Author(s) :K. Raja Reddy and C.S. Reddy
Article courtesy: ENABLE Publication
This report titled “Self Help Groups (SHGs) in India: A study on quality and sustainability” comes to you at a time when the SHG movement is at a critical juncture. ENABLE, a National Network Enabling Self Help Movement, came into being in 2007 with a vision of “vibrant women SHG movement in India”. Enable network has seven resource organizations as its members: APMAS, Chaitanya, CmF, Indian School of Microfinance for Women, Reach India, Sampark and West Bengal SHGPF. The members together have presence in almost the entire country, and necessary techno-managerial expertise to promote member-owned, member-managed and member-controlled people’s institutions to strengthen the SHG movement.
To strengthen its evidence based advocacy through research, ENABLE conducted a comprehensive research study on the ‘quality and sustainability of SHGs’ in eight states, viz. Andhra Pradesh, Assam, Bihar, Gujarat, Karnataka, Maharashtra, Rajasthan and West Bengal. These state level studies were conducted with common research methodologies, uniform sample size and same research tools, so that the results are comparable and a national level synthesis study report could be prepared. Each of the 7-member organizations of ENABLE anchored these studies in their main operational states.
The findings of the national study clearly indicate the need for much greater effort to enhance the quality of the SHG movement in the country, to address all the constraints related to SHG bank linkage and to support the SHGs and their federations through sustained institutional capacity building to broaden their agenda and deepen their engagement in all dimensions that will enable them to march towards prosperity.
As per NABARD’s microfinance report, as on March 2012, about 79.6 lakh SHGs, with an estimated membership of 9.7 crores, have savings accounts in the banks, with aggregate bank balance of Rs. 6,551 crores. Over 43.54 lakh SHGs have loan accounts with total loan outstanding of Rs. 36,340 crores. The total number of SHG Federations formed is 1.66 lakh most of which are primary federations. Decreasing trend in the number of SHGs that have a loan outstanding with banks during 2010-12 which came down from 48.51 lakh SHGs in 2010 to 43.54 lakh SHGs as on March 2012, a reduction of nearly 10% is a major cause for concern. During the same period, the number of SHGs having a savings bank account has gone up from 69.53 lakh SHGs to 79.6 lakh SHGs, an increase of nearly 15%.
Only 55% of the SHGs that have a bank account are having a loan outstanding with the bank. Another disturbing trend is steady increase in Non Performing Assets (NPAs), which doubled in two years from 2.9% in 2010 to 6.1% in 2012. Increasing NPAs and reducing percentage of SHGs that have bank loan outstanding may adversely affect the prospects of newer SHGs being promoted.
Though, the SHG bank linkage programme is in existence for more than two decades, there are very few large scale studies on SHGs, particularly on issues related to their performance, problems faced by them and their sustainability. Further, to strengthen its advocacy through research, ENABLE network planned to conduct research studies about ‘quality and sustainability of SHGs’ in eight states. In this context, ENABLE undertook the responsibility of conducting a large scale SHG sample study in India, covering a sample of 1942 SHGs in eight states, which provides a very good representation of the diversity of the SHG movement in the country. The present study is an effort to develop a deeper understanding on the SHG movement and to come up with appropriate recommendations.
The report primarily focuses on quality and sustainability of SHGs, besides the socioeconomic empowerment of SHG women. Firstly, it addressed the issue of inclusion and exclusion of vulnerable sections in SHGs, the incidence of dropouts and enrollment, issue of saving products and decrease of group savings and the frequency of savings, member attendance and agenda for meetings which have been enabling the SHG women; and the issue of leadership rotation.
Secondly, it speaks on the sustainability issues, which include poor quality of book keeping in the absence of supporting systems; dependency on external agencies to build the group corpus, so as to address financial needs of SHG member households; issue of repayment rate and the how the SHGs, SHPIs and banks ensure high repayment rate at all levels. Thirdly, it discussed on the changes in the relations between SHGs and community and changes at household level and the empowerment of women with reference to self confidence, mobility, and access to resources, decision making and political participation.
Finally, to address the quality issues, the authors have proposed several recommendations, such as continuous Capacity Building of SHGs, system of annual elections, a system of internal audit, self regulation for SHG & their federations, bank mitras for SHG bank linkage facilitation and adequate funds to NGOs for promotion of SHGs and Federations.
This report would not have been possible without the tireless efforts of Dr. Raja Reddy, Director of Research & Advocacy, APMAS, over a period of several months, in pooling the data from the eight states, in cleaning the data, analyzing it and preparing the report.
But for him, ENABLE would not have brought out this report. We are deeply indebted to him for his efforts and contribution. Thanks to the Advisory Committee of ENABLE and also the network members for excellent support, guidance and contribution. Most importantly we thank all the SHG members, Bankers, Government Officials and SHPIs for their support and cooperation in making this study possible.
We hope that the present study answers many issues that the SHGs have been facing and is useful to the policy makers, bankers, academicians, NGOs, and other development practitioners, who have been working with community based organizations.
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