SELF HELP GROUPS IN INDIA

Submitted By, ManojKumar.P Kaviraj.B Michael Nicholas Anand.A

SELF HELP GROUPS IN INDIA

SHG is group of rural poor who have volunteered to organize themselves into a group for eradication of poverty of the members. They agree to save regularly and convert their savings into a Common Fund known as the Group corpus. The members of the group agree to use this common fund and such other funds that they may receive as a group through a common management. The group formation will keep in view the following broad guidelines : Generally a self-help group may consist of 10 to 20 persons. However, in difficult areas like deserts, hills and areas with scattered and sparse population and in case of minor irrigation and disabled persons, this number may be from 5-20. The difficult areas have to be identified by the State Level SGSY Committee and the above relaxation in membership will be permitted only in such areas. Generally all members of the group should belong to families below the poverty line. However, if necessary, a maximum of 20% and in exceptional cases , where essentially required, upto a maximum of 30% of the members in a group may be taken from families marginally above the poverty line living contiguously with BPL families and if they are acceptable to the BPL members of the group. This will help the families of occupational groups like agricultural labourers, marginal farmers and artisans marginally above the poverty line, or who may have been excluded from the BPL list to become members of the Self Help Group. However,the APL members will not be eligible for the subsidy under the scheme. The group shall not

consist of more than one member from the same family. A person should not be a member of more than one group. The BPL families must actively participate in the management and decision making, which should not ordinarily be entirely in the hands of APL families. Further, APL members of the Self Help Group shall not become office bearers( Group Leader, Assistant Group Leader or Treasurer )of the Group. The group should devise a code of conduct (Group management norms) to bind itself. This should be in the form of regular meetings (weekly or fortnightly), functioning in a democratic manner, allowing free exchange of views, participation by the members in the decision making process. The group should be able to draw up an agenda for each meeting and take up discussions as per the agenda. The members should build their corpus through regular savings. The group should be able to collect the minimum voluntary saving amount from all the members regularly in the group meetings. The savings so collected will be the group corpus fund. The group corpus fund should be used to advance loans to the members. The group should develop financial management norms covering the loan sanction procedure, repayment schedule and interest rates. The members in the group meetings should take all the loaning decisions through aparticipatory decision making process. The group should be able to prioritise the loan applications, fix repayment schedules, fix appropriate rate of interest for the loans advanced and closely monitor the repayment of the loan instalments from the loanee.

The group should operate a group account preferably in their service area bank branch, so as to deposit the balance amounts left with the groups after disbursing loans to its members. The group should maintain simple basic records such as Minutes book, Attendance register, Loan ledger, General ledger, Cash book, Bank passbook and individual passbooks. The sample proforma for maintenace of above records by the group is in the Annexure II for guidance. These could be used with necessary changes/ modifications wherever required. 50% of the groups formed in each block should be exclusively for the women. In the case of disabled persons, the groups formed should ideally be disability-specific wherever possible, however, in case sufficient number of people for formation of disability-specific groups are not available, a group may comprise of persons with diverse disabilities or a group may comprise of both disabled and non-disabled persons below the poverty line.

Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

District

KANCHEEPURAM THIRUVALLUR VELLORE THIRUVANNAMALAI DHARMAPURI KRISHNAGIRI SALEM NAMAKKAL ERODE COIMBATORE THE NILGIRIS CUDDALORE VILLUPURAM THANJAVUR NAGAPATTINAM THIRUVARUR THIRUCHIRAPALLI

No. of New No. of New % of Groups to Groups Achievement be formed formed 600 1297 216% 325 804 247% 550 384 70% 250 260 104% 250 341 136% 175 174 99% 825 889 108% 475 585 123% 1325 2032 153% 1300 1599 123% 275 536 195% 400 605 151% 375 704 188% 550 966 176% 200 522 261% 175 409 234% 425 418 98%

18 19 20 21 22 23 24 25 26 27 28 29

PERAMBALUR PUDUKKOTTAI DINDUGAL KARUR MADURAI THENI RAMANATHAPURAM VIRUDHUNAGAR SIVAGANGA TIRUNELVELI TUTICORIN KANYAKUMARI Total

150 200 600 275 300 550 175 225 300 900 475 1400 14025

180 175 1318 364 172 316 92 257 136 1340 1230 3349 21454

120% 88% 220% 132% 57% 57% 53% 114% 45% 149% 259% 239% 153%

TRAINING FOR SELF HELP GROUPS & INDIVIDUAL SWAROZGARIS SHGs trained No. of No. of persons Trained Nature of Training SHGs Total SC ST Women 1 2 4 5 6 7 8 Kancheepuram 15 169 99 7 136 Catering, Motor winding Tailoring,catering, fashion, Tiruvallur 20 268 148 0 203 driving Vellore 82 146 33 71 115 Computer,Electrician ,Fitter Tiruvannamalai 24 60 20 35 90 Computer,Tailoring, Driving Tailoring,Rexine leather, Paper Dharmapuri 52 115 115 174 plate Tailoring,Rexine leather, Paper Krishnagiri 41 90 90 170 plate Tailoring,Beautician,Rexine, Salem 120 359 0 359 359 Coir making Tailoring,Beautician, Rexine, Namakkal 62 135 0 135 135 Coir making Erode 75 225 82 174 62 Tailoring,Comput,Mat Tailoring,Man.of Coimbatore 84 170 65 170 129 Bags,tailoring,Baking,Beautician Nilgiris 56 127 70 62 65 Computer,Tailoring, Candle, appalam, seaweed /Crab culture, Book binding, Cuddalore 35 501 66 20 140 Horticulture, Coir making, Herbal Products, Palm products & Masonry Appalam, Jam, seaweed /Crab Villupuram 20 257 50 10 85 culture, Vermi culture Thanjavur 158 585 87 45 283 Computer,Tailoring, Nagapattinam 2 231 37 18 44 Leather products Tiruvarur 54 150 15 12 28 Computer,Tailoring,

Sl. Name of No. District 1 1 2 3 4 5 6 7 8 9 10 11

12

13 14 15 16

17 Trichy 18 Perambalur 19 Pudukottai 20 21 22 23 24 25 26 27 Dindigul Karur Madurai Theni Ramanad Virudhunagar Sivagangai Tirunelveli

52 47 34 18 11 14 87 19 25 24 132 114

130 101 87 74 37 59 196 49 46 55 314 148

25 31 43 27 21 4 45 5 31 9 9 4

1 1 0 12 8 0 0 10 0 0 27 0

28 Tuticorin

29 Kanniyakumari 112

248

Total 1589 5132 1026 1382

Terracotta,Greeting card, Ready made,Home appliance 36 Driving Screen Print,Home App,Note 82 making, Table mat making 41 Tailoring 21 Tailoring 30 Computer,Tailoring, Toys 124 Computer,Tailoring, Toys 39 Computer 27 Computer 54 Tailoring 259 Computer,Coir, Fisheries,Honey Computer,Coir, Seashore 141 sippies, Panai Service Kiosk, Leather products, Bakery, Napkin, wiring,seaweed /Crab culture, 169 Coir making, Herbal Products, Palm products & Masonry, Fishnet, Tailoring, Hollow Block, Tiles, Photography 3363 122

Financial Management The financial management of SHGs has been found to be ranging from weak to average. Specifically, internal controls at SHGs and SHG Federations are lacking. Internal controls represents the systems and processes that manage the day to day transaction flow and ensure that roles and responsibilities are defined and executed to safeguard assets. Field studies have indicated that these systems and processes have been ill-defined and poorly executed by members. In addition to internal controls, how SHGs are managing their cash flows is especially important. Since SHGs are accessing external borrowings through SHG Bank Linkage and then lends these funds to its members, there has been cases of poor cash flow management to repay debts not just externally but also internally. The risk of overleveraging SHGs is high.

Governance

Since SHGs are an informal organization and a SHG Federation is a composition of informal groups, there is poor governance and the capacity of the members to enact good governance is weak. The members of SHGs do not have much experience with establishing formalized monitoring and review functions or complying with legal regulations. With the growing size of the loans being made to SHGs, a strong governance system is needed to ensure that there is accountability.

Human Resources
While the achievements of the women members to form common interest groups to help themselves is remarkable, there is a long way to go to build the capacities of the staff of SHGs. The role of NGOs to provide support is essential to many SHGs success stories. The support needed ranges from bookkeeping and accounting, organizational structure, governance and other areas.

The Governments in developing countries therefore must take effective steps to enroll the members of SHGs in the Schemes of open schooling or any other distance mode to impart education. Although it is also true that economic empowerment alone does not always lead to reversal in gender relationship.1

Bank-SHGs linkage models

Since the introduction of financial sector reforms in 1991 the banks are using these distinct linkage models to finance SHGs.

1 Sabharwal, Gita (2003) From Margin to the Mainstream: MicroWomen

finance Programmes nd

Empowerment: The Bangladesh Experience http://www.gdre.org 4 1. Model I: - Banks provide micro finance to non-governmental organisation (NGOs) for lending to SHGs and ultimately to the micro entrepreneur (It covers about 27% of SHGs) 2. Model II: - Banks provide direct financing directly to SHGs for on landing to micro entrepreneur (It covers 17%) 3. Model III: - Banks finance directly to SHGs for on lending to micro entrepreneur with the intervention of NGO as social mobilizers and facilitators (It covers 56% of SHGs). 4. Model IV: - The fourth model envisages bank loans directly to individual members of SHGs upon recommendations of the SHGs and NGO. In this case, the NGO assists the Bank in monitoring supervising and recovery of loans.

References
http://www.tn.gov.in/dtp/shg.htm http://www.ekya.org/currentprojects.html?gclid=CMqA1Yfmwq4CFQUb6wodpEfFWg http://www.giveindia.org/c-58-women.aspx