STERLING INSTITUTE OF MANAGEMENT STUDIES

SELF HELP GROUP

SUBMITTED TO: TASNEEM KHIDHIR

SUBMITTED BY: AMOL S PHADATARE

SELF HELP GROUPS

Since the reconstitution of the Commission in January 2000, the Commission started projects with the aim of making women economically empowered. One of the major initiatives taken by the Delhi Commission for Women in the year 2000-2001 was to set up pilot projects in collaboration with partner NGOs for empowering women economically and thus helping prevent crimes against women. The Commission tied up with various NGOs working in various parts of Delhi for formation of Self-Help Groups. 1 What is a Self-Help Group? Self-Help Group (SHG) is a small voluntary association of poor people, preferably from the same socio-economic background. They come together for the purpose of solving their common problems through selfhelp and mutual help. The SHG promotes small savings among its members. The savings are kept with a bank. This common fund is in the name of the SHG. Usually, the number of members in one SHG does not exceed twenty.

2 What are the objectives of Self-Help Groups ? The SHGs comprise very poor people who do not have access to formal financial institutions. They act as the forum for the members to provide space and support to each other. It also enables the members to learn to cooperate and work in a group environment. The SHGs provide savings mechanism, which suits the needs of the members. It also provides a cost effective delivery mechanism for small credit to its members. The SHGs significantly contribute to the empowerment of poor women. 3 Who helps in the formation of SHGs ? Non Governmental Organisations (NGOs) Social Workers, health workers, village level workers, etc Informal Associations of local people Development oriented government departments Banks Bank personnel and other individuals (in their personal capacities) Farmers' Clubs under the Vikas Volunteer Vahini ( VVV) Programme of NABARD Other development institutions.

4 Should SHG members comprise only poor people? The SHG-bank linkage programme is targeted to reach the poorest sections, which are bypassed by the formal banking system. Therefore, it is essential that only the very poor be considered as the target group for the SHG -bank linkage programme.

5 Should the SHG comprise only women members? An SHG can be all-women group, all-men group, or even a mixed Group. However, it has been the experience that women's groups perform better in all the important activities of SHGs. Mixed group is not preferred in many of the places, due to the presence of conflicting interests.

6 What is the importance of training in the success of SHG strategy? Training can contribute significantly to the success of the SHG bank linkage programme. Appropriate training (formal or informal) at each stage of SHGs' growth is one of the essential inputs required.

7 What are the types of training programmes that would be necessary in promoting SHGs? Training is essential for all partner agencies who participate in the SHG bank linking programme. The details regarding the different types of training needs, organisational facilities, modules,etc are presented in Section 4 - Capacity Building of Partner Institutions in microFinance.

8 What could be considered as indicators of a good SHG? Homogeneous membership As far as possible, the membership of an SHG may comprise people from comparable socio-economic background. Though difficult to define in clear terms, a major indicator of homogeneity in membership is absence of conflicting interests among members. No discrimination There should not be any discrimination among members based on caste, religion or political affiliations.

Small membership Ideally, the group size may be between 15 and 20, so that the members are participative in all activities of the SHG. In a smaller group, members get opportunity to speak openly and freely. However, the membership may not be too small that its financial transactions turn out to be insignificant. . Regular Attendance Total participation in regular group meetings lends strength to the effectiveness of SHGs. To achieve this, the SHGs should place strong emphasis on regular attendance in the group meetings. Transparency in functioning It is important that all financial and non-financial transactions are transparent in an SHG. This promotes trust, mutual faith and confidence among its members. Maintenance of books of accounts as also other records like the minutes book, attendance register, etc., are important. Set of Byelaws The SHG may discuss and finalise a set of byelaws, indicating rules and regulations for the SHG's functioning and also roles and responsibilities of members. It is better to have a written set of byelaws. The Self Help Promoting Institution (SHPI) and bank may guide the SHGs in this. Thrift The habit of thrift (small savings) is fundamental to the SHG and helps in building up a strong common fund. Utilising savings for loaning Once an SHG has accumulated sizeable amount in the form of savings say for a period of about 3-6 months, the members may be allowed to avail loans against their savings for emergent consumption and supplementary income generating credit needs.

9 How is a bank account opened by an SHG? As soon as the SHG is formed and a couple of group meetings are held, an SHG can open a Savings Bank account with the nearest Commercial or Regional Rural Bank or a Cooperative Bank. This is essential to keep the thrift and other monies of the SHG safely and also to improve the transparency levels of SHG's transactions. Opening of SB account, in fact, is the beginning of relationship between the bank and the SHG. The Reserve Bank of India has issued instructions to all banks permitting them to open SB accounts in the name of registered or unregistered SHGs.

10 What are the advantages of internal lending of own savings in an SHG? By initially managing their own common fund for some time, SHG members not only take care of the financing needs of each other, but develop their skills of financial management and intermediation as well. Lending to members also enhances the knowledge of SHG members in setting the interest rate and periodic loan installments, recovering the loan, etc.

The SHG programme has assumed such enormous dimension in a brief period of about one year that these are as mentioned below:Self-Help Groups-more than 16,000 women have been involved. Total No. of Groups No. of Members (Approx.) 716 16000

(in Rs.) Total Saving Loan given Total recovery Interest received Default 40,63,926.00 26,48,375.00 10,01,844.00 82,848.00 11

Bank Account opened

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MICRO FINANCE

SHG MOVEMENT A MISSION: SBI has taken up SHG movement as a mission.A noble mission to reach those families who were hitherto having no access to the credit by any formal financial institution and, therefore, were depending on informal sources and moneylenders.

MICRO FINANCE DEEP ROOTS IN SBI: Micro finance is not new to State Bank of India.Banks association with non-government organizations (NGOs) or voluntary agencies in extending financial help can be traced as far back as 1976 well before NABARD introduced SHG-Bank Credit Linkage Programme as a pilot project in 1992. STEADY GROWTH IN SHG-BANK CREDIT LINKAGE PROGRAMME: SBI has actively participated in SHG-Bank Credit Linkage programme since its inception in 1992 as a pilot project of NABARD.Since then the Bank has made a steady progress in financing SHGs.As on March 2006, SBIs branches spread throughout the length and breadth of the country

have opened 6,30,067 Savings Bank account of SHGs out of which more than 5.41 lac SHGs have been provided with credit facilities thus benefiting more than 75 lac poor people.Majority of these SHGs are women SHGs.The year-wise cumulative position of SHGs-Bank Linkage programme for the last 4 years is as under:

Year SHGs linked (financed) No. of beneficiaries Amount disbursed Amount outstanding No. of SHGs maintaining Savings a/c in the Bank Amount in Savings a/c (Amt. in Rs.)

March 03 1,07,553 12,33,660 324.84 cr. 269.43 cr. 2,79,466

March 04 1,74,666 21,50,752 614.87 cr. 462.77 cr. 3,69,568

March 05 3,43,691 48,11,674 1311.45 cr. 872.08 cr. 5,08,396

March 06 5,40,481 75,68,842 2262.95 cr. 1459.89 cr. 6,36,067

261.36 cr.

348.31 cr.

411.82 cr.

434.07 cr.

SBI LEADER IN SHG-BANK CREDIT LINKAGE SBI is maintaining its position as a leader among Commercial Banks in credit linking of SHGs and is a prime driver for the movement.As at the end of March 2006, SBI with a share of approximately 47% of total SHGs financed by Commercial Banks is far ahead of others.

INNOVATIONS & INITIATIVES Bank has successfully initiated various measures toward widening its SHG network.To list a few examples:

(i)Sensitisation of staff: Banks aim is to sensitise the entire staff from Manager to Messenger working in rural and semi-urban branches towards the programme. (ii)Special training programmes in SHGs are being conducted at 54 training centres of the Bank in the country apart from State Bank Institute of Rural Development, Hyderabad. (iii)Close liaison with NGOs: Operating functionaries at branch level and region level are in close contact with NGOs in their area to take the movement ahead.For the purpose, regular meetings are arranged with the NGOs and their support is solicited. (iv)SHG cells: Special SHG cells have been opened at major branches. (v)Lending to NGOs / Federations of SHGs: Lending to credible NGOs / Federations of SHGs on selective basis for on lending to SHGs is being encouraged.

(vi)Sahayog Niwas: SBI has launched its Housing Loan product SAHAYOG NIWAS meant for SHG members.Under the scheme formulated keeping the socio economic conditions of villages insight, housing loans are given to the SHG members without any mortgage of house / land.Response to this product is very encouraging.

(vii)SBI Life - Shakti: SBI Life, our insurance subsidiary, is the first to introduce a life insurance scheme, especially designed for SHG members.Special feature of the scheme is that entire premium

amount paid by the member is refunded after maturity, i.e., 10 years.

(viii)Rural training institutes: To help the rural youth to stand on their feet, two RUDSETI type training institutes have been established at Gulbarga and Gadag in Karnataka State, to impart training in self employment to youth free of cost.

(ix)SBI staff as SHPI: The main role of formation and nurturing of SHGs have been played by NGOs who, apart from their fundamental role of social service, also aim to make the poor economically self sufficient.But in SBI, our committed work force is not lagging behind and a number of committed staff members have worked hard to form and nurture SHGs on their own.

(x)Appreciation by Government: A number of our branches / Circles have also received commendation and appreciation from various State Governments for doing excellent job in SHG-Bank Credit Linkage programme. NABARD felicitated 15 SHGs at a function organized in New Delhi on 13 th September 2005.The function was presided over by the Honble Union Finance Minister.Out of total 15 SHGs felicitated, 4 were financed by our branches, one each from Orissa, Jharkhand, Madhya Pradesh and Uttaranchal.

(xi)Samanwita: Bank has sponsored and financially supported NGO SAMANWITA in collaboration with Government of Orissa for supplementing the process of socio economic upliftment of the tribals and the downtrodden in the poorest and most backward Kandhamal district of Orissa State where 52% of the population is that of tribals.Core activities performed by Samanwita is empowerment of people through promotion of SHGs, especially women SHGs and development of human resources.

(xii)SHPI status: State Bank of India is the first Commercial Bank to which NABARD has recently given SHPI status.

FUTURE PLANS SBI has set for itself an ambitious target of credit linking 1 million SHGs up to March 2008. The Bank has started to leverage our vast SHG network for various services beyond credit delivery.

Women self help group

Nilakantha Mahila Kosha is the name of a women self help group from Puran Panchayat of Balianta Block. It was created, with the help of a local NGO, after the Super Cyclone, in 1999. This eighteen member group, besides undertaking micro credit enterprise, shares all their problems and try to resolve it collectively. During the critical floods from 2001 the group faced one more challenge. It fortunately could be solved with techniques and information they acquired in the trainings promoted by the Disaster Campaign and Preparedness Programme. It was last year, when one of the villagers got drunk. He did not take proper care and went near the river to see the floodwater. Suddenly, he swayed and fell into the river and began to drown. The self-help group was informed in time and, with the help of the local youths, could save him. As he required some medical support, also because his wife was about to give birth, again Nilakantha Mahila Kosha came to his rescue. The self-help group gave from their savings a financial assistance to the family. The group, after this experience, called a meeting with all the male members of the village to try to close all the liquor shops of the village. Also, the local police and the Panchayat - the village level politician - assisted them in this mission. In addition, the villagers came forward to prepare a contingency plan for the natural disaster faced by them and this women self help group took the lead in doing so. They organized male groups and started rehabilitation works of the community by repairing roads, monitored relief distribution and management of village affairs.