Self Help Group Movement in West Bengal and India

SHGPF: SHG in India and West Bengal 1

Self Help Groups in India and West Bengal

Discussion Forum Organized by: Institute of Social Sciences and Self Help Group Promotional Forum2nd February, 2013


Outline of this presentation

1. Genesis of SHGs2. Finance Focus 3. Strategy of SHGs4. Characteristics of SHGs5. Progress of SHGs6. What is the impact7. Supply demand mis-match8. Visible changes in the environment 9. What is the way out – a strategic framework 10. Foreseeing the future – financial, livelihood, social and governance scenario 11. What is the way out - an operational framework


Genesis of Self Help Groups

As part of supplementary developmental approach - SHG-bank Linkage Program in 1992 – financial access 1. Linkage between informal groups like SHG

and formal banking sector2. without any security or collateral3. without any scheme


Finance Focus …. why

• 51.4% of farmer households are financially excluded from both formal / informal sources.• Overall, 73% of farmer households have no access t0 formal sources of credit.


Progress on Self Help Groups

The SHG - Bank Linkage Programme can be regarded as the most potent initiative since Independence for delivering financial services to the poor in a sustainable manner – Rangarajan Committee on Financial Inclusion


The major strategy of MC through SHG

to provide easy credit for poor people

togenerate income

through various self employment means


Characteristics of SHGs

a strong feeling of affinity•relationships of trust, non-exploitative relationships•homogeneity among members, •voluntarism • self reliance •willingness to support one another in need on certain structural features - common origin / same livelihood base / gender bond


Characteristics of SHGs

Strong feeling of affinity

vis a vis

Peer Pressure in the case of Grameen Model

9

Status on Self Help Groups … coverageSL Rural HH

coverage range %

No. of states

States

1 0 - 20 9 Bihar, Jharkhand, J&K, UP, Sikkim, …

2 21 - 50 10 Assam, CG, Guj, HP, Raj, Uttaranchal…

3 51 - 75 5 Maha, Tripura, WB. (57% and 150%) ….

4 76 - 100 2 Goa andOdisha5 > 100 7 AP (150%& 765%),

Karnataka, Kerala, TN.


Status on Self Help Groups … Savings

SL State / Country

No. of SHGs (lakh)

Amount (Crores)

Savings / SHG (Rs.)

1 AP 14.96 1490 9962

2 TN 9.25 790 8541

3 WB 6.85 377 5499

4 India 79.60 6551 8230


Status on Self Help Groups … Credit

SL State / Country

No. of SHGs (lakh)

Credit disbursed (Crores)

Credit / SHG (Rs.)

1 AP 3.79 8171 2158752 TN 1.80 1933 107443

3 WB 0.99 551 55481

4 India 11.48 16535 144046


Status on Self Help Groups … Outstanding

SL State / Country

No. of SHGs (lakh)

OS (Crores)

OS / SHG (Rs.)

1 AP 14.01 15342 109506

2 TN 5.14 4639 90223

3 WB 3.83 1570 40999

4 India 43.54 36340 83455


Status on Self Help Groups … linkage

SL State / Country

% of SHGs – Credit received during this year

% of SHGs – Credit

outstanding during this

year1 AP 25.30 93.662 TN 19.44 55.573 WB 14.50 55.874 India 14.42 54.70


Status on Self Help Groups … NPA

SL State / Country

NPA – 2012 (%) NPA – 2011 (%)

1 AP 3.46 2.02

2 TN 9.58 7.72

3 WB 3.11 2.28

4 India 6.09 4.72


Few other observations ….

1 % of sample SHGs having a loan outstanding to Banks

59

2 SHG Savings and Loan Ratio 1:3.5

3 Inadequate quantum of loan (%) 43

4 Bank loans are not timely 27


Few other observations ….

1 Learnt to sign 88 %

2 SHG women attends (alone) meetings outside the village

66 %

3 Casting of vote – independent decision

52 %

4 Husband shares the household work 68 %5 Women taking up non-traditional

works30%


What is the impact• ‘Strikingly, 30 years into the microfinance movement we have little solid evidence

that (microfinance) improves the lives of clients in measurable ways’

• A study shows “..on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008” * This study made no attempt to establish causality between microcredit and poverty alleviation. Instead, it simply estimates the change in status of microcredit client households between 1990 and 2008, when compared with their status during the time of the first loan received by any member of the household.

• Microcredit is a tool for unlocking human dreams. But microcredit, by itself, is usually not enough.

• That may seem like an unusual way to start an annual report from an organization named the Microcredit Summit Campaign, but we recognize that we cannot achieve our goals, especially the goal to see 100 million families move above the US$1.25 a day threshold, with microcredit alone.


Supply demand (mis) match

• What ever your types of business venture, the repayment schedule is weekly.

• At the same time, even if one embarks upon long term economic venture, the repayment period is not more than one year.

• The demand side has to comply with the delivery and to the advantage of the supplier


(mis) match means

• the repayment is not from the economic activities for which the credit is supposed to be used and yield economic surplus.

• But it is very useful for trading / vending type of activities where business cycle is very short and likely to be less than or match with the credit repayment period.

• It is true that most of the categories of credit recipients of MCs are either engaged in trading and small traditional economic activities.

• And some cases, they have to repay from the incomes of other activities.


Visible changes in the environment

• National Conference on CBMF Community Based Approaches for Inclusive Growth

• “.... we need to focus on the last theme--empowerment and less on the NABARD/Velugu obsession with credit” -- Deep Joshi

• “I asked how many of you have toilets at home “ – a question asked to SHG members in AP by Mr. Jairam Ramesh, Union Minister

• It is really nice to see that this conference is discussing something outside credit” … opening remark by Dr. Chakraborty, Dy. Governor, Reserve Bank of India

• NRLM – Social Mobilisation, Institution Building, Financial Inclusion, Livelihoods Promotion and Convergence


SHGPF’s strategy

From the very beginning – SHG is micro development unit, not a MF delivery units and

Therefore the key functional areas for SHG movement are1. creating organizations of poor and marginalized women (SHG,

Clusters, Federations, etc.)2. ensuring facilities for financial services (savings, credit,

insurance, pension, provident fund, and remittance)3. addressing income enhancement through various livelihood

measures4. addressing social, gender and women empowerment issues, and

finally and very importantly5. strengthening governance locally and globally


What is the way out

Broad sectoral Intervention in

Approach Intermediary Goal Final Goal

1. Financial Services.

2. Social

sector services

3. Livelihood

services

1. Institution building

2. Facilitation 3. Service

provisioning 4. Engagement

for rights

1. Economic empowerment of women

2. Women’s

collective voice and political empowerment

Poverty elimination & improved quality of life


The process needs high level of performance

• in financial management, • in institution building, • in making use of financial services for obviating the supply-demand gap at

the subsistence level along with treading into investment for income generation by sustainable use of resources through participation in the market.

Coupled with this, there is a need to understand the environment they live in, • to identify the immediate and long term and wherever possible micro and

macro level linkages that are severely affecting to wreck their lives• to strengthen their own internal institutional systems, they also need to

understand the relative position of theirs vis a vis the other institutions and mechanisms in order to change the relationships in favour of them


Foreseeing the future .... Financial Scenario

• Silver BleakSHG members deposit multiple types of savings with Formal FI / Banks

Limited scopes like compulsory savings

SHG members getting adequate and multiple loan from Banks

Losing the battle with MFIs

SHG members getting adequate and multiple insurance / remittance / pension products from Banks

Almost absent

Financially sustainable own institutions Weak Institutions Local Cooperative Banks / BCC / German Cooperative - as owner

As clients and vulnerable


Foreseeing the future .... Livelihood Scenario

• Silver BleakSome members engaged in self employment - production, manufacturing and trading

Only trading through MFI’s loan

Skill for Jobs Unskilled Market - own and external External market Wage Employment with negotiable skill and voice

Unskilled wage eraner – unorganized

Own collectives


Foreseeing the future .... Social Scenario

• Silver BleakRights and entitlement - control and access ensured

At the receiving end of the delivery

Social Equity Social inequality Gender Equity Gender inequality

Strong Institution and capacity to engage

Lack of voice

Inclusive with necessary positive discrimination

Exclusive / discriminating


Foreseeing the future .... Governance Scenario

• Silver BleakInstitutions with participatory governance

No institutions of poor /vulnerable

Engagement with and Participants in Elected governance

Engagement not possible – one sided

Synergy between Participatory governance and Elected governance : a case for people’s governance

Elected governance affords to ignore people’s needs and voice

Constituents ‘ interest preserved Elites prevail

people’s governance controls / manages economic principle

Economy driven by corporate interest


Way out – an operational frameowrk

• the promotion of local micro-savings for accumulation of capital

• promotion of genuine community-owned and controlled financial institutions, such as credit unions,

• Explore local markets and build own strangth • Macro policies that promote local sustainable

businesses


Thank you for your patience

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Requesting you to debate ……

Self Help Group Movement in West Bengal and India

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