Exploring the great potential of the SHG federations, to address poverty by serving as a platform for providing financial and livelihood promotion services, this article traces their evolution, significance, limitations and uniqueness—where women are the owners, managers, users and beneficiaries
Exploring the great potential of the SHG federations, to address poverty by serving as a platform for providing financial and livelihood promotion services, this article traces their evolution, significance, limitations and uniqueness—where women are the owners, managers, users and beneficiaries.
Introduction
A Self Help Group (SHG) is an informal group of 10–20 members of similar socio-economic background, that come together for a common objective, having developed its own norms and holding regular meetings to engage in savings and credit activities to improve livelihoods. The SHG movement in India began in the 1980s, with several NGOs experimenting with social mobilization, organizing the rural poor into groups for self help and mutual benefit, mainly women’s empowerment and poverty reduction. The SHG bank linkage programme (SBLP), under the leadership of NABARD, which built upon these initiatives, will be completing two decades of existence soon. The SHG movement has come to mean more than merely the provision of financial services to group members, composed mainly of poor women. The role of SHGs in financial intermediation holds greatest promise as a means of continued financial inclusion and mainstreaming of poor families, as well as a development model with wider application.
According to a report—‘Status of microfinance in India 2011—by NABARD, as on 31 March 2011, approximately 7.5 million SHGs have savings bank accounts and 4.8 million SHGs have taken a loan from a bank. The total amount of bank loans outstanding with SHGs as on 31 March 2011 is Rs 306 billion, with an average per group loan of Rs 122,744. The SBLP in India is perhaps the world’s largest community based microfinance programmes in the world. In spite of the phenomenal success in terms of outreach to the poor, many practitioners and policy makers are of the opinion that the SHG–Bank linkage model has not succeeded because it still is an uphill task for an SHG to open a bank account or to access a bank loan in many states in northern and eastern India. (According to Dr. Y.C. Nanda, former Chairman of NABARD, the SHG model has been successful in delivering development interventions through the SHGs; however, the SHGBank linkage model has not been successful.) Over a period of more than 20 years, the growth of the SHG movement has been phenomenal, being the strongest in South India. Starting from 1999, the rural development department of state governments has taken up promoting SHGs under the Swarnajayanti Gram Swarozgar Yojana (SGSY), a Government of India (GoI) programme for Rural Development, either through their partner NGOs or directly through their own staff. In some states, the women and child development department also played a significant role in the promotion of SHGs.