Evaluation and Improvement of SHG(Micro-Credit) Program at ProjectVikaharCenter for Development of Corporate Citizenship S P Jain Institute of Management & Research Mumbai 2008-2010A Project under Economic Rural Development Society, Kolkata By Vikram PGP-08-175
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Microfinance has evolved over the past quarter century across India into various operating forms and
to a varying degree of success. One such form of microfinance has been the development of the self-
help movement. Based on the concept of “self-help,” small groups of women have formed into
groups of ten to twenty and operate a savings-first business model whereby the member’s savings are
used to fund loans. The results from these self-help groups (SHGs) are promising and have become a
focus of intense examination as it is proving to be an effective method of poverty reduction.
The formation of common-interest groups consisting primarily of women has had a substantial
impact on their lives. The impact of SHGs on women’s empowerment and social security has been
invariably an improvement from the status quo but there is a need for support in several areas whichare analyzed in this report. The status of women has generally improved as they have developed
stronger confidence which has changed gender dynamics and their role in the household. In south
India, significant improvements in fertility rates, female literacy, participation in development
programmes and economic independence are evident. Women are able to fight for their rights and
entitlements and have emerged as a force to be reckoned with. Further, SHGs are becoming more
than just financial intermediaries, instead they have emerged into a more political and social unit of
society.
ERDS has been running SHG program from 2002 in regions of Malda and Dakshin Dinajpur. The
program was started with a view to empower the women in these areas.
This project studies and evaluates the current status of the SHG program running at Project Vikahar.
The evaluation of the program started with collection of data from Vikahar Project Office. The
effectiveness of the program has been evaluated with a survey which was conducted for SHG
members spread across 5 villages in Vikahar area. The survey was conducted for 100 respondents
from 20 different SHGs. Shortcomings in the program have been pointed out and ways to improve
and enhance the program have been suggested. In addition to this market research was done by
interviews with the local shopkeepers and traders. As a result, new business initiatives have been
suggested which can be undertaken to drastically improve the household incomes of the SHG
members and also help them psychologically in gaining business and trade management skills.
Implementation of the recommendations has only been initiated with the future path depending on
the funding tied up and the in-depth evaluation of the recommendations by the Kolkata head office in
The country is on a high economic growth trajectory. However, there are also concerns among
policy makers for the even distribution of wealth created among various segments of the
population. There is need for continuously searching for products and strategies for delivering
financial services to the poor in a sustainable manner consistent with high repayment rates.
NABARD initiated the SHG (self help groups) Bank Linkage Programme in 1992 to bring the
poor together for pooling in their savings and dispensing small and emergent unsecured loans.
While no definitive date has been determined for the actual conception and propagation of
SHGs, the practice of small groups of rural and urban people banding together to form a savings
and credit organization is well established in India. In the early stages, NGOs played a pivotal
role in innovating the SHG model and in implementing the model to develop the process fully. In
the 1980s, policy makers took notice and worked with development organizations and bankers to
discuss the possibility of promoting these savings and credit groups. Their efforts and the
simplicity of SHGs helped to spread the movement across the country. State governments
established revolving loan funds which were used to fund SHGs. By the 1990s, SHGs were
viewed by state governments and NGOs to be more than just a financial intermediation but as a
common interest group, working on other concerns as well. The agenda of SHGs included social
and political issues as well.
.The SHG bank linkage programme has become the largest and fastest growing micro-finance
programme in the world, with over 2.8 million SHGs having been provided credit by the formal
banking structure by the end of March 2007. Annual credit flow to SHGs from the formal
banking system was of the order of Rs 6570.39 crore covering 1.10 million SHGs during 2006-07 with a loan outstanding of Rs 12366.49 crores against 2.89 million SHGs as on 31 March
2007.
This project covers the SHG (Micro Credit) program being run by ERDS in Vikahar Project.
Vikahar Project is located in the Dakshin Dinajpur district of West Bengal. Vikahar village falls
under block Tapan of the district. Dakshin Dinajpur is predominantly an agricultural district with
large area of land being under cultivation. The district is drained by a number of North-South
security and empowerment for all those in the society who are blighted by poverty and lack of
privilege and opportunity.
Management Structure
The General Body is the highest decision making body of the organisation. The General Body
elects the Executive Committee. It also oversees the day-to-day administration of the
organisation. The General Secretary acts on behalf of the Executive Committee. There are sub-
committees that are headed by a member of the organization to oversee the implementation of
the individual programmes.
The staffs of the organization are accountable to the Co-ordinator or Project Manager and theCo-ordinator /Project Manager are accountable to the Executive Committee.
The day-to-day accounts are maintained by the Accountant.
Beneficiaries
The beneficiaries constitute families living below the poverty line or marginally above the
poverty line. They are mainly drawn from Schedule Caste/ Schedule Tribe/ Other Backward
Caste communities and also from Minority Community.
Areas of Operation
• Kolkata
• Boral, South 24 Paraganas
• Vikahar, Dakshin Dinajpur
• Thinagar, Malda
• Habibpur, Malda
• Majhra, Gazole, Malda
Current Activities Mainstreaming Street & Working Children Child Sponsorship Programme Education Support Programme Adopt a Grand Parent Programme Campaign against Child Trafficking Self-Help Group( Micro-Credit) Programme
The women in particular were suffering from the lack of education and low social outlook.
ERDS considered women to be driving force of the households and as a measure to counter the
problems faced by women, it started the SHG program. Currently the SHG program is running at
four Project locations. The details of the SHG groups are given below.
Operational Area No. of Villages No. of SHGs No. of Members
Boral 13 50 1530Thinagar 36 198 1664
Gajole 41 201 1344
Habibpur 12 50 327
Vikahar 6 110 925
Total 108 609 5790
Table 2: SHG Program Details
The program at Vikahar centre was launched in 2002. During the initial years, since the workers
were not well versed with the nuances of this particular program, the program remained stagnantfor few years. But with the help of training and visits to other NGOs running the similar type of
program gave them some idea of how to exactly go about the program. This resulted in
transformation of some sort and as a result SHGs flourished in Vikahar Project.
During the initial phase, ERDS emphasised only on formation of SHGs and promoting the notion
of Savings among the SHG members. After a while, it started micro-credit program. The micro-
credit program was meant for providing easy access to finance for development of households,
but the focus remained on the idea of savings for the future.
members’ accounts who are contributing to the loan. However, as of today, no intra-group
borrowing/lending has been observed. The groups can also withdraw their savings if they want to
by passing a resolution and there is no limit on the withdrawal. The amount that can be taken as
loan is limited to 4 -5 times their accumulated savings. The cap has been put to ensure that
enough liquidity is maintained in terms of lending to groups.
The group size is limited to a maximum of 12 members with the average size being 6 or 7
members. This has been done to ensure that the communication within the group members is
maintained. Every group has three leaders. The first leader is point of contact with the Project
Office and is effectively in-charge of running the group. The second leader assists the first leader in handling the group and the third leader is responsible for maintaining the accounts. The
leaders are fixed at the time of formation of the groups and in absence of any leader; the next in
line takes the charge. There is no rotation of leaders within the groups.
Every group has to maintain certain books given by the Project Office. These are:
i) Minutes of Meetings Book
ii) Resolution Book
iii) Group Account Book
The groups are also mandated to hold meetings at least once every month and discuss their
Age distribution of the members indicates a fairly young population. This implies that they can
do some work and contribute to the income of the families. Also being young implies that they
would be willing to both spend and consume more. Inculcation of saving habits in a young age
would enable them to save enough for their future.
Caste distribution indicates that the population largely consists of marginal categories of society.
This means that the section has been neglected so far and therefore, their potential for development remains large. Also the schemes available from the government are numerous
which can help them provided implemented properly.
Chart 2: Demographic Profile
5.2 Education Profile
Education level profile confirms the well known fact that the villages have low education
background. Though combined percentage of Primary and High School education may be higher than Illiterate population, in depth analysis reveals something else. In most cases, the High
school education meant education upto Class 8 only.
Besides the economic empowerment, the real need is for psychological empowerment. A study
into various factor considered for psychological empowerment shows that empowerment has
occurred, but needs to be augmented in some areas to make a real impact. This part of survey
show the members’ perception on the factor considered for psychological empowerment. Due to
participation in the SHG program, the self-confidence and communication skills of members
have grown. They are ready to take initiative on their own for solution of their household
problems and can go wherever required to get the things done. The results also indicate thatsense of mutual help and co-ordination amongst themselves is quite high. This is also a factor for
success of SHGs, but there is a need to build on this to start new projects. However, attitudinal
change and social outlook of members continue to pose hurdle for the growth of SHG program.
Members need to be emphasised the need to change their thinking and broaden their outlook for
As it has been mentioned earlier that the effort made in SHGs is largely individual and not group,
it will lead to economic development of only a few households that have been able to
successfully deploy the financial assistance received from the group for elevation of their
household income. Therefore, to ensure that the development is spread across the households, it
is imperative that the SHGs start working as a group for any particular activity. Such group effort
would be beneficial in several ways, some of which are outlined below:i) The individual effort required in the activity would be distributed throughout the group.
Therefore, the effort required from an individual would be low.
ii) In times of difficulty, some individuals may not be able to contribute to the activity. This
would be compensated by the other members of the group.
iii) The financial liability would be shared by the group as a whole and therefore, the burden
of loan repayment would not be contingent on any particular individual.
iv) Working as a group, SHGs can have a certain scale of operations of their activity which
would make it economically viable and sustaining.
v) Working as a group, ideas generated would be more and hence, there would be better
scope for future development and growth of the group and business.
vi) Also as it has been observed that the ownership of assets created from loans is largely
with the husbands of the families, the economic empowerment is not really happening. With
working as a group, the SHGs would be owners of their business and hence, it would help in
economic empowerment of members.
Based on the market conditions , demand /supply conditions and the skills present in certain
individuals observed, three business can be carried out which would be viable in terms of
profitability, long term sustenance and future growth. These are:
nearby villages. Since the scale is sufficient, a shop may be setup in the village itself (to save on
the costs of the owning/renting a shop in the market) for selling the milk to individuals who
desire so for their individual household consumption. Since the milk would have to be stored,
therefore milk preservation techniques would have to be taught.
Phase-III: Long Term
After successful running of business in Medium Term, structure of the business should be
changed to make the business sustainable for the long run. This implies that the demand for the
product is always available. Since the demand from the villages nearby Vikahar would have
limited, it is advisable now to focus on new and larger markets e.g. Malda, Gangarampur,Balurghat etc. For this, there should be a network of diary farms should be established not only
in Vikahar but also in villages where ERDS projects are running. This essentially means setting
up of a co-operative society. For initial stage, no processing of milk is recommended. Only basic
preservation process should (boiling) be carried out to ensure the milk remains good till
delivered at destinations. Each village would have the collection centre. The entire produce of
the village would be collected and boiled at the collection centre. A small truck (Tata Ace etc.)
or pick-up vehicle would take the milk from the collection centre of each village and deliver to
the destinations. Since the logistics and accounting of the project would require quite good effort,
therefore, additional staff would have to be recruited (preferably from the village).
6.1.2 Handicrafts & Tailoring
During the survey carried for evaluation of SHG, it was observed that several women possess
skills in embroidery and handicrafts. They had learned the skills mostly before the marriage, butdid not continue making the wares after the marriage. The reasons for not making the handicrafts
were various namely lack of time, lack of support etc. The crafts they had kept were of quite
good quality. If such products were to be sold in markets like Malda, Balurghat etc., they would
fetch a good price. Therefore, this business of handicrafts is a good opportunity for generating
Groups have to be organised according to the kind of skill speciality they possess. Therefore,
separate groups for Jute handicrafts, fabric handicrafts, and bamboo handicrafts would be
formed. Those members who are trained in this particular craft would be made leader of the
group and the responsibility of training other members of the group lies on them. Once the other
members have picked up the basics of the craft, the production should be initiated. Since the
business is new and the demand for the product is not known exactly, therefore the production
target for Phase-I would be kept low. For marketing of the produce, some research has to be
done in the target markets of Malda, Balurghat etc. to determine the traders dealing with these
kinds of goods. Contracts would be made based on the samples shown to them. Example- JuteHandbags sell in these markets starting at Rs.80. So after adjusting for the dealer margin,
transportation cost and other miscellaneous expenses, the cost to the trader would be determined.
Since the initial volumes would be low, the transportation cost would not be much. The goods
can be packed in 2-3 cartons and carried through the public transport i.e. buses and autos.
Phase-II: Medium Term
After the business starts up and the demand picks up, more groups should be trained in the
similar crafts. Also since the markets always want newer and better products, special training
sessions for the groups should be organised. Now since the volumes would be larger, there
would be needed to make contracts with the trucks which transport goods to the target markets.
Since the products are not of perishable nature nor demand is persistent, the delivery period can
be fixed accordingly. Also to generate more income in future and command a respect for quality,
trade name should be given to the products. This would help in marketing the products to
markets beyond these regions.
Phase-III: Long Term
After the business has established itself in the nearby markets, the thrust should be made on
marketing the products outside these markets. This means going to larger markets e.g. Kolkata,
Siliguri. Here, products can be sold in two ways. First- the present way of tying up with the shop
owners selling these products can be done. This is more time and effort intensive job. Second-
The product can be marketed to big business groups e.g. Spencer, Big Bazaar, Bazaar Kolkata
etc. This would ensure that the product reaches not only Kolkata, but also throughout India.
Besides Handicrafts, there is great scope for Tailoring business in the village. As already
observed, several women in the village possess tailoring skill and are also doing some temporary
tailoring jobs for the bigger shops. Group should be organised of such women so that they can
take contract work in larger volumes and also deliver in time. Also it was observed that there was
not a single ladies’ garment tailoring shop in the village i.e. all the women clothes are stitched by
men tailor only. This is a real opportunity as more women would be willing to come to ladies
tailor. Initially the tailoring business can be operated out of some member’s home. At later stage,a shop can be rented in the market to step up the business. Also special tailoring skills sessions
should be conducted for the members to take up bigger jobs.
6.1.3 Vegetable Growing
In the local village market (HAAT) which happens every Thursday, it was observed that the
prices of the vegetables are comparatively more than some sold in the cities. This is quite a
paradoxical situation where the individual earning lesser in a village has to pay more for
vegetables than a person in the city. Also it was observed that there was only a single shop that
too temporary for selling the vegetables in the village on other days. The shopkeeper sourced the
vegetables from Gangarampur. If the vegetables were to be grown in the village itself, the entire
transportation cost would be wiped out of the prices of the vegetables. Moreover, when grown in
certain quantity would yield decent profit. Groups for this business would have to be formed and
trained according to type of vegetables they are willing to grow.
Phase-I: Start-Up
The groups can start growing the vegetables in either homes or part of their fields itself. The
produce would be collected in the group and the sold. For the initial stage, to ensure that all the
vegetables get sold, the selling would be done in two ways. First- a shop ( temporary) should be
set up in the market place which would be running from morning till evening to ensure that
buyers get the vegetables throughout the day. Therefore, some basic preservation techniques
would have to be taught. Second- a certain portion of the produce would be kept in a VAN and
the van would go round the village twice through the day, once in morning and once in evening.
Since the food is prepared at both these times , there are chances of getting all vegetables sold.
Also since the vegetable would be available at doorsteps of households, the housewives would
be more willing to buy the vegetables since it would save them time and effort of going to the
market.
Phase-II: Medium Term
After the business has started running, it should be scaled up to take advantage of the market
conditions. Field should be purchased and some irrigation arrangements should be made for thevegetables. Secondly a permanent shop should be setup in the village market. Since the produce
from the fields would be over and above the daily demand, the vegetables need to be preserved,
which would be done in the shop. The excess produce can then be stocked and sold in HAAT. To
grow vegetables on large scale, certain agricultural skills would be required. Training regarding
the same should be imparted to the groups and also new groups should be incorporated in the
business to take advantage of the opportunity as well as help in growth of business.
Phase-III: Long Term
After achieving capability to perform in local markets, the production of vegetables should be
expanded to grow more quantity and variety of vegetables. Growing new vegetables would
require certain skills, training for the same should be provided. Secondly, since the produce
would be in excess of local consumption, transport arrangements should be made to sell the
vegetables in nearby villages.
After attaining success with the vegetables, certain fruits growing can also be tried out.
6.2 Microcredit Program
From the results of the survey, it clearly indicates that the micro-credit program is a success. But
in a limited manner because the level of upliftment is not much and also several households have
Unlike business sector, human resource management in microfinance is quite new and not well
understood. It is also worth to be noted that all NGOs are having problems on human resource.
The continuing problems on human resource aspect are caused by lack of focus study and
development of the subject. Human resource for NGOs is having distinctive characteristics
different with other activities. The characteristics are: ability to serve the poor, ability to work
with customized method ( balance of the context of the poor and on the other hand meeting the
standard of prudential principles and cost effectiveness), a bility of having paradox values; they
have to understand the situation of the poor but also maintaining discipline, need to have specific
competency needed by the job.
The first step to conduct appropriate training for SHG program is to consider the target group,
methodology of the organization, and the recruits in needs assessment. Identification of the target
group is very important since the poor in different context has their own characteristics. The
result of the assessment use to develop training objectives that elaborate further in training
content and training method. Training delivery need to be followed by evaluation of the skills,knowledge, and ability of staff. The evaluation will be used as an input for further training and
In context of ERDS, the training need assessment was carried out by means of TNA survey of
the employees working at Project Office in Vikahar. The results of the survey brought out some
important facts, which are:
1) Language Skills: The workers are well versed with Bengali which is the mother tongue of
the areas of influence. Also knowledge of English is quite sufficient to deal with the
office work. But severe lacking in knowledge of Hindi was observed.
2) Special Skills: Few workers are observed to some special skills. These skills can be used
in various programs for the benefit of the community.
3) Training History: All workers have undergone some specific training programs, bothinternal (conducted in-house) and external. However, their learnings are not been utilised
properly.
4) Knowledge of Programs: Almost all the workers have the knowledge of Education
support programs, but the knowledge of SHG program is very limited.
5) Knowledge of Issues: The knowledge of some workers is good in area of govt. programs
and the legal aspects regarding the individual rights and laws formulated by state, but
overall the knowledge is quite low. In contrast, knowledge of social problems in the
village and the Health issues is quite good among all the workers.
6) Rating of Skills: Almost all the workers said that they have good mathematical skills and
can maintain book of accounts. Similarly communication skill is also good for majority.
However Leadership and Teamwork skills are fairly known to all. The only lacking area
is the Entrepreneurial skills, which was found lacking in almost all the workers.
7) Further Training & Development: All the workers are willing to undergo further training
to enhance their skills. The constraints from families are low for most of them. Also they
are willing to take charge of any new initiative.
Based on this assessment, the areas for training are:
i) Language Skills: To improve the communication skills of the workers in order to enable
them to co-operate with other NGOs and organisations to facilitate their work.