How and Why Women Join in SHGs-A study in Vellore district

By K.Rajendran, K.Rajendran, Research Scholar, Department of Management Studies, Pondicherry University. kraj1962@gmail.com

& Dr.R.P.Raya, Prof & Head, Department of Management Studies, Pondicherry University.
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

How and Why Women Join in SHGs-A study in Vellore district

1 Introduction NABARD has became the pioneer of organizing SHGs since 1992.NABARD with the help of Reserve Bank of India commenced the pilot project in 1992 in

promoting and financing 500 SHGs across the country. The strategy involved was forming small and cohesive groups of the poor below poverty line and encouraging them to pool their saving and the pooled thrift was made available to the group members as internal loan with small interest. Government of Indias economic survey (2007) reported that as on March 31, 2006 the average bank loan per SHG was around Rs.50,917, the programme has enabled nearly 329 lakh poor families in the country to gain access to micro finance facilities from the formal banking system. With a small beginning in 1992 by the efforts of NABARD, growth of SHG movement has liberated lakhs of families in villages from the clutches of money lenders and SHGs have been accepted as an alternate pathway to rural development in the globalized era. When people join

together as a group and receive required financial assistance, a mass development takes place with considerable reduction in poverty and the empowerment leads to socio

economic development in a holistic and sustainable manner. The groups should collectively mobilize internal and external resources and invest in entrepreneurial activities which will generate surplus to break the vicious cycle of poverty leading to sustainable rural development. Women gain self confidence to venture on enterprising activities leading to social, economic and political empowerment and with their increased knowledge and awareness, they become partners for developmental activities. Up to 31.3.2007 a cumulative total of 337744 SHGs formed under Mahalir Thittam in Tamil
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

3 Nadu and Rs.2337.79 crores of micro finance loan disbursed to 273098 groups. There are 11625 SHGs in Vellore District and the cumulative loan sanctioned is Rs.43.97 Crores in this district as on 31.3.2007, with 1,95,148 members in the 11,625 Self Help Groups and the average group size is 17 members. The SHGs in the District covered only 11.23% of women population in the district. 2 Profile of the respondents A study was conducted in Vellore district during 2007-08 with 450 respondents (members of 90 SHGs @ 5 per group) in two blocks viz. Natrampalli and Nemili which have similarities in number of SHGs and poverty level in Vellore district. Majority of the respondents are less than 40 years of age (343 respondents out of 450)and 107 respondents were beyond 40 years. Most of the respondents (59.1 percent) have studied up to 10th standard (S.S.L.C) while nine respondents (2 percent) are graduates and there is a significant difference between the respondents regarding their education level in the two blocks. 98.4 percent of the respondents are married and small family norms are followed by majority of the members. Most of the respondents (57.1 percent) have only two children i.e. their family consists of only 4 members followed by respondents having 5-6 members in the family.155 Respondents who studied up to tenth standard have family size with less than 4 members, where as only 80 respondents who did not have any formal education have 4 members in the family which shows that education is having some impact on the family size of the respondents. Most of the respondents (48.4%) are landless followed by 30 percent respondents having one acre of land. 45 percent of respondents have land up to 2 acres. The main objective of the study was to find out who motivated women to form SHG and who motivated them to join in SHGs, reasons for joining in SHGs and to find out the amount and purpose of utilization of micro finance. 3 Findings of the study 3.1 Formation of Self Help Group Generally SHGs are formed with the motivation of NGOs, Government departments, banks, neighboring SHG members, relatives and own interest of women. Some times a

Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

4 combination of the factors also helps in the formation of SHGs. Table 1 explains the opinions of the respondents about who helped in the formation of SHG. Table 1 Formation of Self Help Group S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Opinions Bank NGO Govt department Neighbor SHG Own interest Relatives Neighbors Bank &NGO Bank & Govt department NGO & Govt department NGO & Neighboring SHGs NGO & Own Interest NGO & Relatives NGO & Neighbors Total Frequency 13 247 1 47 66 2 3 1 1 4 1 9 1 54 450 Percent 2.9 54.9 0.2 10.4 14.7 0.4 0.7 0.2 0.2 0.9 0.2 2.0 0.2 12.0 100.0

Source: Primary data Nearly 55 percent of the respondents informed that Non Governmental Organizations helped women to form Self Help Groups and own interest of women is another main factor for the formation of Self Help Groups. Government departments and neighboring Self Help Groups play very negligible role in the formation of Self Help Groups. It is inferred that NGOs play a vital role in the formation of SHGs. The calculated value of F is lesser than (F=26.815, p=0.000) the hypothetical value at 1 % which indicates there is a significant difference between the respondents in the two blocks about who motivated and helped in the formation of SHGs. 3.2 Motivational factors to join Self Help Groups Non Governmental Organisations play a vital role in the formation of Self Help Groups and they play a key role in motivating women to join the Self Help Groups so as
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

5 to get the benefits of micro finance. Most of the respondents revealed (55.6 percent) that Non Governmental Organisations motivated them to join the Self Help Groups. Following table 2 shows the responses of the respondents about who motivated them to join Self Help Groups. Table 2 Motivational factors to join Self Help Groups Opinions Frequency Percent Bank 11 2.4 NGO 250 55.6 Govt department 4 0.9 SHG members 67 14.9 Family members 21 4.7 Own interest 73 16.2 Bank &NGO 2 0.4 Bank &Govt department 1 0.2 Bank &SHG members 1 0.2 NGO &SHG members 8 1.8 NGO & Family members 3 0.7 NGO & Own interest 8 1.8 SHG members & Own interest 1 0.2 Total 450 100.0 It is concluded from the above table that NGOs and self motivation of women are the main motivational factors to join in SHGs. The table also reveals that Self Help Group members also influence women to join in the groups. The calculated value of F is lesser than(F=42.183,p=0.000) hypothetical value at 1 % which indicates there is a significant difference between the respondents in the two blocks about who motivated women to join in SHGs, 3.3 Reasons for joining Self Help Group One third of the respondents joined in Self Help Groups for the purpose of savings and 19 percent of respondents joined to supplement their family income and 11 percent of respondents joined in groups to save as well as to avail loans. It is worth to mention that only 42 respondents (9.3 percent ) joined Self Help Groups exclusively to
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

S.No 1 2 3 4 5 6 7 8 9 10 11 12 13

6 start income generating activities. Many of the respondents have multiple reasons to join the groups and very few joined to gain special status and to get subsidy from banks. Following table 3 explains the reasons for joining in groups. Table 3 Reasons for joining Self Help Group S.No 1 2 3 4 5 6 7 8 9 10 11 12 13 Reasons for joining the group To save To avail loan To start IGA Employment opportunity Social status Subsidy Neighbours pressure Supplement family income To meet unexpected cash demand Save &loan Save & IGA Save & employment Save & social status Total Source: Primary data Frequency Percent 150 33.4 24 5.3 43 9.5 5 1.1 6 1.3 12 2.6 4 0.9 99 22 15 3.3 51 11.4 24 5.3 4 0.9 13 2.9 450 100

These findings are similar to the findings of some researchers viz Lakshmamma (2005) identified 80 % respondents joined in SHGs to supplement family income in A.P; Suguna (2006) reported that 71 per cent respondents joined to supplement their family income in A.P, Rao (2004) and Loyola (2004) identified savings habit as one of the main reasons to join SHGs in Karnataka. Kabeer (2005) reported that 93 per cent of respondents observed SHG as a safe place to save and savings focus of SHG attracted women to join SHGs. It is no doubt that the SHG mechanism increases the habit of thrift and enhances the income of the family to meet the daily domestic cores.

Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

7 3.4 Loan Amount Main objective of SHG programme is to ensure availability of credit through formal banking system. Most of the respondents received loans less than Rs.5000/- and 88 percent of respondents received loans less than Rs.50000/- only 14 respondents out of 450 respondents received more than one lakh rupees as loan. 18 respondents did not obtain any loan from banks and they were satisfied with the internal loan of the group. Following table 4 explains the loans received by the respondents in the study area. Table 4 Loan Amount S.No 1 2 3 4 5 6 7 Loan Amount( Rs) Up to 5000 5001 to 9999 10000 to 24999 25000 to 50000 50001 to 100000 Above 150000 No loan from banks Frequency Percent 207 53 106 32 20 14 18 450 46.0 11.8 23.6 7.1 4.4 3.1 4.0 100.0

Total Source: Primary data

From the above table it is evident that 46 per cent of the respondents received only Rs 5000 as micro finance and totally 81.4 per cent respondents received up to Rs 25000 as loan.The calculated value of F is lesser than(F=22.778,p=0.000)hypothetical value at 1 % which indicates there is a significant difference between the respondents in their loan amount in the two blocks. 3.5 Purpose of loan The study reported that 188 respondents(41.77 per cent ) used loans to start income generating micro enterprises in non farm sector and 143 respondents for animal husbandry activities.60 respondents (13.33 per cent) used loan for consumption purposes;41 respondents(9.11 per cent)used loans for traditional activities such as agriculture and handlooms. 18 respondents ( 4 per cent)who did not get any external loan.
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

8 It is interesting to note that 42 respondents (4.22 per cent ) started provision or petty shops;95 respondents (21.11)micro business in the form of selling vegetables, milk coconut, cattle feed, cut piece and shandy sales.19 respondents started service activities such as renting of utensils and cable T.V;15 respondents (3.33 per cent ) started production and sale of pickles and candles. Table 5 explains the purpose of loans of the respondents in the study area. Table 5 S.NO 1 2 3 4 5 Purpose of loan Percent 31.7 13.3 9.1 6.8 18.4

6 7 8

Purpose of loan Frequency Animal husbandry (Sheep, Milch 143 animals, Poultry) Consumption expenses (Medical 60 expenses, Children education) Traditional activities (Agriculture, 41 handlooms) Services(Cable T.V, suppliers, tailoring) 31 Micro and small business(Cut piece sales 83 Cattle feed sales, Construction materials sales, Small business(cart sales), Shandy sales etc) Provision shops 42 Manufacturing and sales (pickles, 32 agarbathi, candles) No bank loan 18 Total 450

9.3 7.1 4.0 100.0

Source: Primary data In the study area it was found that some groups started new activities like cable T.V. service centre, Cattle feed shop, Mosaic tiles sales, renting of construction materials (centering sheets ) and utensils (suppliers) so there is trend towards non farm based activities which is an healthy move towards alternative livelihood practices. Loans were mainly received for income generating activities/micro enterprises including animal husbandry (73.55 per cent respondents), consumption 13.33 percent
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)

respondents;

9 traditional activities like agriculture and handlooms 9.11 per cent of respondents. These findings undoubtedly establishes that micro finance causes synergism on SHG movements and provided impetus for the income generating activities These findings of the study also runs concurrent with the findings of some eminent researchers Lakshmi Devi(2006); Rao(2004); Suguna(2006); Kabeer and Noponen (2001); Morduch and Haley (2001); Hulme and Moshley (1996) on the issue of purposes of obtaining micro finance . 4 Conclusion It is concluded that Non Governmental Organisations play a vital in helping rural women to form Self Help Groups and they motivated women to join Self Help Groups. Nearly 55 percent of the respondents informed that Non Governmental Organizations helped them to form Self Help Groups. Government departments and neighboring Self Help Groups play very negligible role in the formation of Self Help Groups. NGOs and self motivation of women are the main motivational factors to join in SHGs and Self Help Group members also influence women to join in the groups. Most of the respondents received loans less than Rs.5000/- and 88 percent of respondents received loans less than Rs.50000/- only 14 respondents out of 450 respondents received more than one lakh rupees as loan. Only 13.33 per cent respondents used loans for consumption purposes and remaining used loans for production purposes and loans were mainly used for productive purposes such as investing in income generating activities/micro enterprises. It is concluded that NGOs play a vital role in the group formation as well as motivating women to join in SHGs. Majority of women join in SHGs to get loan and there is a productive utilization of loan in income generating activities and there is a diversification from farm activities to non farm sector in rural areas as a result of joining in SHG.
Tamil Nadu Journal of Cooperation.Vol.10 No 3.pp 30-34. (January 2010)