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

More documents

Recommendations

Info

EXECUTIVE SUMMARY1. Introduction1.1 This study, which has been undertaken for Sa-Dhan, New Delhi on behalf of ICCOand Cordaid, supplements studies undertaken by I/C Consult on the self-help group(SHG) landscape in India (Bosch, 2001; & Bosch and Damen, 2000). It analyses therole and development of SHGs in financial intermediation in rural India.1.2 The principal objective of the study is to contribute to a consistent and relevantfunding policy for ICCO and Cordaid. It seeks to achieve an understanding of “bestpractice” in SHG development in India and to help direct donor funds formicrofinance (MF).1.3 The study addresses three main issues:• Efficiency: What can be said about the average cost of SHG promotion both with andwithout emphasis on social and political empowerment? What difference does thecredit plus approach make to average SHG promotion costs?• Effectiveness: What is known through results of assessment studies of the effects andimpact of SHG promotion? What is known about the results of monitoring indicatorsof impact?• Sustainability: What kind of sustainability or phase out strategy is employed byNGOs?1.4. The study is based on a review of literature on SHGs, the experiences of sevenleading NGOs involved in the formation of SHGs and interviews with chief executivesand staff of a dozen other major NGOs/ projects promoting SHGs.2. SHG Development in India: An Overview2.1 While the term ‘self-help group’ or SHG can be used to describe a wide range offinancial and non-financial associations, in India it has come to refer to a form ofAccumulating Saving and Credit Association (ASCA) promoted by government agencies,NGOs or banks. These groups manage and lend their accumulated savings and externallyleveraged funds to their members.2.2 SHGs have varied origins, mostly as part of integrated development programmes runby NGOs with donor support. The major programme involving financial intermediationby SHGs is the SHG-bank Linkage Programme. This Programme was launched in 1992by National Bank for Agriculture and Rural Development (NABARD), the apex bank forrural development in India. By March 2002, the programme covered 7.8 million familieswith 90 per cent women members. On-time repayment of loans was over 95% for banksparticipating in the programme. It also involved 2,155 non-government organizationsvi
(NGOs) and other self-help promoting institutions. NABARD’s corporate mission is tomake available microfinance services to 20 million poor households, or one-third of thepoor in the country, by 2008. However, there is at present a high degree of concentrationin the southern states, with just two states, Andhra Pradesh and Tamil Nadu accountingfor more than 66% of the SHGs linked to banks.2.3 The outreach of SHG-bank linkage may seem impressive, but in the context of themagnitude of poverty in India and the flow of funds for poverty alleviation, it represents avery small intervention. Only about one-third of the SHG members are able to accessloans out of external funds in the initial years. Thus of 4.5 million families covered byMarch 2001, only 1.5 million would have received a loan of an average of Rs. 3,000 atpresent. Disbursements under the poverty-focused self-employment programme SwarnaJayanti Swarozgar Yojana (SGSY), meant for families below the poverty line, were Rs.642.34 crores * during 2000-2001, as against Rs. 250.62 crores under bank linkage.2.4 Apart from NABARD, about half a dozen other apex bodies or wholesalers provideloans to financial intermediaries for on-lending to SHGs. These include the SmallIndustries Development Bank of India (SIDBI), Rashtriya Mahila Kosh (RMK), Housingand Urban Development Corporation (HUDCO), Housing Development FinanceCorporation (HDFC) and Friends of Women’s World Banking (FWWB). Donors andbanks, including Rabobank, also provide grants and loans to microfinance institutions(MFIs) for on-lending to SHGs and federations of SHGs.2.5 The leading SHG-promoting NGOs constitute a mixed group that includes both pureSHG promoters as well as NGOs operating as MFIs. They have developed a variety ofinstitutional arrangements, including cooperatives, to provide access to financial servicesto the poor, particularly women.3. Paths of SHG Development: NGO Strategies and Structures for FinancialIntermediation3.1 Linking SHGs directly to banks is the basic model in which an SHG, promoted by anNGO or other institution, can access a multiple of its savings in the form of loan funds ora cash credit limit from the local rural bank. The SHG onlends the funds it accesses frombanks to its members. The bank linkage model a savings-led model, with a minimumsavings period of 6 months prior to the availability of bank credit. The quantum of creditavailable to SHGs starts from parity with savings and can increase to eight times the levelof SHG savings.3.2 The SHG-bank linkage model provides the cheapest and most direct source of funds.However, this has to be set against the low volume of funds that available through thischannel in view of the linkage of credit with SHG savings. Further, the SHG is notnecessarily the appropriate unit for organising a host of other community-based financialand non-financial services. Many leading NGOs have formed federations of SHGs for* 1 crore = 10 million; 1 lakh = 1,00,000; 100 lakhs = 1 crorevii
Page 4 and 5: List of AcronymsAIAMEDAIMSAPMASASAA
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 36 and 37: Name ofNGO/StateDHANFoundation,Tami
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
show all

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

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?