Self-help Groups as Financial Intermediaries in India ... - Sa-Dhan

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Name ofNGO/StateDHANFoundation,Tamil NaduBriefvision/missionstatementPromotion ofrurallivelihoods andempowermentthroughinstitutionbuildingSHG modeltypeCommunityowned andmanagedcluster nidhis(trusts)2. Federation ofkalanjiams atblock levelParticularsoffederationmodelSHGs(Kalanjiams)formed intofederationsat clusterand blocklevelSources ofexternalloan fundsfor SHGon-lendingBanklinkage,DRDA/SGSY, bulkfinanceroutedthroughfederation/cluster nidhiTerms of loansto SHGs andfederationsAs perprevailing ratesfor differentbulk financeprovidersRemarks1. 15-20 SHGs formed into an unregisteredcluster association with promotional andfinancial (nidhi) wings.2. About 100-150 SHGs are primarymembers of block-level federationregistered as a society (cluster nidhis areassociate members).3. Cluster nidhis supplement kalanjiamfinancial resources and providemanagement services with charge of 10%of SHG income.4. Federations access funds for large andspecialized needs, e.g., housing from bulkfinance providers such as NABARD,SIBDI, HUDCO, HDFC, RMK.5. Federations and cluster associationsprovide a range of other civic services.26
4. COSTS OF SHG PROMOTIONThe cost of promotion of SHGs has become a live issue for discussion in development circlesin India. Rough estimates of promotion cost per SHG for different projects, NGOs and banksengaged in SHG promotion varies considerably 31 . The wide range of such estimates is notunsurprising. First, there remains a lack of uniformity about what costs to include, how stafftime is imputed for development workers partially engaged in SHG promotion along withother functions, and whether and how overhead costs are allocated. Second, the period ofsupport and the nature and purpose of SHGs promoted is also varied. Some SHGs are broughttogether in federations, which requires in turn the building of further capacity and incurringof costs in respect of these institutions. Third, distance and time taken to reach interiorvillages and to motivate communities bypassed by development is greater than formainstream villages. Finally, the prices of inputs differ across the country such that the sameset of physical inputs may cost more in some regions than in others. The cost of SHGpromotion is a particular concern of the donor community that is keen to ensure theproductive and effective use of grants provided for this purpose.As part of this study data has been obtained from 10 NGOs/projects on costs of SHGpromotion through interviews and written communications. This consisted of estimatesvarying from rough calculations to more detailed item-wise estimates prepared in model formor worked out on the basis of historical cost of the projects. These are discussed in section4.4. However, before attempting an analysis of data obtained from leading NGO promoters ofSHGs towards benchmarking of promotion costs, it would be instructive to examine theconcept of cost-effectiveness, or efficiency, of SHG promotion.4.1 Concepts of Cost EfficiencyIn any development project activities are undertaken with a view to generate a level ofbenefits in excess of the costs of the project. Neo-classical decision rules can be employed forchoosing between alternative investments using techniques based upon marginal analysis.These involve discounting future costs and benefits accruing to project participants to arriveat the net present worth of a project. In projects expected to yield tangible outputs, like anincrease in agricultural production, the quantification of benefits is relatively easy. However,where intangible outputs result, e.g., in education and health projects, the method used is to“determine on a present worth basis the least cost combination of tangible costs that willrealise the same intangible benefit.” (Gittinger, 1984). This is known as least-cost analysis orcost effectiveness analysis.We can view SHG formation as an “intermediate project output” within a larger developmentproject or service delivery programme. Cost-effectiveness analysis can also be applied topromotion of a unit SHG to make a selection from different approaches representing differenttechnologies of promotion. Using the constant effects method, a comparison of thediscounted present worth of costs incurred over the years in developing an SHG underdifferent models can help determine the least-cost or efficient technology 32 .31 Harper (2002) reports a range of between about Rs. 1,350 and Rs. 16,000 for the cost of initially developingand assessing an SHG.32 This does not, however, constitute a measure of effectiveness, or impact, of a project since the analysis isdone without reference to the participants or users of the project.27
Page 4 and 5: List of AcronymsAIAMEDAIMSAPMASASAA
Page 6 and 7: EXECUTIVE SUMMARY1. Introduction1.1
Page 8 and 9: self-management by members and scal
Page 10 and 11: 6.4 On the other hand field reports
Page 12 and 13: sustainable self-help groups. An in
Page 14 and 15: 2. DEVELOPMENT OF SELF-HELP GROUPS
Page 16 and 17: average loan per SHG was Rs. 18,227
Page 18 and 19: • training and sensitising bank o
Page 20 and 21: organizational structure and the na
Page 22 and 23: Table 2.1 (contd.)S.No.ParticularsN
Page 24 and 25: the SHG from banks starts from pari
Page 26 and 27: • In either situation SHGs can co
Page 28 and 29: 3.2.3 SHG Federations Linked to MF
Page 32 and 33: 3.4 ConclusionThis section served t
Page 34 and 35: MYRADA,Karnatakaa.o.OUTREACH,Karnat
Page 38 and 39: However, for a comparative analysis
Page 40 and 41: linkages with credit and savings 34
Page 42 and 43: out of 5,153 SHGs covered under the
Page 44 and 45: eceived revolving fund grants, cost
Page 46 and 47: the high level of educated unemploy
Page 48 and 49: CARE-CASHE Project(A.P.)(implemente
Page 50 and 51: Holy CrossSocial ServiceCentre(HCSS
Page 52 and 53: Agency/Programme5. Rashtriya Mahila
Page 54 and 55: microfinance intermediary 41 . Unde
Page 56 and 57: On the other hand, there is evidenc
Page 58 and 59: infrastructural and other constrain
Page 60 and 61: would not be possible while working
Page 62 and 63: through the SHG as a basis to sourc
Page 64 and 65: the programme is particularly probl
Page 66 and 67: It is possible to query the methodo
Page 68 and 69: world. Other partners from India ar
Page 70 and 71: RECOMMENDATIONSIt is not clear what
Page 72 and 73: REFERENCESAIAMED (2000), Good Pract
Page 75: Mahajan, Vijay and G. Nagasri (1999
Page 79 and 80: Appendix 2: Types of SHGsTypes of S
Page 81 and 82: Appendix 3 (contd.)OrganisationSIDB
Page 83 and 84: 4. Trade based Group model: The est
Page 85 and 86: Appendix 5S.No.1. JOTHI 92,077.00
Page 87:
Appendix 6: Stages of Evolution of
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Self-help Groups as Financial Intermediaries in India ... - Sa-Dhan

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