1.1. Background of the study
1.1.1. SHG movement in India
A number of experiments were made during the last century towards poverty alleviation in the country. The attempts were at finding technical solutions, infrastructural solutions, financial solutions, institutional solutions; skill training solutions, rights based solutions. Large scale projects, large bureaucracies, large scale developmental institutions, programs and schemes were seen as a means which would address poverty in the country. A major experiment which attracted large scale attention of development players is the concept of self-help groups (SHGs). SHGs were seen as a means of enhancing financial inclusion, poverty alleviation and women empowerment.
Beginning with grassroots experiments which were taken up in the late 1970s and 80-s, SHG-Bank linkage program has been adopted as a poverty alleviation tool in the country by NABARD in 1992. SHG movement has grown in the country especially through the efforts of NGOs, National Rural Livelihood Mission (NRLMs) and State Rural Livelihood Mission (SRLMs) in the country. Starting from a modest scale as a pilot in the year 1992, the SHG-Bank linkage programme has turned into a solid structure with more than 79.60 lakh savings-linked Self Help Groups (SHGs) covering over 10.3 crore poor households as on 31 March 2012. The total savings of these SHGs amounted to 6,551.41 crore. The number of credit-linked SHGs under the programme stood at 43.54 lakh. From a 2.2 million SHGs in 2006, it has increased to about 4.3 million in 2012. Despite the phenomenal growth of the programme, there was skewness in favor of Southern states. Over half (54%) of the SHGs were in the Southern region. Large sections of rural population from States like Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal were uncovered under the Programme. Even with respect of states, which have achieved relatively greater degree of intensity in promotion of SHGs, regional imbalances are observed within blocks/districts. Table 1.1: Growth Trends in SHG-Bank linkage Particulars 2006 2007 2008 2009 2010 2011 2012 No. of SHGs provided with bank loans 2,238,565 2,924,973 3,625,941 4,224,338 4,587,178 4,813,684 4,354,567 Southern region 1,214,431 1,522,144 1,861,373 2,283,992 2,421,440 2,663,569 2,355,732 Share of Southern region in % 54 52 51 54 53 55 54 Average disbursed loan per group in Rs. 37,574 44,343 46,800 74,000 115,820 122,744 144,086 Outstanding loans Rs. (billion) 123.66 169.99 226.76 272.66 306.19 363.41 Incremental groups (million) 0.69 0.70 0.60 0.36 0.22 (-) 0.05 Incremental loans O/S Rs. (billion) 123.66 46.33 56.77 45.90 33.53 57.22 (Source: Status of Microfinance in India Report, NABARD) 1.1.2. SHG federations in India An important development in the SHG movement is the emergence of SHG federations. …show more content…
SHG federation has emerged as a critical institutional mechanism to ensure sustainability of SHGs besides providing them both financial and non-financial support. The main objective of federating the SHGs is to make them stronger and ensure their organizational, operational and financial sustainability. The earliest SHG federation was formed by the then PRADAN (presently the Dhan Foundation) in Tirupati in 1992 and later in Madurai, soon followed by CDS, Alappuzha in 1993 and MYRADA in 1996. Rapid expansion in the number of SHG federations took place in South India in the later 1990s, particularly with the introduction of several externally funded projects through DRDAs. There are more than 1,70,000 primary federations, 7,091 secondary federations and 66 tertiary federations in the country. Southern and eastern regions account for more than 90 percent of total number of federations in the country. Table 1.2: State wise Promotion of SHG Federations as on March 2013 Region/State Number of Total Primary Federations Secondary Federations Tertiary Federations A Northern …show more content…
In legal dimensions, Trusts / Society acts places restrictions on financial services by federations. Federations find it difficult to provide adequate services to SHGs which has a bearing on the quality of SHGs. In relation to credit supply, it remains grossly low in relation to demand. In financial services, there are issues related to lack of robust accounting systems and accounting processes in place. In sector development, while SHGs may be having auditing they do not have AGM to discuss audit reports and for appropriation of profit / loss. In social services, federations are not pursuing the same due to poor ability to generate funds. In livelihood, there is more focus on marketing of external products and relatively less on marketing of the member’s
1.1.1. SHG movement in India
A number of experiments were made during the last century towards poverty alleviation in the country. The attempts were at finding technical solutions, infrastructural solutions, financial solutions, institutional solutions; skill training solutions, rights based solutions. Large scale projects, large bureaucracies, large scale developmental institutions, programs and schemes were seen as a means which would address poverty in the country. A major experiment which attracted large scale attention of development players is the concept of self-help groups (SHGs). SHGs were seen as a means of enhancing financial inclusion, poverty alleviation and women empowerment.
Beginning with grassroots experiments which were taken up in the late 1970s and 80-s, SHG-Bank linkage program has been adopted as a poverty alleviation tool in the country by NABARD in 1992. SHG movement has grown in the country especially through the efforts of NGOs, National Rural Livelihood Mission (NRLMs) and State Rural Livelihood Mission (SRLMs) in the country. Starting from a modest scale as a pilot in the year 1992, the SHG-Bank linkage programme has turned into a solid structure with more than 79.60 lakh savings-linked Self Help Groups (SHGs) covering over 10.3 crore poor households as on 31 March 2012. The total savings of these SHGs amounted to 6,551.41 crore. The number of credit-linked SHGs under the programme stood at 43.54 lakh. From a 2.2 million SHGs in 2006, it has increased to about 4.3 million in 2012. Despite the phenomenal growth of the programme, there was skewness in favor of Southern states. Over half (54%) of the SHGs were in the Southern region. Large sections of rural population from States like Assam, Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Odisha, Rajasthan, Uttar Pradesh and West Bengal were uncovered under the Programme. Even with respect of states, which have achieved relatively greater degree of intensity in promotion of SHGs, regional imbalances are observed within blocks/districts. Table 1.1: Growth Trends in SHG-Bank linkage Particulars 2006 2007 2008 2009 2010 2011 2012 No. of SHGs provided with bank loans 2,238,565 2,924,973 3,625,941 4,224,338 4,587,178 4,813,684 4,354,567 Southern region 1,214,431 1,522,144 1,861,373 2,283,992 2,421,440 2,663,569 2,355,732 Share of Southern region in % 54 52 51 54 53 55 54 Average disbursed loan per group in Rs. 37,574 44,343 46,800 74,000 115,820 122,744 144,086 Outstanding loans Rs. (billion) 123.66 169.99 226.76 272.66 306.19 363.41 Incremental groups (million) 0.69 0.70 0.60 0.36 0.22 (-) 0.05 Incremental loans O/S Rs. (billion) 123.66 46.33 56.77 45.90 33.53 57.22 (Source: Status of Microfinance in India Report, NABARD) 1.1.2. SHG federations in India An important development in the SHG movement is the emergence of SHG federations. …show more content…
SHG federation has emerged as a critical institutional mechanism to ensure sustainability of SHGs besides providing them both financial and non-financial support. The main objective of federating the SHGs is to make them stronger and ensure their organizational, operational and financial sustainability. The earliest SHG federation was formed by the then PRADAN (presently the Dhan Foundation) in Tirupati in 1992 and later in Madurai, soon followed by CDS, Alappuzha in 1993 and MYRADA in 1996. Rapid expansion in the number of SHG federations took place in South India in the later 1990s, particularly with the introduction of several externally funded projects through DRDAs. There are more than 1,70,000 primary federations, 7,091 secondary federations and 66 tertiary federations in the country. Southern and eastern regions account for more than 90 percent of total number of federations in the country. Table 1.2: State wise Promotion of SHG Federations as on March 2013 Region/State Number of Total Primary Federations Secondary Federations Tertiary Federations A Northern …show more content…
In legal dimensions, Trusts / Society acts places restrictions on financial services by federations. Federations find it difficult to provide adequate services to SHGs which has a bearing on the quality of SHGs. In relation to credit supply, it remains grossly low in relation to demand. In financial services, there are issues related to lack of robust accounting systems and accounting processes in place. In sector development, while SHGs may be having auditing they do not have AGM to discuss audit reports and for appropriation of profit / loss. In social services, federations are not pursuing the same due to poor ability to generate funds. In livelihood, there is more focus on marketing of external products and relatively less on marketing of the member’s