
directly. banks, and by agencies of the institution and granting a
government like DRDA, loan to the small
Non-government firms, etc. borrowers and the self-
help groups.

First model: Direct Banking Model:

Self-Help Groups Promoting

the Institutions

Banking Institute SHGs

The model first states that the banking institute directly facilitates the
financial assistance to self-help groups and that get enlarge suddenly unescorted
interruption of any Self-help promotion Institution (or NGOs). The event of the
linkage of the SHGs with the banks was not so common, as, at ground level, the
focuses on the ordinary operations i.e. identify the issue faced by the poor people and
prudence the credit facilities.

24
Second Model: SHGs- linkage with Banks Model

SHPI

Banking institute SHGs

GGGGhgg
This model is the most ordinary association modelgGGGGG
of India, where the
GGGGGG
banking institutes directly promoting the SHGs. In this concern, the self-help
GGGroups
promoting institute and SHGs facilitating the training, and advising the poor people
of the rural areas to access the credit facility in a disciplinary approach. Moreover, in
several circumstances, the self-help promoter institute also offering ground-level
assistance to Self-help groups towards managing their resources. Additionally, it is
also determined that the institute of the SHP also supervised and guaranteed that after
framing a association with the banks, the Self-help groups functioning is at a
satisfactory level. As the institute of the SHP plays a vital role in pre as well as post
association of banks and self-help groups directly and under this model, more than
70% of the SHGs are associated with banks.

Third Model : (MFI –Bank Linkage Model) :

SHPI

SHGs
BANK

Under this model, the institute of the self-help promoter played a role of the
mediator between several entities of the SHGs and the banking institution. Moreover,
as a mediator institute of the SHP encounters the duties in context to promote the
desired groups not the other. Additionally, the institute of the SHP received the
contractual duties for the loan reimbursement to the institute of the banks. This
context of the indirect association will assist the self-help groups as this model is
ordinary.
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1.8 Apex level microfinance institutions:
To overcome the challenges faced by the cooperative banking institute and
the commercial banking institute in terms to assist the poor people of rural areas, the
Narasimhan committee had suggested and formed several rural financial institutions
in 1975. Based on the suggestion, the five rural regional banking institutions were
established at Jaipur, Gorakhpur, Bhiwani, Malada, and Moradabad. Moreover, these
established financial banking systems played a most important role in call arms to
facilitate the saving for the marginal, small farmers, agriculture laborers, and artisans
and also develop a habit of saving among the poor people of the rural areas (Reddy
and Ram, 1999). The following financial institute on rural-based are discussed
below:
Banks: In the formal-financial sector, the cooperative banks, commercial-
banks, and regional-banks are the core three agencies that facilitate microfinance and
routine services of finance in a area of the rural market. Subsequently, to facilitate
several services related to the finance for the poor people of urban and people not so
poor, the urban co-operative an i.e. SEWA bank is also established.

RMK (Rashtriya Mahila Kosh):- MahilaKosh financial institute was

enrolled in 1993 March under the society’s registration act 1860 as the national level
firm under the child development and ministry of the women in context to meet the
financial requirements of the women live in a poverty state in an unorganized sector
and deployed socio-economic change in the society. It supports NGOs, Co-Operative
Societies, and WDC for facilitating the services of the financial to poor women. As
of 31st March 2010 RMK's operations operated across 27 states and have benefitted
over 6.67 Lakh borrowers involving 1442 NGOs.

NABARD: It is a financial institution that lends financial services to self-help

groups. In the year 1992, the NABARD originated a pilot research project of
associating 500 SHGs with the-system of the banks all over the countries. Till March
2019, with this association Self- help group achieved a vital encouragement of 2.92
million with the association of 498 banking institutes across the 31 Indian states and
578 districts. Moreover, with time, self-help groups achieved a new 0.55 million

26
from the exclusion of the credit associate with SGSY and banking institute, and the
bank loan amount of Rupees 25.42 billion was paid out. Additionally, in the
timeframe of the year 2018-2019, at a position of all India, banks have recorded an
additional saving of 12.70 Lakh Rupees associated with the self-help groups which
enrolled progress of 14.5 percent. Over the several regions, the enrolled progress
growth of the western region is depicted a 26.55 percent whereby the central region
growth is 17.8 percent and eastern region growth is 24.6 percent and meanwhile, the
lowest progress i.e. 5.1 percent was enrolled in the region of southern. Over the
several states like Orissa, Rajasthan, West Bengal, Assam, Chhattisgarhi, Assam,
Maharashtra, Telangana, Kerala, UP, and Karnataka enrolled a boosted progress of
the SHGs while on the other hand, states like Tripura, Andhra Pradesh, Nagaland,
Pondicherry, Sikkim enrolled negative growth of the SHGs and promote to decrease
the number of the SHGs in these states during the year of 2017-2018. The decrease
in the accounts of the saving of the SHGs especially causes of the closure of dormant
accounts, data sanitization that is recorded in particular states. Moreover, the
transformation of the bank association of the self-help group model. For instance,
SHGs have moved to associate with correspondent banking institutes.

SIDBI: To facilitate the growth of the industry of the small region, SIDBI
was originated in 1990 to serve the framework of the institute of finance. It has
launched MCS (Micro Credit Scheme in Feb 1994 to provide support to NGOs for
on-lending to the poor individuals or groups for setting up Micro-Enterprise. The
minimum loan to an NGO is Rs. 1 million with no maximum limit which is to be
repaid within 5 years. SIDBI has also launched a foundation for Micro Credit
(SFMC) in 1998 which has sanctioned a term loan of Rs. 18.72 billion to 76 MFIs
during 2008-09 which is expected to help about 1.96 million poor, mainly women.

1.9 Developmental Schemes

SGSY, Swa-Shakti, Swayamsidha, SJSRY, Kudumbashree, and VSS
(VanaSamrakshana Smith) are some of the programmes the government has
introduced under Joint Forest Management Groups, which are run by SHGs.

27
 SGSY: After the merger of the "Integrated Rural Development Programme"
and its linked plan of action, it was launched on April 1st, 1999. The reason behind
planning a program is to facilitate support to the poor families and also offering
assets for the income generation by mixing the credit of the banks and the subsidy of
the government. The ratio of the share fund between the center & the state is 75:25.
As of March 31, 2008, 2.74 million SHGs had already been created since the start of
SGSY, and 5.81 million SHGs had received assistance. The most significant finding
is that 82.54% of these SHGs are led by women. The programme has given the SHGs
credit in the amount of Rs. 72.03 billion and a subsidy of Rs. 28.03 billion. Under
SGSY, the annual per capita investment increased from Rs. 17113 in 1999-2000 to
Rs. 26941 in 2007-08.

CAPART‘(Council for Advancement of People’s Action and Rural

Technology):’ Funding and training assistance are provided by CAPART to
nonprofit and community based organisations that work with SHGs. For a federation
of more than 100 active SHGs, it offers a fund of Rs. 10,000 per SHG without
charging interest and even finances up to Rs. 2 lakh as bridging funds.

Anganwadi-Groups: These kinds of groups are established by the women's

department for the welfare of the children and women at the level of the habitation
for facilitating the literacy program, health, and nutrition. The members of the
Institute of the micro-finance are enlarged for generating income for the group or
individual firm.””

Kudumbashree Project: This project was started by the Kerala government

in collaboration with the Indian government, NABARD, and the goal of eradicating
poverty from the state of Kerala in ten years.”

DWCRA Groups‘(Development of Women and Children in Rural Areas)

The department only creates groups with a maximum of 15 people. The group
receives total grant of Rs. 25,000 in cash. A key component of the plan includes
leadership, attitude, and income-generating skill training.

28
 SJSRY (Swaran Jayanti Shahari Rojgar Yojana Scheme):. This initiative
was started to end urban poverty. SJSRY scheme helps urban-poor people in getting
profitable work through-group activities.

“Joint Forest Management Groups: To preserve the wealth of the forests,

VanaSamrakshana Smith was founded. This programme aims to increase social
mobilisation and alternative sources of revenue through the SHG paradigm.

NRLM (National Rural Livelihood Mission): Ministry of Rural

Development (Government of India) has implemented a poverty alleviation project
named NRLM. In this scheme, the promoting of self-employment focused as well as
the rural poor organization. Behind this program, the basic idea is to manage the poor
people with improving the capability of self-employment after restructuring in 1999,
SGSY (Swarnajayanti Grameen Swarojgar Yojana). It is because it focuses on the
promotion of self-employment amongst poor people. Nowadays, SGSY is remodeled
to form NRLM that was launched in 2011as a flagship program of the Ministry of
Rural Development. It has removed the shortfalls of the SGSY program. This
scheme had a budget of $5.1 billion and considered as one of the world's biggest
initiatives for improving thealivelihood of rural poor. At the same time, World Bank
supported this program by offering a credit of $1 Billion. Deen Dayal
AntyodayaYojana succeeded the scheme on 25 September 2015.To minimize
poverty to access profitable self-employment by supporting poor households with
offering different skilled wage employment opportunities was the key vision of
NRLM.

Swayamsidha: The foundation of this programme is the creation of Women

SHGs, with a focus on integrating services, expanding access to microcredit, and
encouraging microbusinesses. As of the end of March 2007, there were 68163 SHGs
covering 0.99 million families.

Sewa-Shakti Project: The project began on October 16th, 1988, and was
budgeted for 5 years at a cost of Rs. 1.86 billion. The initiative was carried out in six
states—Bihar, Gujarat, Haryana, Madhya Pradesh, and Uttar Pradesh—in
collaboration with the World Bank and the International Fund for Agricultural
29
Development. It was intended to expand capacity by encouraging women's SHGs,
and it was successful when, in 2003–2004, 17647 SHGs were founded as opposed to
the target of 16000. Under this programme, 1550 SHGs were founded in Haryana.

Haryana State Rural Livelihood Mission (HSRLM): The Government

of India approved a sum of Rs. 27.04 crores for the NRLM, which was launched on
January 1, 2013. As a result of the programme, 1639 new SHGs were created and
914 SHGs received funding. A total of Rs. 13.66 crore had been spent in a revolving
fund scheme as of January 2015.

(Source: Haryana Economic Survey2014-15. Web1.hry.nic.in/budget/survey)

In the rural area of India, SHGs play a significant role. Increasing the ratio of
the poor people (usually females) in several parts of India is the organ of the SHGs
and they actively participate to access credit, savings, or any other facilities. The
main focus of the self-help group is to facilitate the opportunity for everyone to have
control over their finance although in a small ratio. The system of the SHGs has
proved significant in offering this opportunity to the females who are isolated and
exploited in society.The program developed by the government of the state and
Central to mitigate the poverty are presently activated in the India whose tactics is to
develop the infrastructure for enhancing the social development of the people usually
in the health and education sector for enhancing the livelihood of the rural people
but due to the cause of ineffective access of the credit facility and formal system of
the banks it is determined that the cause of the poverty for the poor people of the
rural areas lead limitation for the society and the study's central hypothesis is that
financial inclusion can help socially excluded groups, such as poor individuals in
rural areas who are typically women, reintegrate into society.”

30