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A REPOR
RT ON 

 
   

A nsight in
An In nto SSelf Help
p Grroup
ps

B
BY,
R
RICHI KA
AUR SAL
LUJA
0
09BSHYD
D0660
I
INDIAN B
BANK

 
 

 
A REPORT

ON

AN INSIGHT INTO SELF HELP GROUPS

BY,

RICHI KAUR SALUJA

09BSHYD0660

INDIAN BANK

A REPORT SUBMITTED IN PARTIAL FULFILMENT OF

THE REQUIREMENTS OF

MBA PROGRAM OF

IBS HYDERABAD

DISTRIBUTION LIST:

MR.D.SATISH (FACULTY GUIDE)


MR.S.R.VEERARAGHAVAN (COMPANY GUIDE)

DATE OF SUBMISSION:

15.05.2010
An Insight Into Self Help Groups  
 

AUTHORIZATION 

This report is submitted as partial fulfillment of the requirement of MBA Program IBS
Hyderabad.

[i] 
 
An Insight Into Self Help Groups  
 

ACKNOWLEDGMENTS 
The success behind the completion of any good job is the support and the joint team effort of a
number of people. There are many persons, whose help & cooperation, this project would not
have been possible. While submitting the project in printed form, I would take this opportunity to
thank everyone who has supported me during the project.

Firstly, my sincere gratitude to Mr. Lakshmi Narayan, Chief Manager who has allowed me to
undertake the project on Urban Microfinance and my Company Guide, Mr. S.R.
Veeraraghavan, Branch Manager, Dharavi, who has supported and helped me at every point
throughout the tenure of the project. He has played a pivotal role in the successful completion of
this project.

Secondly , I would like to thank Mr. D. Satish, Faculty Member, ICFAI Business School, for his
continuous interaction and support. One remarkable quality of Prof. Satish which has helped me
to do justice to the work assigned to me is his quest for excellence. He guided me all the way
from the beginning till the end by giving me his valuable inputs, whenever I required them.

I would also like to thank Mrs. Ashmita Pati, Assistant Branch Manager, Dharavi, Mr. Ashok
Mohite, Area Coordinator, Brihan Mumbai Municipal Corporation who have always been
supportive throughout the project and have encouraged me in going ahead with the mission at
hand.

Lastly, I would like to thank all those who have interacted with me to make this field survey a
success.

   

[ii] 
 
An Insight Into Self Help Groups  
 

ABSTRACT 
The project “An Insight into Self Help Groups” provides an in-depth understanding of SHGs
presently being financed by Indian Bank at Dharavi. The project deals with the examination of
various SHG-Linkage models being used between the SHGs and the Formal Financial
Agencies.

The purpose of the study is to obtain a comprehensive knowledge of the performance of SHGs in
Dharavi area with special importance to the income generating activities undertaken, benefits
derived by the members, the difficulties encountered as well as the outreach of the initiative
taken by Indian Bank to include the otherwise considered un-bankable poor into the banking
system. This paper examines the SHG operating model, the loan processing scheme for SHGs,
the state of SHGs today and how they need to be supported in going forward. All the members of
SHGs selected formed the main respondents. This study explores various questions, based on
field research in Dharavi presenting a reality check of 'what is really happening'.

We began our research by gaining knowledge of the SHG-Bank linkage by interacting with the
company officials and doing a thorough review of the text related to the same. After that
interaction with the SHG members via semi-structured interviews and focus group discussions
had been done. We wanted to be able to quantify, but at the same time, be exploratory and open-
ended in our approach and therefore, Focus Group Discussions combined with review of
records and individual interviews were carried out with each of the sample SHGs. After the
process of data collection via interviews and focus group discussions was over, in order to cross-
check for different experiences and perceptions, we reviewed the available group records.

The Dharavi branch of Indian Bank has been working successfully since its inception with a
repayment rate of 100%. We were interested in the understanding the various shades of this
initiative and therefore we have had detailed discussions with the help of Structured
questionnaires with the Company officials, the Area Coordinator and the Community
Organizers to develop this case study. Sharing of the preliminary findings with Indian bank
functionaries, the Branch Manager Mr. S.R. Veeraraghavan and Mrs. Ashmita Pati to check the
veracity of the conclusions drawn was done.

[iii] 
 
An Insight Into Self Help Groups  
 

TABLE OF CONTENTS 

AUTHORIZATION ........................................................................................................................... I 

ACKNOWLEDGMENTS ................................................................................................................ II 

ABSTRACT ...................................................................................................................................... III 

INTRODUCTION............................................................................................................................. 1 
ABOUT DHARAVI................................................................................................................................................ 1 

ABOUT INDIAN BANK ......................................................................................................................................... 2 

ABOUT THE PROJECT .......................................................................................................................................... 5 

OBJECTIVE OF THE PROJECT .................................................................................................. 6 

VALUE ADDITION TO THE ORGANIZATION ..................................................................... 6 

STEPS SHOWING THE WORK DONE .................................................................................... 7 

SELECTION OF SHGS, APPROACH AND METHODOLOGY ........................................... 8 

REPORT FORMAT ...................................................................................................................... 10 

LIMITATIONS ............................................................................................................................... 10 

MICROFINANCE .......................................................................................................................... 11 
A BRIEF HISTORY OF MICROFINANCE IN INDIA ................................................................................................... 11 

LITERATURE REVIEW ............................................................................................................. 14 

SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY) .......................................... 21 

UNDERSTANDING SELF HELP GROUPS ........................................................................... 23 

 
An Insight Into Self Help Groups  
 
STRUCTURE OF SHG .......................................................................................................................................... 23 

SHG BANK‐LINKAGE .......................................................................................................................................... 24 

PRINCIPLES ....................................................................................................................................................... 25 

FEATURES OF SELF HELP GROUPS ...................................................................................................................... 26 

HOW SELF‐HELP GROUPS WORK ....................................................................................................................... 28 

HOW DO SELF HELP GROUPs SAVE (BACHAT GAT) ............................................................................................. 29 

PURPOSE OF GETTING LOAN ............................................................................................................................. 30 

LOAN PROCESSING……………….. ........................................................................................... 31 
SELF HELP GROUPS ‐BANK LINKAGE MODELS. .................................................................................................... 33 

COMPARATIVE ANALYSIS OF MICRO‐FINANCE SERVICES OFFERED TO THE POOR ............................................... 35 

IMPACT OF THE INITIATIVE BY THE BANK: ......................................................................................................... 36 

INTERVIEW QUESTIONS ........................................................................................................ 38 

EVALUATION SHEET FOR SHGS .......................................................................................... 41 

OM SAI MAHILA UTPADAK GAT .......................................................................................... 45 

KEY ACTIVITIES ......................................................................................................................... 49 

CAPACITY BUILDING OF SHG MEMBERS ........................................................................ 50 
SHG TRAINING .................................................................................................................................................. 50 

IMPACT OF SHGS ON SWAROZGARIS ............................................................................... 52 

ROLE AND PERCEPTION OF KEY STAKEHOLDERS .................................................... 54 
BANKERS .......................................................................................................................................................... 54 

AREA COORDINATOR & COMMUNITY ORGANISERS .......................................................................................... 56 

 
An Insight Into Self Help Groups  
 

RECOMMENDATIONS .............................................................................................................. 57 

CONCLUSION ............................................................................................................................... 61 

APPENDIX ..................................................................................................................................... 63 

REFERENCES ............................................................................................................................... 73 

 
An Insigh
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INTRODUCTION

"The pooor stay poor, not becausee they are lazzy but becauuse they havee no access to
t capital"
-Milton Friedman
F

ABOUT
T DHARAVII            
Dharavi, one of Asiia’s largest slums, hass a populatioon of over a million livving in 1,255,000
househollds spread ov
ver 1.75 sq.kkm. The people are engaaged in produucing goods worth over 8800
crore a year. Dharavii is less a sluum and moree an unorgannized, unreguulated indusstrial estate, and a
showcasee of Indian entrepreneur
e ship.

This slum ustling with economic activities


m area is bu a whhich inter aliia include taanneries, plaastics,
readymadde garmentss, confectionnery, soap, eateries
e or chakli/papad
c d factories, clay
c pots ettc. by
employinng migrant workers
w of various
v backkgrounds. Abbout 40% of the residennts are emplloyed
with perm
manent jobss, 35% are self-employe
s ed and 15%
% are employyed on tempporary basis. The
remaininng 10% are unemployed.
u

The peopple of Dharaavi, had


no acccess to banking
services, even though they
live inn the co
ountry’s
commerccial capital,, which
boasts off hundreds of bank
branches and ATM
Ms. The
only banking service
availablee in the arrea was
Abhyudaaya Co-Op
p Bank
Ltd. C
Commercial banks
have gennerally ignorred Dharavi for a varietty of reasonns. One of thhe reasons was
w that the poor
migrant workers
w werre unable to provide
p prooof of residennce.

To some Indians, thee Dharavi shantytown is an eyesore taking


t up priime real estaate. For residdents,
it is the sum
s of their hopes.
h
 

 
An Insight Into Self Help Groups  
 

ABOUT INDIAN BANK 
Financial inclusion is aimed at providing banking / financial services to all people in a fair,
transparent and equitable manner at affordable cost. The unbanked public is largely cut off from
the Banking products/services. It is the endeavor of the Bank to provide the basic banking
facility of Savings Bank accounts to all the unbanked. Towards this initiative the Bank has taken
the lead and evolved two different models i.e. Rural and Urban Financial Inclusion Model to take
care of the requirement of the people in rural and urban areas which differ from each other.

Rural Financial Inclusion Model:

Indian Bank as SLBC, convener in the Union Territory of Pondicherry (UTP), for the first time
in the Country launched a National Pilot Project on Financial Inclusion in 2006 under Rural
model involving all banks operating in UTP with the aim of providing at least one Bank account
to each household.

Urban Financial Inclusion Model:

There is a general feeling that Financial Inclusion is not necessary in Urban & Metro Centers. In
reality, large numbers of persons in urban centers are not having banking facility and financial
exclusion is very common particularly in respect of the migrated labor who moved into the
urban/metro centers in search of jobs. Most of them do not have bank accounts and knowledge
of banking facilities. Hence they send money to their family members through informal sources
such as friends, relatives etc or carry cash whenever they visit their native place.

The situation was not different in Dharavi (Mumbai) Asia’s largest slum, in the country's
commercial capital. Indian Bank had launched financial inclusion in Dharavi, to fulfill banking
requirement of the people in this area following its successful implementation in Pondicherry
UT. In fact, for Indian Bank, the poor, who are otherwise considered to be un-bankable, are
certainly reliable and bankable.

Before launching the project, discussions were held with Senior officials of NGOs (Nirman)
operating in Dharavi and Community leaders to assess the needs of the migrant workers in
Dharavi in keeping their savings safe and using the amount when they need it. Reserve Bank of
India has also evinced keen interest in ensuring that the Banking products/facilities are provided

 

 
An Insight Into Self Help Groups  
 

to the inhabitants of the area. RBI officials, Smt. Usha Thorat and Sri. Kaza Sudhakar had been
extremely supportive for the success of the pilot project.

Under the inspiring and dynamic leadership of Dr. K.C.Chakrabarty, then Chairman and
Managing Director and Shri M.S.Sundara Rajan, then Executive Director, Indian Bank, the pilot
project was launched in September 2006 with the immediate objective of enabling thousands of
migrant workers from Tirunelveli to have access to Banking and Technology. Efforts are to
extend all financial and social security products and services for the people.

Mass campaigns were conducted with teams of officers and staff from nearby branches viz.,
Sion, Mahim, King’s Circle for taking up households survey and simultaneous opening of ‘no
frills’ accounts at convenient centres such as Sundara Vinayagar Temple, Adi Dravida Sangham,
St. Anthonys Church, etc.

Door-to-door ‘account opening camps’ at select locations was done by officers .In all cases,
ATM card applications were obtained to issue ATM cards subsequently so that the migrant
workers could draw cash from Bank’s ATMs at Mumbai or at their native place or elsewhere. As
a result of the campaign, over 7000 persons in Dharavi were provided with Banking facility and
the process is being continued. ATM cards were issued to over 3000 account holders. Under the
financial inclusion project, eligible persons are being provide with overdraft facility in their
saving account up to Rs. 5000, General Credit Cards up to Rs. 25000 to micro entrepreneurs and
Life insurance and Health insurance at minimal premium rates.

THE FIRST COMMERCIAL BANK’S BRANCH TO FUNCTION IN DHARAVI

Simultaneously, the Bank took the initiative for obtaining a license to open a branch in the slum
area. The Bank’s effort has succeeded with the permission of RBI, which has resulted in opening
of the branch with CBS and ATM facility in Dharavi. Indian Bank is the first scheduled
commercial Bank branch located in this largest slum area meeting the long felt need of the
people.

With the implementation of the Financial Inclusion project in Dharavi, the migrant workers from
Tirunelveli and other villages from Tamil Nadu are benefited as they have been provided with
easy money transfer facility. Besides, the account holders have been issued ATM cards, which

 

 
An Insight Into Self Help Groups  
 

can be used for withdrawing the amount from their account using the wide ATM network
established.

Laying strong emphasis on life, disability and health cover for the vulnerable section, the bank
provides two new micro-insurance schemes namely Janashree Bima Yojana for members of
the groups such as SHGs, etc., in association with Life Insurance Corporation to provide life and
disability cover and Universal Health Care Policy (UHCP), a mediclaim insurance scheme in
association with United India Insurance Company Ltd (UIIC) aimed at below poverty line (BPL)
families. The premium payable is low and affordable and the policy benefits are very attractive
and come handy in unforeseen circumstances such as death, accident, sickness, etc.
The Bank is in the process of issuing smart cards to the no-frill account holders of Dharavi in
association with M/s Financial Information and Operations Network Ltd.(FINO),Mumbai, which
will enable them to do banking transaction at their
doorsteps through the Bank’s mobile banking officer. Enrollment for more than 149 cards is
over. These smart cards embedded with a chip can act as customer identity tokens using the
finger print as bio-password and an e-pass book for storing transaction data. This e-inclusion will
help in achieving the Bank’s mission namely “Taking Technology to the Common Man”.

 

 
An Insight Into Self Help Groups  
 

ABOUT THE PROJECT 
SHGs are seen to confer many benefits, both economic and social. Although the SHGs can be
formed for any development activity, for the financial institutions to use them as a conduit for
banking activities, the SHGs should be practicing thrift and credit and be familiar to money
management. SHGs enable members to grow their savings and to access the credit which banks
are increasingly willing to lend.

But there are also some questions. How effective are the groups in managing their financial
transactions? Are the groups sustainable? Do they help in mobilizing women to take social
action? Who is really benefiting? Do the poorest benefit, do they not join at all or if they do join,
are they more likely to drop out?

This study explores such questions, based on field research in Dharavi presenting a reality
check of 'what is really happening'. While microcredit is used as a viable tool in fighting
poverty, more than half of the poor individuals choose not to participate for various reasons.
And, therefore, the question whether microcredit is really able to improve the conditions of the
poor is worthy of research such as the one being undertaken in this study.

The study encompasses many parameters like outreach, meetings, leadership, savings by the
group, literacy level of members, group membership, recoveries, awareness level of the
members, etc. and based on these the SHGs with whom interaction had been done have been
evaluated to come up with the one to be granted repeat loan by the bank.

The opinion of Branch Manager of the bank and officials who were directly in contact with the
SHG women with regard to the choice of group / individual mode of financing was obtained
through a structured questionnaire. The reasons for the success of the model employed at the
Dharavi branch of Indian Bank (reported to have a repayment rate of 100%) were uncovered by
having detailed discussions with the key bank officials.

 

 
An Insight Into Self Help Groups  
 

OBJECTIVE OF THE PROJECT  

ƒ The main objective of the study is to obtain a comprehensive knowledge of the


performance of SHGs, find out the social and economic benefits and the downsides of
SHGs being financed by Indian Bank. The aim is partly to find out what is really
happening at group level. It is also to try and look at what can be done, exploring
factors that contribute to positive and negative outcomes, and to consider what can be
done to optimize the benefits or to avoid or mitigate the downsides.
ƒ To examine the various SHG-linkage models being used between the SHGs and the
Formal Financial Agencies.
ƒ To find the model being employed and the reasons for 100% repayment rate at the
Dharavi branch of the bank.

VALUE ADDITION TO THE ORGANIZATION  

The project would help Indian Bank in a number of ways:

ƒ They can use the details obtained of the SHGs and approach them to spread awareness
and involvement in microcredit.
ƒ The bank’s burden of assessing the SHGs in order to sanction them repeat loans would be
considerably reduced.

 

 
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STEPS  SHOWING
G THE WO
ORK DONE 

Unnderstanding
g all the relevvant documeents from thee bank for gaaining know
wledge on thee
organizzation and SHGs

Literature suurvey done to


t obtain knoowledge aboout SHGs.

Fiield Survey.

Revieew of records from the bank, collectiion of seconddary data annd preparatioon of evaluattion
sheet.

Evaluattion of the SH
HGs.

Intterviews and
d discussionss with the baank officials,, Area Coorddinators and Community
y
O
Organisers.

C
Compilation

 

 
An Insight Into Self Help Groups  
 

SELECTION OF SHGS, APPROACH AND METHODOLOGY   
A random sampling technique was used to select SHGs. The study approach is depicted
diagrammatically in below mentioned figure. The study employed a combination of qualitative
methods and the data collected both from primary and secondary sources.

METHODOLOGY   
The sections in the pages overleaf describe the methodology for each key task that was
undertaken to meet the requirements of the assignment.

1. Meeting with the officials of Indian Bank


In the inception phase, a meeting was held with the key officials of the bank. In this
meeting, we discussed about the requirements for the assignment, the work plan, the
expected deliverables and the associated timelines, reporting schedules, etc and finalized
the same.

2. Training
A thorough briefing of the expectations that the project should fulfill was conducted by
the Branch Manager at Dharavi.

3. Secondary Research
Secondary data was collected from the Reports and administrative guidelines of the bank.
Apart from these, books, journals, seminar papers, websites, etc. also formed the sources
for the collection of secondary data for the study. The necessary primary and secondary
data in respect of this study were also collected from the functionaries at various levels.

4. Development of Survey Tool


Based on secondary research and interaction with key officials, the following data
collection tools were developed :
• Semi-Structured Interviews conducted with SHG women in Dharavi, PrabhaDevi ,
Elphinsston Road, etc.( questionnaire is given in Annex B)

 

 
An Insight Into Self Help Groups  
 

• Unstructured Interview Schedules were used to elicit information from the Indian Bank
officials.

5. Familiarization Visits
Preliminary field visits to Dharavi with an objective to assess the SHG situation and pilot
test data collection formats. Based on the inputs from various respondents, data collection
formats were revised.

6. Primary Research
The primary data were collected by personal interviews with key respondents. The data
collected with the help of schedules were separately compiled for every information
sought on various aspects of SHGs functioning, activities undertaken, results produced,
opinions held, etc. The opinion of Branch Manager of the bank and officials who were
directly in contact with the SHG women with regard to the choice of group / individual
mode of financing was obtained through a structured questionnaire. Sharing of the
preliminary findings with Indian bank functionaries, the Branch Manager Mr. S.R.
Veeraraghavan and Mrs. Ashmita Pati to check the veracity of the conclusions drawn
was done.

The Respondents for the study were:

• Branch Manager, Dharavi, Mr. S. R. Veeraraghavan

• Assistant Branch Manager, Dharavi, Mrs. Ashmita Pati

• Area Coordinator, Mr. Ashok Mohite

• Community Organisers, Mrs. Ranjana Manohar Katke and Mrs. Rekha Devkar

• SHG women

 

 
An Insight Into Self Help Groups  
 

7. Data Analysis
After the survey was completed, the data was carefully scrutinized and the results were
tabulated to evaluate the performance of the 15 SHGs and eventually find out the best
amongst them.

REPORT FORMAT  

The report is structured as:

¾ Overview of the project, the objectives, approach and methodology of the study ,
literature review and limitations.
¾ Overview of the concept of Self Help Group (SHGs) and Developmental Paradigm
¾ Field Survey on Swarozgaris and the evaluation of SHGs
¾ Self Help Groups: Paradigm of Success.
¾ The stakeholder analysis
¾ The impact of SHGs on Swarozgaris
¾ Recommendations for improving the scheme.
¾ Conclusion

LIMITATIONS  

The major limitations for the study are as follows:

ƒ Respondents to the survey are mainly residents of Dharavi area and the study findings
and recommendation given are based on the limited coverage of 15 SHGs, therefore the
analysis may not be representative of the entire poor population of India.
ƒ There are many acclaimed benefits of the SHG programme that are yet to be examined
empirically.
ƒ Lack of accurate information from the members of the SHGs.
ƒ Time constraint is another limitation to the study.

 
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MICROFINANCE  
Microfinance is defined as any activity that includes the provision of financial services such as
credit, savings, and insurance to low income individuals which fall just above the nationally
defined poverty line, and poor individuals which fall below that poverty line, with the goal of
creating social value. The creation of social value includes poverty alleviation and the broader
impact of improving livelihood opportunities through the provision of capital for
micro enterprise, and insurance and savings for risk mitigation and consumption smoothing.
According to International Labor Organization (ILO), “Microfinance is an economic
development approach that involves providing financial services through institutions to
low income clients”. A large variety of actors provide microfinance in India, using a range of
microfinance delivery methods. Since the founding of the Grameen Bank in Bangladesh,
various actors have endeavored to provide access to financial services to the poor in creative
ways. Governments have piloted national programs, NGOs have undertaken the activity of
raising donor funds for on-lending, and some banks have partnered with public organizations or
made small inroads themselves in providing such services. This has resulted in a rather broad
definition of microfinance as any activity that targets poor and low-income individuals for the
provision of financial services. The range of activities undertaken in microfinance include
group lending, individual lending, the provision of savings and insurance, capacity building,
and agricultural business development services. Whatever the form of activity however, the
overarching goal that unifies all actors in the provision of microfinance is the creation of social
value.

A BRIEF HISTORY OF MICROFINANCE IN INDIA 
The post-nationalization period in the banking sector, witnessed a substantial amount of
resources being earmarked towards meeting the credit needs of the poor. There were several
objectives for the bank nationalization strategy including expanding the outreach of financial
services to neglected sectors. As a result of this strategy, the banking network underwent an
expansion phase without comparables in the world. Credit came to be recognized as a remedy
for many of the ills of the poverty. There spawned several pro-poor financial services, supported
by both the State and Central governments, which included credit packages and programs
customized to the perceived needs of the poor. While the objectives were laudable and

 
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substantial progress was achieved, credit flow to the poor, and especially to poor women,
remained low. 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), which was given the tasks of framing appropriate policy for rural credit, provision
of technical assistance backed liquidity support to banks, supervision of rural credit institutions
and other development initiatives.

In the early 1980s, the Government of India launched the Integrated Rural Development Program
(IRDP), a large poverty alleviation credit program, which provided government subsidized credit
through banks to the poor. It was aimed that the poor would be able to use the inexpensive credit
to finance themselves over the poverty line.

Also during this time, NABARD conducted a series of research studies independently and in
association with MYRADA, a leading non-governmental organization (NGO) from Southern
India, which showed that despite having a wide network of rural bank branches servicing the
rural poor, a very large number of the poorest of the poor continued to remain outside the fold of
the formal banking system. These studies also showed that the existing banking policies, systems
and procedures, and deposit and loan products were perhaps not well suited to meet the most
immediate needs of the poor. It also appeared that what the poor really needed was better access
to these services and products, rather than cheap subsidized credit. Against this background, a
need was felt for alternative policies, systems and procedures, savings and loan products, other
complementary services, and new delivery mechanisms, which would fulfill the requirements of
the poorest, especially of the women members of such households. The emphasis, therefore, was
on improving the access of the poor to microfinance rather than just micro-credit.

Based on the studies mentioned above, NABARD developed the Self Help Group [SHG] bank
linkage approach as the core strategy that could be used by the banking system in India for
increasing their outreach to the poor. The strategy involved forming SHGs of the poor,
encouraging them to pool their thrift regularly and using the pooled thrift to make small interest
bearing loans to members, and in the process learning the nuances of financial discipline. Bank
credit to such SHGs followed. NABARD saw the promotion and bank linking of SHGs not

 
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merely as a credit programme but as part of an overall arrangement for providing financial
services to the poor in a sustainable manner leading to empowerment of the members of these
SHGs.

The past 25 years has seen a variety of microfinance programs promoted by the government and
NGOs. Some of these programs have failed, and the learning experience from them have been
used to develop more effective ways of providing financial services. These programs vary from
regional rural banks with a social mandate to MFIs. In 1999, the GoI merged various credit
programs together, refined them and launched a new programme called Swaranjayanti Gram
Swarazagar Yojana (SGSY). The mandate of SGSY is to continue to provide subsidized credit
to the poor through the banking sector to generate self-employment through a self-help group
approach and the program has grown to an enormous size.

MFIs have also become popular throughout India as one form of financial intermediary to the
poor. MFIs exist in many forms including co-operatives, Grameen-like initiatives and private
sector MFIs. Thrift co-operatives have formed organically and have also been promoted by
regional state organizations like the Cooperative Development Foundation (CDF) in Andhra
Pradesh. Private sector MFIs include NGOs that act as financial services provider for the poor
and include other support services but are not technically a bank as they do not take deposits. .

Today, Self-Help Groups and MFIs are the two dominant form of microfinance in India. This
report focuses on the aspects of the Self Help Groups as an effective means to provide financial
services to the poor.

 
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LITERATURE REVIEW 
A thorough Secondary data analysis was undertaken in order to plan the survey. The previously
conducted researches on related topics provided us with the guidelines for further course of
action. For the secondary data, we used various journals and websites.

ƒ SLUMDOGS REALITY

In this paper the author has drawn a parallel on the life in Dharavi to that reflected in the movie
“Slumdog Millionaire”. The author says that the film's depiction of the legendary Dharavi, which
is home to some one million people, is that of a feral wasteland, with little evidence of order,
community or compassion (Sengupta Mitu,2009).Other than the children, the “slumdogs”. no-
one is even remotely well intentioned in the film, eventually arguing that Dharavi teems with
dynamism and creativity, and is a hub of entrepreneurial activity, in industries such as garment
manufacturing, embroidery, pottery, and leather, plastics and food processing. The author argues
that Dharavi's lanes are lined with cell-phone retailers and cybercafés, and according to surveys
by Microsoft Research India, the slum's residents exhibit a remarkably high absorption of new
technologies.

The author has also put-forth the role of many cooperative societies which work together with
grassroots associations to provide residents with essential services such as basic healthcare,
schooling and waste disposal, and tackle difficult issues such as child abuse and violence against
women. The author has lastly commented on the “Dharavi Redevelopment Project” which
proposes to convert the slums into blocks of residential and commercial high rises, taking the
stand that the project may destroy thousands of livelihoods by rendering unviable countless
household-centered businesses and criticizing the government for integrating its "problem-
population" into modern, middle-class Mumbai.

 
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ƒ INCOME GENERATING ACTIVITIES OF WOMEN SELF HELP GROUPS OF


DHARWAD DISTRICT OF KARNATAKA: An Insight

The study was conducted in Dharwad, Kalghatagi and Kundgol taluk of Dharwad district
of Karnataka during 2005,covering 12 women SHGs(Malshet K.K. et al ,2009). This study is
divided in two parts. The purpose of the first part of the study was to obtain a comprehensive
knowledge on the participation of women Self Help Groups of Dharwad district of Karnataka in
various Income Generating Activities. In this study, performance of the SHGs was referred to the
economic activities undertaken by the members and activities undertaken by the group as a
whole for the benefit of its members. Primary data in the study was obtained from the founder,
promoters of SHGs, middle and grass root level personnel of NGOs and members of self-help
groups. Semi-structured interviews were used to interview all the SHG members. To interview
the spokespersons of the groups, structured interviews were used, and open-ended questions
were used for the middle and grass root levels personnel of the NGO. Data collected from the
SHG members were completed and analyzed. The observations from the study were that the
income per month of SHG members had a positive relation with respect to the factors like Age,
Family size and land holding, TV, Radio, Education level of the members. The most common
income generating activity found was raising of paddy nursery.

The purpose of the next part was to obtain a comprehensive knowledge of the performance of
SHGs with special importance to the procedure followed in the formation activities undertaken,
benefits derived by the members, the difficulties encountered as well as their suggestions and
socio-economic profile of members. All the members of SHGs and grass root level workers of
NGOs were interviewed. The observations from the study were that the majority of the members
of the SHGs were motivated by themselves, because they understood that the SHGs is a good
means to save. The correlation tests applied for the independent variables with income per month
as the dependent variable revealed that there is positive significant relationship between
education and income per month, also mass media participation with income per month.
Misunderstanding amongst SHG members, difficulty in diversification of the activities, lack of
space for storage of materials, difficulties experienced in marketing prepared products and
frequent powers cuts were some of the problems reported by SHGs members.

 
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An Insight Into Self Help Groups  
 

ƒ SUSTAINABILITY OF MICROFINANCE SELF HELP GROUPS IN INDIA

The major form of microfinance in India is that based on women’s Self Help Groups (SHGs),
which are small groups of 10-20 members(Nair Ajai,2005). The small size of the SHGs and
thereby, the limited resources – both financial and human – they have access to, make most
SHGs dependent on the promoter agencies that have developed these groups for several essential
services. This paper explores the merits and constraints of federations of SHGs that provide
services to the SHGs for which they were dependent on the promoter agencies. The SHG
federations being studied are Sri Padmavathy Mahila Abyudaya Sangam (SPMS), Kurinji
Vattara Kalanjiam (KVK), Sanghamitra Mandala Mahila Samakhya (SMMS), Sri Viswabharthi
Association of Women Thrift Cooperatives (SVAWTC). These federations provide the broadest
range of services of significant value to the SHGs. The main objective of the study is to explore
the potential of SHG federations in making SHGs financially and organizationally sustainable,
and to recommend strategies to strengthen them.

The author has described the services provided by the primary organizations and the federations
which help the SHGs gain economies of scale, obtain value-added services, reduce transaction
costs, and enhance empowerment, thereby contributing to organizational sustainability of the
SHGs. The author has identified the internal(like governance, staffing, accountability to SHGs)
and external(like Capacity of Promoter Agencies , Inadequate Knowledge Base on SHG
Federations, the extent of the services provided by them, or the amount of financial resources
handled by them) issues and challenges related to the sustainability and promotion of SHG
federations.

The findings of this study suggest that federations could help SHGs become institutionally and
financially sustainable because they provide the economies of scale that reduce transaction costs
and make the provision of various services viable. However, their sustainability is constrained by
several factors – both internal, related to the federations themselves and external, related to the
other stakeholders. The paper concludes by recommending some actions to address these
constraints.

 
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ƒ LINKING BANKS AND(FINANCIAL) SELF HELP GROUPS IN INDIA-An


Assessment

In this paper, the author has described the role of NABARD in developing the SHG-Bank
linkage approach as the core strategy to be used by the banking system in India for in increasing
their outreach to the poor (Kroop Edward & Suran B.S.,2002). The author has also provided an
in-depth text on how NABARD has taken the initiative of testing the strategic concept of SHGs
in Indian conditions and implementing the linking of SHGs to banks (Linkage Banking
Programme started in 1992). NABARD as Linkage Banking programme initiator and prime
mover has developed a detailed strategy for SHG-Banking promotion with the purpose to
include, address and familiarize NGOs, Bankers, Government officials, Volunteers, etc. with the
programme. The author has further argued that SHG-lending is organization-based and therefore,
facilitating agencies were given support by NABARD to assist in establishing SHGs and to cover
the costs involved. The author has also talked about the Vikas Volunteer Vahini (VVV)
Programme to include Farmers’ Clubs sponsored by bank branches. The author has argued that
in SHG-Banking, the central assumption underlying this banking by the people is the firm belief
that the SHGs of the poor are reliable partners in handling bank funds.

The author has explained the role of SHGs as financial intermediaries in the villages, further
stating that SHG is a social design in which people participate by making themselves socially
and economically accountable to each other. SHG-Banking is an ideal combination of the formal
banking sector’s “banking with the poor” and “banking by the people” through informal SHGs.
Credit is a catalyst. It comes and goes but leaves behind some changes.

The author has noticed that to increase the number of SHGs who start to make voluntary thrift on
a regular basis is the most essential strategic variable in the Linkage Banking. The author has
then identified the operational aspects of SHG Banking and the significance of MFI or Non-
Government Microfinance Sector(NGMS),the achievements in SHG-Banking, the acceptance of
SHG-Banking by the Formal Banking System in India, the reasons why SHG-Banking has
achieved good results and the risks in SHG Banking. Lastly, the author has said that an
evaluation of the experience of those SHGs which have not been a success should be undertaken
to learn from potential failures in the group formation process.

 
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ƒ SELF-HELP GROUPS: A KEYSTONE OF MICROFINANCE IN INDIA

This paper examines the SHG operating model, the state of SHGs today, their impact on civil
society (on aspects like politics, social harmony, social justice, livelihoods, etc.) and how they
need to be supported in going forward(Reddy C.S & Manak Sandeep,2005). An analysis of how
the Government, NGOs, Banks and others including the private sector can work together to help
answer the needs to SHGs in an effective manner has been done. The report focuses on the
aspects of the SHG as an effective means to provide financial services to the poor.

The research paper has shown that the financial management of SHGs is average or weak ,
eventually stating that it is vitally important that both government and NGOs work to bear all the
costs of interventions to make them sustainable otherwise the SHGs will be overburdened and
destined to failure. The author has also stated the key areas of SHG financial management that
need to be improved such as internal controls, accounting, organizational efficiency, etc. The
author argues that if the government were to enact policy that would regulate the quality of
SHGs and tied this to their eligibility for SHG Bank Linkage, then this would help bring about a
more measured and responsible growth to the movement.

The author concludes by stating that there is a need for a well developed third party rating
system for SHG federations before they are linked with financial institutions to act as an
intermediary as they handle large volume of funds from the bank linkage and also undertake
savings from their members and that there is a need for establishing a computerized MIS for
SHGs and SHG federations to monitor their performance on a regular basis.

 
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ƒ SELF HELP GROUPS AS FINANCIAL INTERMEDIARIES IN INDIA

This study, which has been undertaken for Sa-Dhan, New Delhi on behalf of ICCO and Cordaid,
supplements studies undertaken by I/C Consult on the self-help group (SHG) landscape in India
(Tankha Ajay,2002). It analyses the role and development of SHGs in financial intermediation
in rural India. The study is based on the experiences of seven leading NGOs involved in the
formation of SHGs and interviews with chief executives and staff of a dozen other major NGOs/
projects promoting SHGs. The study addresses three main issues:

• Efficiency wherein the average cost of SHG promotion both with and without emphasis on
social and political empowerment has been talked about. Also, the caused to the average
promotion costs due to the credit plus approach has been discussed.

• Effectiveness wherein the results of assessment studies of the effects and impact of SHG
Promotion and the results of monitoring indicators of impact has been described.

• Sustainability wherein the kind of sustainability or phase out strategy employed by NGOs is
explained.

The study seeks to achieve an understanding of “best practice” in SHG development in India and
to help direct donor funds for microfinance.

 
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ƒ MICRO-CREDIT PROGRAMME THROUGH SHGs ENSURES SILENT


REVOLUTION IN KEELA MULLAIKUDI PANCHAYAT OF TIRUVERUMBUR
UNION

The major objective of the study is to analyse the micro credit programme operation through
SHGs and to find out the socio – economic conditions of the members with special reference to
Keela Mullaikudi Panchayat of Tiruverumbur Union, Tiruchirappalli District(Xavier Joseph &
Jerome V,2008). Keela Mullaikudi Panchayat of Tiruverumbur Union is a rural area where
programmes are launched to promote economic and social development. The study explores the
operation of micro credit programme and how it influences the rural people and the SHGs to plan
for future target with better organization and effective utilization of resources through SHGs.
The investigator has collected primary data age, family size, educational qualifications,
occupation, income of the respondents with the help of the questionnaire by personal interview.
The researcher aimed to collect the views and opinions of the respondents in order to understand
the appropriateness of ceiling of loan sanctioned, validity of terms of loan, the feasibility of
repaying the loan and interest on loan as well as the standard of operation and general
performance of SHGs.

The study reveals that micro-credit programmes through SHGs are innovative, progressive and
productive and that it brings socio-economic development, undoubtedly. The author has
concluded by saying that SHGs have instilled faith among women to work in vision for their
economic emancipation.

 
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SWARNAJAYANTI GRAM SWAROZGAR YOJANA (SGSY) 

SHORT DESCRIPTION OF THE SCHEME  

Swarnajayanti Gram Swarozgar Yojana(SGSY) is a self-employment scheme. This scheme was


introduced on 1 April, 1999. The principal
aim of this scheme is to bring Below Poverty
Line families to Above Poverty Line status
within three years. It is rooted in the belief
that the rural poor in India have competencies
and, given the right support can be successful
producers of valuable goods/services. SGSY
is conceived as a holistic programme of
micro-enterprises covering all aspects of self-
employment viz. organisation of the rural
poor into self-help groups (SHGs) and their
capacity building, planning of activity
clusters, infrastructure build up, technology,
credit and marketing. One of the most
important components of the SGSY is the
scaling up of micro enterprises in a group
formed of women belonging to below poverty
line families. This component is titled
“Development of Women & Children in Urban Areas” wherein group activities of women
can be sponsored for loan in which fifty percent of the project cost can be given as subsidy as per
the Government of India.

Initially groups are formed with 10 or 15 persons belonging to the BPL families. This group is
called a Self Help Group (SHG) and the individual members of the group Swarozgaris. There is
provision under the scheme to involve local NGOs to help the District Rural Development Cell
in forming such groups.

 
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An Insight Into Self Help Groups  
 

The funds received by the DRDC are kept in a savings bank accounts. The DRDC can open their
account with branches of the principal participating banks in the field. The funds deposited in the
saving account earn interest at the usual rates till the amount is given as loans to the Swarozgaris.

In the first six months the group members are taught to save money i.e. they have to build up a
corpus fund by saving a certain amount every week/month. These savings are kept in a local or
field bank. After six months, the groups are evaluated by a team where the Project Director, a
member of the Block Development Office and a representative of the bank are present. If they
pass the evaluation test they are given Grade I status. At this stage they are paid Rs. 10,000 as a
revolving fund. Individual members can borrow from this money either for business purposes or
for personal consumption. They do not have to pay any interest. They are also given Rs. 15,000
as loan by the bank, which is called the cash credit or matching corpus fund.

After completion of one year, according to performance and again going through an evaluation
process, the group gets Grade II status. After a group gets Grade II status they get credit cum
subsidy facilities. This stage is called bank credit linkage. Subsidy under SGSY is uniform at
30% of the project cost, subject to a maximum of Rs. 10,000. For groups of Swarozgaris (SHGs)
the subsidy is 50%.

   

 
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An Insight Into Self Help Groups  
 

UNDERSTANDING SELF HELP GROUPS 
STRUCTURE OF SHG  
A SHG is a group of about 20 people (usually women) from a homogeneous class, who come
together for addressing their common problems. They are encouraged to make voluntary thrift on
a regular basis. They use this pooled resource to make small interest bearing loans to their
members. The process helps them imbibe the essentials of financial intermediation including
prioritization of needs, setting terms and conditions and accounts keeping. This gradually builds
financial discipline & credit history for themselves, as the money involved in the lending
operations is their own hard earned money saved over time with great difficulty. This is ‘warm
money.’ They also learn to handle resources of a size that is much beyond their individual
capacities. The SHG members begin to appreciate that resources are limited and have a cost.
This process creates an ethic that focuses on savings first. Once the groups show this mature
financial behavior, banks are encouraged to make loans to the SHG in certain multiples of the
accumulated savings of the SHG. This is ‘cold money’. The bank loans are given without any
collateral and at market interest rates. Banks find it easier to lend money to the groups as the
members have developed a credit history. ‘Cold (outside) money’ gets added to the own ‘warm
money’ in the hands of the groups, which have become structures, which are able to enforce
credit discipline among the members. The members have experienced the benefits of credit
discipline by being able to save & borrow regularly without many hassles. The groups continue
to decide the terms of loans to their own members. The peer pressure ensures timely repayments
& replaces the “collateral” for the bank loans. While men very often leave the village to work
outside, makes it difficult to form groups and to meet regularly. They usually end up in heated
discussions and find it much more difficult to come to acceptable decisions regarding fund
allocation among the members. They face the problem of sustainability to a greater degree than
women groups.

 
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SHG BANK­LINKAGE  
A most notable milestone in the SHG movement was when NABARD launched the pilot phase
of the SHG Bank Linkage programme in February 1992. This was the first instance of mature
SHGs that were directly financed by a commercial bank. The informal thrift and credit groups of
poor were recognized as bankable clients. Soon after, the RBI advised commercial banks to
consider lending to SHGs as part of their rural credit operations thus creating SHG Bank
Linkage.

The linking of SHGs with the financial sector was good for both sides. The banks were able to
tap into a large market, namely the low-income households, transactions costs were low and
repayment rates were high. The SHGs were able to scale up their operations with more financing
and they had access to more credit products. SHGs formed on the initiative of the Banking
System (by bank staff or agents) have the overwhelming objective to help SHGs get access to
banking (saving and credit) services to improve the economic condition of their members and to
wean them away from moneylenders. They may be called financial SHGs.

Linked not only to banks but also to wider development programmes, SHGs are seen to confer
many benefits, both economic and social. SHGs enable women to grow their savings and to
access the credit which banks are increasingly willing to lend. SHGs can also be community
platforms from which women become active in various areas, stand for local election or take
action to address social or community issues (the abuse of women, alcohol, the dowry system,
schools, water supply).

 
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PRINCIPLES 
 
The concept of SHG is based on the following principles:

ƒ Self-help supplemented with mutual help can be a powerful vehicle for the poor in their
socio-economic development;
ƒ Participative financial services management is more responsive and efficient;
ƒ Poor need not only credit support, but also savings and other services;
ƒ Poor can save and are bankable and SHGs as clients, result in wider outreach, lower
transaction cost and much lower risk costs for the banks;
ƒ Creation of a common fund by contributing small savings on a regular basis;
ƒ Flexible democratic system of working;
ƒ Loaning is done mainly on trust with a bare documentation and without any security;
ƒ Amounts loaned are small, frequent and for short duration;
ƒ Defaults are rare mainly due to group pressure.

 
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FEATURES OF SELF HELP GROUPS 

The basic concept remaining precisely the same, some additional features and working resilience
have been incorporated in the SHGs for making the concept still more user-friendly and for
achieving the avowed objectives of the SHG concept in its true spirit. The notable features are:
 

  Features of SHGs 
Strategy  ƒ Conceived as a holistic programme of self‐
  employment.  It  covers  all  the  aspects  of 
  self‐employment  of  the  poor,  viz. 
  organizing  them  in  SHGs,  their  capacity 
  building  of  key  activities,  planning  of 
    activity  clusters,  infrastructure  build‐up, 
technology and marketing support. 
SHG Formation  ƒ Specifically  SHG  members  from  BPL 
families  with  some  exception  for  a  few 
marginal  APL  families  if  acceptable  to  the 
BPL members of the group. 
  ƒ Group  size  of  10‐20  persons,  with  the 
exception  of  disabled  persons  where  the 
number of members vary from 5 to 20. 
  ƒ Special focus on the formation of exclusive 
women  Self‐Help  Groups.  50%  of  the 
groups  formed  in  each  block  should  be 
exclusively for women. 
  ƒ SHGs  are  normally  formed  by  NGOs, 
Community‐based Coordinators, or a team 
of  dedicated  functionaries  of  the 
government. 
Income Generating Activities(IGAs)  ƒ SGSY Committee identifies about 8‐10 key 
activities for the groups to choose some of 
them  as  the  sustainable  income‐
generating activity for themselves. 
  ƒ Primarily,  single  income‐generating 
activity  by  the  group  is  given  preference 
under  group  loan.  Group,  however,  may 
go for multiple activities also under group 
loaning.  Thus,  IGAs  are  taken  by  the  SHG 
members as a group activity. 
  ƒ The focus is on the development of activity 
cluster  to  facilitate  forward  and  backward 
linkages to the IGAs. 
   
   
 
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An Insight Into Self Help Groups  
 

Promotional Support  ƒ Revolving  Fund  Assistance(RFA)  is 


(i) Financial Support  provided  to  groups  equal  to  their  group 
(ii) Group  Formation  and  Nurturing  corpus within the prescribed limit. 
Support 
  ƒ Back‐end  subsidy  to  the  extent  of  30%  to 
50%  of  the  project  cost  is  provided  to 
individual  beneficiary,  and  50%  of  the 
project  cost  of  the  group  level  activity  is 
provided within the prescribed limits. 
  ƒ Financial  Assistance  is  provided  to  NGOs 
for promotion and development of SHGs. 
Capacity Building Support  ƒ Fund support is made available to organize 
training of beneficiaries in group processes 
and skill development. 
Infrastructure Building Support  ƒ There  is  planned  focus  on  infrastructure 
build‐up,  technology  and  marketing 
support  to  make  self‐employment  activity 
economically sustainable. 

   

 
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HOW SELF­HELP GROUPS WORK 
The rules and regulations of SHGs vary according to the preferences of the members and those
facilitating their formation. A common characteristic of the groups is that they meet regularly
(typically once per fortnight or once per month) to collect the savings from members, decide to
which member to give a loan, discuss joint activities (such as training, running of a communal
business, etc.), and to mitigate any conflicts that might arise. Most SHGs have an elected
President, a vice-president, a treasurer, and sometimes other office holders.

Most SHGs start without any external financial capital by saving regular contributions by the
members. These contributions can be very small (e.g. 50 Rs per month). After a period of
consistent savings (e.g. 6 months to one year) the SHGs start to give loans from savings in the
form of small internal loans for micro enterprise activities and consumption. Only those SHGs
that have utilized their own funds well are assisted with external funds through linkages with
banks and other financial intermediaries.

Bank gives loans to SHGs either as "matching loans" (whereas the loan amount is proportionate
to the group's savings) or as fixed amounts, depending on the group's record of repayment,
recommendations by group facilitators, etc.

   

 
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HOW DO SELF HELP GROUPs SAVE (BACHAT GAT) 
Among the poor households, the capacity for saving is remarkable and testifies their skill in
efficient utilization of resources and also their ability of setting aside thrift even at extreme low
income levels. The savings account of the group is opened at the Bank forging a future
relationship with the banker. The newly established groups do not start with a loan from the
bank. They start as savers’ groups with regular monthly small savings targets. The savings are
collected during the regular meetings and entered into individual passbooks and the group
passbook. Each member saves identical amount (approximately Rs. 50 to Rs. 100). This
contractual saving system has been introduced by every group visited in the field with the aim to
start developing a basic financial discipline and to build-up an own capital stock as an internal
resource base and to become eligible for a bank loan.

The group aggregates the small individual saving and borrowing requirements of its members,
and the bank needs only to maintain one account for the group as a single entity. The banker
assesses the competence and integrity of the group as a micro-bank, but once he has done this he
does not concern himself with the individual loans made by the group to its members, or the uses
to which these loans are put. He treats the group as a single customer, whose total business and
transactions are probably similar in amount to the average for his normal customers, because
they represent the combined banking business of some twenty ‘micro-customers’. Any bank
branch can have a small or a large number of such accounts, without having to change its
methods of operation.

   

 
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PURPOSE OF GETTING LOAN
All the members get loan for different purposes. The various purposes for which loans obtained
by the respondents are to start business, to educate their children, to meet medical expenses, to
meet marriage expenses, to maintain house expenses, to redeem other loans and to meet festival
expenses.

It paves the way for the empowerment of women and builds confidence in them to stand on their
own feet. The banks provide assistance for various entrepreneurial activities such as setting up
small shops, vegetables shops, tailoring units, charcoal making units, dairies etc.,Besides
focusing on entrepreneurial development and empowering women, SHGs concentrate on all-
round development of the beneficiaries. The concept of SHG moulds women as responsible
citizens of the country achieving social and economic status.

The SHG is a viable alternative to achieve the objectives of urban development and specially
women empowerment. Through the SHG, the micro credit is disbursed to women for the
purposes of making them enterprising women and encouraging them to enter entrepreneurial
activities. The group rotates the money to the needy members for various purposes at a specified
interest rate. As the repayment is cent percent and the recycling is fast, the savings amount
increases rapidly owing to the accumulation of income from interest. The savings habit helps the
members to escape from the clutches of money lenders.

 
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LOAN PROCESSING                                             
Step 1 The Community Organizer identifies the
members who are in need of loans in each
monthly group meeting. Priority is given to the
members or loan basing on regular savings,
repayment behavior, purpose of loan,
attendance in meeting. Duly filled in
application in the prescribed format along with
the credit demand of the clients, description of
the purpose for which the clients need loans
and a signed resolution of the group is
collected by the Community Organizer in the
weekly meeting and forwarded to the Area
Coordinator.
Step 2 The Area Coordinator along with the
Community Organizer scrutinizes the filled in
application form based on the status of internal
lending in the group, prospective loanees’
savings with the group, repayment capacity of
the client, amount of loan, purpose of loan.
Incase the Area Coordinator finds the need of
loan and the submitted documents are not
proper or appropriate, he/she can reject the
loan application. After ensuring that all the
required documents are there along with the
loan application, he/she forwards the same to
the Assistant Branch Manager. The
Community Organizer/ Area Coordinator does
not have any authority to assure a loan to any
of the groups.
Step 3 The Assistant Branch Manager or other bank
officials make visits to all the groups, appraise
them and if satisfied, make a loan proposal and
forward it to the Branch Manager for his
approval.
Step 4 The applications are assessed by the Branch
Manager to authenticate the information. If he
finds them genuine, he approves the loans.
Step 5 All the necessary documents are filled at the
borrower’s level and the loan is disbursed to
the respective borrowing SHG by cheque.
Most importantly, before disbursing a loan to
the group, the bank ensures keeping of all the
 
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An Insight Into Self Help Groups  
 

required information of all the clients of a


group.
Step 6 A computer generated repayment schedule is
prepared in mutual agreement of both the
parties (group & Indian Bank).
Step 7 Repayment starts after one month of disbursal
of loan.

 
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SELF HELP GROUPS ­BANK LINKAGE MODELS 
There are three models of linkage of banks with SHGs and NGOs:

MODEL - 1:

In this model, the bank itself acts as a Self Help Group Promoting Institution (SHPI). It takes
initiatives in forming the groups, nurtures them over a period of time and then provides credit to
them after satisfying itself about their maturity to absorb credit.

MODEL -2:

In this model, groups are formed by NGOs (in most of the cases) or by government agencies.
The groups are nurtured and trained by these agencies. The bank then provides credit directly to
the SHGs, after observing their operations and maturity to absorb credit. While the bank provides
loans to the groups directly, the facilitating agencies continue their interactions with the SHGs.
Most linkage experiences begin with this model with NGOs playing a major role. This model has
also been popular and more acceptable to banks, as some of the difficult functions of social
dynamics are externalized.

BANK 

BRANCH 

NGO 

SHG 

Fig. Model adopted by Indian Bank

 
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MODEL - 3:

Banks finance to Microfinance Institutions for lending to the SHGs. The bank is the lender and
the MFI acts as an agent for handling items of work relating to credit monitoring, supervision
and recovery. In other words, the MFI acts as an agent and takes care of all relationships with the
people. This model is based on the ability of the MFIs to get close to the poor clients while
relying on the financial strength of the bank to safeguard the deposits.  The model has the
potential to significantly increase the amount of funding that MFIs can leverage.

  BANK 

MFI 

SHGs 

 
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COMPARATIVE ANALYSIS OF MICRO­FINANCE SERVICES OFFERED TO THE 
POOR 

Source: R. Arunachalam - Alternative Technologies in the Indian Micro- finance Industry

The number of SHGs linked to Indian bank has increased to 183301 as on March 31, 2009. This
translates into an estimated 2.5 million very poor families brought within the fold of formal
banking services. More than 90 percent of groups linked with banks are exclusive women groups
with savings of 1841.6 lakhs. Cumulative disbursement of bank loans to the SHGs stands at
Rs. 1056.4 crore.

 
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IMPACT OF THE INITIATIVE BY THE BANK: 
The Dharavi branch of Indian Bank which was inaugurated in 2007 has emerged as a powerful
and vibrant movement spread over the length and breadth of this area. As on 30.04.2010 there
are 725 SHGs under this branch of Indian Bank.
Because of the sustained activities under Indian Bank and BMC like SHG formation, training
and skill development, there has been perceptible changes in the social status of women in
general and women of Dharavi in particular. The SHG movement has brought about the
following:

DIRECT EFFECTS OF SHG BANKING include :

ƒ Excellent credit culture, with SHG members fully observing their loan obligations.
ƒ An increase in the bank’s overall repayment rate, due to the influence of the SHG
women members
ƒ Increased overall vibrancy in branch business, due to the economic activities of SHGs
in the villages, very much welcomed by the branches where “large underutilized
capacities” exist
ƒ Substantial decrease in the reliance on moneylenders, many of whom have reportedly
gone out of business, while the remaining ones have tended to lower their interest rate.
ƒ The spreading of thrift among members and non-members, resulting in improvement in
self-reliance and self-financing.
ƒ Propagation of financial management skills
ƒ Their self confidence has been raised to a great extent and there is a sense of economic
security now.
ƒ Increased awareness among poor women about the various welfare schemes of the
Government
ƒ Asset creation among SHG members Decision Making

   

 
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INDIRECT EFFECTS OF SHG BANKING include:

ƒ Increase in school enrolment


ƒ Better health, family planning, support for government programmes
ƒ Income-generating activities undertaken by SHG members
ƒ Access to credit by non-members (at 3% interest per month, compared to 2% to members
and 5% charged by moneylenders).
ƒ Gaining entrepreneurial experience
ƒ Earlier they were confined to the boundaries of their houses only but now they come out
of their houses for monthly meetings and this has made them vocal; during our focused
group discussion we saw 95% of the members raising some issues or another.
ƒ Preparing the ground for direct microenterprise promotion
ƒ Social benefits are reportedly many, attributed to a significant degree to the vibrancy of
the SHG movement and its supporters
ƒ Improved communication skills
ƒ SHGs functioning as alternate conflict resolution mechanism
ƒ Empowerment of women in community development programmes and civic affairs
ƒ Improved women literacy
ƒ Increase in school enrolment
ƒ Improved sanitation and access to drinking water.

 
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INTERVIEW QUESTIONS
AREAS OF ENQUIRY NUMBER PERCENTAGE
AGE
Young(19-30 years)
Middle(31-50 years)
Old(Above 50)
EDUCATION
Illiterate
Primary School
Middle School
High School

INCOME
Annual Income
ƒ Upto 10,000
ƒ 10,000-20,000
ƒ 21,000-30000
ƒ 31,000-40,000

Monthly Income
ƒ Upto 200
ƒ 201-300
ƒ 301-400
ƒ 401-500

Income Generating ACTIVITY UNDERTAKEN by the


SHG Members
• Activity Undertaken
ƒ Eateries
ƒ Groceries
• Reasons for choosing the activity
ƒ Familiarity of women with the activity
ƒ Easy mastering skills involved
ƒ Raw materials easily available
Constraints faced by SHG Members
ƒ Not getting adequate quantity of raw materials at the
right time
ƒ Lack of space for storage of materials
ƒ Difficulties in sale of prepared products
ƒ Misunderstandings amongst SHG members
ƒ Not getting adequate credit
ƒ Maintenance of accounts
ƒ Difficulties in diversification of activities

 
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OUTREACH:

Membership:

ƒ How many women have joined ?


ƒ Exclusion: reasons for not joining?
ƒ Dropouts: how many drop out ? and why?
ƒ Number of years of operation.

MAIN ACTIVITY:

ƒ What are the main activities undertaken by the group members?


ƒ Why were these activities chosen:
- familiarity of women with the activity
- easy mastering skills involved
- low input cost
- easy availability of raw materials

MEETINGS:

ƒ How many times in a month are the meetings held?


ƒ What is the average attendance in the meetings?
ƒ Are the members punctual?
ƒ Do all the members actively participate in the meetings?

LEADERSHIP:

ƒ Whether the leaders have been elected and rotated?


ƒ Whether there is a conscious attempt to groom other members to take up leadership?

RECOVERIES:

ƒ What is the pattern of loan repayment & what happens in case of default(if any)?
ƒ Number of external borrowings since group formation?

SAVINGS:

ƒ Are they saving regularly?


ƒ Is there an increase in the saving amount?

 
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AWARENESS LEVEL OF MEMBERS:

ƒ What is the awareness level of the group members about the groups’ activities-loan
amount, savings amount, bank loan details, etc.
ƒ Do they feel the benefits? If yes, what kind?

GROUP MEMBERS:

ƒ Family linkages within SHGs.


ƒ Homogeneity by caste of SHG members.
ƒ Schooling of SHG members.

LOAN AMOUNT and OTHER CONSTRAINTS:

ƒ Is there equal distribution of bank loan?


ƒ Is the loan size adequate?
ƒ What are the constraints faced by them?

   

 
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EVALUATION SHEET FOR SHGs 
Evaluation Parameters Variables Weightage
Group Size a. Less than 10 members 5
b. 10-15 members 8
c. 15- 20 members 10
Number of years of operation a. 1-3 years 5
b. 4-5 years 8
c. More than 5 years 10
Meetings I. Monthly
a. 1 meeting 5
b. 2-3 meetings 8
c. 4 meetings 10
II. Regularity
a. Irregular 5
b. Regular 10
III. Timings
a. Afternoon 3
b. Morning 5
c. Evening 8
d. Night of after 7pm 10
Average attendance a. Less than 50% 3
b. 50%-70% 5
c. 70%-90% 8
d. More than 90% 10
Participation a. Low 3
b. Medium 5
c. High 10
   

 
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Loan Recovery a. Nil recovery since no loan was


given for more than 6 months 3
b. Dues recovered less than 70%
c. Dues covered 70% to 90% 5
d. Dues recovered more than 90%
8

10
Savings Amount saved
a. 50/- 5
b. 100/- 8
c. 150/- 10
Frequency in a month
a. Once 3
b. 2 times 5
c. 3 times 8
d. 4 times 10
Regularity
a. Irregular 5
b. Regular 10
Intra lending rate
a. Nil 0
b. More than 36% 5
c. 24%-36% 8
d. Depending upon the purpose 10
Utilization of the loan Amount
e. No utilization 0
f. Partial utilization 5
g. Full utilization 10
   

 
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Awareness level a. Low 3


b. Medium 5
c. High 10
Homogeneity by caste a. Homogenous 8
b. Mixed group 10
Family linkages a. Yes 8
b. No 10
Education level a. Less than 20% having functional 3
literacy
b. 20%-50% 5
c. More than 50% 10
Documentation (Maintenance, a. Bad 3
upkeep, Custody, etc.) b. Medium 5
c. Good 10
Accumulated savings a. Less than 2000/- 3
b. Rs. 2000/- to Rs. 3000/- 5
c. Rs. 3000/- to Rs. 5000/- 8
d. More than Rs. 5000/- 10
Records maintained a. Attendance register 1
(Each record maintained gets 1 b. Minutes book 1
point) c. Loan ledger 1
d. Savings ledger 1
e. Cash book 1
f. General ledger 1
g. Bank pass book for the group 1
h. Receipts voucher file 1
i. Payments voucher file 1
j. Visitors book 1

 
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Evaluation.xlsx

 
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The SHG which has received the maximum marks in the evaluation process is:

OM SAI MAHILA UTPADAK GAT no. of women-10 

AREAS OF ENQUIRY NUMBER OF WOMEN


AGE
Young(19-30 years) 4
Middle(31-50 years) 6
Old(Above 50) -
EDUCATION
Illiterate -
Primary School 3
Middle School 6
High School 1

INCOME
Annual Income
ƒ Upto 10,000 -
ƒ 10,000-20,000 2
ƒ 21,000-30000 7
ƒ 31,000-40,000 1

Monthly Income
ƒ Upto 200 1
ƒ 201-300 1
ƒ 301-400 2
ƒ 401-500 6

Income Generating ACTIVITIES UNDERTAKEN by the SHG


Members(more than one)
• Activities Undertaken
ƒ Manufacturing of toys. 5
ƒ Catering 3
ƒ Tiffin Service 2
ƒ Buying and selling of sarees from Surat 2
ƒ Buying and selling of towels 4
ƒ Broom making 6
ƒ Buying of grains in bulk and selling them, gaining the 6
margin
• Reasons for choosing the activity
ƒ Familiarity of women with the activity 7
ƒ Raw materials easily available 3
   

 
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OUTREACH: 

ƒ Formed in 2005 comprising of 10 women members


ƒ There have been 2 dropouts since its formation, reasons for the dropouts being a death
and an operation after which she quit from the SHG.
ƒ This group has been operational since 5 years and therefore, it can be said that the
members of this SHG are quite compatible with each other.

These women earlier had their accounts at Bank Of Baroda but didn’t receive the loan amount
even after 3 years, as against Indian bank which sanctioned the loan amount in just 10 months.

A sum of Rs. 10,000/- only had been provided as revolving fund by the government after six
months of formation of the SHG.

MAIN ACTIVITIES: 

ƒ Manufacturing of toys.
ƒ Catering
ƒ Tiffin Service
ƒ Buying and selling of sarees from Surat
ƒ Buying and selling of towels
ƒ Broom making
ƒ Buying of grains in bulk and selling them, gaining the margin.

These activities were chosen by the members due to the familiarity of women with the activity
and easy availability of raw materials.  

These women had been given training by “Savita Bai Phule Sanstha” on:

ƒ File making,
ƒ Broom making,
ƒ Parlor work,
ƒ Basic computer training, and
ƒ Cooking
 

   

 
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MEETINGS: 

ƒ Meetings of the group take place once in a month before the 15th day of the month.
ƒ The group members are reported to have an average of more than 90% attendance in
the meetings, members being punctual and actively participating in the group discussions.

LEADERSHIP:

ƒ The President of this group is Mrs. Kavita Savant. She had been elected by the group
members at the inception of the group formation.
ƒ Since the group members share a good relation amongst themselves, they feel that there
have been conscious attempts to groom other members to take up leadership.
ƒ There has been no rotation of the positions of President, Secretary and Treasurer since
the group formation.

RECOVERIES: 

ƒ An amount of 4400 is deposited every month in the bank as part of repayment of the loan
amount of 1.25 Lakhs. There have been no defaults in the repayment of the loan amount
till date.
ƒ No external borrowings have taken place since the group formation as the members feel
that high amount of interest rates are being charged by moneylenders.

SAVINGS: 

ƒ Apart from the repayment of the loan amount, the members save Rs. 100 per month and
there has been no increase in this amount since the inception of the group.

AWARENESS LEVEL OF MEMBERS: 

ƒ The members have full awareness about the groups’ activities-loan amount, savings
amount, bank loan details, etc.
ƒ The benefits felt by them are as follows:
9 Increase collective savings which help them during contingencies
9 Feeling of being secure in a group
9 Interest obtained on the savings
9 Able to meet contingencies.
9 Increase in assets
9 Social Empowerment

   
 
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GROUP MEMBERS: 

ƒ There is no family linkage within the SHG


ƒ There is homogeneity by caste of the SHG members, all members being Hindu (sub-
castes are different).
ƒ 30% of the SHG members have primary education, 60% have education till middle
school and 10% have schooling till high school.

LOAN AMOUNT and CONSTRAINTS: 

ƒ There has been equal distribution of bank loan among the members.
ƒ The members feel that the loan amount is adequate as they get free training in various
activities which helps them in enhancement of their skills.

The group members are happy with the SGSY scheme launched by GOI for the betterment of
families living below the poverty line.

   

 
48 
 
An Insigh
ht Into Self Help Group
ps  
 

KEY AC
CTIVITIES
S
Funding diverse actiivities aims to identify few select activities
a andd provide coomplete rangge of
developm
mental suppo
ort which includes markket survey, credit,
c technoology and trraining leading to
skill up gradation and
a establishhment of foorward and backward linkages.
l Thhe choice of
o the
activity, throughout the processs, is guided by the viabbility, readyy market, avvailability of
o the
required infrastructu
ure and the local resourcces, the aptittude and skiill profile off the womenn and
ready maarket for the products. The
T potentiall to generatee appreciablle incrementtal incomes that
could heelp women cross
c the pooverty line iss also a basis.

The SHG
G movemen
nt has led too wide spreaad economicc empowerm
ment of poorr women. Today
T
SHGs arre involved in multifarioous econom
mic activitiess with substaantial success. A few of
o the
successfuul ventures among
a the many
m undertaaken by SHG
Gs with whoom interactioon had been done
are :
ƒ Selling of reeady made garments liike low cosst ladies weear at “Aaddhar Kendraa” in
B
BrihanMumb
bai Municipaal Corporatioon
ƒ W
Working as Community
C O
Organizer inn BrihanMum
mbai Municiipal Corporaation.
ƒ B
Buying of graains and oil in
i bulk and selling
s at Dhharavi, therebby gaining margins
m
ƒ Selling of eatteries like vaada pao, sweeets, idli , chaapati, puri bhhaji, etc.
ƒ M
Making of incense stticks and
perfumes
ƒ R
Running partmental stores,
Dep
ƒ C
Canteens,
ƒ C
Catering
ƒ Sewing
ƒ T
Tiffin Servicee
ƒ Selling dairy products
ƒ Selling fruits
ƒ M
Making drink
ks like cocum
m, etc.
ƒ T
Tailoring
ƒ E
Employed in old age hom
mes
ƒ M
Making of leaather goods

 
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An Insight Into Self Help Groups  
 

CAPACITY BUILDING OF SHG MEMBERS 
 
All the swarozgaris are provided an opportunity to better their practical, serviceable and
entrepreneurial skills through one or two days orientation programme. In this basic orientation
training, the beneficiaries are familiarized with the goals, responsibilities, and aspects of book
keeping.

SHG members interviewed to collect data for this study were also asked questions to collect
information about the training programmes they underwent during the last one-year.

The data reported clearly points out that the highest priority was accorded to the training
programme for technology education (Income Generating Activity related) and SHG awareness
creation. Next in priority was the training on book-keeping which was organized.

SHG TRAINING 
The processes of group formation and training are critical stages for stability of the group.
Training includes teaching rules and regulations governing bank procedures and administrative
requirements, maintenance of book of accounts, rules for internal lending and repayment of
loans, keeping the group fund intact (trust is essential in relations with the bank and among
group members), knowing in detail the responsibilities of the President, Secretary and Treasurer
of the group, the potential of own savings or learning to write one’s signature. Community
organizers do this job during 4 to 5 visits to a newly formed group. Book keeping is usually
given to a knowledgeable and trustworthy person.

ENTREPRENEURSHIP DEVELOPMENT TRAINING : 
ED training is conducted by Savita Bai Phule Sanstha to expose the SHG women to various
business opportunities and to motivate them to start economic activities. Training related to the
following has been given :
ƒ File making,
ƒ Broom making,
ƒ Parlor work,
ƒ Basic computer training, and
ƒ Cooking.

 
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SKILL UPGRADATION TRAINING PROGRAMME : 
BrihanMumbai Municipal Corporation has taken the initiative to provide skill training to SHG
women so as to enable them to start their own income generating activities. The duration of the
training and the cost depends on the nature of the trade selected by the members.

AWARENESS PROGRAMME : 
Akshara Organisation conducts “Barefoot Counselling” for the SHG women wherein women
are given lessons to enhance their knowledge on womens’ right. It is a BrihanMumbai Municipal
Corporation initiative.

 
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IMPACT OF SHGS ON SWAROZGARIS 

Self-employment is a significant step to have sustained incomes and remove the shackles of
poverty. During the study, adequate attention was given to cover various aspects of the program
and understand the impact of the support on the slated objectives. Detailed information was
collected on the income generating activities being undertaken by the groups and analysis done
on the benefits percolated. The contribution of the scheme in creating sensitivity towards health
and hygiene, fostering entrepreneurial skills, etc was also analyzed. The concern of the group for
livelihood security was inferred from their behaviours like taking interest in planning and
initiating income-generating activities, inter-loaning and taking interest in the outreach activities
and securing bank credits, etc. Primary data as well as the secondary information has been used
to measure the programme performance and its impact.

The findings, inferences and results of the survey based on the results of questionnaire canvassed
among the group members and on the interviews and discussions held are as follows:

ƒ Incremental employment: Various economic activities have been pursued by the


groups. Activity wise analysis of incremental employment and income suggests that the
women involved in activities like selling eateries which require lesser amount of forward
and backward linkages have been more successful. The activities requiring more linkages
and service inputs have not been successful to that extent.
ƒ Impact on Poverty: The assistance under SGSY was found to have enabled the SHG
women enhance their earnings. However, these incremental levels of income are largely
due to the low level of earning prior to interventions under SHG. As such a small
increase in income has resulted in a significant rise in the group income. The
employment activity taken up by some SHG women ranged from 8 days to 11 mandays
per month.
ƒ Occupational Preference: These women have taken low risk loans to support their
activities. Though service sector is a more attractive source of employment and income,
in the urban areas, it was not actively pursued by them.
ƒ License: Licenses have not been granted to these women by the Municipal Corporation.
The concept is at its infancy and has to be properly nourished

 
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ht Into Self Help Group
ps  
 

ƒ W
Workload: The
T purposee behind thee idea of revvamping poor people's activities was
w to
reeduce the en
normous worrkload that poor
p women especially carry
c in theirr multiple rolles as
reeproducers and producers.
Itt was hoped
d that the new
w
Leeadership  Decision 
Emplo
oyment E
Empowerment
acctivities would b
be Quality Making

suufficiently productive
p f
for
thhem to earn
n better incomes
w
with less ph
hysical labouur. Instead, in the intterviews wiith the beneeficiaries, itt was
reepeatedly pointed out by the woomen how joining
j the SHGs hadd increased their
w
workload. Th
his was maiinly becausee joining thhe SHGs hadd provided them with some
suupplementarry work, but the new activities couldd not generatte enough inncome for theem to
give up any of
o their earlieer tasks.
ƒ F
Financial Sta
atus: The financial statuus of househholds had im
mproved duee to improveement
inn access cred
dit. Additionnal family inncomes to members
m rangge from Rs.1000 to 3000 per
annnum depen
nding on the income gennerating activvities. Increaase in incom
me has been spent
onn better nutrrition of Chilldren and onn the health care.
c
ƒ In
ncrease in awareness levels about the society led too planting trees,
t conserving
ennvironment, campaign against
a eraddication of social
s evils like
l dowry, child marriiages,
crrime againstt girls and women, untouuchables, Aidds and suppoort to widow
ws and destitute.
ƒ T involvem
The ment of the poor in the SHGs had significantly contributeed to their social
s
em
mpowermen
nt, as witneessed by thee improvem
ment in theirr confidencee, their treattment
w
within the fam
mily, their coommunicatioon skills andd their other behavioural changes.
ƒ In
ncrease in the assets ow
wned by them
m.
ƒ SHG memberrs' family problems as well
w as sociall problems afffect their SH
HG activitiees.
ƒ T social an
The nd economic status has im
mproved.
ƒ T
There are imp
provements in
i school ennrolment, atteendance, sannitation facillities, etc.
ƒ A
Access to creedit has enabbled women to
t undertakee income gennerating activvites.

 
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ROLE AND PERCEPTION OF KEY STAKEHOLDERS 
For successful implementation of the concept of SHGs, clarity and a common platform in the
perception of all the stakeholders is required. The important stakeholders in the program are
Bankers, Area Coordinators, Community Organisers and NGO. It is clearly spelt out in the
programme guidelines what each stakeholder at every stage of the program has to do. In
establishing the micro enterprises, the emphasis has to be on the identification of key activities.
The following were the some of the important observations regarding the role and perception of
various stakeholders involved in the programme implementation:

BANKERS 
Close association of bankers at all stages of programme implementation right from identification
of key activities, selection of SHGs and planning for all the elements of key activities, post credit
monitoring and loan recovery is important for the success of the SHG concept. The bankers in
the study region had a positive perception regarding programme implementation.

BRANCH MANAGER 

His interest, attitude and level of commitment critically decided the degree of success of the
programme. The programme design and the guidelines had given this functionary the authority,
discretion and financial resources to operationalise his decisions.

The discussions with him in the study suggested that only some of them were able to play this
role successfully in respect of a few activities, particularly in planning for infrastructure, forward
and backward linkages. His leadership has played a decisive role in the key activity
development and building its viability. His expertise, capabilities and aptitude made all the
difference in the success of the programme. His capacities to build market infrastructure,
integrate / network with other public programmes for market development, workout partnerships
with public / private institutions, provide access to technology proved to be pivotal to the
programme.

 
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The findings based on the unstructured interviews held with the bank officials are as follows:

ƒ The problems of the members of SHG's were solved by the proper guidance of the NGO
in the study area.
ƒ Accounts are properly maintained and audited and the system of collecting money is
good, that is, the problems of the members in the SHGs are solved by the effective
functioning of the SHGs in the study area.
ƒ SHGs promote a sense of oneness. Women empowerment is possible through SHGs and
it creates a sense of confidence, that is, women empowerment has been created with the
help of SHG's in the study area.
ƒ SHGs function in a democratic manner and transparency in SHG functioning is
maintained.
ƒ Adequate facilities for savings are provided and the rate of interest (12.5% p.a.) is
reasonable.
ƒ Bank procedures are easy to follow and adequate funds are available from Bank.
ƒ The average value of the household assets, which includes consumer durables and the
like has increased in the post-SHG stage. The housing conditions have generally
improved with a shift in the ownership from Kuchha to Pucca houses.
ƒ Almost all the members had developed the savings habit in the post-SHG situation
ƒ Self Help Groups enhance the equality status of women as participants, as decision
makers and as beneficiaries in the economic, social and cultural spheres of life. Self help
groups encourage women to take an active part in the socioeconomic progress of the
nation.
ƒ The SHGs collectively ensure prompt repayment of the bank loans. The SHG have thus
provided access to credit for the urban poor. The transaction costs are low, because of
the constant and effective supervision, the proper utilization of the loans and the
repayments of the loans.

 
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AREA COORDINATOR & COMMUNITY ORGANISERS 
It was heartening to note that the Area Coordinator felt they had adequate flexibility, discretion
and access to fund support to implement the programme. The area coordinator felt that bankers’
cooperation was absolutely necessary for the successful programme implementation. The
synopsis of the interaction with the area coordinator is given below:

ƒ The hallmark of the SHGs promoted by BMC and the primary reason for their success is
the systematic training provided to SHG members, which leads to qualitative changes in
their attitude and behaviour.
ƒ The most critical learning is that even uneducated women can take up higher
responsibility, when one gives the right autonomy and environment to them. The
existence of such a large number of SHGs at Indian Bank is a great proof, in which belief
in business and leadership acumen of the women was given a priority in formal training.
ƒ The sense of ownership among the SHG members is an important factor in its success.
This has helped them in achieving efficiency in operations and reaching a scale with
uncompromising quality. The labour intensive and familiar nature of the activity chosen
has led to the success of the initiative. The diversification into new activities is a well
thought out decision wherein the skill set of the people is taken into consideration. The
thrusting of activity to people through and capacity building can have chances of failure
though.
ƒ The critical aspect of catering to the market demand and tapping the same is evident.
Since it is necessary that the market for products should be identified first so that a
continuous cycle of production and sale is maintained, the required support is given by
them. This helps in building confidence in the beneficiaries to engage themselves in a
sustained manner. Large scale operation also requires establishment of forward and
backward linkages for easy and smooth operations.

 
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RECOMMENDATIONS 
ƒ Distance Learning:
In the study it has been reported that the members of the Groups were not fully literate
and were not able to read and write. The handicap of literacy is a hurdle for achieving
many desired results. For example, they are unable to follow the accounts maintained by
the group and hence remain ignorant about the amount pooled individually and in the
group, and are be unable to draft an application to represent their case. It is therefore
essential to provide them education through especially designed modules e.g. through
distance education that are directly useful as a member of SHG.

On the face of it, Distance Education appears per se a ‘women friendly’ form of
acquiring education and formal qualifications. There are two characteristics which are
generally seen to render this mode of learning especially suitable for women, by making
distance education compatible with other spheres of life. First, there is no attendance
requirement, Second, at the same time, there is a high degree of flexibility in learning
schedules and time management. These characteristics have three distinct and undisputed
advantages for the distant student. Since, the distance-teaching curriculum is designed for
independent study if can well fit with family commitments and living at home. Learning
material should be sent to the women at their home or workplace, they can learn while
they earn and the NGO may provide them the required tuition wherever they desire.

ƒ Group based strategies: At this stage they do not need school or university certificate,
Diploma or degrees. They need improvement in their professional skills and solving their
day-to-day problems in the working and functioning of SHGs. They should be explained
the advantage of group based strategies in poverty alleviation. It is important to explain
that she is not alone and that such problems are being faced universally. Only by self-help
they may fight against their misfortune and improve upon the fate of their family and
children.

 
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All these problems, opportunities and chances can be explained to women through a short
duration training module delivered at their doorstep or work place. At the initial stage
certain problems and resistance from the participants may be faced if some extra time and
money is demanded. It is therefore suggested that the benefits should be linked with the
Distance learning modules and subsidies should be in the form of distance education
and not cash.

ƒ Differential Rate of Interest: It has been observed in several research studies that
women do experience a double day, as they return to work combined with their domestic
roles. The Policy planners must think to integrate the economic benefits with education. I
suggest the Differential Rate of Interest (DIR) for women doing any Course through
Open schools or any other mode of Open and Flexible learning.

ƒ Self Help Study Groups: A UNICEF study (1998) on Violence against women in South
East Asia concluded that compulsory schooling for all girls would be a long-term
measure to reduce violence against women by providing them qualifications as the basis
for getting a job which in turn will enable them to earn their own income and improve
their status. Thus the SHGs should in-fact also be converted into Self Help Study Groups
that will give them not only enhanced income but also enhanced esteem and self
confidence to do something meaningful for the society as a whole. They should realize
that they are not isolated and unproductive but an important wheel for the smooth running
of the society. The economic incentives and effective NGOs participation will definitely
make the women empowerment a reality. All this demands some extra time and money.

ƒ A top-down approach: Policy makers need to appreciate the fact that, the poor do
intensely use the limited knowledge and experience at their command. If their lives are to
be changed significantly, then outside agencies have to bring in substantial inputs of a
kind that they want but cannot get. For this it is important to find out what they do know
and have. It is only then that schemes can be devised that can give right inputs in right
quantities. Jobs, not micro credit, is the solution.

 
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ƒ At present, the gestation period of the SHGs to get through the grading process and avail
the loan for economic activity is almost one year. It has been reported that some SHGs
have not got loan from the bank even after more than one year of its formation and group
activities. Therefore, the grading exercise should be given to an independent agency to
reduce time.
ƒ Motivation training for income-generating activities and technological training for
capacity building should be organized by competent agencies with greater seriousness,
and, therefore, identification of good training institutions/ master trainers and developing
a system for evaluation of training conducted by them should be done by the NGO.

Women of dharavi are poor not because they do not work, but because they work on low
productivity work. So, to improve their condition, they should be given:
– Thorough analysis of market opportunities to find out what production is to be
encouraged in each area.
– The skills required for activities to generate those products; these are to be modern
professionally imparted skills.
– Technical expertise to acquire the required tools.

ƒ There must be lot more publicity given among the potential beneficiaries about the
scheme and its contents as well as the authorities in charge and their responsibilities. That
way the targeted population can seek help. For this extensive use should be made of all
forms of media and particularly of the visual media.
ƒ Generating awareness about the schemes and its benefits so that the aim that people’s
quality of life after joining the SHGs significantly improve and they are not overburdened
with poorly remunerated extra work is achieved.
ƒ For empowerment of women it is essential that the attitudes and perceptions of organizers
be radically changed. Women must be seen not just as reproducers and home makers and
supplementary earners but as productive members of the economy and society
ƒ Wherever the group is not cohesive, interpersonal differences should be removed through
counseling and organizing special training programmes for them.

 
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ƒ Training programmes on
– Health education
– Formal education for school going, school dropout children and
– Awareness about prevalent social evils should be given adequate priority
ƒ The NGOs should actively help the SHGs in both backward and forward linkages and
provide them market support in particular.
ƒ The subsidy provided under the SGSY programme should be discontinued and the
amount should be spent on creating market support to the SHGs for their Income
Generating Activities, products and also provide some sort of reward to the successful
SHGs as an incentive for good work.

 
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CONCLUSION 

The women led SHG's have successfully demonstrated that they could mobilize and manage
thrift, better appraise their own credit needs and enforce financial self discipline among them.
The present research study of women self-help groups has revealed that these women groups had
gained confidence among them and had mostly brought about the attitudinal changes and had
transformed their social outlook among its members. The self-help groups in this area have
emerged as a new paradigm for eradicating poverty. These groups have enhanced the equality
status of the women folk as participants, decision-makers and beneficiaries in the democratic,
economic, social and cultural spheres of their lives and sensitized the women members to take a
very active part in the socio-economic progress. Their ingenuity in the endeavour to survive
appears inexhaustible. Common to them is the competence to make a living from it.

Some valuable lessons can be drawn from the experience of this successful Microfinance
operation. First of all, the poor repay their loans and are willing to pay for higher interest rates
provided that access to credit is provided. The solidarity group pressure and sequential lending
provide strong repayment motivation and produce extremely low default rates. Secondly, the
poor save and hence microfinance should provide both savings and loan facilities. These two
findings imply that banking on the poor is a profitable business. However, attaining financial
viability and sustainability is the major institutional challenge. In order to be sustainable,
microfinance lending should be grounded on market principles because large scale lending
cannot be accomplished through subsidies.

Poor people are reliable and honorable. They are aware, the only way to combat their problem of
poverty and dependence is by acting together as a group. Their ideas centre around the most
rational use of money and on the collective production of goods and services. The most preferred
input is credit. Credit is a catalyst. It comes and goes but leaves behind some changes

Women empowerment aims is possible only when a woman has increased access to economic
resources, more involvement through social relationships and participation, more self-motivation
and confidence, and more say in the family matters. Women should be willing to take additional
effort for building a mind set which is suitable for their overall empowerment. It is a gradual and
consistent process which requires the support of many in one way or other.
 
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A major conclusion is that this financial scheme is a unique contribution to microfinance. The
SHGs are not “used” by banks to channel a bulk loan to several poor people in a “single-size-
fits-all” kind of methodology with all members benefiting equally. This was the predominant
retail delivery system at the start up phase in which Microcredit has been delivered to groups in
different countries. In SHG-Banking, the central assumption underlying this banking by the
people is the firm belief that the SHGs of the poor are reliable partners in handling bank funds,
they will always pay back their loans and they are much more creative in allocating the loan fund
among their members than any outside agency because they know the character and capacity of
every person very intimately. Therefore, full autonomy is given to them by the Bank to decide,
to which member a loan is given and how to make it best fit for them (“tailor made”) in terms of
purpose, amount, duration, size of installments, interest rates etc.

The good performance of the SHG-Banking Programme at Indian Bank is due to its strategy to
mobilize underused capacities of the target group. At last I would conclude by saying that
“SHG-Banking is an ideal combination of the formal banking sector’s “banking with the
poor” and “banking by the poor” .

 
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APPENDIX 

Interview Templates  

 
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SIDDHIVINAYAK MAHILA BACHAT GAT 

The group was formed in 2004 comprising of 10 women. There have been two dropouts since
the inception, reasons a death and a transfer to village. The President and cashier of this group
are Ms. Madhura Tukaram Patil and Mrs. Sushma Birje respectively. They had been elected by
the group members at the inception of the group formation. There has been no rotation of the
positions of President, Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 150 per month and there has been no increase in this amount since the
inception of the group.Five members of this SHG also deposit Rs. 20 in Patthpeedi every day.
The SHG women feel that the loan amount is inadequate and that they would require a larger
amount of loan for expansion of their activities.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Preparation and selling of eateries-snacks.


ƒ Catering
ƒ Tailoring
ƒ Employed in Old Age Home

30% of the SHG members have primary education, 40% have education till middle school and
30% have schooling till high school. The income per month of 80% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of space for storage, and difficulty
in diversification of activities and that though the loan amount has been granted to them, no
license for undertaking any activity has been granted to them by the Brihanmumbai Municipal
Corporation.

 
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SWAYAM MAHILA BACHAT GAT 

The group was formed in 2009 comprising of 10 women. There have been no dropouts since the
inception. The President of this group is Ms. Shweta Goutam Pawar. She had been elected by
the group members at the inception of the group formation. There has been no rotation of the
positions of President, Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 50 per month and there has been no increase in this amount since the
inception of the group.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Food Supply at Kindergarten school


ƒ Supply of ladies inner garments
ƒ Supply of ladies nightwear

The main reasons for choosing these activities have been the familiarity of women with the
activities ,easy availability of raw materials and easy mastering skills involved.

30% of the SHG members have primary education, 60% have education till middle school and
10% have schooling till high school. The income per month of 60% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of difficulty in sale of products
due to lack of marketing and not getting adequate quantity of raw materials at the right time.

 
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UNNATI MAHILA BACHAT GAT 

The group was formed in 2007 comprising of 15 women. The President, Secretary and Cashier
of this group are Mrs. Ranjana Manohar Katke, Mrs. Shubhangi Patil and Mrs. Sumitra
respectively. They had been elected by the group members at the inception of the group
formation. There has been no rotation of the positions of President, Secretary and Treasurer
since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 100 per month and there has been no increase in this amount since the
inception of the group. The SHG women feel that the loan amount is highly inadequate and that
they need a loan of Rs. 25,000 per member to start and sustain their respective businesses.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Making of Leather Belts.


ƒ Catering
ƒ Making of Leather bags

The main reasons for choosing these activities have been the familiarity of women with the
activities and easy availability of raw materials. Also these activities can be undertaken even
from home.

30% of the SHG members have primary education, 40% have education till middle school and
30% have schooling till high school. The income per month of 80% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of space for storage of the raw
materials, and difficulty in diversification of activities .The group members are satisfied with the
SGSY scheme launched by GOI for the betterment of families living below the poverty line.

 
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JUDAANI MAHILA BACHAT GAT 

The group was formed in 2007 comprising of 15 women. The President of this group is Mrs.
Alka. She had been elected by the group members at the inception of the group formation. There
has been no rotation of the positions of President, Secretary and Treasurer since the group
formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 100 per month and there has been no increase in this amount since the
inception of the group. The women of this group feel that the loan amount is inadequate and that
they would require a loan of atleast Rs. 50,000 in order to start a concrete activity.

ACTIVITY:

The major activity undertaken by this group is:

ƒ Buying of grains and oil in bulk from Vashi and selling them at Dharavi, gaining a
margin of Rs. 2 per kg.

The main reasons for choosing these activities have been the familiarity of women with the
activities and easy availability of raw materials.

30% of the SHG members have primary education, 50% have education till middle school and
20% have schooling till high school. The income per month of 70% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of space for storage, and
inadequacy of credit.

The group members are happy with the SGSY scheme launched by GOI for the betterment of
families living below the poverty line.

 
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SUVIDHA MAHILA BACHAT GAT 

The group was formed in 1996 comprising of 10 women. There have been three dropouts since
the inception. The President of this group is Mrs. Naina Bhanishirge. She is a Community
Organizer for a NGO and had been elected by the group members at the inception of the group
formation. There has been no rotation of the positions of President, Secretary and Treasurer
since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members used to save Rs. 50 per member per month, now save Rs. 100 per month. The SHG
women feel that the loan amount is inadequate and that they would require a larger amount of
loan for expansion of their activities.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Selling of eateries like idli, puri bhaji, chapatti,etc.


ƒ Catering
ƒ Tailoring

The main reasons for choosing these activities have been the familiarity of women with the
activities and easy availability of raw materials.

20% of the SHG members have primary education, 60% have education till middle school and
20% have schooling till high school. The income per month of 60% of the group members
reportedly lies within the range of 400-500.  The group was provided training masala
making,etc.

Majority of the members have reported to face the constraint of space for storage, and difficulty
in sale of prepared products as the orders for catering are irregular.

 
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OM SAI MAHILA BACHAT GAT 

The group was formed in 2005 comprising of 10 women. There have been two dropouts since
the inception. The President of this group is Mrs. Kavita Savant. She had been elected by the
group members at the inception of the group formation. There has been no rotation of the
positions of President, Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 100 per month and there has been no increase in this amount since the
inception of the group.

These women earlier had their accounts at Bank Of Baroda but didn’t receive the loan amount
even after 3 years, as against Indian bank which sanctioned the loan amount in just 10 months.

A sum of Rs. 10,000/- only had been provided as revolving fund by the government after six
months of formation of the SHG.

The members feel that the loan amount is adequate as they get free training in various activities
which helps them in enhancement of their skills.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Tiffin service.
ƒ Catering during diwali
ƒ Buying and selling of towels thereby gaining margins
ƒ Buying of grains in bulk and selling them, gaining the margin.

The main reasons for choosing these activities have been the familiarity of women with the
activities and easy availability of raw materials and low input costs.

 
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30% of the SHG members have primary education, 60% have education till middle school and
10% have schooling till high school. The income per month of 80% of the group members
reportedly lies within the range of 400-500.

These women had been given training by “Savita Bai Phule Sanstha”

ƒ File making,
ƒ Broom making,
ƒ Parlor work,
ƒ Basic computer training, and
ƒ Cooking.

Majority of the members have reported to face the constraint of space for storage of the grains
they buy for selling in the Dharavi area.

The group members are happy with the SGSY scheme launched by GOI for the betterment of
families living below the poverty line.

   

 
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SWAMI SAMARTH MAHILA BACHAT GAT  

The group was formed in 2005 comprising of 10 women. There have been no dropouts since the
inception. The President, secretary and cashier of this group are Mrs. Suhasini Ambolkar, Mrs.
Sulochana and Mrs. Reshma respectively. They had been elected by the group members at the
inception of the group formation. There has been no rotation of the positions of President,
Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 100 per month and there has been no increase in this amount since the
inception of the group. The SHG women feel that the loan amount is inadequate and that they
should be granted Rs. 25,000 individually so that they could start their own business.

ACTIVITIES:

The major activities undertaken by this group are :

ƒ Making Cloth Bags.


ƒ Making Perfumes.
ƒ Making Incense sticks
ƒ Sewing

The main reasons for choosing these activities have been the easy mastering skills involved for
these activities and that they could be made at home, even in small quantities.

30% of the SHG members have primary education, 30% have education till middle school and
40% have schooling till high school. The income per month of 50% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the constraint of credit inadequacy.

   

 
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LAKSHMI MAHILA BACHAT GAT 

The group was formed in 2005 comprising of 10 women. There have been no dropouts since the
inception of the group in 2005. The President, Secretary and Treasurer of this group are Mrs.
Ranjana Pawar, Mrs. Suhasini and Mrs. Suparna Kadam. They had been elected by the group
members at the inception of the group formation. There has been no rotation of the positions of
President, Secretary and Treasurer since the group formation.

After the second gradation the Bank Manager sanctioned the loan of Rs. 3,00,000.00 to the SHG
including subsidy of Rs. 1,25,000.00. An amount of 4400 is deposited every month in the bank
as part of repayment of the loan amount of 1.25 Lakhs. There have been no defaults in the
repayment of the loan amount till date. Apart from the repayment of the loan amount, the
members save Rs. 100 per month and there has been no increase in this amount since the
inception of the group. The SHG women feel that the loan amount is inadequate and that they
would require a larger amount of loan for expansion of their tiffin business in particular.

The major activities undertaken by this group are :

ƒ Selling articles outside temples.


ƒ Making incense sticks.
ƒ Tiffin service.

The main reasons for choosing these activities have been the familiarity of women with the
activities and easy availability of raw materials.

30% of the SHG members have primary education, 40% have education till middle school and
30% have schooling till high school. The income per month of 90% of the group members
reportedly lies within the range of 400-500.

Majority of the members have reported to face the difficulty in the sale of their products.

The group members are happy with the SGSY scheme launched by GOI for the betterment of
families living below the poverty line.

   

 
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REFERENCES 
ƒ Issues and success factors in microfinancing. 2007. Issues and success factors in
microfinancing pp. 11-15.
ƒ SENGUPTA MITU, 2009. Slumdogs reality, pp.1-3.
ƒ MALSHET K.K. ET AL , 2009.Income generating activities of women self help groups
of dharwad district of karnataka: an insight, pp.1-7.
ƒ NAIR AJAI, 2005. Sustainability of microfinance self help groups in India, 2005, pp.3-7.
ƒ KROOP EDWARD & SURAN B.S., 2002. Linking banks and(financial) self help groups
in India-an assessment, pp.6-20.
ƒ REDDY C.S. & MANAK SANDEEP, 2005. Self-help groups: a keystone of
microfinance in india, pp. 8-10.
ƒ TANKHA AJAY, 2002, Self help groups as financial intermediaries in india, pp. 10-15
ƒ XAVIER JOSEPH & JEROME V., 2008, Micro-credit programme through shgs ensures
silent revolution in keela mullaikudi panchayat of tiruverumbur union, pp. 18-22
ƒ MALCOLM HARPER & BERKHOFF ANDREAS, 2005. Shg bank linkage - a tool for
reform in cooperatives?, pp.3-7.
ƒ GHADOLIYA M.K., 2006. Empowering women through self -help groups: role of
distance education , pp.7-14.
ƒ VOLUNTARY OPERATION IN COMMUNITY & ENVIRONMENT,2008. A report on
the success and failure of shgs in india-impediments and paradigm of success, pp. 10-15.
ƒ DHAVAMANI P., 2010, Empowerment of rural women through self help groups in
sattur taluk of virudhunagar district , Journal for bloomers of research, pp. 4-5.
ƒ SEIBEL HANS & DAVE HARISHKUMAR,2002, Commercial aspects of self-help
group banking in india: a study of bank transaction costs,pp. 3-10.
ƒ REDDY ANUPPALLE, 2008, Self-help groups in India - a catalyst for women economic
empowerment and poverty eradication, pp. 2-5.
ƒ LAKSHMANAN S., 2008. Expanding access to urban poor through microsate branches,
pp. 36-37.
ƒ SRIRAMAN V., 2007. Micro finance, self help groups and women empowerment –
current issues and concerns, pp. 11-15.

 
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