Role of NGOs in Self Help Groups (SHG) Movement in India

Suveer Malhotra - 109Rupesh Jain - 83Shruti Patra - 73Ruchi Gupta - 133

SELF HELP GROUPS

• Self Help Group is a group of 12 to 20 members of women who come forward voluntarily to work together for their socio-economic upliftment.

• The group creates social capital, self esteem and dignity among its members.

• It also creates a sense of discipline, responsibility, cooperation and above all a strong mutual trust and human relations.

• About 2 million SHGs have taken bank loans.• Total membership around 26 million people.• 94% women; growth around 30% + per year

• A Self-Help Group may be registered or unregistered.

• It comprises a group of micro entrepreneurs having homogenous social and economic backgrounds.

• Everyone voluntarily come together to save regular small sums of money, mutually agreeing to contribute to a common fund and to meet their emergency needs.

• The group members use collective wisdom and peer pressure to ensure proper end-use of credit and timely repayment.

• Self-help groups are seen as instruments for empowering women, developing leadership abilities among poor people, increasing school enrolments, improving nutrition and the use of birth control.

NGO’s role in SHGs• To motivate the rural people to organise themselves and to form into

SHG.• To educate, train the group members in managing the group activities

like maintenance of books of accounts, conducting meetings, management of funds etc.

• To promote savings habit among the group members and to help in institution building along with the development of individual.

• To help the SHG in identifying raw materials and local resources.• To help the group members to upgrade their skills and technology to

make best use of resources.• To make available credit facilities and to act as a link between the rural

poor and the bank.• To educate and train the group members to utilise credit properly and

to improve their economic conditions.• To help the group members in exploring markets for their products.• To work as facilitator in the meetings of the SHG.

ROLE OF NGOS

• NGOs are Self Help Promotion Institutions (SHPI) with a special task of promoting, nurturing, strengthening and monitoring the SHGs.

• Many studies reveal that the groups promoted by NGOs are relatively perform better than other agencies.

• They are a catalyst in between SHGs and Funding agencies like banks and MFIs.

BENEFITS OF SHG MODEL 

• SHG movement created an institutional framework.• Participation of women in SHGs improved their access to credit.• Culture of thrift and disciplined loan repayment.• Winning confidence of mainstream financial sector as credit

worthy institutions.• Interest rates in the informal credit sector decreased.• Consumption needs and certain production needs met.

CRITERIA FOR SHGS BORROWING FROM NGOS

• The borrowers must be a member of SHGs, which is promoted by the NGO.

• Group or members of the SHG should act as the Guarantor for the Loan.

• Loan amount should be used for the purpose for which it has been availed.

• Limit of loan depends upon the purpose for which the loan is used.

BENEFITS OF NGOs

• NGOs’ supported SHGs are more successful in functioning and consistency.

• NGOs conduct more trainings for SHGs.• SHGs supported by NGOs are very prompt in repayment of

loans (99%).• Capacity planning is a key role played by NGOs• The SHGs are turning out to be quality clients in view of

better credit management, low transactions cost and full repayments because of NGOs involvement in this programme.

• Regular meetings and savings are compulsory ingredients in the product system.

• Faster and shorter repayment schedule ensure faster recycling of funds.

TRAINING PROGRAMMES BY THE NGOS• NGOs conduct periodical trainings to its SHG members to promote

leadership qualities and income generating activities.• SHGs that are getting trainings from NGOs are performing better than

others.• NGOs conduct two types of trainings.▫ (i) Trainings to SHG members and▫ (ii) Trainings to SHG leaders.

• Orientation and social awareness• Micro-credit training• Identifying and training in income generating activities• SHG Federation Concept and Panchayat Raj• Motivation• Leadership training in SHGs• Record Maintenance and• Marketing SHG Products.

REASONS FOR SHGs PREFFERING NGOs• Facilitates in Formation• Getting Loan from Banks• Leadership and skill training• Coordination in conducting meeting• Helping in Marketing SHG products• Easy Access to Banks• Record Maintenance/ Accounting/Auditing• Savings and Repayment

FUNCTIONAL ISSUES• Lack of follow –up by the NGOs .• There is sometimes no dedicated authority to take care of the

needs of the SHGs.• Many members show lack of involvement and commitment

towards group activities.• Absence of effective leadership in SHGs.• Lack of motivation to start up a group enterprise.• Lack of wider market prospects. SHGs sell their product only

local market.• Resistance to women’s entry in local market and political

structures .• Family resistance to changing power relations

EMERGING CHALLENGES 

• Damage to ‘credit discipline’ because of high interest rates and political reactions to incidents of coercion

• High handed recovery of loans• Lack of skills/experience for advisory/technical support services

to promote livelihoods and build market intervention• Internalised notions of vulnerability of women affecting their

confidence and performance. • Social norms inhibiting women from articulating personal needs. • Women experience Invisible barriers to entry in economic &

political spheres.• Interior and tribal villages have not benefited.• SCs and women headed households have not benefited.

RECOMMENDATIONS TO NGOS• Leadership development activities are essential. There should

be rotation or change in leadership.• A workable business strategy should be generated for SHGs.• “Savings first and credit later” this concept should be given

priority.• NGOs should give more priority for capacity planning.• Market oriented approach is essential for SHGs’ continuity

and stability.• The transaction cost may be reduced.• NGOs should examine whether the loan amount has been

used for good purpose.

REFERENCES

• http://en.wikipedia.org/wiki/Self-help_group_(finance)• http://www.ifad.org/evaluation/public_html/eksyst/doc/insight/pi/india-

13.htm• http://www.publishyourarticles.net/eng/articles/short-notes-on-the-role-

of-ngo-in-shg.html• http://www.rajeshtimane.com/331/ngos/shg_in_rural_devt.html• Role of non-governmental organisations in micro finance through shgs –a

study in vellore district of tamil nadu - Dr. K.Rajendran, Dr.R.P.Raya.

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