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

out of 5,153 SHGs covered under the project, only 949 had been newly formed while 4,214were pre-existing groups. The latter had been formed following a state government campaignin 1997 without much further support.4.4.3 Promotion of SHGs by NGOs engaged in livelihoods developmentThe NGOs covered in this study are at the forefront of SHG promotion in India. They havethe most comprehensive vision and methodology and professionalism in approach and areactively sought resource NGOs. They also have the most comprehensive training materialsand systems. These organisations receive substantial project funding from a variety of donors.They may be seen as best practice institutions in this sector. However, in some respects theyrepresent a scale of operation that cannot be replicated by other smaller NGOs in the shortrun. On the one hand they have already developed in-house expertise that can be drawn uponfor new initiatives and can be expected to be cost-effective in extending their coverage. Onthe other, they carry many overheads and costs that may not be applicable to smaller NGOsundertaking SHG promotion in a similar context.While all have encouraged SHGs to federate, HCSSC, PRADAN and MYRADA have notbeen in favour of promoting cluster- or higher-level financial federations. They have optedfor linking SHGs to banks, though MYRADA has recently promoted Sanghamitra, an NBFC,for meeting the financial needs of SHGs promoted by it and others. DHAN Foundation, andmore recently OUTREACH, in addition to bank linkage, have promoted cluster-levelassociations which have been registered as trusts and societies. They also have promotedsecondary block and project level non-financial federations. Cost estimates of HCSSC,PRADAN and MYRADA pertain to the non-financial federation model. Indeed, PRADANdoes not incur any additional costs towards federation since these costs are relatively minorand met by the groups. Average total costs of SHG promotion for these NGOs are Rs. 12,100(PRADAN, Hazaribagh) 36 , Rs. 20,575 for HCSSC 37 and Rs. 15,000 to 25,000 for MYRADA(Karnataka, Tamil Nadu). PRADAN’s costs pertain to the activities of a development supportteam of 6-7 professionals adopting a “saturation approach” in 2-3 development blocks of adistrict. They have no community level workers other than the professionals who manageabout 30 groups each. MYRADA estimates are based upon costs of a field worker managing12-15 groups within a more conventional organisational structure.It is not clear whether staff time devoted to SHG development is any greater in the case of thecomparatively high cost NGO promoters with a broader canvas of livelihoods promotion thanfor other NGOs. For example, discussions at CARE-India (A.P.) suggested 35-40 visits perSHG as the norm for NGO field workers in the process of group development. The PRADAN“saturation” methodology involves a similar level of contact. There is also no evidence tosuggest that less successful NGOs do not have the same level of inputs as the goodpractitioners. In the final analysis the difference could boil down to the “quality” of processinputs. It is the case of the leading NGOs that to promote good groups, better quality staff isrequired which in turn means higher costs.DHAN Foundation’s average total costs of SHG promotion for a minimum of 150 groups hasbeen worked out as Rs 17,000 (Best Practices in Group Dynamics and Micro-credit, 2000)for the kalanjiam model of federating SHGs into a cluster level financial institution and Rs.36 This is not to be confused with the figure for PRADAN, Ranchi covered by the CARE-India CREDIT project.37 Rough estimates provided by the NGO that were subsequently advised to be overestimates. HCSSC works inparticularly inaccessible areas of Jharkhand, which results in higher costs for its operations.32