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The Light and Shades Study
A major breakthrough in our understanding of the SHG bank linking model came with the
release in 2006 of the study "Self Help Groups in India: The Lights and Shades of SHGs" by EDA
in association with APMAS (EDA and APMAS (2006)) referred to hereafter as LSS. The study
combined survey research with a search for "stories", which give us a rich feel for the
qualifications and nuances attached to the numbers. Before this study much of the information
on the programme had been largely anecdotal (with a few prominent exceptions) and without
data on how representative the success and horror stories were. As a result what went on
inside an SHG remained largely a black box to non-field workers.
The study has
provided
welcome
reassurance on
a number of
issues that
have been
raised in
discussions of
SHG bank
linking
programme.
These relate to
the equity of
loan
distribution
within the
groups, the
longevity or
stability over
time of the
groups, and the
incidence of
dropouts among
members
The study was carried out in four states, two southern (AP and Karnataka) and two northern
(Orissa and Rajasthan). In all, 214 SHGs in 108 villages in 9 districts selected purposively to
reflect different agro-climatic and socio-economic conditions (three in AP, and 2 each in the
rest) were visited by three teams of researchers during October 2004 to May 2005. The villages
were selected purposively as those most likely to have groups that had had bank savings
accounts for at least four years, with some external borrowing, and that would yield a mix of
three types of SHPAs (NGO, government and bank) in roughly the proportions that prevailed
in the nationwide programme at the time. Accordingly, the majority of groups chosen in the
sample were formed by NGOs, and 60 percent of them belonged to cluster networks or
federations. 13 Given the sampling criteria adopted, Table 2.3 shows the profile of the typical
SHG in the study.
As already noted, 51 percent of members were poor, and 55 percent belonged to the SC/ST.
Sixty-six percent of SHGs were single-caste SHGs (in other words SHGs tend to be homogenous
in caste, but less so in terms of wealth). However a good third had mixed-caste membership
which contributes over time to bridging caste divisions through the experience of working
together in monthly meetings. 72 percent of the membership had had no schooling at all. In
only 51 percent of the groups did more than half the members have a primary school education.
It is this characteristic of the membership that renders bookkeeping and accounting so
challenging, as discussed below. Sample SHGs covered 29 percent of all households in their
villages.
Average monthly savings were Rs 45, and cumulative member savings Rs 2,400. The modal rate
of interest charged on loans to members was 2 percent per month. Seventy-seven percent of
the groups had borrowed from banks or federations at least once, for an average of 2.5 times.
Their cumulative borrowings had been Rs 102,300 each and current outstandings (for those
groups who had them) were an average of Rs 58,600 per group. The average size of the group
fund (savings and surpluses on lending to members) was Rs 33,700. For a subset of the sample
with available/usable balance sheets the ratio of external borrowings outstanding to internal
capital was 1.43 14
The study has provided welcome reassurance on a number of issues that have been raised in
discussions of the SHG bank linking programme. These relate to the equity of loan distribution
within the groups, the longevity or stability over time of the groups, and the incidence of
dropouts among members. Loans are relatively well distributed among members, with low variance
around the mean both in respect of number of loans and loan amount. 15 Moreover, the proportion
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