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Sustainability of SHG Institutions: Study of Best Practices
byDGRV, APMAS & Enable
Supported byGTZ and NABARD
Research TeamGuidance:GTZ: Marie L. Haberberger & R. RamakrishnaAPMAS: C. S. Reddy & S. Rama Lakshmi Study Team:• Dr. Wolfgang Salomo, DGRV• Dr. G. Bhaskara Rao, APMAS & Enable• Mr. Naveen Kumar, APMAS• Representatives of NABARD• Representatives of Enable
Context• Emerged largest community based mF model in
the world; as on March 2009– Saving linked SHGs: 6.12 mn; amount Rs.55.46 bn– Credit linked SHGs: 5.76 mn; amount Rs.391.44 bn– Loan outstanding SHGs: 4.22 mn; amount Rs.226.8 bn
• Issues of quality, sustainability, policy contradictions, predominant focus on credit, limited attention on saving, democracy and social agenda
• Evolved independently in different parts of the country with very little cross learning
• Good scope for cross learning
ObjectivesTo contribute for the sustainability of SHG
institutions in India. The specific objectives are:• To learn the best practices in respect to promotion
and functioning of SHG federations• To understand the underlying factors behind the
successful SHG systems• To collect and document all the best practices in SHG
institution in different parts of the country and disseminate the results for the benefit of all stakeholders in the sector.
Methodology
• Collect information about Federation through publications and resource persons
• Post a question on Solution Exchange• Identify best federations from available
information and through Enable members• Short listed over 20 federations for field visit
in 7 states – AP, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, UP & WB
Methodology
• In each visited federation, the research team interacted with promoters, board of Apex Fed, boards of two PLF and four SHGs
• Objective assessment of quality of visited federations using APMAS’s ‘GRADES’ tool
• Qualitative information was collected through focused group discussions using separate check lists for each category of respondents
Progress and Framework
• Visit of 10 Federations in 5 states has been completed
• Review of available literature is in progress• Based on the insights gained from the
literature review, a tentative sustainability framework has been developed.
Visited Federations
State Federation/ SHPI Fed./ SHPI
Rajasthan Savera/ IBTADA Saheli Samiti/ PRADAN
UPShakti Mahila/ RGMVP
Shakti Mahila/ Shramika Bharati
WB Bagnan MS/ DRDA NBTMS/ CDHI
KarnatakaHD Pura CMRC/ Myrada
Koyiloor/ SKDRDP
Tamil Nadu Maduranthakam MBT/ SNFL
Jawadhi Tribal Women Development Society/ Don Basco
Core Elements of Sustainability
• Institutional sustainability (IS)
• Financial Sustainability (FS)
• Legal and Regulatory Framework (LRF)
• Promotion
• These issues will be discussed with available data and information. Before that .. Definition of Best Practices
Some definitions of Best Practices
• Have large impact• Cost effective• Enhanced sustainable• Total involvement of, and, ownership by, the
primary members• Promoted self reliance• Able to develop a vision and realize it• Strong demand system• User friendly systems• Promotes inclusion and equity
IS: Ownership & Governance• SHG membership is growing at fast pace –
– saturation in AP; – 1.5 million families covered by SKDRDP – a NGO – Extension model by Myrada; – Convert project participants into SHG members by
Pradan, Bagnan, CDHI; Don Basco– Adoption of SHG institutions to fulfill their own
missions/ projects by SGSY/ NRLM; Shramik Bharati; SERP; RGMVP; Don Basco
Unhealthy competition between GO Vs GO (banks); GO Vs NGO; NGO Vs NGO
IS: Ownership and Governance
• Federations are deeply involved in the loan process and recovery
• Federations became important source of information for SHGs about available opportunities
• Still heavy dependence on Promoters/ staff and leaders (Not able to control own staff)
• Focus on leadership (some risks)• Top down approaches
FS: Vision, strategy, plan & systems• Very few federations have vision. Articulate
accomplishments/ activities as Vision. Exception Myrada and SNFL
• Strategy: Totally dependent on promoting agencies• Plan: Heavy dependence on promoters/ staff and
leaders• Good systems at few places – SNFL separate
meetings for internal funds transactions and external funds transactions; bonus distribution in SNFL and SKDRDP
FS: Products & ServicesFinancial services – • Loans grossly inadequate. Banks are not
cooperating in north. MFIs/ Federations provide limited loans – Exception SKDRDP provide multiple loans, de-linked loans with saving and repayment schedules
• High interest, exception SKDRDP and AP• Regular interest payment on thrift in Bagnan• Many restrictions in the use of internal funds• Insurances are sold not marketed. SKDRDP
and SNFL are providing social security
FS: Products & Services
Non-financial services by federations• Federations provide book keeping services in all
places (including training of book-keepers)• Auditing of SHG books in few, (paid by SHGs in
Myrada and Shramika Bharati)• Fed. promoting new SHGs in many places (as
strategy to increase membership/ income at SB)• Paid Community Resource Persons (CRPs) in few
places and unpaid CRPs in many places• Fed. help in loan process and recovery
FS: Social Services• Almost all fed are involved, but focus is different. • Provided platforms to women. Health and
hygiene are most common services• Bagnan Fed. promoted a NGO to take up social
services• SHGs in Myrada and SKDRDP are involved in anti-
liquor agitations• IBTADA groups are focusing on women/ girl
education and gender issues• Social security programs of SNFL and SKDRDP
FS: Livelihoods & Marketing• Consumption protection – Food security in AP,
door to door sale in Bagnan, shops and network marketing in Myrada and Saheli Samiti
• Large number of employment opportunities for CRPs in SHG institutions
• Vocational training and placement/ marketing support in many places (Myrada, SNFL, SKDRDP)
• AP: community managed sustainable agriculture (CMSA), BMCUs management, procurement of Paddy, Dal, Maize, NTFPs
FS: Livelihoods & Marketing
• Brand development for SHG members’ products ‘SIRI’ in SKDRDP. Rs.20 cr. turnover, 5000 women
• Accessing of many development programs – transfer of farm technologies
• Permanent and temporary exhibitions under SGSY
• Don Basco at Jawadhi hills - Conservation of natural resources; Bidding for development works; transport support for marketing; group level economic activities. Brand development is under process
Legal and regulatory framework• Fed in north want to take up financial
intermediation, but are scared of registering under old cooperative act.
• Need MACS act in all states• Federations in Myrada are scared of any
registration. Prefer self regulation vis-à-vis outside regulation
• SNU of APMAS could be a good frame for self regulation
• PEDO practices of annual review of accounts, annual bonus, etc, could be other option
Promotion: Funds
• GOI – SGSY: More focus on Livelihoods and less on institution development
• State Governments – target approach, no role transformation plan, not involving NGOs
• International donors are migrating to MFIs • NABARD is only donor. But limited focus on
institutional capacity building (ICB). Even less focus on capacity building of SHPIs
Promotion: Policy contradictions
• Banks are shying away from SHGs, despite good business potential. (Growth of MFIs)
• Loan wavers• Corruption in SGSY and its adverse effect on
SHG – banking• Target approach by the state governments
and taking over of SHGs promoted by NGOs• NGOs are forced to become MFOs
Thank you
Open for discussion
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