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

self-management by members and scaling up of development activities and to enableaccess to increased resources from funding institutions.3.3 An examination of the SHG federation models adopted by the leading NGOs revealsa variety of innovations. These include linkage to the parent NGO-MFI, linkage withexternal MFIs, community ownership of a Non-Banking Finance Company (NBFC) andSHGs being reconstituted into mutually aided credit and thrift cooperatives. Federationsof SHGs are now in a position to access funds even from wholesale MFIs. However,several of these innovations are one-off initiatives incapable of easy replication or, as inthe case of the mutually-aided cooperatives, specific to the context of state in which theyhave been introduced.3.4 The many possible combinations of formal and non-formal institutional channels thatreach MF for the poor through SHGs are a feature of a system where a suitable regulatoryenvironment of MF has not developed and MFIs struggle to find an appropriate pathgiven the national and local constraints.4. Costs of SHG Promotion4.1 Estimates of costs of SHG promotion have been undertaken for 10 NGOs/projectsalong with a discussion of the factors involved. A distinction is made between four majortypes of SHG “models”: (i) the “minimalist” approach of banks and NBFCs promotingmicrofinance SHGs; (ii) large project initiatives related to savings and credit, capacitybuilding and women’s empowerment; (iii) leading NGOs adopting a microfinance plusapproach focusing on livelihoods development; and (iv) a mixed category of SHGsformed through local initiatives, including SHGs promoted by the district developmentagency.4.2 Though inputs and contexts differ across the country, rough benchmarks for cost ofpromotion of SHGs have been proposed in the study. The available data suggests aconvergence of cost of promotion per SHG at around Rs. 4,000 for the minimalist modelof pure bank linkage and Rs. 10,000 to Rs. 12,000 within a more comprehensiveempowerment framework. The cost of promotion of SHGs appears generally to be in linewith the scale of support provided by various government agencies. Necessaryadjustments would, however, have to be made for particular regional, social and povertycontexts.4.3 Some other benchmarks that can be suggested: (i) period of support – 3 to 5 years;(ii) clients per field worker – 400 or 20 to 25 groups; (iii) minimum scale of interventionto justify costs incurred – 150 to 200 groups, or 2,500 to 3,000 members, in ageographically compact area.4.4 There are prospects for a reduction in these costs over time as SHG numbers increasein an area and where associations of existing SHGs help to form new SHGs.viii