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

5. Sustainability of SHGs and SHG-based Institutions5.1 The sustainability of SHGs and SHG-based institutions is coming under closescrutiny. However, financial viability at the level of the SHGs is currently not an issue.SHG income, though small, is matched by an extremely low cost of operations.5.2 The quality and institutional sustainability of the SHGs promoted is more open toquestion. Even best practice NGOs generally place only about 50% of groups in thehighest category of performance, with 10-20% failing to take off. SHGs linked to banksdo not appear thus far to be able to easily graduate to (larger) individual loans under thebank’s normal lending programme. The leading NGOs covered in this study have phasedout from some areas after linking SHGs to banks. There is, however, unease about theability of SHGs to continue to access funds from the banks and to help their membersmove along a growth path out of poverty.5.3 Nevertheless, SHGs linked to banks are emerging as a low cost option tomainstream delivery systems of financial services for the poor. At the same time theevidence suggests MFIs lending to SHGs realise a poor return on their portfolio.5.4 Where SHGs have been formed into federations, the operational self-sufficiency ofthe intermediary institutions has yet to be demonstrated. The type of emerginginstitutions and their development is constrained by the existing regulatory framework forMF and the legal forms available in each state.5.5 The phase-out of NGOs from areas where SHGs have been federated has proved tobe difficult in practice. The leadership and management of most SHG federations andcooperatives continue to be in the hands of NGO staff. The development of the capacityof these institutions for self-management remains an important issue.6. Impact of SHG-based MF programmes6.1 Comprehensive impact studies on the effectiveness of SHGs are virtually nonexistenteven for the best practice NGOs. Programme Management Information Systems(MIS) of NGOs are also generally not geared to providing substantive impact data.6.2 A major NABARD impact evaluation covering 560 members of 223 SHGs linked tobanks in 11 states showed that SHG members realized major increases in assets, incomeand employment. Also, women members were found to have become more assertive inconfronting social evils and problem situations. Nearly half the poor member householdshad crossed the poverty line.6.3 Various other reviews and evaluations of SHG programmes suggest that SHGs have• provided access to credit to their members;• helped to promote savings and yielded moderate economic benefits;• reduced the dependence on moneylenders; and• resulted in empowerment benefits to women.ix