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Impact and Sustainability of SHG

Bank Linkage Programme

Submitted to:

GTZ-NABARD

Final Report



Impact and Sustainability of SHG Bank Linkage Programme

Contents

STUDY TEAM

ACKNOWLEDGEMENTS

EXECUTIVE SUMMARY

CHAPTER 1: INTRODUCTION 1

1.1 A Review of Earlier Studies.................................................................................................................................................. 1

1.2 Objectives of the Study....................................................................................................................................................... 10

CHAPTER 2: SAMPLE DESIGN AND METHODOLOGY 11

2.1 Methodology ....................................................................................................................................................................... 11

2.1.1 Selection of Districts...........................................................................................................................................................12

2.1.2 Selection of SHGs........................................... ................................................................................................................... 12

2.1.3 Selection of SHG Members ................................................................................................................................................ 13

2.2 Case Studies ........................................................................................................................................................................ 14

CHAPTER 3: SHPIS AND BANKS 15

3.1 SHPIs: Cost of Promotion, Maintenance and Intensity of Support Received ....................................................................15

3.2 Banks: An Assessment of Loan Services to SHGs............................................................................................................. 18

CHAPTER 4: FUNCTIONING OF SHGS UNDER BAN K LINKAGE PROGRAMME 21

4.1 Profile of the sample SHGs........................................................................................................................................................21




5.4 Changes in Practices Relating to Nutrition, Children’s Education and Health Care ..........................................................46

5.4.1 Change in access to drinking water.....................................................................................................................................47

5.4.2 Changes in access to sanitation by households...................................................................................................................47

5.5 Changes in Savings and borrowing practices ..................................................................................................................... 47

5.5.1 Annual savings per household............................................................................................................................................ 47

5.5.2 Changes in access to instruments of savings ...................................................................................................................... 48

5.5.3 Saving facilities fulfilled by SHGs..................................................................................................................................... 48

5.5.4 Changes in Average value of consumer durable assets per household...............................................................................49

5.6 Changes in Borrowing Habits ............................................................................................................................................. 49

5.6.1 Average loan amount .......................................................................................................................................................... 50

5.6.2 Sources of borrowings ........................................................................................................................................................ 50

5.6.3 Change in loan use patterns................................................................................................................................................51

5.6.4 Distribution of loan account by interest rate.......................................................................................................................52

5.6.5 Repayment of loans.............................................................................................................................................................52

5.6.6 Assessment of Current borrowing needs by SHG members...............................................................................................53

5.7 Change in Incidences of Poverty ........................................................................................................................................ 53

5. 8 Changes in Dependence on Moneylender by Households.................................................................................................. 55

5.9 Social Empowerment .......................................................................................................................................................... 56

5.9.1 Changes in self confidence of female members..................................................................................................................56

5.9.2 Changes in abilities to face problems ................................................................................................................................. 57

5.9.3 Changes in control over use of money by female SHG members ...................................................................................... 57

5.9.4 Change in SHG member ownership on productive and consumer assets...........................................................................58

5.9.5 Change in abilities of female SHG members in household decision making.....................................................................58

5 9 6 Changes in Participation in P blic Iss es at Village Le el 59




CHAPTER 7: SUMMARY AND CONCLUSIONS 94

7.1 Approach of the Study ........................................................................................................................................................ 94

7.2 Major Findings on the Level of SHGs................................................... .............................................................................94

7.3 Major Findings on the Level of SHG Members and their Households .............................................................................. 95

7.3.1 Economic Impact ................................................................................................................................................................ 95

7.3.2 Social empowerment...........................................................................................................................................................97

7.4 Major Findings on the Level of SHPIs and Banks..............................................................................................................98

7.5 Findings from Case Studies ................................................................................................................................................ 98

7.6 Conclusions.........................................................................................................................................................................98

References ...................................................................................................................................................................................... 103

Appendix

A3.1: Opinions of SHGs on operating independently without the help of SHPIs.........................................................................103

A3.2: Average distances of SHGs from credit linkage banks and nearest towns ..........................................................................103

A.4.1: Distribution of SHGs by characteristics of members (contd.) ............................................................................................ 104

A.4.2: Governance aspects of SHGs............................................................................................................................................. 105

A.4.3: General Management Practices .......................................................................................................................................... 105

A.4.3a: Change in the General Management Practices ................................................................................................................. 107

A.4.4: Financial Management Practices ........................................................................................................................................ 108

A.4.5: Saving activities of SHGs members.................. ................................................................................................................. 109

A.4.5a: Change in the saving activities since establishment/bank linkage ................................................................................... 109

A.4.6: Source of funds and external borrowings ........................................................................................................................... 110

A.4.7: Lending Activities of SHGs ................................................................................................................................................ 111

A4.7a: Change in the lending activities of SHGs since bank linkage/establishment .....................................................................112

A4.7b: Change in the Major Purposes for which loans are used since bank linkage/establishment..............................................113

A4 8: Percentage distribution of SHGs by Development of Skills of their members 113




List of Figure and Tables

Figure 3.1: SHPIs by types of supporting agencies (%)...................................................................................................................17

Figure 3.2 Problems relating to promotion of SHGs (%).................................................................................................................17

Figure 3.3: Problems relating to bank linkage of SHGs (%)............................................................................................................18

Figure 3.4: Problems relating to Monitoring of SHGs (%)..............................................................................................................18

Figure 5.2.1: Percentage distribution of income by source of earnings: All India...........................................................................44

Figure 5.5.1: Change in average borrowings per household............................................................................................................50

Table 2.1: Regions, States and Districts included in the Study........................................................................................................11

Table 2.2: Development and poverty indicators of districts included in the study ..........................................................................12 Table 2.3: District-wise tehsils and villages by State.......................................................................................................................13

Table 2.4: Model type-wise distribution of selected SHG members in different states...................................................................14

Table 3.1: Number of SHPIs by State..............................................................................................................................................16

Table 3.2: Average cost of promotion per SHG incurred by different SHPI ..................................................................................16

Table 3.3: Percentage distribution of SHPIs by type of support ...................................................................................................... 16

Table 3.4: State-wise number of Banks............................................................................................................................................18

Table 3.5 Lending activities of banks .............................................................................................................................................. 19

Table 3.6: Non-performing assets as percentage of total loan outstanding to SHGs*.....................................................................19

Table 3.7 Distribution of banks reporting percentage of loan recovery from SHGs.......................................................................20

Table 4.1: State-wise number of sample SHGs by Model type.......................................................................................................21

Table 4.2: Profile of sample SHGs –Model Type wise....................................................................................................................22

Table 4.2a: Profile of sample SHGs: State-wise..............................................................................................................................22

Table 4.3: Distribution of SHGs by characteristics of members......................................................................................................23

T bl 4 4 G t f SHG 25




Table 5.9: Annual expenditure per household on education (level and growth) .............................................................................46

Table 5.10: Annual expenditure per household on health (level and growth) ................................................................................. 46

Table 5.11: Share of households reporting change in access to nutrition, children’s education and health care ............................47 Table 5.12: Average level of savings per households (level and growth): All India .......................................................................48

Table 5.13: Distribution of saving instruments by households (%): All India.................................................................................48

Table 5.14:Distribution of households by saving facilities fulfilled by SHG: All India..................................................................49

Table 5.15: Change in household assets across states......................................................................................................................49

Table 5.16: Changes in household availing loan: All-India level (%) ............................................................................................. 49

Table 5.17: Average loan amount per household by Model type and rate of growth......................................................................50

Table 5.18: Percentage distribution of borrowers by source of loan................................................................................................51 Table 5.19: Percentage distribution of loan use by purpose: All India ............................................................................................ 51

Table 5.20: Distribution of loan account by interest rate.................................................................................................................52

Table 5.21: Distribution of household borrowings by regularity in repayment (%)........................................................................52

Table 5.22: Distribution of households by loan requirements (%).................................................................................................. 53

Table 5.23:Loan requirement fulfilled and additional loan per household ...................................................................................... 53

Table 5.24: Share of population living below the poverty line in 2004-05......................................................................................54

Table 5.25: State-wise poverty line in 2006-07 ............................................................................................................................... 54 Table 5.26: Distribution of poor and non-poor households in pre and post-SHG situation.............................................................54

Table 5.27: Net poverty reduction by states.....................................................................................................................................55

Table 5.28: Change in dependence on moneylenders (%)............................................................................................................... 55

Table 5.29: Impact on social empowerment of women (%) ............................................................................................................ 56

Table 5.30: Distribution of women members by self confidence in different activities– All India.................................................57

Table 5.31: Distribution of women members in ability to face problems (%): All India ................................................................57

T bl 5 32 P t di t ib ti f ti t l f All I di 58



Study Team

Project Leader

Anushree Sinha

Consultants

P K Roy

Ramamani Sundar

Geeta Natesh

Research Team



Acknowledgements

The team acknowledges the immense contribution made by Mr. Y.C.Nanda as an Advisor to this study.The team especially thanks Ms. Marie-Luise Haberberger, Programme Director of the GTZ RuralFinance Programme for her valuable insights. It places on record its appreciation of the cooperationrendered by Mr. K. M. Rao and Mr. Krishan Jindal both from NABARD and Mr. R. V. Ramakrishnafrom GTZ Rural Finance Programme. The NCAER team received important comments whileformulating their views from Mr. Prabhu Ghate, independent consultant, Mr. D. Narendranath, ProgramDirector, PRADAN and Mr. U. Ganesh Kamath, Chairman Gurgaon Gramin Bank.

The team is thankful to Dr. Rajesh Shukla for his valuable support in the project. We are also obliged toMs. Rupinder Kaur for her contribution in the study. The team places on record its sincere gratitude tothe District Development Managers (DDMs), NABARD of the selected districts of the six states, i.e.,Assam (Cachar and Marigaon), Orissa (Kalahandi and Sambalpur), Uttar Pradesh (Azamgarh andMoradabad), Maharashtra (Dhule and Solapur), Andhra Pradesh (Mahbubnagar and Srikakulum), andKarnataka (Bellary and Shimoga) for rendering their support during the field surveys. The study teamwould like to put on record their sincere gratitude to the 1200 plus SHGs and the 6000 odd households

for sparing their time and rendering cooperation with the survey team because without such commitmentthe study would not have been possible. Last but not the least; we are also thankful to the innumerablebank managers and the SHPI staff who provided support by interacting with us in the course of thesurvey.

We are grateful to Mr. Udayan Namboodiri for providing editorial support painstakingly at a very shortnotice. The team thanks Dr. Susmita Dasgupta, Economist, Joint Plant Committee for her technicalediting.



Executive Summary

The present study assesses the impact and sustainability of SHG bank linkage on the socio-economicconditions of the individual members and their households in the pre-SHG and post-SHG scenarios. Thestudy was conducted for India as a whole covering six states (Andhra Pradesh, Karnataka, Maharashtra,Orissa, Uttar Pradesh and Assam) from five different regions, namely the south, west, east, central andnorth-east. The overall findings of the study suggest that SBLP has significantly improved the access tofinancial services of the rural poor and had considerable positive impact on the socio-economicconditions and the reduction of poverty of SHG members and their households. It has also reportedlyempowered women members substantially and contributed to increased self-confidence and positive

behavioural changes in the post-SHG period as compared to the pre-SHG period.

MAJOR FINDINGS

• The bulk of SHGs, i.e. 80 per cent of SHGs have only women members.

• Distribution of the SHG members by caste indicates that SCs/STs and OBCs account for 22.3 percent of total SHG members.

• The percentage of SHGs that only have SC/ST members is 21 per cent.

• More than 60 per cent of SHGs consist of members belonging to BPL families.

• Changes in net household income between pre-SHG and post-SHG registered a significant growthper year at 6.1 per cent.

• Across different income activities of households, livestock registered highest growth at 11.2 per cent.

•

Th l h f h h ld i di f d d f d i




• More than 70 per cent of women respondents reported improvements or even significantimprovements in their ability to face health related problems and financial crisis. About 63 per centof the women respondents reported such changes in the case of family disputes.

• More than 60 per cent of the households indicated that there is an increase in the ownership of productive assets in post-SHG situation as compared pre-SHGs situation.

• In terms of control over money, about 21.3 per cent of the households reported a significantimprovement in control over money with respect to buying of consumer durable assets. 27 per centreported increased decision-making and control over expenditure on children’s education.

• The findings show 22.5 per cent of women SHG members in the households had taken decision in

the post-SHG period as compared to 9.1 per cent in the pre-SHG period with respect to children’seducation.

• Participation of public sphere show that 49.4 per cent of households had approached governmentofficials to solve problems in the post-SHG period as compared to 13.5 per cent in the pre-SHGperiod.

• The findings of SHPI suggest that the average cost of promotion and maintenance per SHG incurredby a bank SHPI is lower than that by non-bank SHPIs.

• To promote a SHG, 75.5 per cent of banks, 55.2 per cent of NGOs and 43.0 per cent of governmentSHPIs reported to have received financial grants from NABARD and public sector banks.

• About 60 per cent of SHPIs visualized NABARD and other banks as the main source of support forfinancing and promoting SHGs.

• The major problems in promoting new SHGs as reported by SHPIs were mainly illiteracy andignorance of people (48 per cent) and shortage of field staffs (28 per cent).




Chapter 1

Introduction

Microfinance programmes1

are known for their potential to generate income and employment andalleviate poverty in developing countries. They are considered an important approach to povertyalleviation and enhancement of living standards, particularly of women. Moreover, microfinance hascome to be regarded as a supplementary development paradigm, which widens the financial servicedelivery system by linking the large rural population with formal financial institutions through SHGs. Anumber of impact analyses studies carried out internationally have clearly established that microfinance

programmes contribute to the achievement of several aspects of the Millennium Development Goals(MDGs)2.

In India, NABARD was the first organization to notice the phenomenon of microfinance. Ever since thattime the spread of microfinance is steadily growing through the SHGs. However in 1996, NABARDlaunched a nationwide pilot projects to link the SHGs to the banks. In 1998, NABARD tied up with GTZRural Finance Programme to support the SBLP programme since then.

According to NABARD, a SHG consists of an ‘average size’ of 15 people from a homogeneous social oreconomic class, all of who come together for addressing their common problems. The SHGs meetregularly and save small sums of money. They rotate these small-pooled savings as loans within theSHG. They maintain records of such financial transactions and slowly learn the basic aspects of financialmanagement. They then approach a bank and leverage their accumulated savings for higher loans, whichthey then intermediate within the SHG. The groups are promoted either by banks or non - governmentalorganisations (NGOs) and are credit linked to various models developed by banks.

I I di h SBLP h b i i f ll d d Th NABARD (2005 06)




But has financial outreach made a significant impact on the economic, social and political life of thepoor?

3. The existing literature suggests that the concept of forming SHGs and linking to banks would

raise incomes and broaden financial markets by principally providing credit, among other services, tosmall scale entrepreneurs and thereby reducing poverty (Aghion & Morduch 2000). This would also leadto women’s empowerment, since microfinance programmes have mostly targeted women as clients(Littlefield, Morduch and Hashemi, 2003 and Cheston and Kuhn, 2002). India, which has about 70 percent of the total population living in rural areas-most of who are poor - the programme of microfinance interms of linking SHGs with banks holds a critical role in targetting poverty reduction and empoweringwomen socially, politically and economically. Since the concept of SHGs is more than 25 years old, anumber of studies have already examined the impact of microfinance on various aspects as noted above,we make an effort here to review a few of them to highlight the pros and cons of this programme in India.

In India, the first survey on SHGs was undertaken by NABARD, along with other Indian members of theAsian and Pacific Regional Agricultural Credit Association (APRACA). They conducted an actionresearch on linking SHGs with the concept of savings and credit in 1987 and published the outcome of the research in the form of a survey report in 1989. The survey was carried out in the form of case studiesof 46 SHGs spread over 11 states and associated with 20 SHPIs. Of all the SHGs sampled, 17 hadsavings collection and credit provision as a major activity. Another 13 were engaged in farming or farm-based activities, five were into social forestry and afforestation, eight were engaged in non-farm activitiesand three were occupied in diverse occupations.

Based on the case studies on savings and credit of 17 SHGs, the study reported that when a SHG waspromoted by a SHPI, it generally comprised only members of the weaker sections. In contrast, whenevera SHG emerged on its own, it generally included members of the poor as well as not-so-poor households.Many SHPIs, including Andhra Mahila Sabha (AMS), Kerala Gandhi Samarak Nidhi (KGSN), NazarethAshram (NA) and MYRADA relied on the resourcefulness of the women and concentrated on forminggroups involving only women. It was easier to form women’s groups by providing them necessary healthcare and other facilities and gradually involving them into other activities.




each state. The study included SHGs that had completed a minimum of one year of bank linkage as onMarch 31, 1999.

The results of the above study suggest that out of the total sample, 84 per cent belonged to theeconomically weaker sections, of which agricultural labourers comprised 32 per cent followed by 29 percent of small farmers and 23 per cent of marginal farmers. Regarding the status on education, it wasfound that 24 per cent of household members of SHGs were illiterate and 26 per cent could only signtheir names. About 21 per cent had primary education, 23 per cent had secondary education and the resthad higher secondary education or something close to it.. The study found homogeneity in terms of groupmembers living in the same village or having uniform socio-economic status. Homogeneity in standardof living of SHG members constituted about 60 per cent, followed by proximity of residence reported by

29 per cent. With regard to meetings, about 65 per cent of the groups recorded more than 90 per cent of attendance during group meetings. The study found that frequency of monthly meetings was highest(54 per cent), followed by that of weekly meetings (23 per cent). Only about 8 per cent of the groups didnot have regular meetings at all.

When one assesses whether lifestyles have changed after getting into the SHG mould, it is found thatpeople who come together to form SHGs end up better off in social and economic terms. The averagevalue of assets per household (including consumer durables and livestock) was Rs. 6,843 during the pre-

SHG period, which increased by 72.3 per cent to Rs. 11,793 in the post-SHG period. Only 23 per cent of the members had some savings during the pre-SHG period in contrast to almost all interviewed memberswho saved during the post-SHG period. The average household saving was merely Rs. 460 during thepre-SHG period, which increased manifold to Rs. 1,444.

Similarly, average borrowings rose from Rs. 4,282 during the pre-SHG period to Rs. 8,341 in the post-SHG period. Most significantly, this increase was spent for income generating purposes by a largenumber of households during the post-SHG period. It could be the major reason for the 33 per cent




had made a significant contribution to social and economic improvement of SHG members. About 83 percent of the sampled SHG members belonged to the SC/ST communities. The study reported frequencyand regularity in meetings among the members. It was found that 65 per cent of the time meetings wereheld on a monthly basis, 18 per cent of the time there were fortnightly meetings, the weekly meetingswere held 8 percent of the time and only 1 per cent of SHGs had irregular meetings. Actually, NGO -supported SHGs were more particular about holding monthly meetings (68 per cent) than the bank linkedgroups (59 per cent). Older SHGs (formed 3 years or earlier) observed monthly meetings more regularlythan the new SHGs. However, 24 per cent of new SHGs had irregular meetings and 50 per cent of SHGshad a fixed date and timing for meetings. About 88 per cent of SHGs had meetings at the residence of members and 12 per cent had in a common place like Panchayat office, Anganwadi office, villagecommunity halls, etc.

The study also reported an increase in household savings and assets for the SHG members after theyformed the group. Out of the total sample, 45 per cent reported an increase in assets after joining a SHG.The mean annual savings of households increased two - fold after joining SHGs. About 23 per cent of SHGs reported an increase in savings over a period of time. Higher savings were reported for bank linkedgroups (36 per cent) than for NGO supported groups (16 per cent). The proportion of savings to totalresources was relatively higher for bank linked groups (35.7 per cent) than NGO supported groups (30.5per cent). The average loan per member increased significantly by 123 per cent during the post-SHG

situation. Out of total loans received by SHG members, 72 per cent were used for income generatingpurposes and 28 per cent for consumption. The size of loan was reported to be generally higher in thecase of NGO -promoted SHGs than those promoted by banks. The distribution of loan suggests thatabout 78 per cent of members received loans, which indicates that loans were well distributed amongSHG members The percentage of members who availed loan was higher for bank linked groups (86 percent) as compared to NGO supported groups (72 per cent). The interest rate charged on loans out of group savings was higher in the case of bank linked groups (2.68 per cent) than in the case of NGOsupported groups (2.50 per cent). About 60 per cent of the SHGs had borrowed from banks more than




of SHG members had schooling till the primary level and 11 per cent had only adult education to become‘neo-literate’. Average monthly savings were Rs. 45 and cumulative member savings were Rs. 2,400.The modest rate of interest charged on loans to members was 2 per cent per month. Around 77 per cent of the groups had borrowed from banks or federations at least once; the average number of borrowings was2.5 times. As regard longevity, it was found that the proportion of defunct and broken groups was only7 per cent, which is low considering that the average group age was 6 years.

In case of dropout, 10 per cent of members had dropped out of the functioning SHGs of above sample,with over a third of them for reasons of migrations, death or illness. The dropout rate from the very poorwas 11 per cent and was less for those who were financially better off. Members who dropped outusually obtained their savings amount without interest on savings. Only 10 per cent of dropouts were

defaulters who did not get back their savings amount at all.

With regard to social responsibility, the study reported that at least one member in a SHG ran a localpolitical office and one in every five SHGs had a woman member who was elected either as a wardmember at the village level or a ‘Sarpanch’ at the block level. The proportion of active representativeswas surprisingly higher in the northern region than in the south. On SHGs based on caste, the studyreported that two-thirds of total sample were single caste groups and one third of SHGs had membersfrom different castes. However, in some places with SHPI initiative, SHGs started bridging differences

through mixed caste membership or through joint actions across groups of different castes. The studyfound that though SHGs supported their members in their fight for social justice, they did not deal withsuch issues regularly. Only 12 per cent of SHGs had taken up issues like domestic and sexual violence,bigamy (a punishable crime), dowry deaths, or had prevented child marriage or supported the remarriageof separated women. The study also did not find any significant involvement of members in communityparticipation. Only 30 per cent of SHGs in the sample were involved in community actions. Of the totalSHG members involved in community actions, 43 per cent were in community services (related to watersupply, education, health care, veterinary care, and building and maintenance of village roads), 31 per




Rs. 6,808. With regard to the staff cost (expenses for staff involved in forming and promoting newSHGs) in a particular year (i.e., 2004–05), the study reported that staff cost was higher but risk of loanloss (1.5 per cent and 0.4 per cent of loan outstanding) was less. In the case of normal lending operations,

this was just the opposite -low staff cost and high risk of loan loss (0.9 per cent and 1.5 per cent of loanoutstanding). However, the study mentioned that the staff cost calculated over several years (6 years) wasfound to be less than that for one year (1.3 per cent as compared to 1.5 per cent under one year), but wasstill more time and cost-intensive than normal lending (0.9 per cent). The importance for the viability of SHG lending operations lies in the low risk costs of SHG lending in comparison to normal transactions.

Another study carried out by Ramakrishna (2006) of the NABARD GTZ Rural Finance Programassessed the SHG bank-linkage programme from the survey data that was collected from 27 public sector

banks, 192 regional rural banks and 114 cooperative credit institutions in Tamil Nadu, West Bengal,Karnataka, Chhatisgarh and Maharashtra. The analysis of the study was based on information from thebanks as on March 31, 2005. The study reported that commercial banks had a major share of the marketat 61 per cent of total number of active SHG members and 68 per cent of the share in the number of loansoutstanding to these SHGs. As compared to 61 per cent market share of commercial banks, the RRBs’market share had 30 per cent and cooperative banks had very small market share of 9 per cent in theSHG-bank linkage programme. The cooperative banks in Tamil Nadu, Karnataka and West Bengal,however, had an 82 per cent of share in the overall share of the cooperative banks.

The study has defined savings outreach in terms of opening of savings account and amount of moneydeposited by SHGs in their savings account. In the case of the former, the study found that commercialbanks had major share (52 per cent) followed by RRBs (34 per cent) and cooperative banks (14 per cent).On the share of banks in savings of SHGs it was reported that RRBs had the major share of 49 per centfollowed by commercial banks (44 per cent) and cooperative banks (7 per cent). The share of SHG loansin overall loans and advances was 0.36 per cent in the case of commercial banks, 6 per cent for RRBs and0.81 per cent for cooperative banks. The time required for a bank to sanction a loan was found to berelatively fast, with an average of only 11 days for the first loan and nine days for subsequent loans. On




occupations for the SHG members in the former group, agricultural labour (41 per cent) andmanufacturing (29 per cent) were the chief occupations for the latter group.

On sources of information about the concept of SHG, its activities and the benefit of joining it,34.4 per cent of SHG members in the old group and 41.9 per cent in the new group reported that otherSHGs in the locality was the main source that inspired them to join the SHG. With regard to impact of the SHG, 89 per cent of interviewees in the old group agreed that their financial position had changed forthe better as against only 71 per cent in the new groups. More importantly, more members in the oldergroups reported a positive influence on their share in the family income than in the new ones. Theaverage share of earning SHG members in the family income was also higher in the older SHGs.The impact of the SHG on the member’s level of comfort and confidence was reflected more in the older

groups than that of new. For example, in case of dealing with people (outsiders / strangers etc.),75 per cent of members of old SHGs reported change in confidence as compared to 72.6 per cent for newgroups. The study also found better awareness with regard to health and hygiene. About family planningmethods, 53.9 per cent reported that change of knowledge was evident in the case of the old groupagainst 35.5 per cent for new group. Older groups also reported better awareness in washing hands beforeeating/cooking, child’s vaccination, using toilets at home and adding fruits and vegetables in the diet of pregnant women.

The contribution of SHG members in their respective household income was found higher for oldergroups as compared to the younger ones. The share of SHG members in household income between 50and 100 per cent was found 17.3 per cent for older groups against 6.8 per cent of younger groups. On aquestion pertaining to an important indicator -for instance, whether SHG members are practicallyempowered in managing the banking operations on their own -it was reported that more members in theolder group (70.8 per cent) were aware about it as compared to 60 per cent in the younger group. Withregard to power over her own development, the study found that more respondents in the older groupsreported that their control over their own lives had improved and that they had a greater role in makingdecisions about themselves than before. As for the participation of SHG members in the local polity is




financing SHGs. Presently, well over 500 NGO-MFIs are actively engaged in microfinance activitiesacross the country. In the policy perspective, the study stated that microfinance programmes haveimproved in various respects significantly. However, the scope for further improvement is unlimited.

NABARD intends to cover 100 million of the poor through microfinance (about one-third) by 2008. Thecoverage by March 31, 2006 touched about 32.98 million families. This would mean the programme hasreached over 150 million people, most of them poor.

Nair (2005) examined the potential of SHG federations in providing sustainability to SHGs throughfinancial and organisational support. Specifically, the study examined issues like (i) variety of servicesprovided by the federations and their benefits to SHGs, (ii) financial variability of SHGs and SHGfederations and cost of promoting them, (iii) identification of constraints of promoting SHG federations,

and, (iv) policy recommendations to strengthen SHG federations. In terms of services provided by SHGfederations and thrift cooperation to SHGs, the study found that the most common service is savings andloan facilities. Savings include general savings and particular savings for education, housing, marriages,and festivals. Loans include both small and large loans at costs lower than those available in the market.Besides these services, the SHG federations helped SHGs to internalise all operational costs and reducethe cost of promoting new SHGs. Further, SHG federations provide all essential services to SHGs withminimum costs. These services were often provided by the promoting agencies in the initial stage of SHG development. They include auditing, capacity building like training the SHG members, leaders and

SHG accountants, and forming a common forum for reviewing the performance of SHGs. Thefederations also help in resolving conflicts among SHG members, between SHGs and between SHGs andbanks. Another important aspect is that they assist in reducing the transaction costs of SHG-bank linkageprogramme by grouping 10-20 accounts into one single SHG account. The federations help in reductionof loan default-both within SHGs and from SHGs to banks. They provide micro-insurance services andsocial services such as education, health and livestock support. The federations employ their ownresources in promoting new SHGs while minimising the promotional costs as compared to other agencieslike the banks and NGOs. They also help in empowering the SHG members.




Apart from the SBLP model discussed above, the study also assesses the progress of the MFI model inIndia covering various issues like portfolio quality, efficiency, sustainability, delivery of other financial

services like micro insurance including health insurance and issues related to commercial financing. Onthe progress of MFI model, the report reviews two recent studies by Sa-Dhan (2005) and by MIX (2006).The study found that like the SBLP model, the MFI model is also growing fast. It assures good portfolioquality and is efficient too. Most importantly, large and medium MFIs have attained operationalsustainability.

Moyle, Dollard and Biswas (2006) assessed the economic and personal empowerment of 100 womenaged between 16 and 65 years, participating in SHGs from two villages (Delwara and Shishvi) in

Rajasthan. Based on qualitative data, the study found that after joining SHGs, the members achieved botheconomic and personal empowerment in terms of collective efficiency, pro-active attitudes, self-esteemand self efficacy. In case of personal empowerment, 99 per cent of women believed that ‘self-help groupmembers are always able to discuss problems that affect everyone’, and 91 per cent of women believedthat ‘if a problem arises that people cannot solve by themselves, the group as a whole will be able tosolve it’. Similar results were found in case of perceived capability of group members. Eighty one percent of members believed that ‘I have confidence that our group members can perform the tasks that areassigned to them’ and 85 per cent believed ‘our SHG has the ability to tackle any issue affecting the

group’. In terms of perceived efficacy to solve problems as a group, 60 per cent believed that ‘asmembers of this group, we are able to tackle the most difficult situations because we are all committed tothe same collective goals’. In case of proactive attitude, 63 per cent of the women believed exactly truethat ‘I feel responsible for my own life’ and 93 per cent believed that they were ‘able to choose their ownactions’. Ninety-seven per cent said that ‘they focus their efforts on things that they can control’. In termsof ‘self esteem’, 91 per cent of women strongly felt that they had good qualities, and 71 per cent stronglyagreed that they had a positive attitude towards themselves. Besides these positive results the study alsofound negative appraisals of pressure, challenges and stress for most of the SHG members.




etc. they also provide loans to SHGs on low rate of interest. As far as organisational support isconcerned, federations employ their own resources in promoting new SHGs and were able to reduce thecost of promotion of SHGs or promotional costs as compared to other agencies such as banks and NGOs.

A specific study on women empowerment (Moyle, Dollard and Biswas, 2006) found that a high share of women SHG members reported significant development of their self-confidence and work efficiency.The study also reported that most of the women experience pressure, challenges and stress due to extrawork and more responsibilities.

The present study differs from earlier studies in many aspects. First, it covers a wide range of socio-economic impact issues on the level of SHG members and not only at the level of a SHG. Moreover, itincludes also the organisational and financial viability and sustainability aspects. Second, it covers long

span data on credit link to get reliable information on the SBLP. Last but not the least, the analysis of thestudy is based on a large sample size with bank-linked group and covers a wide cross section from almostall regions of India.

1.2 OBJECTIVES OF THE STUDY

The objective of this study is to assess the impact of the SBLP at two levels. First, the impact of microfinance on SHGs and, second, the socio-economic impact on the members of the SHGs and thehouseholds to which the SHG members belong is to be assessed. Only such SHGs are to be included inthe study which have already completed at least four years of bank linkage.

The specific objectives of the study are:

• Assessment of the impact due to participation in SHG activities on economic activities, householdwelfare and social empowerment of members.

• Comparative assessment of the quality of the groups promoted by different self help promotioninstitutions (SHPI) including the changes over time in group members participation and behaviours,




Chapter 2Sample Design and Methodology

Given the comprehensive nature of the impact assessment of the SHG-bank linkage programme, thestudy is based on information obtained from a primary sample survey conducted at three different levels:the SHGs as a group, the individual members and the various functionaries associated with theprogramme of bank-linkage. The indicators to assess the impact covered a wide range of socio-economicindicators of the individual SHG members and their households. The three SHG-bank linkage modeltypes as discussed in Chapter 1 were selected in consultation with NABARD and the NABARD -GTZRural Finance Programme

The study extended over all five regions of the country (Table 2.1). It covered six states, viz, AndhraPradesh and Karnataka (southern region), Maharashtra (western region), Orissa (eastern region) UttarPradesh (central region) and Assam (north-eastern region). In each of the states, two districts have beenselected taking into account the development of the SBLP against their overall socio-economic profile.The classification of the districts into ‘developed’ and ‘less developed’ with respect to data ondevelopment indices was made on the basis of data on the number of SHGs, extent of bank branchnetwork in rural areas and indicators of economic development at the district level (e.g., poverty ratio).

Table 2.1: Regions, States and Districts included in the Study

Region State Code State Name District Code District Name Number of SHG

(2002)

North Eastern 1 Assam 1 Cachar 86

North Eastern 1 Assam 2 Marigaon 365

Eastern 2 Orissa 3 Kalahandi 2812

Eastern 2 Orissa 4 Sambalpur 356




facilitated the collection of qualitative data from the group, as well as quantitative data from the recordsmaintained by SHGs. Feedback from the functionaries of banks and SHPIs associated with the SHGsfacilitated cross-checking of data. Relevant information from the banks and SHPIs was collected on the

performance of the selected SHGs on loans taken and disbursed and repayment performance of loans.Further, their responses on problems faced by the SHGs and their suggestions on improvement of theSHGs’ performance were gathered through discussions. Relevant data were collected through pre-structured questionnaires, covering the qualitative and quantitative aspects of SHGs and their membersbefore and after bank linkage. The consistency of data collected from primary sources was ascertained byusing different styles of questions to capture the same information. Also, the validity of the informationwas crosschecked through NGOs to get reliable information on the pre-SHG situation. The field surveywas conducted over March and April 2007. The reference year for the study was January- December

2006. All the economic parameters for pre and post-SHG membership were measured at reference yearprices.

2.1.1 Selection of Districts

As mentioned above, the districts of a State were classified in two categories i.e., less developed anddeveloped, mainly on the basis of the District Infrastructure Index and district-wise poverty ratio. It wasfound that the district infrastructure index and poverty ratio were negatively correlated, indicating that

higher the infrastructure index, lower the poverty ratio.

One district was selected from each of the two groups, with the Probability Proportional to Size (PPS)method, size being the number of bank-linked SHGs in the district as on March 2002. Care was alsotaken to select districts in which there were at le ast 100 SHGs as on March 2002. In the case of Assam,only two districts had more than 100 bank-linked SHGs as on March 2002 and both were underdevelopedby the criteria mentioned above. Therefore, one district was selected from the two underdevelopeddistricts in Assam and while the other one was selected that was the nearest to the average State index of development. The latter district also had more than 80 SHGs. The district was thus selected with the




1. SHGs formed and financed by banks (Model type 1).

2. SHGs formed by formal agencies other than banks, NGOs and others but directly financed by banks(Model type 2).

3. SHGs financed by banks using NGOs and other agencies as financial intermediaries(Model type 3).

Thus, as far as practicable, the list of SHGs obtained with the help of NABARD officials in each districtwas further classified by the above three Model types. The number of SHGs to be selected wasdistributed as a proportion to the total in each Model type group. However, in a few states like

Maharashtra and Uttar Pradesh, the Model type 3 of SBLP could not be obtained. In any large-scalesurvey where data are to be collected from a number of units, in this case SHGs and households, a fewnon-responses are inevitable due to either respondents’ absence or non-cooperation. Taking cue from theearlier studies, an additional 15 per cent of SHGs was selected in order to cover up for the inactive ordefunct SHGs as well as non-response cases, if any. Thus, 92 SHGs were selected in each district tocover a sample of 80 bank-linked SHGs. Although an effort was made to select SHGs by type inproportion to the total number of SHGs, the proportional allocation could not be adhered to because of the following reasons, viz.

• Non-functioning of SHGs selected in March 2007.

• SHGs converting into Swarnjayanti Gram Swarozgar Yojana (SGSY) groups.

The selected SHGs, which were found to be non-functioning and/or converted to SGSY groups, wereagain substituted by other SHGs depending on the availability of the SHGs from the list obtained in thefield itself. Care was taken to select SHGs from different tehsils and villages within a district to obtain awidespread sample of SHGs from the entire district. The conversion of bank-linked SHGs into SGSY-nurtured groups was found in most of the states, but as per our sample this happened most frequently in




collected by canvassing the questionnaire. The total number of effective sample SHG members coveredfrom bank-linked SHGs by Model type in each State is given in Table 2.4.

Table 2.4: Model type-wise distribution of selected SHG members in different states

All ModelsState

Model type 1 Model type 2 Model type 3 Total

Assam 361 340 75 776

Ori ssa 315 225 250 790

Uttar Pradesh 260 527 - 787

Maharashtra 184 649 - 833

Andhra Pradesh 10 636 110 756

Karnataka 249 385 215 849Grand Total 1379 2762 650 4791

2.2 CASESTUDIES

Case studies of SHGs as a group, as well as their individual members, were conducted to supplement thefindings of the impact survey. Case studies have been successfully used as a research tool by socialscientists to investigate a wide range of developmental issues. They may be defined as a detailed analysis

or an intensive study of a person or group and are usually carried out by conducting an in-depth interviewof a person or a group. In this study, a few case studies of individual members of SHGs, as well as SHGsas a group itself were carried out to determine what factors led to their success or failure. Some of thesecase studies may also be seen as exemplary models for replication. Case studies were expected tohighlight unique cases as well, to provide answers, support and provide insights on the data collectedthrough the survey.

In all, 24 case studies were conducted i.e., four from each State covering the two selected districts, in




Chapter 3SHPIs and Banks

Most of the Self-Help Promoting Institutions (SHPIs) in India have come into existence due to the urgeto help the underprivileged people of society. Their key objective is to help small and marginal farmers,landless agricultural labourers, poor artisans, women and people drawn from the schedule castes andtribes of the rural areas. Moreover, the goal of many of the SHPIs is to provide various financialservices,empower people socially and support them in accessing various government programmes and incentives.In order to solve the economic and social problems of the poor and particularly that of women in thevillages, SHPIs have chosen to support microfinance programmes as a key instrument of empowerment

and alleviation of poverty. The basic hypothesis is that microfinance programmes, were to form SHGsand link the groups to the banks, they would provide a vital development mechanism for improving thestandards of living of rural women. Overall, such microfinance programmes are expected to contribute toan increase in income, consumption and production activities of the SHG members and facilitate theiraccess to adequate and sustainable financial services. Moreover, they open a window for the bankingsector to expand their credit outreach by providing financial services to a large section of the ruralpopulation.

SHPIs, whether NGOs, banks or State governments, have been playing a vital role in promoting,nurturing and sustaining the SHG programmes under SBLP. One of the results of the study reveals that asubstantial proportion of SHGs still feel that they are dependent on the services of SHPIs even after fouryears of functioning (see Table A3.1 in Appendix A3). The latest NABARD report (2005-06) suggeststhat there are 44,000 branches of 547 banks (47 commercial banks, 158 RRBs and 342 co-operativebanks) and 4,896 NGOs participating in SBLP. The role of NGOs in promoting and sustaining SBLP isgenerally assessed as very critical (Chakrabarti, 2004). The existing literature suggests that the cost of promotion per SHG incurred by an NGO is less than that of a bank (Harper, et al, 1998) often due to




Table 3.1: Number of SHPIs by State

Assam Orissa Uttar

Pradesh

Maharashtra Andhra

Pradesh

Karnataka Total

Bank 1 16 0 12 0 11 40

NGO 2 11 9 5 19 8 54

Government 0 7 0 0 19 0 26

Total 3 34 9 17 38 19 120

The issue of promotional cost per SHG appears to be one of the prominent issues in the literature on theprogramme. A study by Friends of Women’s World Banking (2002) reported that between Rs. 1,350 andRs. 16,000 was needed for an SHPI to promote a SHG from set-up to bank linkage stage. Another study(Harper, et al 1998) reported that a typical NGO had to spend Rs. 8,520 to develop a SHG for bank linkage, whereas the corresponding cost for a bank to do so was Rs. 11,000. The results of the presentstudy show that NGOs incur more cost than State governments and banks for promoting a SHG up to thebank linkage stage. The present study finds that the average promotional cost

11of a SHG was Rs. 4,045

for NGOs in 2004 as compared to Rs. 3,562 for governments and Rs. 2,440 for banks (Table 3.2). Asimilar trend for all three SHPI categories is observed in 2005 and 2006.

Table 3.2: Average cost of promotion per SHG incurred by different SHPI12

(In Rupees)

Type of SHPI 2004 2005 2006

Bank 2440 2957 3575

NGO 4045 8512 8701

Government 3562 3595 4010

The issue of maintenance cost of SHGs incurred by different SHPIs is as important as that of promotionalcost. A SHPI incurred maintenance costs in different heads such as training, book-keeping, social




The support received by SHPIs from various donors can be observed in Figure 3.1 below. It shows thatabout 60 per cent of SHPIs expressed the view that NABARD and banks were the main sources of support for financing and promoting SHGs. About 28 per cent of SHPIs declared that State governments

had provided various kind of support to them. A very low share of SHPIs stated that they had receivedhelp from private organisations/institutions, international donors and from other sources for supportingtheir activities.

Figure 3.1: SHPIs by types of supporting agencies (%)

NABARD/banks

60%

Government

28%

Private

organizations/inst

itutions

3%

Others

5%

International

agencies

4%

When the problems faced by SHPIs, were examined, it was observed that many of them (48 per cent)reported that illiteracy and people’s ignorance regarding the benefits of SHGs were the major problems inpromoting new SHGs (see Figure 3.2). Shortage of field staff was also another problem faced by SHPIs,and 28 per cent of them reported this constraint. About 24 per cent of them indicated that lack of financial support was one of the major problems for them to promote new SHGs.




Figure 3.3: Problems relating to bank linkage of SHGs (%)

Lack o f

interest

a m o n g S H G

members

( 4 5 % )

Lack o fgua ran tee

(14%)

Prob lems

associa tedw i th banks

( 4 1 % )

Lack of guarantee due to non-availability of collaterals

Though many SHPIs had received financial grants from NABARD/banks for promoting and financingnew SHGs, about 32 per cent of them reported the unavailability of sufficient funds as a problem tomonitor the new SHGs (Figure 3.4). Besides, 30 per cent indicated shortage of field staff and a further 19

per cent reported that insufficient time were the other problems they had experienced when monitoringSHGs. Illiteracy and ignorance were worries for 14 per cent of SHPIs for monitoring of new SHGs. Withregard to other problems (6 per cent), the SHPIs reported factors such as: no fixed time of meeting of SHGs, paltry attendance and improper bookkeeping.

Figure 3.4: Problems relating to Monitoring of SHGs (%)

I l l i teracy and Others




The banks were asked about the average number of days required for approving a loan, the averagedistance of SHGs from credit linkage banks, loan amount per SHG member, loan amount presentlyoutstanding, contribution of bank in total loans to SHGs, non-performing assets, and other related issues.

The analysis of these financial components is reported below. Detailed information on SHGs’outstanding loans, arrears are provided in Chapter 4.

Table 3.5 Lending activities of banks

Three major sources of bank loanStates Average number of

days required for

approving loan

Percentage

distribution of bank

loans across states Commercial

Banks

Regional

Rural Banks

Cooperative

Banks

Bank

loan (%

of total

loan toSHGs)

Assam 11 6.8 57.2 42.2 0.6 99.6

Orissa 5 11.4 38.6 57.9 3.5 93.2

Uttar Pradesh 4 10.2 6.7 92.0 1.3 97.7

Maharashtra 9 18.3 75.4 16.1 8.5 97.3

Andhra Pradesh 4 24.4 65.3 34.4 0.3 97.3

Karnataka 18 28.8 54.9 32.1 13.0 90.2

All states 9 100.0 54.6 39.5 6.0 94.9

Table 3.5 shows that banks were the major source of external loan for SHGs in all the states. It revealsthat on an average, a bank takes nine days to approve a loan for setting up a SHG. But this variessignificantly across states. In Karnataka the loan approval time often goes up to 18 days. The least lengthof time, i.e. four days, was reported from cases in Andhra Pradesh and Uttar Pradesh. An importantreason could be the distance of a SHG from the credit-offering bank. In the case of Karnataka, it wasfound that the average distance of SHGs from the credit- offering banks was 9 Km, which was higherthan the distances in other states. Many reasons were cited by the banks for taking longer (higher number




loan recovery; and less than 50 per cent loan recovery. The overall results in Table 3.7 shows thatAndhra Pradesh, Maharashtra and Orissa performed better in terms of loan recovery than the otherstates

13.

Table 3.7 Distribution of banks reporting percentage of loan recovery from SHGs

Distribution of banks by percentage of loan recovery in 2006

<50% 50-74% 75-95% 96-100%

Assam 40.0 40.0 0.0 20.0

Orissa 4.0 12.0 24.0 60.0

Uttar Pradesh 12.5 31.3 25.0 31.2

Maharashtra 2.2 10.9 21.7 65.2

Andhra Pradesh 0.0 0.0 6.3 93.7Karnataka 3.4 37.9 17.2 41.5




Chapter 4

Functioning of SHGs under Bank Linkage Programme

The purpose of forming SHGs is to make financial services available to those who are otherwise likely tobe bypassed by the formal banking system. This reduces the dependence of the members of the groupthus formed on moneylenders who generally charge exorbitant rates of interest. The SHGs provide themembers, in particular women, with a launch pad to gain confidence, skills and power to promote theirinterests. By making credit available, it provides opportunities to people belonging to the weaker sectionsto start income generating activities and empower themselves by improving their economic status.

In 1992, NABARD launched the SBLP on a pilot basis to link 500 SHGs to financial banks with the aimof improving access to financial services for about one-third of the rural poor by 2008 (NABARD andGTZ, 2005). The programme has expanded since then, and as on 31st March 2006 as many as 2,238,565SHGs are credit-linked and the programme has enabled an estimated number of 32.98 million poorhouseholds in the country to gain access to microfinance (NABARD, 2005-06) from the formal bankingsystem. Over the years, three different models of credit linkage have evolved. Up to March 2006, 20 percent of the total number of SHGs financed was in the category of Model type 1, in which SHGs are

formed by the members and financed by banks. In Model type 2, SHGs are formed by NGOs and otherformal agencies other than banks, but they are directly financed by banks. This model is most popular, as74 per cent of the total number of SHGs financed up to March 2006 belonged to this category. In thethird type of Model banks finance the SHGs by using NGOs and other agencies as financialintermediaries. The share of cumulative number of SHGs linked under this model is relatively small at6 per cent.

In this chapter, an attempt has been made to study the functioning of the SHGs under SBLP and examinetheir performance since the linkage happened The study covers 961 bank-linked SHGs spread over the




Table 4.2: Profile of sample SHGs –Model Type wise

Model type 1 Model type 2 Model type 3 All Models

Average number of members 11.8 13.0 13.8 13.0Average number of years of Bank Linkage 5.3 5.4 5.5 5.4

Percentage distribution of SHGs by no. of years of bank linkage

• 3-5 years 60.8 59.5 55.4 59.3

• >5 years 39.2 40.5 44.6 40.7

• Total 100.0 100.0 100.0 100.0

Average distance from bank (kms) 6.3 5.1 5.6 5.5

Average distance from nearest town (kms) 13.4 11.7 19.8 13.4

SHG networking with others into a

federation (%)

29.9 24.2 17.7 25.0

Table 4.2a: Profile of sample SHGs: State-wise

Assam Orissa Uttar

Pradesh

Maharashtra Andhra

Pradesh

Karnataka

Average number of members 12.0 12.0 11.0 13.0 13.0 15.0

Average number of years of bank

linkage

4.8 5.4 5.1 5.6 5.8 5.3

Percentage distribution of SHGs by no. of years of bank linkage• 3-5 years 76.1 60.8 65.0 43.7 42.1 68.0

• >5 years 23.9 39.2 35.0 56.3 57.9 32.0

• Total 100.0 100.0 100.0 100.0 100.0 100.0

Average distance from bank (Km) 4.8 5.6 3.3 6.2 5.0 8.5

Average distance from nearest town

(Kms)

14.3 20.3 9.0 11.2 NA 11.6

SHG networking with others into a

federation (%)

25.8 31.0 12.7 33.5 30.3 16.9




Table 4.3: Distribution of SHGs by characteristics of members

Model

type 1

Model

type 2

Model

type 3

All Models

Average age of members (years) 33.7 35.9 33.1 34.9Distribution of SHGs by sex of members (%)

• All female 67.2 90.0 97.7 80.5

• All male 20.9 6.2 1.5 9.3

• Both 11.9 3.8 0.8 10.2

Total 100.0 100.0 100.0 100.0

Distribution of SHGs by caste of members (%)

• Only SC/ST 18.5 23.3 20.0 21.5

• Only OBC 34.6 36.4 37.0 36.0

• SC/ST & OBC 25.9 21.9 17.0 22.3

• SC/ST, OBC and General 21.0 18.4 26.0 20.2

Total 100.0 100.0 100.0 100.0

Distribution of SHGs by literacy level of members (%)

• All Illiterate 6.5 7.6 7.7 7.3

• Upto 50% Literate 34.9 45.0 50.0 42.8

• > 50% Literate 58.6 47.4 42.3 49.9

Total 100.0 100.0 100.0 100.0

Distribution of SHGs by economic status of members (%)

• All/majority BPL 60.4 61.8 63.8 61.7

• All/ majority APL 34.9 35.6 29.2 34.5

• Equal no. of APL & BPL 4.7 2.5 6.9 3.7

Total 100.0 100.0 100.0 100.0

Distribution of members by occupation (%)

• Farmers 28.3 28.0 22.4 27.3

• Artisans 2.6 2.9 5.6 3.2

• Traders 11.8 12.8 15.2 12.9




wise distribution, it is seen that Uttar Pradesh had the highest percentage of SHGs with only SC/STmembers, while Andhra Pradesh had the lowest.

A very high percentage of sample SHGs in Andhra Pradesh had only OBC members. Assam,Maharashtra and Karnataka states that had a higher percentage of SHGs consisting of mixed category of backward classes as well as general members (for state-wise details refer Appendix A 4.1).

In order to study the percentage distribution of SHGs by literacy level of the members of the groups, theSHGs were divided into three categories: (a) those in which all the members of the group are illiterate,(b) those in which less than 50 per cent of the members were literate and (c) those in which more than 50per cent of the members were literate. It can be seen that a very small percentage of SHGs (7 per cent)

fall in category (a). While a higher percentage of SHGs (47 per cent) fell into the second category, nearlyhalf (50 per cent) of the SHGs were in the third category, that is with more than half the members in eachgroup being literate (i.e., in category c). Only a small variation in literacy percentages was noticed amongthe members of the SHGs. Of these, there appeared to be a fair mount of uniformity in the literacy levelsamong the SHGs that belonged to Model 1. The literacy levels varied more widely among the SHGs of the Model 2 and Model 3 types. The literacy levels, however, varied sharply across the states. Assam hada high percentage (82 per cent) of SHGs with more than half the members in each group being literate,and Andhra Pradesh had the least (16 per cent of SHGs) in category (c) i.e. the category that comprisedthe most literate members. For the interpretation of the above figures, it should be kept in mind that hereliterate members include even those persons who have had no formal education, but have learnt to signand read.

The justification of bank linkage is to provide financial services, especially to poor people who areunable to get bank credit on their own and therefore, dependant on informal sources includingmoneylenders to meet their urgent needs. In the present sample, a little more than 60 per cent of thesample SHGs had their entire, or at least the majority of membership from below the poverty line. About35 per cent of such SHGs have the bulk of their membership drawn from non-poor families. In the case




Table 4.4: Governance aspects of SHGs

Model type

1

Model type

2

Model type

3

All Models

System of Selecting leaders• Election 9.4 9.1 2.3 8.2

• Nomination 88.4 85.7 96.2 87.9

• Any other 2.2 5.3 1.5 3.9

Total 100.0 100.0 100.0 100.0

SHGs reporting change in leadership since

establishment (%)

41.9 38.8 45.7 36.2

Frequency of change in leadership

• 6 months 2.6 2.8 5.1 3.1

• 1 year 36.2 45.3 50.8 43.4• 2 years 47.4 40.6 28.8 40.8

• > 2 years 13.8 11.3 15.3 12.7

Total 100.0 100.0 100.0 100.0

It is seen that in more than 80 per cent of the SHGs, the leader was nominated and elections were held inonly about 10 per cent of cases. Nomination seems to be the practice, particularly among Model type 3SHGs. While it was 100 per cent nomination for the SHGs in the sample in Maharashtra, SHGs in Uttar

Pradesh had the highest percentage of elected leaders (37 per cent) (Appendix A4.2). During the fieldstudy it was observed that in many of the SHGs the members mostly wanted and preferred the highesteducated among them to be the leader since most of the members were illiterate. Further, it could be alsoin the interest of the NGOs to appoint a capable as well as literate member of the group as the leader sothat the running of the SHG is smooth. The concern for smoothness in day to day operations could be animportant reason for the high percentage of leaders chosen by nominations in the SHGs.

For an SHG to run smoothly, it is important that there should be change in le adership so that one persondoes not hold the reins for ever and also to see that more members get experience in leadership functions




Table 4.5: General management practices

Model

type 1

Model

type 2

Model

type 3

All Models

No. of meetings conducted per month 1.7 1.5 1.4 1.6Member attending meetings (%) 86.8 91.5 92.5 90.3

Members participating in the discussions (%) 73.7 83.2 80.5 80.3

SHGs having rules and regulation in written form (%) 85.3 92.8 92.3 90.5

Frequency of updation of rules & regulation

• Frequently 14.0 18.3 25.9 18.0

• Rarely 61.8 46.9 70.7 53.7

• Never 24.3 34.7 3.4 28.3

SHGs reporting accessibility of rules & regulation to all

members (%)

93.1 98.5 93.7 96.3

Level of awareness about objectives of the group among members (%)

• High 37.0 49.9 25.4 42.8

• Moderate 59.1 45.7 67.7 52.6

• Very little/Not at all 4.0 4.4 6.9 4.6

Maintenance of Minutes Register

• A literate member 75.2 61.7 70.8 66.8

• Representative of NGO 4.0 12.1 19.2 10.7

• Any person employed by SHG 6.1 19.0 3.1 13.1

• Any other 6.1 5.6 4.6 5.6

• None 8.6 1.6 2.3 3.7

Frequency of updating minutes by

• Regularly 76.9 74.6 89.0 77.2

• Occasionally 14.5 9.8 5.9 10.5

• Rarely 8.5 15.6 5.1 12.3

Total 100.0 100.0 100.0 100.0

I d S i bili f SHG B k Li k P




Table 4.5a: Change in the general management practices

At time of linkage In 2006

Number of meetings per month 1.63 1.57

Members attending (%) 88.90 89.11Members participating in discussions (%) 74.7 78.7

System of selecting the leader (%)

• Election 9.8 8.2

• Nomination 77.7 79.2

• Others 12.5 12.5

Reporting accessibility of rules and regulations to all members (%) 94.5 96.3

Awareness about rules and regulation among members (%)

• High 31.7 45.5

• Moderate 46.1 50.1

• Very Little/Not at all 22.2 4.4

Awareness about objectives of the group among members (%)

• High 29.7 42.8

• Moderate 46.5 52.6

• Very Little/Not at all 23.9 4.6

Total 100.0 100.0

There was very little or no change in the average number of meetings held per month. Almost identicalwas the experience with members attending group meetings or participating in group discussions. Thesystem of selecting the group leader in the two kinds of SHGs since bank linkage has also remainedlargely unchanged. However, awareness about the rules and regulations of the SHGs as well as about theobjectives of the group has increased considerably among the members over the years.

4.4 FINANCIAL MANAGEMENT PRACTICES

I t d S t i bilit f SHG B k Li k P




Model

type 1

Model

type 2

Model

type 3

All Models

(%)

Frequency of updating book of accounts• Regularly 81.7 85.7 90.4 85.2

• Occasionally 6.7 6.2 4.8 6.2

• Rarely 11.5 8.1 4.8 8.6

Frequency of updating members' passbook

• Regularly 79.9 78.7 88.8 80.5

• Occasionally 8.8 9.4 6.4 8.8

• Rarely 11.2 11.8 4.8 10.7

Frequency of updating passbook of SHG

• Regularly 77.1 81.9 94.2 82.4• Occasionally 12.3 9.4 1.7 9.1

• Rarely 10.6 8.7 4.2 8.5

SHGs taking admission/membership fee (%) 19.7 25.4 75.0 28.9

Total 100.0 100.0 100.0 100.0

The books of accounts of SHGs were, to a considerable extent, maintained by literate members in thegroup. This percentage was highest for Model type 1 SHGs (77 percent), and was generally high for

SHGs in Model type 2 (65 per cent). The same is true with regard to maintenance of the SHG passbooksas well as passbooks of individual members of the SHGs. It is also seen that in about 20 per cent or moreof Model type 3 SHGs, a representative of the NGO was responsible for maintenance of accounts andpassbooks. As Model type 3 SHGs are formed and financed through NGOs, it follows that frequently arepresentative is appointed to look after financial management. A small percentage of SHGs did notmaintain the SHG passbook (0.9 per cent) and passbooks of individual members (1.9 per cent). Generallya high percentage of the SHGs (>80 per cent) were seen to update the book of accounts, SHG passbooksand the passbooks of members regularly.





Table 4.7: Saving activities of SHGs members

Model

type 1

Model

type 2

Model

type 3

All Models

Distribution of SHGs by periodicity of saving services offered in 2006 (%)• Weekly 24.0 16.0 16.3 18.3

• Fortnightly 2.5 2.4 1.6 2.3

• Monthly 71.3 79.9 82.2 77.7

• Every two months 1.8 1.3 0.0 1.3

• Every three months 0.4 0.5 0.0 0.4

SHGs paying interest on the savings of members (%) 61.5 75.5 60.3 69.4

SHGs which have revised minimum saving per member since

formation (%)

30.9 34.0 47.7 35.0

SHGs reporting members unable to make mandatory savings atany point of time (%)

20.1 17.0 37.7 20.7

Average amount of mandatory saving per month per member

(Rs.)

59.73 46.69 35.64 49.00

Average amount of saving per year per member (2006) (Rs.) 1358.69 958.10 1717.50 1176.76

Saving on a monthly basis seems most popular as more than three-fourths of the SHGs seem to havepreferred monthly savings to other kinds of periodicity. Nearly 18 per cent of SHGs save weekly. Only avery small percentage of SHGs resort to saving fortnightly or once in two months. Based on the financialstrength of the members, each SHG fixes a certain amount as mandatory savings. In the present sample,the average mandatory saving per member amounted to Rs. 49. There was, however, a great deal of variation among the three Model types of SHGs, ranging from about Rs. 36 for Model type 3 SHGs toRs. 60 for Model type 1 SHGs. The amount of mandatory monthly savings observed in the present studyis marginally higher than the monthly savings of members reported in the Light and Shade Study (GhatePrabhu, 2006), which reported an average monthly saving of Rs. 45 per member with wide variationacross the sample states. The average amount of saving per year per member for 2006 was Rs. 1,177.There were significant differences in savings performances between the different Model types of SHGs.





to save varied drastically among different states, from Uttar Pradesh (49.7 per cent) to Andhra Pradesh(7.9 per cent).

Changes in savings practices of the SHGs from the pre-bank linkage to 2006 are provided in Table 4.5a.

Table 4.7a: Change in the saving activities since bank linkage

At time of linkage 2006

Distribution of SHGs by periodicity of saving services offered (%)

• Weekly 18.8 18.2

• Fortnightly 17.0 2.3

• Monthly 62.0 77.1

• Every two months 1.6 1.3

• Every three months 0.6 1.1

Average rate of interest paid to members per annum 7.67 8.22

Average amount of saving per year per member (Rs.) 580.06 1176.76

As far as the periodicity of savings is concerned, most of the SHGs that were saving once a fortnight hadchanged over to saving monthly, making the month predominant period of saving. The average amountof saving per annum per member had risen to Rs. 1,177 from Rs. 580. The average number of years of bank linkage for the sample SHGs has worked out to 5.4. Hence, the average savings increased annually

by Rs. 110.50 during this period.

More than one-third of the SHGs reported that they have revised upward the minimum saving permember, from the time of formation to the present, and 69.4 per cent of the SHGs are paying interest onthe savings of members.

The rate of interest paid to the members by the SHGs has increased only marginally over the years. It hasremained between 7 and 8 per cent. The average rate of interest paid to members by SHGs has varied





Table 4.8: Source of funds and external borrowings of SHGs

Model

type 1

Model

type 2

Model

type 3

All Models

Percentage distribution of external borrowings and own funds of SHGs• SHG own Fund 4.1 1.9 16.4 5.0

• Commercial Bank 36.5 45.3 48.3 43.7

• Regional Rural Bank 52.4 45.8 22.6 43.3

• Co-operative Bank 6.6 6.4 1.9 5.7

• Moneylender 0.2 0.0 2.8 0.5

• Employer 0.0 0.1 0.2 0.1

• Others 0.2 0.5 7.9 1.7

SHGs facing problems in raising external funds (%) 65.1 70.9 68.5 68.9

Average amount of own funds available at the time of Bank Linkage (Rs.)

3733 2576 3240 3562

Average amount of own funds available in 2006 (Rs.) 38041 43439 33316 40508

Average external borrowed funds by SHG since Bank

Linkage (Rs.)

123177 141219 142433 136164

It is seen that the average amount of own funds available to SHGs in the pre- linkage period was aboutRs. 3,500. Within the different Model types of bank-linked SHGs however, Model type 1 had slightlyhigher funds available (Rs. 3,733) with Model type 2 having the lowest (Rs. 2,576). The average amountof own funds available with the SHGs in 2006 suggests that the funds available is Rs. 40,508 in 2006.Taking into account the average number of years since bank linkage as 5.4, the average annual increaseof SHG’s own funds works out to be Rs. 6,849. From the state-wise figures provided in Appendix A 4.6,it appears that the SHGs in Karnataka, Andhra Pradesh and Maharashtra had been most successful inimproving their fund availability.

The average externally borrowed funds by SHGs since bank linkage was fairly high at Rs. 1,36,164,indicating an average increase of Rs 25 216 per year This is mostly because of the increased





4.7 LENDING ACTIVITIES OF SHGS

The lending activities of the sample SHGs are described in Table 4.9 below:

Table 4.9: Lending activities of SHGs

Model

type 1

Model

type 2

Model

type 3

All Models

Average number of months after establishment SHGs started

providing loans to members

7.6 6.5 7.8 7.0

Distribution of SHGs by the periodicity of credit Services to members (%)

• Weekly 7.7 6.4 3.1 6.3

• Fortnightly 3.7 3.7 1.6 3.4

• Monthly 75.4 67.8 71.7 70.5

• Every 2 months 2.6 4.9 1.6 3.8

• Every 3 months 10.7 17.2 22.0 16.0

Average number of days required for approving loan 9.2 7.7 13.4 8.9

Average number of loans approved per year per SHG 8.0 8.3 6.9 8.0

Average loan period in months 10.6 11.7 11.8 11.4

Interest rate (%) charged per annum by SHGs 25.5 22.8 20.5 23.3

Percentage of SHGs charging penal interest from defaulters 7.1 35.0 52.8 29.3

Average loan amount per member (Rs.) 4926.29 5129.43 3350.45 4833.86

It is seen that on an average, the sample SHGs had started providing loans to members from accumulatedsavings within about seven months after their formation. About 71 per cent of the SHGs provide loanservices to members once a month. A small percentage of SHGs also offer credit services on a weekly,fortnightly or three-monthly basis. The periodicity of lending services by the SHGs is more or lesssimilar to that of savings services observed in an earlier chapter. Whenever the SHGs meet, they tend toconduct all their transactions together, be it savings, disbursement of loan, or any other matter connectedwith the SHG. It appears as if most of the SHGs find it convenient to operate on a monthly basis.




p y g g

The average loan period was fairly similar among the sample SHGs belonging to different states, exceptMaharashtra where it was 15 months. The average number of days for approving a loan was relatively

high in Karnataka (18 days) and with less than six days in Uttar Pradesh, Andhra Pradesh and Orissa. Theincidence of penal interest was higher in Maharashtra (41 per cent) than the other states where it rangedbetween 23 and 32 per cent. Table 4.9a provides a summarized survey data on the changes in the lendingactivities of SHGs over time.

Table 4.9a: Change in the lending activities of SHGs since bank linkage/establishment

At time of Linkage 2006

Distribution of SHGs by the periodicity of credit services to members (%)

• Weekly 7.3 6.3

• Fortnightly 3.6 3.4

• Monthly 67.3 70.5

• Every 2 months 4.1 3.8

• Every 3 months 17.6 16.0

Distribution of SHGs by usage of funds for providing loan to members (%)

• Own fund 62.3 24.7

• Borrowed fund 9.5 8.3

• Both 28.2 67.0

Average number of days required for approving loan 10.0 8.9Average number of loans approved per year 6.4 8.0

Average loan period in months 9.9 11.4

Interest rate charge per annum by SHG (%) 24.6 23.3

Major purposes for which loans are used (%)

• Repayment of debts 10.3 7.6

• Basic consumption needs 12.8 10.2

• Household assets/house improvements 5.5 6.0

• Other social needs (e.g. health, education) 14.7 14.4




p y g g

The findings of the present study are in line with the results of impact studies conducted earlier, whichreported an increase in the share of borrowed funds being used for production purposes between pre-SHGand post-SHG situation. (NABARD and GTZ, 2005).

The percentage of loans used for various purposes varied widely among the states studied. The SHGs inAssam were using a very high share (more than 85 per cent) of the loan for income generating activities.At the other end, SHGs in Andhra Pradesh were utilising only a small portion of the loan amount forincome generating activities (about 31 per cent) as they were using most of it for social needs (26 percent) and repayment of debt (23 per cent). The sample SHGs in Maharashtra increased substantially theshare of loans for income generating activities from 39 per cent to 56 per cent over the years (Appendix

A4.7b).

4.8 OTHER FINANCIAL SERVICES OFFERED BY SHGS

An attempt was also made to find out if SHGs are offering any other financial services to their membersand the results are presented in Table 4.10.

Table 4.10: Other financial services offered by SHGs

Modeltype 1 Model type 2 Model type 3 All Models

SHGs offering Health Insurance (%) 18.3 7.6 0.8 9.8

SHGs offering other Insurance (%) 0.4 3.6 0.0 2.2

SHGs Other Financial Services (%) 0.4 1.8 0.0 1.1

It is seen that about 9.8 per cent of the sample SHGs are offering health insurance to their members. Thepercentage is quite high among Model type 1 SHGs (18.3 per cent) and almost negligible in Model type 3groups. A small number of SHGs are also offering insurance and other financial services to theirmembers.




Table 4.11: Training needs of SHG members

Model

type 1

Model

type 2

Model

type 3

All Models

SHGs which have helped members to develop skills (%) 47.1 48.8 51.2 48.6SHGs which have developed the following human development skills (%)

• Leadership 37.8 39.6 49.2 40.4

• Motivation 46.4 40.7 38.5 42.0

• Delegation 24.5 18.8 16.2 20.1

• Communication 28.1 29.5 40.8 30.6

• Negotiation 13.3 14.5 10.8 13.6

• None 14.0 22.6 18.5 0.0

SHGs which have developed the following Management skills (%)

• Strategy 23.4 25.7 23.8 26.7• Planning 22.3 41.0 29.2 38.2

• Marketing 21.9 31.5 40.8 33.7

• Financial/Numeric 16.5 26.0 29.2 25.8

• Project management 6.8 4.9 11.5 6.6

• Time Management 7.6 8.5 11.5 8.7

• None 16.5 27.5 20.8 0.0

SHGs reporting following Fields in which members require more knowledge and skills for income generating

activities (%)

• Technical Skills 50.7 64.4 63.1 60.2

• Financial Skills 59.0 63.5 37.7 58.7

• Management Skills 45.0 38.0 37.7 40.0

• Market Development Skills 37.4 29.8 36.9 33.0

• Others Skills 6.1 2.9 9.2 4.7

• No further training required 4.3 3.1 5.4 3.7

SHGs reporting facing problems in developing the skills

of members (%)

89.9 84.6 80.8 85.6




The SHGs have to maintain a number of financial records and accounts. Generally, the promoter of theSHGs trains an educated member in simple accounting procedures. It has already been seen that in someSHGs a person nominated by the NGO maintains the accounts, while in some others; a person is hired for

the job. However, many SHGs are trying to see that all members are well versed in these matters and aretaking turns to do this work. About 26 per cent of the sample SHGs has developed financial skills amongthe members. Once again it is noticed that among the SHGs belonging to different model types, Modeltype 3, has the highest percentage of skill development.

A high percentage of SHGs (more than 80 per cent) has reportedly faced problems in developing theskills of their members. The major reasons for this were given as lack of time, lack of interest, inadequateliteracy among the members and insufficient training facilities.

Many of the existing and potential income generating activities require a lot of technical knowledge andskills. Even in agriculture and animal husbandry, more income could be generated by improving theknowledge and skill base of farmers in various aspects of their respective activities. Further knowledgeabout processing, preservation and refrigeration also becomes essential in many cases. During the casestudies, it was observed in many instances where members were trained in fish farming and bee keeping.It is therefore not surprising that around 60 per cent of SHGs have reported a need for improving thetechnical skills of their members. Other important fields in which knowledge and skills were requiredincluded financial (59 per cent), management (40 per cent) and market development skills (33 per cent).

Very few SHGs claimed that further training was unnecessary.

Among states, (Appendix A4.8), a large variation exists in the percentage of SHGs which have helpedmembers develop their skills. While the percentage was highest (88 per cent) in Karnataka, it was thelowest in Uttar Pradesh (20 per cent). There is also considerable variation in the percentage of the varioushuman development skills developed in the different states.

A high proportion of the SHGs reported that they were facing problems in developing the skills of




Table 4.12: Organisational sustainability of SHGs

Model type

1

Model type

2

Model type

3

All Models

SHGs reporting dropout of members (%) 42.1 40.7 55.4 43.1Dropout rate (%) 9.0 7.8 8.2 8.2

Reasons for members dropping out

• Migration 22.4 32.8 26.9 28.9

• Illness 5.6 7.8 10.8 7.8

• Not satisfied with SHG 48.0 40.6 45.2 43.5

• Defaulter 17.6 13.7 17.2 15.4

• Others 6.4 5.1 0.0 4.4

SHGs reporting members withdrawing due to non

availability of loan amount demanded (%)

19.6 11.2 21.2 14.6

SHGs reporting joining of new members (%) 28.4 23.1 55.9 29.2

About 43 per cent of the sample SHGs have reported drop out by members since establishment. Thispercentage is slightly higher in Model type 3 SHGs in comparison to Models 1 and 2 where thepercentages are almost similar. The drop out rate has worked out to be 8.2 per cent or an average of aboutone person per group. There were only slight variations among the three Model types of bank-linkedSHGs.

The most important reason for members dropping out was the lack of benefits from SHGs. This reasonwas cited by 44 per cent of the sample SHGs, reporting drop out of members. Nearly 29 per cent of thedrop outs were caused by migration and about 8 per cent by illnesses, the reasons that were unavoidable.The other main reason appeared to be members defaulting to make savings/repayments and this made upfor about 15 per cent. Many persons become members of SHGs because of the lure of bank loansavailable at a lower interest rate than loans from moneylenders. It is seen that about 15 per cent of SHGshave reported withdrawal of members due to reasons of non-availability of loan. However, this problemof members dropping out has not assumed great importance since 29 per cent of the SHGs have also




The percentage distribution of SHGs by percentage of loan recovery reveals that 69 per cent of thesample SHGs has reported 100 per cent repayment by members. Among the various models in Modeltype 1, 80 per cent of SHGs have reported 100 per cent repayment by members, Model type 2-71 per

cent, but Model type 3 only 41 per cent have reported full recovery. In fact 96 per cent of Model type 1SHGs has reported 75-100 per cent loan recovery from its members.

Table 4.13: Financial sustainability of SHGs

Model

type 1

Model

type 2

Model

type 3

All

Models

Distribution of SHGs by percentage of loan recovery (%)

• 100% 79.9 70.5 40.8 69.2

• 95-99 2.9 1.1 0.8 1.6

• 90-94 6.1 4.7 11.5 6.0

• 85-90 0.4 0.2 2.3 0.5

• 75-84 6.8 5.4 22.3 8.1

• 50-74% 1.1 5.1 19.2 5.8

• <50% 2.9 13.0 3.1 8.7

Causes of non-repayment of loan by members (%)

• Natural calamity 40.8 17.8 14.4 21.4

• Inadequate peer pressure 15.8 20.7 8.8 15.7

•

Blocking of payments from buyer of products sold (Cashflow problems) 30.3 28.4 4.0 20.5

• Health/illness problem 11.8 19.5 44.0 26.2

• Others 1.3 13.6 28.8 16.2

SHGs reporting loan repayment arrears (%) 17.6 6.9 14.6 7.2

SHGs reporting repayment arrears (%)

• > 6 Months 14.0 6.3 12.3 9.4

• > 12 Months 11.5 5.6 7.7 7.6

Average amount of loan presently outstanding (Rs.) 31015 29835 40346 31598




4.12 ADEQUACY /APPROPRIATENESS OF SUPPORT RECEIVED FROM SHPI

Generally, SHGs are promoted by banks, NGOs, government departments, other institutions and these

are called the the Self Help Promoting Institutions (SHPIs). These SHPIs get the members together,explain and advise about formation and functioning of the groups, help them to form rules andregulations and in the training of group leaders, teach them simple accounting procedures and generallysee to it that after a time the members would be able to manage the SHGs themselves. Often, NGOs trainthe members in some income generating activity. The information collected on the adequacy of thesupport received from the SHPI is provided below in Table 4.14.

More than half the sample SHGs were satisfied with the information provided to them by SHPIs on thevarious aspects (ranging between 51 and 69 per cent) important for group establishment. “Especiallypositive” was generally the assessment of Model type 2 groups, whereas Model type 1 groups weregenerally expressed “below average” levels of satisfaction about the support received from the SHPI.Over the past year, SHPI staff had visited SHGs around four times. Model type 2 SHGs were visitedmore often (5.4) and the other two Model types at lower intervals (1.9 and 2.9). About 57 per cent of theSHGs (68 per cent of Model type 2 SHGs) were satisfied with this. On an average, representatives of SHGs had visited their respective SHPIs around 8 times in a year.

The SHGs also came up with some suggestions for useful changes in the activities of SHPIs. Most often,

it was mentioned that SHPIs should devote more time for training and discussions at the group formationstage, followed by the allocation of more time for group discussions and addressing questions. Thepresence of qualified staff for extended lengths of time at the group formation stage goes a long way toimprove the competence of group facilitators in the relevant subjects.

Table 4.14: Adequacy/appropriateness of support received from SHPI Model

type 1

Model

type 2

Model

type 3

All

Models




considering the different requirements of groups. The SHGs in all the states have suggested that SHPIsallow more time in training and group discussions, albeit in varying degrees. In this connection, it maybe mentioned that an NGO- SHPI in Uttar Pradesh has not only promoted a considerable number of

SHGs (more than 500), but has also helped the SHG members in acquiring various skills to enable themtake up income generation schemes. It has also arranged insurance facilities to the SHGs members(Chapter 6.3).

Similarly, the adequacy and appropriateness of support received from financial institutions and banks hasbeen analysed in Table 4.15.

Table 4.15: Adequacy/appropriateness of support received from FI/Banks

Model

type 1

Model

type 2

Model

type 3

All

Models

Average number of times staff member of FI/bank visit SHGs in a year 1.4 2.9 0.6 2.2

SHGs reporting support/activities provided by FI/banks (%)

• Training on book keeping 44.4 20.4 12.9 24.3

• Checking & advising on book keeping accuracy 24.7 25.5 13.3 23.2

• Reviewing & advising on SHG financial activities 21.1 21.1 18.1 20.6

• Reviewing & advising on SHG financial health aspect 5.3 16.0 4.0 11.6

• Appraising SHG loan request 4.6 16.0 25.8 15.3

SHGs satisfied with the adequacy/appropriateness of services received from FI (%)• Frequency of visits to the SHGs 9.9 32.0 29.8 26.8

• Provisions of loans according to the needs of SHGs 55.8 60.9 56.9 58.9

• Conditions for loans to the SHGs 57.6 62.0 56.9 60.0

• Saving services according to the needs of SHG 56.8 65.5 78.5 64.7

• FI conditions for savings of the SHG 59.7 63.3 72.3 63.5

• Accessibility of SHG representative to bank managerial staff 61.5 63.7 75.4 64.6

On an average staffers of concerned financial institutions/banks visited each of the sample SHG about




Chapter 5Impact of SBLP on households

An attempt is made in this chapter to measure the impact of SBLP on various socio-economic parametersincluding the living standards of the SHG members and their household (henceforth “households” or“SBLP households”) separately for the six states covering all the regions in India. These six statestogether cover 77 per cent of the total credit-linked SHGs as on March 2002. It could, therefore, beconcluded that the aggregate experience largely represents an All-India picture.

As discussed earlier in Chapter 2, the relevant data was collected from a total of 4,791 households

covering different models of SBLP households. The randomised selection was made from SHGhouseholds having bank linkage of more than four years. The impact of the programme on the SHGhouseholds’ economic activities, welfare and social empowerment is obtained by measuring the changesin pre-SHG and post-SHG situations among the beneficiaries. The impact of bank linkage was measuredas the difference in the Compound Annual Growth Rate (CAGR) of a given parameter between the pre-SHG and post-SHG linkage situation of the SHG members and their households. All the financialparameters for pre-SHG and post-SHG situations are measured in the reference year prices. The referenceyear for the study was January-December 2006 (calendar year).

Three different models of bank-linkage have been covered to assess the impact by models at the All-India levels as given below:

• SHGs formed and financed by banks (Model type 1).

• SHGs formed by formal agencies other than banks, NGOs and others, but directly financed by banks(Model type 2).

• SHGs financed by banks using NGOs and other agencies as financial intermediaries




relevant comparisons among the various types of models. It was not possible to select Model type 3 fromUttar Pradesh and Maharashtra due to non-availability of any list of SHGs under this model type.

5.1.1 Years of bank linkage

As discussed in the chapter describing the sample design methodology (Chapter 2), the majority of SHGs were selected whose bank linkage goes back to 2002. The average number of years of bank linkage by type of model at the All India level is given below.

Table 5.2: Average number of years of bank linkage per household

Model Number of years of bank linkage

Model type 1 5.3

Model type 2 5.4Model type 3 5.5

All Models 5.4

The overall average number of years of bank linkage of SHG members was 5.4 years. The averagenumber of years of bank linkage per household by model and state is given in Appendix A5.1.1. Theaverage linkage was highest in Andhra Pradesh with 5.8 years and least in Assam with 4.8 years.

5.1.2 Level of literacy

Information on the level of current education of the head of the households was collected of the SBLPmember households. About 30.6 per cent of household heads were found to be illiterate. Another 26 percent reported primary level education. However, the majority had completed primary education. Thepercentage distribution of education of heads of household at the all-India level is given in Table 5.3.

Table 5.3: Distribution of head of households by education level: All-India (%)

Model type Education of the head of the household




Table 5.4: Growth in annual net household income (%)

State Income per household (Rupees)

Base level CAGR*

Assam 28004 6.4Orissa 23740 5.6

Uttar Pradesh 39110 5.6

Maharashtra 38637 6.9

Andhra Pradesh 46467 5.0

Karnataka 33077 7.3

All India 34786 6.1

Note: *- Compound Annual Growth Rate

5.2.1 Changes in net household income by model types

An analysis of net household income by SHG model types revealed that the annual rates of growth inincomes did not vary significantly across models. For both Model type 1 and Model type 3, incomesgrew by 6.2 per cent, while for Model type 2 it was 6.1 per cent. The base level incomes per householdthe annual growth rates across types of model are given in Table 5.5.

Table 5.5: Net income per household by types of model

Types of

model

Description of models Income per household (Rupees)

Base Level (Rs.) CAGR

1 Formed and financed by bank 34789 6.2

2 Formed by NGOs and financed directly by bank 36142 6.1

3 Financed by bank using financial intermediaries 29019 6.2

Table 5.5 depicts that the income at base level per household was highest at Rs. 36,142 for household in




Table 5.6: Household income by source s of earnings : Distribution and growth (%)

Source of income Share (%) CAGR

Base level 2006

Agriculture 30.9 29.9 5.5

Livestock 5.7 7.3 11.2

Wages 26.5 25.3 5.3

Salaries 15.1 14.6 5.4

Self employment (non-farm) 17.4 18.2 7.0

Others 4.4 4.7 7.3

Total 100.0 100.0 6.1

Average annual income per household (Rs.) 34786 47934

Figure 5.2.1: Percentage distribution of income by source of earnings: All India

All India

0

5

10

15

20

25

30

35

Agriculture Livestock Wages Salaries Self Others

P e r c e n t

Base Level

2006




pan, beedi and cigarettes, intoxicants, ceremonies, and other heads like newspaper, travel and also onhealth and education. The annual consumption expenditure on food per household at the base level andtheir annual growth rates are given in the Table 5.7.

Table 5.7: Changes in annual per household consumption expenditure of food (level and growth)

Annual Consumption expenditure on food per household State Base (Rs.) CAGR

Assam 3468 5.1

Orissa 2544 4.1


Maharashtra 2952 5.1


Karnataka 2244 6.8

All India* 3040 5.1

Note: * All India refers to all six states.

The share of consumption expenditure on food to total consumption expenditure at the base le vel hasbeen worked out to be 66.6 per cent (Tables 5.7 and 5.8). The households’ expenditure on food seemed tobe growing at a faster rate in Karnataka because of the low base level consumption in Karnataka. The

share of food in total consumption expenditure increased in the post-SHG period in all the states exceptAndhra Pradesh and Maharashtra, where the share of non-food expenditure increased. This could bebecause of greater number of years of bank linkage in these states.

5.3.1 Changes in expenditure on non-food items

The overall annual growth in non-food expenditure of households across different states is given belowin Table 5.8.




households was lowest in Assam followed by Orissa. The rate of growth was highest in Andhra Pradesh(7.4 per cent) followed by Maharashtra (7.1 per cent) and Uttar Pradesh (7 per cent).

Table 5.9: Annual expenditure per household on education (level and growth)States Annual expenditure on Education per household

Base (Rs.) CAGR

Assam 119 Neg.

Orissa 74 1.6


Maharashtra 172 7.1


Karnataka 196 3.8All India 180 5.6

5.3.3 Changes in expenditure on health

The share of expenditure on health to total expenditure (food plus non-food) for households in the baseyear has been worked out at 4.15 per cent (Tables 5.7, 5.8 and 5.10).The annual growth rate in the healthexpenditure of households was 5.5 per cent, which was found to be higher than the growth rate for foodand non-food items at the all-India level. Wide variation in the growth rates in health expenditure is

found across the states. The annual expenditure on health per household in the base level and their annualgrowth rates are given in Table 5.10. The annual growth in health expenditure was higher in Karnataka,Andhra Pradesh and Assam compared to their growth rates in food and non-food items.

Table 5.10: Annual expenditure per household on health (level and growth)

State Annual expenditure on health per household

Base (Rs ) CAGR




Table 5.11: Share of households reporting change in access to nutrition, children’s

education and health care

Types of

model

Nutrition Children’s education Health care

Increase Nochange

Decrease Increase Nochange

Decrease Increase Nochange

Decrease

Model type 1 76.9 18.9 1.1 79.9 15.1 0.9 77.6 20.4 0.9

Model type 2 79.6 16.5 1.4 81.2 14.1 1.8 83.5 13.9 0.9

Model type 3 76.9 19.5 0.9 77.4 17.8 1.2 84.3 13.5 0.6

All Models 78.5 17.6 1.3 80.3 14.9 1.5 81.9 15.7 0.8

It can be seen from Table 5.11 that on an average about 80 per cent of the households reported an

increase in their access to nutrition, children’s education and health care of members as compared to thepre-SHG situation. The state-wise tables on changes in access to nutrition, children’s education andhealth care of members are given in Appendix A5.4.1- A5.4.3.

5.4.1 Change in access to drinking water

Households were asked to indicate their major source of drinking water in the pre-SHG situation and inthe reference year 2006. The responses revealed that there was an increase of seven percentage points atthe all-India level for households in getting piped water within the house compound. The most prominentsource of drinking water supply was reported to be hand pumps. The percentage of households reportingtheir major source of drinking water across states, types of model in pre-SHG situation and in 2006 aregiven in Appendix A5.4.4.

The state-wise analysis shows that the major source of drinking water was piped water in Maharashtra,followed by Andhra Pradesh and Karnataka. The increase in the growth rate was more prominent in theModel type 2 than in other model types. It is reasonable to acknowledge that access to piped water supplygenerally shows improvement in quality and quantity of water supply. This speaks much about the




• SHGs

• Banks

• Post offices

•

Co-operative societies• Life insurance and

• Cash in hand

The physical savings include net change in investments during the year in land/house improvement:

• Purchase of gold and jewellery, including silver and imitation jewellery and

• Business assets

The average physical and financial annual savings per household in the base year and their annual growthrates are presented in Table 5.12.

Table 5.12: Average level of savings per households (level and growth): All India

Model type Type of savings

Financial (Rs.) Physical (Rs.) Total

Base 2006 CAGR Base 2006 CAGR Base 2006 CAGR

Model type 1 2601 4764 12.1 790 1949 18.7 3391 6714 13.8

Model type 2 2068 4392 15.0 842 1592 12.5 2911 5984 13.3Model type 3 853 2285 19.5 474 663 6.2 1327 2948 15.5

All Models 2057 4213 14.3 777 1569 14.0 2834 5782 14.2

In comparison to the base year, the households were generated more than doubled their financial savings– from Rs. 2, 057 to Rs. 4,213 and their physical savings from Rs. 777 to Rs. 1, 569. This resulted in anoverall increase in savings by 104 per cent from Rs. 2, 834 to Rs. 5, 782. It may also be seen from Table5.12 that the annual growth rate of both financial and physical savings reached was more than 14 percent The growth rate in savings was higher in Model type 3 compared to the other Model types




Table 5.14 presents percentage of households reporting whether their needs for saving facilities are metby SHGs.

Table 5.14:Distribution of households by saving facilities fulfilled by SHG: All India

Model type Saving facilities fulfilled by SHG (%)

Very well met Well met Not met Non-response

Model type 1 22.5 53.5 18.5 5.6

Model type 2 37.5 48.6 10.9 2.9

Model type 3 37.1 51.1 7.1 4.8

All Models 33.1 50.3 12.5 3.9

It can be observed from Table 5.14 that as high as 83 per cent of households reported that their needs for

saving facilities were sufficiently met by SHGs.

5.5.4 Changes in Average value of consumer durable assets per household

The net changes in the value of consumer durables owned per household and their annual rate of growthare presented in Table 5.15. The net change indicates the difference in the value of assets owned in thepost-SHG period. The average net change in the magnitude of value of assets was Rs. 4329 perhousehold at all-India level and the rate of growth per annum in the consumer durable assets wasconsiderably high at 9.9 per cent. The magnitude of change was highest in Model type 2. At the statelevel, the magnitude was highest for households in Andhra Pradesh, followed by Maharashtra, Karnatakaand Uttar Pradesh.

Table 5.15: Change in household assets across states

State Net Change in assets per household (Rs.) CAGR

Assam 2907 11.5

Oris sa 2979 15.4

Uttar Pradesh 4214 6 1




5.6.1 Average loan amount

On an average, the households borrowed a total of Rs. 14,640 in the post-SHG period (with about 5 yearsof bank linkage), compared to a total of Rs. 5,384 in the pre-SHG situation (Table 5.17 and Figure5.5.1). The average loan taken by households was growing at an annual rate of 20.45 per cent. Theaverage per household loans in post-SHG period for the different type of models varied only to a smallextent - between Rs. 14,202 in Model type 3 to a maximum of Rs. 14,922 in Model type 2.

Table 5.17: Average loan amount per household by Model type and rate of growth

Model type Loan amount per household

Pre-SHG Post-SHG CAGR

Model type 1 5229 14282 20.95

Model type 2 5636 14922 19.81Model type 3 4645 14202 22.42

All Models 5384 14640 20.45

The average loan amount per household by states is given in Appendix A5.5.2

Figure 5.5.1: Change in average borrowings per household

5384

3623

14640

41146000

8000

10000

12000

14000

16000

R u p e e s

Pre-SHG

post -SHG




Table 5.18: Percentage distribution of borrowers by source of loan

Model type SHG Banks Moneylenders Relatives /

friends

Others

Model type 1

Pre-SHG

Post-SHG

-

68.6

15.5

29.2

56.0

1.0

23.3

0.8

5.2

0.4

Model type 2

Pre-SHG

Post-SHG

-

44.4

12.8

50.8

57.8

1.6

27.1

2.2

2.3

1.0

Model type 3

Pre-SHG

Post-SHG

-

49.8

4.8

42.9

79.9

0.2

13.9

0.6

1.4

6.5

All Models

Pre-SHG

Post-SHG

-

51.2

13.5

44.2

60.4

1.2

24.4

1.6

1.7

1.8

5.6.3 Change in loan use patterns

Households were asked to indicate the actual use of the loans taken. The main purpose of this set of questions was to find out the type of use, categorised by production-oriented or consumption-orientedloans. The use of loans for productive purposes includes the loans used in:

• Agriculture• Livestock

• Petty business and trade activities

• Arts and crafts• Agro-processing and other service activities

Apart from these, all other uses of loan were considered as consumption-oriented which include:




5.6.4 Distribution of loan account by interest rate

Table 5.20 presents the percentage distributions of loan accounts of major agencies by rates of interestcharged by them.

Table 5.20: Distribution of loan account by interest rate

Agencies Interest rate per annum (%)

Upto 12 12-24 24-36 36-48 >48

Pre -SHG

Post -SHG

Pre -SHG

Post -SHG

Pre-SHG

Post -SHG

Pre-SHG

Post-SHG

Pre-SHG

Post-SHG

SHG - 21.9 - 67.2 - 8.4 - 2.4 - -

Bank 35.3 65.3 64.7 34.7 - - - - - -

Moneylenders 6.7 14.8 30.6 48.7 42.8 24.5 4.3 1.6 15.5 10.3Friends and relatives 16.2 29.0 22.0 67.9 29.7 4.4 32.1 10.3 - -

The agency-wise distribution of loan accounts by interest rate reveals that the majority of loans providedby different agencies were in the 12-24 per cent interest rate band. A significant reduction in the rate of interest charged by moneylenders may also be observed in the post-SHG period. The increasedcompetition caused by the credit services provided through bank linkage and SHG activities was likely tobe a contributing factor.

5.6.5 Repayment of loans

This information throws light on the discipline of households in their repayment behaviour afterbecoming SHG members. The households taking loan from SHGs were asked to indicate whether theymake regular repayments. The responses of borrowing households were classified in three categoriesaccording the regularities of repayment as:

• Always




5.6.6 Assessment of Current borrowing needs by SHG members

The members of the SHGs were asked to indicate whether their current loan requirements were fully metby their SHGs. The information collected reveals that loan requirements were fully met by SHGs in 82

per cent of the households (Table 5.22). Only 18.3 per cent of households indicated that theirrequirements are not fully met by their SHGs. The level of satisfaction on this aspect of financial servicedelivery was highest in Model type 3 (90.9 per cent) and lowest in Model type 1 groups (70.8 per cent).At the state level the best results were achie ved by Karnataka (i.e., higher than 90 per cent). On the otherside, about 31.3 per cent of households in Assam followed by Orissa (25.1 per cent) and Maharashtra(23.6 per cent) reported that loan needs were not fully met through SHGs. Intermediaries of Model type 3are the NGOs. The NGOs interact more with the SHGs and, therefore, are in a position to understand theneed of SHG members better. The proactive interaction in the banks and SHGs help in meeting their loan

requirements better.

Table 5.22: Distribution of households by loan requirements (%)

State Requirement of loan

Fully met by SHGs Not met fully by SHGs

Assam 68.9 31.1

Orissa 74.9 25.1

Uttar Pradesh 81.7 18.3

Maharashtra 76.4 23.6Andhra Pradesh 89.3 10.7

Karnataka 95.8 4.2

Model type 1 70.8 29.2



All India 81.7 18.3

The households where current requirements were not fully met were further asked to indicate their




no. 508(61/1.0/1)]. Here, two different poverty ratios have been provided to estimate the percentage of people below the poverty line. The first one, “Uniform Recall Period” (URP) is based on 30 days’ recallperiod of consumption of all the items. The other is “Mixed Recall Period” (MRP), based on 365 days’recall for five in frequent non-food items, namely clothing, footwear, durable goods, education andinstitutional medical expenses, together with 30 days’ recall for the remaining items. Based on this, thepoverty estimates for 2004 -05 in the rural areas by the selected states and their poverty lines are givenbelow. People living below the poverty line will henceforth be referred to as the poor.

Table 5.24: Share of population living below the poverty line in 2004-05

States Based on URP consumption Based on MRP consumption Poverty line

(Rs./capita/ month)

% of persons Number of

persons(million)

% of persons Number of

persons(million)

Assam 22.3 5.45 17.0 4.15 387.64

Orissa 46.8 15.18 39.8 12.93 325.79

Uttar Pradesh 33.4 47.30 25.3 35.77 365.84

Maharashtra 29.6 17.11 22.2 12.84 362.25

Andhra Pradesh 11.2 6.47 7.5 4.32 292.95

Karnataka 20.8 7.51 12.0 4.33 324.17

India* 28.3 220.92 21.8 170.30 356.30

Note: * India represents all the states in India covered by NSSO.Source: The National Sample Survey Organisation (NSSO), Report No-508 (61/1.0/1), July 2004 to June 2005.

One of the major objectives of SBLP is to help poor households through financial inclusion by providingcredit through a formal system. Thus, the most important aspect is to gather information on whetherSBLP helps poor members of SHGs to come out of the poverty trap.

In this section, an attempt is made to examine whether there is any significant change in the status of




25.3 percentage points in poor households was found after about five years of bank linkage. The netpoverty reduction rates by states including the annual poverty reduction rates are provided in Table 5.27.

Table 5.27: Net poverty reduction by states

States Percentage of households below poverty line

Base level 2006 Net reduction(percentage

points)

CAGR

Assam 66.1 41.4 24.7 -9.24

Orissa 78.0 56.8 21.2 -5.63

Uttar Pradesh 61.4 34.7 26.7 -10.54

Maharashtra 62.8 30.1 32.7 -12.16

Andhra Pradesh 11.6 0.8 10.8 -36.89Karnataka 67.0 33.0 34 -12.38

Model type 1 62.4 38.5 23.9 -8.74

Model type 2 55.6 30.2 25.4 -10.7

Model type 3 61.1 33.1 28 -10.51

All India 58.3 33.0 25.3 -10.0

Table 5.27 reveals that the annual poverty reduction rates of 10 per cent was found at the all-India level.The performances of the SHG Model types 2 and 3 in poverty reduction rate were slightly above the all-

India average, whereas Model type 1 reported a poverty reduction rate of 8.74 per cent which is clearlybelow the average. At the state level, higher rates of poverty reduction were found, especially in AndhraPradesh, followed by Karnataka, Maharashtra and Uttar Pradesh. Poverty below average rates wasrecorded in Orissa, followed by Assam.

5. 8 CHANGES IN DEPENDENCE ON MONEYLENDER BY HOUSEHOLDS

The indicator on the dependence of households on moneylenders was worked out as a proportion of




5.9 SOCIAL EMPOWERMENT

One of the objectives of the SBLP is to enhance social empowerment, which includes developing the

self-confidence of members of rural households, especially women through promotion of group and ownactivities and the conduct of training, organised mainly by SHPIs. The indicators of social empowermentstudied in this report are:

• Self confidence of female members• Abilities to face problems

• Control over use of money

• Decision making

• Participation in public affairs

• Ownership of productive and consumer assets

Except for the ownership of assets, all the other indicators of social empowerment in this report are forwomen members. The female SHG members were asked to indicate their perceptions on whether theirmembership in SHGs had any impact on their empowerment in general and on various social matters asper the indicators specified above. The results of the responses are presented in Table 5.29.

Table 5.29: Impact on social empowerment of women (%)

State Distribution of householdsIncrease No change Decrease Non response Total

Assam 86.5 12.5 0.3 0.8 100.0

Orissa 94.4 5.3 0.1 0.1 100.0

Uttar Pradesh 90.3 8.3 0.3 1.1 100.0

Maharashtra 95.4 3.7 0.1 0.7 100.0

Andhra Pradesh 91.5 8.3 0.1 0.0 100.0

Karnataka 93.6 1.4 3.7 1.3 100.0

Model type 1 91 4 7 3 0 4 0 9 100 0




Table 5.30: Distribution of women members by self confidence in different activities– All India

Type of aspects Level of confidence (per cent)

Significantly

improved

Improved No change Non

response

Travelling alone to nearest town/ districtheadquarters

43.1 36.4 8.6 12.0

Going alone for medical treatment for self / children 37.4 40.3 10.1 12.1

Handling money 30.2 47.0 10.7 12.1

Addressing the forum 25.2 42.4 20.3 12.1

It may be observed from the results presented in Table 5.30 that the response of the women membersreporting significant improvement of self-confidence was reflected mostly in the aspect of travellingalone. Except for addressing a forum (68 per cent), other indicators, about 80 per cent of female membersof SHGs indicated significant improvement in self confidence.

5.9.2 Changes in abilities to face problems

Three different aspects of problematic situations were indicated to the women members and currentinformation on their ability to face them were recorded and compared to the pre-SHG situation. Theproblems on which their responses were elucidated are given below:

• Health-related• Financial crisis in the family

• Family disputes

The percentage of women respondents indicating changes in abilities to face such situations by level of improvement is given in Table 5.31.

Table 5 31: Distribution of women members in ability to face problems (%): All India


Th f i i i l f d h SHG



The percentage of women reporting improvement in control over use of money compared to the pre-SHGsituation is given in Table 5.32.

Table 5.32: Percentage distribution of women reporting control over use of money – All India

Type of use Level of improvement

Significantly

improved

Improved No change Non response

Buying consumer durables 21.3 40.9 25.7 12.1

Buying physical assets 15.0 36.7 36.2 12.2

Expenditure on family / social functions 18.5 47.7 21.3 12.4

Expenditure on children’s education 27.0 44.3 15.5 13.2

5.9.4 Change in SHG member ownership on productive and consumer assets

Information from the households was collected on their opinion whether SHG membership made anyimpact in terms of increased ownership in productive assets like livestock and business assets over thepre-SHG period. The responses of households were categorised as follows:

• Increase

• No change

• Decrease

• Non response

The above information was collected on the change in the SHG members’ ownership over householdassets compared to the pre-SHG period. Table 5.33 provides the findings on changes in memberhouseholds’ ownership over productive and consumer assets.

Table 5.33: Model-wise changes in ownership over productive and consumer assets by households –All I di


Child ’ d i



• Children’s education

• Purchase of assets

• Taking loan

• Use of loan

The information was collected on who decided on the above issues in the pre-SHG period and whetherthere was any change in the post-SHG period. Table 5.34 provides the percentage distribution of members reporting on the decision-making person in pre-SHG and post-SHG situations by indicators.

Table 5.34: Distribution of decision making members in pre -SHG and post-SHG periods (%)

Items Decision taken by

Women

member

Spouse Jointly Othersh

Children’s education

Pre-SHG

Post-SHG

9.1

22.5

34.4

15.8

45.6

51.7

2.9

2.6

Purchase of assets

Pre-SHG

Post-SHG

7.5

16.2

39.2

23.7

46.9

55.7

4.3

2.7

Taking loan

Pre-SHG

Post-SHG

9.3

28.9

42.6

17.6

41.0

49.8

4.7

1.9Use of loan

Pre-SHG

Post-SHG

9.1

22.7

40.6

20.0

43.7

53.6

4.0

2.1

The participation of women in the decision-making process increased significantly after joining SHGs.The trends were similar for all the different aspects included under this survey item. Especiallyencouraging was that the share of women increased from an overall average of nearly 9 per cent to about




Significant improvements were observed from about 15 (pre-SHG) to 50 per cent (post-SHG) on theaspects of approaching government officials and attending committees and village meetings. The changeswere much less pronounced on the side of female SHG members becoming members in

village/government committees where membership increased from nearly 5 per cent to 16 per cent.

The respective survey results by Model types (Table 5.36) showed similar trends as those analysed abovefor the All-India level. The changes in participation in public issues by states are given in AppendixA5.13.1.

Table 5.36: Changes in participation on public issues by type of model across householdmembers (%)

Approached govt. officialsto solve problems

Attended Committees,village meetings

Members of village/govt.committees

Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG

Model type 1 11.3 46.4 17.0 51.3 6.8 16.4

Model type 2 12.4 51.6 15.3 51.1 3.8 14.7

Model type 3 21.0 45.2 13.3 52.9 6.0 20.7

5.10 ASSESSMENT OF TRAINING NEEDS OF SHG MEMBERS AND THEIR FAMILIES

5.10.1 Training provided

Information was collected on whether training has been provided to the members of SHG or theirfamilies for improving income-generating activities such as farming, craft or business during the previousyear i.e., 2006. The results show that about 50 per cent of households were not imparted any training forthe required capacity development for the above mentioned occupations. The share of householdsreceiving training only once was 35 per cent in 2006 and another 15 per cent had received training


The study reveals the importance of developing need based training of households that could be adapted



The study reveals the importance of developing need-based training of households that could be adaptedand translated for local needs with follow-up technical assistance.

5.10.3 Adequacy of extension services

The extension services include knowledge information provided by NGOs, block offices and village-level members regarding financial and technical services, agricultural and farming practices to thehouseholds.

Information was also collected from the households on the adequacy of the existing extension services inrelation to their needs for developing income-generating activities. The results (Table 5.39) revealed thefollowing at the all-India level:

• Only 18.6 per cent of households reported the existence of adequate extension services.

• About 20 per cent of households reported that the extension services do not exist at all.

A very low percentage (14 per cent) was the adequacy rating of extension services which was reported byModel type 3 SHG households.

Table 5.39: Level of adequacy of extension services (%): All India

Type of model Level of adequacy of extension servicesNot existing Inadequate Adequate

Model type 1 26.0 53.3 20.7

Model type 2 18.9 62.4 18.8

Model type 3 14.4 72.0 13.6

All Models 20.3 61.1 18.6

5.10.4 Training needs


households opted for development in technical skills in Model type 3 followed by 48 per cent in Model



households opted for development in technical skills in Model type 3 followed by 48 per cent in Modeltype 2, while financial skills topped the list in Model type 1 households.

State-wise percentage distribution of households specifying major areas on which they need training is

presented in Appendix A5.14.1. A wide variation exists in the type of training required across states. Ingeneral, the pattern of importance as summarised at the all-India level appears also to be relevant at thestate level, i.e. technical training has been given in most states the priority by most respondents followedby training in financial aspects. Management and especially market development aspects had generally alower priority in the training needs.

5.11 OPINION ON WORKING OF THE SHGS

The selected SHG members were asked to rate the working of their SHGs with respect to the following:• Rules and regulations, including the extent to which SHGs develop appropriate rules/ regulations,

updating them regularly to solve various conflicts.

• Leadership including existence of strong leadership, competencies in their function withaccountability towards rules and regulations.

• Members’ participation in meetings and feeling of “ownership” of their SHGs.

• General management practices, which include planning/ implementation and monitoring of group

decisions and quality of record keeping of meetings.

• Financial management practices, which includes transparency of group financial matters to membersand accuracy in maintaining SHG financial records.

• Service delivery, which includes level of adequacy of various services to members such as savingsand loans.

• External relations, which include level of collaboration with other SHGs, SHG federations andt i i i tit ti


multiplying it by 100 The maximum score of 300 will be 100 The index of performance for each aspects



multiplying it by 100. The maximum score of 300 will be 100. The index of performance for each aspectsof the working of SHGs by Model type as perceived by the selected members of the SHG is presented inTable 5.41.

Table 5.41: Performance index on working of SHGModel type Rules and

regulations

Leadership Members

participation

General

managementpractices

Financial

managementpractices

Service

delivery

External

relations

Model type 1 67 62 59 55 52 53 35

Model type 2 74 70 67 65 62 64 49

Model type 3 70 64 66 60 59 65 52

All Models 71 67 65 62 59 61 45

It may be observed from Table 5.41 that the overall index of the workings of SHGs by Model type 2 isbetter than that of the other models in majority of the aspects recorded. Significant positive difference inthe working of the Type 2 model as compared to other models is observed indicating better working inSHGs in Model type 2, especially in the working of the SHGs with regard to rules and regulations,general management practices, financial management practices and service delivery.

5.12 CHANGES IN MEMBERS BEHAVIOUR AND ORGANIZATIONAL AND FINANCIAL

SUSTAINABILITY OF SHGS DURING LAST FEW YEARS

Perceptions of selected members during the last few years on the following aspects were collected. Theratings from members were collected on the following aspects of SHGs:

- Members participation and their behaviour in group.

- Organisational development of SHGs.

- Financial performance and health of the SHGs.


A significant positive difference on the performance index of working in Model type 2 as compared to



A significant positive difference on the performance index of working in Model type 2 as compared toModel type 1 is observed indicating better working of SHGs in Model type 2.

5.13 EMPLOYMENT GENERATION

Timely availability of credit, especially when used for productive purposes, enhances opportunities forundertaking income generating activities as a result of which employment opportunities at the householdlevel increase. The estimated employment days per household was worked out to be 400 person days.The employment of households registered an increase of 27.3 per cent between pre and post-SHGsituations. It is interesting to note that nearly 30 per cent increase is observed in female employment inthe post-SHG period, compared to the pre-SHG situation. Similarly, an increase of 26 per cent in male

employment also was observed in households belonging to SHGs. The benefits of employmentopportunities of female members as compared to male members seemed to be higher. Averageemployment per household by gender is presented in Table 5.43.

Table 5.43: Employment per household during pre and post –SHG situation by gender(Person days)

Male Female Total

Pre-SHG Post -

SHG

Incremental

change in

employment

Pre-SHG Post -SHG Incremental

change in

employment

Pre-

SHG

Post -

SHG

Incremental

change in

employment

192 242 50

(26.0)

122 158 36

(29.5)

314 400 86

(27.3)

Note: *Figures in bracket is percentage growth.

The share of employment in paid and unpaid employment by gender is presented in Table 5.44. Theshare of paid employment has gone up in the post-SHG situation by six percentage points for femalemembers and 3.6 percentage points for male members. This could probably be attributed to better


Chapter 6



Chapter 6Case studies of SHGs

The main objective of the study is to assess the impact of SBLP on the welfare of the households and thesocial empowerment of members due to their participation in the programme. It also analyses thesustainability of SHGs and impediments they face, if any, in their development. To examine theseaspects, a variety of case studies of both SHGs and individual members were conducted.

In all, the study team conducted 24 case studies spread over the six sample States i.e. four case studies ineach State and two from each of the selected districts. Besides highlighting successful cases of SHGs andmembers, care was also taken to find out about cases of non-functional or defunct SHGs and those that

could not get bank linkage. Thus, the 24 case studies conducted are broadly grouped as success storiesand the not-so-successful ones.

6.1 CASESTUDIES BASED ON SUCCESS STORIES

The case studies in this category include success stories of SHGs as not just groups but also taking intoaccount individual members and households. Some of the SHGs have been fairly successful in startinggroup enterprises and developing expertise in income generating activities. They impart training to their

members and undertake community development work. The cases presented here also include stories of members, in particular of women, who have been empowered to successfully initiate income generatingactivities. Some of the women have shown remarkable leadership qualities and have realised their hiddencapabilities after joining SHGs. They have also served as role models for others.

The case studies under this category are further grouped as:

• SHGs with successful group activities including the ones with strong social commitments


working as a school teacher. The SHG started with 15 female members, and was promoted by Aadarsha



g , p yWelfare Society, a highly successful NGO responsible for promoting a number of SHGs in this district.In 1999, the SHG got credit linked to Sangameshwara Grameen Bank, a RRB.

One of the important reasons for the success of the SHG is the level of discipline the leader succeeded ininculcating in the others. All members have to compulsorily attend meetings, which are held twice amonth. Any member who does not attend the meeting has to pay a nominal fine of Rs 5. These highlydisciplined members repaid their loans without default and hence could avail of further loans to augmenttheir economic activity. Since its inception in 1995, except for one member, the others are continuingwith the group and the total strength remains 15. A strong bond of solidarity has evolved among themembers and they provide moral and financial support to each other in times of need. This isnotwithstanding the fact that the group includes women from different castes and religions. Three of themembers are Muslims, two are from the general category and all the others belong to the scheduledcastes. The president of the group, Girija, is the most literate among the members. A strong personality,Girija has overcome the problems that could have been posed by the diversity of the members’backgrounds. The other members look up to her for constant guidance and leadership.

Even though only six members of the SHG were literate during the time of formation of the group, todayall the members have attained functional literacy thanks to Girija’s initiative and background as a teacherof the non-formal adult education programme. The group members decided that unless the memberslearned to sign, they would not be given any loan. It is primarily due to Girija’s persuasion skills that all

the members today sign and have numeric skills and can read bus signs. They were earlier working aseither wage labourers or were housewives with hardly any opportunity to speak to outsiders or officials.Today, they feel quite empowered not only financially but, also in terms of their ability to face up to theoutside world.

As far as economic uplift of the group is concerned, the records, as well as discussions with the members,reveal that most of the families were below the poverty line till as recently as a decade back. Today, all15 members are above the poverty line, and a few are fairly well off. Girija is currently the President of


Though Jyoti Mahila Sangam as a group has not started an enterprise (except running a nursery for a



g y g g p p p g yyear), its members have been fairly successful in their endeavours. No wonder the SHG attracts a numberof visitors from within as well as from outside the State. The visitors included a team from the WorldBank, a group of NGOs from Australia and the Minister for Rural Development from Sri Lanka.

6.1.1.2 SHG – An aid to improve the quality of life

By becoming a member of a SHG, and getting out of the clutches of moneylenders, these women fromKarnataka are now assured of a steady income and savings. Their lives have changed and they are able toenjoy a social life of their own.

Generally, the SHG concept is associated with collective savings by groups comprising the poor, whobank them and obtain funds in the form of loans to eventually escape the clutches of moneylenders. Thiswas the core objective of the Dr Ambedkar Nirantara Ulitaya Gumpu (Dr Ambedkar Everlasting SavingsGroup), a SHG in Bhadravati Taluk of Shimoga District in Karnataka, which was formed to improve thequality of the lives of its members. This SHG has 20 female members, of whom 19 belong to thescheduled castes and one to the OBC category. All of them were vegetable vendors, whose working daybegan early in the morning. They used to take loans from the moneylenders, buy vegetables from thewholesale market, and go around the city with baskets on their heads selling their stuff. In the afternoonsthey would return, repay the moneylender, and attend to their household chores. While somemoneylenders would take Rs 110 for every Rs 100 loaned, there were others who would extract Rs 100

for every Rs 90. Their entire lives were spent in making ends meet. They had no social life at all.

An Aanganwadi worker living in the same locality had informed these women about the concept of SHGs. As they were interested in saving money, and also wanted to be free frommoneylenders, they approached the municipal office in Bhadravati and informed them of their decision tostart a SHG by saving Rs 50 per month. The SHG was started in 2003 with Rs 10 as the initialmembership fee. The municipal office gave the SHG Rs 20,000 under the Rozgar Yojana, to be used forinternal lending among the members under the condition that the money was to be returned if the SHG


Oral Polio Programme last year. Whenever there is a function in any of the members’ families, the others



pool money to buy an agreed upon gift. Their quest for knowledge has also improved and the womenwent on a three day-long visit to places of interest in their vicinity. Once, they also took the men whoexpressed a desire to go with them. The SHG has been instrumental in improving the quality of their

lives, both economically and socially.

6.1.1.3 Aspiring for a better life against all odds

This is the story of a SHG formed in Nimbegondi of Shikaripura taluk in Shimoga district of Karnatakaknown as the Huchchangeshwari Swa-Sahaya Mandali. It was formed in 1998 by 18 illiterate group of women belonging to the Valmiki (ST) community locally called the Talwars. The women represented themost backward community in terms of social, economic and educational parameters. In fact, when they

came to know about the benefits of joining a SHG, they themselves formed the group without the help of a promoting agency. They approached the bank directly. In spite of their lack of literacy and poorbackground, they have successfully run the SHG for nearly a decade and utilised the forum to improvetheir activities.

The families of all the members of the SHG are BPL cardholders. They are small landholders, basicallydependent on agriculture and those without land work as agricultural wage labourers. Some of thempossess farm animals today. They live in semi- pucca houses with even the drainage water flowing rightin front of their houses today. Washing of animals, clothes, etc. is done in front of the house, so that thewastewater can flow into the open drain. When these women came to know about other SHGs working inthe area, and the benefits thereof, they also decided to form a Sangha. Though these women were poorand illiterate, they dreamt big. They not only wanted to improve their economic and living condit ions tothe extent possible, they also aspired to educate their children. Once, when their colony was very dirtyand the gutters overflowed, they took it upon themselves to clean it. The members of their communityfrowned upon this action and three of the members quit the SHG because of it. The others were howeversteadfast in their belief and have continued over the years. These women, who had never entered a bank


6.1.1.4 SHG – A ray of hope for the poor



Fifteen women from BPL families of the drought-prone areas of Dhule district of Maharashtra cametogether with the purpose of getting out of the clutches of the moneylenders. After forming the SHG they

are no longer dependent on the moneylenders and have also become confident enough to take part in anumber of developmental activities.

Life for the landless labourers and the small farmers in Aarthe block of Shirpur taluka in Dhule district of Maharastra was very difficult. As the lands are not irrigated, the yield is very low and it is very difficultfor an agricultural labourer to get employment throughout the year. The uneducated have no option but totake up work as daily wage earners wherever work is available and the earnings are very small andseasonal. They could not go to any financial institutions for a loan, as they had no assets to offer as

collateral. For some families, it was inevitable to approach the “sahukar” (the moneylenders) even forhaving two square meals a day. Unable to repay the high interest, some of them had lost even their smallland holdings. It was a vicious circle from which there was no respite.

In the beginning of 2001, a representative of Rajashri Shahu Sevabhavi Sanstha, an NGO, came to thisvillage and created awareness among them about the role of SHGs in creating income sources. The needfor working together as a team was also impressed upon them. This became a turning point in the lives of some of the villagers. On 20

thMarch 2001, 15 women whose families were below the poverty line, got

together and formed a SHG called Jai Yogeshwar Mahila Bachat Gut. They decided to save Rs 100 permonth and opened an account with the Bank of Maharashtra, Aarthe branch. After about six months, theystarted disbursing internal loans (small amounts), to meet their emergent requirements. In October 2001,they got bank linkage, and took a loan of Rs 25,000. Except for three women, all the others were literatebut they were not able to start a new enterprise of their own. Hence, they got together and made Papad,Kurdaya, Banana and Sago Chips, participated in an exhibition in Mumbai, made profits and repaid theloan. However, two members who were unable to repay the loans were removed.


6.1.1.5 SHG as a livelihood option



This SHG was started by a group of literate, but not much educated, young men from Solapur district of Maharshtra. For these unemployed youth whose families could neither provide them with enough capital

to start a business, nor get individual loans due to lack of assets, the SHG became the only means to raiseresources for livelihood enhancement.

This SHG is an exception to the general rule in two ways. Firstly, it is an all-male SHG. Generally,women make up the membership of SHGs. Secondly, all the members have a fair level of education. Tenhitherto unemployed young men who were around 30 years of age and hailed from Pawar Vasti hamlet of Islampur, about 18 Km from Malshirapur taluka of Solapur district of Maharashtra, got together to form aSHG. This hamlet was in existence for the last 10 years and about 50 households reside here. The main

occupation was agriculture and agricultural wage labour depending on the size of their land holdings. Theincome from this was very meagre. There was virtually no opportunity for any other kind of work here.The children of these families had attended school, and though literate were not educated enough to gooutside the village and get jobs. They also did not have any vocational training. Banks were unwilling toprovide them loans individually, as they had no assets. In such circumstances, life was tough for theunemployed youth. Then, they came to know about SHGs.

Ten literate young men who were educated up to the middle or high school level, came together andformed a SHG in March 2000. They began by saving Rs 100 per month and got bank linkage in April2001.The members decided to take only as much loan as they would be able to repay. While some of themembers with land utilised the loans for buying modern farming equipment and improved seeds andfertilisers so as to improve their yield, some others used it for buying hybrid cows and started a dairybusiness. Others, who could not afford to take larger loans, bought sheep.

The members have been able to repay the loans promptly. They have already been granted loans threetimes by the bank. The first time the SHG got Rs 2, 50,000, which was mostly used as working capital


the president of the SHG and Smt. Deshpande became the secretary. Of the 11 members, only three weret lit t d th i i th h d l l f lit



not literate and the remaining others had some level of literacy.

Smt. Deshpande also knew that initially it would be difficult for the members to work together. So, she

insisted that rules are to be formed taking into account the opinion of all the members, and this helped inrunning the SHG till date. All the members agreed on a fine of Rs 10 for non-attendance of groupmeetings and a fine of Rs 2 for delayed monthly savings.

Within nine months, on August 12, the SHG got linked to the Grameen Bank located in Upalai block. Of the first loan of Rs 25,000 received from the bank, the subsidy component was Rs 10,000. In the next twoloans of Rs 1,40,000 each received from the bank, the SHG got 50 per cent subsidy. Though the loanreceived from the bank was made use of in part by the members for marriage expenses/education of

children/construction of house, a part of it was also used to buy buffaloes and earn income from the saleof milk and milk products. While most of them are in the dairy business (in addition to working on eithertheir own land or as agricultural labourers), two of the members own sewing machines to augment theirincome, in addition to their agricultural activity. Most of the members have thus invested the moneyborrowed in improving their agricultural lands or in livestock. This has not only increased the value of their assets, but has also enhanced incomes. Hence, the members were also able to make timelyrepayments along with continued savings. However, there has not been any noticeable change in theirpattern of consumer assets ownership. They have given high priority to increasing their savings bybuying other savings instruments. Today, these families are much better off financially, though they feelthat they can increase their income further if they were to have better marketing skills.

Earlier, before forming their SHG, the world of these women was restricted to the kitchen and children.They had little knowledge of the outside world. This was the first SHG formed in the village. It has notonly improved the economic status of the families of the members, but the members themselves are nowcapable of participating in issues concerning the village. Further, the fact that not a single member hasdropped out of the SHG speaks highly about the cooperation, understanding and trust among the


that the members, whether literate or illiterate, have been successful in generating additional incomes.This is e ident from the follo ing e amples:



This is evident from the following examples:

One of the members, Alimun Nasa, though educated up to class X, was not involved in any income

earning activity and was a housewife. Her husband was a tailor. After becoming a member of the SHG,she used the loan to buy another sewing machine so that they could employ an assistant for her husband.Thereafter, she has been buying one machine from the loan money every year and presently they havefive machines and five workers to assist them in their tailoring business. She has also started supervisingand monitoring the business. Their income has increased three-fold after joining the SHG. Not only havethey built a new house but are now also well recognised in the village.

The case of Nurjahan Begum is also similar. An illiterate woman, Nurjahan was a housewife with four

children. They only owned half a bigha of land, the income from which was very meagre. They alsoowned one rickshaw (cycle), from which they earned Rs 20 as rent per day. After becoming a member of the SHG, Noorjahan used the loan for buying additional rickshaws, which they rented out. Today, theyhave nine rickshaws and the family is mainly dependent on renting them out for their livelihood. Theirincomes have increased by seven times and apart from acquiring the rickshaws, she also constructed afour-roomed, semi- pucca house. More importantly, she also learned to read and write.

Thanks to the SHG, these women are now enjoying a better life. They have also become instrumental inhelping others to earn their livelihood.

6.1.1.8 Successful, despite denied of bank assistance

This is an example where the SHG has amply demonstrated that financial assistance from any source, aslong as the rate of interest is low, could work wonders in transforming the lives of members.

The SHG, “Anand”, was formed in June 2004 in Majargram, situated 30 Km from Silchar town


Today, the members of the SHG enjoy economic freedom. They are sending their children to school andare able to provide proper health care and nutritious food to their families Poverty illiteracy and



are able to provide proper health care and nutritious food to their families. Poverty, illiteracy andmalnutrition, which were common in their families are now things of the past. This, in spite of notreceiving any assistance from banks. If they had received loans from the banks at lower rates of interest,

the members could have gained more. It is high time that either the NGO/any other body comes to theirhelp and assists them in getting bank linkage so that they get better credit facilities.

6.1.2 SHGs with successful group ventures

The experience with some SHGs showed that when a group of like-minded individuals come together,they could venture into group activities, as unity and common purpose provide strength. As a group theycould access larger loans, divide the work, share training facilities, pool their expertise and avail of other

facilities like the village property. In this category of case studies, we also have SHGs with strong socialcommitment in undertaking community activities. Once the group becomes empowered, they also seemto realise their social responsibility and want to render service to society.

6.1.2.1 Tent house SHG

This is a SHG, which has ventured into various group activities. Although it has also been successful intaking up the dealership of kerosene distribution, it is known more for its tent house business. By gettinginto the tent house business, these women from Orissa have ventured into an activity that was hitherto amale domain.

Budharajan SHG, popularly known as “Tent House SHG”, is located in Pandaloi village in Rengali block of Sambalpur district of Orissa. This SHG was formed in 2001 by 10 women who were motivated byAnganwadi workers attached to the Integrated Child Development Services (ICDS) scheme. All of thembelonged to OBC communities and were from BPL families. Like many others, of the SHGs, theBudharajan SHG was also formed by the women with the intention of setting up some micro enterprise


chairs, durris, mats, mike set, sound box, stage and altar decorative items, mattress, pillows, roof top tent,water drum pots and pans and aluminium discs that are required for the business



water drum, pots and pans and aluminium discs that are required for the business.

In order to attract customers, the SHG distributed leaflets and pasted posters at different places within

and around their village. It did brisk business during the marriage season and till now they have earned aprofit of about Rs 13,000. It is very rare for women to take up such activities and register success too.Now, they have acquired fame in the area as the “Tent House SHG”.

This highly motivated group of 10 women does not seem to be content with these activities. They plan toundertake some more projects in the near future. They are planning to take up pisciculture activity as thenext venture. There are three large ponds in their village and with the consent of the villagers, one of theponds is proposed to be utilised for this purpose. However, to take up this activity, they would need some

training. Another, even more ambitious plan of the SHG is to take to road construction. The village hasbeen sanctioned with Rs 5,00,000 by the Block for road construction and allied activities. Since therewere complaints regarding the quality of the work of the contractor who was engaged for this work, theconcerned authorities have cancelled his contract. As a result, the work has been stopped and now theBudhrajan SHG is contemplating taking up construction activity, which could be a very interestingexperiment.

The members also want to manufacture machine-made leaf plates, but due to the paucity of supply of therequired quantity of leaves in the area, due to deforestation, this activity may not be forthcoming. Somemembers are engaged in rolling beedis. In a day they roll about 1,000 beedis, earning Rs 40.

The group has also taken up the social responsibility of creating awareness about health issues. Due tothe efforts of the SHG, the leprosy and TB patients have been identified and sent for medical tests andtreatment. Members have motivated people not to treat these patients as social outcastes but help themget treatment. The SHG members are also taking interest in the immunisation programmes and want toensure that all the children in the village are immunised.


formation, the group could get credit-linked to the local branch of Andhra Bank. Currently, the group has14 members as one of the members subsequently left the village At the time of the formation of the



14 members as one of the members subsequently left the village. At the time of the formation of theSHG, most of the women were working as agriculture labourers for as a low a wage as Rs 20 per day.Even this employment was seasonal.

All the members of this SHG belong to the OBC category. Only three of them are literate. Initially, themembers joined the SHG with the objective of having mutual support and cooperation among themembers and in particular providing financial support. Each of the members has been saving Rs 30regularly since the inception of the SHG and the group has been repaying bank loans without any default.Besides availing bank loan, the SHG also got a grant from the DRDA. The most striking achievement of this SHG is that it is running two successful ventures.

One of the ventures, as mentioned above is making chalk pieces in which almost all the members areinvolved. This activity is carried out during April and May and in the span of a day, the group manages toproduce two cases (each containing 36 boxes, of eighty pieces each). This operation is carried out at theresidence of the group leader, Sharda, whose main task is to make chalk with the help of a mouldingmachine, while other members are involved in drying and packing the chalk pieces. The product is soldto grocery shops and directly to a number of schools in the area with the help of the husband of the leaderwho also is a primary school teacher in a government school. Each case of white chalk is sold for Rs 180,and the coloured chalk cases are sold for Rs 230. The activity required only a small investment in theform of a moulding vessel. Hence, the SHG did not need to take any loan from the bank for this activity,but used its own savings. The SHG is located very near Srikakulam town and there are a number of schools nearby that have helped the women market the chalk pieces.

However, the most remarkable achievement of the group is securing a labour contract for breakingstones. They swung this deal in 2004. A loan of Rs 1,00,000 was raised to take up the labour contract, asthey needed money to hire about 30 labourers and 4-5 supervisors. The SHG has already repaid the first


called Sharif Gramudyog Vikas Kendra. The SHG was formed in August 2000 and got bank-linked withthe RRB Prathama Bank after six months.



the RRB Prathama Bank after six months.

Among the 10 members of the current average age of 35 years, half are women. These five women are

wives or relatives of the male members. While all the male members are educated at least up to the 9th

Standard, all but one female member is illiterate. Individually, each member was involved in cropcultivation either as primary or secondary occupation. Most of them belonged to the group of marginalfarmers who cultivated only small patches of land. They were also tilling land taken on lease basis. Themembers were also involved in some other income-generating activities to supplement their familyincomes. While one of them was a taxi driver, another had a small tailoring shop in the village itself. Thesecretary of the SHG was prescribing medicines and treating villagers despite being unqualified for thetask. He also owned a PCO. The President of the SHG was cultivating land taken on lease basis. One of

the female members was working as an Anganwadi worker and the remaining four women wereprimarily housewives. Nevertheless, they were assisting the men in farming and other activities

The members have not changed their income generating activities, which they were involved in before joining the SHG. However, now members report that they are able to carry out their farming and otheractivities in a much more organised and effective manner. This has become possible because of theirmembership in the SHG, and the easy and timely availability of loan funds, which has immenselybenefitted them. For example, getting money needed for employing labourers, buying seeds, fertilisers,diesel for pump sets, weaning and weeding of crops is no longer a problem. As a result, their productionhas increased, along with the quality.

Earlier when they needed money for anything, they would approach moneylender. The moneylenderwould normally dilly-dally and they felt exploited by them being charged very high rate of interest; ashigh as 5 per cent per month. Things have now changed for the better and after becoming a member of the SHG, no one has been taking further loans from moneylenders for crop production.


The members feel that their incomes have increased almost 50 per cent since they became members of the SHG. This has changed their savings patterns. Apart from saving in SHGs, all of them have opened



g g p p g , ptheir individual savings account with the bank. No one has invested in either health or life insurance,which is primarily due to lack of proper knowledge about its benefits. Access to these services may also

be limited. However, discussions with the NGO revealed that some insurance schemes for the membersare being initiated and soon the members are likely to acquire insurance policies. Individually, membershave invested in improving their living standards in terms of food, consumption, better clothing andeducation of their children.

An important change that has come also about is in the area of education facilities for the children.Earlier, the children were enrolled in government schools (no fees and mid-day meals provided) whichwere reportedly not doing well due to the absence of teachers or other reasons. However, now all the

members are able to enroll their wards in private schools in their area, which are reportedly providingbetter education.

This SHG has also become a source of inspiration for others in the village. It has played an active role infacilitating the Sharif Gramudyog Vikas Kendra in forming 10 more SHGs during 2006-07 in theirvillage. All these SHGs are currently operational and have been bank-linked.

6.1.2.4 From begging to basket making

This is an extraordinary case where beggars from a tribal community in Andhra Pradesh have attaineddignity in society after forming a SHG. Though it is the women who have formed the SHG, the men havealso stopped begging and have joined hands with their spouses in making baskets.

Begging used to be the only livelihood option for this group of people living in Amachandrapuramvillage of Srikakulam district of Andhra Pradesh. They belonged to the Scheduled Tribe community andwere related to one another., They lived in utter poverty and were trying to get two square meals a day by


are paid daily wages for the days they make baskets and also when helping in transporting the baskets. Itis interesting to note that the husbands do not seem to have any ego problem in working for the SHG on a



g y g p gdaily wage basis since they do not have any other livelihood option. It may be that at that low level of theeconomy, the only concern is survival.

Today, the members of the Sri Durga Swayam Shakthi Sangam are well respected in the village and oneof the members stated, “Earlier we were taking loan from others; but today we are in a position to lend toothers”. Also, as another member put it, as beggars they had to roam around in the sun and rain andleading a difficult life, but now they are able to be in one place and earn their livelihood. Most of themembers are now educating their children, as well. Moreover, whenever they need money, they are ableto get a loan (even up to about Rs 5,000) from the SHG. Another benefit perceived by the members isthat now they are in a position to get their daughters married; prior to the formation of the SHG, some of

the girls from their families had eloped with boys because of lack of any resources for their marriage.Hence in their opinion, today socially they are better off and are more respected and empowered.

The credit for the success of this SHG can be attributed mainly to the Gram Sevika who was instrumentalin motivating the beggars to give up begging and take up a productive activity. The block developmentoffice helped the SHG by assuring a regular demand for the baskets in the municipal market of thenearby town where the farmers’ bazaar is organised. This experiment can be successfully replicated inother places as well. What is required is motivation.

6.1.2.5 Prosperity leads to charity

The members of the Nishadraj SHG have not only prospered after forming the SHG, but have also beenof great financial help to other needy members of their community in the village. Located about 67 Kmfrom the district headquarter, Nishadraj SHG was formed in Kharsahan Khurd (Tal) village of PhoolpurTehsil of Azamgarh district in UP by a group of 11 people. The members belonged to the Nishadcommunity, which has been categorized as OBC and most of the members were from poor stratum of the


Before starting fish farming, four members of the group underwent the relevant training in Kolkata. ThePresident of the group was trained on the technical aspects of fish farming in Vishakapatnam in Andhra



g p p g pPradesh. Eight members have also attended an 11-day training programme organised by the FisheriesDepartment-Azamgarh at the block level. The SHG has participated in financing the training of the

members and has spent Rs 5,000 on this.

For starting fish farming venture, the SHG leased a pond in the village from the Gram Panchayat. TheSHG members first removed “jal kumbhi” (water lettuce stratiotes) from the pond and reinforced itsembankment (strutting). The major income of the group comes from producing fish seeds (nursery) andselling it to the other fish farmers in the district. The members had learnt the technique of developing fishseeds during their training in Kolkata. They consider this as more lucrative than mere fish farming. Inorder to reach out to buyers they had to provide publicity to their activity in the district. (and what did

they do for publicity?)

6.1.2.6 SHG with social commitment - Orissa

This SHG, formed by highly motivated women from the socially and economically backward class, hasbecome conscious of its responsibility towards the society in which its members live. These women fromOrissa have even become powerful enough to fight for their rights and against the liquor menace in thevillage.

The Biswabharati SHG is doing an outstanding work for the benefit of the community under the activeand capable leadership of its President, Rajkumari Sahoo. It is located in Khajuripalli village in Jujumarablock of Sambalpur district, and was promoted by an Anganwadi worker of Jujumara. The group wasestablished in February 2001. At present it has 10 members. Starting with Rs 25, each member now savesRs 30 per month. This became possible after the incomes of the members increased, thanks to the variousactivities of the SHG. While eight members of this group belong to the Scheduled Caste category, theremaining two were drawn from the OBC group. All of them come from BPL families. Though the


extension official, tried to persuade them to buy poor quality cows. The women refused to buy them andraised the issue also with the bank manager. This indicates the level of awareness of these female



members of the SHG and the matured way in which they conduct business.

Due to their different initiatives, the SHG has earned a good name in the area and its women membersgathered the pluck to tackle the liquor menace in the village. Their efforts were fruitful as the social evilhas decreased considerably. Quarrels among villagers who were drunk have dropped significantly due tothe reduction in consumption of liquor. As part of their social commitment, the members of the SHGhave made sure that the senior citizens of the village get the old age pension from the Government.

Over the years, the standard of living of the SHG members has improved. They are now able to affordnew dresses for their children and also encourage children, including girls, to attend school regularly. Themembers are also engaged in literacy drives. Earlier, only three members could sign their names, but nowall of them can sign. This group is also promoting adult education. Members have learnt to maintainrecords of the group themselves. The President of the SHG is a member of the (VEC) Village EducationCommittee. The group has also appointed a teacher at Rs 2,000 per month to teach the village children.

The Biswabharati SHG was adjudged “Best SHG” in Jujumara block in 2004, on the basis of therecommendation of the CDPO and Supervisor. This was no wonder because their successful socio-economic activities that have slowly changed the face of the village. Due credit for the success of theSHG must be given to its President, Rajkumari Sahoo. She has also been elected as the Secretary of the

Maha Sangha formed by 15 SHGs of the surrounding areas. This speaks highly of her leadership qualitiesand efficiency. This is also a testimony to the fact that women and their work have gained recognitionand appreciation. Women have been drawn out of their shell and involved in socio-economic activitiesthat has enriched themselves and their community.

6.1.3 Case sudies based on success of individual members and households


parents as well. Hence, after passing the class X, she had to supplement the family income by givingprivate tuition to children and also working as a para-teacher in her village. She even started looking after



the accounts of the SHG. After completing her ITI training, she worked as an apprentice in RTC for Rs1,200 per month for two years. Unfortunately, in spite of the reserved quota for ladies, she could not get a

regular employment due to some union problems. Though she was disappointed that she could not get a job for which she was trained, she did not despair and continued to work for the SHG and maintainaccounts and other registers.

The year 2002 was a turning point in her life when she was asked to manage Aadarsha FamilyRestaurant, located on the highway near her village. She never looked back since. She got this job as amember of the SHG, since this restaurant is under the control of the Federation of SHGs in the Mandal.She was given a monthly salary of Rs 1,500 for this job. After working as a manager for two years, sheacquired enough confidence to take the restaurant on lease and run it as her own enterprise. TheAadharsha Family Restaurant, a highly successful venture, is operating in a building constructed by theNGO, Aadarsha Walfare Society. The operation of the restaurant is for the exclusive benefit of SHGmembers in the Mandal, as only a SHG member can get the lease. In order to get the lease for running therestaurant, she had to pay Rs 50,000 as security deposit and it is needless to say that she could makeavailable this huge amount because of her SHG membership.

The restaurant employs 22 persons, and all of them belong to familie s of SHG members. Since therestaurant is located on the highway connecting Hyderabad to places like Bangalore, Kurnool, Tirupati

and Mantralaya, it attracts a fairly large crowd. It is open from 6:30 am to 11:30 pm and serves bothvegetarian and non-vegetarian food to around 150-200 persons per day. After taking care of all herexpenses, including a monthly rent of Rs 6,000, Chandrakala makes around Rs 15, 000 per month.

Chandrakala is ever grateful to the NGO (Aadarsha Walfare Society), the promoter of the SHG, whichalso arranged experts in hotel management from Hyderabad to come to this restaurant and impart “on the job” training to her for two months. Not only has Chandrakala achieved this success for herself, she has


hard work and entrepreneurship, has made extraordinary progress not only economically, but also interms of stature and status. These people, who not so long ago used to work for others, have todayb l h l I h h h h l d h l h i li lih d



become employers themselves. In the process they have helped other people earn their livelihood.Basanna's family comprising his wife Bharati and three children, presently reside in Hosahalli in Bellary

district of Karnataka. They own about two acres of agricultural land. As the land was not irrigated, theyield was very small. In order to supplement their income, both Basanna and Bharati used to weave silk sarees on handloom at home for a businessman from Molakalmuru. The businessman had loaned themthe use of two looms, used to supply them with silk, zari and other raw materials required, and pay themRs 300-350 for one completed saree. While Basanna could complete about four to five sarees in a month,Bharati could only finish about two after her household chores. The returns for long hours of diligentwork were indeed very low. However, they were forced to do this work. They were aware that thebusinessman was making a lot of money out of their work. But due to the lack of capital, they could notundertake the business on their own and earn good profits.

During 1999, a number of SHGs were being formed in and around Hasahalli. Basanna and his wife cameto know of the benefits of joining a sangha. In 1999, Basanna became a member of Aadarsha Swa-Sahaya Sangha and Bharati, a member of Saleshwaran SHG. Both began saving regularly, initially withRs 15 and Rs 10 respectively. Bharati was not satisfied with the working of her SHG and so left it to joinBhagyalakhsmi SHG. Initially, both of them took loans through their respective SHGs and the total loanamount was Rs 20,000. This enabled them to buy one loom of their own and they hired a person tooperate the machine on wage basis. After a while, Basanna started going to nearby places to sell the

sarees and established contacts with saree merchants. Later, they took out a second loom and started towork less for the businessman. When they took the next loan, they bought silk, zari, etc. and startedsupplying it to others in the village and bought back the woven sarees and started selling them. In courseof time, Basanna also found out that there were other weavers in the village who were workingindependently on their looms, but found marketing their goods difficult. Basanna took the initiative,bought the sarees from them and started selling them along with his own. Throughout, both husband andwife were very prompt in repaying their loans to the SHG and also keen on saving. The officers of the


6.1.3.3 SHG – A tool to recognise one’s potential



Becoming a member of a SHG has helped this educated housewife realise her potential to run the SHG

efficiently and to motivate and help other women to form such groups. This is the story of Padmawathi,who lives in the outskirts of Bellary in Karnataka.

The Family Planning Association of India, (FPAI), an NGO in Bellary, was promoting SHGs in Bellaryduring 2002. As a part of this exercise, they organized a gathering of some ladies and explained to themabout the working and benefits of SHGs. The women however were not convinced at the first and took about 15 days’ time to think about the matter. Later, with a lot of convincing by FPAI, the MotherTheresa Swashakti SHG was formed with 16 female members, of whom Padmawati was the mosteducated, having passed her SSLC (class X). Another member had studied up to the class VII, while fourothers had attended school and could sign. The remaining 10 could only affix their thumb impressions.As Padmawati was the most educated in the group, she was made the first leader. FPAI taught heraccount keeping and other procedures. The group decided to save Rs 10 per week. Initially, the moneysaved was given as loans to members at 2 per cent per month. The SHG got bank linkage in 2003.Thereafter, they have been taking loans from the bank, and have been lending the money to the membersaccording to their requirements.

Padmawati, a housewife, lives with her husband and two sons who are both studying. They were

dependent on the holding of two acres on which her husband worked. It was difficult for them to makeends meet, as both the children were studying. The children were interested in further studies.Padmawati, who had until then never ventured out of the house except with her family, started interactingnot only with the group members and officials of FAPI, but also had to deal with the bank officials. This,along with the fact that she learnt to maintain the accounts, gave her a lot of self confidence, as well as anidea about her hidden potential. Padmawati felt that she herself should earn the money that she had tosave. As she had studied up to class X, and was maintaining the accounts of the SHG (with the help of


operating the SHG to the members themselves. The SHG has been running successfully and presently thesavings have been increased to Rs 25 per week. With the help of a loan from the bank, Padmawati hasenlarged her house The family has been able to procure an education loan and the elder son is now



enlarged her house. The family has been able to procure an education loan and the elder son is nowpursuing an MBA at Bangalore. The younger one is in a degree course in Bellary. On the personal front,

she has opened a savings account in the bank in her own name. Further, she has herself been instrumentalin starting four other SHGs and has successfully trained the members of those SHGs in maintaining theaccounts and getting them bank linkage. Due to the added responsibility of all these activities, there aretimes when she can’t be present for tuition. To see that the students do not suffer because of this, she hasnow got her husband interested in giving her a hand at it. Today, she reminiscences about those earlydays when she was unenthusiastic about forming the SHG. She remembers with gratitude the way inwhich the FAPI encouraged them. Thanks to the SHG, she has proved here mettle and stands tall.

6.2

CASE

STUDIES

OF

SHGS

THAT

ARE

NOT

SO

SUCCESSFUL

/NON

-FUNCTIONAL

While conducting the case studies in the six States, the team noticed that apart from well-functioningSHGs, there were also some which were in the ‘also ran’ category. There is the famous case of a SHG,which is still being “nurtured” by the NGO that promoted it eight years ago. There are also SHGs whichare bogged down by infighting among its members. Other SHGs have been unable to get bank linkagedue to various reasons. Apart from these, there are also SHGs which have closed down because of failedventures or lack of trust among the members, resulting in their inability to repay their loans.

6.2.1 Lack of literacy responsible for not getting bank linkage – Uttar Pradesh

This is the case of a SHG where the poor illiterate women members from the Scheduled Castes werecompletely dependent on the SHPI. As they were totally unlettered, the members of this SHG inAzamgarh district of Uttar Pradesh could not understand the importance of bank linkage andapprehended a debt trap ahead for them. As a result, the SHG has been reduced to the level of a chit fundgroup


The major advantage (in a way it’s a big achievement), which the members see in forming the SHG, isthat they offer freedom from moneylenders. So far, they have not received any loan from the bank andthe reason for this is said to be their lack of knowledge about the procedures for obtaining a loan The



the reason for this is said to be their lack of knowledge about the procedures for obtaining a loan. TheSHG was able to provide loans to its members from their own savings. Each year, three to four members

take a loan for 12 months’ duration. The minimum amount of loan taken by the member was Rs 1,000. Itis important to note that so far the members have taken loan mainly for meeting expenses relating tomedical treatment, education of children and agriculture, but not for starting income generating activities.The rate of interest on loans is fixed at 2 per cent per month. No penal interest is charged if a member isunable to repay the loan on time. However, the members generally seem to adhere to the fixed repaymentschedule. The financial status of the SHG could at best be termed as average. Presently, this total savingsexceed Rs 12,000.

Initially, a SHPI representative helped them in attempting to get a loan of Rs 25,000 from the UnionBank of India. Of this amount, Rs 10,000 would have been given in the form of a subsidy. However, themembers informed the study team that they were offered only Rs 15,000 and they suspected that somepersons were intending to pocket the subsidy part. While they did not name anyone in particular, theyasserted they were offered only Rs 15,000. Therefore, they had refused credit-linkage fearing that theywere being trapped. Being illiterate they were quite confused with different versions of the process givenby different people and hence they refused to get bank-linked. When contacted, the bank was unable tooffer any valid reason for non-linkage of the SHG. The office bearers of the SHG mentioned that theirchief problems are lack of literacy and non- availability of information.

Paucity of information and SHG members’ ignorance of rules and regulations leads to perceptions thatbank linkage would lead to perennial indebtedness. So, they said they were happier off without banks.Nonetheless, they also feel that with credit available from the bank, they could think of starting their ownindividual activities to augment their income and therefore still aspire to get bank-linked.

Though the members thought that there had not been much change in their overall economic condition, it


better days. Attracted by the evident benefits of the SHG movement, 10 women got together to improvetheir own financial situations. Taking the help of an already existing SHG, they started a group of theirown called the Hari Om Mahila Bachat Ghat However the membership of the group was not



own called the Hari Om Mahila Bachat Ghat. However, the membership of the group was nothomogenous. Of the 10 members, six were from APL families and the remaining belonged to the BPL

category. Only three of the members had ever attended school and the others were illiterate. The mosteducated among the members, one who had passed class VII, was made the President so that she wouldbe able to maintain the accounts and also interact with bank officials. Another educated member wasmade the vice-president. The SHG was formed in February 1999, and members started saving Rs 50 eachper month. In August 1999, they got bank linkage with the Thalner branch of the Central Bank of India.

The problems, however, began when they took the very first loan of Rs 25, 000 from the bank. This loanwas used for disbursing among the members, who instead of utilising it for income generating activities,made use of it for routine household expenses. While one member used the loan amount for herdaughter’s marriage, another spent it on household matters. Some of the members were unaware of thebasic concept that loans are to be invested in income generating schemes to ensure complete and timelyrepayment. Without any additional income, they found it difficult to make their monthly savingscontribution and repay the loan. So, some of the members defaulted. At this juncture, they were neithergiven sound advice, nor helped by the other members. As a result of non-payment of loans, the bank refused to further loans to the SHG and this aggravated matters. Some SHG members thought that if thebank is not going to provide them any further loan, there is no point in saving and so they stopped theirmonthly savings altogether. The President and other office bearer tried to convince these members, but

they were unsuccessful in winning their confidence.

To make matters worse, the illiterate members of the SHG believed that their SHG had got a subsidy(given to SHGs by banks as the members were from BPL families). As they could not read and write,they failed to understand matters and suspected that they had been cheated out of it by their officebearers. The inability of the members to repay the loan and the lack of trust between the literate andilliterate members finally caused the failure of the SHG. The heterogeneity of members contributed to


The members of the SHG are engaged in a variety of activities. Two are farmers, ten are artisans, one is atrader and the remaining three are in agro-processing.(the counts make it a 16 member SHG but it wasmentioned earlier that this SHG had 15 members) Ever since the bank linkage the SHG seems to be



mentioned earlier that this SHG had 15 members) Ever since the bank linkage, the SHG seems to becontinuously availing of bank loans and the members are investing in some activity or the other. This was

possible because the group was also very prompt in repaying the loans. The group availed of a loan of Rs12,000 initially, i.e. in 2000, (what is this figure of 2000?) from the bank and the amount was dividedamong all the 10 members (before the 5 more members joined in), making it Rs 1,200 for each. Themembers used the money to trade in vegetables (mostly potatoes, tomatoes and brinjal), carry out potterybusiness, make bamboo handicrafts and make and sell Lia, a local snack. The loan amount was repaid ina year. Within one month of repaying the first loan, they got another one of Rs 20,000. This was used forsetting up a brick-kiln business. The cost of production for 1,000 bricks was Rs 700 and they were sellingthe same at a cost of Rs 1,000. There was good profit from this venture and members were able to repaythe bank loan with profits earned from the business. Resultantly, there was marked improvement in theirliving standards. The households had better quality food to eat and the president of the SHG, Sumitra,was happy to mention that she was able to buy new sarees and purchase an insurance policy as well.Some of the repayment was also done from their own money. The third loan that the Maa LankeswariSHG availed was for Rs 40,000 in 2003. The members used it to take over the distribution of kerosene.Their efforts and sincerity yielded profits and they repaid the loan and took another one of Rs 60,000 in2005 to carry out business. Some members have invested the money in sugarcane cultivation. Twolandless members have taken land on lease costing Rs 10,000 and have benefited from increased cropcultivation activities.

After joining the SHG, there have also been some improvements in the members’ self confidence andawareness. They have been motivated by the SHPI to learn to sign their names and they are also learningto read and write. Earlier, none of them could sign. They have also been motivated to educate theirchildren, particularly their daughters. They do not want their children to remain uneducated like theirown generation; “We did not get the opportunity, but we will not deprive our children”, they said.


Lack of foresight in investing the loans taken resulted in financial woes to the group. These SHGscontrast the ones formed by women, which are generally free of such problems.



Throughout the country there are many examples of highly successful SHGs consisting solely of women

members. Here in the Kalahandi district, the study team came across at least two SHGs with all-malecomposition that have run into troubled waters. In the case of both the SHGs, the men feel that typicalmale ego problems, coupled with their lack of unity, was responsible for their lack of success.Interestingly, the men themselves admitted that female groups had a definite edge over the male groups,since women do not have ego problems. Women tend to respect and follow their leaders, are more co-operative and work in harmony. They are also more cautious in money matters and meticulouslymaintain records of each and every rupee.

The Maha Laxmi SHG located in Kikia village of Kesinga block in Kalahandi district, was formed by 12male members in 1999. Just two years after the SHG was formed, i.e. in 2001, the SHG was linked to theUtkal Gramya Bank in Kesinga. Most of the members are from the OBC category. Like any other SHG,the desire to improve living standards and have income-generating investments in the process motivatedthem to form this group. The SHG also wanted to play a role in the development of the community.However, unforeseen circumstances and their internal differences have hampered the progress of MahaLaxmi SHG. In addition, the SHG seems to be suffering from a serious financial crisis.

The members of the group obtained a bank loan of Rs 15, 000 to start a fertiliser business. Since local

soil conditions and climate were suitable for cotton production, they had hopes of earning a good profit.Therefore, they utilised the bank loan for buying fertiliser and supplying the same to cotton farmers.However, natural calamity in the form of a drought gripped the area in 2001. All hopes of profits wereshattered. The farmers to whom they had supplied fertilisers were directly hit. Till today, Maha LaxmiSHG has been unable to recover and repay its outstanding loans.

This was not all. There were other problems to tackle. The members admit that their constant infighting


that all the disturbances can be settled and the SHG would work again. (please check which group isbeing discussed here)



The group suffered due to the activities of one member who was dissatisfied with the SHG on financial

matters. He is no more a member of the group but the incident affected the SHG. Meetings and collectionbecame irregular. Now, efforts are on to regularise the activities of the group. Members admitted to theutter lack of unity among members, which they know is detrimental to productive work. Maa Laxmimembers praise all-women SHGs for their unity. They appreciate the understanding and coordinationamong women SHG members. Male members of SHGs have problem accepting leaders due to theiraggressive attitude. However, they feel that the male members being more mobile than their femalecounterparts, have also an advantage for them.

With so many SHGs made up of female members, the all-male Maa Laxmi SHG has got to compete toprove its worth. A loan of Rs 20,000 was taken from the bank to invest in cotton farming. Each membertook Rs 1,600. Also, this group fell victim to the vagaries of nature. Farmers all over the nation receiveda severe blow in 2001 when a major drought devastated their crops. They were unable to repay their bank loan. They regret not having taken any insurance cover. With sincere efforts the members have managedto repay only Rs 7,000, roughly one-third of their outstanding dues to the bank.

“We will work on making proper bye-laws. We will also get our group registered as aco-operative”, members say. They plan to turn their group into a full- fledged NGO in the future as they

expect that they are capable of contributing through hard work. They also plan to settle their differences.

Maa Laxmi SHG is one group that has been successful in some of their social activities. All members of the group joined hands to close a liquor den in the area, unlike the other all-male SHG. Even theCollector has given his approval for closure of the dens. Malaria camps have been organised by the SHG.Resultantly, people have become aware of health hazards due to mosquitoes. The group helped to cleandrains in the village as drains provide the breeding ground for mosquitoes. People have been encouraged


women from male domination through economic empowerment. More particularly, this has taken placein a scheme that is meant basically for women, and that too in a north-eastern state where women aregenerally more educated and economically independent.



g y y p

This all-male SHG received a loan of Rs 25,000 from Canara Bank in 2003. Again, in 2006, theyreceived Rs 2 lakh as loan. The SHG in turn provided loans to its members. Right from the beginning, theSecretary had been motivating members to get into fish farming, which is highly profitable and asustainable business. The members also took loans to invest in fish farming. But, while the secretary andpresident raised their own fish farming units and made substantial profits from the enterprise, the rest of the members used the loans for meeting household expenses, paying medical bills and funding marriages.In addition, the much-hyped Community Fisheries Project is yet to take off. In fact, this project appearsto have been the major excuse for not including women in the group. It was generally held at that stagethat the fishing business involved muscle power as it involves removing weeds, casting nets and such

things. The men argued that women were physically unfit for such activities.

That women were perhaps intentionally left out from the SHG indicates the prevalence of a gender biasin that society. It looks as if it can be very difficult for women to get their dues even in areas that arepredominantly meant for them.

As far as the SHG is concerned, it has survived in spite of most of the members not investing their loansamount in income generating activities. The major reason could be that though the money has been spent

on family expenditure, it was deployed for necessary and unavoidable purposes, for which, they wouldhave had to return to the clutches of the moneylender. Currently, the Community Fisheries Project is alsobeing finalised where it is proposed to undertake fish farming on 30 bighas on which a huge pond is to beconstructed for the purpose.

6. 2.6 Are too many members the bane of SHGs?




6. 3 CASESTUDY OF AN NGO (SHPI)

NGO with a zeal for rural development

This NGO was founded by Mr Sharif Hussain based on the ideals of Mahatma Gandhi and his vision forrural India. It has promoted more than 600 SHGs in Moradabad district of Uttar Pradesh. Besides startingthe SHGs, the NGO also imparted training in specialised income generating activities and worked forcreating employment for the rural poor. No wonder the NGO and its founder have received wide acclaim.

In India, the voluntary agencies have been supplementing the efforts of the government in implementingvarious welfare programmes for the poorer section of the population. In the field of microfinance, theseorganisations play an important role in facilitating the formation of SHGs. In some cases, the NGOs alsotake on the additional responsibility of acting as financial intermediaries for the SHGs. The study teamcame across a number of such NGOs playing important roles in the promotion of SHGs in the entiresample States. Below a case is presented of one such NGO operating in the Moradabad district of UP,which is unique in its performance.

The Sharif Gramudyog Vikas Kendra was founded by Mr Hussain in Jetpurpatti village of Kundarkiblock and was registered under the Societies Registration Act. This NGO purports to uphold the thoughtsand ideals of Mahatma Gandhi and his vision of Indian villages- development of Khadi and GramUdyog, education and agriculture, improving the status of women and their literacy, development of youth, improvement in the condition of village people, etc. Since this organisation has been involved increating employment-generating activities since its inception, it is not surprising that it has promotednearly 600 SHGs since 2001 (Table 6.1).


The founder had a very humble beginning, starting out as a manual labourer. Born in 1970 in Moradabaddistrict of Uttar Pradesh, Shariff Hussain was married at the early age of 15. Even though he had passedhigh school, he started working as a labourer and could not get any other employment. He used to walk



18 Km to Moradabad. His luck improved when he developed friendship with one Mr Iqbal Khan, who

was working as a projector operator in a cinema hall in Moradabad. With his help, Mr Hussain learnt tooperate the projector and started earning Rs 500 per month for his job as a projector operator in a cinemahall. Slowly, but steadily, he became more ambitious and wanted to increase his earnings.

The seed of the idea of forming a voluntary organisation was sown when he left the job of projectoroperator in 1986. He started colouring brass articles and carving things from brass. He also helped theother unemployed youths of the village to get involved in this work. Later, in 1988, seeing his leadershipqualities and concern for the poor people, youngsters of the village elected him the President of NehruYouth Club, which was formed in the village. He started involving the village youths in activities like

organising job-oriented workshops. With the help of the unemployed youths, he also started running aVocational Training Centre.

In 1992, he formed the NGO. Already, in the same year, under Training of Rural Youth for Self Employment (TRYSEM) and Development of Women and Children in Rural Areas (DWCRA) schemesof the Moradabad District Rural Development Authority (DRDA), the NGO conducted a six-monthtraining course for 25 unemployed youths and women in carpet (durri) weaving, colour filling inbrassware, repair of pump sets and tailoring. After getting loan from banks, these people began running

their own income generation activities. More than 300 unemployed youths and women have receivedtraining under DWCRA schemes till 1998-99 and got engaged in self-employment or income generationactivities.

During 2000-01, NABARD sanctioned a Rural Entrepreneurship Development Programme (REDP)

to the NGO for training 30 youths. Two-month training in carpet weaving and colouring of brass utensilswas organized and on completion of the training, loans were arranged for starting income generation


Further, there are proposals under the REDP scheme of NABARD for training the unemployed villageyouths and women in various trades. Also, training of members of old SHG groups that are credit-linkedhas been planned under the Micro Credit Development Programme.



In addition to creating employment for the youth and women, the NGO has also participated in varioussocial welfare programmes such as the Pulse Polio campaign, a rally to generate awareness about the useof iodized salt and awareness on HIV/AIDS through group discussions, film shows and “nukkad nataks’.These were organised by the Government of India’s Regional Publicity office.

The activities of Shariff Gram Udyog Kendra and the zeal of its founder, Mr Hussain, have beenrecognised by the Government. It is not surprising that the organisation has received a number of awards. In 1999-2000, the NGO was awarded the “Zilla Yuva Club Award” by Nehru Yuva KendraSanghthan, Moradabad. Under this, Rs 10,000 was given to the organisation in recognition of its work in

creating employment opportunities for unemployed youths and women. In 2003-04, the NGO wasselected for first prize in Uttar Pradesh by NABARD’s Lucknow Office, for its excellent performance ingenerating employment for village youth and women. The NGO has also been given citations in numberof programmes organized by the Uttar Pradesh and Central Governments.

Last, but not the least, in recognition of his services to the society, the founder president and torchbearerof this NGO (Mr Hussain), was selected by the Government to take part in the ‘Mutiny March of 1857’ which was undertaken from Meerut to Delhi during May 2007.


Chapter 7 Summary and Conclusions



y

The study assessed the impact of SBLP on the economic activities, household welfare and socialempowerment of SHG members. It also examined the quality of the groups promoted by different SHPIs,the changes over time in group members’ participation and behaviour, and the quantity and quality of financial services and their sustainability.

7.1 APPROACH OF THE STUDY

The study was conducted for the country as a whole covering six States from five different regions –

Andhra Pradesh and Karnataka (south), Maharashtra (west), Orissa (east), Uttar Pradesh (central) andAssam (north-east). These six States covered among them 77 per cent of the total credit-linked SHGs ason March 2002. Two districts from each state and 100 SHGs per district was selected. Five memberswere randomly picked from each of the sample SHGs. The impact of bank linkage was measured as thedifference in magnitude in terms of annual growth of a given parameter between the pre-bank linkage(pre- SHG, base line situation) and post-SHG bank linkage situation (post-SHG) of the SHG membersand their households. Thus, ‘before and after’ methodologies were adopted for the assessment of theperformance and impact created by SBLP. All the financial parameters for the pre and post-SHG

situations were measured at reference year (January-December 2006) prices. In addition to the impactanalysis, the study also examines various issues related to SHPIs and banks such as promotional/linkagecost, sources of funding available for different SHPIs, problems of bank linkage and monitoring of SHGsand non-performing assets. Case studies of SHGs as a group and of their individual members wereconducted to supplement the findings of the quantitative survey.

7.2 MAJOR FINDINGS ON THE LEVEL OF SHGS


is seen that the funds of the SHGs were growing at the rate of 196 per cent per annum, reiterating thebenefits of bank linkage. This has had a cascading effect as credit facility means more money forinvesting in income generating schemes. Therefore, this implies more savings as well as timely

t f l hi h i t h l f t h b k l



repayment of loans, which in turn helps fetch more bank loans.

On an average, SHGs are able to approve about eight loans per year to their members. They could lendRs 4,833 on an average and, as of 2006, offered loans for longer periods in comparison to the time of linkage (11.4 as against 9.9 months). The SHGs are utilising 61.8 percentage of loans received forincome-generating activities since the loan amount available to them is much higher. A whopping 69.2percentage of SHGs have reported 100 per cent loan recovery from the members.To a certain extent, the SHGs have helped their members to acquire management skills. However, themembers are also of the view that they require technical, financial and marketing skills particularlyrelated to income generating activities. According to them, illiteracy and the lack of advanced skills limit

the scope for improvement in livelihood options.

The SHGs are not satisfied with the number of visits made by SHPI staff and the help provided by them.The SHGs have come up with suggestions for changes in the activities of SHPIs to make them moreuseful. For instance, more time could be allotted for training and group discussions. Moreover, only avery small percentage of SHGs reportedly received support from financial institutions (FIs) /banks inbook keeping, as well as from financial activities. They are also not satisfied with the frequency of visitsfrom the personnel of FIs/banks.

7.3 MAJOR FINDINGS ON THE LEVEL OF SHG M EMBERS AND THEIR HOUSEHOLDS

7.3.1 Economic Impact

7.3.1.1 Net household income


Another important point that could be noted here is that the share of expenditure on health to totalexpenditure (food plus non-food) in the base year is 4.15 per cent, which is higher than that of expenditure on education which is 3.97 per cent.



7.3.1.3 Changes in savings

The average level of savings per household increased significantly in 2006 when compared to the baselevel. Total savings, which includes financial and physical savings, registered 14.2 per cent annualgrowth rate. Individually, both financial savings and physical savings registered annual growth rates of 14.3 per cent and 14 per cent respectively. The growth rate in savings is the highest in Model type 3 ascompared to the other two Model types. The access to financial savings instruments has improvedconsiderably in the post-SHG period as compared to the earlier era. The study found that apart fromsavings in SHG, the other major saving instruments used by households are banks deposits (28.5 per

cent) followed by LIC (17.6 per cent), post offices savings (8.6 per cent) and savings in co-operativesocieties (3.1 per cent).

7.3.1.4 Improvement in assets holdings

The value of assets in the form of consumer durable assets per household recorded significant growth ineach State. The magnitude of net change in the value of assets between pre and post-SHG periods washighest in Andhra Pradesh followed by Maharashtra and Karnataka. Among different Model types of

bank linkage, groups under Model type 2 experienced the maximum increment in value of consumerdurable assets ownership.

7.3.1.5 Changes in borrowing habits

The SBLP generated a significant change in the borrowing habits of households. The study found thatabout 92 8 per cent of households reported of loan taken in the post SHG period compared to 46 5 per


7.3.2 Social empowerment

A very high share of respondents reported positive impact of the SBLP on the empowerment of women.E t i 92 t f h h ld i d ft tt i i b hi i SHG



Empowerment in 92 per cent of households increased after attaining membership in SHGs.

7.3.2.1 Self-confidence

Questions related to the self-confidence of women were asked, such as, travelling alone to the nearesttown/district, going alone to hospitals, handling certain amount of money and addressing a forum. Theshare of women members reporting significant improvement in their self-confidence level for allindicators has gone up in the post-SHG period.

7.3.2.2 Positive Behavioural changes

In behavioural changes, the study found that more than 70 per cent of women respondents reportedimprovement, or even significant enhancement, in their ability to face problems. More than 73 per cent of women reported that they could handle problems related to health, 72 per cent on financial crisis and 63.8per cent on resolving family disputes.

On the question of control over use of money, more than 62 per cent of women reported significantimprovement in the acquisition of consumer durable assets during the post-SHG period. Similarly, more

than 51 per cent women reported an increase in control over use of money on buying of physical assets,66.2 per cent on expenditure on family/social functions and 71.3 per cent on expenditure on children’seducation.

More than 60 per cent of households indicated that there was an increase in the ownership of productiveassets in the post-SHG situation. One-third of households indicated “no change” in the ownership of productive assets The overall findings suggest that households are better off now in terms of acquisition


7.4 MAJOR FINDINGS ON THE LEVEL OF SHPIS AND BANKS

Various issues like promotional and maintenance costs of SHPIs per SHG, types of support received bySHPIs and sources of support have been addressed As far as banks are concerned the assessment



SHPIs and sources of support have been addressed. As far as banks are concerned, the assessmentincluded examining the percentage of bank loans to SHGs across States and non-performing assets aspercentage of total loan outstanding to SHGs.

With regards to promotional costs, the study reported that on an average a bank incurred lower cost forpromoting a SHG than that by an NGO. To promote a SHG, SHPIs received financial aid/grant and othersupport from different sources. About 60 per cent of SHPIs visualised that NABARD and other bankswere the chief sources of support for financing and promoting SHGs. About 28 per cent of SHPIs statedthat State governments had provided various forms of help to them. A very low share of SHPIs statedthat they had received help from private organisations, international donors and other sources for

supporting their activities. Regarding problems related to the promotion of SHGs, many of the SHPIs (48per cent) expressed that people’s illiteracy or ignorance constituted a major problem for promoting newSHGs. About 28 per cent of SHPIs stated that shortage of field staff was also another problem forpromoting new SHGs. On the major problems related to bank linkage, 45 per cent of SHPIs revealed thata lack of interest among the SHG members was responsible for the failure or delay in providing themwith bank linkage. On the problems experienced in relation to the monitoring of SHGs, the interviewedSHPIs indicated that insufficient financial support (32 per cent), followed by shortage of field staff (30per cent) were the two major impediments.

With regards to loan approval, it was found that on an average a bank takes 9 days to approve a loan to aSHG. At the State level it varied between a maximum of 18 days in Karnataka and to four days in AndhraPradesh. The study found that NPAs, as a percentage of total loans outstanding by all banks to SHGs, isquite low. The NPAs was 4.2 per cent in 2002, which declined to 1.2 per cent in 2006.

7.5 FINDINGSFROM CASE STUDIES


(11.4 months as against 9.9). Secondly, in 2006, SHGs used a higher percentage of their loans (61.8 percent as against 56.7 per cent of latter groups) for income- generating activities. About 60.2 per cent of SHGs have 100 per cent loan recovery record.



SHGs reported better performance both in financial as well as in empowerment aspects. Their nethousehold incomes registered 6.1 per cent annual increase (Table A.7.2). (where is the table)More than60 per cent of the SHG household groups perceived that there is an increase in the ownership of productive assets in the post-SHG situation. The study found that 5.1 per cent and 5.4 per cent change inper household annual consumption expenditure for food and non-food items respectively in relation totheir pre-SHG situation. Per household expenditure annually on education and health registered 5.6 percent and 5.5 per cent increase respectively. Total savings, which include financial and physical savings,registered 14.2 per cent annual growth. Net change in the value of consumer durable assets per householdrecorded 9.9 per cent growth (annually?) The study found that about 93 per cent of households took loans

in the post-SHG situation as compared to that of 46.5 prior to the bank-linkage. On an average, thehouseholds after getting linked to banks borrowed Rs 14,640 compared to a total amount of Rs 5,384earlier. The per annum average loans amount changes between pre-SHG and post-SHG was found at 20.5per cent. One of the most significant goals of SBLP is reduction of poverty viz., through outreachingfinancial resources in the rural areas. In this regard, the study found that in the pre-SHG situation, 58.3per cent households were below the poverty line. The average annual poverty reduction rate was 10 percent in the post-SHGs situation as compared to the pre-SHG situation.

Our findings on social empowerment indicate that more than 90 per cent of households in bank- linkedgroups reported that social empowerment of women has increased over time since joining the SHGmovement. It indicates that SBLP has helped the rural poor, particularly women, to achieve social rights.Further, we found that more than 70 per cent of women respondents reported improvements or evensignificant improvements in their ability to face problems on health and financial crisis aspects and about63 per cent reported the aspect of similar improvement in terms of family disputes. The study also foundthat the participation of women members in household decision making processes has considerably


References

1. Aghion, B. A. de & Morduch, J. (2000): “Microfinance beyond group lending, in economics of T i i V l 8 N 2 401 420



Transition, Vol. 8, No. 2, pp. 401-420.

2. APMAS (2005), “A study on Self-Help Group-Bank Linkage in Andhra Pradesh”, Hyderabad.

3. Chakrabarti, Rajesh (2004), “The India Microfinance Experience – Accomplishments andChallenges’, in Bibek Debroy and Amir Ullah Khan eds. ‘Integrating the Rural Poor into Markets’,Academic Foundation, New Delhi.

4. Chakrabarti, Rajsh (2004), “The India Microfinance Experience – Accomplishments and

Challenges’, in Bibek Debroy and Amir Ullah Khan eds. ‘Integrating the Rural Poor into Markets’,Academic Foundation, New Delhi.

5. Cheston, S.; Kuhn, L. (2002): Empowering women through microfinance, UNIFEMhttp://www.opportunity.org/files/Empowering%20Women%20Paper%20FINAL.pdf (13.02.2004).

6. CMIE (2000), ‘District & State-wise Infrastructure Index: Profile of District’, October.

7. Debroy Bibek and Laveesh Bhandari (2003), ‘District level deprivation in the New Millennium’,Konark Publishers, New Delhi.

8. EDA Rural Systems and APMAS (2006), “The Light and Shades of SHGs in India’, for CRS,USAID, CARE and GTZ/NABARD, CARE India.


17. Meissner, J (2006), “Viability analysis of SHG lending in a Regional Rural bank branch, GTZ,February.

18 MIX(Micro Finance Information Exchange) (2006) “Performance and Transparency: A survey of



18. MIX(Micro Finance Information Exchange) (2006), Performance and Transparency: A survey of Microfinance in South Asia”, Washington, DC.

19. Moyle, Dollard and Biswas (2006), ‘Personal and Economic empowerment in Rural Indian women:A Self-help Group Approach’, International Journal of Rural Management, 2, Sage Publications.

20. MYRADA (2002), ‘Impact of Self Help Groups (Group process) on the Social/Empowerment statusof Women members in Southern India’, paper presented at the seminar on SHG-bank LinkageProgramme at New Delhi on 25th and 26th November 2002.

21. NABARD (1989), ‘Studies of Self-Help Groups of the Rural Poor’, Bombay

22. NABARD 2005-06: Progress of SHG-Bank Linkage in India.

23. NABARD and GTZ 2005: Impact of Microfinance Linkage Banking in India on the MillenniumDevelopment Goals (MDG) .

24. Nair, Ajai (2005), “Sustainability of Microfinance Self Help Groups in India: Would FederatingHelp?”, World Bank Research Working Paper, 3516, February.

25. Prakash, L B and others (2005), “Do Self-Help Groups provide value for money?”, CGAP,Washington DC.

26 P h h di V d K C B d t (2002) “SHG B k Li k P f R l P A




Appendix


Appendix A3



A3.1: Opinions of SHGs on operating independently without the help of SHPIsStates Yes No Total

Assam 36.17 63.83 100.00

Orissa 48.92 51.08 100.00

Uttar Pradesh 24.18 75.82 100.00

Maharashtra 33.77 66.23 100.00

Andhra Pradesh 36.96 63.04 100.00

Karnataka 55.95 44.05 100.00

All States 39.53 60.47 100.00

A3.2: Average distances of SHGs from credit linkage banks and nearest towns

Average distance from bank (kms) Average distance from nearest town (kms)

Assam 4.8 14.3

Orissa 5.6 20.3

Uttar Pradesh 3.3 9.0

Maharashtra 6 2 11 2


Appendix A4

A.4.1: Distribution of SHGs by characteristics of members (contd.)

Average age

of members

Distribution of SHGs by sex of

members (%)

Distribution of SHGs by caste of members (%) Distribution of SHGs by literacy level of

members (%)



104

( ) ( )

All

female

All male Both Only

SC/ST

Only

OBC

SC/ST &

OBC

SC/ST,

OBC andGeneral

All Illiterate Upto 50%

Literate

> 50%

Literate

Assam 30.3 69.7 23.9 6.5 22.0 44.0 17.0 17.0 6.5 11.6 81.9

Oriss a 34.2 94.9 4.4 0.6 29.0 19.4 40.6 11.0 2.5 43.7 53.8

Uttar Pradesh 37.8 55.4 19.7 24.8 34.9 39.6 15.1 10.4 12.1 51.0 36.9

Maharashtra 37.8 92.8 7.2 - 19.4 19.4 21.8 39.5 1.8 41.9 56.3

Andhra Pradesh 36.6 99.0 - 1.0 3.7 73.4 14.7 8.3 11.2 73.0 15.8

Karnataka 32.6 93.6 4.1 2.3 17.8 30.5 16.9 34.7 9.9 36.6 53.5

All India 34.9 80.5 9.3 10.2 21.5 36.0 22.3 20.2 7.3 42.8 49.9

A.4.1: Distribution of SHGs by characteristics of members

Distribution of SHGs by economic status

of members (%)

Distribution of members by occupation (%)

All/majority

BPL

All/ majority

APL

Equal no. of

APL & BPL

Farmers Artisans Traders Agro

processors

Agriculture

labour

Non

agriculture

labour

Others Total No. of SHGs

Assam 63.9 28.4 7.7 37.5 4.2 24.0 1.5 14.3 8.9 9.6 100.0 155

Oriss a 76.6 17.7 5.7 19.6 5.5 7.3 3.0 25.4 35.2 4.0 100.0 158

Uttar Pradesh 33.8 64.3 1.9 29.1 2.0 13.5 2.7 11.9 34.5 6.3 100.0 157

Maharashtra 62.3 34.7 3.0 33.0 2.5 10.1 0.6 29.6 17.8 6.4 100.0 167

Andhra

Pradesh

53.9 46.1 - 15.1 3.6 19.7 0.0 32.8 21.5 7.4 100.0 152

Karnataka 77.9 18.0 4.1 29.7 2.0 6.6 1.2 39.5 16.4 4.5 100.0 172

All India 61.7 34.5 3.7 27.3 3.2 12.9 1.4 27.3 22.0 6.0 100.0 961


A.4.2: Governance aspects of SHGs

System of selecting leaders SHGs reporting change in

leadership (%)

Frequency of change in leadership Total

Election Nomination Any other 6 months 1 yr 2 yr Others

Assam 2.6 97.4 - 11.1 0.0 50.8 47.5 1.7 100.0

Oriss a 1.3 93.0 5.7 15.9 8.0 44.0 20.0 28.0 100.0

Uttar Pradesh 36.9 63.1 - 66.2 1.0 56.7 26.0 16.3 100.0

Maharashtra - 100 - 10.2 11.8 23.5 47.1 17.6 100.0



105

Andhra

Pradesh

5.9 87.5 6.6 13.5 20.0 25.0 45.0 10.0 100.0

Karnataka 3.5 86.0 10.5 94.2 1.9 36.4 50.0 11.7 100.0

All India 8.2 87.9 3.9 36.2 3.1 43.4 40.8 12.7 100.0

A.4.3: General Management Practices

No. of meetings

conducted per

month

Percentage of

member

attending

meetings

Percentage of

members

participating in

the discussions

Percentage of

SHGs havings

rules and

regulation in

written form

Frequency of updation of rules &

regulation

Percentage of SHGs

reporting

accessibility of rules

& regulation to all

members

Frequently Rarely Never

Assam 1.76 91.2 81.4 92.9 15.3 78.0 6.8 97.4Oriss a 1.30 91.4 75.3 89.9 16.0 64.0 20.0 96.1

Uttar Pradesh 1.06 88.7 79.4 86.0 - 23.1 76.9 92.9

Maharashtra 1.02 92.1 81.6 82.6 64.7 35.3 - 97.0

Andhra

Pradesh

1.63 96.3 88.5 99.3 36.8 52.6 10.5 100.0

Karnataka 2.63 83.8 75.9 93.0 22.5 70.6 6.9 94.8

All India 1.57 90.3 80.3 90.5 18.0 53.7 28.3 96.3


A.4.3: General Management Practices (cont.)

Level of awareness about objectives of

the group among members (%)

Maintenance of Minutes register by Frequency of updating minutes

register

Total

High Moderate very little/not

at all

A literate

member

Represen

tative of

NGO

any

person

employed

by SHG

Any

other

None regularly Occasionall

y

Rarely

Assam 46.1 52.6 1.3 96.8 - 1.9 - 1.3 83.4 15.9 0.7 100

Oriss a 31 0 62 0 7 0 44 3 24 1 7 6 6 3 17 7 69 2 8 5 22 2 100



106

Oriss a 31.0 62.0 7.0 44.3 24.1 7.6 6.3 17.7 69.2 8.5 22.2 100

Uttar Pradesh 27.4 67.5 5.1 56.7 8.3 29.9 4.5 0.6 47.7 16.1 36.2 100

Maharashtra 49.1 46.7 4.2 76.0 7.2 3.0 11.4 2.4 78.9 12.0 9.2 100

Andhra

Pradesh

89.0 6.9 4.1 60.5 - 30.3 8.6 0.7 92.8 - 7.2 100

Karnataka 19.8 74.4 5.8 66.3 23.3 7.6 2.9 - 89.2 9.6 1.2 100

All India 42.8 52.6 4.6 66.8 10.7 13.1 5.6 3.7 77.2 10.5 12.3 100


A.4.3a: Change in the General Management Practices

Number

of

meetings

per

month

Membe

rs

attendin

g (%)

Members

participat

ing in

discussio

ns (%)

System of selecting the leader

(%)

Reporting

accessibility

of rules and

regulations

to allmembers

(%)

Awareness about rules and

regulation among members (%)

Awareness about objectives of

the group among members

(%)

Election Nomination Others High Moderat e Little Not atall

High Moderat e VeryLittle/



107

all Little/

Not at all

Assam At time of

Linkage

1.9 88.3 80.0 2.6 97.4 - 98.04 49.35 44.81 5.84 - 45.45 49.35 5.19

2006 1.8 87.7 78.3 2.6 97.4 - 97.39 50.00 45.45 4.55 - 46.10 52.60 1.30

Orissa At time of

Linkage

1.58 95.0 71.0 1.3 93.0 5.7 91.03 11.54 56.41 26.92 5.13 12.66 55.06 32.28

2006 1.30 93.4 76.9 1.3 93.0 5.7 96.13 31.21 60.51 7.01 1.27 31.01 62.03 6.96

Uttar Pradesh At time of

Linkage

1.06 95.6 75.9 36.9 10.2 52.9 92.95 17.83 71.97 10.19 - 18.47 63.06 18.47

2006 1.06 86.6 77.6 36.9 10.2 52.9 92.95 31.85 63.06 5.10 - 27.39 67.52 5.10

Maharashtra At time of

Linkage

1.01 93.3 77.6 - 100.0 - 90.30 19.76 68.26 10.78 1.20 10.18 76.65 13.17

2006 1.02 92.9 82.3 - 100.0 - 96.97 55.09 41.32 2.40 1.20 49.10 46.71 4.19

Andhra

Pradesh

At time of

Linkage

1.60 100.0 91.2 4.7 88.0 7.3 100.00 89.29 10.71 - - 88.11 8.39 3.50

2006 1.63 99.0 91.1 5.9 87.5 6.6 100.00 90.78 9.22 - - 88.97 6.90 4.14

Karnataka At time of

Linkage

2.62 75.3 65.9 13.5 76.6 9.9 95.35 11.63 21.51 66.86 11.63 23.26 65.12

2006 2.63 84.9 76.9 3.5 86.0 10.5 94.77 20.35 75.00 4.65 19.77 74.42 5.81

All India At time of

Linkage

1.63 88.9 74.7 9.8 77.7 12.5 94.53 31.71 46.09 21.14 1.06 29.7 46.5 23.9

2006 1.57 89.1 78.7 8.2 79.2 12.5 96.32 45.46 50.11 3.16 1.27 42.8 52.6 4.6


A.4.4: Financial Management Practices

Maintenance of book of accounts of SHG by Maintenance of SHG passbook by Maintenance of passbook of members by

A

literatemember

Represe-

ntativeof NGO

any person

employed bySHG

Any

other

None A

literatemember

Representative

of NGO

any person

employed bySHG

Any

other

None A

literatemember

Represe-

ntative of NGO

any person

employed bySHG

Any

other

None

Assam 97.4 - 1.9 - 0.6 95.5 0.6 1.9 - 1.9 97.4 - 1.9 - 0.6

Oriss a 43.7 31.0 17.7 6.3 1.3 34.8 23.4 4.4 34.8 2.5 47.5 27.2 12.7 5.7 7.0

Uttar

Pradesh

44.6 6.4 11.5 5.1 32.5 38.9 7.0 7.0 46.5 0.6 52.9 7.0 29.3 8.9 1.9



108

Maharashtra 76.0 6.6 3.0 12.0 2.4 77.2 7.2 3.6 12.0 77.8 7.2 3.0 10.8 1.2

AndhraPradesh

60.5 - 30.3 8.6 0.7 60.5 - 30.3 8.6 0.7 60.5 - 30.3 8.6 0.7

Karnataka 66.3 23.8 8.7 1.2 - 70.9 21.5 6.4 1.2 - 68.0 24.4 7.0 0.6 -

All India 64.8 11.6 12.0 5.5 6.1 63.2 10.2 8.7 17.0 0.9 69.8 11.6 10.7 5.9 1.9

A.4.4 Financial Management Practices (Cont.)

Frequency of updating book of

accounts by

Frequency of updating members'

passbook by

Frequency of updating passbook of SHG by SHGs taking

admission/

membership fee

(% )

Regularly Occasionally Rarely Regularly Occasionally Rarely Regularly Occasionally Rarely

Assam 98.1 - 1.9 87.7 11.0 1.3 80.9 16.4 2.6 7.2

Oriss a 73.4 10.5 16.1 70.1 9.7 20.1 73.7 6.3 20.0 32.3Uttar Pradesh 68.4 15.3 16.3 61.2 15.1 23.7 67.5 20.5 12.0 31.2

Maharashtra 83.8 8.5 7.7 80.1 7.5 12.3 77.4 8.2 14.4 25.1

Andhra

Pradesh

92.8 - 7.2 92.8 - 7.2 92.8 - 7.2 2.0

Karnataka 88.2 5.9 5.9 88.3 9.4 2.3 91.8 6.5 1.8 44.0

All India 85.2 6.2 8.6 80.5 8.8 10.7 82.4 9.1 8.5 28.9


A.4.5: Saving activities of SHGs members

Distribution of SHGs by periodicity of saving

services in 2006 (%)

Average amount of

saving per year per

member (2006) (Rs.)

SHGs paying interest

on the savings of

members (%)

SHGs revising

minimum saving per

member since

formation (%)

SHGs reporting

members unable to

make mandatory

savings at any time

(%)

Weekly Fortnightly Monthly Every two

months

Every three

months

Assam 27.3 1.3 66.9 4.5 - 428.37 17.22 51.61 9.7

O i 10 3 2 6 86 5 0 6 549 50 26 28 48 10 26 6



109

Oriss a 10.3 2.6 86.5 - 0.6 549.50 26.28 48.10 26.6

Uttar Pradesh 12.8 1.9 85.3 - - 1265.77 98.73 12.10 49.7Maharashtra 4.2 0.6 94.0 0.6 0.6 1630.48 97.60 18.56 9.6

Andhra

Pradesh

3.3 6.0 88.7 0.7 1.3 943.25 82.00 34.21 7.9

Karnataka 49.4 1.7 47.1 1.7 - 2097.37 89.47 45.35 20.9

All India 18.3 2.3 77.7 1.3 0.4 1176.76 69.4 34.96 20.7

A.4.5a: Change in the saving activities since establishment/bank linkage

Distribution of SHGs by periodicity of saving services in 2006 Average rate of interest

paid to members per

annum

Average amount of

saving per year per

member (Rs.)

Weekly Fortnightly Monthly Every two

months

Every three

monthsAssam At time of Linkage 31.0 4.5 61.9 2.6 15.28 397.65

2006 27.3 1.3 66.9 4.5 15.17 428.37

At time of Linkage 12.66 87.34 5.57 348.39Orissa

2006 10.32 2.58 86.45 0.65 6.48 549.50

At time of Linkage 12.74 2.55 84.08 0.6 3.90 715.48Uttar Pradesh

2006 12.82 1.92 85.26 4.12 1265.77

At time of Linkage 4.19 95.21 0.60 6.13 791.32Maharashtra

2006 4.19 0.60 94.01 0.6 0.60 4.50 1630.48

Andhra Pradesh At time of Linkage 3.36 6.71 87.92 0.7 1.3 11.65 486.11

2006 3.31 5.96 88.74 0.7 1.3 11.18 943.25

Karnataka At time of Linkage 47.09 2.91 45.35 4.7 12.61 707.79

2006 49.42 1.74 47.09 1.7 13.81 2097.37

All India At time of Linkage

18.81 17.05 61.95 1.6 0.6 7.67 580.06

2006 18.17 2.28 77.05 1.3 1.1 8.22 1176.76


A.4.6: Source of funds and external borrowings

Average

external

borrowed

funds by

SHG since

bank

linkage/esta

blishment

Percentage distribution of external borrowings and own funds of SHGs

SHGs facing

problems in

raising external

funds (%)



110

(Rs.)

Average amount of

own funds available

at the time of bank

linkage (Rs.)

Average amount

of own funds

available in

2006 (Rs.)

Total

SHG

own

Fund

Commer

cial Bank

Regiona

l Rural

Bank

Co-

operative

Bank

Money

Lender

Employ

erOthers

Assam 553.99 36318.32 59551.94 0 46.6 51.7 0.8 0.0 0.0 0.8 49.68

Oriss a 2387.27 20069.11 87176.03 1.3 39.8 48.3 6.2 0.3 0.0 4.2 82.91

Uttar Pradesh 1501.49 18224.92 81692.48 2.6 7.7 87.0 2.8 0.0 0.0 0.0 97.45

Maharashtra 8514.71 61829.66 144873.05 0.8 68.2 19.4 10.6 0.0 0.0 1.0 89.82

Andhra

Pradesh803.94 43293.11 206341.09 1.4 63.7 32.6 0.7 0.0 0.0 1.6 53.95

Karnataka 6861.08 60234.67 229453.90 16.7 39.5 28.3 10.8 2.1 0.3 2.2 40.12

All India 3561.97 40507.85 136164.20 5.0 43.7 43.3 5.7 0.5 0.1 1.7 68.89


A.4.7: Lending Activities of SHGs

Average number

of months after

formation SHGs

started providing

loans to members

Distribution of SHGs the periodicity of credit services to

members (%)

Average

number of

days

require for

approvingloan

Average

numbers of

loan approved

per year per

SHG

Average loan

amount per

member (Rs.)

Average loan

period in

months

Interest

rate (%)

charged

per

annumby SHG

SHGs

charging

panel

interest

fromdefaulters

(%)

Weekly Fortnightly Monthly Every 2

months

Every 3

months



111

Assam 7.3 12.3 5.2 76.0 3.9 2.6 11.2 12.3 3093.68 10.6 33.4 23.45Oriss a 9.1 2.7 3.4 78.5 5.4 10.1 5.2 7.4 2040.07 11.6 28.1 23.65

Uttar

Pradesh

6.2 8.5 4.6 60.1 6.5 20.3 4.1 5.7 6428.60 7.5 23.2 30.20

Maharashtra 5.4 1.2 1.8 85.6 5.4 6.0 9.1 9.9 6516.27 15.3 21.4 41.33

Andhra

Pradesh

6.0 5.3 33.3 2.0 59.3 3.9 3.6 4754.38 11.1 17.8 24.31

Karnataka 8.2 12.8 0.6 85.5 - 1.2 17.9 8.8 5859.13 11.9 20.6 31.93

All India 7.0 6.3 3.4 70.5 3.8 16.0 8.9 8.0 4833.86 11.4 24.1 29.27


A4.7a: Change in the lending activities of SHGs since bank linkage/establishment

Distribution of SHGs the periodicity of credit services

to members (%)

Distribution of SHGs by

usage of funds for

providing loan to

members (%)

Average

number of

days

required for

approvingloan

Average

number

of loans

approved

per year

Average

loan

amount

per

member(Rs.)

Average

loan

period in

months

Interest

rate

charge

per

annumby SHG

(%)

Weekly Fortnightly MonthlyEvery 2

months

Every 3

months

Own

fund

Borrow

ed fundBoth



112

Assam At time of Linkage 15.58 4.55 68.18 8.44 3.25 66.67 3.27 30.07 12.8 8.7 1011.97 9.7 33.62006 12.34 5.19 75.97 3.90 2.60 6.54 5.88 87.58 11.2 12.3 3093.68 10.6 32

Orissa At time of Linkage 2.65 2.65 75.50 6.62 12.58 44.30 18.35 37.34 6.9 8.3 853.84 9.6 28.2

2006 2.68 3.36 78.52 5.37 10.07 35.48 7.10 57.42 5.2 7.4 2040.07 11.6 28.1

Uttar Pradesh At time of Linkage 6.54 5.88 62.75 3.92 20.92 48.72 14.74 36.54 4.3 4.8 2003.8 6.5 23.3

2006 8.50 4.58 60.13 6.54 20.26 4.46 15.29 80.25 4.1 5.7 6428.6 7.5 23.2

Maharashtra At time of Linkage 1.20 2.41 80.72 5.42 10.24 65.87 2.99 31.14 9.3 6.7 1491.29 10.0 22.7

2006 1.20 1.80 85.63 5.39 5.99 19.16 11.38 69.46 9.1 9.9 6516.3 15.3 21.4

Andhra

PradeshAt time of Linkage - 4.76 33.33 0.68 61.22 76.51 0.67 22.82 5.5 3.0 2098.6 10.8 18.8

2006 - 5.33 33.33 2.00 59.33 75.66 0.66 23.68 3.9 3.6 4754.4 11.1 16.6

Karnataka At time of Linkage 16.86 1.74 79.65 - 1.74 71.51 16.28 12.21 20.5 6.6 2350.0 12.3 21.2

2006 12.79 0.58 85.47 - 1.16 9.94 8.77 81.29 17.9 8.8 5859.13 11.9 19.0

All India At time of Linkage 7.32 3.61 67.34 4.14 17.60 62.30 9.53 28.17 10.0 6.4 1642.7 9.9 24.62006 6.35 3.39 70.48 3.81 15.98 24.71 8.27 67.02 8.9 8.0 4833.86 11.4 23.3


A4.7b: Change in the Major Purposes for which loans are used since bank linkage/establishment

Major purposes for which loans are used (%)

Repayment of

debts

Basic

consumption

needs

Household

assets/house

improvements

social needs (e.g.

health,

education)Agriculture

Agro

processingTrade Crafts

Other

incoming

generating

activities

Total

Assam 2.0 5.3 2.6 3.9 55.5 2.9 21.7 4.5 1.5 100.0

1.5 4.8 2.2 3.9 54.8 2.6 23.6 5.2 1.6 100.0

Orissa 3.6 15.4 5.4 18.9 24.6 5.4 14.9 1.1 10.7 100.0



113

2.7 10.3 5.6 19.9 30.1 1.9 17.1 0.8 11.6 100.0

Uttar Pradesh 1.2 10.8 6.4 18.6 35.2 14.7 10.6 2.1 0.4 100.0

0.8 10.5 7.2 17.8 33.2 15.5 12.2 2.3 0.4 100.0

Maharashtra 16.4 24.2 6.3 14.1 25.4 0.4 8.4 1.0 3.7 100.0

9.5 17.4 5.8 11.8 38.5 0.8 10.8 1.3 4 .1 100.0

23.7 11.0 7.7 26.3 17.2 3.9 9.7 0.3 0.2 100.0Andhra

Pradesh 23.1 10.5 7.9 26.3 16.3 4.8 10.4 0.3 0.3 100.0

Karnataka 16.9 8.9 4.8 7.1 22.7 0.1 6.0 0.8 32.7 100.0

9.1 7.6 7.3 7.2 25.2 0.5 8.1 1.8 33.3 100.0

All India 10.3 12.8 5.5 14.7 30.3 4.7 11.9 1.7 8.1 100.0

7.6 10.2 6.0 14.4 33.3 4.4 13.7 2.0 8.4 100.0

A4.8: Percentage distribution of SHGs by Development of Skills of their membersSHGs which

have helped

members to

develop skills

(% )

SHGs which have developed the following human development skills

(% )SHGs which have developed the following Management skills (%)

Leadership Motivation DelegationCommunic

ationNegotiation Others Strategy Planning Marketing

Financial/N

umeric

Project

management

Time

Management

Assam 78.6 32.9 65.2 25.2 39.4 1.3 0.0 29.7 51.6 58.1 26.5 3.9 1.9

Orissa 27.2 32.3 39.2 6.3 36.1 22.2 0.0 13.9 17.1 34.2 22.8 12.0 7.0

Uttar Pradesh 20.4 36.9 21.0 17.8 9.6 56.7 1.3 35.0 36.3 11.5 23.6 6.4 18.5

Maharashtra 41.9 35.3 45.5 17.4 30.5 3.0 0.0 22.2 45.5 29.9 26.9 5.4 5.4

Andhra

Pradesh 32.2 34.2 25.7 18.4 28.9 0.0 0.7 20.4 34.9 18.4 25.7 1.3 2.0

Karnataka 88.4 68.0 54.1 34.3 38.4 0.0 2.3 38.4 43.0 48.8 29.1 9.9 16.9

All India 48.6 40.4 42.0 20.1 30.6 13.6 0.7 26.7 38.2 33.7 25.8 6.6 8.7


A4.9: Training needs of SHG members

SHGs reporting following Fields in which members require moreknowledge and skills for income generating activities (%)

Type of problems faced by SHG in developing the skills of members

TechnicalSkills

FinancialSkills

Management Skills

MarketDevelop

ment

Skills

OthersSkills

No furthertraining

required

SHGs reportingfacing problems

in developing theskills of

members (%)

Lack of literacy &

interest

amongmembers

Lack of co-operation &

initiative

from Banks& Financial

Institutes

Lack of co-operation &

initiative

fromNGO/promo

ting agencies

Insufficient /inadequate

training

facility

Lack of timeamong

membersOthers



114

Institutes ting agencies

Assam 59.4 58.7 48.4 47.1 1.3 0.0 93.5 20.7 2.1 0.0 0.0 69.0 1.4Orissa 64.6 63.3 58.2 27.8 3.8 3.8 96.8 56.2 8.5 2.6 14.4 16.3 2.0

Uttar Pradesh 59.9 73.2 16.6 21.0 5.1 7.0 98.7 34.8 15.5 0.6 9.0 30.3 9.7

Maharashtra 49.1 70.7 47.9 44.9 2.4 5.4 88.0 8.8 1.4 0.0 34.0 53.7 2.0

Andhra

Pradesh75.7 37.5 13.8 5.9 1.3 3.9 61.8 7.4 0.0 0.0 91.5 0.0 1.1

Karnataka 54.7 48.3 52.3 48.3 13.4 2.3 75.0 8.5 14.0 0.0 4.7 24.0 48.8

All India 60.2 58.7 40.0 33.0 4.7 3.7 85.6 24.4 7.3 0.6 21.6 34.3 12.0

A4.10: Organisational sustainability of SHGs

SHGs

reporting

dropout of members (%)

Drop

rate (%)

Reasons for members droping out SHGs reporting

joining of new

members (%)

SHGs reporting

members withdrawing

due to non availability of loan amount demanded

(% )

Migration Illness Not satisfied

with SHG

Defaulter Others

Assam 23.9 5.4 35.6 11.1 46.7 6.7 0.0 20.6 0.0

Oriss a 50.0 9.8 14.9 1.1 70.2 13.8 0.0 29.5 3.4

Uttar Pradesh 49.7 10.6 18.8 3.5 24.7 29.4 23.5 36.1 5.0

Maharashtra 38.9 9.3 41.9 4.1 50.0 4.1 0.0 29.2 3.4

Andhra

Pradesh

49.3 8.9 37.4 9.9 44.0 8.8 0.0 26.5 5.5

Karnataka 46.5 5.9 30.6 18.8 24.7 24.7 1.2 31.7 58.3

All India 43.1 8.2 28.9 7.8 43.5 15.4 4.4 29.2 14.6


A4.11: Financial sustainability of SHGs

Distribution of SHGs by percentage of loan

recovery

Causes of non-repayment of loan by members (%) Average

loan

amount

presently

outstanding(Rs.)

SHGs

reporting

loan

repayment

arrears(%)

Average

amount

of

arrears

for thereporting

SHGs

(Rs.)

SHGs reporting

repayment

arrears (%)

100% 95-

99

90-94 85-

90

75-

84

50-

74%

<50% Natural

calamity

Inadequate

peer

Blocking

of

Health/illness

problem

Others > 6

months

> 12

months



115

99 90 84 74% calamity peer

pressure

of

paymentsfrom

buyer of

products

sold

problem months months

Assam 100.0 - 100.0 - - 1.9 - 22.6 12.9 9.7 32.3 22.6 8927.23 2.0 64000.00 3.2 2.6

Oriss a 63.6 1.5 3.0 - 10.6 12.0 13.6 14.8 5.7 25.0 33.0 21.6 37818.18 27.3 11937.45 31.6 24.7

Uttar

Pradesh

100.0 - - - - 3.2 - 36.1 8.3 22.2 22.2 11.1 18631.81 2.1 34180.00 5.1 5.1

Maharashtra 71.4 - - - 14.3 4.8 - 33.3 28.1 22.8 10.5 5.3 25400.46 2.9 24264.57 3.0 3.0

Andhra

Pradesh

33.3 - 11.1 - - 10.5 33.3 15.1 20.9 18.6 25.6 19.8 51306.51 3.6 31126.78 6.6 5.9

Karnataka 78.6 - 7.1 - 14.3 2.9 3.5 19.4 16.7 19.4 30.6 13.9 46753.04 5.6 19601.43 6.4 4.7

All India 69.2 1.6 6.0 0.5 8.1 5.8 8.7 21.4 15.7 20.5 26.2 16.2 31598.52 7.2 18897.97 9.4 7.7


A4.12: Adequacy/appropriateness of support received from SHPI at the time of establishment/bank linkage

SHGs satisfied with the information provided on by SHPI (%) Average

number of times

SHPI staff

visited SHG

during last oneyear

SHGs satisfied

with the

frequency of the

visit of SHPI

staff (%)

Average number

of times

representatives of

SHG visited SHPI

in the last oneyear

Group formation

and functioning

Functions

and

qualification

of office

Rules and

regulations

Planning,

management

and

monitoring

Financial

service

provisions,

conditions and

Training of

group

leaders

Training of

book

keeper



116

of office

bearers

monitoring conditions and

procedures

Assam 66.5 66.5 70.3 67.7 68.4 67.1 66.5 3.8 71.0 13.6

Oriss a 47.5 47.5 48.1 45.6 45.6 40.5 34.8 4.5 46.2 9.0

Uttar Pradesh 68.2 61.1 63.1 63.1 67.5 59.2 52.2 4.1 58.6 4.5

Maharashtra 71.9 71.9 75.4 65.9 69.5 59.3 58.1 4.2 67.1 4.8

Andhra

Pradesh

63.2 56.6 57.2 55.3 54.6 44.7 46.7 4.6 58.6 7.2

Karnataka 56.4 55.2 52.9 51.7 52.9 51.2 50.6 3.2 41.9 8.5

All India 62.2 68.5 52.1 58.2 59.7 53.7 51.5 4.1 57.0 7.7


A4.13: Adequacy/appropriateness of support received from FI/Bank

Average

number of

times staff

member of

FI/bank visit

SHGs in a

year

SHGs reporting support/activities provided by FI/banks

(% )

SHGs satisfied with the adequacy/appropriateness of services received

from FI/bank on (%)

Training

on book

checking

&

reviewing

&

Reviewing

& advising

Appraising

SHG loan

Frequency

of visits to

Provisions

of loans

Conditions

for loans

Saving

services

FI

conditi

Accessibility

of SHG



117

on book

keeping

&

advising

on book

keeping

accuracy

&

advising

on SHG

financial

activities

& advising

on SHG

financial

health

aspect

SHG loan

request

of visits to

the SHGs

of loans

according

to the

needs of

SHGs

for loans

to the

SHGs

services

according

to the

needs of

SHG

conditi

ons for

savings

of the

SHG

of SHG

representative

to bank

managerial

staff

Assam 2.5 45.5 18.7 18.2 5.7 7.2 12.9 76.1 79.4 81.3 78.06 77.4

Oriss a 1.2 17.3 16.2 17.8 9.7 24.9 20.1 48.7 48.1 57.0 56.96 54.4

UP 1.7 24.6 25.4 19.6 10.7 19.2 89.0 43.3 48.4 47.8 50.32 47.8

Maharashtra 2.2 20.9 27.9 24.8 12.0 14.0 20.1 61.7 59.3 64.7 64.67 66.5

Andhra

Pradesh

3.1 16.9 23.3 18.9 22.1 12.9 89.0 72.4 73.7 77.0 72.37 78.9

Karnataka 2.3 22.6 24.7 22.6 8.1 15.2 20.1 52.3 52.9 61.6 59.30 63.4

All India 2.2 24.3 23.2 20.6 11.6 15.3 89.0 58.9 60.0 64.7 63.48 64.6


Appendix A5

A5.1.1: The average number of years of bank linkage per household by state

State Years of bank linkages

Assam 4.8

Orissa 5.4

Uttar Pradesh 5.1



118

Maharashtra 5.6Andhra Pradesh 5.8

Karnataka 5.3

A5.2.1: The share of income by sources and states

Agriculture Live Stock Wages Salary Self-emp (non farm) Others

Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG

Assam 34.9 32.2 5.4 7.0 18.4 17.8 17.6 17.5 20.7 22.5 3.0 2 .9

Orissa 22.0 22.3 1.6 1.9 42.7 41.9 15.3 14.8 14.4 14.9 4.1 4.2

U.P 27.0 24.6 8.2 9.0 17.7 17.3 17.5 15.6 15.0 16.2 14.7 17.4

Maharashtra 33.6 32.3 10.5 15.7 20.3 16.9 21.5 20.4 11.8 12.5 2 .1 2.2

Andhra Pradesh 31.4 30.9 1.8 2.0 28.6 29.3 10.7 10.4 26.1 26.7 1.3 0.8

Karnataka 34.2 34.2 5.2 5.6 35.8 33.8 8.6 9 .3 14.9 15.8 1.3 1.3

Model type 1 33.8 33.0 8.3 9.9 25.4 24.1 14.7 13.3 14.9 16.3 2.9 3.3

Model type 2 31.3 29.7 4.6 6.5 26.7 25.8 15.8 15.6 16.1 16.7 5.5 5.8

Model type 3 21.3 22.7 4.9 5.1 27.6 26.3 12.5 12.1 30.6 30.9 3.2 2.9

All India 30.9 29.9 5.7 7.3 26.5 25.4 15.1 14.5 17.4 18.2 4.5 4.7


A5.2.2: Annual income per household by sources of income and their growth rates by states and type of model

Agriculture Live Stock Wages Salary Self-emp (non

farm)

Others

Base

level

Growth %

Annual

Base

level

Growth

%

Annual

Base level Growth %

Annual

Base

level

Growth %

Annual

Base level Growth %

Annual

Base

level

Growth %

Annual

Assam 9784 4.7 1506 12.3 5151 5.7 4929 6.3 5803 8.3 832 6.2

Orissa 5232 5.8 369 9.5 10127 5.3 3628 4.9 3408 6.4 977 6.0

Uttar Pradesh 10555 3.7 3205 7.4 6926 5.1 6838 3.3 5852 7.2 5735 9.1

Maharashtra 12997 6.1 4069 14.8 7849 3.4 8322 5.8 4573 8.0 828 7.3



119

Maharashtra 12997 6.1 4069 14.8 7849 3.4 8322 5.8 4573 8.0 828 7.3

Andhra Pradesh 14609 4.6 830 6.8 13299 5.4 4976 4.4 12136 5.3 617 -4.2

Karnataka 11321 7.3 1715 8.9 11830 6.2 2849 8.7 4926 8.5 436 6.6

Model type 1 11759 5.8 2874 10.0 8842 5.2 5123 4.3 5194 8.0 998 9.2

Model type 2 11326 5.1 1654 13.1 9660 5.4 5710 5.8 5808 6.8 1985 7.2

Model type 3 6183 7.4 1422 7.0 8013 5.2 3615 5.6 8857 6.4 920 4.2

All India 10753 5.5 1974 11.2 9201 5.3 5257 5.4 6046 7.0 1557 7.3

A5.4.1: Changes in member household's Children Education

States Increase No change Decrease No Response Total

Percentage distribution of households

Assam 67.7 28.6 0.6 3.1 100.0

Oriss a 81.1 15.2 0.8 2.9 100.0

Uttar Pradesh 83.1 10.7 0.8 5.5 100.0

Maharashtra 84.8 10.3 0.1 4.8 100.0

Andhra Pradesh 71.4 23.3 3.0 2.2 100.0

Karnataka 92.2 3.1 3.4 1.3 100.0

Model type 1 79.9 15.1 0.9 4.1 100.0

Model type 2 81.2 14.1 1.8 2.8 100.0

Model type 3 77.4 17.8 1.2 3.5 100.0

All India 80.3 14.9 1.5 3.3 100.0


A5.4.2: Changes in member household's Nutrition



Ass am 70.1 23.2 0.0 6.7 100.0

Oriss a 68.5 26.3 0.6 4.6 100.0

Uttar Pradesh 88.3 11.2 0.0 0.5 100.0

Maharashtra 82.0 16.1 0.4 1.6 100.0

Andhra Pradesh 71.3 26.5 2.0 0.3 100.0

Karnataka 89.2 3.9 4.5 2.5 100.0

Model type 1 76.9 18.9 1.1 3.0 100.0



120

Model type 2 79.6 16.5 1.4 2.5 100.0Model type 3 76.9 19.5 0.9 2.6 100.0

All India 78.5 17.6 1.3 2.7 100.0

A5.4.3: Changes in member household's Health



Assam 71.1 22.6 0.0 6.3 100.0

Oriss a 70.0 27.2 1.3 1.5 100.0

Uttar Pradesh 84.9 14.1 0.8 0.3 100.0

Maharashtra 84.4 14.6 0.4 0.6 100.0

Andhra Pradesh 84.9 14.0 1.1 0.0 100.0

Karnataka 94.9 2.8 1.5 0.7 100.0Model type 1 77.6 20.4 0.9 1.1 100.0

Model type 2 83.5 13.9 0.9 1.8 100.0

Model type 3 84.3 13.5 0.6 1.5 100.0

All India 81.9 15.7 0.8 1.5 100.0


A5.5.1: Changes in borrowing habits

Before joining SHG After joining SHG


States

Loan not taken Loan taken Total Loan not taken Loan taken Total

Assam 87.1 12.9 100.0 29.0 71.0 100.0

Oriss a 78.4 21.6 100.0 4.3 95.7 100.0

Uttar Pradesh 28.2 71.8 100.0 5.2 94.8 100.0

Maharashtra 56.8 43.2 100.0 4.7 95.3 100.0

Andhra Pradesh 42.3 57.7 100.0 0.4 99.6 100.0

Karnataka 30.0 70.0 100.0 0.5 99.5 100.0



121

Model type 1 57.7 42.3 100.0 9.0 91.0 100.0Model type 2 52.2 47.8 100.0 7.4 92.6 100.0

Model type 3 50.3 49.7 100.0 2.6 97.4 100.0

All India 53.5 46.5 100.0 7.2 92.8 100.0

A5.5.2: Total loan taken per household (Rs.)

States Pre-SHG Post -SHG

Assam 1560 3026

Oriss a 890 6842

Uttar Pradesh 7772 19101

Maharashtra 5089 16492Andhra Pradesh 6885 20675

Karnataka 9802 21186

Model type 1 5229 14282

Model type 2 5636 14922

Model type 3 4645 14202

All India 5384 14640


A5.5.3: Percentage distribution of use of loan by purpose by States

Loan taken for production oriented purposes as per cent to total loan

taken

Loan used for consumption purposesStates

Pre-SHG Post –SHG Pre-SHG Post –SHGAssam 39.3 49.2 60.7 50.8

Orissa 36.7 68.9 63.3 31.1Uttar Pradesh 41.4 54.8 58.6 45.2

Maharashtra 63.6 69.6 36.4 30.4Andhra Pradesh 26.1 32.4 73.9 67.6

Karnataka 43.9 45.7 56.1 54.3



122

Model type 1 54.5 62.5 45.5 37.5Model type 2 37.1 45.9 62.9 54.1

Model type 3 42.3 51.3 57.7 48.7All India 42.6 51.3 57.4 48.7

A5.4.4: Changes in practices related to drinking water supply by major source

Percentage of respondents Major source of drinking wa ter

Well Hand pump Pond/River Pipe water inside/ withinhouse compound

Pipe water nearbystreet/ within village

No response

Pre-SHG 10.6 49.2 35.2 0.4 4.0 0.6AssamPos t-SHG 9.9 51.9 32.0 0.4 5.2 0.6

Pre-SHG 20.1 66.2 10.3 1.1 2.2 0.1OrissaPos t-SHG 7.1 82.7 5.1 1.4 3.7 0.1

Pre-SHG 1.0 98.2 0.0 0.4 0.0 0.4Uttar PradeshPos t-SHG 0.9 98.1 0.0 0.6 0.0 0.4Pre-SHG 7.0 22.3 0.6 35.9 34.1 0.1Maharashtra

Pos t-SHG 6.5 10.7 0.6 51.0 31.1 0.1Pre-SHG 21.4 37.0 7.7 10.8 23.0 0.0Andhra Pradesh

Pos t-SHG 13.8 33.3 4.8 25.3 22.9 0.0Pre-SHG 6.5 9.5 0.6 15.1 68.2 0.1Karnataka

Pos t-SHG 3.5 7.2 0.8 27.3 61.1 0.0Pre-SHG 8.7 47.4 15.1 9.6 18.9 0.2Model type 1

Pos t-SHG 6.1 49.7 11.9 13.3 18.8 0.2

Pre-SHG 9.6 46.6 5.4 13.5 24.5 0.3Model type 2Pos t-SHG 5.5 45.2 4.1 22.7 22.2 0.3

Pre-SHG 21.2 43.7 9.8 2.6 22.6 0.0Model type 3Pos t-SHG 14.0 45.4 9.1 8.6 22.9 0.0

Pre-SHG 10.9 46.4 8.8 10.9 22.6 0.2All India

Post-SHG 6.8 46.5 7.0 18.1 21.3 0.2


A5.4.5: Changes in practices related to sanitary facilities

(in per cent)

Major source of sanitary facilities No response Not available Available

inside house

Available inside

house compound

Available within

village

Total

Pre-SHG 0.6 16.2 4.4 69.6 9.1 100.0Assam

Pos t-SHG 0.5 16.2 5.7 71.8 5.8

Pre-SHG 0.4 73.9 18.2 1.6 5.8 100.0Orissa

Pos t-SHG 0.4 71.8 18.7 3.0 6.1 100.0

Pre-SHG 0.3 72.9 18.4 7.8 0.6 100.0Uttar Pradesh

Pos t-SHG 0.3 69.9 19.9 9.4 0.5 100.0

P SHG 0 2 58 0 10 8 7 8 23 2 100 0M h h



123

Pre-SHG 0.2 58.0 10.8 7.8 23.2 100.0MaharashtraPos t-SHG 0.1 46.3 17.5 12.1 23.9 100.0

Pre-SHG 0.0 36.1 12.0 4.2 47.6 100.0Andhra

Pradesh Pos t-SHG 0.1 35.8 18.9 11.9 33.2 100.0

Pre-SHG 0.7 30.4 13.2 10.1 45.6 100.0Karnataka

Pos t-SHG 0.7 24.7 21.9 26.6 26.0 100.0

Pre-SHG 0.4 45.3 18.3 20.6 15.4 100.0Model type 1

Pos t-SHG 0.5 41.1 20.2 24.4 13.8 100.0


Pos t-SHG 0.4 45.5 14.9 21.3 17.9 100.0


Pos t-SHG 0.0 43.8 20.8 22.5 12.9 100.0

Pre-SHG 0.4 48.0 12.9 16.6 22.2 100.0All India

Post-SHG 0.4 44.0 17.2 22.4 16.0 100.0


A5.12.1: Changes in abilities of female SHG members to influence decision-making in their households on Children’s Education

Decision taken byDecision – Children's Education

Woman respondent

(SHG member)=

Spous e Jointly Others No response Total

Pre-SHG 7.2 9.7 77.1 1.8 4.2 100.0Assam

Post-SHG 11.4 7.7 74.7 2.2 4.0 100.0

Pre-SHG 5.9 48.4 39.4 2.4 3.9 100.0Orissa

Post-SHG 13.4 12.1 69.8 1.3 3.4 100.0


Post-SHG 23.8 36.1 27.7 5.6 6.8 100.0

P SHG 7 7 27 3 51 1 1 2 12 7 100 0M h ht



124

Pre-SHG 7.7 27.3 51.1 1.2 12.7 100.0MaharashtraPost-SHG 23.1 9.0 53.5 1.1 13.2 100.0

Pre-SHG 11.5 26.5 38.9 4.1 19.0 100.0Andhra Pradesh

Post-SHG 23.0 10.2 46.7 4.8 15.3 100.0


Post-SHG 35.9 24.2 37.8 1.5 0.6 100.0


Post-SHG 21.4 17.2 52.8 2.1 6.6 100.0


Post-SHG 23.2 16.7 49.1 2.8 8.1 100.0


Post-SHG 21.3 10.2 60.6 2.2 5.7 100.0

Pre-SHG 9.1 34.4 45.6 2.9 8.0 100.0All India

Post-SHG 22.5 15.8 51.7 2.6 7.4 100.0


A5.12.2: Changes in abilities of female SHG members to influence decision-making in their households on Purchase of Asset

Decision usually taken by

Decision – Purchase of Asset Woman respondent

(SHG member)=Spous e Jointly Others No response Total

Pre-SHG 3.9 14.9 75.3 3.8 2.1 100.0Assam

Post-SHG 4.8 12.3 79.1 3.4 0.3 100.0

Pre-SHG 4.1 43.4 46.3 5.6 0.7 100.0Orissa

Post-SHG 18.0 21.7 58.5 1.5 0.4 100.0


Post-SHG 17.9 42.3 34.3 5.6 0.0 100.0

Pre SHG 8 3 37 2 45 4 1 4 7 7 100 0M h h



125

Pre-SHG 8.3 37.2 45.4 1.4 7.7 100.0MaharashtraPost-SHG 15.2 14.6 61.6 0.7 7.8 100.0


Post-SHG 17.7 22.9 54.6 4.5 0.3 100.0


Post-SHG 21.2 31.8 44.9 1.9 0.1 100.0


Post-SHG 15.3 23.1 55.7 2.9 2.9 100.0


Post-SHG 16.5 23.8 55.3 2.9 1.5 100.0


Post-SHG 16.7 24.1 57.3 1.4 0.5 100.0

Pre-SHG 7.5 39.2 46.9 4.3 2.1 100.0

All India Post-SHG 16.2 23.7 55.7 2.7 1.7 100.0


A. 5.12.3: Changes in abilities of female SHG members to influence decision-making in their households on Taking Loans

Decision usually taken by

Decision – Taking Loans Woman respondent

(SHG member)=Spouse Jointly Others No response Total

Pre-SHG 4.7 24.0 63.2 4.7 3.3 100.0Assam

Pos t-SHG 15.1 14.9 65.8 2.8 1.4 100.0

Pre-SHG 5.3 56.2 27.5 10.0 1.1 100.0Orissa

Pos t-SHG 39.3 8.9 50.3 1.3 0.1 100.0


Pos t-SHG 24.8 39.8 29.7 5.3 0.4 100.0

Pre SHG 7 9 36 7 47 1 1 0 7 3 100 0M h ht



126

Pre-SHG 7.9 36.7 47.1 1.0 7.3 100.0MaharashtraPos t-SHG 18.6 11.9 61.6 0.6 7.3 100.0


Pos t-SHG 31.7 12.2 53.2 2.9 0.0 100.0


Pos t-SHG 39.3 24.5 35.7 0.4 0.1 100.0


Pos t-SHG 28.4 18.1 48.6 1.7 3.2 100.0


Pos t-SHG 27.0 18.3 50.9 2.3 1.5 100.0


Pos t-SHG 37.6 14.3 47.0 0.9 0.2 100.0

Pre-SHG 9.3 42.6 41.0 4.7 2.4 100.0

All India Post-SHG 28.9 17.6 49.8 1.9 1.7 100.0


A5.12.4: Changes in abilities of female SHG members to influence decision-making in their households on Use of Loans

Decision usually taken byDecision – Use of Loans

Woman respondent

(SHG member)=

Spous e Jointly Others No response Total

Pre-SHG 4.2 18.0 70.2 4.5 3.1 100.0Assam

Pos t-SHG 13.2 14.2 68.4 3.1 1.0 100.0

Pre-SHG 6.1 56.4 29.2 6.7 1.6 100.0Orissa

Pos t-SHG 22.0 17.3 59.4 1.3 0.0 100.0


Pos t-SHG 20.2 40.2 34.3 5.0 0.4 100.0

Pre-SHG 7 7 35 3 48 4 1 1 7 6 100 0Maharashtra



127

Pre SHG 7.7 35.3 48.4 1.1 7.6 100.0MaharashtraPos t-SHG 15.4 13.0 63.5 0.8 7.3 100.0


Pos t-SHG 29.6 13.0 54.0 3.4 0.0 100.0


Pos t-SHG 32.4 27.4 39.9 0.2 0.1 100.0


Pos t-SHG 18.0 22.3 54.5 2.0 3.2 100.0


Pos t-SHG 22.9 19.2 54.2 2.4 1.4 100.0


Pos t-SHG 29.9 19.5 49.8 0.8 0.0 100.0

Pre-SHG 9.1 40.6 43.7 4.0 2.6 100.0All India

Post-SHG 22.7 20.0 53.6 2.1 1.6 100.0


A5.13.1: Percentage of female me mbers participating in public issues on village level

StateApproached Govt officials for

solving problems

Attended community or village

meetingsMembers of village/ govt committees

Pre-SHG 18.1 36.1 4.4Assam

Post-SHG 35.2 50.1 9.0

Pre-SHG 4.2 3.4 1.3Orissa

Post-SHG 18.1 34.0 15.5

Pre-SHG 7.9 1.8 0.2Uttar Pradesh

Post-SHG 16.4 14.7 1.0

Pre-SHG 21.0 27.5 14.8Maharashtra

Post-SHG 68.0 63.8 32.4



128

Post SHG 68.0 63.8 32.4Pre-SHG 6.5 10.4 3.5

Andhra PradeshPost-SHG 47.9 51.4 17.0

Pre-SHG 21.0 13.1 3.7Karnataka

Post-SHG 90.8 78.4 13.4

Pre-SHG 11.3 17.0 6.8Model type 1

Post-SHG 46.4 51.3 16.4


Post-SHG 51.6 51.1 14.2


Post-SHG 45.2 52.9 20.7

A5.14.1: Percentage distribution of households specifying areas on which they require training on income generating activitiesFields in which more knowledge and skills are required for further improving income generating activitiesStates

Technical Financia l Management Market development Others No response

Total

Assam 33.6 35.4 18.0 11.2 0.5 1.2 100.0

Oriss a 33.8 48.2 13.3 3.5 0.6 0.5 100.0

Uttar Pradesh 59.3 32.5 2.3 4.1 1.3 0.5 100.0

Maharashtra 29.4 37.0 19.4 13.3 0.4 0.5 100.0

Andhra Pradesh 74.6 20.2 1.3 1.5 1.7 0.7 100.0

Karnataka 42.2 26.4 21.4 8.2 0.4 1.4 100.0

Model type 1 35.8 41.3 13.3 8.1 0.7 0.8 100.0

Model type 2 48.0 30.5 13.0 6.7 1.0 0.9 100.0

Model type 3 52.8 28.5 11.5 6.6 0.2 0.5 100.0

All India 45.1 33.3 12.9 7.1 0.8 0.8 100.0


A7.1: Major Findings on the Level of SHGs

Model type 1 Model type 2 Model type 3 All Models

Average number of years of Bank Linkage 5.3 5.4 5.5 5.4

Percentage of SHG members belong to BPL category 60.4 61.8 63.8 61.7

Percentage of SHGs updating passbook regularly 77.1 81.9 94.2 82.4

No. of meetings conducted per month 1.7 1.5 1.4 1.6

Member attending meetings (%) 86.8 91.5 92.5 90.3

SHGs havings rules and regulation in written form (%) 85.3 92.8 92.3 90.5

Frequency of updation of rules & regulation

§ Frequently 14.0 18.3 25.9 18.0

§ Rarely 61.8 46.9 70.7 53.7

N 24 3 34 7 3 4 28 3



129

y§ Never 24.3 34.7 3.4 28.3

Average amount of saving per year per member (2006) (Rs.) 1358.69 958.10 1717.5 1176.76

Percentage distribution of external borrowings and own funds of SHGs

§ SHG own Fund 4.1 1.9 16.4 5.0

§ Commercial Bank 36.5 45.3 48.3 43.7

§ Regional Rural Bank 52.4 45.8 22.6 43.3

§ Co-operative Bank 6.6 6.4 1.9 5.7

Percentage of SHGs had 100% loan recovery 79.9 70.5 40.8 69.2

Arrears as a % of loan outstanding 9.78 5.97 3.34 6.60

SHGs which have developed the following human development skills (%)

§ Leadership 37.8 39.6 49.2 40.4

§ Motivation 46.4 40.7 38.5 42.0

Two major Management skills developed by percentage of SHGs§ Planning 22.3 41.0 29.2 38.2

§ Marketing 21.9 31.5 40.8 33.7

Two most important problems faced by SHGs for developing the skills of members

§ Lack of literacy & interest among members 34.8 17.5 30.5 24.4

§ Lack of time among members 34.0 37.2 21.9 34.3

SHGs reporting dropout of members (%) 42.1 40.7 55.4 43.1

Dropout rate (%) 9.0 7.8 8.2 8.2

Level of awareness of SHGs about objectives of the group among members (%)

§ High 37.0 49.9 25.4 42.8

§ Moderate 59.1 45.7 67.7 52.6


A7.2: Major Findings on the Level of SHG Members and their Households

Items Income per househol d (Rupees)

Base

(Rs.)

Growth rate %

Annual

Changes in annual net household income 34786 6.1

Changes in annual per household consumption expenditure of food 3040 5.1

Changes in annual per household consumption expenditure of non-food 1529 5.4

Annual per household expenditure on education 180 5.6

Annual expenditure per household on health 193 5.5

Average level of savings per household 2834 14.2

Average loan amount per household 5384 20.5Net change in the value of consumer durable assets 9 9



130

g pNet change in the value of consumer durable assets 9.9

Average loan amount per household changes between pre-SH G and post-SHG 20.45

Pre-SHG Post-SHG

Number of times loan taken from money lender to total count of loan (%) 60.1 1.2

Net poverty reduction

Model type 1 23.9 -8.74

Model type 2 25.4 -10.7

Model type 3 28 -10.51

All India 25.3 -10.0


Increase No change Decrease Non response Impact of membership in SHG on social empowerment of women 92.0 6.5 0.8 0.7

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