PDF GTZ Ncaer

Final Report
Impact and Sustainability of SHG

Bank Linkage Programme
Submitted to:
GTZ-NABARD
March 2008
Impact and Sustainability of SHG Bank Linkage Programme
Contents
STUDY TEAM
ACKNOWLEDGEMENTS
EXECUTIVE SUMMARY
CHAPTER 1: INTRODUCTION 1
1.1 A Review of Earlier Studies..................................................................................................................................................1
1.2 Objectives of the Study.......................................................................................................................................................10
CHAPTER 2: SAMPLE DESIGN AND METHODOLOGY 11

2.1 Methodology .......................................................................................................................................................................11
2.1.1 Selection of Districts...........................................................................................................................................................12
2.1.2 Selection of SHGs..............................................................................................................................................................12
2.1.3 Selection of SHG Members ................................................................................................................................................13
2.2 Case Studies ........................................................................................................................................................................14
CHAPTER 3: SHPIS AND BANKS 15

3.1 SHPIs: Cost of Promotion, Maintenance and Intensity of Support Received ....................................................................15
3.2 Banks: An Assessment of Loan Services to SHGs.............................................................................................................18
CHAPTER 4: FUNCTIONING OF SHGS UNDER BAN K LINKAGE PROGRAMME 21

4.1 Profile of the sample SHGs........................................................................................................................................................21
4.2 Governance aspects of SHGs.....................................................................................................................................................24
4.3 General Management Practices ..................................................................................................................................................25
4.4 Financial Management Practices ................................................................................................................................................27
4.5 Saving Activities of SHG Members...........................................................................................................................................28
4.6 Source of Funds and External Borrowings for the SHGs ..........................................................................................................30
4.7 Lending Activities of SHGs .......................................................................................................................................................32
4.8 Other Financial Services Offered by SHGs ...............................................................................................................................34
4.9 Training Needs of SHGs Members............................................................................................................................................34
4.10 Organisational sustainability of SHGs...................................................................................................................................36
4.11 Financial Sustainability of SHGs.............................................................................................................................................37
4.12 Adequacy/Appropriateness of Support Received from SHPI ..................................................................................................39
CHAPTER 5: IMPACT OF SBLP ON HOUSEHOLDS 41

5.1 Profile of sample households ..............................................................................................................................................41
5.1.1 Years of bank linkage .........................................................................................................................................................42
5.1.2 Level of literacy ..................................................................................................................................................................42
5.2 Changes in Annual Net Household Income ........................................................................................................................42
5.2.1 Changes in net household income by model types .............................................................................................................43
5.2.2 Changes in the mix of economic activities .........................................................................................................................43
5.3 Changes in the pattern of consumption expenditure...........................................................................................................44
5.3.1 Changes in expenditure on non-food items.........................................................................................................................45
5.3.2 Changes in expenditure on education .................................................................................................................................45
5.3.3 Changes in expenditure on health.......................................................................................................................................46
5.4 Changes in Practices Relating to Nutrition, Children’s Education and Health Care ..........................................................46
5.4.1 Change in access to drinking water.....................................................................................................................................47
5.4.2 Changes in access to sanitation by households...................................................................................................................47
5.5 Changes in Savings and borrowing practices .....................................................................................................................47
5.5.1 Annual savings per household ............................................................................................................................................47
5.5.2 Changes in access to instruments of savings ......................................................................................................................48
5.5.3 Saving facilities fulfilled by SHGs .....................................................................................................................................48
5.5.4 Changes in Average value of consumer durable assets per household...............................................................................49
5.6 Changes in Borrowing Habits.............................................................................................................................................49
5.6.1 Average loan amount ..........................................................................................................................................................50
5.6.2 Sources of borrowings ........................................................................................................................................................50
5.6.3 Change in loan use patterns ................................................................................................................................................51
5.6.4 Distribution of loan account by interest rate.......................................................................................................................52
5.6.5 Repayment of loans.............................................................................................................................................................52
5.6.6 Assessment of Current borrowing needs by SHG members...............................................................................................53
5.7 Change in Incidences of Poverty........................................................................................................................................53
5. 8 Changes in Dependence on Moneylender by Households..................................................................................................55
5.9 Social Empowerment ..........................................................................................................................................................56
5.9.1 Changes in self confidence of female members..................................................................................................................56
5.9.2 Changes in abilities to face problems .................................................................................................................................57
5.9.3 Changes in control over use of money by female SHG members ......................................................................................57
5.9.4 Change in SHG member ownership on productive and consumer assets...........................................................................58
5.9.5 Change in abilities of female SHG members in household decision making.....................................................................58
5.9.6 Changes in Participation in Public Issues at Village Level ................................................................................................59
5.10 Assessment of Training Needs of SHG Members and their Families ............................................................................60
5.10.1 Training provided..............................................................................................................................................................60
5.10.2 Adequacy of training provided .........................................................................................................................................60
5.10.3 Adequacy of extension services ........................................................................................................................................61
5.10.4 Training needs...................................................................................................................................................................61
5.11 Opinion on working of the SHGs .......................................................................................................................................62
5.12 Changes in members behaviour and organizational and financial sustainability of SHGs during last few years..............63
5.13 Employment generation ......................................................................................................................................................64
CHAPTER 6: CASE STUDIES OF SHGS 65

6.1 Case Studies Based On Su ccess Stories ..............................................................................................................................65
6.1.1 SHGs with successful individual activities .........................................................................................................................65
6.1.2 SHGs with successful group ventures.................................................................................................................................73
6.1.3 Case sudies based on success of individual members and households...............................................................................80
6.2 Case Studies Of SHGs That Are Not So Successful /Non-Functional.....................................................................................84
6.2.1 Lack of literacy responsible for not getting bank linkage – Uttar Pradesh........................................................................84
6. 2.2 Can a SHG survive without mutual trust?.........................................................................................................................85
6.2.3 Living under the shadow of NGOs....................................................................................................................................86
6.2.4 Men flounder where women succeed..................................................................................................................................87
6.2.5 Gender bias in SHG ............................................................................................................................................................89
6. 2.6 Are too many members the bane of SHGs?.......................................................................................................................90
6. 3 Case Study of An NGO (SHPI)..........................................................................................................................................91
CHAPTER 7: SUMMARY AND CONCLUSIONS 94

7.1 Approach of the Study ........................................................................................................................................................94
7.2 Major Findings on the Level of SHGs................................................................................................................................94
7.3 Major Findings on the Level of SHG Members and their Households ..............................................................................95
7.3.1 Economic Impact ................................................................................................................................................................95
7.3.2 Social empowerment...........................................................................................................................................................97
7.4 Major Findings on the Level of SHPIs and Banks..............................................................................................................98
7.5 Findings from Case Studies ................................................................................................................................................98
7.6 Conclusions.........................................................................................................................................................................98
References...................................................................................................................................................................................... 103
Appendix
A3.1: Opinions of SHGs on operating independently without the help of SHPIs.........................................................................103
A3.2: Average distances of SHGs from credit linkage banks and nearest towns ..........................................................................103
A.4.1: Distribution of SHGs by characteristics of members (contd.) ............................................................................................104
A.4.2: Governance aspects of SHGs.............................................................................................................................................105
A.4.3: General Management Practices ..........................................................................................................................................105
A.4.3a: Change in the General Management Practices .................................................................................................................107
A.4.4: Financial Management Practices ........................................................................................................................................108
A.4.5: Saving activities of SHGs members...................................................................................................................................109
A.4.5a: Change in the saving activities since establishment/bank linkage ...................................................................................109
A.4.6: Source of funds and external borrowings ...........................................................................................................................110
A.4.7: Lending Activities of SHGs ................................................................................................................................................111
A4.7a: Change in the lending activities of SHGs since bank linkage/establishment .....................................................................112
A4.7b: Change in the Major Purposes for which loans are used since bank linkage/establishment..............................................113
A4.8: Percentage distribution of SHGs by Development of Skills of their members....................................................................113
A4.9: Training needs of SHG members .........................................................................................................................................114
A4.10: Organisational sustainability of SHGs...............................................................................................................................114
A4.11: Financial sustainability of SHGs........................................................................................................................................115
A4.12: Adequacy/appropriateness of support received from SHPI at the time of establishment/bank linkage ............................116
A4.13: Adequacy/appropriateness of support received from FI/Bank...........................................................................................117
A5.1.1: The average number of years of bank linkage per household by state..............................................................................118
A5.2.1: The share of income by sources and states........................................................................................................................118
A5.2.2: Annual income per household by sources of income and their growth rates by states and type of model.......................119
A5.4.1: Changes in member household's Children Education .......................................................................................................119
A5.4.2: Changes in member household's Nutrition........................................................................................................................120
A5.4.3: Changes in member household's Health............................................................................................................................120
A5.5.1: Changes in borrowing habits.............................................................................................................................................121
A5.5.2: Total loan taken per household (Rs.).................................................................................................................................121
A5.5.3: Percentage distribution of use of loan by purpose by States.............................................................................................122
A5.4.4: Changes in practices related to drinking water supply by major source...........................................................................122
A5.4.5: Changes in practices related to sanitary facilities .............................................................................................................123
A5.12.1: Changes in abilities of female SHG members to influence decision-making in their households on Children’s Education
........................................................................................................................................................................................................124
A5.12.2: Changes in abilities of female SHG members to influence decision-making in their households on Purchase of Asset
........................................................................................................................................................................................................125
A. 5.12.3: Changes in abilities of female SHG members to influence decision-making in their households on Taking Loans ...126
A5.12.4: Changes in abilities of female SHG members to influence decision-making in their households on Use of Loans ......127
A5.13.1: Percentage of female members participating in public issues on village level ...............................................................128
A5.14.1: Percentage distribution of households specifying areas on which they require training on income generating activities
........................................................................................................................................................................................................128
A7.1: Major Findings on the Level of SHGs .................................................................................................................................129
A7.2: Major Findings on the Level of SHG Members and their Households................................................................................130
List of Figure and Tables

Figure 3.1: SHPIs by types of supporting agencies (%)...................................................................................................................17
Figure 3.2 Problems relating to promotion of SHGs (%).................................................................................................................17
Figure 3.3: Problems relating to bank linkage of SHGs (%)............................................................................................................18
Figure 3.4: Problems relating to Monitoring of SHGs (%)..............................................................................................................18
Figure 5.2.1: Percentage distribution of income by source of earnings: All India...........................................................................44
Figure 5.5.1: Change in average borrowings per household............................................................................................................50
Table 2.1: Regions, States and Districts included in the Study........................................................................................................11

Table 2.2: Development and poverty indicators of districts included in the study ..........................................................................12
Table 2.3: District-wise tehsils and villages by State.......................................................................................................................13
Table 2.4: Model type-wise distribution of selected SHG members in different states...................................................................14
Table 3.1: Number of SHPIs by State..............................................................................................................................................16
Table 3.2: Average cost of promotion per SHG incurred by different SHPI ..................................................................................16
Table 3.3: Percentage distribution of SHPIs by type of support ......................................................................................................16
Table 3.4: State-wise number of Banks............................................................................................................................................18
Table 3.5 Lending activities of banks ..............................................................................................................................................19
Table 3.6: Non-performing assets as percentage of total loan outstanding to SHGs*.....................................................................19
Table 3.7 Distribution of banks reporting percentage of loan recovery from SHGs .......................................................................20
Table 4.1: State-wise number of sample SHGs by Model type.......................................................................................................21
Table 4.2: Profile of sample SHGs –Model Type wise....................................................................................................................22
Table 4.2a: Profile of sample SHGs: State-wise ..............................................................................................................................22
Table 4.3: Distribution of SHGs by characteristics of members......................................................................................................23
Table 4.4: Governance aspects of SHGs..........................................................................................................................................25
Table 4.5: General management practices .......................................................................................................................................26
Table 4.5a: Change in the general management practices ...............................................................................................................27
Table 4.6: Financial management practices .....................................................................................................................................27
Table 4.7: Saving activities of SHGs members...............................................................................................................................29
Table 4.7a: Change in the saving activities since bank linkage .......................................................................................................30
Table 4.8: Source of funds and external borrowings of SHGs.........................................................................................................31
Table 4.9: Lending activities of SHGs.............................................................................................................................................32
Table 4.9a: Change in the lending activities of SHGs since bank linkage/establishment................................................................33
Table 4.10: Other financial services offered by SHGs.....................................................................................................................34
Table 4.11: Training needs of SHG members..................................................................................................................................35
Table 4.12: Organisational sustainability of SHGs..........................................................................................................................37
Table 4.13: Financial sustainability of SHGs...................................................................................................................................38
Table 4.14: Adequacy/appropriateness of support received from SHPI..........................................................................................39
Table 4.15: Adequacy/appropriateness of support received from FI/Banks ....................................................................................40
Table 5.1: Distribution of sample households by type and state......................................................................................................41
Table 5.2: Average number of years of bank linkage per household...............................................................................................42
Table 5.3: Distribution of head of households by education level: All-India (%) ...........................................................................42
Table 5.4: Growth in annual net household income (%).................................................................................................................43
Table 5.5: Net income per household by types of model.................................................................................................................43
Table 5.6: Household income by source s of earnings : Distribution and growth (%) ...................................................................44
Table 5.7: Changes in annual per household consumption expenditure of food (level and growth)...............................................45
Table 5.8: Annual per household consumption expenditure of non-food (level and growth) .........................................................45
Table 5.9: Annual expenditure per household on education (level and growth) .............................................................................46
Table 5.10: Annual expenditure per household on health (level and growth) .................................................................................46
Table 5.11: Share of households reporting change in access to nutrition, children’s education and health care ............................47
Table 5.12: Average level of savings per households (level and growth): All India .......................................................................48
Table 5.13: Distribution of saving instruments by households (%): All India.................................................................................48
Table 5.14:Distribution of households by saving facilities fulfilled by SHG: All India..................................................................49
Table 5.15: Change in household assets across states......................................................................................................................49
Table 5.16: Changes in household availing loan: All-India level (%) .............................................................................................49
Table 5.17: Average loan amount per household by Model type and rate of growth......................................................................50
Table 5.18: Percentage distribution of borrowers by source of loan................................................................................................51
Table 5.19: Percentage distribution of loan use by purpose: All India ............................................................................................51
Table 5.20: Distribution of loan account by interest rate.................................................................................................................52
Table 5.21: Distribution of household borrowings by regularity in repayment (%)........................................................................52
Table 5.22: Distribution of households by loan requirements (%) ..................................................................................................53
Table 5.23:Loan requirement fulfilled and additional loan per household ......................................................................................53
Table 5.24: Share of population living below the poverty line in 2004-05......................................................................................54
Table 5.25: State-wise poverty line in 2006-07 ...............................................................................................................................54
Table 5.26: Distribution of poor and non-poor households in pre and post-SHG situation.............................................................54
Table 5.27: Net poverty reduction by states.....................................................................................................................................55
Table 5.28: Change in dependence on moneylenders (%) ...............................................................................................................55
Table 5.29: Impact on social empowerment of women (%) ............................................................................................................56
Table 5.30: Distribution of women members by self confidence in different activities– All India.................................................57
Table 5.31: Distribution of women members in ability to face problems (%): All India ................................................................57
Table 5.32: Percentage distribution of women reporting control over use of money – All India....................................................58
Table 5.33: Model-wise changes in ownership over productive and consumer assets by households – All India..........................58
Table 5.34: Distribution of decision making members in pre-SHG and post-SHG periods (%).....................................................59
Table 5.35: Changes in participation on public issues (All India) shares in per cent ......................................................................59
Table 5.36: Changes in participation on public issues by type of model across household members (%).....................................60
Table 5.37: Percentage distribution of household provided training for income generating activities in 2006: All-India.............60
Table 5.38: Distribution of trained households on adequacy of training received (%): All-India...................................................60
Table 5.39: Level of adequacy of extension services (%): All India ...............................................................................................61
Table 5.40: Training requirements by households by areas of income generating activities: All-India..........................................61
Table 5.41: Performance index on working of SHG........................................................................................................................63
Table 5.42: Performance index on last few years’ trends on members’ participation, organisational development and financial
performance......................................................................................................................................................................................63
Table 5.43: Employment per household during pre and post –SHG situation by gender................................................................64
Table 5.44: Share of labour days in paid and unpaid employment by gender .................................................................................64
Table 6.1: NABARD funded activities carried out by Sharif Gram Uddyog Vikas Kendra since 2000-01...................................91
Study Team
Project Leader
Anushree Sinha
Consultants
P K Roy
Ramamani Sundar
Geeta Natesh
Research Team
Purna Chandra Parida
S K Dwivedi
Tarujyoti Buragohain
Poonam Munjal
Rakesh Kumar Srivastava
Kuntal Basu
Technical Support
Sadhana Singh
Acknowledgements
The team acknowledges the immense contribution made by Mr. Y.C.Nanda as an Advisor to this study.
The team especially thanks Ms. Marie -Luise Haberberger, Programme Director of the GTZ Rural
Finance Programme for her valuable insights. It places on record its appreciation of the cooperation
rendered by Mr. K. M. Rao and Mr. Krishan Jindal both from NABARD and Mr. R. V. Ramakrishna
from GTZ Rural Finance Programme. The NCAER team received important comments while
formulating their views from Mr. Prabhu Ghate, independent consultant, Mr. D. Narendranath, Program
Director, PRADAN and Mr. U. Ganesh Kamath, Chairman Gurgaon Gramin Bank.
The team is thankful to Dr. Rajesh Shukla for his valuable support in the project. We are also obliged to
Ms. Rupinder Kaur for her contribution in the study. The team places on record its sincere gratitude to
the District Development Managers (DDMs), NABARD of the selected districts of the six states, i.e.,
Assam (Cachar and Marigaon), Orissa (Kalahandi and Sambalpur), Uttar Pradesh (Azamgarh and
Moradabad), Maharashtra (Dhule and Solapur), Andhra Pradesh (Mahbubnagar and Srikakulum), and
Karnataka (Bellary and Shimoga) for rendering their support during the field surveys. The study team
would like to put on record their sincere gratitude to the 1200 plus SHGs and the 6000 odd households
for sparing their time and rendering cooperation with the survey team because without such commitment
the study would not have been possible. Last but not the least; we are also thankful to the innumerable
bank managers and the SHPI staff who provided support by interacting with us in the course of the
survey.
We are grateful to Mr. Udayan Namboodiri for providing editorial support painstakingly at a very short
notice. The team thanks Dr. Susmita Dasgupta, Economist, Joint Plant Committee for her technical
editing.
Executive Summary
The present study assesses the impact and sustainability of SHG bank linkage on the socio-economic
conditions of the individual members and their households in the pre-SHG and post-SHG scenarios. The
study was conducted for India as a whole covering six states (Andhra Pradesh, Karnataka, Maharashtra,
Orissa, Uttar Pradesh and Assam) from five different regions, namely the south, west, east, central and
north-east. The overall findings of the study suggest that SBLP has significantly improved the access to
financial services of the rural poor and had considerable positive impact on the socio-economic
conditions and the reduction of poverty of SHG members and their households. It has also reportedly
empowered women members substantially and contributed to increased self-confidence and positive
behavioural changes in the post-SHG period as compared to the pre-SHG period.
M AJOR FINDINGS
• The bulk of SHGs, i.e. 80 per cent of SHGs have only women members.
• Distribution of the SHG members by caste indicates that SCs/STs and OBCs account for 22.3 per
cent of total SHG members.
• The percentage of SHGs that only have SC/ST members is 21 per cent.
• More than 60 per cent of SHGs consist of members belonging to BPL families.
• Changes in net household income between pre-SHG and post-SHG registered a significant growth
per year at 6.1 per cent.
• Across different income activities of households, livestock registered highest growth at 11.2 per cent.
• The annual growth rate of per household consumption expenditure on food and non-food items
recorded 5.1 per cent and 5.4 percent respectively.
• Per household annual expenditure on education and health recorded 5.6 per cent and 5.5 per cent
growth respectively.
• Net change in the value of consumer durable assets per household was Rs. 4,329 between pre-SHG
and post-SHG periods and the annual growth of assets recorded a high growth between the two
periods at 9.9 per cent. The average level of savings (financial and physical savings) per households
registered 14.2 per cent annual growth between base level and 2006.
• Apart from high savings in SHGs’ own fund (99.6 per cent), the share of savings of SHG households
were 28.5 per cent in banks followed by 17.6 per cent in Life Insurance Corporation and 8.6 per cent
in post offices. On an average, per household borrowed an amount of Rs. 14,640 in the post-SHG
period compared to Rs. 5,384 in the pre-SHG situation. The average loan amount per household grew
at an annual rate of 20.5 per cent between the pre-SHG and the post-SHG periods.
• About 93 per cent of households reported that loans were taken in the post-SHG situation as
compared to that of 46.5 per cent during pre-SHG.
• On the issue of repayment of loan by SHG members, the findings show 96.4 per cent of households
reported regularity in repayments of loans.
• The share of households living below the poverty line reduced from 58.3 per cent in the
pre-SHG period to 33 per cent in the post-SHG situation. The average annual poverty reduction rate
was 10 per cent.
• About 92 per cent of households reported that the social empowerment of women had increased after
attaining membership in SHGs over a period of time.
• More than 70 per cent of women respondents reported improvements or even significant
improvements in their ability to face health related problems and financial crisis. About 63 per cent
of the women respondents reported such changes in the case of family disputes.
• More than 60 per cent of the households indicated that there is an increase in the ownership of
productive assets in post-SHG situation as compared pre-SHGs situation.
• In terms of control over money, about 21.3 per cent of the households reported a significant
improvement in control over money with respect to buying of consumer durable assets. 27 per cent
reported increased decision-making and control over expenditure on children’s education.
• The findings show 22.5 per cent of women SHG members in the households had taken decision in
the post-SHG period as compared to 9.1 per cent in the pre-SHG period with respect to children’s
education.
• Participation of public sphere show that 49.4 per cent of households had approached government
officials to solve problems in the post-SHG period as compared to 13.5 per cent in the pre-SHG
period.
• The findings of SHPI suggest that the average cost of promotion and maintenance per SHG incurred
by a bank SHPI is lower than that by non-bank SHPIs.
• To promote a SHG, 75.5 per cent of banks, 55.2 per cent of NGOs and 43.0 per cent of government
SHPIs reported to have received financial grants from NABARD and public sector banks.
• About 60 per cent of SHPIs visualized NABARD and other banks as the main source of support for
financing and promoting SHGs.
• The major problems in promoting new SHGs as reported by SHPIs were mainly illiteracy and
ignorance of people (48 per cent) and shortage of field staffs (28 per cent).
• Non-performing assets as a percentage of total loans outstanding to SHGs by all types of banks were
4.2 per cent in 2002, which declined to 1.2 per cent in 2006.
2
Chapter 1
Introduction
Microfinance programmes1 are known for their potential to generate income and employment and
alleviate poverty in developing countries. They are considered an important approach to poverty
alleviation and enhancement of living standards, particularly of women. Moreover, microfinance has
come to be regarded as a supplementary development paradigm, which widens the financial service
delivery system by linking the large rural population with formal financial institutions through SHGs. A
number of impact analyses studies carried out internationally have clearly established that microfinance
programmes contribute to the achievement of several aspects of the Millennium Development Goals
(MDGs)2 .
In India, NABARD was the first organization to notice the phenomenon of microfinance. Ever since that
time the spread of microfinance is steadily growing through the SHGs. However in 1996, NABARD
launched a nationwide pilot projects to link the SHGs to the banks. In 1998, NABARD tied up with GTZ
Rural Finance Programme to support the SBLP programme since then.
According to NABARD, a SHG consists of an ‘average size’ of 15 people from a homogeneous social or
economic class, all of who come together for addressing their common problems. The SHGs meet
regularly and save small sums of money. They rotate these small-pooled savings as loans within the
SHG. They maintain records of such financial transactions and slowly learn the basic aspects of financial
management. They then approach a bank and leverage their accumulated savings for higher loans, which
they then intermediate within the SHG. The groups are promoted either by banks or non - governmental
organisations (NGOs) and are credit linked to various models developed by banks.
In India, the SBLP has now been in operation for well over a decade. The NABARD report (2005-06)
suggests that the cumulative number of SHGs financed by banks till March 2006 was approximately
2.3 million across the country with a membership of 32.98 million persons. The report also points out
that more than 7.8 lakh new SHGs were formed during 2005 - 06 and the banks extended a total finance
of Rs. 620,109. Regarding the regional distribution of SHGs, the report suggests that more than half the
SHGs (12.1 lakh up to March 2006) are operating in south India, followed by 3.9 lakh in the east and
2.7 lakh in the central region. However, the north-east has only about 60,000 SHGs. The existing
literature on SHG- bank linkage programme reveals an overall picture of great promise on the socio-
economic well being of the members’ households. (Puhazhendi and Satyasai, 2000; and Puhazhendi
and Badatya, 2002).
Much has happened in this sector during the past decade and a number of studies have already evaluated
the outreach and the coverage of SHG programmes, of which we have reviewed some. The major
findings of the relevant reports are summarised below in a way that it becomes possible for us to compare
the earlier evaluations with the present study.
1.1 A R EVIEW OF EARLIER STUDIES

In this section, we present a review of a number of studies that has gone into the various socio-economic
issues related to SHGs in India - self-confidence, communication skills, positive behavioural changes,
savings, incomes and assets. As already mentioned, the programme has already reached about 23 lakh
SHGs till March 31, 2006 leading to greater outreach of financial services for the poor.
1
The term microfinance in this study means self help group bank linkage programme (SBLP).
2
Please see Hannover (2005) for more details on the impact of microfinance on MDG.
1
But has financial outreach made a significant impact on the economic, social and political life of the
poor? 3 . The existing literature suggests that the concept of forming SHGs and linking to banks would
raise incomes and broaden financial markets by principally providing credit, among other services, to
small scale entrepreneurs and thereby reducing poverty (Aghion & Morduch 2000). This would also lead
to women’s empowerment, since microfinance programmes have mostly targeted women as clients
(Littlefield, Morduch and Hashemi, 2003 and Cheston and Kuhn, 2002). India, which has about 70 per
cent of the total population living in rural areas-most of who are poor - the programme of microfinance in
terms of linking SHGs with banks holds a critical role in targetting poverty reduction and empowering
women socially, politically and economically. Since the concept of SHGs is more than 25 years old, a
number of studies have already examined the impact of microfinance on various aspects as noted above,
we make an effort here to review a few of them to highlight the pros and cons of this programme in India.
In India, the first survey on SHGs was undertaken by NABARD, along with other Indian members of the
Asian and Pacific Regional Agricultural Credit Association (APRACA). They conducted an action
research on linking SHGs with the concept of savings and credit in 1987 and published the outcome of
the research in the form of a survey report in 1989. The survey was carried out in the form of case studies
of 46 SHGs spread over 11 states and associated with 20 SHPIs. Of all the SHGs sampled, 17 had
savings collection and credit provision as a major activity. Another 13 were engaged in farming or farm-
based activities, five were into social forestry and afforestation, eight were engaged in non-farm activities
and three were occupied in diverse occupations.
Based on the case studies on savings and credit of 17 SHGs, the study reported that when a SHG was
promoted by a SHPI, it generally comprised only members of the weaker sections. In contrast, whenever
a SHG emerged on its own, it generally included members of the poor as well as not-so-poor households.
Many SHPIs, including Andhra Mahila Sabha (AMS), Kerala Gandhi Samarak Nidhi (KGSN), Nazareth
Ashram (NA) and MYRADA relied on the resourcefulness of the women and concentrated on forming
groups involving only women. It was easier to form women’s groups by providing them necessary health
care and other facilities and gradually involving them into other activities.
Most of the SHPIs were reported to promote more than one development activity in a given area. With
regard to savings activity, the study found that eight smaller SHGs tried to promote small or tiny savings.
As most members were illiterate and the amounts were very small - in the range of 10 to 25 paise - and
that too subject to uncertain periodicity, the concerned SHGs used the system of saving cards. In most
cases it was found that a member could withdraw her money only after Rs. 100 had been accumulated
and until then the money remained with the SHG and could be used for loans. Only a few of the SHGs
paid interest on individual member savings. With regard to loans taken by individual members from the
SHG group fund, the study reported that the loan amount ranged from Rs. 20 to Rs. 500. From the
accumulated profits, the needy members could take small emergency loans of up to Rs. 100 for a month
at an interest rate of 10 per cent per month. Interest rates on short-term loans ranged between 2 per cent
and 3 per cent per month. Loans taken for consumption purposes generally carried a higher interest rate
than that of loans for productive purposes. Relatively longer term loans in the sense that were repayable
in 10 months or more formed a very small proportion of the total loans. The interest rates for such loans
varied between 1 and 1.5 per cent per month, irrespective of the purpose for which it was being taken.
The first impact study of NABARD on SHG-bank linkage programme was carried out by Puhazhendhi
and Satyasai for NABARD in 2000. The study assessed the impact of microfinance on socio-economic 4
conditions of 560 household members from 223 SHGs located in 11 states; Rajasthan (Northern region),
Orissa and West Bengal (Eastern region), Madhya Pradesh and Utter Pradesh (Central region), Gujarat
and Maharashtra (Western region), and Andhra Pradesh, Karnataka and Tamil Nadu (Southern region).
The selection of SHG household members was based on multistage stratified random sampling method.
The number of SHGs was distributed across the surveyed states as per probability proportional to the
cumulative number of SHGs bank-linked as on March 31, 1998 - subject to a minimum of 10 SHGs from
3
Please refer to Kropp and Suran (2002) for details on the performance SHGs and SHPIs and role of NABARD in promoting
microfinance in India.
4
Socio-economic parameters include savings, borrowings, assets, levels of income, employment, consumption pattern etc, self-
confidence, communication skill, behavioural changes, family violence etc.
2
each state. The study included SHGs that had completed a minimum of one year of bank linkage as on
March 31, 1999.
The results of the above study suggest that out of the total sample, 84 per cent belonged to the
economically weaker sections, of which agricultural labourers comprised 32 per cent followed by 29 per
cent of small farmers and 23 per cent of marginal farmers. Regarding the status on education, it was
found that 24 per cent of household members of SHGs were illiterate and 26 per cent could only sign
their names. About 21 per cent had primary education, 23 per cent had secondary education and the rest
had higher secondary education or something close to it.. The study found homogeneity in terms of group
members living in the same village or having uniform socio-economic status. Homogeneity in standard
of living of SHG members constituted about 60 per cent, followed by proximity of residence reported by
29 per cent. With regard to meetings, about 65 per cent of the groups recorded more than 90 per cent of
attendance during group meetings. The study found that frequency of monthly meetings was highest
(54 per cent), followed by that of weekly meetings (23 per cent). Only about 8 per cent of the groups did
not have regular meetings at all.
When one assesses whether lifestyles have changed after getting into the SHG mould, it is found that
people who come together to form SHGs end up better off in social and economic terms. The average
value of assets per household (including consumer durables and livestock) was Rs. 6,843 during the pre-
SHG period, which increased by 72.3 per cent to Rs. 11,793 in the post-SHG period. Only 23 per cent of
the members had some savings during the pre-SHG period in contrast to almost all interviewed members
who saved during the post-SHG period. The average household saving was merely Rs. 460 during the
pre-SHG period, which increased manifold to Rs. 1,444.
Similarly, average borrowings rose from Rs. 4,282 during the pre-SHG period to Rs. 8,341 in the post-
SHG period. Most significantly, this increase was spent for income generating purposes by a large
number of households during the post-SHG period. It could be the major reason for the 33 per cent
increase in SHG households’ incomes, i.e. from Rs. 20,177 per annum before the formation of the
savings group to Rs. 26,889 per annum after formation of the group 5 . The share of households within the
SHG living below the poverty line was reduced from about 42 per cent to about 22 per cent in the post-
SHG situation. Thus, nearly half of all the sampled SHG members were seen as competent to earn higher
incomes and stay above the poverty line. The study also found that pre-SHG inequalities in the
distribution of income, savings and borrowings declined in the post-SHG period. With regard to
employment performance, the study established that employment increased by 17 per cent -from 320
person days to 375 person days per household between pre-SHG and post-SHG periods.
With regard to social aspects, the study found that becoming members of SHGs and associating in its
activities had significantly contributed to improving the self-confidence of the participating women. The
women admitted that their sense of self worth was enhanced. The members were also very confident of
confronting the various social evils and problems they faced in their everyday lives. Moreover, there was
a decline in family violence after members joined SHGs. In addition, the study stated that the composite
index of different socio-economic parameters6 increased from 40 to 65 from the pre-SHG to post-SHG
period. On the performance of different Model types, it was reported that linkage models involving
NGOs as either facilitator or financial intermediary, recorded better performance than others7 .
Another impact study on SHG Linkage Programme in India was carried out by Puhazhendi and Badatya
in 2002. The study assessed the impact on SHG members in three eastern states, i.e., Orissa, Jharkhand
and Chattisgarh. The analysis of the study was based on primary data collected from a sample of 115
members of 60 SHGs. A socio-economic impact was arrived at by comparing the pre and post SHG
situations of members. The overall findings of the study suggest that the SHG- bank linkage programme
5
To note, the net income of SHG households has been calculated using the reference year price of 1998.
6
By using the scoring technique a la Singh and Chand (2000), the study has calculated the composite socio-economic index by
taking into account the variables mentioned in footnote 4. For more details, please see page no-10 of the concerned study.
7
The study assessed the performance of three SHG-bank linkage models such as SHGs those are promoted and financed by
banks, SHGs financed by banks but promoted by NGOs and others and SHGs financed by banks using NGOs and others as
financial intermediaries.
3
had made a significant contribution to social and economic improvement of SHG members. About 83 per
cent of the sampled SHG members belonged to the SC/ST communities. The study reported frequency
and regularity in meetings among the members. It was found that 65 per cent of the time meetings were
held on a monthly basis, 18 per cent of the time there were fortnightly meetings, the weekly meetings
were held 8 percent of the time and only 1 per cent of SHGs had irregular meetings. Actually, NGO -
supported SHGs were more particular about holding monthly meetings (68 per cent) than the bank linked
groups (59 per cent). Older SHGs (formed 3 years or earlier) observed monthly meetings more regularly
than the new SHGs. However, 24 per cent of new SHGs had irregular meetings and 50 per cent of SHGs
had a fixed date and timing for meetings. About 88 per cent of SHGs had meetings at the residence of
members and 12 per cent had in a common place like Panchayat office, Anganwadi office, village
community halls, etc.
The study also reported an increase in household savings and assets for the SHG members after they
formed the group. Out of the total sample, 45 per cent reported an increase in assets after joining a SHG.
The mean annual savings of households increased two - fold after joining SHGs. About 23 per cent of
SHGs reported an increase in savings over a period of time. Higher savings were reported for bank linked
groups (36 per cent) than for NGO supported groups (16 per cent). The proportion of savings to total
resources was relatively higher for bank linked groups (35.7 per cent) than NGO supported groups (30.5
per cent). The average loan per member increased significantly by 123 per cent during the post-SHG
situation. Out of total loans received by SHG members, 72 per cent were used for income generating
purposes and 28 per cent for consumption. The size of loan was reported to be generally higher in the
case of NGO -promoted SHGs than those promoted by banks. The distribution of loan suggests that
about 78 per cent of members received loans, which indicates that loans were well distributed among
SHG members The percentage of members who availed loan was higher for bank linked groups (86 per
cent) as compared to NGO supported groups (72 per cent). The interest rate charged on loans out of
group savings was higher in the case of bank linked groups (2.68 per cent) than in the case of NGO
supported groups (2.50 per cent). About 60 per cent of the SHGs had borrowed from banks more than
once, which indicates that SHGs increased their financial intermediation activities with the help of
external borrowings. On loan repayment, the study reported that 83.3 per cent of the groups had promptly
repaid the loans and only 16.7 per cent repaid late. The ‘in time’ loan repayment performance was
reportedly higher for bank linked groups (90.8 per cent) than for NGO-facilitated groups (82.1 per cent).
The net incomes of SHG member households increased by 23 per cent, from Rs. 12,319 to Rs. 15,814
after forming the SHG. With regard to employment, the study found that employment per household
increased by 34 per cent between the pre-SHG and post-SHG situations. The share of BPL households
was reduced from a high of 88 per cent to about 75 per cent in the SHG after its group formation and
activities. Thus, about 15 per cent of the sample SHG member households were able to raise their income
levels sufficiently to cross the poverty line. There was also a remarkable improvement in the social
empowerment of SHG members in terms of self-confidence, as reflected in their decision-making
abilities and communication skills. Sustainability of SHGs was well established in terms of increased
value of assets and savings rate, better access to institutional loans, higher rate of repayment of loans,
elimination of informal sources and impressive social empowerment. The study reported that members in
80 per cent of SHGs received some form of training. About 97 per cent formed by NGOs received
training programmes, while only 50 per of those formed by banks got such inputs. When asked about the
usefulness of training programmes, 73 per cent of the members said they were well served by them.
The study on SHGs conducted by EDA Rural System and APMAS (2006) on the SHG-Bank-linkage
programme in India, addressed a wide range of issues including cases of dropouts from SHGs and
internal politics, and issues of social harmony and social justice, community actions, book-keepings,
equity, defaults and recoveries and sustainability of SHGs. The study was based on a primary survey of
214 SHGs in 108 villages in 9 districts of four states, two southern (Andhra Pradesh and Karnataka) and
two northern (Orissa and Rajasthan). The sample of the study was based on older women’s groups,
mostly bank-linked (with a bank loan) before March 2000. The study found that 51 per cent of SHG
members were poor, 55 per cent belonged to the SC/ST category and 66 per cent of SHGs had members
of a single caste. It also found that 74 per cent of SHG members had no schooling at all, only 15 per cent
4
of SHG members had schooling till the primary level and 11 per cent had only adult education to become
‘neo-literate’. Average monthly savings were Rs. 45 and cumulative member savings were Rs. 2,400.
The modest rate of interest charged on loans to members was 2 per cent per month. Around 77 per cent of
the groups had borrowed from banks or federations at least once; the average number of borrowings was
2.5 times. As regard longevity, it was found that the proportion of defunct and broken groups was only
7 per cent, which is low considering that the average group age was 6 years.
In case of dropout, 10 per cent of members had dropped out of the functioning SHGs of above sample,
with over a third of them for reasons of migrations, death or illness. The dropout rate from the very poor
was 11 per cent and was less for those who were financially better off. Members who dropped out
usually obtained their savings amount without interest on savings. Only 10 per cent of dropouts were
defaulters who did not get back their savings amount at all.
With regard to social responsibility, the study reported that at least one member in a SHG ran a local
political office and one in every five SHGs had a woman member who was elected either as a ward
member at the village level or a ‘Sarpanch’ at the block level. The proportion of active representatives
was surprisingly higher in the northern region than in the south. On SHGs based on caste, the study
reported that two-thirds of total sample were single caste groups and one third of SHGs had members
from different castes. However, in some places with SHPI initiative, SHGs started bridging differences
through mixed caste membership or through joint actions across groups of different castes. The study
found that though SHGs supported their members in their fight for social justice, they did not deal with
such issues regularly. Only 12 per cent of SHGs had taken up issues like domestic and sexual violence,
bigamy (a punishable crime), dowry deaths, or had prevented child marriage or supported the remarriage
of separated women. The study also did not find any significant involvement of members in community
participation. Only 30 per cent of SHGs in the sample were involved in community actions. Of the total
SHG members involved in community actions, 43 per cent were in community services (related to water
supply, education, health care, veterinary care, and building and maintenance of village roads), 31 per
cent in campaigning against alcoholism, and 12 per cent for protecting natural resources and acts of
charity work for non - members.
On issues related to sustainability and financial aspects of SHGs, the study found that the quality of
records/note books was good only in 15 per cent of groups, moderate in 39 per cent and weak in 40 per
cent8 . The government-promoted groups were weakest in record keeping and were half as likely as NGO
or bank-promoted groups to have well or moderately maintained records. In matters of distribution of
loan amount, the number of non-borrowers was quite small -5 per cent in the southern region and 8 per
cent in the north. Overall, the data reflect relatively low standard deviation around the mean for the
number of loans and amount borrowed by members. Group leaders generally have better access to loans.
The study evaluated the repayment of loans by members to SHGs on monthly basis. It was found that 24
per cent of borrowers were more than three months behind schedule on repayments, of whom 5 per cent
were more than 12 months behind schedule. Default by 12 months was significantly higher for the very
poor and 8-9 per cent for poor borrowers, compared to borderline cases at 4 per cent and for non-poor at
1 per cent. Data on portfolio at risk (PAR) for 155 SHGs show that 45 per cent of such groups (but 66 per
cent in Andhra Pradesh) had defaulted for more than a year, amounting to 17 per cent of the portfolio
(but one-third in Andhra Pradesh).
A study by Meissner (2006) of the NABARD-GTZ Rural Finance Program examined the viability
of SHG lending in a regional rural bank branch, the Alwar Bharatpur Anchalik Gramin Bank (ABAGB),
in Alwar district of Rajasthan. The analysis of the study was based on survey data collected in August
and October 2005 for 2004 -05. Overall, the study found that the SHG lending operations of the branch
were viable and sustainable. Moreover, the study found that the branch accumulated more profits from
SHG lending (3.9 per cent of loan outstanding) than that from other (normal) lending operations (3.1 per
cent). The operation cost 9 of the branch on lending to SHGs was found to be higher in case of Model
Type 1 (directly financed by bank) -Rs. 7,113) -than for Model Type 2 (SHPI as intermediary),
8
Records were not accessible in 6% of sample groups.
9
Social mobilizing costs incurred by the branch are called operational costs in the profit and loss statement.
5
Rs. 6,808. With regard to the staff cost (expenses for staff involved in forming and promoting new
SHGs) in a particular year (i.e., 2004–05), the study reported that staff cost was higher but risk of loan
loss (1.5 per cent and 0.4 per cent of loan outstanding) was less. In the case of normal lending operations,
this was just the opposite -low staff cost and high risk of loan loss (0.9 per cent and 1.5 per cent of loan
outstanding). However, the study mentioned that the staff cost calculated over several years (6 years) was
found to be less than that for one year (1.3 per cent as compared to 1.5 per cent under one year), but was
still more time and cost-intensive than normal lending (0.9 per cent). The importance for the viability of
SHG lending operations lies in the low risk costs of SHG lending in comparison to normal transactions.
Another study carried out by Ramakrishna (2006) of the NABARD GTZ Rural Finance Program
assessed the SHG bank-linkage programme from the survey data that was collected from 27 public sector
banks, 192 regional rural banks and 114 cooperative credit institutions in Tamil Nadu, West Bengal,
Karnataka, Chhatisgarh and Maharashtra. The analysis of the study was based on information from the
banks as on March 31, 2005. The study reported that commercial banks had a major share of the market
at 61 per cent of total number of active SHG members and 68 per cent of the share in the number of loans
outstanding to these SHGs. As compared to 61 per cent market share of commercial banks, the RRBs’
market share had 30 per cent and cooperative banks had very small market share of 9 per cent in the
SHG-bank linkage programme. The cooperative banks in Tamil Nadu, Karnataka and West Bengal,
however, had an 82 per cent of share in the overall share of the cooperative banks.
The study has defined savings outreach in terms of opening of savings account and amount of money
deposited by SHGs in their savings account. In the case of the former, the study found that commercial
banks had major share (52 per cent) followed by RRBs (34 per cent) and cooperative banks (14 per cent).
On the share of banks in savings of SHGs it was reported that RRBs had the major share of 49 per cent
followed by commercial banks (44 per cent) and cooperative banks (7 per cent). The share of SHG loans
in overall loans and advances was 0.36 per cent in the case of commercial banks, 6 per cent for RRBs and
0.81 per cent for cooperative banks. The time required for a bank to sanction a loan was found to be
relatively fast, with an average of only 11 days for the first loan and nine days for subsequent loans. On
repayments of loans, 14 of the 27 (more than 50 per cent) commercial banks had an on-time recovery
of more than 90 per cent, which compares favourably with the lower recovery rates for their normal
lending activities. For banks like Oriental Bank of Commerce, State Bank of Bikaner and Jaipur,
India Bank, Indian Overseas Bank and State Bank of Travancore, the recovery rate was more than even
95 per cent. With regard to NPAs, the study reported that overall NPA of SHG-bank linkage programme
is 1.36 per cent. The NPAs of SBLP under commercial banks were found to be especially low, with only
0.93 per cent, less than the overall NPA ratio of 2.65 per cent reported for their normal lending activities.
The NPAs of SBLP under RRBs and cooperative banks were 2.32 and 2.14 per cent and compared also
very well with their NPA ratio of 8.70 and 18.84 per cent for normal lending activities respectively.
A study by MYRADA on women’s empowerment of SHG members commenced in 2002 for the
southern region’s states. In all, 13 SHGs were surveyed and it covered four professionally managed
NGOs (DHAN, RASS, CHASS and MYRADA), one from each state. The “empowerment” of a SHG
member is defined in terms of her influence over the family’s economic resources and her participation in
its economic decision-making. In addition, the influence made by her on her own development as an
individual, power over local polity and participation in socio-political decision-making and influence
over other decisions pertaining to general welfare of the family are considered. In order to assess the
above aspects of empowerment, the study had undertaken four Model types of instruments such as
structured interview schedule for SHG household members, in-depth interview schedule for SHG leaders,
NGO-leaders and bank officials, peer group evaluations for skills and abilities evaluation of SHG
members and in-meeting observations for evaluating the moderation skills of SHG leaders in a live
meeting situation. The study found that most of the SHG members were young (26-35 years of age)
married women in both type of SHGs (less than one year to more than three years old). About 45 per cent
of SHG members were illiterate in the first category of SHGs and 47 per cent in the second group of
SHG. In terms of occupation, 53 per cent of respondents were non - earning members in the first group
and in the second, 66 per cent of the respondents were either the chief wage earners or contributors to the
family earnings. While agriculture (55 per cent) and allied business (33 per cent) were the main
6
occupations for the SHG members in the former group, agricultural labour (41 per cent) and
manufacturing (29 per cent) were the chief occupations for the latter group.
On sources of information about the concept of SHG, its activities and the benefit of joining it,
34.4 per cent of SHG members in the old group and 41.9 per cent in the new group reported that other
SHGs in the locality was the main source that inspired them to join the SHG. With regard to impact of
the SHG, 89 per cent of interviewees in the old group agreed that their financial position had changed for
the better as against only 71 per cent in the new groups. More importantly, more members in the older
groups reported a positive influence on their share in the family income than in the new ones. The
average share of earning SHG members in the family income was also higher in the older SHGs.
The impact of the SHG on the member’s level of comfort and confidence was reflected more in the older
groups than that of new. For example, in case of dealing with people (outsiders / strangers etc.),
75 per cent of members of old SHGs reported change in confidence as compared to 72.6 per cent for new
groups. The study also found better awareness with regard to health and hygiene. About family planning
methods, 53.9 per cent reported that change of knowledge was evident in the case of the old group
against 35.5 per cent for new group. Older groups also reported better awareness in washing hands before
eating/cooking, child’s vaccination, using toilets at home and adding fruits and vegetables in the diet of
pregnant women.
The contribution of SHG members in their respective household income was found higher for older
groups as compared to the younger ones. The share of SHG members in household income between 50
and 100 per cent was found 17.3 per cent for older groups against 6.8 per cent of younger groups. On a
question pertaining to an important indicator -for instance, whether SHG members are practically
empowered in managing the banking operations on their own -it was reported that more members in the
older group (70.8 per cent) were aware about it as compared to 60 per cent in the younger group. With
regard to power over her own development, the study found that more respondents in the older groups
reported that their control over their own lives had improved and that they had a greater role in making
decisions about themselves than before. As for the participation of SHG members in the local polity is
concerned, the study found the situation was largely the same as before. Nearly 63 per cent of new
groups and 49 per cent members of old groups reported that they had never had any role in village-level
decision making. Only 10 per cent and 16 per cent members of these two groups revealed that they had
participated more than before in the local polity.
On group formation, the SHG leader stated that the focus should be on the women who need it the most.
Therefore, members should be selected from the poorest of the poor households in the village. Another
important aspect of group formation is stability. Because of migration, particularly of unmarried women
who move after marriage to another village, it was suggested that group leaders focus only on married
women for group formation. Apart from stability, the group leaders reported that SHG groups need the
goodwill of the villagers, control and discipline and financial stability. The study also found that four
NGOs have been playing an important role in different activities under the SHG programme. For
example, RASS has been focusing on awareness of health and hygiene issues and DHAN on regular
documentation.
A study by Chakrabarti (2004) reassessed the microfinance scenario in India and the impact of
microfinance programme on poverty eradication. It also discussed the role of banking sector in
outreaching and financial sustainability. Based on the secondary data available, it found that the focus of
banking, particularly of RRBs over the period, had shifted from outreach to financial profitability. To
overcome the heavy losses incurred till the mid-1990s, regional banks started investing more in
government bonds (narrow banking) on the recommendation of the Narsimhan Committee (set up in
1991). The locational distribution of RRBs has also undergone a shift from rural to semi-urban and urban
areas. In order to keep some balance between outreach and profitability, the study suggested that
microfinance provides an important way to banking sector to operate in the rural areas.
The study acknowledged the role of NGOs in promoting microfinance programmes. Though over half of
the SHGs are formed by government agencies, NGOs continue to play a critical role in promoting and
7
financing SHGs. Presently, well over 500 NGO-MFIs are actively engaged in microfinance activities
across the country. In the policy perspective, the study stated that microfinance programmes have
improved in various respects significantly. However, the scope for further improvement is unlimited.
NABARD intends to cover 100 million of the poor through microfinance (about one-third) by 2008. The
coverage by March 31, 2006 touched about 32.98 million families. This would mean the programme has
reached over 150 million people, most of them poor.
Nair (2005) examined the potential of SHG federations in providing sustainability to SHGs through
financial and organisational support. Specifically, the study examined issues like (i) variety of services
provided by the federations and their benefits to SHGs, (ii) financial variability of SHGs and SHG
federations and cost of promoting them, (iii) identification of constraints of promoting SHG federations,
and, (iv) policy recommendations to strengthen SHG federations. In terms of services provided by SHG
federations and thrift cooperation to SHGs, the study found that the most common service is savings and
loan facilities. Savings include general savings and particular savings for education, housing, marriages,
and festivals. Loans include both small and large loans at costs lower than those available in the market.
Besides these services, the SHG federations helped SHGs to internalise all operational costs and reduce
the cost of promoting new SHGs. Further, SHG federations provide all essential services to SHGs with
minimum costs. These services were often provided by the promoting agencies in the initial stage of
SHG development. They include auditing, capacity building like training the SHG members, leaders and
SHG accountants, and forming a common forum for reviewing the performance of SHGs. The
federations also help in resolving conflicts among SHG members, between SHGs and between SHGs and
banks. Another important aspect is that they assist in reducing the transaction costs of SHG-bank linkage
programme by grouping 10-20 accounts into one single SHG account. The federations help in reduction
of loan default-both within SHGs and from SHGs to banks. They provide micro-insurance services and
social services such as education, health and livestock support. The federations employ their own
resources in promoting new SHGs while minimising the promotional costs as compared to other agencies
like the banks and NGOs. They also help in empowering the SHG members.
A study by Prabhu Ghate (2006) highlighted the findings of recent studies on the SBLP-microfinance
institutions model in India and in other countries. This report is important in the context of the
unprecedented rise of the microfinance sector in India during the past decade and the anxiety of different
players (like the government, NGOs, financial institutions and others) to know the pros and cons. The
study reviewed the findings of three important recent studies, Prakash and others (2005), APMAS (2005)
and EDA Rural System and APMAS (2006). All these studies revealed that SBLP is growing at a higher
rate ahead of the capacity of SHPIs to ensure equity. The study notes that groups formed by government
agencies tend to be the weakest and reducing their share relative to those promoted by NGOs and even
banks could enhance overall programme quality. The study also reports that the key to a group’s
prospects of achieving equity, longevity and reduction of drop out rates lies in improving its
bookkeeping, capacity and the formation of clusters and federation. Further, this enables banks to
appraise and monitor loan portfolios on which their repayment rate depends in the long run. Apart from
the review of previous studies, this one highlights the issues based on the data reported in the annual
reports of NABARD. The NABARD data revealed that the rate of growth of loans to new groups
declined sharply in 2006 as compared to previous years. A similar trend is also observed for repeat loans
to existing SHGs. The SBLP is especially prominent in the three southern states of Andhra Pradesh,
Tamil Nadu and Karnataka. For some years now, NABARD has supported activities aiming at reducing
the regional imbalances. The share of new loans for the four southern states (Andhra Pradesh,
Tamil Nadu, Karnataka and Maharashtra) came down from 49 per cent in 2005 to 44 per cent in 2006.
Thirteen priority states identified by NABARD account for 70 per cent of India’s poor and these states
have been provided special attention to increase the coverage of SBLP programme. In this regard, the
number of groups linked in these states increased by 68 per cent in 2005 and 51 per cent in 2006 as
against an increase of 49 per cent in 2005 at the all-India level. In policy recommendations, moreover,
the study states that there is a need for slowing down of coverage and increasing the focus on quality to
make SBLP successful. In this regard, it suggests that only indicative targets for the undeserved states
and regions within them be encouraged. Policies could also be developed to ensure better bookkeepings,
effective training programmes and helping to devise viable incentives for participation in the system.
8
Apart from the SBLP model discussed above, the study also assesses the progress of the MFI model in
India covering various issues like portfolio quality, efficiency, sustainability, delivery of other financial
services like micro insurance including health insurance and issues related to commercial financing. On
the progress of MFI model, the report reviews two recent studies by Sa-Dhan (2005) and by MIX (2006).
The study found that like the SBLP model, the MFI model is also growing fast. It assures good portfolio
quality and is efficient too. Most importantly, large and medium MFIs have attained operational
sustainability.
Moyle, Dollard and Biswas (2006) assessed the economic and personal empowerment of 100 women
aged between 16 and 65 years, participating in SHGs from two villages (Delwara and Shishvi) in
Rajasthan. Based on qualitative data, the study found that after joining SHGs, the members achieved both
economic and personal empowerment in terms of collective efficiency, pro-active attitudes, self-esteem
and self efficacy. In case of personal empowerment, 99 per cent of women believed that ‘self-help group
members are always able to discuss problems that affect everyone’, and 91 per cent of women believed
that ‘if a problem arises that people cannot solve by themselves, the group as a whole will be able to
solve it’. Similar results were found in case of perceived capability of group members. Eighty one per
cent of members believed that ‘I have confidence that our group members can perform the tasks that are
assigned to them’ and 85 per cent believed ‘our SHG has the ability to tackle any issue affecting the
group’. In terms of perceived efficacy to solve problems as a group, 60 per cent believed that ‘as
members of this group, we are able to tackle the most difficult situations because we are all committed to
the same collective goals’. In case of proactive attitude, 63 per cent of the women believed exactly true
that ‘I feel responsible for my own life’ and 93 per cent believed that they were ‘able to choose their own
actions’. Ninety-seven per cent said that ‘they focus their efforts on things that they can control’. In terms
of ‘self esteem’, 91 per cent of women strongly felt that they had good qualities, and 71 per cent strongly
agreed that they had a positive attitude towards themselves. Besides these positive results the study also
found negative appraisals of pressure, challenges and stress for most of the SHG members.
From the discussion of the above studies, we find that while several studies (Puhazhendi and Satyasai,
2000; Puhazhendi and Badatya, 2002; and EDA Rural System and APMAS, 2006) discussed mainly
various socio-economic parameters of SHG members related to the situation during pre-SHG and post-
SHG periods, other studies (Nair, 2005; Moyle, Dollar and Biswas, 2006 and Chakrabarti, 2004) assessed
more specific type of issues such as role of SHG federations in providing sustainability of SHGs,
economic and personal empowerment of women and role of microfinance in poverty eradication. The
broad findings of first group of studies suggest:
• A high percentage of SHGs are meeting regularly and mostly at monthly intervals.
• The average value of assets of SHG member households increased after joining a SHG.
• Household savings increased significantly during the post-SHG period as compared to the pre-SHG
period.
• More percentage of household members reported that they use higher proportion of loan amount for
income generating purposes.
• The repayment of loans by SHGs household members was reported to be much higher during post-
SHG period compared to pre-SHG period.
• The average annual net income of SHG member households increased significantly after joining a
SHG and considerable contributions were made for poverty reduction.
• Employment per household increased during the post-SHG period as compared to the pre-SHG
period.
• There was remarkable improvement in social empowerment of SHG members in terms of self-
confidence, decision-making and better communication.
The discussion of the second group of studies suggests that SHG federations play a critical role in
improving the sustainability of SHGs through financial and organisational support. Besides the
promotion of general savings of SHGs and special savings for education, housing, marriage and festivals
9
etc. they also provide loans to SHGs on low rate of interest. As far as organisational support is
concerned, federations employ their own resources in promoting new SHGs and were able to reduce the
cost of promotion of SHGs or promotional costs as compared to other agencies such as banks and NGOs.
A specific study on women empowerment (Moyle, Dollard and Biswas, 2006) found that a high share of
women SHG members reported significant development of their self-confidence and work efficiency.
The study also reported that most of the women experience pressure, challenges and stress due to extra
work and more responsibilities.
The present study differs from earlier studies in many aspects. First, it covers a wide range of socio-
economic impact issues on the level of SHG members and not only at the level of a SHG. Moreover, it
includes also the organisational and financial viability and sustainability aspects. Second, it covers long
span data on credit link to get reliable information on the SBLP. Last but not the least, the analysis of the
study is based on a large sample size with bank-linked group and covers a wide cross section from almost
all regions of India.
1.2 OBJECTIVES OF THE STUDY
The objective of this study is to assess the impact of the SBLP at two levels. First, the impact of
microfinance on SHGs and, second, the socio-economic impact on the members of the SHGs and the
households to which the SHG members belong is to be assessed. Only such SHGs are to be included in
the study which have already completed at least four years of bank linkage.
The specific objectives of the study are:

• Assessment of the impact due to participation in SHG activities on economic activities, household
welfare and social empowerment of members.
• Comparative assessment of the quality of the groups promoted by different self help promotion
institutions (SHPI) including the changes over time in group members participation and behaviours,
the quantity and quality of financial services and their sustainability.
• Identification/ assessment of the extent of capacity building/ training needs of SHG members for
undertaking income generating activities.
• Preparation of strategies for further strengthening of group cohesion within SHGs.
• Study/assessment of the factors affecting the sustainability of SHGs and identification of constraints,
if any.
10
Chapter 2
Sample Design and Methodology
Given the comprehensive nature of the impact assessment of the SHG-bank linkage programme, the
study is based on information obtained from a primary sample survey conducted at three different levels:
the SHGs as a group, the individual members and the various functionaries associated with the
programme of bank-linkage. The indicators to assess the impact covered a wide range of socio-economic
indicators of the individual SHG members and their households. The three SHG-bank linkage model
types as discussed in Chapter 1 were selected in consultation with NABARD and the NABARD -GTZ
Rural Finance Programme
The study extended over all five regions of the country (Table 2.1). It covered six states, viz, Andhra
Pradesh and Karnataka (southern region), Maharashtra (western region), Orissa (eastern region) Uttar
Pradesh (central region) and Assam (north-eastern region). In each of the states, two districts have been
selected taking into account the development of the SBLP against their overall socio-economic profile.
The classification of the districts into ‘developed’ and ‘less developed’ with respect to data on
development indices was made on the basis of data on the number of SHGs, extent of bank branch
network in rural areas and indicators of economic development at the district level (e.g., poverty ratio).
Table 2.1: Regions, States and Districts included in the Study

Region State Code State Name District Code District Name Number of SHG
(2002)
North Eastern 1 Assam 1 Cachar 86
North Eastern 1 Assam 2 Marigaon 365
Eastern 2 Orissa 3 Kalahandi 2812
Eastern 2 Orissa 4 Sambalpur 356
Central 3 Uttar Pradesh 5 Azamgarh 762
Central 3 Uttar Pradesh 6 Moradabad 1601
Western 4 Maharashtra 7 Dhule 398
Western 4 Maharashtra 8 Solapur 438
Southern 5 Andhra Pradesh 9 Mahbubnagar 11653
Southern 5 Andhra Pradesh 10 Srikakulam 19722
Southern 6 Karnataka 11 Bellary 3406
Southern 6 Karnataka 12 Shimoga 2109
It was decided to select 80 functioning SHGs with bank linkage going back to 2002 from each district as
on March 2007. Thus, it was decided to select a sample of 160 SHGs from two districts of each State and
a total sample of 960 SHGs from six states to study the impact at the all-India level. It was also decided
to select five SHG members from each of the sample SHGs to study the impact at the member household
level. A total sample of 4,800 households was selected to assess the impact of bank-linkage of SHGs at
the household level. It should be noted that these six states together cover 77 per cent of the bank-linked
SHGs in India as on March 31,st 2002.
2.1 M ETHODOLOGY
A multistage sample design was adopted for selecting the sample SHGs and sample SHG members to be
interviewed in the survey. The methodology of the impact study of the SBLP on SHG members at the
household level is based on assessment of the detailed information obtained from a primary sample
survey of major model types of SHGs, their household members and the various functionaries associated
with the programme, e.g. banks and other SHPIs in the rural areas of the six states.
In order to assess the impact of the SBLP, the “before and after” approach was primarily followed. A
structured questionnaire targeting SHGs was completed using the focus group discussion method, which
11
facilitated the collection of qualitative data from the group, as well as quantitative data from the records
maintained by SHGs. Feedback from the functionaries of banks and SHPIs associated with the SHGs
facilitated cross-checking of data. Relevant information from the banks and SHPIs was collected on the
performance of the selected SHGs on loans taken and disbursed and repayment performance of loans.
Further, their responses on problems faced by the SHGs and their suggestions on improvement of the
SHGs’ performance were gathered through discussions. Relevant data were collected through pre-
structured questionnaires, covering the qualitative and quantitative aspects of SHGs and their members
before and after bank linkage. The consistency of data collected from primary sources was ascertained by
using different styles of questions to capture the same information. Also, the validity of the information
was crosschecked through NGOs to get reliable information on the pre-SHG situation. The field survey
was conducted over March and April 2007. The reference year for the study was January- December
2006. All the economic parameters for pre and post-SHG membership were measured at reference year
prices.
2.1.1 Selection of Districts
As mentioned above, the districts of a State were classified in two categories i.e., less developed and
developed, mainly on the basis of the District Infrastructure Index and district-wise poverty ratio. It was
found that the district infrastructure index and poverty ratio were negatively correlated, indicating that
higher the infrastructure index, lower the poverty ratio.
One district was selected from each of the two groups, with the Probability Proportional to Size (PPS)
method, size being the number of bank-linked SHGs in the district as on March 2002. Care was also
taken to select districts in which there were at le ast 100 SHGs as on March 2002. In the case of Assam,
only two districts had more than 100 bank-linked SHGs as on March 2002 and both were underdeveloped
by the criteria mentioned above. Therefore, one district was selected from the two underdeveloped
districts in Assam and while the other one was selected that was the nearest to the average State index of
development. The latter district also had more than 80 SHGs. The district was thus selected with the
intention to represent a developed district of Assam. The list of selected districts in each State, along with
cumulative number of SHGs as on 2002 and data on the infrastructure index and poverty ratio, is given in
Table 2.2.
Table 2.2: Development and poverty indicators of districts included in the study
State District Number of SHGs in Infrastructure index Poverty ratio (ii)
2002 2000 (i)
Assam Cachar 86 97.39 33.7
Marigaon 365 89.13 48.6
Orissa Kalahandi 2812 95.6 74.9
Sambalpur 356 115.39 38.8
Uttar Pradesh Ajamgarh 762 97.83 36.2
Moradabad 1601 109.5 18.2
Maharashtra Dhule 398 89.64 40
Sholapur 438 216.49 19.7
Andhra Pradesh Mahbubnagar 11653 65.5 26.4
Srikakulam 19722 107.92 10.6
Karnataka Bellary 3406 98.28 43.3
Shimoga 2109 107.62 7.8
Sources: (i) District & stat e-wise Infrastructure Index: Profile of District, CMIE, 2000.
(ii) District wise Poverty ratio: District level deprivation in the New Millennium, Bibek Debroy & Laveesh Bhandari, 2003, Konark
Publishers Private Limited.
2.1.2 Selection of SHGs
One of the objectives of the survey was to assess the impact of the SBLP on the quality and sustainability
of SHGs by the three different Model types:
12
1. SHGs formed and financed by banks (Model type 1).

2. SHGs formed by formal agencies other than banks, NGOs and others but directly financed by banks
(Model type 2).
3. SHGs financed by banks using NGOs and other agencies as financial intermediaries
(Model type 3).
Thus, as far as practicable, the list of SHGs obtained with the help of NABARD officials in each district
was further classified by the above three Model types. The number of SHGs to be selected was
distributed as a proportion to the total in each Model type group. However, in a few states like
Maharashtra and Uttar Pradesh, the Model type 3 of SBLP could not be obtained. In any large-scale
survey where data are to be collected from a number of units, in this case SHGs and households, a few
non-responses are inevitable due to either respondents’ absence or non-cooperation. Taking cue from the
earlier studies, an additional 15 per cent of SHGs was selected in order to cover up for the inactive or
defunct SHGs as well as non-response cases, if any. Thus, 92 SHGs were selected in each district to
cover a sample of 80 bank-linked SHGs. Although an effort was made to select SHGs by type in
proportion to the total number of SHGs, the proportional allocation could not be adhered to because of
the following reasons, viz.
• Non-functioning of SHGs selected in March 2007.
• SHGs converting into Swarnjayanti Gram Swarozgar Yojana (SGSY) groups.
The selected SHGs, which were found to be non-functioning and/or converted to SGSY groups, were
again substituted by other SHGs depending on the availability of the SHGs from the list obtained in the
field itself. Care was taken to select SHGs from different tehsils and villages within a district to obtain a
widespread sample of SHGs from the entire district. The conversion of bank-linked SHGs into SGSY-
nurtured groups was found in most of the states, but as per our sample this happened most frequently in
Uttar Pradesh. The state -wise number of tehsils and villages covered in the selected districts, together
with the effective number of bank-linked SHGs selected for the survey, is given in Table 2.3
Table 2.3: District-wise tehsils and villages by State

State District Number of Number of SHGs bank- Effective
tehsils covered villages covered linked as in number of
in 2002 March 2002 Bank- linked
SHGs selected
Assam Cachar 8 53 86 77
Marigaon 4 34 365 78
Orissa Kalahandi 5 65 2812 80
Sambalpur 6 80 356 78
Uttar Pradesh Ajamgarh 12 60 762 80
Moradabad 7 78 1601 77
Maharashtra Dhule 4 51 398 80
Sholapur 7 58 438 87
Andhra Pradesh Mahbubnagar 6 29 11653 72
Srikakulam 4 23 19722 80
Karnataka Bellary 4 26 3406 78
Shimoga 5 49 2109 94
Grand Total 72 606 45710 961
2.1.3 Selection of SHG Members
In the final stage, a complete list of members in the selected SHGs was obtained from the officials of the
SHGs and five SHG members per SHG was selected at random. In case of non-availability of the
selected SHG members, other SHG members were called from the list and the required information was
13
collected by canvassing the questionnaire. The total number of effective sample SHG members covered
from bank-linked SHGs by Model type in each State is given in Table 2.4.
Table 2.4: Model type -wise distribution of selected SHG members in different states
State All Models
Model type 1 Model type 2 Model type 3 Total
Assam 361 340 75 776
Orissa 315 225 250 790
Uttar Pradesh 260 527 - 787
Maharashtra 184 649 - 833
Andhra Pradesh 10 636 110 756
Karnataka 249 385 215 849
Grand Total 1379 2762 650 4791
2.2 CASE S TUDIES
Case studies of SHGs as a group, as well as their individual members, were conducted to supplement the
findings of the impact survey. Case studies have been successfully used as a research tool by social
scientists to investigate a wide range of developmental issues. They may be defined as a detailed analysis
or an intensive study of a person or group and are usually carried out by conducting an in-depth interview
of a person or a group. In this study, a few case studies of individual members of SHGs, as well as SHGs
as a group itself were carried out to determine what factors led to their success or failure. Some of these
case studies may also be seen as exemplary models for replication. Case studies were expected to
highlight unique cases as well, to provide answers, support and provide insights on the data collected
through the survey.
In all, 24 case studies were conducted i.e., four from each State covering the two selected districts, in
each of the states. The cases were identified by the field investigators during the field survey and were
later interviewed in-depth by senior researchers of the study team. The case studies are broadly divided
into the success stories and the not-so-successful ones. The former includes both successful stories of
SHGs as a group venturing into group activities as well as those SHGs where individual members have
successful income generating activities. In addition, there are stories of individual members who have
been extremely successful in their own business ventures. There are women who have shown leadership
qualities and demonstrated good examples of women’s empowerment. A few cases of not-so-successful
SHGs have also been studied to understand the problems and obstacles faced by them. A case study of an
extremely successful NGO, which has promoted more than 500 SHGs, has also been included in this
report to understand the dynamics of an SHPI in promoting SHGs successfully.
14
Chapter 3
SHPIs and Banks
Most of the Self-Help Promoting Institutions (SHPIs) in India have come into existence due to the urge
to help the underprivileged people of society. Their key objective is to help small and marginal farmers,
landless agricultural labourers, poor artisans, women and people drawn from the schedule castes and
tribes of the rural areas. Moreover, the goal of many of the SHPIs is to provide various financialservices,
empower people socially and support them in accessing various government programmes and incentives.
In order to solve the economic and social problems of the poor and particularly that of women in the
villages, SHPIs have chosen to support microfinance programmes as a key instrument of empowerment
and alleviation of poverty. The basic hypothesis is that microfinance programmes, were to form SHGs
and link the groups to the banks, they would provide a vital development mechanism for improving the
standards of living of rural women. Overall, such microfinance programmes are expected to contribute to
an increase in income, consumption and production activities of the SHG members and facilitate their
access to adequate and sustainable financial services. Moreover, they open a window for the banking
sector to expand their credit outreach by providing financial services to a large section of the rural
population.
SHPIs, whether NGOs, banks or State governments, have been playing a vital role in promoting,
nurturing and sustaining the SHG programmes under SBLP. One of the results of the study reveals that a
substantial proportion of SHGs still feel that they are dependent on the services of SHPIs even after four
years of functioning (see Table A3.1 in Appe ndix A3). The latest NABARD report (2005-06) suggests
that there are 44,000 branches of 547 banks (47 commercial banks, 158 RRBs and 342 co-operative
banks) and 4,896 NGOs participating in SBLP. The role of NGOs in promoting and sustaining SBLP is
generally assessed as very critical (Chakrabarti, 2004). The existing literature suggests that the cost of
promotion per SHG incurred by an NGO is less than that of a bank (Harper, et al, 1998) often due to
locational advantages. The major problems reportedly faced by SHPIs while promoting SHGs at the
grass root level include conflicts with moneylenders and the village bureaucracy. Moreover, the SHPIs
have been facing problems like lack of finance and training support, shortage of field staff for promoting
and monitoring the SHGs, and lack of awareness/knowledge among local people in understanding the
concept of SHGs.
In this chapter, various issues related to SHPIs10 and banks are addressed. With regard to SHPIs, the
issues include promotional and maintenance cost of SHPIs per SHG, types of support received by SHPIs
and the sources of support. Further, the adequacy of various types of support and problems related to
promotion, bank linkage and monitoring of SHGs is discussed. As far as the banks are concerned, the
assessment includes examining the percentage of SHGs repaying bank loans, non-performing assets as
percentage to total loan outstanding of banks, and percentage of SHG loan recovery . All these issues are
discussed using the information collected on SHPIs and banks in the field in the six surveyed states.
3.1 SHPIS : COST OF PROMOTION, M AINTENANCE AND INTENSITY OF S UPPORT R ECEIVED

As discussed earlier, the analysis of SHPI is based on primary survey data collected from relevant
institutions in the six states. Most of the issues on SHPIs mentioned earlier are analysed by using
qualitative responses received from various SHPIs. A few issues on promotional/linkage cost of SHPIs
are also discussed by using quantitative data collected from respondents. The number of SHPIs involved
in the survey in the six states is given below in Table 3.1.
10
SHPIs include banks, NGOs, and state governments. In SHPI section, we have considered bank as a promoter, but in bank
section, it is considered as a financier.
15
Table 3.1: Number of SHPIs by State

Assam Orissa Uttar Maharashtra Andhra Karnataka Total
Pradesh Pradesh
Bank 1 16 0 12 0 11 40
NGO 2 11 9 5 19 8 54
Government 0 7 0 0 19 0 26
Total 3 34 9 17 38 19 120
The issue of promotional cost per SHG appears to be one of the prominent issues in the literature on the
programme. A study by Friends of Women’s World Banking (2002) reported that between Rs. 1,350 and
Rs. 16,000 was needed for an SHPI to promote a SHG from set-up to bank linkage stage. Another study
(Harper, et al 1998) reported that a typical NGO had to spend Rs. 8,520 to develop a SHG for bank
linkage, whereas the corresponding cost for a bank to do so was Rs. 11,000. The results of the present
study show that NGOs incur more cost than State governments and banks for promoting a SHG up to the
bank linkage stage. The present study finds that the average promotional cost 11 of a SHG was Rs. 4,045
for NGOs in 2004 as compared to Rs. 3,562 for governments and Rs. 2,440 for banks (Table 3.2). A
similar trend for all three SHPI categories is observed in 2005 and 2006.
Table 3.2: Average cost of promotion per SHG incurred by different SHPI 12
(In Rupees)
Type of SHPI 2004 2005 2006
Bank 2440 2957 3575
NGO 4045 8512 8701
Government 3562 3595 4010
The issue of maintenance cost of SHGs incurred by different SHPIs is as important as that of promotional
cost. A SHPI incurred maintenance costs in different heads such as training, book-keeping, social
mobilisation, etc. for the stability and sustainability of SHGs. The present study finds that the
maintenance cost incurred by a SHPI for a SHG is often less than the funds deployed for promoting it.
Further, bank SHPIs incurred less maintenance costs than non-bank SHPIs. While a bank spent Rs. 964
per SHG towards maintenance, a non-bank SHPI incurred Rs. 1, 123 per SHG for the same in 2005.
In order to promote and monitor new SHGs, the SHPIs require various kinds of help from NABARD and
other banks, national and international donors and State governments. The SHPIs were mainly supported
by financial grants/aids or training programmes. In Table 3.3, the responses of different SHPIs are
summarised. A high proportion of SHPIs have received financial grants from NABARD and other banks
followed by training and other support from the same source. About 30 per cent of SHPIs expressed the
view that they had received financ ial grants from NABARD or from other banks. Generally, it is
observed that NABARD is an important source of funding and the driving force for SHPIs in ensuring
that all the stakeholders involved in the programme are adequately trained and supported to make SBLP
successful.
Table 3.3: Percentage distribution of SHPIs by type of support

Type of support Banks NGOs Government
(% share) (% share) (% share)
Financial grant from NABARD and banks 75.5 55.2 43.2
Financial grant from others 20.0 25.2 28.2
Training and other support from NABARD and banks 65.5 55.2 40.2
Training and other support from others 5.0 8.0 5.2
Note: Others include government, private and international agencies.
11
Promotional costs include cost incurred by SHPI on social mobilisation, training to animators and SHG members,
documentation and linking up SHGs with bank.
12
The average cost of promotion per SHG is calculated from total cost incurred on promoting SHGs divided by total number of
SHGs promoted.
16
The support received by SHPIs from various donors can be observed in Figure 3.1 below. It shows that
about 60 per cent of SHPIs expressed the view that NABARD and banks were the main sources of
support for financing and promoting SHGs. About 28 per cent of SHPIs declared that State governments
had provided various kind of support to them. A very low share of SHPIs stated that they had received
help from private organisations/institutions, international donors and from other sources for supporting
their activities.
Figure 3.1: SHPIs by types of supporting agencies (%)
International Others
agencies 5%
4%
Private
organizations/inst
itutions
3%
Government
28% NABARD/banks
60%
When the problems faced by SHPIs, were examined, it was observed that many of them (48 per cent)
reported that illiteracy and people’s ignorance regarding the benefits of SHGs were the major problems in
promoting new SHGs (see Figure 3.2). Shortage of field staff was also another problem faced by SHPIs,
and 28 per cent of them reported this constraint. About 24 per cent of them indicated that lack of
financial support was one of the major problems for them to promote new SHGs.
Figure 3.2 Problems relating to promotion of SHGs (%)
Financial support
24%
Illiteracy/ignoran
Shortage of field ce of people
staffs 48%
28%
SHPIs are not only facing problems in promoting new SHGs, but also in linking new SHGs with banks.
To understand the problems related to this, the perceptions of different SHPIs were assessed. The
responses on SHPIs’ perception are illustrated in Figure 3.3. A high proportion of SHPIs (45 per cent)
revealed that lack of interest among SHG members was responsible for failure or dela y of bank linkage.
The banks too had their own problems (lack of cooperation from bank managers, irregular visits of bank
managers to village, frequent postponement of date for providing loans, etc.,) in giving linkage to SHGs
(41 per cent), mostly when NGOs were involved. Another problem of bank linkage was the lack of
guarantee or the inability of the poor to provide marketable collateral for loans. About 14 per cent of
SHPIs expressed this view.
17
Figure 3.3: Problems relating to bank linkage of SHGs (%)

Problems
Lack of associated
interest with banks
among SHG (41%)
members
(45%)
Lack of
guarantee
(14%)
Lack of guarantee due to non-availability of collaterals
Though many SHPIs had received financial grants from NABARD/banks for promoting and financing
new SHGs, about 32 per cent of them reported the unavailability of sufficie nt funds as a problem to
monitor the new SHGs (Figure 3.4). Besides, 30 per cent indicated shortage of field staff and a further 19
per cent reported that insufficient time were the other problems they had experienced when monitoring
SHGs. Illiteracy and ignorance were worries for 14 per cent of SHPIs for monitoring of new SHGs. With
regard to other problems (6 per cent), the SHPIs reported factors such as: no fixed time of meeting of
SHGs, paltry attendance and improper bookkeeping.
Figure 3.4: Problems relating to Monitoring of SHGs (%)
Illiteracy and Others

ignorance (6%)
(14%)
Shortage of field
staffs
(30%)
Insufficient time Financial

(19%) support
(32%)
3.2 BANKS : AN ASSESSMENT OF LOAN S ERVICES TO SHGS
Quantitative and qualitative responses of banks on various issues are discussed based on the primary data
collected from 177 banks in the different states. Table 3.4 shows the distribution of banks by states that
were identified for this study:
Table 3.4: State -wise number of Banks

States No. of banks
Assam 5
Orissa 25
Uttar Pradesh 51
Maharashtra 49
Andhra Pradesh 16
Karnataka 31
Total 177
18
The banks were asked about the average number of days required for approving a loan, the average
distance of SHGs from credit linkage banks, loan amount per SHG member, loan amount presently
outstanding, contribution of bank in total loans to SHGs, non-performing assets, and other related issues.
The analysis of these financial components is reported below. Detailed information on SHGs’
outstanding loans, arrears are provided in Chapter 4.
Table 3.5 Lending activities of banks

States Average number of Percentage Three major sources of bank loan Bank
days required for distribution of bank loan (%
approving loan loans across states Commercial Regional Cooperative of total
Banks Rural Banks loan to
Banks SHGs)
Assam 11 6.8 57.2 42.2 0.6 99.6
Orissa 5 11.4 38.6 57.9 3.5 93.2
Uttar Pradesh 4 10.2 6.7 92.0 1.3 97.7
Maharashtra 9 18.3 75.4 16.1 8.5 97.3
Andhra Pradesh 4 24.4 65.3 34.4 0.3 97.3
Karnataka 18 28.8 54.9 32.1 13.0 90.2
All states 9 100.0 54.6 39.5 6.0 94.9
Table 3.5 shows that banks were the major source of external loan for SHGs in all the states. It reveals
that on an average, a bank takes nine days to approve a loan for setting up a SHG. But this varies
significantly across states. In Karnataka the loan approval time often goes up to 18 days. The least length
of time, i.e. four days, was reported from cases in Andhra Pradesh and Uttar Pradesh. An important
reason could be the distance of a SHG from the credit-offering bank. In the case of Karnataka, it was
found that the average distance of SHGs from the credit- offering banks was 9 Km, which was higher
than the distances in other states. Many reasons were cited by the banks for taking longer (higher number
of days) than others. Further, this was also higher than the overall average of 6 Km of all states (see
Table A3.2). With regards to bank loans disbursed in each State, Karnataka and Andhra Pradesh ranked
among the top two, with shares of 28.8 per cent and 24.4 per cent respectively. Of the remaining states,
Assam experienced low loan disbursement with only 6.8 per cent, followed by Orissa with 11.4 per cent.
The reason for lower loan disbursements in Assam and Orissa could be the higher risks involved in these
states for the repayments of loans.
Another key financial indicator to measure the performance of SHGs and SBLP is accumulation of non-
performing assets (NPAs). The results computed for all three categories of banks discussed earlier are
reported in Table 3.6. The all-state average indicates that NPAs, as a percentage of total loans
outstanding to SHGs by all banks, declined from 4.2 per cent in 2002 to 1.2 per cent in 2006. As
compared to the all-state average, Uttar Pradesh and Assam reported higher and other states lower NPA
in all the three years.
Table 3.6: Non-performing assets as percentage of total loan outstanding to SHGs*

States 2002 2005 2006
Assam na 3.8 3.3
Orissa 2.3 1.2 1.0
Uttar Pradesh 9.1 3.2 2.1
Maharashtra 3.4 0.7 0.2
Karnataka 3.0 1.4 1.8
All state average 4.2 1.5 1.2
Note: *Data on NPAs was not received from Andhra Pradesh.
Information was collected from 177 banks for the purpose of gauging the performance of SHGs in terms
of loan recovery. With regard to timely recovery of loans from SHGs, the banks were classified into four
categories of groups: 96 to 100 per cent loan recovery; 75 to 95 per cent loan recovery; 50 to 74 per cent
19
loan recovery; and less than 50 per cent loan recovery. The overall results in Table 3.7 shows that
Andhra Pradesh, Maharashtra and Orissa performed better in terms of loan recovery than the other
states13 .
Table 3.7 Distribution of banks reporting percentage of loan recovery from SHGs
Distribution of banks by percentage of loan recovery in 2006
<50% 50-74% 75-95% 96-100%
Assam 40.0 40.0 0.0 20.0
Orissa 4.0 12.0 24.0 60.0
Uttar Pradesh 12.5 31.3 25.0 31.2
Maharashtra 2.2 10.9 21.7 65.2
Andhra Pradesh 0.0 0.0 6.3 93.7
Karnataka 3.4 37.9 17.2 41.5
13
A detailed information on this issue from household survey is provided in chapter 4 and 5.
20
Chapter 4
Functioning of SHGs under Bank Linkage Programme
The purpose of forming SHGs is to make financial services available to those who are otherwise likely to
be bypassed by the formal banking system. This reduces the dependence of the members of the group
thus formed on moneylenders who generally charge exorbitant rates of interest. The SHGs provide the
members, in particular women, with a launch pad to gain confidence, skills and power to promote their
interests. By making credit available, it provides opportunities to people belonging to the weaker sections
to start income generating activities and empower themselves by improving their economic status.
In 1992, NABARD launched the SBLP on a pilot basis to link 500 SHGs to financial banks with the aim
of improving access to financial services for about one-third of the rural poor by 2008 (NABARD and
GTZ, 2005). The programme has expanded since then, and as on 31st March 2006 as many as 2,238,565
SHGs are credit-linked and the programme has enabled an estimated number of 32.98 million poor
households in the country to gain access to mic rofinance (NABARD, 2005-06) from the formal banking
system. Over the years, three different models of credit linkage have evolved. Up to March 2006, 20 per
cent of the total number of SHGs financed was in the category of Model type 1, in which SHGs are
formed by the members and financed by banks. In Model type 2, SHGs are formed by NGOs and other
formal agencies other than banks, but they are directly financed by banks. This model is most popular, as
74 per cent of the total number of SHGs financed up to March 2006 belonged to this category. In the
third type of Model banks finance the SHGs by using NGOs and other agencies as financial
intermediaries. The share of cumulative number of SHGs linked under this model is relatively small at
6 per cent.
In this chapter, an attempt has been made to study the functioning of the SHGs under SBLP and examine
their performance since the linkage happened. The study covers 961 bank-linked SHGs spread over the
six sample states. State -wise details about the number of sample SHGs selected for the study are
presented in Table 4.1.
Table 4.1: State -wise number of sample SHGs by Model type

State Model type 1 Model type 2 Model type 3 All Models
Assam 72 68 15 155
Orissa 63 45 50 158
Uttar Pradesh 52 105 0 157
Maharashtra 37 130 0 167
Karnataka 52 77 43 172
All India 278 553 130 961
4.1 PROFILE OF THE SAMPLE SHGS
The model-wise profile of the sample SHGs is provided in Table 4.2 and state-wise profile is presented
in Table 4.2a. It can be seen from the table 4.2 that the average number of members per SHG in the
sample is 13. Among the six states covered in the sample, the average number of members in the sample
SHGs range between 11 (Uttar Pradesh) and 15 (Karnataka). This fits in well with the ideal size of a
SHG, which is between 10 and 20 members, the reason being that in a bigger group, members cannot
participate actively.
21
Table 4.2: Profile of sample SHGs –Model Type wise

Model type 1 Model type 2 Model type 3 All Models
Average number of members 11.8 13.0 13.8 13.0
Average number of years of Bank Linkage 5.3 5.4 5.5 5.4
Percentage distribution of SHGs by no. of years of bank linkage
• 3-5 years 60.8 59.5 55.4 59.3
• >5 years 39.2 40.5 44.6 40.7
• Total 100.0 100.0 100.0 100.0
Average distance from bank (kms) 6.3 5.1 5.6 5.5
Average distance from nearest town (kms) 13.4 11.7 19.8 13.4
SHG networking with others into a
29.9 24.2 17.7 25.0
federation (%)
Table 4.2a: Profile of sample SHGs: State-wise

Assam Orissa Uttar Maharashtra Andhra Karnataka
Pradesh Pradesh
Average number of members 12.0 12.0 11.0 13.0 13.0 15.0
Average number of years of bank 4.8 5.4 5.1 5.6 5.8 5.3
linkage
Percentage distribution of SHGs by no. of years of bank linkage
• 3-5 years 76.1 60.8 65.0 43.7 42.1 68.0
• >5 years 23.9 39.2 35.0 56.3 57.9 32.0
• Total 100.0 100.0 100.0 100.0 100.0 100.0
Average distance from bank (Km) 4.8 5.6 3.3 6.2 5.0 8.5
Average distance from nearest town 14.3 20.3 9.0 11.2 NA 11.6
(Kms)
SHG networking with others into a 25.8 31.0 12.7 33.5 30.3 16.9
federation (%)
Note: NA = Not available
Of the 961 SHGs in the sample, about 41 per cent have been in existence for more than five years, while
the remaining 59 per cent have obtained bank linkage in the last 3-5 years. State-wise, a higher
percentage of SHGs (around 57 per cent) in Maharashtra and Andhra Pradesh have been linked for more
than five years. In the remaining four states, the majority of SHGs have been bank-linked for only 3-5
years.
The distance of the SHGs from banks as well as the nearest towns are important considerations from the
point of view of the development of the SHGs, as the income generating schemes opted by the SHG
and/or its members depend on the availability of the market. In the present sample, while the average
distance of the SHGs from the bank is around 5.5 Km, the same is nearly 13 Km from the nearest town.
SHGs in Uttar Pradesh are at the least distant (3.3 Km) from the banks while those in Karnataka are the
farthest (8.5 Km). Similarly, the SHGs in Uttar Pradesh are on an average only about 9 Km away from
the nearest town while those in Orissa are nearly 20 Km away.
SHGs get a number of benefits by networking with other SHGs and becoming part of a federation. In the
present sample, one fourth of the SHGs are members of a federation.
4.1.1 Distribution of sample SHGs by characteristics of its members
The percentage distribution of sample SHGs by various socio-economic characteristics of the members
for the all-India level is presented in Table 4.3 below and state-wise details are provided in Appendix
A4.1.
22
Table 4.3: Distribution of SHGs by characteristics of members

Model Model Model All Models
type 1 type 2 type 3
Average age of members (years) 33.7 35.9 33.1 34.9
Distribution of SHGs by sex of members (%)
• All female 67.2 90.0 97.7 80.5
• All male 20.9 6.2 1.5 9.3
• Both 11.9 3.8 0.8 10.2
Total 100.0 100.0 100.0 100.0
Distribution of SHGs by caste of members (%)
• Only SC/ST 18.5 23.3 20.0 21.5
• Only OBC 34.6 36.4 37.0 36.0
• SC/ST & OBC 25.9 21.9 17.0 22.3
• SC/ST, OBC and General 21.0 18.4 26.0 20.2
Total 100.0 100.0 100.0 100.0
Distribution of SHGs by literacy level of members (%)
• All Illiterate 6.5 7.6 7.7 7.3
• Upto 50% Literate 34.9 45.0 50.0 42.8
• > 50% Literate 58.6 47.4 42.3 49.9
Total 100.0 100.0 100.0 100.0
Distribution of SHGs by economic status of members (%)
• All/majority BPL 60.4 61.8 63.8 61.7
• All/ majority APL 34.9 35.6 29.2 34.5
• Equal no. of APL & BPL 4.7 2.5 6.9 3.7
Total 100.0 100.0 100.0 100.0
Distribution of members by occupation (%)
• Farmers 28.3 28.0 22.4 27.3
• Artisans 2.6 2.9 5.6 3.2
• Traders 11.8 12.8 15.2 12.9
• Agro processors 2.9 0.9 1.1 1.4
• Agriculture labour 27.4 27.0 28.3 27.3
• Non agriculture labour 20.0 23.4 19.9 22.0
• Others 7.1 5.1 7.5 6.0
Total 100.0 100.0 100.0 100.0
The members of the sample SHGs were reported to be young, with an average age of about 34 years. The
bulk of SHGs, i.e. 80.5 per cent of them, are all female. 9.3 per cent of the SHGs are all male, while the
remaining is mixed. Though mixed groups are generally not preferred, out of a fear that women may not
be able to effectively participate in group activity, the survey results show that such SHGs with members
from both genders exist. In Orissa, Andhra Pradesh, Maharashtra and Karnataka, nearly all SHGs, had
only female members. Assam had the highest share (24 per cent) of SHGs with only male members
followed by Uttar Pradesh (20 per cent). In these two states and especially in Uttar Pradesh (25 per cent
of the SHGs), mixed groups are also common. There could be various reasons for the high share of all-
women SHGs in the states of Andhra Pradesh, Maharashtra, Orissa and Karnataka and the reasons could
be different in different states. It could be either due to higher status of women as a result of higher
literacy level of women or may be in the very low income belts women are the principal breadwinners,
hence have greater freedom as compared to their counterparts in Uttar Pradesh and Assam. This point is
also confirmed by a case study conducted in Assam where the idea of forming a SHG with both men and
women was considered, but ultimately rejected in favour of an all-male SHG by the less liberal section of
the community (refer Chapter 6.2).
In an ideal SHG, the members should have similar social and financial backgrounds. This contributes not
just to easier interaction of members, but also to smoother communication, facilitating equal opportunity
of self-expression for members. As far as the distribution of the SHG members by caste is concerned, the
percentage of SHGs with members from the SC/ST category and OBCs was 22.3 per cent. The
percentage of SHGs with only SC/ST members was slightly higher (29.4 per cent). Looking at the state-
23
wise distribution, it is seen that Uttar Pradesh had the highest percentage of SHGs with only SC/ST
members, while Andhra Pradesh had the lowest.
A very high percentage of sample SHGs in Andhra Pradesh had only OBC members. Assam,
Maharashtra and Karnataka states that had a higher percentage of SHGs consisting of mixed category of
backward classes as well as general members (for state-wise details refer Appendix A 4.1).
In order to study the percentage distribution of SHGs by literacy level of the members of the groups, the
SHGs were divided into three categories: (a) those in which all the members of the group are illiterate,
(b) those in which less than 50 per cent of the members were literate and (c) those in which more than 50
per cent of the members were literate. It can be seen that a very small percentage of SHGs (7 per cent)
fall in category (a). While a higher percentage of SHGs (47 per cent) fell into the second category, nearly
half (50 per cent) of the SHGs were in the third category, that is with more than half the members in each
group being literate (i.e., in category c). Only a small variation in literacy percentages was noticed among
the members of the SHGs. Of these, there appeared to be a fair mount of uniformity in the literacy levels
among the SHGs that belonged to Model 1. The literacy levels varied more widely among the SHGs of
the Model 2 and Model 3 types. The literacy levels, however, varied sharply across the states. Assam had
a high percentage (82 per cent) of SHGs with more than half the members in each group being literate,
and Andhra Pradesh had the least (16 per cent of SHGs) in category (c) i.e. the category that comprised
the most literate members. For the interpretation of the above figures, it should be kept in mind that here
literate members include even those persons who have had no formal education, but have learnt to sign
and read.
The justification of bank linkage is to provide financial services, especially to poor people who are
unable to get bank credit on their own and therefore, dependant on informal sources including
moneylenders to meet their urgent needs. In the present sample, a little more than 60 per cent of the
sample SHGs had their entire, or at least the majority of membership from below the poverty line. About
35 per cent of such SHGs have the bulk of their membership drawn from non-poor families. In the case
studies conducted in Maharashtra, we did come across an all-male group made up of the non-poor but
who had no assets, the kind that find it impossible to raise individual bank loans. Though they were
educated, they were not competent enough to get jobs. So they formed an SHG, got the bank linkage and
entered the dairy business. Now, they are assured of regular incomes. The state-wise distribution shows
that Karnataka and Orissa had a higher percentage of SHGs with all/majority BPL families, while Uttar
Pradesh had the highest percentage (more than 60 per cent) of SHGs with all/majority non-poor families.
The data reflects that slightly more than 50 per cent of SHG members were farmers (27 per cent) and
agricultural labourers and about 22 per cent were non-agricultural labourers. About 13 per cent of the
SHG members were traders. A very small share of the sample was made up of artisans and agricultural
processors. This distribution of members by occupation was similar across all three types of models with
only slight variations. The picture of occupational spread was similar across the states, where higher
percentages of the SHG members were involved in farming or were employed as agricultural labour or
non-agricultural labour. It was only in Assam and Andhra Pradesh that a more sizeable percentage of the
members were involved in trading activities.
4.2 GOVERNANCE ASPECTS OF SHGS
For a SHG to function properly and become sustainable, it is important to have a good leader in whom all
the members can repose trust. Hence, the way in which the leader is elected assumes great importance.
Table 4.4 below provides the method of electing the leader.
24
Table 4.4: Governance aspects of SHGs

Model type Model type Model type All Models
1 2 3
System of Selecting leaders
• Election 9.4 9.1 2.3 8.2
• Nomination 88.4 85.7 96.2 87.9
• Any other 2.2 5.3 1.5 3.9
Total 100.0 100.0 100.0 100.0
SHGs reporting change in leadership since 41.9 38.8 45.7 36.2
establishment (%)
Frequency of change in leadership
• 6 months 2.6 2.8 5.1 3.1
• 1 year 36.2 45.3 50.8 43.4
• 2 years 47.4 40.6 28.8 40.8
• > 2 years 13.8 11.3 15.3 12.7
Total 100.0 100.0 100.0 100.0
It is seen that in more than 80 per cent of the SHGs, the leader was nominated and elections were held in
only about 10 per cent of cases. Nomination seems to be the practice, particularly among Model type 3
SHGs. While it was 100 per cent nomination for the SHGs in the sample in Maharashtra, SHGs in Uttar
Pradesh had the highest percentage of elected leaders (37 per cent) (Appendix A4.2). During the field
study it was observed that in many of the SHGs the members mostly wanted and preferred the highest
educated among them to be the leader since most of the members were illiterate. Further, it could be also
in the interest of the NGOs to appoint a capable as well as literate member of the group as the leader so
that the running of the SHG is smooth. The concern for smoothness in day to day operations could be an
important reason for the high percentage of leaders chosen by nominations in the SHGs.
For an SHG to run smoothly, it is important that there should be change in le adership so that one person
does not hold the reins for ever and also to see that more members get experience in leadership functions.
However, it often happens that change of leadership does not augur well for the smooth running of the
SHGs. The general trend recorded with more than 80 per cent of SHGs is to change the leader once a
year or once in two years.
4.3 G ENERAL M ANAGEMENT PRACTICES
The number of meetings per month held by SHGs, attendance of members and participation of members
in the group meetings are indicators of the well functioning of the SHGs. These are generally looked into
by banks before deciding on extending credit facilities to the SHGs. Ideally, the meetings should be held
weekly or at least monthly, so that members get together frequently, establish bonds and understand each
others’ difficulties. Attending meetings and participating in the discussions, and having knowledge about
the rules and regulations of the SHG also imply that the members are empowered to take part in the
decision-making processes. Table 4.5 (for state-level details see Appendix A4.3) looks into the
management practices of the sample SHGs.
The average number of meetings conducted per SHG has worked out to 1.6 per month, indicating that on
an average at le ast the SHG met once every month. This also indicates that some SHGs were conducting
meetings fortnightly or even weekly. The percentage of members attending the meetings was fairly high
at 90 per cent. And nearly 80 per cent of the members have reportedly been participating in the group
discussions. About 90 per cent of the SHGs have written down rules and regulations and as high as 96
per cent of them have reported accessibility of the rules and regulations to all the members. These rules
and regulations have rarely (54 per cent) or never (28 per cent) been updated.
25
Table 4.5: General management practices

No. of meetings conducted per month 1.7 1.5 1.4 1.6
Member attending meetings (%) 86.8 91.5 92.5 90.3
Members participating in the discussions (%) 73.7 83.2 80.5 80.3
SHGs having rules and regulation in written form (%) 85.3 92.8 92.3 90.5
Frequency of updation of rules & regulation
• Frequently 14.0 18.3 25.9 18.0
• Rarely 61.8 46.9 70.7 53.7
• Never 24.3 34.7 3.4 28.3
SHGs reporting accessibility of rules & regulation to all 93.1 98.5 93.7 96.3
members (%)
Level of awareness about objectives of the group among members (%)
• High 37.0 49.9 25.4 42.8
• Moderate 59.1 45.7 67.7 52.6
• Very little/Not at all 4.0 4.4 6.9 4.6
Maintenance of Minutes Register
• A literate member 75.2 61.7 70.8 66.8
• Representative of NGO 4.0 12.1 19.2 10.7
• Any person employed by SHG 6.1 19.0 3.1 13.1
• Any other 6.1 5.6 4.6 5.6
• None 8.6 1.6 2.3 3.7
Frequency of updating minutes by
• Regularly 76.9 74.6 89.0 77.2
• Occasionally 14.5 9.8 5.9 10.5
• Rarely 8.5 15.6 5.1 12.3
Total 100.0 100.0 100.0 100.0
Around 43 per cent of the sample SHGs has reported awareness about the objectives of the
SHG movement among their members. There are wide variations in the level of awareness across various
models. While only 25 per cent of SHGs belonging to Model 3 reported high level of awareness about
why they were in the group, 50 per cent of members of the Model 2 category reported high level of
awareness about the objectives of the group. The percentage of SHGs reporting very little or no
awareness about the objectives among their members is only around 5 per cent. Maintenance of the
minutes register was done by a literate member of the SHG, the percentage was fairly high at 67 across
the model types; in Model type 1, the minutes register is maintained by the literate member in 75 per cent
of the cases. The regularity in updating of the books was reported by 82.3 per cent of the SHGs across the
model types.
State-wise analysis reveals that in Assam, the minutes register was generally maintained by a literate
member of the SHG. In Orissa and Karnataka it was often a representative of the NGO who carried out
this function. In Uttar Pradesh and Andhra Pradesh an employee of the SHG was seen doing it. A
remarkably high proportion of SHGs updated the minutes register regularly in Karnataka and Andhra
Pradesh, while the percentage in Uttar Pradesh was relatively low. (For the state-wise details refer to
Appendix A4.3).
Table 4.5a compares the change in general management practices of the sample SHGS under the study
since bank linkage (for state -wise details refer to Appendix A4.3a).
26
Table 4.5a: Change in the general management practices

At time of linkage In 2006
Number of meetings per month 1.63 1.57
Members attending (%) 88.90 89.11
Members participating in discussions (%) 74.7 78.7
System of selecting the leader (%)
• Election 9.8 8.2
• Nomination 77.7 79.2
• Others 12.5 12.5
Reporting accessibility of rules and regulations to all members (%) 94.5 96.3
Awareness about rules and regulation among members (%)
• High 31.7 45.5
• Moderate 46.1 50.1
• Very Little/Not at all 22.2 4.4
Awareness about objectives of the group among members (%)
• High 29.7 42.8
• Moderate 46.5 52.6
• Very Little/Not at all 23.9 4.6
Total 100.0 100.0
There was very little or no change in the average number of meetings held per month. Almost identical
was the experience with members attending group meetings or participating in group discussions. The
system of selecting the group leader in the two kinds of SHGs since bank linkage has also remained
largely unchanged. However, awareness about the rules and regulations of the SHGs as well as about the
objectives of the group has increased considerably among the members over the years.
4.4 FINANCIAL M ANAGEMENT PRACTICES
As the SHGs are involved in monetary transactions, they have to maintain and update a number of
documents. This is an integral part of the successful running of a SHG. Apart from maintaining books of
accounts, SHGs also maintain passbooks showing SHG transactions as well as separate passbooks for all
members. Table 4.6 looks into the financial management practices observed by the SHGs in the sample
(Appendix A4.4 provides state -level details).
Table 4.6: Financial management practices

(%)
Maintenance of book of accounts of SHG by
• any person employed by SHG 10.1 14.6 4.6 12.0
• Any other 6.1 6.0 2.3 5.5
• None 2.9 9.2 0.0 6.1
Maintenance of SHG passbook
• Any other 15.5 20.3 6.2 17.0
• None 2.2 0.5 0.0 0.9
Maintenance of passbook of members by
• Any other 5.8 6.9 2.3 5.9
• None 4.0 1.4 0.0 1.9
27

(%)
Frequency of updating book of accounts
• Regularly 81.7 85.7 90.4 85.2
• Occasionally 6.7 6.2 4.8 6.2
• Rarely 11.5 8.1 4.8 8.6
Frequency of updating members' passbook
• Regularly 79.9 78.7 88.8 80.5
• Occasionally 8.8 9.4 6.4 8.8
• Rarely 11.2 11.8 4.8 10.7
Frequency of updating passbook of SHG
• Regularly 77.1 81.9 94.2 82.4
• Occasionally 12.3 9.4 1.7 9.1
• Rarely 10.6 8.7 4.2 8.5
SHGs taking admission/membership fee (%) 19.7 25.4 75.0 28.9
Total 100.0 100.0 100.0 100.0
The books of accounts of SHGs were, to a considerable extent, maintained by literate members in the
group. This percentage was highest for Model type 1 SHGs (77 percent), and was generally high for
SHGs in Model type 2 (65 per cent). The same is true with regard to maintenance of the SHG passbooks
as well as passbooks of individual members of the SHGs. It is also seen that in about 20 per cent or more
of Model type 3 SHGs, a representative of the NGO was responsible for maintenance of accounts and
passbooks. As Model type 3 SHGs are formed and financed through NGOs, it follows that frequently a
representative is appointed to look after financial management. A small percentage of SHGs did not
maintain the SHG passbook (0.9 per cent) and passbooks of individual members (1.9 per cent). Generally
a high percentage of the SHGs (>80 per cent) were seen to update the book of accounts, SHG passbooks
and the passbooks of members regularly.
Nearly 29 per cent of the SHGs charged membership or admission fees. It was observed that almost
three-fourths of the Model type 3 SHGs charged admission fees while only around 20 per cent of Model
type 1 and 25 per cent of Model type 2 SHGs charged such fees.
Maintenance of the financial books in the states under consideration followed the same pattern as the
minutes register. While it was common to see a literate member maintained the book of accounts and
members’ passbooks in Assam, groups in Orissa and Karnataka tended to leave this work to a
representative of the NGO. In Andhra Pradesh, a significant number of SHGs employed people for this
work.
A significant percentage of SHGs in Uttar Pradesh (33 per cent of the sample) did not maintain the books
of accounts of SHGs. In Orissa, nearly 2.5 per cent of SHGs did not maintain the SHG passbooks, and
another 7 per cent of SHGs did not maintain the members’ passbooks. This indicates that the financial
management of these SHGs needs attention.
4.5 SAVING ACTIVITIES OF SHG M EMBERS
One of the basic principles of SHGs is that even the very poor may save small amounts, and that the
additional incentives of getting bank loans at lower rates of interest, particularly among those who are
otherwise ineligible for getting bank loans, would inculcate and strengthen the habit of saving. The
members of SHGs save a fixed amount periodically, depending upon the convenience of the members of
the SHG, and the savings of all the members is kept together in the bank in the name of the SHG and
forms the SHG Fund.
Table 4.7 provides information regarding the periodicity of saving activities and the amount of savings
by members of SHGs for the three models of SHGs.
28
Table 4.7: Saving activities of SHGs members

Distribution of SHGs by periodicity of saving services offered in 2006 (%)
• Weekly 24.0 16.0 16.3 18.3
• Fortnightly 2.5 2.4 1.6 2.3
• Monthly 71.3 79.9 82.2 77.7
• Every two months 1.8 1.3 0.0 1.3
• Every three months 0.4 0.5 0.0 0.4
SHGs paying interest on the savings of members (%) 61.5 75.5 60.3 69.4
SHGs which have revised minimum saving per member since 30.9 34.0 47.7 35.0
formation (%)
SHGs reporting members unable to make mandatory savings at 20.1 17.0 37.7 20.7
any point of time (%)
Average amount of mandatory saving per month per member 59.73 46.69 35.64 49.00
(Rs.)
Average amount of saving per year per member (2006) (Rs.) 1358.69 958.10 1717.50 1176.76
Saving on a monthly basis seems most popular as more than three-fourths of the SHGs seem to have
preferred monthly savings to other kinds of periodicity. Nearly 18 per cent of SHGs save weekly. Only a
very small percentage of SHGs resort to saving fortnightly or once in two months. Based on the financial
strength of the members, each SHG fixes a certain amount as mandatory savings. In the present sample,
the average mandatory saving per member amounted to Rs. 49. There was, however, a great deal of
variation among the three Model types of SHGs, ranging from about Rs. 36 for Model type 3 SHGs to
Rs. 60 for Model type 1 SHGs. The amount of mandatory monthly savings observed in the present study
is marginally higher than the monthly savings of members reported in the Light and Shade Study (Ghate
Prabhu, 2006), which reported an average monthly saving of Rs. 45 per member with wide variation
across the sample states. The average amount of saving per year per member for 2006 was Rs. 1,177.
There were significant differences in savings performances between the different Model types of SHGs.
Model type 3 SHGs with Rs. 1,718 recorded by far the highest savings, followed by Model type 1, with
Rs. 1,359 and Model type 2 with Rs. 958.
Since the SHGs are generally formed by members of the weaker sections of society, a number of SHGs
have also reported that some of the members were sometimes unable to make the mandatory saving. The
percentage of SHGs reporting inability of members in making the mandatory payment at some point or
other was 20.7 on an average, with wide variations across models.
Among the states, (refer Appendix A4.5), 94 per cent of SHGs in Maharashtra offered monthly saving
services, and the remainder, weekly. More than 80 per cent of SHGs in Orissa, Uttar Pradesh and
Andhra Pradesh saved monthly and the others saved either weekly or fortnightly. The rate of savings
fortnightly in Andhra Pradesh was higher than that in Orissa and Uttar Pradesh. In Assam, nearly 70 per
cent SHGs saved monthly and about 30 per cent of them saved weekly. Karnataka seems to be the
exception, where the percentage of SHGs with weekly saving services is higher than those offering
savings on monthly basis. The average amount of saving per year per member varied considerably in
different states. Rela tively low levels were recorded in Assam (Rs. 428) and Orissa (Rs. 550). Relatively
high levels of savings were reported in Karnataka (Rs. 2,097) and Maharashtra (Rs. 1,630).
While more than 95 per cent in Maharashtra and Uttar Pradesh paid interest on the savings of members,
the percentage was only slightly lower in Andhra Pradesh and Karnataka (82 – 89 per cent). In contrast,
only around one-fourth of the SHGs in Orissa and an even less percentage in Assam (17 per cent) paid
interest on the savings of the members.
Nearly half of the sample SHGs in Assam, Orissa, and Karnataka has revised the minimum saving per
member since inception. While only 34 percent of the SHGs revised the minimum savings of a member
in Andhra Pradesh, (only a small percentage of the SHGs in Maharashtra (18.5 per cent) and Uttar
Pradesh (12.1 per cent) had followed this practice. The percentage of SHGs reporting members’ inability
29
to save varied drastically among different states, from Uttar Pradesh (49.7 per cent) to Andhra Pradesh
(7.9 per cent).
Changes in savings practices of the SHGs from the pre-bank linkage to 2006 are provided in Table 4.5a.
Table 4.7a: Change in the saving activities since bank linkage

At time of linkage 2006
Distribution of SHGs by periodicity of saving services offered (%)
• Weekly 18.8 18.2
• Fortnightly 17.0 2.3
• Monthly 62.0 77.1
• Every two months 1.6 1.3
• Every three months 0.6 1.1
Average rate of interest paid to members per annum 7.67 8.22
Average amount of saving per year per member (Rs.) 580.06 1176.76
As far as the periodicity of savings is concerned, most of the SHGs that were saving once a fortnight had
changed over to saving monthly, making the month predominant period of saving. The average amount
of saving per annum per member had risen to Rs. 1,177 from Rs. 580. The average number of years of
bank linkage for the sample SHGs has worked out to 5.4. Hence, the average savings increased annually
by Rs. 110.50 during this period.
More than one-third of the SHGs reported that they have revised upward the minimum saving per
member, from the time of formation to the present, and 69.4 per cent of the SHGs are paying interest on
the savings of members.
The rate of interest paid to the members by the SHGs has increased only marginally over the years. It has
remained between 7 and 8 per cent. The average rate of interest paid to members by SHGs has varied
over a wide range from state to state, with SHGs in Uttar Pradesh paying the least rate of interest (3.5 per
cent) to Assam paying the maximum rate (15 per cent), (Appendix A4.5a).
The average amount of savings per year per member has increased in all states over the years. The
growth has been fairly high in Uttar Pradesh, Maharashtra, Andhra Pradesh and Karnataka.
4.6 SOURCE OF FUNDS AND EXTERNAL BORROWINGS FOR THE SHGS
The SHGs use their own funds for internal lending among their members and generally charge interest at
the rate of 2 - 3 per cent per month on these lending. These rates are still lower than that charged by
moneylenders. Apart from this, some SHGs (e.g. SHGs consisting of members only from SC/ST
families, with all members from BPL families) also get subsidies from the government depending on
their loan repayment pattern, and these additional amounts of money due to the subsidies also get added
to the SHG funds. The three Model types of bank-linked SHGs get additional loans from commercial
banks, Regional Rural Banks (RRBs), NGOs etc. Table 4.8 provides details about the various kinds of
funds available with the different Model types of SHGs and also the amount of funds borrowed over the
years from different financial institutions.
30
Table 4.8: Source of funds and external borrowings of SHGs

Percentage distribution of external borrowings and own funds of SHGs
• SHG own Fund 4.1 1.9 16.4 5.0
• Commercial Bank 36.5 45.3 48.3 43.7
• Regional Rural Bank 52.4 45.8 22.6 43.3
• Co-operative Bank 6.6 6.4 1.9 5.7
• Moneylender 0.2 0.0 2.8 0.5
• Employer 0.0 0.1 0.2 0.1
• Others 0.2 0.5 7.9 1.7
SHGs facing problems in raising external funds (%) 65.1 70.9 68.5 68.9
Average amount of own funds available at the time of Bank 3733 2576 3240 3562
Linkage (Rs.)
Average amount of own funds available in 2006 (Rs.) 38041 43439 33316 40508
Average external borrowed funds by SHG since Bank 123177 141219 142433 136164
Linkage (Rs.)
It is seen that the average amount of own funds available to SHGs in the pre- linkage period was about
Rs. 3,500. Within the different Model types of bank-linked SHGs however, Model type 1 had slightly
higher funds available (Rs. 3,733) with Model type 2 having the lowest (Rs. 2,576). The average amount
of own funds available with the SHGs in 2006 suggests that the funds available is Rs. 40,508 in 2006.
Taking into account the average number of years since bank linkage as 5.4, the average annual increase
of SHG’s own funds works out to be Rs. 6,849. From the state-wise figures provided in Appendix A 4.6,
it appears that the SHGs in Karnataka, Andhra Pradesh and Maharashtra had been most successful in
improving their fund availability.
The average externally borrowed funds by SHGs since bank linkage was fairly high at Rs. 1,36,164,
indicating an average increase of Rs. 25,216 per year. This is mostly because of the increased
accessibility of bank-linked SHGs to external loan. This factor is once again reinforced when we consider
the distribution of borrowings/ funds by source. It is seen that nearly 93 per cent of the loans disbursed to
members by these SHGs came from loans taken by SHGs from banks and only 5 per cent came from
SHGs own funds while the rest were from miscellaneous sources. The increased amount of credit
available to the members has helped them take concrete steps in investing for income generating
schemes. This has had a cascading effect where, the returns from investments may then be saved and help
in the timely repayment of loans, which in turn helps in getting more loans from the banks.
However, 69 per cent of the SHGs have reported problems in raising external funds. These were seen
most in Uttar Pradesh, Maharashtra and Orissa (Appendix A 4.6). The type of problems faced by the
SHGs includes lack of faith in SHGs among the lending agencies, lengthy procedures, requirements of a
number of documents for the granting of loans and the like.
31
4.7 LENDING ACTIVITIES OF SHGS
The lending activities of the sample SHGs are described in Table 4.9 below:
Table 4.9: Lending activities of SHGs

Average number of months after establishment SHGs started 7.6 6.5 7.8 7.0
providing loans to members
Distribution of SHGs by the periodicity of credit Services to members (%)
• Weekly 7.7 6.4 3.1 6.3
• Fortnightly 3.7 3.7 1.6 3.4
• Monthly 75.4 67.8 71.7 70.5
• Every 2 months 2.6 4.9 1.6 3.8
• Every 3 months 10.7 17.2 22.0 16.0
Average number of days required for approving loan 9.2 7.7 13.4 8.9
Average number of loans approved per year per SHG 8.0 8.3 6.9 8.0
Average loan period in months 10.6 11.7 11.8 11.4
Interest rate (%) charged per annum by SHGs 25.5 22.8 20.5 23.3
Percentage of SHGs charging penal interest from defaulters 7.1 35.0 52.8 29.3
Average loan amount per member (Rs.) 4926.29 5129.43 3350.45 4833.86
It is seen that on an average, the sample SHGs had started providing loans to members from accumulated
savings within about seven months after their formation. About 71 per cent of the SHGs provide loan
services to members once a month. A small percentage of SHGs also offer credit services on a weekly,
fortnightly or three-monthly basis. The periodicity of lending services by the SHGs is more or less
similar to that of savings services observed in an earlier chapter. Whenever the SHGs meet, they tend to
conduct all their transactio ns together, be it savings, disbursement of loan, or any other matter connected
with the SHG. It appears as if most of the SHGs find it convenient to operate on a monthly basis.
Generally, this was the observation during field visits. In deviating from this general trend, a
considerable percentage, ranging between 11 per cent (Model type 1) and 22 per cent (Model type 3),
offered financial services to members only once in three months.
The average number of days required for the approval of loan was about nine days with Model type 3
requiring the maximum number of days (that is, an average of 14 days).
The performance of the sample SHGs, measured in terms of their lending activities show that the SHGs
were able to approve on an average 8 loans per year, amounting to Rs. 4,834 on an average and offered
loans for a period of 11.4 month. Among the three Model types of the sample SHGs, there is a variation
in the loan amount per person, as is apparent with Model type 2 in which SHGs disbursing much more
(Rs. 5,129) than in SHGs of Model type 3 (Rs. 3,350). The rate of interest charged by SHGs was around
24 per cent per annum. The general opinion among all the SHGs noticed during the field visits was to
charge around 2-3 per cent interest per month so that it would be much below the rates charged by
moneylenders, but would also prohibit members from taking loan unnecessarily.
For an SHG to run successfully, it is important that the members repay the loans in a timely manner, so
that the SHGs could, in turn, repay their loans in time and become eligible for bigger loans. In order to
enforce timely repayment, nearly 30 per cent of the sample SHGs charged penal interest from defaulting
members. It is seen from the table that while only around 7 per cent of Model type 1 SHGs were charging
penal interest, 53 per cent of the Model 3 SHGs reported adopting tough steps against defaulters.
The state-wise analysis of lending activities of the SHGs (Table Appendix A4.7) reveals that while
SHGs in most of the states were offering credit services mainly on a monthly basis, the exception was
Uttar Pradesh, where nearly 60 per cent offered credit services once in three months. The average number
of days required for approving loans, average number of loans approved per SHG per annum as well as
the loan amount per member varied to a great extent among the states.
32
The average loan period was fairly similar among the sample SHGs belonging to different states, except
Maharashtra where it was 15 months. The average number of days for approving a loan was relatively
high in Karnataka (18 days) and with less than six days in Uttar Pradesh, Andhra Pradesh and Orissa. The
incidence of penal interest was higher in Maharashtra (41 per cent) than the other states where it ranged
between 23 and 32 per cent. Table 4.9a provides a summarized survey data on the changes in the lending
activities of SHGs over time.
Table 4.9a: Change in the lending activities of SHGs since bank linkage/establishment
At time of Linkage 2006
Distribution of SHGs by the periodicity of credit services to members (%)
• Weekly 7.3 6.3
• Fortnightly 3.6 3.4
• Monthly 67.3 70.5
• Every 2 months 4.1 3.8
• Every 3 months 17.6 16.0
Distribution of SHGs by usage of funds for providing loan to members (%)
• Own fund 62.3 24.7
• Borrowed fund 9.5 8.3
• Both 28.2 67.0
Average number of days required for approving loan 10.0 8.9
Average number of loans approved per year 6.4 8.0
Average loan period in months 9.9 11.4
Interest rate charge per annum by SHG (%) 24.6 23.3
Major purposes for which loans are used (%)
• Repayment of debts 10.3 7.6
• Basic consumption needs 12.8 10.2
• Household assets/house improvements 5.5 6.0
• Other social needs (e.g. health, education) 14.7 14.4
• Agriculture 30.3 33.3
• Agro processing 4.7 4.4
• Trade 11.9 13.7
• Crafts 1.7 2.0
• Other incoming generating activities 8.1 8.4
Average loan amount per member (Rs.) 1642.7 4833.9
As far as the periodicity of credit service offered by the SHGs is concerned, only small changes were
noticed - some more SHGs have shifted to monthly credit services (67 to 70 per cent).
While pre-bank linkage, a majority of SHGs (62 per cent) depended on the SHG’s own funds for
providing loans to members, currently a majority of SHGs utilised 67 per cent of both own and borrowed
funds for providing loans to members.
The average number of days required for approving loans has come down marginally (from 10 to 9) over
the years. The average number of loans approved per annum as well as the average loan amount per
member has increased over the years. The increase in the loan amount per member has been considerable
- from Rs. 1,642 to Rs. 4,833. From the table it is seen that while the period of the loans has increased
over the years and is presently about 11 months, the average rate of interest charged by SHGs has come
down marginally.
The aim of the SBLP is to make credit available to the poor not only for meeting their emergency and
consumption needs, but also for their requirements of investment and working capital. For reaching the
Millennium Development Goal of eradicating extreme poverty and hunger, it is necessary to help the
poor to start sustainable income generating activities. The percentage distribution of loans by major
purposes for which the loans have been utilised by the members suggest that following bank linkage, the
loans used for income generating purposes have gone up from 57 to 62 per cent.
33
The findings of the present study are in line with the results of impact studies conducted earlier, which
reported an increase in the share of borrowed funds being used for production purposes between pre-SHG
and post-SHG situation. (NABARD and GTZ, 2005).
The percentage of loans used for various purposes varied widely among the states studied. The SHGs in
Assam were using a very high share (more than 85 per cent) of the loan for income generating activities.
At the other end, SHGs in Andhra Pradesh were utilising only a small portion of the loan amount for
income generating activities (about 31 per cent) as they were using most of it for social needs (26 per
cent) and repayment of debt (23 per cent). The sample SHGs in Maharashtra increased substantially the
share of loans for income generating activities from 39 per cent to 56 per cent over the years (Appendix
A4.7b).
4.8 OTHER FINANCIAL S ERVICES O FFERED BY SHGS
An attempt was also made to find out if SHGs are offering any other financial services to their members
and the results are presented in Table 4.10.
Table 4.10: Other financial services offered by SHGs

Modeltype 1 Model type 2 Model type 3 All Models
SHGs offering Health Insurance (%) 18.3 7.6 0.8 9.8
SHGs offering other Insurance (%) 0.4 3.6 0.0 2.2
SHGs Other Financial Services (%) 0.4 1.8 0.0 1.1
It is seen that about 9.8 per cent of the sample SHGs are offering health insurance to their members. The
percentage is quite high among Model type 1 SHGs (18.3 per cent) and almost negligible in Model type 3
groups. A small number of SHGs are also offering insurance and other financial services to their
members.
4.9 TRAINING N EEDS OF SHGS M EMBERS
Apart from improving the access to financial services, SHGs go a long way towards improving the
knowledge of their members, especially in terms of financial and communicational skills. They also
groom the members by improving their awareness of human development and management. The
members also need the technical know how in respect of new income generating activities, as well as the
all-important marketing skills. These and related issues are discussed in Table 4.11.
Nearly half the sample SHGs has helped their members in skill development. Among different human
development skills, SHGs gave the highest importance to motivation, leadership and communication
skills. About 40 per cent SHGs had developed leadership skills among their members.
Motivation skills have also been developed by about 42 per cent of the sample SHGs. Perhaps a case in
point is a woman from Karnataka who became a SHG member quite reluctantly, and later became the
leader of the group. She was not only motivated to start several schemes herself, but went on to motivate
other women and has been instrumental in promoting a few SHGs (Chapter 6.1.). About 30 per cent of
the SHGs have developed communication skills among their members and this was very obvious from
the way women, particularly from the villages, spoke about their SHGs to the study team. Women who
had never ventured out of their houses earlier, are now leading delegations to ministers and Members of
Parliament, speaking from various platforms, seeking votes in Panchayat elections, etc. Variations are
seen, however, in the extent to which the three Model types of banks have developed different skills.
Better results in terms of higher percentages of members who developed leadership and communication
skills are seen in type 3 SHGs.
34
Table 4.11: Training needs of SHG members

SHGs which have helped members to develop skills (%) 47.1 48.8 51.2 48.6
SHGs which have developed the following human development skills (%)
• Leadership 37.8 39.6 49.2 40.4
• Motivation 46.4 40.7 38.5 42.0
• Delegation 24.5 18.8 16.2 20.1
• Communication 28.1 29.5 40.8 30.6
• Negotiation 13.3 14.5 10.8 13.6
• None 14.0 22.6 18.5 0.0
SHGs which have developed the following Management skills (%)
• Strategy 23.4 25.7 23.8 26.7
• Planning 22.3 41.0 29.2 38.2
• Marketing 21.9 31.5 40.8 33.7
• Financial/Numeric 16.5 26.0 29.2 25.8
• Project management 6.8 4.9 11.5 6.6
• Time Management 7.6 8.5 11.5 8.7
• None 16.5 27.5 20.8 0.0
SHGs reporting following Fields in which members require more knowledge and skills for income generating
activities (%)
• Technical Skills 50.7 64.4 63.1 60.2
• Financial Skills 59.0 63.5 37.7 58.7
• Management Skills 45.0 38.0 37.7 40.0
• Market Development Skills 37.4 29.8 36.9 33.0
• Others Skills 6.1 2.9 9.2 4.7
• No further training required 4.3 3.1 5.4 3.7
SHGs reporting facing problems in developing the skills 89.9 84.6 80.8 85.6
of members (%)
Type of problems faced by SHG in developing the skills of members (%)
• Lack of literacy & interest among members 34.8 17.5 30.5 24.4
• Lack of co-operation & initiative from Banks & 8.8 4.9 14.3 7.3
Financial Institutes
• Lack of co-operation & initiative from 0.8 0.2 1.9 0.6
NGO/promoting agencies
• Insufficient/inadequate training facility 11.6 28.8 24.8 21.6
• Lack of time among members 34.0 37.2 21.9 34.3
• Others 10.0 11.3 6.7 11.8
Total 100.0 100.0 100.0 100.0
Management skills have also been developed by SHGs among their members, but to a lesser extent than
human development. The SHGs have been successful in developing strategy and planning skills. One
important factor that came out during the field study was that in most of the SHGs, members were
involved in different activities as individuals rather than as a group. The most common reason for not
taking up group activities were:
a. not finding markets for their products,
b. not having the marketing know-how, and thus finding it difficult to compete with established market
leaders,
c. most of the members felt that they were uneducated, not possessing the required skills, and therefore
opted to continue with agriculture or animal husbandry, which they had been doing for years.
About 34 per cent of the sample SHGs reported to have developed market skills among their SHG
members, but, an even higher share of 40 per cent sees the need for developing management skills. It is
noticed that among the sample SHGs of various models, a higher percentage of Model type 2 and Model
type 3 SHGs was able to develop marketing skills among the members.
35
The SHGs have to maintain a number of financial records and accounts. Generally, the promoter of the
SHGs trains an educated member in simple accounting procedures. It has already been seen that in some
SHGs a person nominated by the NGO maintains the accounts, while in some others; a person is hired for
the job. However, many SHGs are trying to see that all members are well versed in these matters and are
taking turns to do this work. About 26 per cent of the sample SHGs has developed financial skills among
the members. Once again it is noticed that among the SHGs belonging to different model types, Model
type 3, has the highest percentage of skill development.
A high percentage of SHGs (more than 80 per cent) has reportedly faced problems in developing the
skills of their members. The major reasons for this were given as lack of time, lack of interest, inadequate
literacy among the members and insufficient training facilities.
Many of the existing and potential income generating activities require a lot of technical knowledge and
skills. Even in agriculture and animal husbandry, more income could be generated by improving the
knowledge and skill base of farmers in various aspects of their respective activities. Further knowledge
about processing, preservation and refrigeration also becomes essential in many cases. During the case
studies, it was observed in many instances where members were trained in fish farming and bee keeping.
It is therefore not surprising that around 60 per cent of SHGs have reported a need for improving the
technical skills of their members. Other important fields in which knowledge and skills were required
included financial (59 per cent), management (40 per cent) and market development skills (33 per cent).
Very few SHGs claimed that further training was unnecessary.
Among states, (Appendix A4.8), a large variation exists in the percentage of SHGs which have helped
members develop their skills. While the percentage was highest (88 per cent) in Karnataka, it was the
lowest in Uttar Pradesh (20 per cent). There is also considerable variation in the percentage of the various
human development skills developed in the different states.
A high proportion of the SHGs reported that they were facing problems in developing the skills of
members. This was, especially the case in Assam, Orissa, Uttar Pradesh and Maharashtra (Appendix
A4.9). On the types of problems faced by SHGs in developing the skills of members a high variation
existed in the different states. Lack of literacy amongst members seemed to be the major hurdle for SHGs
in Orissa, while it was the lack of time among members in Assam and Maharashtra. In Andhra Pradesh,
insufficient/inadequate training facilities appeared to be the major stumbling block. In the remaining
states, a combination of all the factors seemed to be working against better skill development of SHG
members. SHGs indicated their training requirements in various fields with different priorities in the
surveyed states. Training on technical and financial skills was given a high priority in nearly all states.
Training on management and market development skills was indicated as needed by a relatively high
share of SHGs in Orissa, Karnataka, Assam and Maharashtra.
4.10 ORGANISATIONAL SUSTAINABILITY OF SHGS
For a SHG to run successfully on a continuous basis, it should be stable and financially viable. It is for
this reason that SHGs generally should have members from similar socio- economic status so that there is
no one-upmanship. They should also agree about savings and repayments. A number of SHGs are seen to
break up because of lack of trust among members and want of co-ordination. The very fact that the
sample SHGs, despite the diversity in their composition and poverty levels, continue to operate and
provide financial services for an average of 5.3 years after getting bank-linked, goes a long way to prove
their organisational sustainability. In Table 4.12 organisational sustainability has been examined by
observing the drop-out rates of the members and the reasons for such dropouts.
36
Table 4.12: Organisational sustainability of SHGs

Model type Model type Model type All Models
1 2 3
SHGs reporting dropout of members (%) 42.1 40.7 55.4 43.1
Dropout rate (%) 9.0 7.8 8.2 8.2
Reasons for members dropping out
• Migration 22.4 32.8 26.9 28.9
• Illness 5.6 7.8 10.8 7.8
• Not satisfied with SHG 48.0 40.6 45.2 43.5
• Defaulter 17.6 13.7 17.2 15.4
• Others 6.4 5.1 0.0 4.4
SHGs reporting members withdrawing due to non 19.6 11.2 21.2 14.6
availability of loan amount demanded (%)
SHGs reporting joining of new members (%) 28.4 23.1 55.9 29.2
About 43 per cent of the sample SHGs have reported drop out by members since establishment. This
percentage is slightly higher in Model type 3 SHGs in comparison to Models 1 and 2 where the
percentages are almost similar. The drop out rate has worked out to be 8.2 per cent or an average of about
one person per group. There were only slight variations among the three Model types of bank-linked
SHGs.
The most important reason for members dropping out was the lack of benefits from SHGs. This reason
was cited by 44 per cent of the sample SHGs, reporting drop out of members. Nearly 29 per cent of the
drop outs were caused by migration and about 8 per cent by illnesses, the reasons that were unavoidable.
The other main reason appeared to be members defaulting to make savings/repayments and this made up
for about 15 per cent. Many persons become members of SHGs because of the lure of bank loans
available at a lower interest rate than loans from moneylenders. It is seen that about 15 per cent of SHGs
have reported withdrawal of members due to reasons of non-availability of loan. However, this problem
of members dropping out has not assumed great importance, since 29 per cent of the SHGs have also
reported new members joining up.
While in most states hardly any SHG had reported withdrawal of members due to non-availability of loan
amount demanded, a surprisingly high percentage of SHGs in Karnataka (58 per cent) have reported
withdrawal by members (Appendix A4.10). Nearly half the SHGs in Orissa, Uttar Pradesh, Andhra
Pradesh and Karnataka have reported drop out by members. The drop out rate among them varied
between 6 (Karnataka) and 11 (Uttar Pradesh) per cent. The proportion of SHGs reporting dropout was
less in Maharashtra and least in Assam.
Among the reasons for dropout, dissatisfaction with the SHGs was by far the most prominent, especially
in Orissa. A similar picture was observed in Assam, Mahrashtra and Andhra Pradesh. Another significant
reason has been members’ default in repayment of loans in Uttar Pradesh and Karnataka.
The percentage of SHGs which have reported joining of new members varied only to a small extent-
between 21 per cent in Assam and 36 per cent in Uttar Pradesh-among the sample SHGs of various
states.
4.11 FINANCIAL S USTAINABILITY OF SHGS
The financial sustainability of the SHGs depends mainly on the repayment patterns of SHGs. It is only
when SHGs make timely repayment to banks that they get access to bigger loans. This, in turn, depends
on the repayment pattern of the individual members. It has already been seen that some SHGs have even
felt the need to impose penal interest from defaulting members fearing that peer pressure alone is not
enough for members to make timely repayment. Table 4.13 summarises the survey results on financial
sustainability of the SHGs and the causes for non-repayment of loans by members.
37
The percentage distribution of SHGs by percentage of loan recovery reveals that 69 per cent of the
sample SHGs has reported 100 per cent repayment by members. Among the various models in Model
type 1, 80 per cent of SHGs have reported 100 per cent repayment by members, Model type 2-71 per
cent, but Model type 3 only 41 per cent have reported full recovery. In fact 96 per cent of Model type 1
SHGs has reported 75-100 per cent loan recovery from its members.
Table 4.13: Financial sustainability of SHGs

Model Model Model All
type 1 type 2 type 3 Models
Distribution of SHGs by percentage of loan recovery (%)
• 100% 79.9 70.5 40.8 69.2
• 95-99 2.9 1.1 0.8 1.6
• 90-94 6.1 4.7 11.5 6.0
• 85-90 0.4 0.2 2.3 0.5
• 75-84 6.8 5.4 22.3 8.1
• 50-74% 1.1 5.1 19.2 5.8
• <50% 2.9 13.0 3.1 8.7
Causes of non-repayment of loan by members (%)
• Natural calamity 40.8 17.8 14.4 21.4
• Inadequate peer pressure 15.8 20.7 8.8 15.7
• Blocking of payments from buyer of products sold (Cash 30.3 28.4 4.0 20.5
flow problems)
• Health/illness problem 11.8 19.5 44.0 26.2
• Others 1.3 13.6 28.8 16.2
SHGs reporting loan repayment arrears (%) 17.6 6.9 14.6 7.2
SHGs reporting repayment arrears (%)
• > 6 Months 14.0 6.3 12.3 9.4
• > 12 Months 11.5 5.6 7.7 7.6
Average amount of loan presently outstanding (Rs.) 31015 29835 40346 31598
Average amount of arrears per SHG 3034 1780 1347 2084
Arrears as a % of loan outstanding 9.78 5.97 3.34 6.60
Average amount of arrears pending for >12 mo nths 756 92 - 272
Arrears for >12 months as % of loan outstanding 2.44 0.31 - 0.86
About 21 per cent of the sample SHGs (especially high with 41 per cent in Model type 1 SHGs) have
reported natural calamity as the reason for non-repayment of loans. This is understandable since many of
the members do take loans for agricultural purposes. Two of the case studies conducted in Orissa
revealed that utilising the loan amount for cotton farming turned out to be a bad investment due to
drought conditions and the members were unable to return the loan promptly (Chapter 6.2.).
About 21 per cent of the sample SHGs has reported that blocking of payment from buyers of products
sold by the members has been the cause for non-repayment of loans. As high as 26 per cent of the SHGs
have mentioned poor health and illness of the members as reasons for default. Further, inadequate peer
pressure was given as a cause by 16 per cent of the SHGs.
Non-repayment of loans by members has resulted in arrears of repayment by the concerned SHGs. About
7 per cent of the SHGs reported arrears. This was more prevalent in Model type 1 groups (18 per cent)
and Model type 2 groups (15 per cent), whereas the problem was less serious in Model type 3 groups (7
per cent). The amount of arrears as a percentage of loans outstanding was 6.6. However, the arrears
pending for more than 12 months are fairly low at 0.86 per cent of loan outstanding.
State-wise, (Appendix A4.11) better loan repayment was reported in Assam, while below- average
performance figures were recorded in Orissa and Andhra Pradesh. There was a lot of variation in the
reasons for non-repayment of loans. While in most states the share of SHGs reporting arrears was on a
relatively low level, this was not the case in Orissa where 27 per cent of the SHGs had reported arrears.
38
4.12 ADEQUACY/APPROPRIATENESS OF S UPPORT R ECEIVED FROM SHPI
Generally, SHGs are promoted by banks, NGOs, government departments, other institutions and these
are called the the Self Help Promoting Institutions (SHPIs). These SHPIs get the members together,
explain and advise about formation and functioning of the groups, help them to form rules and
regulations and in the training of group leaders, teach them simple accounting procedures and generally
see to it that after a time the members would be able to manage the SHGs themselves. Often, NGOs train
the members in some income generating activity. The information collected on the adequacy of the
support received from the SHPI is provided below in Table 4.14.
More than half the sample SHGs were satisfied with the information provided to them by SHPIs on the
various aspects (ranging between 51 and 69 per cent) important for group establishment. “Especially
positive” was generally the assessment of Model type 2 groups, whereas Model type 1 groups were
generally expressed “below average” levels of satisfaction about the support received from the SHPI.
Over the past year, SHPI staff had visited SHGs around four times. Model type 2 SHGs were visited
more often (5.4) and the other two Model types at lower intervals (1.9 and 2.9). About 57 per cent of the
SHGs (68 per cent of Model type 2 SHGs) were satisfied with this. On an average, representatives of
SHGs had visited their respective SHPIs around 8 times in a year.
The SHGs also came up with some suggestions for useful changes in the activities of SHPIs. Most often,
it was mentioned that SHPIs should devote more time for training and discussions at the group formation
stage, followed by the allocation of more time for group discussions and addressing questions. The
presence of qualified staff for extended lengths of time at the group formation stage goes a long way to
improve the competence of group facilitators in the relevant subjects.
Table 4.14: Adequacy/appropriateness of support received from SHPI

SHGs satisfied with the information provided by SHPI at the time of establishment/Bank Linkage (%)
• Group formation and functioning 42.4 72.3 61.5 62.2
• Functions and qualification of office bearers 84.9 86.0 54.6 68.5
• Rules and regulations 38.1 57.2 59.2 52.1
• Planning, management and monitoring 45.0 66.7 50.0 58.2
• Financial service provisions, conditions and procedures 45.0 69.1 51.5 59.7
• Training of group leaders 44.2 60.2 46.2 53.7
• Training of book keeper 44.60 56.06 46.92 51.51
Average number of times SHPI staff visited SHG during last one year 1.9 5.4 2.9 4.06
SHGs satisfied with the frequency of the visit of SHPI staff (%) 47.1 68.2 30.8 57.0
Average number of times representatives of SHG visited SHPI in the last 13.4 6.4 5.8 7.7
one year
SHGs giving suggestions for changes in the activities of SHPI to make it more useful (%)
• Allow more time in training & discussion during group formation 59.4 58.2 37.7 55.8
• Allow more time for group discussions & questions 41.0 50.5 25.4 44.3
• Support from qualified staff for longer time during group 45.0 44.7 20.8 41.5
formation
• Improve competence of group facilitator in relevant subjects 25.9 28.2 28.5 27.6
• Offer short training to group leaders on group and management 14.7 21.7 21.5 19.7
activities
• Offers short training to book keepers 6.5 13.9 10.8 11.3
• Assist SHGs in identifying training needs for improving income 1.1 17.5 23.1 13.5
generating activities
In most states, more than half of all SHGs seemed to be satisfied with the support received from the
SHPIs (Appendix A4.12). SHGs in Maharashtra, Andhra Pradesh and Assam seemed to be more
satisfied with the support received from SHPIs in comparison to the other states. In Orissa, below
average satisfaction was discerned. There was variation in the average number of times SHPI staff visited
the SHGs, the frequency of return visits by SHGs to the concerned SHPI, which was but natural
39
considering the different requirements of groups. The SHGs in all the states have suggested that SHPIs
allow more time in training and group discussions, albeit in varying degrees. In this connection, it may
be mentioned that an NGO- SHPI in Uttar Pradesh has not only promoted a considerable number of
SHGs (more than 500), but has also helped the SHG members in acquiring various skills to enable them
take up income generation schemes. It has also arranged insurance facilities to the SHGs members
(Chapter 6.3).
Similarly, the adequacy and appropriateness of support received from financial institutions and banks has
been analysed in Table 4.15.
Table 4.15: Adequacy/appropriateness of support received from FI/Banks

Average number of times staff member of FI/bank visit SHGs in a year 1.4 2.9 0.6 2.2
SHGs reporting support/activities provided by FI/banks (%)
• Training on book keeping 44.4 20.4 12.9 24.3
• Checking & advising on book keeping accuracy 24.7 25.5 13.3 23.2
• Reviewing & advising on SHG financial activities 21.1 21.1 18.1 20.6
• Reviewing & advising on SHG financial health aspect 5.3 16.0 4.0 11.6
• Appraising SHG loan request 4.6 16.0 25.8 15.3
SHGs satisfied with the adequacy/appropriateness of services received from FI (%)
• Frequency of visits to the SHGs 9.9 32.0 29.8 26.8
• Provisions of loans according to the needs of SHGs 55.8 60.9 56.9 58.9
• Conditions for loans to the SHGs 57.6 62.0 56.9 60.0
• Saving services according to the needs of SHG 56.8 65.5 78.5 64.7
• FI conditions for savings of the SHG 59.7 63.3 72.3 63.5
• Accessibility of SHG representative to bank managerial staff 61.5 63.7 75.4 64.6
On an average, staffers of concerned financial institutions/banks visited each of the sample SHG about
2.2 times a year. While in Model type 2 SHGs it was about 3 times a year, Model type 3 SHGs had been
visited 0.6 times. Less than one-fourth of the SHGs have reported receiving support from the financial
institutions in training on book keeping, checking the accuracy of book keeping, reviewing and advice on
SHG financial activities and health, and others. Most of the SHGs appeared to be fairly satisfied
regarding the provisions of different financial services and their conditions and the accessibility of the
bank managerial staff, etc. Only a small percentage of SHGs appeared to be satisfied with the frequency
of visits by the financial institutions.
A lot of variation is seen across states in the percentage of SHGs reporting support from financial
institutions in different aspects connected with their functioning. While more SHGs in Uttar Pradesh and
Andhra Pradesh appeared to be satisfied with the frequency of visits by financial institutions, this does
not seem to be the case in the other states. Generally, the SHGs in Assam and Andhra Pradesh appeared
to be more satisfied with the adequacy of support received from financial institutions compared to the
other states (Appendix A4.13).
40
Chapter 5
Impact of SBLP on households
An attempt is made in this chapter to measure the impact of SBLP on various socio-economic parameters
including the living standards of the SHG members and their household (henceforth “households” or
“SBLP households”) separately for the six states covering all the regions in India. These six states
together cover 77 per cent of the total credit-linked SHGs as on March 2002. It could, therefore, be
concluded that the aggregate experience largely represents an All-India picture.
As discussed earlier in Chapter 2, the relevant data was collected from a total of 4,791 households
covering different models of SBLP households. The randomised selection was made from SHG
households having bank linkage of more than four years. The impact of the programme on the SHG
households’ economic activities, welfare and social empowerment is obtained by measuring the changes
in pre-SHG and post-SHG situations among the beneficiaries. The impact of bank linkage was measured
as the difference in the Compound Annual Growth Rate (CAGR) of a given parameter between the pre-
SHG and post-SHG linkage situation of the SHG members and their households. All the financial
parameters for pre-SHG and post-SHG situations are measured in the reference year prices. The reference
year for the study was January-December 2006 (calendar year).
Three different models of bank-linkage have been covered to assess the impact by models at the All-
India levels as given below:
• SHGs formed and financed by banks (Model type 1).
• SHGs formed by formal agencies other than banks, NGOs and others, but directly financed by banks
(Model type 2).
• SHGs financed by banks using NGOs and other agencies as financial intermediaries
(Model type 3).
5.1 PROFILE OF SAMPLE HOUSEHOLDS
The distribution of sample households covered by type of model and state is given below (Table 5.1).
Table 5.1: Distribution of sample households by type and state

State Model type 1 Model type 2 Model type 3 Total
Assam 361 340 75 776
(46.5) (43.8) (9.7) (100)
Orissa 315 225 250 790
(39.9) (28.5) (31.6) (100)
Uttar Pradesh 260 527 - 787
(33.0) (67.0) (100)
Maharashtra 184 649 - 833
(22.1) (77.9) (100)
(1.3) (84.1) (14.6) (100)
Karnataka 249 385 215 849
(29.3) (45.4) (25.3) (100)
All-India 1379 2762 650 4791
(28.8) (57.6) (13.6) (100)
Note: Figures in bracket indicate percentage to total households.
It may be seen from Table 5.1 that 58 per cent of households are selected from Model type 2, another 29
per cent from Model type 1 and 13 per cent from Model type 3 at the All-India level, so as to obtain
41
relevant comparisons among the various types of models. It was not possible to select Model type 3 from
Uttar Pradesh and Maharashtra due to non-availability of any list of SHGs under this model type.
5.1.1 Years of bank linkage
As discussed in the chapter describing the sample design methodology (Chapter 2), the majority of
SHGs were selected whose bank linkage goes back to 2002. The average number of years of bank
linkage by type of model at the All India le vel is given below.
Table 5.2: Average number of years of bank linkage per household
Model Number of years of bank linkage
Model type 1 5.3
Model type 2 5.4
Model type 3 5.5
All Models 5.4
The overall average number of years of bank linkage of SHG members was 5.4 years. The average
number of years of bank linkage per household by model and state is given in Appendix A5.1.1. The
average linkage was highest in Andhra Pradesh with 5.8 years and least in Assam with 4.8 years.
5.1.2 Level of literacy
Information on the level of current education of the head of the households was collected of the SBLP
member households. About 30.6 per cent of household heads were found to be illiterate. Another 26 per
cent reported primary level education. However, the majority had completed primary education. The
percentage distribution of education of heads of household at the all-India level is given in Table 5.3.
Table 5.3: Distribution of head of households by education level: All-India (%)

Model type Education of the head of the household
Illiterate Below primary Above primary Total
Model type 1 22.9 30.0 47.1 100.0
Model type 2 34.8 23.6 41.6 100.0
Model type 3 29.5 28.0 42.5 100.0
All Models 30.6 26.0 43.4 100.0
It may be seen from the table that the level of education of the head of the households is slightly better in
Model type 1.
5.2 CHANGES IN ANNUAL N ET HOUSEHOLD INCOME
Household income and its distribution are central to any economic impact analysis. It is one of the most
important indic ators of development. Members of SHGs are expected to be able to increase their income
generating activities and subsequently the income of their households through improved access to
financial services.
An analysis of net income data collected from households revealed that households increased their net
incomes over the pre and post-SHG situations in 2006 from Rs. 34,786 to Rs. 47, 934 by nearly 38 per
cent. The annual growth of household income was 6.1 per cent after the SHGs linked up to banks (Table
5.4). The state- wise analysis indicated that annual income of households was growing at a faster rate in
Karnataka (7.3 per cent), Maharashtra (6.9 per cent) and Assam (6.4 per cent) compared to the all-India
average of 6.1 per cent. The base level income of households in the pre-SHG situation was highest in
Andhra Pradesh, followed by Uttar Pradesh and Maharashtra. The lowest base-level household income
was reported in Orissa, followed by Assam.
42
Table 5.4: Growth in annual net household income (%)

State Income per household (Rupees)
Base level CAGR*
Assam 28004 6.4
Orissa 23740 5.6
Uttar Pradesh 39110 5.6
Maharashtra 38637 6.9
Andhra Pradesh 46467 5.0
Karnataka 33077 7.3
All India 34786 6.1
Note: *- Compound Annual Growth Rate
5.2.1 Changes in net household income by model types

An analysis of net household income by SHG model types revealed that the annual rates of growth in
incomes did not vary significantly across models. For both Model type 1 and Model type 3, incomes
grew by 6.2 per cent, while for Model type 2 it was 6.1 per cent. The base level incomes per household
the annual growth rates across types of model are given in Table 5.5.
Table 5.5: Net income per household by types of model

Types of Description of models Income per household (Rupees)
model
Base Level (Rs.) CAGR
1 Formed and financed by bank 34789 6.2
2 Formed by NGOs and financed directly by bank 36142 6.1
3 Financed by bank using financial intermediaries 29019 6.2
Table 5.5 depicts that the income at base level per household was highest at Rs. 36,142 for household in
Model type 2. This was followed by households under Model type 1 and the base level income was the
lowest at an average of Rs. 29,019 for Model type 3. This is also validated by earlier studies as noted in
Chapter 1.
5.2.2 Changes in the mix of economic activities
There are a number of activities in which household members engaged themselves to derive income. The
interviewed household derived incomes from several sources, namely:
• Self-employment in agriculture.
• Livestock.
• Wages (farm/non-farm).
• Salaries.
• Self-employment in non-farm.
• Other sources such as rent, interest, dividend and other social assistance, subsidies etc.
The distribution of income by sources for households in the base level and in the post-SHG period
(reference period) at the all-India level is given in Table 5.6 and Figures 5.2.1.
43
Table 5.6: Household income by source s of earnings : Distribution and growth (%)
Source of income Share (%) CAGR
Base level 2006
Agriculture 30.9 29.9 5.5
Livestock 5.7 7.3 11.2
Wages 26.5 25.3 5.3
Salaries 15.1 14.6 5.4
Self employment (non-farm) 17.4 18.2 7.0
Others 4.4 4.7 7.3
Total 100.0 100.0 6.1
Average annual income per household (Rs.) 34786 47934
Figure 5.2.1: Percentage distribution of income by source of earnings: All India
35 All India
30
25 Base Level
20 2006
Percent
15
10
5
0
Agriculture Livestock Wages Salaries Self Others
Employment
(non-farm)
It may be noticed that above average annual income growth rates were achieved in households engaged
in livestock and non-farm activities. There was a slight decline in the share of income from agriculture
(30.9 to 29.9 per cent) and wages and salaries in the households. A shift was noticed in allied farming
activities, which includes livestock as well as self-employed, non-farm activities, including petty
businesses, art & craft and professional activities.
The share of incomes by sources and across states is presented in Appendix A5. 2.1. More than one-
third of the household income was generated from agriculture, except in Orissa and Uttar Pradesh. In
Orissa, the highest share of income was generated through wages and about 70 per cent through non-
agricultural activities.
The changes in the mix of economic activities by type of models revealed the following:
• Incomes from livestock, non-farm and from other income sources increased more substantially in
Model type 1 and Model type 2 and created some impact on the mix of economic activities.
• Moderate income increases were recorded due to agriculture, livestock and non-farm activities in
Model type 3, whic h impacted the mix of economic activities only to a small extent.
Annual incomes per household by sources of income and their growth rates by states and type of model
are presented in Appendix A5.2.2.
5.3 CHANGES IN THE PATTERN OF CONSUMPTION EXPENDITURE
The expenditure on consumption covered in this study relates to both food and non-food items. The
expenditure on food covered cereals, pulses, edible oils, vegetables, milk and milk products, meat and
fish, sugar, gur and other items. Expenditure on non-food covered clothing, footwear, consumer durables,
44
pan, beedi and cigarettes, intoxicants, ceremonies, and other heads like newspaper, travel and also on
health and education. The annual consumption expenditure on food per household at the base level and
their annual growth rates are given in the Table 5.7.
Table 5.7: Changes in annual per household consumption expenditure of food (level and growth)
State Annual Consumption expenditure on food per household
Base (Rs.) CAGR
Assam 3468 5.1

Orissa 2544 4.1
Karnataka 2244 6.8
All India* 3040 5.1
Note: * All India refers to all six states.
The share of consumption expenditure on food to total consumption expenditure at the base le vel has
been worked out to be 66.6 per cent (Tables 5.7 and 5.8). The households’ expenditure on food seemed to
be growing at a faster rate in Karnataka because of the low base level consumption in Karnataka. The
share of food in total consumption expendit ure increased in the post-SHG period in all the states except
Andhra Pradesh and Maharashtra, where the share of non-food expenditure increased. This could be
because of greater number of years of bank linkage in these states.
5.3.1 Changes in expenditure on non-food items

The overall annual growth in non-food expenditure of households across different states is given below
in Table 5.8.
Table 5.8: Annual per household consumption expenditure of non-food (level and growth)
State Annual Consumption expenditure on non-food
Base (Rs.) CAGR
Assam 1023 4.7
Orissa 905 4.1
Karnataka 1459 6.2
All India 1529 5.4
The overall annual growth rate in non-food expenditure was 5.4 per cent at the All-India level. The
highest annual growth rate in non-food consumption expenditure in households was recorded in
Maharashtra (6.7 per cent), followed by Karnataka (6.2 per cent) and Andhra Pradesh (5.4 per cent).
The growth rates in food expenditure were found to be higher than that in non-food expenditure in all the
states except Maharashtra and Andhra Pradesh. However, at the all-India level, the growth rate of
expenditure on non-food was higher (5.4 per cent) than that on food items (5.1 per cent).
5.3.2 Changes in expenditure on education
The share of education in total expenditure of households at the base level has been worked out at 3.97
per cent (Tables 5.7, 5.8 and 5.9). The overall annual growth rate of expenditure on education was 5.6 per
cent for these households (Table 5.9). Moreover, the growth in expenditure of households on education
was higher on food and non-food at the all India level. However, a wide variation in growth rates of
education expenditure is observed across the states. The rate of growth in education expenditure of
45
households was lowest in Assam followed by Orissa. The rate of growth was highest in Andhra Pradesh
(7.4 per cent) followed by Maharashtra (7.1 per cent) and Uttar Pradesh (7 per cent).
Table 5.9: Annual expenditure per household on education (level and growth)
States Annual expenditure on Education per household
Base (Rs.) CAGR
Assam 119 Neg.
Orissa 74 1.6
Maharashtra 172 7.1
Karnataka 196 3.8
All India 180 5.6
5.3.3 Changes in expenditure on health
The share of expenditure on health to total expenditure (food plus non-food) for households in the base
year has been worked out at 4.15 per cent (Tables 5.7, 5.8 and 5.10).The annual growth rate in the health
expenditure of households was 5.5 per cent, which was found to be higher than the growth rate for food
and non-food items at the all-India level. Wide variation in the growth rates in health expenditure is
found across the states. The annual expenditure on health per household in the base level and their annual
growth rates are given in Table 5.10. The annual growth in health expenditure was higher in Karnataka,
Andhra Pradesh and Assam compared to their growth rates in food and non-food items.
Table 5.10: Annual expenditure per household on health (level and growth)
State Annual expenditure on health per household
Base (Rs.) CAGR

Assam 112 5.9
Orissa 125 3.5
Maharashtra 245 3.6
Karnataka 182 9.7
All India 193 5.5
5.4 CHANGES IN PRACTICES R ELATING TO NUTRITION, CHILDREN’S EDUCATION AND

H EALTH CARE
All the selected households were asked to indicate their perception about the connection, if any, between
improvement of level of nutrition, children’s education and general health and their becoming members
of a SHG. The replies were categorised in four groups of respondents who reported:
• Increase,
• No change,
• Decrease and
• Not aware
The percentage distribution of households reporting perceived change in access to nutrition, children’s
education and health is reported in Table 5.11.
46
Table 5.11: Share of households reporting change in access to nutrition, children’s

education and health care
Types of Nutrition Children’s education Health care
model
Increase No Decrease Increase No Decrease Increase No Decrease
change change change
Model type 1 76.9 18.9 1.1 79.9 15.1 0.9 77.6 20.4 0.9
Model type 2 79.6 16.5 1.4 81.2 14.1 1.8 83.5 13.9 0.9
Model type 3 76.9 19.5 0.9 77.4 17.8 1.2 84.3 13.5 0.6
All Models 78.5 17.6 1.3 80.3 14.9 1.5 81.9 15.7 0.8
It can be seen from Table 5.11 that on an average about 80 per cent of the households reported an
increase in their access to nutrition, children’s education and health care of members as compared to the
pre-SHG situation. The state-wise tables on changes in access to nutrition, children’s education and
health care of members are given in Appendix A5.4.1- A5.4.3.
5.4.1 Change in access to drinking water
Households were asked to indicate their major source of drinking water in the pre-SHG situation and in
the reference year 2006. The responses revealed that there was an increase of seven percentage points at
the all-India level for households in getting piped water within the house compound. The most prominent
source of drinking water supply was reported to be hand pumps. The percentage of households reporting
their major source of drinking water across states, types of model in pre-SHG situation and in 2006 are
given in Appendix A5.4.4.
The state-wise analysis shows that the major source of drinking water was piped water in Maharashtra,
followed by Andhra Pradesh and Karnataka. The increase in the growth rate was more prominent in the
Model type 2 than in other model types. It is reasonable to acknowledge that access to piped water supply
generally shows improvement in quality and quantity of water supply. This speaks much about the
improved economic status of households. It could be related to the better knowledge services provided in
SBLP in improving health and hygiene of households.
5.4.2 Changes in access to sanitation by households

The information collected on the sanitary facilities of households in the pre-SHG situation and later in
2006 revealed that the percentage of households not having any such facility declined from 48 per cent to
44 per cent. (Appendix A5.4.5). The availability of toilet facilities inside the house or within the
compound for households increased by 10 percentage points.
The distribution of households by access to types of sanitary facilities across the six states is given in
Appendix A5.4.5. Non-availability of sanitary facilities was reported to be the lowest in Assam and
Andhra Pradesh, while it was the highest in Orissa, followed by Uttar Pradesh.
5.5 CHANGES IN S AVINGS AND BORROWING PRACTICES
5.5.1 Annual savings per household
Under SBLP, greater emphasis is placed on savings. The philosophy of the programme is “savings first
and credit next”. Saving and credit are two sides of the same coin. One saves and uses the savings for
acquiring an asset. Alternatively, one acquires an asset by borrowing and later pays the same from future
savings. It rests on the premise that members would need to develop the habit of thrift before availing
loans. The people learn financial discipline by regularly saving and the regular savers are more likely to
maintain regular repayment of loans. In this section, an attempt is made to estimate the annual savings
per household during the period in the base year (pre-SHG situation) and in the current year 2006 (post-
SHG situation). The savings in this study include both financial and physical savings measured through
changes in investment in physical assets. The financial savings include savings in:
47
• SHGs
• Banks
• Post offices
• Co-operative societies
• Life insurance and
• Cash in hand
The physical savings include net change in investments during the year in land/house improvement:
• Purchase of gold and jewellery, including silver and imitation jewellery and
• Business assets
The average physical and financial annual savings per household in the base year and their annual growth
rates are presented in Table 5.12.
Table 5.12: Average level of savings per households (level and growth): All India
Model type Type of savings
Financial (Rs.) Physical (Rs.) Total
Base 2006 CAGR Base 2006 CAGR Base 2006 CAGR
Model type 1 2601 4764 12.1 790 1949 18.7 3391 6714 13.8
Model type 2 2068 4392 15.0 842 1592 12.5 2911 5984 13.3
Model type 3 853 2285 19.5 474 663 6.2 1327 2948 15.5
All Models 2057 4213 14.3 777 1569 14.0 2834 5782 14.2
In comparison to the base year, the households were generated more than doubled their financial savings
– from Rs. 2, 057 to Rs. 4,213 and their physical savings from Rs. 777 to Rs. 1, 569. This resulted in an
overall increase in savings by 104 per cent from Rs. 2, 834 to Rs. 5, 782. It may also be seen from Table
5.12 that the annual growth rate of both financial and physical savings reached was more than 14 per
cent. The growth rate in savings was higher in Model type 3 compared to the other Model types.
However, the magnitude of changes in savings was much higher in Model types 1 and 2.
5.5.2 Changes in access to instruments of savings

The access to different financial saving instruments by households has improved substantially compared
to the pre-SHG situation (Table 5.13).
Table 5.13: Distribution of saving instruments by households (%): All India

Model type SHG Bank Post office Co-operative Life
society insurance
Base 2006 Base 2006 Base 2006 Base 2006 Base 2006
Model type 1 - 99.3 29.2 34.4 8.6 11.0 3.0 3.6 12.3 19.6
Model type 2 - 99.7 21.6 28.7 4.5 7.6 2.0 3.5 9.6 17.1
Model type 3 - 99.7 10.0 15.5 3.7 7.8 0.3 0.5 4.3 15.4
All Models - 99.6 22.2 28.5 5.6 8.6 2.0 3.1 9.7 17.6
It may be seen from Table 5.13 that apart from savings in SHGs by practically all survey respondents in
the 2006 situation, the other major saving instruments increasingly used by households were banks
(increase from 22.2 to 28.5 per cent). This was followed by life insurance (9.7 to 17.6 per cent), post
offices (5.6 to 8.6 per cent) and co-operative societies (2.0 to 3.1 per cent).
5.5.3 Saving facilities fulfilled by SHGs

The SHG members were asked to indicate whether their needs for saving facilities are significantly met
by SHGs or not and the responses were categorised in three groups viz;
• Very well met
• Well met
• Not well met
48
Table 5.14 presents percentage of households reporting whether their needs for saving facilities are met
by SHGs.
Table 5.14:Distribution of households by saving facilities fulfilled by SHG: All India

Model type Saving facilities fulfilled by SHG (%)
Very well met Well met Not met Non-response
Model type 1 22.5 53.5 18.5 5.6
Model type 2 37.5 48.6 10.9 2.9
Model type 3 37.1 51.1 7.1 4.8
All Models 33.1 50.3 12.5 3.9
It can be observed from Table 5.14 that as high as 83 per cent of households reported that their needs for
saving facilities were sufficiently met by SHGs.
5.5.4 Changes in Average value of consumer durable assets per household
The net changes in the value of consumer durables owned per household and their annual rate of growth
are presented in Table 5.15. The net change indicates the difference in the value of assets owned in the
post-SHG period. The average net change in the magnitude of value of assets was Rs. 4329 per
household at all-India level and the rate of growth per annum in the consumer durable assets was
considerably high at 9.9 per cent. The magnitude of change was highest in Model type 2. At the state
level, the magnitude was highest for households in Andhra Pradesh, followed by Maharashtra, Karnataka
and Uttar Pradesh.
Table 5.15: Change in household assets across states

State Net Change in assets per household (Rs.) CAGR
Assam 2907 11.5
Oris sa 2979 15.4
Karnataka 4416 18
All India Change in household assets across Model Types
Model type 1 3233 6.1
All Models 4329 9.9
5.6 CHANGES IN BORROWING H ABITS
Through bank linkages, SHG members improved their access to credit services substantially. While in
the pre-SHG situation only 47 per cent of all members had taken loans, this nearly doubled in the post-
SHG situation to the very high rate of 93 per cent (Table 5.16). The rate was especially high in Model
type 3 with 97 per cent of all the members taking loans. Appendix A5.5.1 presents the changes in
borrowing habits by states.
Table 5.16: Changes in household availing loan: All-India level (%)

Model type Pre-SHG Post-SHG
Loans not taken Loans taken Loans not taken Loans taken
Model type 1 57.7 42.3 9.0 91.0
Model type 2 52.2 47.8 7.4 92.6
Model type 3 50.3 49.7 2.6 97.4
All Models 53.5 46.5 7.2 92.8
49
5.6.1 Average loan amount
On an average, the households borrowed a total of Rs. 14,640 in the post-SHG period (with about 5 years
of bank linkage), compared to a total of Rs. 5,384 in the pre-SHG situation (Table 5.17 and Figure
5.5.1). The average loan taken by households was growing at an annual rate of 20.45 per cent. The
average per household loans in post-SHG period for the different type of models varied only to a small
extent - between Rs. 14,202 in Model type 3 to a maximum of Rs. 14,922 in Model type 2.
Table 5.17: Average loan amount per household by Model type and rate of growth
Model type Loan amount per household
Pre-SHG Post-SHG CAGR
Model type 1 5229 14282 20.95
Model type 2 5636 14922 19.81
Model type 3 4645 14202 22.42
All Models 5384 14640 20.45
The average loan amount per household by states is given in Appendix A5.5.2
Figure 5.5.1: Change in average borrowings per household
16000 14640
14000
Pre-SHG
12000
post -SHG
10000
Rupees
8000
5384
6000 4114
3623
4000
2000
0
Bank linked Non-bank linked
5.6.2 Sources of borrowings
An attempt to analyse the pattern of borrowings by source reveals that the moneylender was the most
important source in the pre-SHG situation (Table 5.18). Before the SHG formation, about 60 per cent of
households obtained loans through moneylenders, followed by relatives and friends (25 per cent) and
banks (13 per cent). The picture changed drastically in the post-SHG period, where loans from
moneylenders were reported to be taken by only 1.2 per cent. A substantial reduction in obtaining loan
from relatives/friends was also observed in the households. The major sources of loans in the post-SHG
situation are SHGs and banks. About 51 per cent of households reported SHGs as their major source of
loan. About 44 per cent of households used banks to obtain loans in the post-SHG period.
50
Table 5.18: Percentage dis tribution of borrowers by source of loan

Model type SHG Banks Moneylenders Relatives / Others
friends
Model type 1
Pre-SHG - 15.5 56.0 23.3 5.2
Post-SHG 68.6 29.2 1.0 0.8 0.4
Model type 2
Pre-SHG - 12.8 57.8 27.1 2.3
Post-SHG 44.4 50.8 1.6 2.2 1.0
Model type 3
Pre-SHG - 4.8 79.9 13.9 1.4
Post-SHG 49.8 42.9 0.2 0.6 6.5
All Models
Pre-SHG - 13.5 60.4 24.4 1.7
Post-SHG 51.2 44.2 1.2 1.6 1.8
5.6.3 Change in loan use patterns

Households were asked to indicate the actual use of the loans taken. The main purpose of this set of
questions was to find out the type of use, categorised by production-oriented or consumption-oriented
loans. The use of loans for productive purposes includes the loans used in:
• Agriculture
• Livestock
• Petty business and trade activities
• Arts and crafts
• Agro-processing and other service activities
Apart from these, all other uses of loan were considered as consumption-oriented which include:
• Repayment of debts
• Basic consumption needs
• Purchase of durable goods
• Health/ illness
• House building and house improvement
• Education
• Other purposes like marriages, funerals, other social rites
Table 5.19: Percentage distribution of loan use by purpose: All India

Model type Loan used for productive purposes Loan used for consumption purposes
Pre-SHG Post-SHG Pre-SHG Post-SHG
Model type 1 54.5 62.5 45.5 37.5
Model type 2 37.1 45.9 62.9 54.1
Model type 3 42.3 51.3 57.7 48.7
All Models 42.6 51.3 57.4 48.7
It may be observed from Table 5.19 that the use of loans for productive purposes has increased by 20 per
cent from 42.6 per cent in the pre-SHG situation to 51.3 per cent for the post-SHG situation. The positive
trend may be observed in all the states in the use of loans for production oriented purposes (Appendix
A5.5.3). It appears that households use loans to satisfy consumption needs when they initially join a
SHG. However, the member households reduce the usage of such loans after their SHGs are bank-linked.
They can access higher loan amounts after the bank linkage and they use these more for productive
purposes.
51
5.6.4 Distribution of loan account by interest rate
Table 5.20 presents the percentage distributions of loan accounts of major agencies by rates of interest
charged by them.
Table 5.20: Distribution of loan account by interest rate

Agencies Interest rate per annum (%)
Upto 12 12-24 24-36 36-48 >48
Pre - Post - Pre - Post - Pre- Post - Pre- Post- Pre- Post-
SHG SHG SHG SHG SHG SHG SHG SHG SHG SHG
SHG - 21.9 - 67.2 - 8.4 - 2.4 - -
Bank 35.3 65.3 64.7 34.7 - - - - - -
Moneylenders 6.7 14.8 30.6 48.7 42.8 24.5 4.3 1.6 15.5 10.3
Friends and relatives 16.2 29.0 22.0 67.9 29.7 4.4 32.1 10.3 - -
The agency-wise distribution of loan accounts by interest rate reveals that the majorit y of loans provided
by different agencies were in the 12-24 per cent interest rate band. A significant reduction in the rate of
interest charged by moneylenders may also be observed in the post-SHG period. The increased
competition caused by the credit services provided through bank linkage and SHG activities was likely to
be a contributing factor.
5.6.5 Repayment of loans
This information throws light on the discipline of households in their repayment behaviour after
becoming SHG members. The households taking loan from SHGs were asked to indicate whether they
make regular repayments. The responses of borrowing households were classified in three categories
according the regularities of repayment as:
• Always
• Irregular
• Never
Table 5.21 presents the distribution of borrowing households by regularity in repayment.
Table 5.21: Distribution of household borrowings by regularity in repayment (%)

State Regularity in Repayment
Always Irregular Never Total
Assam 99.9 - 0.1 100
Orissa 88.7 9.8 1.5 100
Uttar Pradesh 92.9 3.5 3.6 100
Maharashtra 96.9 2.7 0.4 100
Andhra Pradesh 100 - - 100
Karnataka 99.8 0.2 - 100
Model type 1 93.8 5.2 1.0 100
Model type 2 97.3 1.8 0.9 100
Model type 3 98.5 0.9 0.6 100
All India 96.4 2.7 0.9 100
More than 96 per cent of households reported that they make their loan repayments on time. It can be
observed that only 1 per cent of the households indicated that they could never repay their loans. Non-
repayment of loans by households was found to be highest in Uttar Pradesh (3.6 per cent), followed by
Orissa (1.5 per cent). Irregular repayment of loans was also common with 9.8 per cent of households in
Orissa.
52
5.6.6 Assessment of Current borrowing needs by SHG members
The members of the SHGs were asked to indicate whether their current loan requirements were fully met
by their SHGs. The information collected reveals that loan requirements were fully met by SHGs in 82
per cent of the households (Table 5.22). Only 18.3 per cent of households indicated that their
requirements are not fully met by their SHGs. The level of satisfaction on this aspect of financial service
delivery was highest in Model type 3 (90.9 per cent) and lowest in Model type 1 groups (70.8 per cent).
At the state level the best results were achie ved by Karnataka (i.e., higher than 90 per cent). On the other
side, about 31.3 per cent of households in Assam followed by Orissa (25.1 per cent) and Maharashtra
(23.6 per cent) reported that loan needs were not fully met through SHGs. Intermediaries of Model type 3
are the NGOs. The NGOs interact more with the SHGs and, therefore, are in a position to understand the
need of SHG members better. The proactive interaction in the banks and SHGs help in meeting their loan
requirements better.
Table 5.22: Distribution of households by loan requirements (%)

State Requirement of loan
Fully met by SHGs Not met fully by SHGs
Assam 68.9 31.1
Orissa 74.9 25.1
Uttar Pradesh 81.7 18.3
Maharashtra 76.4 23.6
Andhra Pradesh 89.3 10.7
Karnataka 95.8 4.2
Model type 1 70.8 29.2
All India 81.7 18.3
The households where current requirements were not fully met were further asked to indicate their
current loan requirements. Table 5.23 presents the share of loans provided by SHGs to total current loan
requirement in the states for those households which had assessed that their loan requirements were not
fully satisfied through SHGs. Further, the table includes the estimated additional loan requirements of
these respondents. The members of SHGs indicated that 29 per cent of their loan requirements were met
by SHGs and that they would require an additional loan amount of Rs. 1,539. The additional credit
requirement was relatively low for Model type 3 households wit h Rs. 470 and on the other hand,
relatively high for Model type 1 households amounting to Rs. 3,791.
Table 5.23:Loan requirement fulfilled and additional loan per household

State Percentage of total loan provided by SHGs to Additional loan required per
total requirement(%) household (Rs.)
Assam 16.5 2703
Orissa 20.8 3533
Uttar Pradesh 25.1 3652
Maharashtra 40.1 3675
Andhra Pradesh 44.5 2223
Karnataka 28.7 538
Model type 1 24.8 3971
All India 29.2 1539
5.7 CHANGE IN INCIDENCES OF POVERTY
Poverty alleviation has always been given the highest priority in successive governments’ agenda since
Independence. But, the incidence of rural poverty is still large. The National Sample Survey Organisation
(NSSO) has released the findings of its latest survey covering the period July 2004 to June 2005. [Report
53
no. 508(61/1.0/1)]. Here, two different poverty ratios have been provided to estimate the percentage of
people below the poverty line. The first one, “Uniform Recall Period” (URP) is based on 30 days’ recall
period of consumption of all the items. The other is “Mixed Recall Period” (MRP), based on 365 days’
recall for five in frequent non-food items, namely clothing, footwear, durable goods, education and
institutional medical expenses, together with 30 days’ recall for the remaining items. Based on this, the
poverty estimates for 2004 -05 in the rural areas by the selected states and their poverty lines are given
below. People living below the poverty line will henceforth be referred to as the poor.
Table 5.24: Share of population living below the poverty line in 2004-05
States Based on URP consumption Based on MRP consumption Poverty line
(Rs./capita/ month)
% of persons Number of % of persons Number of
persons persons
(million) (million)
Assam 22.3 5.45 17.0 4.15 387.64
Orissa 46.8 15.18 39.8 12.93 325.79
Uttar Pradesh 33.4 47.30 25.3 35.77 365.84
Maharashtra 29.6 17.11 22.2 12.84 362.25
Andhra Pradesh 11.2 6.47 7.5 4.32 292.95
Karnataka 20.8 7.51 12.0 4.33 324.17
India* 28.3 220.92 21.8 170.30 356.30
Note: * India represents all the states in India covered by NSSO.
Source: The National Sample Survey Organisation (NSSO), Report No-508 (61/1.0/1), July 2004 to June 2005.
One of the major objectives of SBLP is to help poor households through financial inclusion by providing
credit through a formal system. Thus, the most important aspect is to gather information on whether
SBLP helps poor members of SHGs to come out of the poverty trap.
In this section, an attempt is made to examine whether there is any significant change in the status of
households. The state-wise rural poverty lines for the concerned states for 2004-05 were updated using
the CPI of agricultural labourers (CPIAL) to obtain state-specific rural poverty lines for 2006-07. The
state-specific poverty lines for 2006-07 thus computed are depicted in Table 5.25.
Table 5.25: State-wise poverty line in 2006-07

State Poverty line in 2006-07 (Rupees/capita/month)
Assam 432.20
Orissa 371.60
Uttar Pradesh 431.40
Maharashtra 416.10
Andhra Pradesh 329.10
Karnataka 349.90
The cut-off per capita per month poverty lines were applied both at the base level (pre-SHG)
consumption data as well as for the situation in 2006 (post-SHG) for each of the selected sample
household in the survey. The distribution of poor and non-poor households at the base level and in 2006
for households is given in Table 5.26.
Table 5.26: Distribution of poor and non-poor households in pre and pos t-SHG situation.
Pre-SHG Post-SHG
Total households
Poor Non-poor Poor Non-poor
2792 1999 1580 3211 4791
(58.3) (41.7) (33.0) (67.0) (100)
It may be observed from Table 5.26 that 58.3 per cent of households were poor in the pre-SHG period.
The percentage of poor declined to 33 per cent in the post-SHG period. A substantial net reduction of
54
25.3 percentage points in poor households was found after about five years of bank linkage. The net
poverty reduction rates by states including the annual poverty reduction rates are provided in Table 5.27.
Table 5.27: Net poverty reduction by states

States Percentage of households below poverty line
Base level 2006 Net reduction CAGR
(percentage
points)
Assam 66.1 41.4 24.7 -9.24
Orissa 78.0 56.8 21.2 -5.63
Uttar Pradesh 61.4 34.7 26.7 -10.54
Maharashtra 62.8 30.1 32.7 -12.16
Andhra Pradesh 11.6 0.8 10.8 -36.89
Karnataka 67.0 33.0 34 -12.38
Model type 1 62.4 38.5 23.9 -8.74
Model type 2 55.6 30.2 25.4 -10.7
Model type 3 61.1 33.1 28 -10.51
All Indi a 58.3 33.0 25.3 -10.0
Table 5.27 reveals that the annual poverty reduction rates of 10 per cent was found at the all-India level.
The performances of the SHG Model types 2 and 3 in poverty reduction rate were slightly above the all-
India average, whereas Model type 1 reported a poverty reduction rate of 8.74 per cent which is clearly
below the average. At the state level, higher rates of poverty reduction were found, especially in Andhra
Pradesh, followed by Karnataka, Maharashtra and Uttar Pradesh. Poverty below average rates was
recorded in Orissa, followed by Assam.
5. 8 CHANGES IN D EPENDENCE ON M ONEYLENDER BY HOUSEHOLDS

The indicator on the dependence of households on moneylenders was worked out as a proportion of
number of loans taken from the moneylender to total count of loans before members joined SHGs, and
after members joined SHGs till 2006 . The difference in these two proportions would indicate the change
in the dependence on moneylenders over the reference periods for comparison. Table 5.28 presents the
percentage counts of loan taken from moneylenders to total counts of loans taken by households across
the six states and by the three Model types.
Table 5.28: Change in dependence on moneylenders (%)

State Number of times loan taken from money lender to total count of loan
Base level 2006
Assam 32.0 0.1
Orissa 68.1 1.0
Andhra Pradesh 86.2 0.3
Karnataka 79.4 0.5
All India 60.1 1.2
It may be observed from Table 5.28 that the dependence on moneylenders has reduced drastically for
households in 2006. The situation was worse in the pre-SHG era, as 60.1 per cent of the total count of
loans were from that source. After bank linkage, only 1.2 per cent of total loans were taken by
households from moneylenders in 2006. The dependence on moneylenders was highest in Model type 3
(79.1 per cent) compared to Model types 1 and 2 in the base year. Thus, the reduction in dependence on
moneylenders was found to be highest for Model type 3. Households in all the states under study reported
significant reduction in the dependence on moneylenders. Substantial reduction in the dependence of
moneylenders was observed most in Andhra Pradesh, followed by Karnataka and Orissa.
55
5.9 SOCIAL EMPOWERMENT
One of the objectives of the SBLP is to enhance social empowerment, which includes developing the
self-confidence of members of rural households, especially women through promotion of group and own
activities and the conduct of training, organised mainly by SHPIs. The indicators of social empowerment
studied in this report are:
• Self confidence of female members
• Abilities to face problems
• Control over use of money
• Decision making
• Participation in public affairs
• Ownership of productive and consumer assets
Except for the ownership of assets, all the other indicators of social empowerment in this report are for
women members. The female SHG members were asked to indicate their perceptions on whether their
membership in SHGs had any impact on their empowerment in general and on various social matters as
per the indicators specified above. The results of the responses are presented in Table 5.29.
Table 5.29: Impact on social empowerment of women (%)
State Distribution of households
Increase No change Decrease Non response Total
Assam 86.5 12.5 0.3 0.8 100.0
Orissa 94.4 5.3 0.1 0.1 100.0
Uttar Pradesh 90.3 8.3 0.3 1.1 100.0
Maharashtra 95.4 3.7 0.1 0.7 100.0
Andhra Pradesh 91.5 8.3 0.1 0.0 100.0
Karnataka 93.6 1.4 3.7 1.3 100.0
Model type 1 91.4 7.3 0.4 0.9 100.0
Model type 2 91.7 6.5 1.2 0.7 100.0
Model type 3 95.1 4.6 0.0 0.3 100.0
All India 92.0 6.5 0.8 0.7 100.0
A very high share, that of 92 per cent, of households indicated that the social empowerment of women
has increased after attaining membership in SHGs over a period of time. Only about 6 per cent of women
members reported no change in their social empowerment.
While examining across states, it is seen that the percentage of households reporting increase in social
empowerment of women was highest in Maharashtra followed by Orissa, Karnataka and Andhra Pradesh.
5.9.1 Changes in self confidence of female members
Information was collected on the changes in the self-confidence levels of women in the following
aspects:
• Travelling alone to the nearest town/ district headquarters.
• Going alone for medical treatment for self / children.
• Handling certain amount of money.
• Addressing a forum.
Table 5.30 provides the percentage of women members indicating a level of improvement in self
confidence, if any, over the pre-SHG period at the all-India level
56
Table 5.30: Distribution of women members by self confidence in different activities– All India
Type of aspects Level of confidence (per cent)
Significantly Improved No change Non
improved response
Travelling alone to nearest town/ district 43.1 36.4 8.6 12.0
headquarters
Going alone for medical treatment for self / children 37.4 40.3 10.1 12.1
Handling mo ney 30.2 47.0 10.7 12.1
Addressing the forum 25.2 42.4 20.3 12.1
It may be observed from the results presented in Table 5.30 that the response of the women members
reporting significant improvement of self-confidence was reflected mostly in the aspect of travelling
alone. Except for addressing a forum (68 per cent), other indicators, about 80 per cent of female members
of SHGs indicated significant improvement in self confidence.
5.9.2 Changes in abilities to face problems
Three different aspects of problematic situations were indicated to the women members and current
information on their ability to face them were recorded and compared to the pre-SHG situation. The
problems on which their responses were elucidated are given below:
• Health-related
• Financial crisis in the family
• Family disputes
The percentage of women respondents indicating changes in abilities to face such situations by level of
improvement is given in Table 5.31.
Table 5.31: Distribution of women members in ability to face problems (%): All India
Type of aspects Level of improvement
Significantly Improved No change Non response
improved
Health related problems 29.5 44.1 14.3 12.1
Financial crisis 22.8 49.2 15.8 12.3
Family disputes 22.4 41.4 23.8 12.3
Improvements/significant improvements in their ability to face health-related problems were reported by

more than 73 per cent of households. Adding up responses of “significantly improved” and “improved”,
we observe that 72 percent of the women respondents said that they were confident to handle financial
crisis while 63.8 percent said that they could do so with regard to family disputes.
5.9.3 Changes in control over use of money by female SHG members
The women members were asked to indicate whether their control over the use of money they earned has
improved over time compared to the pre-SHG situation. Information was collected with regard to the
following aspects:
• Buying consumer durable goods
• Buying physical assets like land and plot
• Expenditure on family / socialfunction
• Expenditure on children’s education
When the control over money earned by women is examined, we find interesting results. The highest
rates of improvements/significant improvements over such control was reported by households on
expenditure for children’s education (71 per cent), followed by expenditure on family/social functions
(66 per cent), purchase of consumer durables (62 per cent) and purchase of physical assets (52 per cent).
57
The percentage of women reporting improvement in control over use of money compared to the pre-SHG
situation is given in Table 5.32.
Table 5.32: Percentage distribution of women reporting control over use of money – All India
Type of use Level of improvement
Significantly Improved No change Non response
improved
Buying consumer durables 21.3 40.9 25.7 12.1
Buying physical assets 15.0 36.7 36.2 12.2
Expenditure on family / social functions 18.5 47.7 21.3 12.4
Expenditure on children’s education 27.0 44.3 15.5 13.2
5.9.4 Change in SHG member ownership on productive and consumer assets

Information from the households was collected on their opinion whether SHG membership made any
impact in terms of increased ownership in productive assets like livestock and business assets over the
pre-SHG period. The responses of households were categorised as follows:
• Increase
• No change
• Decrease
• Non response
The above information was collected on the change in the SHG members’ ownership over household
assets compared to the pre-SHG period. Table 5.33 provides the findings on changes in member
households’ ownership over productive and consumer assets.
Table 5.33: Model-wise changes in ownership over productive and consumer assets by households –
All India
Type of use Percentage distribution of households
Increase in ownership No change Decrease in ownership Non response
Productive assets
§ Model type 1 65.7 30.5 0.9 2.8
§ Model type 2 60.5 35.6 1.6 2.4
§ Model type 3 58.6 33.4 2.5 5.5
• All Models 61.7 33.8 1.5 2.9
Household assets
§ Model type 1 76.1 20.2 2.5 1.1
§ Model type 2 80.2 17.9 1.3 0.6
§ Model type 3 83.8 14.0 1.5 0.6
§ All Models 79.5 18.0 1.7 0.8
About 60 per cent of the households indicated that there was an increase in the ownership of productive
assets in the post-SHG situation. About one-third of households indicated that there was “no change” in
the ownership of productive assets. Increase in ownership of productive assets was prominent in Model
types 1 and 2 as compared to Model type 3.
About 80 per cent of households indicated that there was an increase in the ownership of household
consumer assets. This was more prominent in Model type 3.
5.9.5 Change in abilities of female SHG members in household decision making
The decision-making capacity of women members is expected to improve through participation in

various SHG activities. To test this hypothesis, the female SHG members were asked to provide their
opinions on whether there was any change in decision making from the pre-SHG to post- SHG period in
the following areas:
58
• Children’s education
• Purchase of assets
• Taking loan
• Use of loan
The information was collected on who decided on the above issues in the pre-SHG period and whether
there was any change in the post-SHG period. Table 5.34 provides the percentage distribution of
members reporting on the decision-making person in pre-SHG and post-SHG situations by indicators.
Table 5.34: Distribution of decision making members in pre -SHG and post-SHG periods (%)
Items Decision taken by
Women Spouse Jointly Others h
member
Children’s education
Pre-SHG 9.1 34.4 45.6 2.9
Post-SHG 22.5 15.8 51.7 2.6
Purchase of assets
Pre-SHG 7.5 39.2 46.9 4.3
Post-SHG 16.2 23.7 55.7 2.7
Taking loan
Pre-SHG 9.3 42.6 41.0 4.7
Post-SHG 28.9 17.6 49.8 1.9
Use of loan
Pre-SHG 9.1 40.6 43.7 4.0
Post-SHG 22.7 20.0 53.6 2.1
The participation of women in the decision-making process increased significantly after joining SHGs.
The trends were similar for all the different aspects included under this survey item. Especially
encouraging was that the share of women increased from an overall average of nearly 9 per cent to about
20 per cent who took decisions solely on their own in the post-SHG situation. The joint decision making
by women members together, with their spouses also improved significantly for all aspects investigated.
The change in the ability of female members to reach decisions is given by state-basis in Appendix
A5.12.1 through 5.12.4.
5.9.6 Changes in Participation in Public Issues at Village Level
Regarding the participation of women in public issues at the village level, female SHG members were
asked to provide their perceptions for the pre and post- SHG periods on:
• Whether they have ever approached a government official to obtain services to solve a problem
• Whether they attended any committee or village meeting such as the Panchayat, Gram Sabha or
other committee meetings
• Whether they have been members of any village or Government committee
Table 5.35 provides the percentage of women members to total members on participation in the various
activities noted in both pre and post-SHG situations at the all-India level.
Table 5.35: Changes in participation on public issues (All India) shares in per cent
Indicators of Change Pre-SHG Post-SHG
Approached government officials to solve problems 13.5 49.4
Attended committees, village meetings 15.4 51.4
Member of village/Govt. committees 4.9 15.7
h
includes other members of the family and non response cases
59
Significant improvements were observed from about 15 (pre-SHG) to 50 per cent (post-SHG) on the
aspects of approaching government officials and attending committees and village meetings. The changes
were much less pronounced on the side of female SHG members becoming members in
village/government committees where membership increased from nearly 5 per cent to 16 per cent.
The respective survey results by Model types (Table 5.36) showed similar trends as those analysed above
for the All-India level. The changes in participation in public issues by states are given in Appendix
A5.13.1.
Table 5.36: Changes in participation on public issues by type of model across household
members (%)
Approached govt. officials Attended Committees, Members of village/govt.
to solve problems village meetings committees
Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG
Model type 1 11.3 46.4 17.0 51.3 6.8 16.4
Model type 2 12.4 51.6 15.3 51.1 3.8 14.7
Model type 3 21.0 45.2 13.3 52.9 6.0 20.7
5.10 ASSESSMENT OF TRAINING N EEDS OF SHG M EMBERS AND THEIR FAMILIES
5.10.1 Training provided
Information was collected on whether training has been provided to the members of SHG or their
families for improving income-generating activities such as farming, craft or business during the previous
year i.e., 2006. The results show that about 50 per cent of households were not imparted any training for
the required capacity development for the above mentioned occupations. The share of households
receiving training only once was 35 per cent in 2006 and another 15 per cent had received training
several times. Table 5.37 presents the percentage of households that had received training for improving
income-generating activities across the types of models.
Table 5.37: Percentage distribution of household provided training for income generating
activities in 2006: All-India
Type of model Training provided for farming, crafts or business
Several times Once No training
Model type 1 13.6 34.6 51.8
Model type 2 14.8 32.5 52.6
Model type 3 19.8 44.5 35.7
All Models 15.2 34.7 50.1
5.10.2 Adequacy of training provided
When households received training, they were further asked whether the training provided was adequate
for the needs of their farming or business activities. Only 30 per cent (Table 5.38) of households that
had received training reported that it was adequate. The adequacy rating by Model type 3 was 23 per
cent, which was much below that of the all-India average of 30 per cent.
Table 5.38: Distribution of trained households on adequacy of training received (%): All-India
Type of model Level of adequacy of training
Highly inadequate Inadequate Adequate
Model type 1 9.6 60.1 30.3
Model type 2 7.1 61.1 31.9
Model type 3 3.4 74.0 22.6
All Models 7.1 63.1 29.8
60
The study reveals the importance of developing need-based training of households that could be adapted
and translated for local needs with follow-up technical assistance.
5.10.3 Adequacy of extension services
The extension services include knowledge information provided by NGOs, block offices and village-
level members regarding financial and technical services, agricultural and farming practices to the
households.
Information was also collected from the households on the adequacy of the existing extension services in
relation to their needs for developing income-generating activities. The results (Table 5.39) revealed the
following at the all-India le vel:
• Only 18.6 per cent of households reported the existence of adequate extension services.
• About 20 per cent of households reported that the extension services do not exist at all.
A very low percentage (14 per cent) was the adequacy rating of extension services which was reported by
Model type 3 SHG households.
Table 5.39: Level of adequacy of extension services (%): All India

Type of model Level of adequacy of extension services
Not existing Inadequate Adequate
Model type 1 26.0 53.3 20.7
Model type 2 18.9 62.4 18.8
Model type 3 14.4 72.0 13.6
All Models 20.3 61.1 18.6
5.10.4 Training needs
All the households were asked to specify the major fields in which they required more knowledge and
skills for improving their income-generating activities. The responses were classified under the four main
categories, viz:
• Technical
• Financial
• Management
• Market development
The technical category mainly included training related to the development of agricultural practices
consisting of livestock and non-farm business activities, while “financial” aspects contain developing
numerical, book keeping and accounting capabilities which require educational progress. Table 5.40
presents the percentage distribution of households indicating the major areas on which they required
knowledge.
Table 5.40: Training requirements by households by areas of income generating activities: All-India
(Per cent)
Type of model Field in which training required
Technical Financial Management Market development
Model type 1 35.8 41.3 13.3 8.1
Model type 2 48.0 30.5 13.0 6.7
Model type 3 52.8 28.5 11.5 6.6
All Models 45.1 33.3 12.9 7.1
A considerable proportion of households (about 45 per cent) felt that they required training in technical
development aspects, followed by financial skills (about 33 per cent). More than 50 per cent of
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households opted for development in technical skills in Model type 3 followed by 48 per cent in Model
type 2, while financial skills topped the list in Model type 1 households.
State-wise percentage distribution of households specifying major areas on which they need training is
presented in Appendix A5.14.1. A wide variation exists in the type of training required across states. In
general, the pattern of importance as summarised at the all-India level appears also to be relevant at the
state level, i.e. technical training has been given in most states the priority by most respondents followed
by training in financial aspects. Management and especially market development aspects had generally a
lower priority in the training needs.
5.11 OPINION ON WORKING OF THE SHGS
The selected SHG members were asked to rate the working of their SHGs with respect to the following:
• Rules and regulations, including the extent to which SHGs develop appropriate rules/ regulations,
updating them regularly to solve various conflicts.
• Leadership including existence of strong leadership, competencies in their function with
accountability towards rules and regulations.
• Members’ participation in meetings and feeling of “ownership” of their SHGs.
• General management practices, which include planning/ implementation and monitoring of group
decisions and quality of record keeping of meetings.
• Financial management practices, which includes transparency of group financial matters to members
and accuracy in maintaining SHG financial records.
• Service delivery, which includes level of adequacy of various services to members such as savings
and loans.
• External relations, which include level of collaboration with other SHGs, SHG federations and
training institutions.
The SHG ratings on each aspect from members were classified in four groups, namely:
• Very good
• Good
• Average
• Poor
An attempt is made to develop a single index for each aspect of working of SHGs by providing scores to
the ratings. The following scores were assigned to the ratings:
Ratings Scores
Very good 3
Good 2
Average 1
Poor Nil
The method of computing these scores is described below. The percentage distribution of ratings by
households is obtained for each aspect of working of SHG. The total score for the distribution on each
aspect is then worked out by assigning the above scores. The total score for each distribution will vary
between 0 and 300. If 100 per cent households provide ‘very good’ rating to a particular aspect of
working of SHG, then the total score would be 300.
Similarly, the score would be 0 if 100 per cent of the households provide ‘poor’ ratings. The total score
thus obtained are then converted in the per cent scale by dividing the total score by 300 and subsequently
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multiplying it by 100. The maximum score of 300 will be 100. The index of performance for each aspects
of the working of SHGs by Model type as perceived by the selected members of the SHG is presented in
Table 5.41.
Table 5.41: Performance index on working of SHG

Model type Rules and Leadership Members General Financial Service External
regulations participation management management delivery relations
practices practices
Model type 1 67 62 59 55 52 53 35
Model type 2 74 70 67 65 62 64 49
Model type 3 70 64 66 60 59 65 52
All Models 71 67 65 62 59 61 45
It may be observed from Table 5.41 that the overall index of the workings of SHGs by Model type 2 is
better than that of the other models in majority of the aspects recorded. Significant positive difference in
the working of the Type 2 model as compared to other models is observed indicating better working in
SHGs in Model type 2, especially in the working of the SHGs with regard to rules and regulations,
general management practices, financial management practices and service delivery.
5.12 CHANGES IN MEMBERS BEHAVIOUR AND ORGANIZATIONAL AND FINANCIAL

SUSTAINABILITY OF SHGS DURING LAST FEW YEARS
Perceptions of selected members during the last few years on the following aspects were collected. The
ratings from members were collected on the following aspects of SHGs:
- Members participation and their behaviour in group.
- Organisational development of SHGs.
- Financial performance and health of the SHGs.
• The assessment of the members’ participation was obtained through proxy indicators such as
participation of members in SHG savings and credit activity, attendance of members in group
meetings and members involvement in assessing group preferences.
• Organisational development covered the proxy indicators such as the groups’ ability to identify and
solve problems, level of accountability and transparency based on accurate and timely financial
records, organising financial services according to the needs of members and adherence to credit
agreements including loan repayment schedules.
• The financial performance and health of the SHG is covered through proxy indicators of ability of
group members in income generating activities of the SHGs, providing financ ial services to members
in a cost recovering and profitable way, complying with financial health indicators promoted by
NABARD.
• A single index is obtained by providing scores to ratings as described earlier (Section 5.11) for each
aspect of working of SHG in the last few years. The performance index for each aspect of working of
the SHGs for each Model type is presented in Table 5.42.
Table 5.42: Performance index on last few years’ trends on members’ participation, organisational
development and financial performance
Model type Members participation Organisational Financial performance and
and behaviour development of SHG health of SHG
Model type 1 58 47 46
All Models 63 54 54
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A significant positive difference on the performance index of working in Model type 2 as compared to
Model type 1 is observed indicating better working of SHGs in Model type 2.
5.13 EMPLOYMENT GENERATION
Timely availability of credit, especially when used for productive purposes, enhances opportunities for
undertaking income generating activities as a result of which employment opportunities at the household
level increase. The estimated employment days per household was worked out to be 400 person days.
The employment of households registered an increase of 27.3 per cent between pre and post-SHG
situations. It is interesting to note that nearly 30 per cent increase is observed in female employment in
the post-SHG period, compared to the pre-SHG situation. Similarly, an increase of 26 per cent in male
employment also was observed in households belonging to SHGs. The benefits of employment
opportunities of female members as compared to male members seemed to be higher. Average
employment per household by gender is presented in Table 5.43.
Table 5.43: Employment per household during pre and post –SHG situation by gender
(Person days)
Male Female Total
Pre-SHG Post - Incremental Pre-SHG Post -SHG Incremental Pre- Post - Incremental
SHG change in change in SHG SHG change in
employment employment employment
192 242 50 122 158 36 314 400 86
(26.0) (29.5) (27.3)
Note: *Figures in bracket is percentage growth.
The share of employment in paid and unpaid employment by gender is presented in Table 5.44. The
share of paid employment has gone up in the post-SHG situation by six percentage points for female
members and 3.6 percentage points for male members. This could probably be attributed to better
exposures, facilities, and capacity building of SHGs.
Table 5.44: Share of labour days in paid and unpaid employment by gender
(Percentage)
Pre-SHG Post –SHG
Male Female Male Female
Paid Unpaid Paid Unpaid Paid Unpaid Paid Unpaid

42.7 57.3 34.4 65.6 46.3 53.7 40.5 59.5
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Chapter 6
Case studies of SHGs
The main objective of the study is to assess the impact of SBLP on the welfare of the households and the
social empowerment of members due to their participation in the programme. It also analyses the
sustainability of SHGs and impediments they face, if any, in their development. To examine these
aspects, a variety of case studies of both SHGs and individual members were conducted.
In all, the study team conducted 24 case studies spread over the six sample States i.e. four case studies in
each State and two from each of the selected districts. Besides highlighting successful cases of SHGs and
members, care was also taken to find out about cases of non-functional or defunct SHGs and those that
could not get bank linkage. Thus, the 24 case studies conducted are broadly grouped as success stories
and the not-so-successful ones.
6.1 CASE S TUDIES BASED ON S UCCESS STORIES
The case studies in this category include success stories of SHGs as not just groups but also taking into
account individual members and households. Some of the SHGs have been fairly successful in starting
group enterprises and developing expertise in income generating activities. They impart training to their
members and undertake community development work. The cases presented here also include stories of
members, in particular of women, who have been empowered to successfully initiate income generating
activities. Some of the women have shown remarkable leadership qualities and have realised their hidden
capabilities after joining SHGs. They have also served as role models for others.
The case studies under this category are further grouped as:
• SHGs with successful group activities including the ones with strong social commitments
• SHGs where the individual members have been successful in improving their economic status
individually
• Case studies focussing on the achievements of individual members/ families.
6.1.1 SHGs with successful individual activities
We came across a number of SHGs, where members were carrying on individual activities successfully.
They were reaping the benefit of being members by availing loans to either augment their existing
economic activity or to start new income generating activities. Venturing into group activity may be
difficult when most of the members are illiterate and they find it very difficult to acquire new skills.
Though a few SHGs had ventured into group activities, e.g. making agarbatti, pickles and papad they
were not very successful due to lack of marketing skills and tough competition from established brands.
Getting into group income generating activities also requires complete trust and understanding among the
members. Here are the stories of SHGs whose members have benefited by pursuing income generating
activities individually.
6.1.1.1 Girija, the True Leader
This is the story of Girija from Andhra Pradesh, who has been instrumental in motivating and guiding all
15 members of her group. As leader of her SHG, she has been able to build a strong bond among
members who are drawn from different castes and religions. This is a deviation from the usual norms of
SHG formation.
The Jyoti Mahila Sangam, a well functioning SHG in Moosapeta village of Mahabubnagar district,
demonstrates how an educated, highly enterprising leader could motivate others and pull entire families
out of poverty. Girija has cleared high school and at the time of the formation of the SHG in 1995, was
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working as a school teacher. The SHG started with 15 female members, and was promoted by Aadarsha
Welfare Society, a highly successful NGO responsible for promoting a number of SHGs in this district.
In 1999, the SHG got credit linked to Sangameshwara Grameen Bank, a RRB.
One of the important reasons for the success of the SHG is the level of discipline the leader succeeded in
inculcating in the others. All members have to compulsorily attend meetings, which are held twice a
month. Any member who does not attend the meeting has to pay a nominal fine of Rs 5. These highly
disciplined members repaid their loans without default and hence could avail of further loans to augment
their economic activity. Since its inception in 1995, except for one member, the others are continuing
with the group and the total strength remains 15. A strong bond of solidarity has evolved among the
members and they provide moral and financial support to each other in times of need. This is
notwithstanding the fact that the group includes women from different castes and religions. Three of the
members are Muslims, two are from the general category and all the others belong to the scheduled
castes. The president of the group, Girija, is the most literate among the members. A strong personality,
Girija has overcome the problems that could have been posed by the diversity of the members’
backgrounds. The other members look up to her for constant guidance and leadership.
Even though only six members of the SHG were literate during the time of formation of the group, today
all the members have attained functional literacy thanks to Girija’s initiative and background as a teacher
of the non-formal adult education programme. The group members decided that unless the members
learned to sign, they would not be given any loan. It is primarily due to Girija’s persuasion skills that all
the members today sign and have numeric skills and can read bus signs. They were earlier working as
either wage labourers or were housewives with hardly any opportunity to speak to outsiders or officials.
Today, they feel quite empowered not only financially but, also in terms of their ability to face up to the
outside world.
As far as economic uplift of the group is concerned, the records, as well as discussions with the members,
reveal that most of the familie s were below the poverty line till as recently as a decade back. Today, all
15 members are above the poverty line, and a few are fairly well off. Girija is currently the President of
the Federation of SHGs (385 SHGs) in the Mandal and has won a few awards for her achievements (Swa
Shakti and Best Mahila awards from the Chief Minister of Andhra Pradesh and the award for being the
best Mandal in the district). As a teacher in a private school, she was earning just Rs 300 a month in
1999. Today, as a result of her training in book keeping, she is maintaining the accounts of all the 20-odd
SHGs in her village. Another example of her enterprise is that she took the Aadarsha Family Restaurant
on a year’s lease (December 2005 to December 2006) and ran it successfully. The restaurant, which is
located on a highway near the village, caters to the passengers travelling by cars and buses. In addition,
she also got training in manufacturing cold cream and was marketing this product under the
“Mahalakshmi” brand. Like a true leader, she subsequently transferred this business to one of her SHG
members, Bhratamma, who needed an occupation quite badly. She had lost her husband and did not have
any skill other than cooking. She learnt to make the cream and started manufacturing it with the help of
the loan availed through the SHG. This brings her Rs 10,000 per month and goes a long way in
supporting her two children. The product is sold in the entire district and also gets publicity through
displays in various Mahila Samiti functions all over Andhra Pradesh. She gets orders even from Sri
Lanka.
As mentioned earlier, Bharatamma is not the only member who has economically benefitted from the
SHG. For instance, Razia Sultana’s husband owns a tyre repair shop on the highway. At the time of
joining the SHG it was a tiny affair and the family did not earn enough to spare money for its expansion.
After joining the SHG, Razia took loans at twice the nominal rate of interest of 1 per cent per month (this
was lower than what they used to pay i.e. 5 per cent to the moneylender) and invested in the shop’s
expansion. At present, the shop is fetching them more than Rs 7,000 per month and she is able to afford
higher education for her children. Her daughter is in the final under-graduate year and her son is in the
second year of college. Similarly, another member borrowed from the SHG and her husband utilised the
money to buy a machine for concrete mixing, which he rents out and earns a decent income in the
bargain. A second lady has acquired a license for operating cable TV and yet another beneficiary is a
couple that has started a laundry successfully thanks to a SHG loan.
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Though Jyoti Mahila Sangam as a group has not started an enterprise (except running a nursery for a
year), its members have been fairly successful in their endeavours. No wonder the SHG attracts a number
of visitors from within as well as from outside the State. The visitors included a team from the World
Bank, a group of NGOs from Australia and the Minister for Rural Development from Sri Lanka.
6.1.1.2 SHG – An aid to improve the quality of life
By becoming a member of a SHG, and getting out of the clutches of moneylenders, these women from
Karnataka are now assured of a steady income and savings. Their lives have changed and they are able to
enjoy a social life of their own.
Generally, the SHG concept is associated with collective savings by groups comprising the poor, who
bank them and obtain funds in the form of loans to eventually escape the clutches of moneyle nders. This
was the core objective of the Dr Ambedkar Nirantara Ulitaya Gumpu (Dr Ambedkar Everlasting Savings
Group), a SHG in Bhadravati Taluk of Shimoga District in Karnataka, which was formed to improve the
quality of the lives of its members. This SHG has 20 female members, of whom 19 belong to the
scheduled castes and one to the OBC category. All of them were vegetable vendors, whose working day
began early in the morning. They used to take loans from the moneylenders, buy vegetables from the
wholesale market, and go around the city with baskets on their heads selling their stuff. In the afternoons
they would return, repay the moneylender, and attend to their household chores. While some
moneylenders would take Rs 110 for every Rs 100 loaned, there were others who would extract Rs 100
for every Rs 90. Their entire lives were spent in making ends meet. They had no social life at all.
An Aanganwadi worker living in the same locality had informed these women about the concept of
SHGs. As they were interested in saving money, and also wanted to be free from
moneylenders, they approached the municipal office in Bhadravati and informed them of their decision to
start a SHG by saving Rs 50 per month. The SHG was started in 2003 with Rs 10 as the initial
membership fee. The municipal office gave the SHG Rs 20,000 under the Rozgar Yojana, to be used for
internal lending among the members under the condition that the money was to be returned if the SHG
closed down. This helped the members a great deal, as they stopped going to the moneylenders. From the
money saved (interest previously paid to moneylenders), the members could not only save Rs 50 for
depositing every month, but could easily repay bank loans. After prompt loan repayment, the SHGs have
asked for further support, which they are very confident of getting by next year. The members have gone
on to increase their savings to Rs 100 per month and what is more, they have done without touching their
accumulated savings.
The loans taken from the bank have been used by the members to increase the assets of their families like
making the house pucca or building additional room, etc. Most of the members have continued with
selling vegetables after becoming members of the SHG. This is because they do not have any special
skills to start new ventures. However, one of the members has given up vegetable vending and along with
her husband, has started a small hotel on the main road in their own colony, from which they earn a good
income. The fact that the status of these women has improved is also reflected in the way they dress and
the way in which they have maintained their houses. More importantly, the coming together of so many
likeminded people has broadened their horizons. All these members who had never entered a bank in
their lives are now familiar with banking activities like depositing money, getting cheques encashed, etc.
It is an unwritten rule that the members have to take turns to go to the bank for bank-related work of the
SHG.
Apart from improving their economic status, the members have also decided to improve the quality of
their lives. Before becoming members of the SHG, their entire world consisted of work, family and
struggling to make ends meet. They had no means of relaxation. In fact, the need to keep some time for
themselves had not struck them at all. But now, they are able to think of themselves for a change. They
meet on a monthly basis in one of the member's houses (by turn) for about 2-3 hours and discuss
common issues. They have decided not to allow in men during these discussions, and have been able to
amicably resolve mutual problems. The meetings also serve as social get-togethers. They have stitched
uniforms for themselves, which they proudly wear when attending social events in town. They have also
become aware of their social obligations and duties towards society. All the members took part in the
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Oral Polio Programme last year. Whenever there is a function in any of the members’ families, the others
pool money to buy an agreed upon gift. Their quest for knowledge has also improved and the women
went on a three day-long visit to places of interest in their vicinity. Once, they also took the men who
expressed a desire to go with them. The SHG has been instrumental in improving the quality of their
lives, both economically and socially.
6.1.1.3 Aspiring for a better life against all odds
This is the story of a SHG formed in Nimbegondi of Shikaripura taluk in Shimoga district of Karnataka
known as the Huchchangeshwari Swa-Sahaya Mandali. It was formed in 1998 by 18 illiterate group of
women belonging to the Valmiki (ST) community locally called the Talwars. The women represented the
most backward community in terms of social, economic and educational parameters. In fact, when they
came to know about the benefits of joining a SHG, they themselves formed the group without the help of
a promoting agency. They approached the bank directly. In spite of their lack of literacy and poor
background, they have successfully run the SHG for nearly a decade and utilised the forum to improve
their activities.
The families of all the members of the SHG are BPL cardholders. They are small landholders, basically
dependent on agriculture and those without land work as agricultural wage labourers. Some of them
possess farm animals today. They live in semi-pucca houses with even the drainage water flowing right
in front of their houses today. Washing of animals, clothes, etc. is done in front of the house, so that the
wastewater can flow into the open drain. When these women came to know about other SHGs working in
the area, and the benefits thereof, they also decided to form a Sangha. Though these women were poor
and illiterate, they dreamt big. They not only wanted to improve their economic and living condit ions to
the extent possible, they also aspired to educate their children. Once, when their colony was very dirty
and the gutters overflowed, they took it upon themselves to clean it. The members of their community
frowned upon this action and three of the members quit the SHG because of it. The others were however
steadfast in their belief and have continued over the years. These women, who had never entered a bank
in their lives, went and met the manager and informed him about their intention to save the small amount
of Rs 10 per month. At that time, only two members could sign. On the bank manager's advice, the
educated daughter-in-law of one of the members maintained the accounts for them. Now, all of them are
educating their children and they also come and help them when the meetings are held.
The bank account was opened in November 1998. After about six months, they got bank linkage and
became eligible for loans. As these women were uneducated and did not possess any income generating
skills, they used the loan money to improve their lands and to buy cattle, the only occupations that they
were familiar with. They have succeeded in their endeavour so far. Once, they had a problem with one of
the members, whose husband refused to repay the loan taken by his wife claiming that he was not aware
of the purpose for which it was spent. The husbands of the other members intervened, and they got back
the money. Of course, the woman in question is no longer a member of the Sangha. After the incident, on
the advice of the bank manager, these wise women are insisting that both husband and wife be present
whenever a member needs a loan, and they have to sign a loan form in front of witnesses, according to
which, the Sangha can take action against the member or seize their assets in case of non-payment of
dues. Their monthly savings has increased from the original Rs 10 per month to Rs 30 per month now.
Their repayment track has been very good. If a member has a problem in repaying the loan, other
members help and a short-term loan is given. After prompt repayment of Rs 2.5 lakh taken for cattle
breeding, the Sangha got a subsidy of Rs 1.25 lakh, which is also being circulated among the members.
They have not touched their savings so far. However, from the interest accumulated from the internal
lending, all the members have got uniforms and also a gold chain each. They take pride in the fact that
they are Sangha members. It is indeed a remarkable achievement that this SHG has managed to prosper
for so long, in spite of the members’ shortcomings. Though the members are not literate and the SHG
does not have an SHPI supporting it, they have gained substantially.
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6.1.1.4 SHG – A ray of hope for the poor
Fifteen women from BPL families of the drought-prone areas of Dhule district of Maharashtra came
together with the purpose of getting out of the clutches of the moneylenders. After forming the SHG they
are no longer dependent on the moneylenders and have also become confident enough to take part in a
number of developmenta l activities.
Life for the landless labourers and the small farmers in Aarthe block of Shirpur taluka in Dhule district of
Maharastra was very difficult. As the lands are not irrigated, the yield is very low and it is very difficult
for an agric ultural labourer to get employment throughout the year. The uneducated have no option but to
take up work as daily wage earners wherever work is available and the earnings are very small and
seasonal. They could not go to any financial institutions for a loan, as they had no assets to offer as
collateral. For some families, it was inevitable to approach the “sahukar” (the moneylenders) even for
having two square meals a day. Unable to repay the high interest, some of them had lost even their small
land hold ings. It was a vicious circle from which there was no respite.
In the beginning of 2001, a representative of Rajashri Shahu Sevabhavi Sanstha, an NGO, came to this
village and created awareness among them about the role of SHGs in creating income sources. The need
for working together as a team was also impressed upon them. This became a turning point in the lives of
some of the villagers. On 20th March 2001, 15 women whose families were below the poverty line, got
together and formed a SHG called Jai Yogeshwar Mahila Bachat Gut. They decided to save Rs 100 per
month and opened an account with the Bank of Maharashtra, Aarthe branch. After about six months, they
started disbursing internal loans (small amounts), to meet their emergent requirements. In October 2001,
they got bank linkage, and took a loan of Rs 25,000. Except for three women, all the others were literate
but they were not able to start a new enterprise of their own. Hence, they got together and made Papad,
Kurdaya, Banana and Sago Chips, partic ipated in an exhibition in Mumbai, made profits and repaid the
loan. However, two members who were unable to repay the loans were removed.
The group was sanctioned a further loan of Rs 25,000 in 2002 at the rate of 8.5 per cent per annum and
after the prompt repayment of the same, the bank, realising the SHG’s capacity for repayment, sanctioned
another loan of Rs 5,20,000 at the rate of 8.5 per cent per annum, with the repayment period of five years.
Of this amount, Rs 2, 60,000 was distributed as internal loans. The loan amount presently outstanding is
Rs 1,10,000, and there are no arrears in repayment. In the beginning, the loans were utilised to repay
debts for consumption needs and social commitments, with a small percentage of the loan being used in
income generating schemes. Later, the percentage increased. Presently, the entire loan amount is being
utilised for productive purposes. In this area, milk was scarcely available and many could not afford to
buy it. Even children had to go to school without milk. Eleven of the 13 members utilised the loan
amount to buy buffaloes, so that they could not only earn money but also provide milk to their children.
Of the remainder, while one member utilised the funds for starting a grocery shop, another used it for a
tailoring business. The additional income generated helped them repay loans promptly. Within six years
of their joining the group, their productive assets have increased, and the general living conditions have
also improved. But there is not much of a difference in their consumer assets. Their dependence on the
moneylenders has almost ceased. Now, the members have assured income and guaranteed work. This has
improved the economic and financial condition of the families and today, they can even boast of some
savings for a rainy day. Presently, their savings in the bank stands at Rs 1,03,000.
Apart from improving their economic position, these women have also gained self-confidence. Whereas
they were once hesitant to step out of the house, today they hold their meetings in the houses of the
members by turn, and discuss their problems. They are slowly becoming aware of their social
responsibilities. The members of the SHG distributed meals to the flood affected people of Tekawade and
Bharwade. They are thankful to the representative NGO who informed them about SHGs and gave a new
direction to their lives.
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6.1.1.5 SHG as a livelihood option
This SHG was started by a group of literate, but not much educated, young men from Solapur district of
Maharshtra. For these unemployed youth whose families could neither provide them with enough capital
to start a business, nor get individual loans due to lack of assets, the SHG became the only means to raise
resources for livelihood enhancement.
This SHG is an exception to the general rule in two ways. Firstly, it is an all-male SHG. Generally,
women make up the membership of SHGs. Secondly, all the members have a fair level of education. Ten
hitherto unemployed young men who were around 30 years of age and hailed from Pawar Vasti hamlet of
Islampur, about 18 Km from Malshirapur taluka of Solapur district of Maharashtra, got together to form a
SHG. This hamlet was in existence for the last 10 years and about 50 households reside here. The main
occupation was agriculture and agricultural wage labour depending on the size of their land holdings. The
income from this was very meagre. There was virtually no opportunity for any other kind of work here.
The children of these families had attended school, and though literate were not educated enough to go
outside the village and get jobs. They also did not have any vocational training. Banks were unwilling to
provide them loans individually, as they had no assets. In such circumstances, life was tough for the
unemployed youth. Then, they came to know about SHGs.
Ten literate young men who were educated up to the middle or high school level, came together and
formed a SHG in March 2000. They began by saving Rs 100 per month and got bank linkage in April
2001.The members decided to take only as much loan as they would be able to repay. While some of the
members with land utilised the loans for buying modern farming equipment and improved seeds and
fertilisers so as to improve their yield, some others used it for buying hybrid cows and started a dairy
business. Others, who could not afford to take larger loans, bought sheep.
The members have been able to repay the loans promptly. They have already been granted loans three
times by the bank. The first time the SHG got Rs 2, 50,000, which was mostly used as working capital
and four members bought sheep. The second loan of Rs 2, 50,000 was used by the members to buy cattle
to start dairy business. Since this loan was also repaid promptly, a third loan of Rs 2,80,000 was
sanctioned. Since the members are educated, they have used the loan amount to improve, intensify and
diversify their crop and livestock production. As a result, their earnings have improved over the years.
Not only have these young men found a way of earning their livelihood, they have also been able to
acquire assets and save for a rainy day.
The members of this SHG believe in taking decisions jointly. Decisions are made final only if all
members agree to it. The benefits are shared equally without discrimination and all the members
contribute equally in SHG work. They have also come to appreciate the importance of working together
for a common purpose and help each other in the times of need. This could be the main reason for this
SHG prospering for the benefit of all of them.
6.1.1.6 Paving the way for other SHGs
Sunanda Ramakrishna Deshpande, who is educated up to the 7th Standard, is a resident of Upalai block in
Madha taluka of Solapur district in Maharashtra. She was aware that there were many women in the
village who, like her, were frequently borrowing from moneylenders at high rates of interest not only for
the education and marriages of their children, but also to defray daily expenses.
Smt.Deshpande had heard about SHGs which were functioning well in other villages of the State. As a
born leader, she approached the BDO and learnt about the formation of SHGs. She also went with the
Panchayat Adhikari (officer) to observe the working of other SHGs and collected the necessary
information. She then made efforts to mobilise other women in the village (without the men) and
explained to them about SHGs. Then she proceeded to form a group along with 10 other women who
assured her that they would be able to save Rs 100 per month. The SHG, Phule Mahila Bachat Gat, was
formed on January 12, 2001. The women elected the most educated (10th passed) member of the group as
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the president of the SHG and Smt. Deshpande became the secretary. Of the 11 members, only three were
not literate and the remaining others had some level of literacy.
Smt. Deshpande also knew that initially it would be difficult for the members to work together. So, she
insisted that rules are to be formed taking into account the opinion of all the members, and this helped in
running the SHG till date. All the members agreed on a fine of Rs 10 for non-attendance of group
meetings and a fine of Rs 2 for delayed monthly savings.
Within nine months, on August 12, the SHG got linked to the Grameen Bank located in Upalai block. Of
the first loan of Rs 25,000 received from the bank, the subsidy component was Rs 10,000. In the next two
loans of Rs 1,40,000 each received from the bank, the SHG got 50 per cent subsidy. Though the loan
received from the bank was made use of in part by the members for marriage expenses/education of
children/construction of house, a part of it was also used to buy buffaloes and earn income from the sale
of milk and milk products. While most of them are in the dairy business (in addition to working on either
their own land or as agricultural labourers), two of the members own sewing machines to augment their
income, in addition to their agricultural activity. Most of the members have thus invested the money
borrowed in improving their agricultural lands or in livestock. This has not only increased the value of
their assets, but has also enhanced incomes. Hence, the members were also able to make timely
repayments along with continued savings. However, there has not been any noticeable change in their
pattern of consumer assets ownership. They have given high priority to increasing their savings by
buying other savings instruments. Today, these families are much better off financially, though they feel
that they can increase their income further if they were to have better marketing skills.
Earlier, before forming their SHG, the world of these women was restricted to the kitchen and children.
They had little knowledge of the outside world. This was the first SHG formed in the village. It has not
only improved the economic status of the families of the members, but the members themselves are now
capable of participating in issues concerning the village. Further, the fact that not a single member has
dropped out of the SHG speaks highly about the cooperation, understanding and trust among the
members. Seeing the success of this SHG, 40 more were formed in this block, of which 29 are functional.
Thus, this SHG has paved the way for others to follow suit.
6.1.1.7 Income generation – Basic ingredient of successful SHG
Utsav Bahar SHG is located in Mari-Musalman Gaon of Marigaon district of Assam. This SHG was
formed by 10 women, all belonging to BPL families. It was a mix of educated and illiterate members.
This SHG, started in 2000, has been running successfully.
As all the members belonged to poor families, they began by contributing Rs 5 per week each, so that
they could save at least Rs 20 in a month. They had been banking with Rashtreeya Grameen Bank
(RGB). The members would meet on Wednesdays and a collector from the bank would also attend to
collect the saved money. In order to inculcate a sense of discipline among the members, it was decided
by the SHG that any member who turns up late for a meeting would be fined Rs 2, which applied to the
collector as well.
The SHG has a very good track record in repayment of the loans received from the RGB. Because of this,
the bank has been granting them larger loans. Each year, members take loans which is double that of the
previous year. So far, in all these years, they have returned the loans without default. The SHG was
sanctioned a loan of Rs 20,000 in 2002, Rs 40,000 in 2003, Rs 80,000 in 2004 which have all been duly
repaid. Presently, an amount of Rs 70,000 is outstanding out of the current loan of Rs 1,00,000
sanctioned in 2006.
The members have not taken up any project as a group. However, they have made use of the loan
received from the bank in ways suitable for them. However, they have all adhered to the basic principle
of the SHG and have used the loan to increase their income – that is, they used it for income generating
assets/investments and therefore have been able to repay the loan promptly. Another notable feature is
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that the members, whether literate or illiterate, have been successful in generating additional incomes.
This is evident from the following examples:
One of the members, Alimun Nasa, though educated up to class X, was not involved in any income
earning activity and was a housewife. Her husband was a tailor. After becoming a member of the SHG,
she used the loan to buy another sewing machine so that they could employ an assistant for her husband.
Thereafter, she has been buying one machine from the loan money every year and presently they have
five machines and five workers to assist them in their tailoring business. She has also started supervising
and monitoring the business. Their income has increased three-fold after joining the SHG. Not only have
they built a new house but are now also well recognised in the village.
The case of Nurjahan Begum is also similar. An illiterate woman, Nurjahan was a housewife with four
children. They only owned half a bigha of land, the income from which was very meagre. They also
owned one rickshaw (cycle), from which they earned Rs 20 as rent per day. After becoming a member of
the SHG, Noorjahan used the loan for buying additional rickshaws, which they rented out. Today, they
have nine rickshaws and the family is mainly dependent on renting them out for their livelihood. Their
incomes have increased by seven times and apart from acquiring the rickshaws, she also constructed a
four-roomed, semi-pucca house. More importantly, she also learned to read and write.
Thanks to the SHG, these women are now enjoying a better life. They have also become instrumental in
helping others to earn their livelihood.
6.1.1.8 Successful, despite denied of bank assistance
This is an example where the SHG has amply demonstrated that financial assistance from any source, as
long as the rate of interest is low, could work wonders in transforming the lives of members.
The SHG, “Anand”, was formed in June 2004 in Majargram, situated 30 Km from Silchar town
in Cachar district of Assam. A large section of the villagers are wage earners in the tea gardens.
This SHG has 10 members, three of them women, all literate and progressive. The SHG was formed with
a vision of pursuing several socio-economic activities with financial assistance from the bank. The
members wanted to raise livestock, grow vegetables and involve themselves in activities that could
increase their income. They also wanted to end their dependence on moneylenders from whom they
would be borrowing money at exorbitant rates to meet emergent needs like medical expenses, childrens’
education, etc.
With this in mind, they moved an application to the banks for loans. There were several formalities
involved in finalising the application and a lot of difficulties arose. From time to time, the bank asked for
one or the other document, including details and antecedents of the office bearers and members. The
members were also informed that the bank would not release the entire loan of Rs 1.5 lakh applied for in
one go, but only in several instalments. The members felt that the bank staff was not helpful. After many
attempts, and spending their time, money and efforts, they decided to look elsewhere for help.
At this juncture, an NGO named ‘Sewa Kendra’ came to their help. The members could get personal loan
from the NGO at 2 per cent monthly rate of interest. Though this was higher than the bank rates, it was
preferable to the 5-10 per cent rate charged by the moneylenders. Apart from financial assistance, the
NGO is also imparting training in different crafts like carpentry, tailoring, hand knitting, etc. for the
eligible family members of the SHG. In addition, two relatively well-educated members of the SHG have
been trained in accounting and book-keeping procedures which are essential for maintaining the accounts
of the SHG. With the help of the NGO, the SHG could not only survive, but could also go ahead with the
objectives for which it was formed and prosper as well. With necessary motivation and training in
livestock husbandry extended to them by the NGO, the members are rearing livestock and increasing
their income.
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Today, the members of the SHG enjoy economic freedom. They are sending their children to school and
are able to provide proper health care and nutritious food to their families. Poverty, illiteracy and
malnutrition, which were common in their families are now things of the past. This, in spite of not
receiving any assistance from banks. If they had received loans from the banks at lower rates of interest,
the members could have gained more. It is high time that either the NGO/any other body comes to their
help and assists them in getting bank linkage so that they get better credit facilities.
6.1.2 SHGs with successful group ventures
The experience with some SHGs showed that when a group of like-minded individuals come together,
they could venture into group activities, as unity and common purpose provide strength. As a group they
could access larger loans, divide the work, share training facilities, pool their expertise and avail of other
facilities like the village property. In this category of case studies, we also have SHGs with strong social
commitment in undertaking community activities. Once the group becomes empowered, they also seem
to realise their social responsibility and want to render service to society.
6.1.2.1 Tent house SHG
This is a SHG, which has ventured into various group activities. Although it has also been successful in
taking up the dealership of kerosene distribution, it is known more for its tent house business. By getting
into the tent house business, these women from Orissa have ventured into an activity that was hitherto a
male domain.
Budharajan SHG, popularly known as “Tent House SHG”, is located in Pandaloi village in Rengali block
of Sambalpur district of Orissa. This SHG was formed in 2001 by 10 women who were motivated by
Anganwadi workers attached to the Integrated Child Development Services (ICDS) scheme. All of them
belonged to OBC communities and were from BPL families. Like many others, of the SHGs, the
Budharajan SHG was also formed by the women with the intention of setting up some micro enterprise
for supplementing their income in order to reduce their dependence on moneylenders.
After the formation of the SHG, an account was opened in the Rengali branch of the State Bank of India.
Each member started saving Rs 40 per month and met once a month. Any member who failed to pay the
amount within a month could pay up in the following month, albeit with a fine of Rs 2. They also had the
facility to avail of personal loans from the group fund at 3 per cent per month interest. After six months
of deposit account, the bank sanctioned the first loan of Rs 25,000 in 2002. This amount was shared
equally by all the members for starting some business activities. Of the 10 members, six of them utilised
the money for vegetable cultivation and the rest used the amount to trade in moori (puffed rice), chana,
groundnuts, etc. All the members were prompt in repaying their loans to the SHG.
The first group activity of this SHG was kerosene dealership, which the SHG managed to get with the
active initiative of the CDPO (Child Development Project Officer), under the ICDS scheme. Since the
earlier loan was promptly repaid, the SHG did not have any difficulty in getting a loan of Rs 10,000 from
the bank for making the initial deposit for the dealership. The SHG is running this business successfully
and the villagers are quite satisfied with the SHG. The villagers were unhappy with the previous dealer
since they were not getting their quota of kerosene due to irregularities in the operation. The SHG is
getting a monthly commission of Rs 500 for the dealership and out of a Rs 10,000 loan that the group had
taken from the bank for the purpose, Rs 6,000 has already been paid back.
Thanks to the success of the kerosene dealership and the promptness with which the SHG has been
repaying loans, Budharajan SHG has recently been sanctioned a loan of Rs 5,00,000 by the bank. From
this amount, these highly enterprising women have utilised Rs 2,98,000 and have started a tent house
business. There was no competition for them in the area. The business was started on the advice of one of
the villagers who had earlier worked in a tent house. The women collectively considered the proposal and
decided to take up the activity. Along with the tent business, the SHG members decided to take up
cooking activities for further augmenting their earnings. The loan was utilised for purchasing utensils,
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chairs, durris, mats, mike set, sound box, stage and altar decorative items, mattress, pillows, roof top tent,
water drum, pots and pans and aluminium discs that are required for the business.
In order to attract customers, the SHG distributed leaflets and pasted posters at different places within
and around their village. It did brisk business during the marriage season and till now they have earned a
profit of about Rs 13,000. It is very rare for women to take up such activities and register success too.
Now, they have acquired fame in the area as the “Tent House SHG”.
This highly motivated group of 10 women does not seem to be content with these activities. They plan to
undertake some more projects in the near future. They are planning to take up pisciculture activity as the
next venture. There are three large ponds in their village and with the consent of the villagers, one of the
ponds is proposed to be utilised for this purpose. However, to take up this activity, they would need some
training. Another, even more ambitious plan of the SHG is to take to road construction. The village has
been sanctioned with Rs 5,00,000 by the Block for road construction and allied activities. Since there
were complaints regarding the quality of the work of the contractor who was engaged for this work, the
concerned authorities have cancelled his contract. As a result, the work has been stopped and now the
Budhrajan SHG is contemplating taking up construction activity, which could be a very interesting
experiment.
The members also want to manufacture machine-made leaf plates, but due to the paucity of supply of the
required quantity of leaves in the area, due to deforestation, this activity may not be forthcoming. Some
members are engaged in rolling beedis. In a day they roll about 1,000 beedis, earning Rs 40.
The group has also taken up the social responsibility of creating awareness about health issues. Due to
the efforts of the SHG, the leprosy and TB patients have been identified and sent for medical tests and
treatment. Members have motivated people not to treat these patients as social outcastes but help them
get treatment. The SHG members are also taking interest in the immunisation programmes and want to
ensure that all the children in the village are immunised.
The members of the Budharajan SHG feel that because of their group, they have been empowered and
have gained the self-confidence to interact also with government authorities. The SHG has helped in
uniting the members to take up thrift and credit activities and in starting various business ventures. For all
these activities the women now are getting support from their husbands and other family members. They
are now more respected in their households and get involved in the household decision making process.
It may be concluded here that this SHG has been very successful not only due to the ability and
motivation of the women, but also due to the fact that they carefully chose their activities. Firstly, they
got into kerosene dealership, which did not require much marketing skill, but assured them of a steady
commission. The second venture, i.e. the tent house business was chosen because there was no other tent
house in the nearby vicinity and there was a demand for it. This group belongs to Model type 3 of the
SHG Bank Linkage Programme where the NGO is also acting as a financial intermediary. It is
understood from the discussion with the SHG that the NGO has also been providing adequate support
since inception in various matters relating to the running of the SHG.
6.1.2.2 Unity is Strength
As a group, Amma Swayam Shakti Sangam, a SHG in the village of Singupuram of Srikakulam distict of
Andhra Pradesh, has initiated a number of activities, which as individuals they could have not dreamt of.
This SHG from Andhra Pradesh has taken up making chalk pieces and marketing in which all the
members are involved at different stages. Apart from this, they have also taken up labour contracts in a
granite quarry, an activity generally not associated with women and one which requires working together
with considerable managerial skills.
The ANM (Auxiliary Nurse Midwife) of the health sub-centre took the initiative and brought together 15
women in the village to form the SHG. The Amma SHG came into existence in 1998. Within a year of
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formation, the group could get credit-linked to the local branch of Andhra Bank. Currently, the group has
14 members as one of the members subsequently left the village. At the time of the formation of the
SHG, most of the women were working as agriculture labourers for as a low a wage as Rs 20 per day.
Even this employment was seasonal.
All the members of this SHG belong to the OBC category. Only three of them are literate. Initially, the
members joined the SHG with the objective of having mutual support and cooperation among the
members and in particular providing financial support. Each of the members has been saving Rs 30
regularly since the inception of the SHG and the group has been repaying bank loans without any default.
Besides availing bank loan, the SHG also got a grant from the DRDA. The most striking achievement of
this SHG is that it is running two successful ventures.
One of the ventures, as mentioned above is making chalk pieces in which almost all the members are
involved. This activity is carried out during April and May and in the span of a day, the group manages to
produce two cases (each containing 36 boxes, of eighty pieces each). This operation is carried out at the
residence of the group leader, Sharda, whose main task is to make chalk with the help of a moulding
machine, while other members are involved in drying and packing the chalk pieces. The product is sold
to grocery shops and directly to a number of schools in the area with the help of the husband of the leader
who also is a primary school teacher in a government school. Each case of white chalk is sold for Rs 180,
and the coloured chalk cases are sold for Rs 230. The activity required only a small investment in the
form of a moulding vessel. Hence, the SHG did not need to take any loan from the bank for this activity,
but used its own savings. The SHG is located very near Srikakulam town and there are a number of
schools nearby that have helped the women market the chalk pieces.
However, the most remarkable achievement of the group is securing a labour contract for breaking
stones. They swung this deal in 2004. A loan of Rs 1,00,000 was raised to take up the labour contract, as
they needed money to hire about 30 labourers and 4-5 supervisors. The SHG has already repaid the first
loan and took another loan of Rs 1,50,000 in 2006. The group now not only hires labourers to work in
the quarry but most of the members themselves join the work force. The SHG members are proud of the
fact that prior to taking this contract they were at the mercy of the contractor who did not provide them
regular employment. But now they are providing employment to others and have gained both socially
and economically.
The group estimates their earnings at Rs 1,500 per week, which appears to be an underestimation.
However, additionally, some of them work in a quarry and get Rs 40 per day as wages. The husbands and
other family members are involved in other income earning activities. All the families are currently living
above the poverty line.
The labour contract business has given the women more power. They proudly proclaim that whereas the
quarry owners earlier controlled them, now the boot is in the other foot. It is they who organise and
control the labourers. The collective activities of this SHG prove that as a group these women are able to
initiate a number of activities which would not have been possible individually. Also, thanks to the
formation of the SHG and bank linkage, the group is able to raise sufficient funds required for taking up
activities like the labour contract for the granite quarry.
6. 1.2.3 Bee-keeping as a successful group activity
This SHG in Uttar Pradesh, with an equal number of male and female members, has immensely
benefitted from the group activity of bee- keeping which has been supported by the SHPI
(an NGO) and the bank to which it has been linked.
About 35 Km from the district headquarter of Moradabad, a SHG named “Maurya” was formed in
Sotipura village by a group of young people in their late 20’s from the OBC category. The group was
originally formed with five members. Another five new members were added later. SHPI was the NGO
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called Sharif Gramudyog Vikas Kendra. The SHG was formed in August 2000 and got bank-linked with
the RRB Prathama Bank after six months.
Among the 10 members of the current average age of 35 years, half are women. These five women are
wives or relatives of the male members. While all the male members are educated at least up to the 9th
Standard, all but one female member is illiterate. Individually, each member was involved in crop
cultivation either as primary or secondary occupation. Most of them belonged to the group of marginal
farmers who cultivated only small patches of land. They were also tilling land taken on lease basis. The
members were also involved in some other income-generating activities to supplement their family
incomes. While one of them was a taxi driver, another had a small tailoring shop in the village itself. The
secretary of the SHG was prescribing medicines and treating villagers despite being unqualified for the
task. He also owned a PCO. The President of the SHG was cultivating land taken on lease basis. One of
the female members was working as an Anganwadi worker and the remaining four women were
primarily housewives. Nevertheless, they were assisting the men in farming and other activities
The members have not changed their income generating activities, which they were involved in before
joining the SHG. However, now members report that they are able to carry out their farming and other
activities in a much more organised and effective manner. This has become possible because of their
membership in the SHG, and the easy and timely availability of loan funds, which has immensely
benefitted them. For example, getting money needed for employing labourers, buying seeds, fertilisers,
diesel for pump sets, weaning and weeding of crops is no longer a problem. As a result, their production
has increased, along with the quality.
Earlier when they needed money for anything, they would approach moneylender. The moneylender
would normally dilly-dally and they felt exploited by them being charged very high rate of interest; as
high as 5 per cent per month. Things have now changed for the better and after becoming a member of
the SHG, no one has been taking further loans from moneylenders for crop production.
Though individually they have not changed their income-generation activities, as a group they are now
involved in the trading of wheat and menthol oil. They normally buy these items in season and later sell
in the market when the prices increase. They had also bought a second hand Sumo vehicle for Rs 70,000
to use as a taxi. The bank, the same that provided credit to the SHG, also extended a loan for this venture.
However, the SHG has subsequently sold the vehicle since this business did not prove to be successful.
Currently, the SHG is doing extremely well in a new joint activity –“bee keeping”. It was started in 2006
at the instance of the SHPI that was guiding them. Apparently, the branch manager of the bank also
played an important role in motivating them to start the bee-keeping project. With the help of the NGO
and the bank, the SHG members participated in a three-day training programme on bee keeping. They
started the venture with a loan of Rs 28,000. The profits earned from bee keeping have been re-invested.
When they started the activity, they had only eight beehives. Now they are having 26 boxes. Soon
another 10 which have already been purchased, will be added. The SHG has decided to share profits
among the members in the next financial year. They have already sold honey worth Rs 90,000 since the
starting of the bee-keeping venture.
The group extracts the honey using a manually operated machine. After that, no further processing is
done at the SHG level. The SHG has been facing some problems in marketing the honey. They are
selling the honey at Rs 52 per Kg to a trader (middleman) in the nearby market. The packed and
processed honey is sold in the market at much higher rates. The SHG members feel that their income
could increase considerably if they could get more appropriate price for their product. In order to
overcome this problem, they need training in packaging and also proper marketing of their product.
Nevertheless, they are already very enthusiastic with their present achievements and plan to develop the
activity on a larger scale in the coming years. The bank manager is ready to sanction an even higher loan
amount for this.
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The members feel that their incomes have increased almost 50 per cent since they became members of
the SHG. This has changed their savings patterns. Apart from saving in SHGs, all of them have opened
their individual savings account with the bank. No one has invested in either health or life insurance,
which is primarily due to lack of proper knowledge about its benefits. Access to these services may also
be limited. However, discussions with the NGO revealed that some insurance schemes for the members
are being initiated and soon the members are likely to acquire insurance policies. Individually, members
have invested in improving their living standards in terms of food, consumption, better clothing and
education of their children.
An important change that has come also about is in the area of education facilities for the children.
Earlier, the children were enrolled in government schools (no fees and mid-day meals provided) which
were reportedly not doing well due to the absence of teachers or other reasons. However, now all the
members are able to enroll their wards in private schools in their area, which are reportedly providing
better education.
This SHG has also become a source of inspiration for others in the village. It has played an active role in
facilitating the Sharif Gramudyog Vikas Kendra in forming 10 more SHGs during 2006-07 in their
village. All these SHGs are currently operational and have been bank-linked.
6.1.2.4 From begging to basket making
This is an extraordinary case where beggars from a tribal community in Andhra Pradesh have attained
dignity in society after forming a SHG. Though it is the women who have formed the SHG, the men have
also stopped begging and have joined hands with their spouses in making baskets.
Begging used to be the only livelihood option for this group of people living in Amachandrapuram
village of Srikakulam district of Andhra Pradesh. They belonged to the Scheduled Tribe community and
were related to one another., They lived in utter poverty and were trying to get two square meals a day by
begging in moving buses, or in bus stops. The Grama Savika of Gara Mandal Development Office
(MDO) motivated them to form a SHG and thanks to this initiative, Sri Durga Swayam Shakthi Sangam
came in to existence in September 2001. Within a short span of time, i.e. in March, 2002, the SHG got
bank-linked to Andhra Pradesh Grameena Vishka bank at the nearby Arasavali branch.
It is an all-female SHG with 12 members, all with very poor socio-economic background. None of the
members are literate and all of them were living below the poverty line. Even after the formation of the
SHG, the members continued with their begging for a few years, Each of the women could manage to
save Rs 30 a month on a regular basis. In addition to this saving, after six months, the group also received
a matching grant of Rs 10,000 from the District Rural Development Agency (DRDA). Initially, the
members borrowed money mainly for meeting the medical expenses of their family members. However,
the idea of starting an income generating productive activity occurred to some of the members of the
SHG when they saw that others from the same community living in the neighbouring villages were active
in the basket making business, with the help of the Swarnajayanti Gram Swarozgar Yojana (SGSY)
scheme. This inspired them to apply for a loan through the SHG and to start the basket making business.
Interestingly, they never received any formal training in basket making.
The Sri Durga Swayam Shakthi Sangam is today a well organised basket making unit. All the members
assemble every day under one roof and make around 500 to 700 baskets a week. Sometimes, their
husbands also join them in basket making if there is an urgency to meet an order. The bamboo baskets
made in various sizes and shapes are used in the bazaars for displaying vegetables, fruits and even cereals
and pulses. The baskets are also used in the poultry units. The SHG has a committee of five members
(the members of the committee change by rotation) which is responsible for procuring raw material
required for making the baskets. They even go to neighbouring Orissa to get good quality material. The
SHG has a regular order for baskets from the weekly “Raithu Bazaar” (farmers’ bazaar) held at the
Srikakulam (district headquarter) municipal market. The members of the group share the profit, which
comes to around Rs 1,500 a month. In addition, their husbands also earn up to Rs 1,000 month, since they
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are paid daily wages for the days they make baskets and also when helping in transporting the baskets. It
is interesting to note that the husbands do not seem to have any ego problem in working for the SHG on a
daily wage basis since they do not have any other livelihood option. It may be that at that low level of the
economy, the only concern is survival.
Today, the members of the Sri Durga Swayam Shakthi Sangam are well respected in the village and one
of the members stated, “Earlier we were taking loan from others; but today we are in a position to lend to
others”. Also, as another member put it, as beggars they had to roam around in the sun and rain and
leading a difficult life, but now they are able to be in one place and earn their livelihood. Most of the
members are now educating their children, as well. Moreover, whenever they need money, they are able
to get a loan (even up to about Rs 5,000) from the SHG. Another benefit perceived by the members is
that now they are in a position to get their daughters married; prior to the formation of the SHG, some of
the girls from their families had eloped with boys because of lack of any resources for their marriage.
Hence in their opinion, today socially they are better off and are more respected and empowered.
The credit for the success of this SHG can be attributed mainly to the Gram Sevika who was instrumental
in motivating the beggars to give up begging and take up a productive activity. The block development
office helped the SHG by assuring a regular demand for the baskets in the municipal market of the
nearby town where the farmers’ bazaar is organised. This experiment can be successfully replicated in
other places as well. What is required is motivation.
6.1.2.5 Prosperity leads to charity
The members of the Nishadraj SHG have not only prospered after forming the SHG, but have also been
of great financial help to other needy members of their community in the village. Located about 67 Km
from the district headquarter, Nishadraj SHG was formed in Kharsahan Khurd (Tal) village of Phoolpur
Tehsil of Azamgarh district in UP by a group of 11 people. The members belonged to the Nishad
community, which has been categorized as OBC and most of the members were from poor stratum of the
society. The SHG was promoted and nurtured by the NGO, Jan Sewashram. It was formed in September
2001 and was linked with a branch of the Union Bank of India in December 2002. The NGO provided
necessary assistance to the SHG, right from motivation to formation of the group and helped in
developing its rules and regulations to facilitate smooth operations. However, now the SHG is fairly
independent of the NGO. After the formation of the group, the mandatory savings was fixed at Rs 100
per month and it is creditable that the members have been saving this amount regularly.
All the 11 members of the SHG are men and their average age is 46 years. Among the 11 members, three
are illiterate. The President and Treasurer are the most educated among the members and both have
passed the 10th Standard. Only one member reported cultivation as his primary occupation while the
others were engaged mainly in casting bricks as labourers in brick kilns. They took to agriculture as a
supplementary source of income, since most of them had some amount of land holding. The President of
the SHG was the only member who was involved in fish farming before joining the SHG.
After joining the SHG, some of the members started other income generation activities. While one
member opened a cloth store, the others ventured into poultry farming. Some others ventured into the
flour, oil and rice business. With the new income generating activities available, most members do not
have to work as daily wage labourers. They are also free of problems in meeting their financial
requirements. Their dependence on the local moneylender has ended.
Fish farming is the most successful group ventures of this SHG. It has become the primary source of
income. The SHG has been able to achieve this success with own initiative and the financial support it
received from the bank in the form of loans. Since the establishment of the SHG in 2002, the SHG has
received in all total loans amounting to Rs 2,30,000, most of which was for fish farming and related
activities.
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Before starting fish farming, four members of the group underwent the relevant training in Kolkata. The
President of the group was trained on the technical aspects of fish farming in Vishakapatnam in Andhra
Pradesh. Eight members have also attended an 11-day training programme organised by the Fisheries
Department-Azamgarh at the block level. The SHG has participated in financing the training of the
members and has spent Rs 5,000 on this.
For starting fish farming venture, the SHG leased a pond in the village from the Gram Panchayat. The
SHG members first removed “jal kumbhi” (water lettuce stratiotes) from the pond and reinforced its
embankment (strutting). The major income of the group comes from producing fish seeds (nursery) and
selling it to the other fish farmers in the district. The members had learnt the technique of developing fish
seeds during their training in Kolkata. They consider this as more lucrative than mere fish farming. In
order to reach out to buyers they had to provide publicity to their activity in the district. (and what did
they do for publicity?)
6.1.2.6 SHG with social commitment - Orissa
This SHG, formed by highly motivated women from the socially and economically backward class, has
become conscious of its responsibility towards the society in which its members live. These women from
Orissa have even become powerful enough to fight for their rights and against the liquor menace in the
village.
The Biswabharati SHG is doing an outstanding work for the benefit of the community under the active
and capable leadership of its President, Rajkumari Sahoo. It is located in Khajuripalli village in Jujumara
block of Sambalpur district, and was promoted by an Anganwadi worker of Jujumara. The group was
established in February 2001. At present it has 10 members. Starting with Rs 25, each member now saves
Rs 30 per month. This became possible after the incomes of the members increased, thanks to the various
activities of the SHG. While eight members of this group belong to the Scheduled Caste category, the
remaining two were drawn from the OBC group. All of them come from BPL families. Though the
members have learnt to read and sign and could therefore be called “literate”, most have not had formal
education. They are mostly daily wage labourers.
The SHG was linked to the Maneswar branch of Punjab National Bank on March 24, 2002. Till date, the
group has taken out two loans from the bank – Rs 25,000 in 2002 for agro-based work and Rs 2,50,000 in
2004 for deployment in diverse ventures such as rearing goats and starting a kerosene dealership. They
have repaid both the loans. The members of Biswabharati SHG are active in goat rearing since there is a
forest nearby, providing abundant fodder for the goats. Each of the members rear as many as 20 goats
and they carry out this activity individually. The members utilised the bank loan to carry out this activity.
As a group, the Biswabharati SHG has also managed to get a dealership to sell kerosene in the area. The
previous kerosene dealer of the village was not properly distributing this essential commodity and the
villagers were subject to undue harassment. The members of the SHG met the District Collector and
expressed their grievances. The Collector cancelled the dealership after an enquiry and handed over the
dealership for supplying kerosene to Biswabharati SHG. Today the villagers are happy to get their quota
of kerosene on demand and if required in emergencies, customers are given kerosene even at night.
Becoming members of the SHG has empowered women. The experience shows that women can be
successful in economic activities with their inherent sensitive ways of dealings. They succeeded where
their menfolk failed. The women are happy that they are members of Biswabharati SHG. Thanks to the
SHG, their level of self-confidence has definitely improved. They are not hesitant to meet higher officials
with their demands.
The members of the SHG are also involved in agro-based work. They have taken training in mushroom
cultivation at the local agricultural centre, Atma. But they feel that they require more training. Plans are
also afoot to start dairy farming on a larger-scale. The group is searching for quality cows that could yield
at least eight litres of milk. They stated that the local vendor / supplier, in connivance with the block
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extension official, tried to persuade them to buy poor quality cows. The women refused to buy them and
raised the issue also with the bank manager. This indicates the level of awareness of these female
members of the SHG and the matured way in which they conduct business.
Due to their different initiatives, the SHG has earned a good name in the area and its women members
gathered the pluck to tackle the liquor menace in the village. Their efforts were fruitful as the social evil
has decreased considerably. Quarrels among villagers who were drunk have dropped significantly due to
the reduction in consumption of liquor. As part of their social commitment, the members of the SHG
have made sure that the senior citizens of the village get the old age pension from the Government.
Over the years, the standard of living of the SHG members has improved. They are now able to afford
new dresses for their children and also encourage children, including girls, to attend school regularly. The
members are also engaged in literacy drives. Earlier, only three members could sign their names, but now
all of them can sign. This group is also promoting adult education. Members have learnt to maintain
records of the group themselves. The President of the SHG is a member of the (VEC) Village Education
Committee. The group has also appointed a teacher at Rs 2,000 per month to teach the village children.
The Biswabharati SHG was adjudged “Best SHG” in Jujumara block in 2004, on the basis of the
recommendation of the CDPO and Supervisor. This was no wonder because their successful socio-
economic activities that have slowly changed the face of the village. Due credit for the success of the
SHG must be given to its President, Rajkumari Sahoo. She has also been elected as the Secretary of the
Maha Sangha formed by 15 SHGs of the surrounding areas. This speaks highly of her leadership qualities
and efficiency. This is also a testimony to the fact that women and their work have gained recognition
and appreciation. Women have been drawn out of their shell and involved in socio-economic activities
that has enriched themselves and their community.
6.1.3 Case sudies based on success of individual members and households
Apart from studying the activities of the SHGs as a group, case studies were carried out on some
individual members who had achieved remarkable success in their activities which empower the women
in many respects considerably. The first is the case study of a woman who has risen from the position of
an agricultural labour to a successful entrepreneur. The other is the story of a woman who has become
aware of her potential and hence could supplement her household income. The story of a husband and
wife pair, who has risen from the position of employees to employers, shows that the economic position
of households could dramatically improve, thanks to the SHG.
6.1.3.1 An example of woman’s empowerment
This is the success story of Chandrakala of Mahabubnagar district in Andhra Pradesh, who has risen from
being an agricultural labourer to managing a restaurant thanks to becoming a member of a SHG. She is
socially, economically and most importantly, educationally empowered today.
Thanks to SBLP, a number of women in Mahabubnagar district of Andhra Pradesh have attained
economic independence and have been empowered with leadership qualities, self confidence and the
ability to negotiate and face the world outside the four walls of their homes. Chandrakala, aged 29, is one
such woman. She displays exemplary entrepreneurial qualities in successfully managing a restaurant on
the Hyderabad- Bangalore highway. She has been a member of Dhanalakshmi Mahila Sangam, located in
Komi Reddy Palli village since its inception in 1995. This SHG was promoted by Aadarsha Walfare
Society, an NGO and linked to a bank, in 1997.
At the time of her marriage, Chandrakala had not even completed elementary education. She worked as
an agriculture labourer for two years after marriage. Only after joining the SHG could she complete
matriculation– with the help of a loan from the SHG. Then, she went for training as an automobile
mechanic at an ITI. Her husband, who had also passed the 10th Standard, used to ply an auto-rickshaw as
their means of livelihood, but his earnings were not enough to support the family, which included his
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parents as well. Hence, after passing the class X, she had to supplement the family income by giving
private tuition to children and also working as a para-teacher in her village. She even started looking after
the accounts of the SHG. After completing her ITI training, she worked as an apprentice in RTC for Rs
1,200 per month for two years. Unfortunately, in spite of the reserved quota for ladies, she could not get a
regular employment due to some union problems. Though she was disappointed that she could not get a
job for which she was trained, she did not despair and continued to work for the SHG and maintain
accounts and other registers.
The year 2002 was a turning point in her life when she was asked to manage Aadarsha Family
Restaurant, located on the highway near her village. She never looked back since. She got this job as a
member of the SHG, since this restaurant is under the control of the Federation of SHGs in the Mandal.
She was given a monthly salary of Rs 1,500 for this job. After working as a manager for two years, she
acquired enough confidence to take the restaurant on lease and run it as her own enterprise. The
Aadharsha Family Restaurant, a highly successful venture, is operating in a building constructed by the
NGO, Aadarsha Walfare Society. The operation of the restaurant is for the exclusive benefit of SHG
members in the Mandal, as only a SHG member can get the lease. In order to get the lease for running the
restaurant, she had to pay Rs 50,000 as security deposit and it is needless to say that she could make
available this huge amount because of her SHG membership.
The restaurant employs 22 persons, and all of them belong to familie s of SHG members. Since the
restaurant is located on the highway connecting Hyderabad to places like Bangalore, Kurnool, Tirupati
and Mantralaya, it attracts a fairly large crowd. It is open from 6:30 am to 11:30 pm and serves both
vegetarian and non-vegetarian food to around 150-200 persons per day. After taking care of all her
expenses, including a monthly rent of Rs 6,000, Chandrakala makes around Rs 15, 000 per month.
Chandrakala is ever grateful to the NGO (Aadarsha Walfare Society), the promoter of the SHG, which
also arranged experts in hotel management from Hyderabad to come to this restaurant and impart “on the
job” training to her for two months. Not only has Chandrakala achieved this success for herself, she has
also motivated her husband to start a small grocery store in her village with the help of the loan she
obtained as a member of the SHG. Her husband’s earning from running the auto rickshaw was very
meagre and since the vehicle was very old, he was incurring losses due to high maintenance. Hence, he
had to give up auto driving and was desperately looking for other work. The opening of the grocery store
proved profitable for him and the family repaid the loan within a year.
Chandrakala owes all this to her SHG and the NGO which promoted it. After joining the SHG she not
only got educated, but was able to uplift the entire family economically. She started her life as an
agriculture labourer and today, thanks to the loan facilities and other encouragement from the SHGs, she
is running a restaurant. It is a very heartening to watch the self-confidence with which she manages the
continuous flow of guests at lunch time and handles the staff and the money, while cradling her one-year-
old baby girl.
Today, because of her status and power, she has a lot of say in her family and has even managed to
reduce the alcohol consumption of her husband to some extent. She is now living a busy but comfortable
life and has purchased consumer durables like TV, grinder, sewing machine and a cell phone. Her dream
house is under construction, again with the help of the loan availed through the SHG.
6.1.3.2 A family enterprise
This is an example of a success story where both husband and wife have reaped the benefit of becoming
members of two different SHGs to achieve their dream of starting their own enterprise. And they
succeeded.
Generally, when a person becomes a member of a SHG, it is seen that the economic position of the
family improves, though the extent of such improvement may vary for different families depending on
many factors like motivation, hard work, skills, etc. Here is the case study of a family, which through
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hard work and entrepreneurship, has made extraordinary progress not only economically, but also in
terms of stature and status. These people, who not so long ago used to work for others, have today
become employers themselves. In the process they have helped other people earn their livelihood.
Basanna's family comprising his wife Bharati and three children, presently reside in Hosahalli in Bellary
district of Karnataka. They own about two acres of agricultural land. As the land was not irrigated, the
yield was very small. In order to supplement their income, both Basanna and Bharati used to weave silk
sarees on handloom at home for a businessman from Molakalmuru. The businessman had loaned them
the use of two looms, used to supply them with silk, zari and other raw materials required, and pay them
Rs 300-350 for one completed saree. While Basanna could complete about four to five sarees in a month,
Bharati could only finish about two after her household chores. The returns for long hours of diligent
work were indeed very low. However, they were forced to do this work. They were aware that the
businessman was making a lot of money out of their work. But due to the lack of capital, they could not
undertake the business on their own and earn good profits.
During 1999, a number of SHGs were being formed in and around Hasahalli. Basanna and his wife came
to know of the benefits of joining a sangha. In 1999, Basanna became a member of Aadarsha Swa-
Sahaya Sangha and Bharati, a member of Saleshwaran SHG. Both began saving regularly, initially with
Rs 15 and Rs 10 respectively. Bharati was not satisfied with the working of her SHG and so left it to join
Bhagyalakhsmi SHG. Initially, both of them took loans through their respective SHGs and the total loan
amount was Rs 20,000. This enabled them to buy one loom of their own and they hired a person to
operate the machine on wage basis. After a while, Basanna started going to nearby places to sell the
sarees and established contacts with saree merchants. Later, they took out a second loom and started to
work less for the businessman. When they took the next loan, they bought silk, zari, etc. and started
supplying it to others in the village and bought back the woven sarees and started selling them. In course
of time, Basanna also found out that there were other weavers in the village who were working
independently on their looms, but found marketing their goods difficult. Basanna took the initiative,
bought the sarees from them and started selling them along with his own. Throughout, both husband and
wife were very prompt in repaying their loans to the SHG and also keen on saving. The officers of the
Pragati Grameena Bank, with which the SHG is linked, were so impressed with Basanna's work that they
brought it to the notice of their Chairman. The Chairman personally visited Basanna's house, and duly
impressed with his work, sanctioned him a personal loan of up to Rs 2 lakh.
Today, the family owns five looms. Basanna has given up weaving sarees and is only involved in
marketing them. Bharati concentrates on supervising the work of the labourers on the loom and also sells
products to customers coming to their house. Their daughter, who is studying to become a primary school
teacher, also helps her mother during her free time. All three of them survey the markets to know about
the latest trends and try to incorporate the best in their sarees. They have also started selling the sarees on
an instalment basis to known people to increase their clientele. While at the initial stage they had working
capital to make only about 10-15 sarees at a time, they can now boast of having about 150 sarees at a
time ranging between Rs 1, 800 and Rs 10,500 per saree. Meanwhile, both husband and wife save more
than the mandatory amounts fixed by their respective Sanghas.
Apart from investing in their flourishing business, they have also remodelled their house, added an upper
floor. They have been able to educate their eldest son and, after completing his pre-university (12th
Standard), he has got a job in the State Police department and is presently undergoing training. The
daughter wanted to become an engineer, but since she had to move out to Hosahalli (check spelling,
Hosahallilli) for her education, which is not socially acceptable in the community, she could not pursue
the course. The family is able to keep the youngest son in a hostel in Hospet to help him study. Now, they
have plans to shift him to a better institution in Bellary by paying Rs 45, 000.
Although many of the other members of their SHG have also improved their financial status, Basanna
proudly admits that he, along with his family, has outshone the rest. The dreams of these hardworking
and enterprising people have been fulfilled thanks to the SHGs.
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6.1.3.3 SHG – A tool to recognise one’s potential
Becoming a member of a SHG has helped this educated housewife realise her potential to run the SHG
efficiently and to motivate and help other women to form such groups. This is the story of Padmawathi,
who lives in the outskirts of Bellary in Karnataka.
The Family Planning Association of India, (FPAI), an NGO in Bellary, was promoting SHGs in Bellary
during 2002. As a part of this exercise, they organized a gathering of some ladies and explained to them
about the working and benefits of SHGs. The women however were not convinced at the first and took
about 15 days’ time to think about the matter. Later, with a lot of convincing by FPAI, the Mother
Theresa Swashakti SHG was formed with 16 female members, of whom Padmawati was the most
educated, having passed her SSLC (class X). Another member had studied up to the class VII, while four
others had attended school and could sign. The remaining 10 could only affix their thumb impressions.
As Padmawati was the most educated in the group, she was made the first leader. FPAI taught her
account keeping and other procedures. The group decided to save Rs 10 per week. Initially, the money
saved was given as loans to members at 2 per cent per month. The SHG got bank linkage in 2003.
Thereafter, they have been taking loans from the bank, and have been lending the money to the members
according to their requirements.
Padmawati, a housewife, lives with her husband and two sons who are both studying. They were
dependent on the holding of two acres on which her husband worked. It was difficult for them to make
ends meet, as both the children were studying. The children were interested in further studies.
Padmawati, who had until then never ventured out of the house except with her family, started interacting
not only with the group members and officials of FAPI, but also had to deal with the bank officials. This,
along with the fact that she learnt to maintain the accounts, gave her a lot of self confidence, as well as an
idea about her hidden potential. Padmawati felt that she herself should earn the money that she had to
save. As she had studied up to class X, and was maintaining the accounts of the SHG (with the help of
NGO), she felt that she would be able to offer home tuition for small children. When she aired her
opinion in a meeting, it was well received, and the members started sending their children for tuition to
her. Word also spread around, and she started with 20 children, and charged Rs 15 per month per child.
This not only helped her save more in the SHG, but also in repaying the loans taken. Presently she has 35
students, and for those in the lower classes (up to Class 5) she charges Rs 20 per month and for the others
(Class 5 to 8), she charges Rs 25 per month. From the loan taken from the bank, the family bought a
thresher, which they are leasing to other farmers. This has become an additional source of income for the
family. The money earned by tuition and the income from the thresher helped them repay the bank loan
without much problem. But, Padmawati did not stop there. She realised that with 35 students, she had a
good market for stationary items. So, she started going to the wholesale market in Bellary and bought
note books, pencils and erasures which not only helped her earn more, but was also convenient for the
students and their parents.
Apart from improving her own situation and that of her family, she has also worked sincerely for the
SHG. At the very beginning, the SHG decided that everyone must learn to sign. In order to ensure this, it
was decided to collect a fine of Rs 2 per month from those who could not sign. Now, all the members can
sign. The SHG also wanted to take up some group activities. However, they did not succeed and in fact
suffered some losses. Hence, all the members started utilising the bank loan individually. The SHG
functioned so well under the leadership of Padmawati that she has remained the first leader since the
beginning – only her deputy has been replaced. Not only have the members been very regular with their
savings and repaying loans, but also managed to complete the community hall in the village by providing
Rs 40,000. This hall is now being used to hold SHG meetings. In fact, it is being used by all SHGs whose
members have taken up income generating activities like tailoring, embroidery, etc.
In 2005, on the occasion of the second centenary celebrations of State Bank of India, the SHG (better to
mention the name of the SHG here) got the award for being the “Best SHG” in Bellary district. Also,
during 2005, the NGO (mention the name of the NGO FAPI)handed over the complete responsibility for
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operating the SHG to the members themselves. The SHG has been running successfully and presently the
savings have been increased to Rs 25 per week. With the help of a loan from the bank, Padmawati has
enlarged her house. The family has been able to procure an education loan and the elder son is now
pursuing an MBA at Bangalore. The younger one is in a degree course in Bellary. On the personal front,
she has opened a savings account in the bank in her own name. Further, she has herself been instrumental
in starting four other SHGs and has successfully trained the members of those SHGs in maintaining the
accounts and getting them bank linkage. Due to the added responsibility of all these activities, there are
times when she can’t be present for tuition. To see that the students do not suffer because of this, she has
now got her husband interested in giving her a hand at it. Today, she reminiscences about those early
days when she was unenthusiastic about forming the SHG. She remembers with gratitude the way in
which the FAPI encouraged them. Thanks to the SHG, she has proved here mettle and stands tall.
6.2 CASE STUDIES OF SHGS THAT ARE NOT SO S UCCESSFUL /N ON-FUNCTIONAL
While conducting the case studies in the six States, the team noticed that apart from well-functioning
SHGs, there were also some which were in the ‘also ran’ category. There is the famous case of a SHG,
which is still being “nurtured” by the NGO that promoted it eight years ago. There are also SHGs which
are bogged down by infighting among its members. Other SHGs have been unable to get bank linkage
due to various reasons. Apart from these, there are also SHGs which have closed down because of failed
ventures or lack of trust among the members, resulting in their inability to repay their loans.
6.2.1 Lack of literacy responsible for not getting bank linkage – Uttar Pradesh
This is the case of a SHG where the poor illiterate women members from the Scheduled Castes were
completely dependent on the SHPI. As they were totally unlettered, the members of this SHG in
Azamgarh district of Uttar Pradesh could not understand the importance of bank linkage and
apprehended a debt trap ahead for them. As a result, the SHG has been reduced to the level of a chit fund
group
The Adarsh Mahilan SHG, formed by a group of poor women belonging to the Scheduled Caste
community, has neither succeeded much in improving the economic condition of its members, nor has it
been successful in getting bank linkage. Originally, nine women formed the Adarsh Mahilan SHG in
Kharsan Khurd village of Phoolpur tehsil of Azamgarh district. Three months later, one more woman
joined the SHG and so far none of the members has left it.
The SHG was formed in March 2002 under SHG Model type 2 and was promoted by Bhumi Sudhar
Nigam, an NGO on the NABARD pattern. The SHPI helped in forming the SHGs as part of their
ongoing programmes to ameliorate the economic condition of rural people. The Adarsha Mahilan SHG
opened its saving banks account in a branch of the Union Bank of India and the mandatory saving for the
members had been fixed at Rs 20 per month. The situation remains unchanged today. Membership fee
was fixed at Rs 7, which was spent in buying registers, seals, etc. and visiting the bank whenever needed.
The SHG holds a meeting in the first week of every month. Invaria bly, all the members attend the
meetings and it is also reported that most of them participate in the discussions. The SHPI has not
provided any training to the SHG members in the maintenance of accounts, etc. The members were also
not informed about the rules and regulations. Since all the members are illiterate, they depend on others
(mostly children of the members) for maintaining the accounts and records of the group. It was obvious
from the discussion that they are not satisfied with the support provided by the SHPI after the formation
of the group.
Since joining the SHG not one of the 10 members have made changes in the income generating activities.
Almost all of them are still working as daily wage labour in agricultural and non-agricultural sectors.
Cultivation is the secondsource of income in their households, with the families tilling land taken on
lease.
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The major advantage (in a way it’s a big achievement), which the members see in forming the SHG, is
that they offer freedom from moneylenders. So far, they have not received any loan from the bank and
the reason for this is said to be their lack of knowledge about the procedures for obtaining a loan. The
SHG was able to provide loans to its members from their own savings. Each year, three to four members
take a loan for 12 months’ duration. The minimum amount of loan taken by the member was Rs 1,000. It
is important to note that so far the members have taken loan mainly for meeting expenses relating to
medical treatment, education of children and agriculture, but not for starting income generating activities.
The rate of interest on loans is fixed at 2 per cent per month. No penal interest is charged if a member is
unable to repay the loan on time. However, the members generally seem to adhere to the fixed repayment
schedule. The financial status of the SHG could at best be termed as average. Presently, this total savings
exceed Rs 12,000.
Initially, a SHPI representative helped them in attempting to get a loan of Rs 25,000 from the Union
Bank of India. Of this amount, Rs 10,000 would have been given in the form of a subsidy. However, the
members informed the study team that they were offered only Rs 15,000 and they suspected that some
persons were intending to pocket the subsidy part. While they did not name anyone in particular, they
asserted they were offered only Rs 15,000. Therefore, they had refused credit-linkage fearing that they
were being trapped. Being illiterate they were quite confused with different versions of the process given
by different people and hence they refused to get bank-linked. When contacted, the bank was unable to
offer any valid reason for non-linkage of the SHG. The office bearers of the SHG mentioned that their
chief problems are lack of literacy and non- availability of information.
Paucity of information and SHG members’ ignorance of rules and regulations leads to perceptions that
bank linkage would lead to perennial indebtedness. So, they said they were happier off without banks.
Nonetheless, they also feel that with credit available from the bank, they could think of starting their own
individual activities to augment their income and therefore still aspire to get bank-linked.
Though the members thought that there had not been much change in their overall economic condition, it
was clear that joining a SHG had given them more self confidence and developed their communication
skills. The women also feel empowered to a certain extent. They were able to get small loans from the
SHG for their needs and combat emergency situations.
However, mobilisation of people and formation of groups without arrangements for initial hand holding
guidance and training makes it extremely difficult for groups (especially those with low educational
standards and lack of leaders) to develop and utilise their potential. The case study also shows that such
groups require strong support from a qualified SHPI. It is important to realise that SHG development is
something more than just mobilisation of people and formation of groups.
6. 2.2 Can a SHG survive without mutual trust?
This is a case study of a SHG formed by a group of women from Dhule district of Maharashtra, who
were drawn from varying economic and educational backgrounds. The lack of uniformity was a factor
behind the lack of mutual trust that developed between them, leading ultimately to the failure of the
group. Thus, this study illustrates that for SHGs to function properly, it is very important to form groups
with members drawn from similar socio-economic backgrounds and with likeminded people who share
trust and co-operate with each other at all times. It is also important that the members choose suitable and
competent leaders who can be trusted and respected by the group members.
Agriculture is the main source of income for people in Manjrod village of Shirpura taluka in Dhule
district of Maharashtra. However, even for land-owning families, agricultural income was not sufficient
since the lands are not irrigated. Without adequate income, these farmers could not invest in modern
farming and hence could not improve their earnings. The families without land were working as
labourers, but work was available only during the agricultural season.
Some SHGs were functioning in the village for some time. Those who had joined them were seeing
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better days. Attracted by the evident benefits of the SHG movement, 10 women got together to improve
their own financial situations. Taking the help of an already existing SHG, they started a group of their
own called the Hari Om Mahila Bachat Ghat. However, the membership of the group was not
homogenous. Of the 10 members, six were from APL families and the remaining belonged to the BPL
category. Only three of the members had ever attended school and the others were illiterate. The most
educated among the members, one who had passed class VII, was made the President so that she would
be able to maintain the accounts and also interact with bank officials. Another educated member was
made the vice-president. The SHG was formed in February 1999, and members started saving Rs 50 each
per month. In August 1999, they got bank linkage with the Thalner branch of the Central Bank of India.
The problems, however, began when they took the very first loan of Rs 25, 000 from the bank. This loan
was used for disbursing among the members, who instead of utilising it for income generating activities,
made use of it for routine household expenses. While one member used the loan amount for her
daughter’s marriage, another spent it on household matters. Some of the members were unaware of the
basic concept that loans are to be invested in income generating schemes to ensure complete and timely
repayment. Without any additional income, they found it difficult to make their monthly savings
contribution and repay the loan. So, some of the members defaulted. At this juncture, they were neither
given sound advice, nor helped by the other members. As a result of non-payment of loans, the bank
refused to further loans to the SHG and this aggravated matters. Some SHG members thought that if the
bank is not going to provide them any further loan, there is no point in saving and so they stopped their
monthly savings altogether. The President and other office bearer tried to convince these members, but
they were unsuccessful in winning their confidence.
To make matters worse, the illiterate members of the SHG believed that their SHG had got a subsidy
(given to SHGs by banks as the members were from BPL families). As they could not read and write,
they failed to understand matters and suspected that they had been cheated out of it by their office
bearers. The inability of the members to repay the loan and the lack of trust between the literate and
illiterate members finally caused the failure of the SHG. The heterogeneity of members contributed to
cause conflicts of interest among the members.
This case is in real contrast to what the research team has observed in one of the SHGs in Mahbubnagar
district of Andhra Pradesh where the members look up to their educated and highly enterprising President
as a true leader and have prospered under her guidance and leadership.
6.2.3 Living under the shadow of NGOs
This SHG in Kalahandi district of Orissa promoted by an NGO consists of illiterate women. However,
they all learned to sign with time. Even after eight years of existence, they continue to be totally
dependent on the NGO for maintaining their accounts and are not confident enough to function
independently.
The Maa Lankeswari SHG in Kaliakundal village in Junagarh block of Kalahandi district of Orissa was
formed in 1999 and was linked to Utkal Gramya Bank at Chicheiguda in 2000. At the time of forming the
SHG, there were 10 women, but subsequently five more joined the group. While 10 are from BPL
families, five are from APL backgrounds. This Mahila Mandal was promoted by an NGO called
Kartavya. The field executive of the NGO had visited the village and motivated them to form a group. At
first, members were unsure about forming a SHG but later they agreed to set up one as they saw this as
an opportunity to organise themselves and work for improving the economic levels of their households.
They were told by the NGO that they could take advantage of livelihood schemes and gain access to bank
loans.
When the SHG was formed, it was decided that every month each member would save Rs 20 and
defaulters would pay Rs 3 as fine. Currently the members are in a position to save Rs 50 per month.
Members have also bought insurance policies, besides saving money in their SHG fund.
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The members of the SHG are engaged in a variety of activities. Two are farmers, ten are artisans, one is a
trader and the remaining three are in agro-processing.(the counts make it a 16 member SHG but it was
mentioned earlier that this SHG had 15 members) Ever since the bank linkage, the SHG seems to be
continuously availing of bank loans and the members are investing in some activity or the other. This was
possible because the group was also very prompt in repaying the loans. The group availed of a loan of Rs
12,000 initially, i.e. in 2000, (what is this figure of 2000?) from the bank and the amount was divided
among all the 10 members (before the 5 more members joined in), making it Rs 1,200 for each. The
members used the money to trade in vegetables (mostly potatoes, tomatoes and brinjal), carry out pottery
business, make bamboo handicrafts and make and sell Lia, a local snack. The loan amount was repaid in
a year. Within one month of repaying the first loan, they got another one of Rs 20,000. This was used for
setting up a brick-kiln business. The cost of production for 1,000 bricks was Rs 700 and they were selling
the same at a cost of Rs 1,000. There was good profit from this venture and members were able to repay
the bank loan with profits earned from the business. Resultantly, there was marked improvement in their
living standards. The households had better quality food to eat and the president of the SHG, Sumitra,
was happy to mention that she was able to buy new sarees and purchase an insurance policy as well.
Some of the repayment was also done from their own money. The third loan that the Maa Lankeswari
SHG availed was for Rs 40,000 in 2003. The members used it to take over the distribution of kerosene.
Their efforts and sincerity yielded profits and they repaid the loan and took another one of Rs 60,000 in
2005 to carry out business. Some members have invested the money in sugarcane cultivation. Two
landless members have taken land on lease costing Rs 10,000 and have benefited from increased crop
cultivation activities.
After joining the SHG, there have also been some improvements in the members’ self confidence and
awareness. They have been motivated by the SHPI to learn to sign their names and they are also learning
to read and write. Earlier, none of them could sign. They have also been motivated to educate their
children, particularly their daughters. They do not want their children to remain uneducated like their
own generation; “We did not get the opportunity, but we will not deprive our children”, they said.
Members hold meetings regularly within their group. They attend the Palli Sabha meetings in their
village. They are pleased that after becoming members of the SHG their status has risen in the
community. They were not invited for such meetings earlier, but now they are. Before they became
members of the SHG, they were kept in the dark about these meetings. But now they are updated on
issues like health and education and other issues at the meetings. They have even gone outside the State
to attend conferences, which is a big change in the lives of these rural women.
However, in spite of all these significant improvements, the women are still dependent on the NGO for
maintenance of their accounts. An educated son of one of the members helps to some extent. Even
though monthly meetings of the SHG are held regularly and an average of 12 members attends them,
only five seem to take part in the discussions. Even after so many years of existence, the SHG is not
confident enough to run the group independent of the NGO. Is this due to insufficient capacity building
measures, or, due to some wrong attitudes of the NGO?
The women still feel lack of self-confidence and insufficient communication and negotiation skills.
Though the NGO has motivated them to get some functional literacy, the members are not confident,
since they are not educated. This could be the main reason for the members feeling strongly about
educating their children, in particular their daughters. The SHG members said that the NGO should allow
more time for group discussions and questions during their meetings with them and also offer short term
training courses to elected group leaders on group as well as activity management. In all, the NGO should
try to improve the competence of the members so that they could function independently.
6.2.4 Men flounder where women succeed
This case study presents the story of two SHGs from Kalahandi district of Orissa with all-male members.
The groups have run into trouble due to lack of unity, ego hassles in accepting a leader and infighting.
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Lack of foresight in investing the loans taken resulted in financial woes to the group. These SHGs
contrast the ones formed by women, which are generally free of such problems.
Throughout the country there are many examples of highly successful SHGs consisting solely of women
members. Here in the Kalahandi district, the study team came across at least two SHGs with all-male
composition that have run into troubled waters. In the case of both the SHGs, the men feel that typical
male ego problems, coupled with their lack of unity, was responsible for their lack of success.
Interestingly, the men themselves admitted that female groups had a definite edge over the male groups,
since women do not have ego problems. Women tend to respect and follow their leaders, are more co-
operative and work in harmony. They are also more cautious in money matters and meticulously
maintain records of each and every rupee.
The Maha Laxmi SHG located in Kikia village of Kesinga block in Kalahandi district, was formed by 12
male members in 1999. Just two years after the SHG was formed, i.e. in 2001, the SHG was linked to the
Utkal Gramya Bank in Kesinga. Most of the members are from the OBC category. Like any other SHG,
the desire to improve living standards and have income-generating investments in the process motivated
them to form this group. The SHG also wanted to play a role in the development of the community.
However, unforeseen circumstances and their internal differences have hampered the progress of Maha
Laxmi SHG. In addition, the SHG seems to be suffering from a serious financial crisis.
The members of the group obtained a bank loan of Rs 15, 000 to start a fertiliser business. Since local
soil conditions and climate were suitable for cotton production, they had hopes of earning a good profit.
Therefore, they utilised the bank loan for buying fertiliser and supplying the same to cotton farmers.
However, natural calamity in the form of a drought gripped the area in 2001. All hopes of profits were
shattered. The farmers to whom they had supplied fertilisers were directly hit. Till today, Maha Laxmi
SHG has been unable to recover and repay its outstanding loans.
This was not all. There were other problems to tackle. The members admit that their constant infighting
and ego problems are major obstacles to the progress of their SHG. As a result, plans are not
implemented. Monthly collections have stopped and meetings are not held. For a SHG to carry out work,
strong leadership must exist. Inability to elect leadership, lack of unity and co-operation are the problems
faced by the group.
Another problem faced by the Maha Laxmi SHG is alcoholism. While most of the women-based SHGs
are up in arms to fight the liquor menace, this all-male entity is a victim of the scourge. Members are not
able to motivate the community to give up drinking, as they themselves are victims of the bad habit. They
are honest about this in their admission and understand the urgency to keep away from liquor. Economic
development is not possible if all the money earned is spent on drinking. Also, drunken members are
more likely to get into fights.
Revamping the group is high on the agenda of the group members. They have decided to collect small
amounts of money regularly to rebuild the SHG fund. This would help them to meet some expenses later
on. The paddy business and pisciculture are what they plan to take up next. Plate- making from dried
leaves is again an option but with forest areas being wiped out, the members wonder from where they
would get enough leaves. Members feel that timely inspection by the field officer would encourage them
to come out of their problematic situation. Besides, proper training on vocational activities and financial
management and other skills would be helpful in the securing sustainability of the group.
There is a somewhat similar story from another all-male SHG from Kalahandi district. Maa Laxmi SHG
in Latakabahali in Kesinga block of the district is facing difficulties due to more or less the same reasons-
male ego, lack of unity, etc. (the case study above was that of Maa Laxmi, is this not a repetition)There
are 12 male members in Maa Laxmi SHG, all of whom are poor farmers. All are literate and have studied
up to the matriculation level. The group, promoted by a Bhawanipatna-based NGO named SEWA, was
formed in 2000 and was linked to Utkal Gramya Bank, Pastigudi in 2001. Currently the group has run
into troubled waters due to non-cooperative activities of one member, though other members are hopeful
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that all the disturbances can be settled and the SHG would work again. (please check which group is
being discussed here)
The group suffered due to the activities of one member who was dissatisfied with the SHG on financial
matters. He is no more a member of the group but the incident affected the SHG. Meetings and collection
became irregular. Now, efforts are on to regularise the activities of the group. Members admitted to the
utter lack of unity among members, which they know is detrimental to productive work. Maa Laxmi
members praise all-women SHGs for their unity. They appreciate the understanding and coordination
among women SHG members. Male members of SHGs have problem accepting leaders due to their
aggressive attitude. However, they feel that the male members being more mobile than their female
counterparts, have also an advantage for them.
With so many SHGs made up of female members, the all-male Maa Laxmi SHG has got to compete to
prove its worth. A loan of Rs 20,000 was taken from the bank to invest in cotton farming. Each member
took Rs 1,600. Also, this group fell victim to the vagaries of nature. Farmers all over the nation received
a severe blow in 2001 when a major drought devastated their crops. They were unable to repay their bank
loan. They regret not having taken any insurance cover. With sincere efforts the members have managed
to repay only Rs 7,000, roughly one-third of their outstanding dues to the bank.
“We will work on making proper bye-laws. We will also get our group registered as a
co-operative”, members say. They plan to turn their group into a full- fledged NGO in the future as they
expect that they are capable of contributing through hard work. They also plan to settle their differences.
Maa Laxmi SHG is one group that has been successful in some of their social activities. All members of
the group joined hands to close a liquor den in the area, unlike the other all-male SHG. Even the
Collector has given his approval for closure of the dens. Malaria camps have been organised by the SHG.
Resultantly, people have become aware of health hazards due to mosquitoes. The group helped to clean
drains in the village as drains provide the breeding ground for mosquitoes. People have been encouraged
to use mosquito nets. Members cited an interesting case when they celebrated Holi by cleaning the
village.
Festivals provide an opportunity for the community to interact. Maa Laxmi SHG has provided a forum
for this by organising Ganesh Puja. This has made the group popular in the village. They also arranged a
cricket tournament where all budding cricketers of the area participated to show their talent. For the rural
youth, this was a welcome event. Prizes were given away by the local MLA. Members inform us that the
then Minister of State for Railways, Shri Bhakta Das, graced the occasion.
Local children are encouraged to attend school regularly. Efforts are on to reduce the dropout rates
among school children. The SHG members are also on the school committee. A member of the group is
on the village education committee. They have a say in education-related matters of the village.
What makes one feel optimistic about both the SHGs is that in spite of their present financial problems,
they are hopeful of turning the corner and doing constructive work in the future. Fortunately, the
members are able to understand where the problems lie and hopefully they should be able to sort out the
differences among the group members and come out of the woods.
6.2.5 Gender bias in SHG
Gobindpur village is situated about 40 Km from Silchar town in Cachar district of Assam. Most of the
villagers are Muslim cultivators. About four years ago, a group of men from this village mooted the idea
of setting up a SHG involving womenfolk. It was a noble attempt to alleviate the economic status of the
women in the village. Several ambitious plans were floated for the welfare of its members. A fisheries
project was one of various schemes intended for augmenting the socio-economic status of the members.
But, ultimately, when the SHG was formed, the members consisted of only men. It was a victory of the
conservative and orthodox over a few progressive- minded people in the village wanting to liberate the
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women from male domination through economic empowerment. More particularly, this has taken place
in a scheme that is meant basically for women, and that too in a north-eastern state where women are
generally more educated and economically independent.
This all-male SHG received a loan of Rs 25,000 from Canara Bank in 2003. Again, in 2006, they
received Rs 2 lakh as loan. The SHG in turn provided loans to its members. Right from the beginning, the
Secretary had been motivating members to get into fish farming, which is hig hly profitable and a
sustainable business. The members also took loans to invest in fish farming. But, while the secretary and
president raised their own fish farming units and made substantial profits from the enterprise, the rest of
the members used the loans for meeting household expenses, paying medical bills and funding marriages.
In addition, the much-hyped Community Fisheries Project is yet to take off. In fact, this project appears
to have been the major excuse for not including women in the group. It was generally held at that stage
that the fishing business involved muscle power as it involves removing weeds, casting nets and such
things. The men argued that women were physically unfit for such activities.
That women were perhaps intentionally left out from the SHG indicates the prevalence of a gender bias
in that society. It looks as if it can be very difficult for women to get their dues even in areas that are
predominantly meant for them.
As far as the SHG is concerned, it has survived in spite of most of the members not investing their loans
amount in income generating activities. The major reason could be that though the money has been spent
on family expenditure, it was deployed for necessary and unavoidable purposes, for which, they would
have had to return to the clutches of the moneylender. Currently, the Community Fisheries Project is also
being finalised where it is proposed to undertake fish farming on 30 bighas on which a huge pond is to be
constructed for the purpose.
6. 2.6 Are too many members the bane of SHGs?
Pragati SHG was formed in Phulbari village of Marigoan district of Assam in 2001. The SHG was
promoted by a facilitator from the NABARD office in Marigoan. The SHG had 24 members and they
opened an account in State Bank of India by contributing Rs 50 each month per member. They got bank
linkage in November 2001. As informal and unregistered structures are not supposed to have more than
20 members, the facilitator advised them to make two groups at the time of taking loan from the bank.
So, they formed two groups under the same President and Secretary. They got a loan of Rs 40,000 in
November 2001 and distributed it among the two groups. Apart from their own share, the second group
borrowed Rs 5,700 from the first. Both the groups used the loan to produce hand-made goods like
cushion covers, traditional dresses, etc. They exhibited their wares in the exhibition held at the Gandhi
Hall in Marigaon in 2002. While they got a lot of appreciation for their work, it did not turn out to be a
profitable venture. In fact, they could not sell all their merchandise, and hence were unable to repay their
loans. While the first group did repay their loans, the second group could neither repay the bank loan, nor
the money taken from the first group. This led to a fight among the members. Finally, with a lot of
difficulty, the SHG closed down in September 2003 after exchanging the unsold goods with repayment
due to the members of the first group.
While having too many members could have been a major cause for the failure of the SHG, it is also
possible that the venture taken up by them was not the right one. It also highlights the problem faced by
many of the SHGs, which first produce goods and then look for markets for them, rather than the other
way round. While training members of SHGs in this aspect might mitigate the problem, it will be
interesting to find out if SHGs can compete with the organised sectors in the marketing of their wares.
The SHGs can market their products in the local market quite easily, but the problems begin once they
look for outside markets. They would then require support for linkage with mainstream institutions as
well as backward linkages /training for qualitative and competitive cost effective production for them to
compete in the established markets. This is where the NGOs or the Federation of SHGs can step in and
facilitate in marketing the products.
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6. 3 CASE S TUDY OF AN NGO (SHPI)
NGO with a zeal for rural development
This NGO was founded by Mr Sharif Hussain based on the ideals of Mahatma Gandhi and his vision for
rural India. It has promoted more than 600 SHGs in Moradabad district of Uttar Pradesh. Besides starting
the SHGs, the NGO also imparted training in specialised income generating activities and worked for
creating employment for the rural poor. No wonder the NGO and its founder have received wide acclaim.
In India, the voluntary agencies have been supplementing the efforts of the government in implementing
various welfare programmes for the poorer section of the population. In the field of microfinance, these
organisations play an important role in facilitating the formation of SHGs. In some cases, the NGOs also
take on the additional responsibility of acting as financial intermedia ries for the SHGs. The study team
came across a number of such NGOs playing important roles in the promotion of SHGs in the entire
sample States. Below a case is presented of one such NGO operating in the Moradabad district of UP,
which is unique in its performance.
The Sharif Gramudyog Vikas Kendra was founded by Mr Hussain in Jetpurpatti village of Kundarki
block and was registered under the Societies Registration Act. This NGO purports to uphold the thoughts
and ideals of Mahatma Gandhi and his vision of Indian villages- development of Khadi and Gram
Udyog, education and agriculture, improving the status of women and their literacy, development of
youth, improvement in the condition of village people, etc. Since this organisation has been involved in
creating employment-generating activities since its inception, it is not surprising that it has promoted
nearly 600 SHGs since 2001 (Table 6.1).
Table 6.1: NABARD funded activities carried out by Sharif Gram Uddyog Vikas Kendra
since 2000-01
Name of the Scheme Year in Target Achievement Type of activity
which (beneficiaries) (beneficiaries) carried out
carried out
Rural Entrepreneurship 2000-01 30 30 Training in Brass coloring,
Development Programme Carpet weaving
(REDP)
Promotion of SHG 2000-01 50 50 Formed and credit-linked
Rural Entrepreneurship 2003-04 25 25 Training in carpet weaving-
Development Programme Place-Bilari
(REDP)
Rural Entrepreneurship 2004-05 25 25 Block printing of cloth
Development Programme printing e.g. bed covers etc.
(REDP) Place-Sahaspur
and helped in developing
income -generation activities
Micro-Enterprise Development 2005-07 25 25 Training in Bee keeping and
Programme (MEDP) helped in starting the
activity
Micro-Enterprise Development 2006-07 30 30 Training in Bee keeping and
Programme (MEDP) helped in starting the
activity through loan from
the bank
Micro-Enterprise Development 2006-07 150 150 Dairy Industry, Making
Programme (MEDP) Vermi compost
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The founder had a very humble beginning, starting out as a manual labourer. Born in 1970 in Moradabad
district of Uttar Pradesh, Shariff Hussain was married at the early age of 15. Even though he had passed
high school, he started working as a labourer and could not get any other employment. He used to walk
18 Km to Moradabad. His luck improved when he developed friendship with one Mr Iqbal Khan, who
was working as a projector operator in a cinema hall in Moradabad. With his help, Mr Hussain learnt to
operate the projector and started earning Rs 500 per month for his job as a projector operator in a cinema
hall. Slowly, but steadily, he became more ambitious and wanted to increase his earnings.
The seed of the idea of forming a voluntary organisation was sown when he left the job of projector
operator in 1986. He started colouring brass articles and carving things from brass. He also helped the
other unemployed youths of the village to get involved in this work. Later, in 1988, seeing his leadership
qualities and concern for the poor people, youngsters of the village elected him the President of Nehru
Youth Club, which was formed in the village. He started involving the village youths in activities like
organising job-oriented workshops. With the help of the unemployed youths, he also started running a
Vocational Training Centre.
In 1992, he formed the NGO. Already, in the same year, under Training of Rural Youth for Self
Employment (TRYSEM) and Development of Women and Children in Rural Areas (DWCRA) schemes
of the Moradabad District Rural Development Authority (DRDA), the NGO conducted a six-month
training course for 25 unemployed youths and women in carpet (durri) weaving, colour filling in
brassware, repair of pump sets and tailoring. After getting loan from banks, these people began running
their own income generation activities. More than 300 unemployed youths and women have received
training under DWCRA schemes till 1998-99 and got engaged in self-employment or income generation
activities.
During 2000-01, NABARD sanctioned a Rural Entrepreneurship Development Programme (REDP)

to the NGO for training 30 youths. Two-month training in carpet weaving and colouring of brass utensils
was organized and on completion of the training, loans were arranged for starting income generation
activities. It was learnt that presently these people are earning Rs 3,000 to Rs 4,000 per month. Under
REDP support of NABARD, another 25 unemployed youths were trained for two months in block
printing of bed covers/cloth, etc. The loans were arranged for them from Prathama Bank- Sahaspur,
Prathama Bank- Bilari and SBI- Bilari to start their own income generation activities.
During 2001-02, the NGO was sanctioned a project for forming 50 SHGs by NABARD. This was
successfully completed and all 50 SHGs got bank-linked and are reportedly doing well. Considering the
successful completion of the previous assignments, the NGO was sanctioned another project for forming
200 SHGs by NABARD during 2002-03. In all, 201 SHGs were formed and nurtured and all the SHGs
got bank-linked. By arranging loans from the banks and their savings, these groups and their members
started individual income generating activities as well as group activities.
Again, during 2005-06, 300 SHGs with around 3000 members were promoted and got credit-linked. The
SHGs are reportedly involved in various income-generation activities, both at the SHG and individual
levels.
Currently, the NGO has several projects from NABARD in the pipeline. Notable among them is the
proposal for formation and promotion of bank linkage of another 600 SHGs during 2007-08 comprising
BPL women and unemployed youth. The NGO is also planning to introduce an insurance scheme for the
members of 500 SHGs. About 5,000 members are likely to benefit by getting the life insurance cover.
The other activities include establishing ‘Rural Haat’ to sell items produced by BPL families after
providing them training in various activities like candle making, soap making, bee keeping, carpet
weaving and cloth printing. This is primarily aimed at solving the problem of marketing often faced by
SHGs and getting good value for their product.
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Further, there are proposals under the REDP scheme of NABARD for training the unemployed village
youths and women in various trades. Also, training of members of old SHG groups that are credit-linked
has been planned under the Micro Credit Development Programme.
In addition to creating employment for the youth and women, the NGO has also participated in various
social welfare programmes such as the Pulse Polio campaign, a rally to generate awareness about the use
of iodized salt and awareness on HIV/AIDS through group discussions, film shows and “nukkad nataks’.
These were organised by the Government of India’s Regional Publicity office.
The activities of Shariff Gram Udyog Kendra and the zeal of its founder, Mr Hussain, have been
recognised by the Government. It is not surprising that the organisation has received a number of
awards. In 1999-2000, the NGO was awarded the “Zilla Yuva Club Award” by Nehru Yuva Kendra
Sanghthan, Moradabad. Under this, Rs 10,000 was given to the organisation in recognition of its work in
creating employment opportunities for unemployed youths and women. In 2003-04, the NGO was
selected for first prize in Uttar Pradesh by NABARD’s Lucknow Office, for its excellent performance in
generating employment for village youth and women. The NGO has also been given citations in number
of programmes organized by the Uttar Pradesh and Central Governments.
Last, but not the least, in recognition of his services to the society, the founder president and torchbearer
of this NGO (Mr Hussain), was selected by the Government to take part in the ‘Mutiny March of 1857’
which was undertaken from Meerut to Delhi during May 2007.
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Chapter 7
Summary and Conclusions
The study assessed the impact of SBLP on the economic activities, household welfare and social
empowerment of SHG members. It also examined the quality of the groups promoted by different SHPIs,
the changes over time in group members’ participation and behaviour, and the quantity and quality of
financial services and their sustainability.
7.1 APPROACH OF THE STUDY
The study was conducted for the country as a whole covering six States from five different regions –
Andhra Pradesh and Karnataka (south), Maharashtra (west), Orissa (east), Uttar Pradesh (central) and
Assam (north-east). These six States covered among them 77 per cent of the total credit-linked SHGs as
on March 2002. Two districts from each state and 100 SHGs per district was selected. Five members
were randomly picked from each of the sample SHGs. The impact of bank linkage was measured as the
difference in magnitude in terms of annual growth of a given parameter between the pre-bank linkage
(pre- SHG, base line situation) and post-SHG bank linkage situation (post-SHG) of the SHG members
and their households. Thus, ‘before and after’ methodologies were adopted for the assessment of the
performance and impact created by SBLP. All the financial parameters for the pre and post-SHG
situations were measured at reference year (January-December 2006) prices. In addition to the impact
analysis, the study also examines various issues related to SHPIs and banks such as promotional/linkage
cost, sources of funding available for different SHPIs, problems of bank linkage and monitoring of SHGs
and non-performing assets. Case studies of SHGs as a group and of their individual members were
conducted to supplement the fin dings of the quantitative survey.
7.2 M AJOR FINDINGS ON THE LEVEL OF SHGS
The study covers 961 SHGs spread over the six sample States. The average number of members in SHGs
in the sample was 13. Of the 961 SHGs in the sample, about 41 per cent have been linked for more than
five years, while the remaining 59 per cent have obtained bank linkage in the last 3-5 years. The average
distance of the SHGs from the link bank is around 5.5 Km, and nearly 13 Km from the nearest town. The
bulk of SHGs, i.e. 80 per cent, are all- woman ones. Nearly 10 per cent are all-male and another 10 per
cent have mixed membership. The distribution of SHG members by caste indicates that the percentage of
SHGs with members from only the SC/ST category and OBC group, is 22.3 per cent. The percentage of
SHGs that have only SC/ST members is 21.5 per cent. A little more than 60 per cent of the SHGs
surveyed are either fully composed of BPL families, or with majority of the members from such
backgrounds.
The very fact that the sample SHGs are still surviving notwithstanding their diverse caste, education and
economic backgrounds -- on an average for 5.3 years among bank-linked groups—goes to prove their
organisational sustainability.
It has been seen that SHG leaders are nominated instead of being elected in more than 80 per cent of
cases. Elections take place in only 10 per cent of situations. On an average, at least one meeting is held
per month by all SHGs. The percentage of members attending the meetings is nearly 90 per cent and it is
also seen that nearly 80 per cent of the members are participating in the discussions. Nearly 90 per cent
of all the SHGs have rules and regulations in written form. As many as 96 per cent of them have reported
that the rules and regulations are accessible by all members.
The group members’ level of awareness about the objectives is quite moderate -- 52.6 per cent among the
SHGs. The average amount of savings per year per member for 2006 was Rs 1,177. This indicates that
bank linkage helps in motivating the members to save more. Also, 69.4 per cent of the SHGs are paying
interest on the savings of members. Taking into account the average number of years of bank linkage, it
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is seen that the funds of the SHGs were growing at the rate of 196 per cent per annum, reiterating the
benefits of bank linkage. This has had a cascading effect as credit facility means more money for
investing in income generating schemes. Therefore, this implies more savings as well as timely
repayment of loans, which in turn helps fetch more bank loans.
On an average, SHGs are able to approve about eight loans per year to their members. They could lend
Rs 4,833 on an average and, as of 2006, offered loans for longer periods in comparison to the time of
linkage (11.4 as against 9.9 months). The SHGs are utilising 61.8 percentage of loans received for
income-generating activities since the loan amount available to them is much higher. A whopping 69.2
percentage of SHGs have reported 100 per cent loan recovery from the members.
To a certain extent, the SHGs have helped their members to acquire management skills. However, the
members are also of the view that they require technical, financial and marketing skills particularly
related to income generating activities. According to them, illiteracy and the lack of advanced skills limit
the scope for improvement in livelihood options.
The SHGs are not satisfied with the number of visits made by SHPI staff and the help provided by them.
The SHGs have come up with suggestions for changes in the activities of SHPIs to make them more
useful. For instance, more time could be allotted for training and group discussions. Moreover, only a
very small percentage of SHGs reportedly received support from financial institutions (FIs) /banks in
book keeping, as well as from financial activities. They are also not satisfied with the frequency of visits
from the personnel of FIs/banks.
7.3 M AJOR FINDINGS ON THE LEVEL OF SHG M EMBERS AND THEIR HOUSEHOLDS
7.3.1 Economic Impact
7.3.1.1 Net household income
Implementation of SBLP significantly contributed to the increase of net household incomes. The analysis
of net household incomes for both pre-SHG and post-SHG stages, revealed a significant growth of 6.1
per cent of net household income. Even at the State level, the net household income has registered a
significant growth. Among three Model types, the net household income displays a marginal variation,
registering 6.2 per cent growth for Model type 1 and Model type 3 and 6.1 per cent growth for Model
type 2.
When sources of income of SHGs are analysed, we see substantial increase in household incomes from
livestock and self-employment in non-farm activities. A declining trend is depicted in the case of
agricultural incomes and the wage earnings of SHGs , which suggests a shift of activities from agriculture
to allied farming. Across different income activities, higher growth rate has been seen in livestock at
11.2 per cent.
7.3.1.2 Consumption expenditure pattern
The SBLP has influenced the consumption pattern of member households. The average annual growth
rate of consumption expenditure on food items registered an increase of 5.1 per cent and with 5.4 per cent
was even higher for non-food items. The average annual growth rate of expenditure on food and non-
food was thus higher than 5 per cent respectively at the All-India level (six States).
The overall growth rate of expenditure of households on education is 5.6 per cent. The rate of growth in
education expenditure is the lowest in Assam with negative growth followed by Orissa with 1.6 per cent
and highest in Andhra Pradesh with 7.4 per cent followed by Maharashtra with 7.1 per cent and Uttar
Pradesh with 7 per cent.
95
Another important point that could be noted here is that the share of expenditure on health to total
expenditure (food plus non-food) in the base year is 4.15 per cent, which is higher than that of
expenditure on education which is 3.97 per cent.
7.3.1.3 Changes in savings
The average level of savings per household increased significantly in 2006 when compared to the base
level. Total savings, which includes financial and physical savings, registered 14.2 per cent annual
growth rate. Individually, both financial savings and physical savings registered annual growth rates of
14.3 per cent and 14 per cent respectively. The growth rate in savings is the highest in Model type 3 as
compared to the other two Model types. The access to financial savings instruments has improved
considerably in the post-SHG period as compared to the earlier era. The study found that apart from
savings in SHG, the other major saving instruments used by households are banks deposits (28.5 per
cent) followed by LIC (17.6 per cent), post offices savings (8.6 per cent) and savings in co-operative
societies (3.1 per cent).
7.3.1.4 Improvement in assets holdings
The value of assets in the form of consumer durable assets per household recorded significant growth in
each State. The magnitude of net change in the value of assets between pre and post-SHG periods was
highest in Andhra Pradesh followed by Maharashtra and Karnataka. Among different Model types of
bank linkage, groups under Model type 2 experienced the maximum increment in value of consumer
durable assets ownership.
7.3.1.5 Changes in borrowing habits
The SBLP generated a significant change in the borrowing habits of households. The study found that
about 92.8 per cent of households reported of loan taken in the post-SHG period compared to 46.5 per
cent in the pre-SHG period. (Thus, an increase of as high as 43.6 per cent points was observed in the
share of borrowers of households. On an average, per household had taken loan a total of Rs 14,640 in
the post-SHG situation compared to just that of Rs 5,384 in the pre-SHG situation .Thus, the average loan
per household registered an annual growth rate of 20.5 per cent. Examining sources of borrowing is an
important aspect in understanding the impact of the bank linkage programme and the study revealed that
the moneylender was the most important source in the pre-SHG period. About 60 per cent of the
households obtained loans through moneylenders before becoming SHG members. Friends and relatives
(25 per cent) and banks (13 per cent) were also accessed. The situation changed drastically when loans
from moneylenders were reported to be taken by only 1.2 per cent of households. The significant impact
of SBLP was also observed in the usage of loans, where the deployment of loans for productive purposes
increased from 42.6 per cent in the pre-SHG situation to 51.3 per cent in the post-SHG situation. The
repayments of loans were also observed to be satisfactory, groups, where only 1 per cent of households
reported that they could never repay their loans. About 96 per cent of household groups were found to
make their repayment in time.
7.3.1.6 Impact on poverty alternative
The report attempted to examine the impact of SBLP on the poverty level of households. The state-wise
poverty line for the year 2006-07 is computed by updating the Planning Commission’s 2004-05 report on
state-wise rural poverty lines. This has been computed by using updated consumer price indices for
agricultural labour. Overall, the study found 25.3 percentage points net reduction in poverty of the
households, who were living below the poverty line, a significant drop from 58.3 per cent at the base
level to 33 per cent in 2006. The average annual poverty reduction rate was 10 per cent at the All-India
level. Model-wise, net poverty reductions (between base level and that in 2006) is relatively more in
Model type 3 (28 per cent) and Model type 2 (25.4 per cent) and less in type 1 (23.9 per cent).
96
7.3.2 Social empowerment
A very high share of respondents reported positive impact of the SBLP on the empowerment of women.
Empowerment in 92 per cent of households increased after attaining membership in SHGs.
7.3.2.1 Self-confidence
Questions related to the self-confidence of women were asked, such as, travelling alone to the nearest
town/district, going alone to hospitals, handling certain amount of money and addressing a forum. The
share of women members reporting significant improvement in their self-confidence level for all
indicators has gone up in the post-SHG period.
7.3.2.2 Positive Behavioural changes
In behavioural changes, the study found that more than 70 per cent of women respondents reported
improvement, or even significant enhancement, in their ability to face problems. More than 73 per cent of
women reported that they could handle problems related to health, 72 per cent on financial crisis and 63.8
per cent on resolving family disputes.
On the question of control over use of money, more than 62 per cent of women reported significant
improvement in the acquisition of consumer durable assets during the post-SHG period. Similarly, more
than 51 per cent women reported an increase in control over use of money on buying of physical assets,
66.2 per cent on expenditure on family/social functions and 71.3 per cent on expenditure on children’s
education.
More than 60 per cent of households indicated that there was an increase in the ownership of productive
assets in the post-SHG situation. One-third of households indicated “no change” in the ownership of
productive assets. The overall findings suggest that households are better off now in terms of acquisition
of productive assets after bank linkage.
Overall findings indicate that the decision making capacity of women members with various SHG
activities has improved from the pre-SHG situation. In case of children’s education, 9.1 per cent of
women members had been involved in decision making process at home in the pre-SHG period, which
improved to 22.5 per cent subsequently. Similarly, in other cases, the pre and post-SHG situations
reflected improvement in the case of the latter. For instance, the purchase of assets went up from 7.5 per
cent to 16.2 per cent, accessing loans from 9.3 per cent to 28.9 per cent, and use of loans improved from
9.1 per cent to 22.7 per cent.
Female SHG members were asked about various aspects of their public participation, like attending
committee or village meetings and membership in village committees. Significant improvement was
observed as from about 15 (pre-SHG) to 50 per cent (post-SHG) of the women could approach
government officials and regularly participated in committees and attended village meetings. The
changes were much less pronounced where female SHG members became members in
village/government committees. But representation from households went up from 5 per cent to 16 per
cent.
7.3.2.3 Assessment of households
The training facilities provided to SHGs by either banks or NGOs or State governments seem to be
inadequate. The overall findings of the study demonstrate that about 50 per cent of households have not
received training on capacity building. Only 15 per cent of households received training more than once
and 35 per cent received such training just once. Only 30 per cent of the households receiving the training
considered it adequate. The majority of households felt that they required better training in technical
development followed by that in financial skill development.
97
7.4 M AJOR FINDINGS ON THE LEVEL OF SHPIS AND BANKS
Various issues like promotional and maintenance costs of SHPIs per SHG, types of support received by
SHPIs and sources of support have been addressed. As far as banks are concerned, the assessment
included examining the percentage of bank loans to SHGs across States and non-performing assets as
percentage of total loan outstanding to SHGs.
With regards to promotional costs, the study reported that on an average a bank incurred lower cost for
promoting a SHG than that by an NGO. To promote a SHG, SHPIs received financial aid/grant and other
support from different sources. About 60 per cent of SHPIs visualised that NABARD and other banks
were the chief sources of support for financing and promoting SHGs. About 28 per cent of SHPIs stated
that State governments had provided various forms of help to them. A very low share of SHPIs stated
that they had received help from private organisations, international donors and other sources for
supporting their activities. Regarding problems related to the promotion of SHGs, many of the SHPIs (48
per cent) expressed that people’s illiteracy or ignorance constituted a major problem for promoting new
SHGs. About 28 per cent of SHPIs stated that shortage of field staff was also another problem for
promoting new SHGs. On the major problems related to bank linkage, 45 per cent of SHPIs revealed that
a lack of interest among the SHG members was responsible for the failure or delay in providing them
with bank linkage. On the problems experienced in relation to the monitoring of SHGs, the interviewed
SHPIs indicated that insufficient financial support (32 per cent), followed by shortage of field staff (30
per cent) were the two major impediments.
With regards to loan approval, it was found that on an average a bank takes 9 days to approve a loan to a
SHG. At the State level it varied between a maximum of 18 days in Karnataka and to four days in Andhra
Pradesh. The study found that NPAs, as a percentage of total loans outstanding by all banks to SHGs, is
quite low. The NPAs was 4.2 per cent in 2002, which declined to 1.2 per cent in 2006.
7.5 FINDINGS FROM CASE S TUDIES
For the purpose of this study, 24 case studies were conducted across the six States. Generally, it was seen
that in most of the SHGs, the members had taken up individual income-generating activities. However,
some SHGs had also taken up group activities successfully. One common observation was that the SHGs
generally felt a greater need for acquiring marketing skills and technical knowledge to improve their
livelihoods. These findings also match with the findings from the survey of SHG member households.
Generally, it was noticed that by joining a SHG, the members had not only improved their financial
status, but also gained a lot in terms of financial skills, communication abilities etc. Moreover, joining
SHGs has also helped in all-round personality development of the members.
The main strength of SBLP observed through the case studies is that membership and participation in the
group is socially and to a reasonable extent economically empowering. There are success stories of group
enterprises as well, but those are not very remarkable. Economic empowerment, together with higher
level of confidence, is the more visible impact of SBLP inter alia.
7.6 CONCLUSIONS
The results of the analysis suggest that SHGs have been performing better not only as providers of
financial services in terms of augmenting savings, lending and ensuring loan recovery, but also in terms
of awareness creation and empowerment. They also lead to the development of human resources and
management skills, leadership and motivation. The study found that the average amount of savings per
year per member for 2006 was Rs 1,177 (Table A. 7.1). On an average, savings increased annually by
14.2 per cent. The study also found that 90 per cent SHGs get their loan funds from banks. In lending
activities, the performance of SHGs was better in 2006 than at the time of linkage in two important
accounts. Firstly, in 2006, SHGs were able to approve more loans per year to members (average 8 as
against 6.4), lend higher amounts (Rs 4,833 as against 1642.7) and also offer loans for longer periods
98
(11.4 months as against 9.9). Secondly, in 2006, SHGs used a higher percentage of their loans (61.8 per
cent as against 56.7 per cent of latter groups) for income- generating activities. About 60.2 per cent of
SHGs have 100 per cent loan recovery record.
SHGs reported better performance both in financial as well as in empowerment aspects. Their net
household incomes registered 6.1 per cent annual increase (Table A.7.2). (where is the table)More than
60 per cent of the SHG household groups perceived that there is an increase in the ownership of
productive assets in the post-SHG situation. The study found that 5.1 per cent and 5.4 per cent change in
per household annual consumption expenditure for food and non-food items respectively in relation to
their pre-SHG situation. Per household expenditure annually on education and health registered 5.6 per
cent and 5.5 per cent increase respectively. Total savings, which include financial and physical savings,
registered 14.2 per cent annual growth. Net change in the value of consumer durable assets per household
recorded 9.9 per cent growth (annually?) The study found that about 93 per cent of households took loans
in the post-SHG situation as compared to that of 46.5 prior to the bank-linkage. On an average, the
households after getting linked to banks borrowed Rs 14,640 compared to a total amount of Rs 5,384
earlier. The per annum average loans amount changes between pre-SHG and post-SHG was found at 20.5
per cent. One of the most significant goals of SBLP is reduction of poverty viz., through outreaching
financial resources in the rural areas. In this regard, the study found that in the pre-SHG situation, 58.3
per cent households were below the poverty line. The average annual poverty reduction rate was 10 per
cent in the post-SHGs situation as compared to the pre-SHG situation.
Our findings on social empowerment indicate that more than 90 per cent of households in bank- linked
groups reported that social empowerment of women has increased over time since joining the SHG
movement. It indicates that SBLP has helped the rural poor, particularly women, to achieve social rights.
Further, we found that more than 70 per cent of women respondents reported improvements or even
significant improvements in their ability to face problems on health and financial crisis aspects and about
63 per cent reported the aspect of similar improvement in terms of family disputes. The study also found
that the participation of women members in household decision making processes has considerably
improved.
99
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101
Appendix
102
Appendix A3
A3.1: Opinions of SHGs on operating independently without the help of SHPIs

States Yes No Total
Assam 36.17 63.83 100.00
Orissa 48.92 51.08 100.00
Uttar Pradesh 24.18 75.82 100.00
Maharashtra 33.77 66.23 100.00
Andhra Pradesh 36.96 63.04 100.00
Karnataka 55.95 44.05 100.00
All States 39.53 60.47 100.00
A3.2: Average distances of SHGs from credit linkage banks and nearest towns
Average distance from bank (kms) Average distance from nearest town (kms)
Assam 4.8 14.3

Orissa 5.6 20.3
Andhra Pradesh 5.0 NA
Karnataka 8.5 11.6
All States 5.5 13.4
103
Appendix A4
A.4.1: Distribution of SHGs by characteristics of members (contd.)
Average age Distribution of SHGs by sex of Distribution of SHGs by caste of members (%) Distribution of SHGs by literacy level of
of members members (%) members (%)
All All male Both Only Only SC/ST & SC/ST, All Illiterate Upto 50% > 50%
female SC/ST OBC OBC OBC and Literate Literate
General
Assam 30.3 69.7 23.9 6.5 22.0 44.0 17.0 17.0 6.5 11.6 81.9
Orissa 34.2 94.9 4.4 0.6 29.0 19.4 40.6 11.0 2.5 43.7 53.8
Uttar Pradesh 37.8 55.4 19.7 24.8 34.9 39.6 15.1 10.4 12.1 51.0 36.9
Maharashtra 37.8 92.8 7.2 - 19.4 19.4 21.8 39.5 1.8 41.9 56.3
Andhra Pradesh 36.6 99.0 - 1.0 3.7 73.4 14.7 8.3 11.2 73.0 15.8
Karnataka 32.6 93.6 4.1 2.3 17.8 30.5 16.9 34.7 9.9 36.6 53.5
All India 34.9 80.5 9.3 10.2 21.5 36.0 22.3 20.2 7.3 42.8 49.9
A.4.1: Distribution of SHGs by characteristics of members

Distribution of SHGs by economic status Distribution of members by occupation (%)
of members (%)
All/majority All/ majority Equal no. of Farmers Artisans Traders Agro Agriculture Non Others Total No. of SHGs
BPL APL APL & BPL processors labour agriculture
labour
Assam 63.9 28.4 7.7 37.5 4.2 24.0 1.5 14.3 8.9 9.6 100.0 155
Orissa 76.6 17.7 5.7 19.6 5.5 7.3 3.0 25.4 35.2 4.0 100.0 158
Uttar Pradesh 33.8 64.3 1.9 29.1 2.0 13.5 2.7 11.9 34.5 6.3 100.0 157
Maharashtra 62.3 34.7 3.0 33.0 2.5 10.1 0.6 29.6 17.8 6.4 100.0 167
Andhra 53.9 46.1 - 15.1 3.6 19.7 0.0 32.8 21.5 7.4 100.0 152
Pradesh
Karnataka 77.9 18.0 4.1 29.7 2.0 6.6 1.2 39.5 16.4 4.5 100.0 172
All India 61.7 34.5 3.7 27.3 3.2 12.9 1.4 27.3 22.0 6.0 100.0 961
104
A.4.2: Governance aspects of SHGs

System of selecting leaders SHGs reporting change in Frequency of change in leadership Total
leadership (%)
Election Nomination Any other 6 months 1 yr 2 yr Others
Assam 2.6 97.4 - 11.1 0.0 50.8 47.5 1.7 100.0
Orissa 1.3 93.0 5.7 15.9 8.0 44.0 20.0 28.0 100.0
Uttar Pradesh 36.9 63.1 - 66.2 1.0 56.7 26.0 16.3 100.0
Maharashtra - 100 - 10.2 11.8 23.5 47.1 17.6 100.0
Andhra 5.9 87.5 6.6 13.5 20.0 25.0 45.0 10.0 100.0
Pradesh
Karnataka 3.5 86.0 10.5 94.2 1.9 36.4 50.0 11.7 100.0
All India 8.2 87.9 3.9 36.2 3.1 43.4 40.8 12.7 100.0
A.4.3: General Management Practices

No. of meetings Percentage of Percentage of Percentage of Frequency of updation of rules & Percentage of SHGs
conducted per member members SHGs havings regulation reporting
month attending participating in rules and accessibility of rules
meetings the discussions regulation in & regulation to all
written form members
Frequently Rarely Never
Assam 1.76 91.2 81.4 92.9 15.3 78.0 6.8 97.4
Orissa 1.30 91.4 75.3 89.9 16.0 64.0 20.0 96.1
Uttar Pradesh 1.06 88.7 79.4 86.0 - 23.1 76.9 92.9
Maharashtra 1.02 92.1 81.6 82.6 64.7 35.3 - 97.0
Andhra 1.63 96.3 88.5 99.3 36.8 52.6 10.5 100.0
Pradesh
Karnataka 2.63 83.8 75.9 93.0 22.5 70.6 6.9 94.8
All Indi a 1.57 90.3 80.3 90.5 18.0 53.7 28.3 96.3
105
A.4.3: General Management Practices (cont.)

Level of awareness about objectives of Maintenance of Minutes register by Frequency of updating minutes Total
the group among members (%) register
High Moderate very little/not A literate Represen any Any None regularly Occasionall Rarely
at all member tative of person other y
NGO employed
by SHG
Assam 46.1 52.6 1.3 96.8 - 1.9 - 1.3 83.4 15.9 0.7 100
Orissa 31.0 62.0 7.0 44.3 24.1 7.6 6.3 17.7 69.2 8.5 22.2 100
Uttar Pradesh 27.4 67.5 5.1 56.7 8.3 29.9 4.5 0.6 47.7 16.1 36.2 100
Maharashtra 49.1 46.7 4.2 76.0 7.2 3.0 11.4 2.4 78.9 12.0 9.2 100
Andhra 89.0 6.9 4.1 60.5 - 30.3 8.6 0.7 92.8 - 7.2 100
Pradesh
Karnataka 19.8 74.4 5.8 66.3 23.3 7.6 2.9 - 89.2 9.6 1.2 100
All India 42.8 52.6 4.6 66.8 10.7 13.1 5.6 3.7 77.2 10.5 12.3 100
106
A.4.3a: Change in the General Management Practices

Number Membe Members System of selecting the leader Reporting Awareness about rules and Awareness about objectives of
of rs participat (%) accessibility regulation among members (%) the group among members
meetings attendin ing in of rules and (%)
per g (%) discussio regulations
month ns (%) to all
members
(%)
Election Nomination Others High Moderate Little Not at High Moderate Very
all Little/
Not at all
Assam At time of 1.9 88.3 80.0 2.6 97.4 - 98.04 49.35 44.81 5.84 - 45.45 49.35 5.19
Linkage
2006 1.8 87.7 78.3 2.6 97.4 - 97.39 50.00 45.45 4.55 - 46.10 52.60 1.30
Orissa At time of 1.58 95.0 71.0 1.3 93.0 5.7 91.03 11.54 56.41 26.92 5.13 12.66 55.06 32.28
Linkage
2006 1.30 93.4 76.9 1.3 93.0 5.7 96.13 31.21 60.51 7.01 1.27 31.01 62.03 6.96
Uttar Pradesh At time of 1.06 95.6 75.9 36.9 10.2 52.9 92.95 17.83 71.97 10.19 - 18.47 63.06 18.47
Linkage
2006 1.06 86.6 77.6 36.9 10.2 52.9 92.95 31.85 63.06 5.10 - 27.39 67.52 5.10
Maharashtra At time of 1.01 93.3 77.6 - 100.0 - 90.30 19.76 68.26 10.78 1.20 10.18 76.65 13.17
Linkage
2006 1.02 92.9 82.3 - 100.0 - 96.97 55.09 41.32 2.40 1.20 49.10 46.71 4.19
Andhra At time of 1.60 100.0 91.2 4.7 88.0 7.3 100.00 89.29 10.71 - - 88.11 8.39 3.50
Pradesh Linkage
2006 1.63 99.0 91.1 5.9 87.5 6.6 100.00 90.78 9.22 - - 88.97 6.90 4.14
Karnataka At time of 2.62 75.3 65.9 13.5 76.6 9.9 95.35 11.63 21.51 66.86 11.63 23.26 65.12
Linkage
2006 2.63 84.9 76.9 3.5 86.0 10.5 94.77 20.35 75.00 4.65 19.77 74.42 5.81
All India At time of 1.63 88.9 74.7 9.8 77.7 12.5 94.53 31.71 46.09 21.14 1.06 29.7 46.5 23.9
Linkage
2006 1.57 89.1 78.7 8.2 79.2 12.5 96.32 45.46 50.11 3.16 1.27 42.8 52.6 4.6
107
A.4.4: Financial Management Practices

Maintenance of book of accounts of SHG by Maintenance of SHG passbook by Maintenance of passbook of members by
A Represe- any person Any None A Representative any person Any None A Represe- any person Any None
literate ntative employed by other literate of NGO employed by other literate ntative of employed by other
member of NGO SHG member SHG member NGO SHG
Assam 97.4 - 1.9 - 0.6 95.5 0.6 1.9 - 1.9 97.4 - 1.9 - 0.6
Orissa 43.7 31.0 17.7 6.3 1.3 34.8 23.4 4.4 34.8 2.5 47.5 27.2 12.7 5.7 7.0
Uttar 44.6 6.4 11.5 5.1 32.5 38.9 7.0 7.0 46.5 0.6 52.9 7.0 29.3 8.9 1.9
Pradesh
Maharashtra 76.0 6.6 3.0 12.0 2.4 77.2 7.2 3.6 12.0 77.8 7.2 3.0 10.8 1.2
Andhra 60.5 - 30.3 8.6 0.7 60.5 - 30.3 8.6 0.7 60.5 - 30.3 8.6 0.7
Pradesh
Karnataka 66.3 23.8 8.7 1.2 - 70.9 21.5 6.4 1.2 - 68.0 24.4 7.0 0.6 -
All India 64.8 11.6 12.0 5.5 6.1 63.2 10.2 8.7 17.0 0.9 69.8 11.6 10.7 5.9 1.9
A.4.4 Financial Management Practices (Cont.)

Frequency of updating book of Frequency of updating members' Frequency of updating passbook of SHG by SHGs taking
accounts by passbook by admission/
membership fee
(%)
Regularly Occasionally Rarely Regularly Occasionally Rarely Regularly Occasionally Rarely
Assam 98.1 - 1.9 87.7 11.0 1.3 80.9 16.4 2.6 7.2
Orissa 73.4 10.5 16.1 70.1 9.7 20.1 73.7 6.3 20.0 32.3
Uttar Pradesh 68.4 15.3 16.3 61.2 15.1 23.7 67.5 20.5 12.0 31.2
Maharashtra 83.8 8.5 7.7 80.1 7.5 12.3 77.4 8.2 14.4 25.1
Andhra 92.8 - 7.2 92.8 - 7.2 92.8 - 7.2 2.0
Pradesh
Karnataka 88.2 5.9 5.9 88.3 9.4 2.3 91.8 6.5 1.8 44.0
All India 85.2 6.2 8.6 80.5 8.8 10.7 82.4 9.1 8.5 28.9
108
A.4.5: Saving activities of SHGs members

Distribution of SHGs by periodicity of saving Average amount of SHGs paying interest SHGs revising SHGs reporting
services in 2006 (%) saving per year per on the savings of minimum saving per members unable to
member (2006) (Rs.) members (%) member since make mandatory
formation (%) savings at any time
(%)
Weekly Fortnightly Monthly Every two Every three
months months
Assam 27.3 1.3 66.9 4.5 - 428.37 17.22 51.61 9.7
Orissa 10.3 2.6 86.5 - 0.6 549.50 26.28 48.10 26.6
Uttar Pradesh 12.8 1.9 85.3 - - 1265.77 98.73 12.10 49.7
Maharashtra 4.2 0.6 94.0 0.6 0.6 1630.48 97.60 18.56 9.6
Andhra 3.3 6.0 88.7 0.7 1.3 943.25 82.00 34.21 7.9
Pradesh
Karnataka 49.4 1.7 47.1 1.7 - 2097.37 89.47 45.35 20.9
All India 18.3 2.3 77.7 1.3 0.4 1176.76 69.4 34.96 20.7
A.4.5a: Change in the saving activities since establishment/bank linkage

Distribution of SHGs by periodicity of saving services in 2006 Average rate of interest Average amount of
paid to members per saving per year per
annum member (Rs.)
Weekly Fortnightly Monthly Every two Every three
months months
Assam At time of Linkage 31.0 4.5 61.9 2.6 15.28 397.65
2006 27.3 1.3 66.9 4.5 15.17 428.37
Orissa At time of Linkage 12.66 87.34 5.57 348.39
2006 10.32 2.58 86.45 0.65 6.48 549.50
Uttar Pradesh At time of Linkage 12.74 2.55 84.08 0.6 3.90 715.48
2006 12.82 1.92 85.26 4.12 1265.77
Maharashtra At time of Linkage 4.19 95.21 0.60 6.13 791.32
2006 4.19 0.60 94.01 0.6 0.60 4.50 1630.48
Andhra Pradesh At time of Linkage 3.36 6.71 87.92 0.7 1.3 11.65 486.11
2006 3.31 5.96 88.74 0.7 1.3 11.18 943.25
Karnataka At time of Linkage 47.09 2.91 45.35 4.7 12.61 707.79
2006 49.42 1.74 47.09 1.7 13.81 2097.37
All India At time of 18.81 17.05 61.95 1.6 0.6 7.67 580.06
Linkage
2006 18.17 2.28 77.05 1.3 1.1 8.22 1176.76
109
A.4.6: Source of funds and external borrowings

Average
external
borrowed
SHGs facing
funds by
problems in
SHG since Percentage distribution of external borrowings and own funds of SHGs
raising external
bank
funds (%)
linkage/esta
blishment
(Rs.)
Average amount of Average amount
SHG Regiona Co-
own funds available of own funds Commer Money Employ
Total own l Rural operative Others
at the time of bank available in cial Bank Lender er
Fund Bank Bank
linkage (Rs.) 2006 (Rs.)
Assam 553.99 36318.32 59551.94 0 46.6 51.7 0.8 0.0 0.0 0.8 49.68
Orissa 2387.27 20069.11 87176.03 1.3 39.8 48.3 6.2 0.3 0.0 4.2 82.91
Uttar Pradesh 1501.49 18224.92 81692.48 2.6 7.7 87.0 2.8 0.0 0.0 0.0 97.45
Maharashtra 8514.71 61829.66 144873.05 0.8 68.2 19.4 10.6 0.0 0.0 1.0 89.82
Andhra
803.94 43293.11 206341.09 1.4 63.7 32.6 0.7 0.0 0.0 1.6 53.95
Pradesh
Karnataka 6861.08 60234.67 229453.90 16.7 39.5 28.3 10.8 2.1 0.3 2.2 40.12
All India 3561.97 40507.85 136164.20 5.0 43.7 43.3 5.7 0.5 0.1 1.7 68.89
110
A.4.7: Lending Activities of SHGs

Average number Distribution of SHGs the periodicity of credit services to Average Average Average loan Average loan Interest SHGs
of months after members (%) number of numbers of amount per period in rate (%) charging
formation SHGs days loan approved member (Rs.) months charged panel
started providing require for per year per per interest
loans to members approving SHG annum from
loan by SHG defaulters
(%)
Weekly Fortnightly Monthly Every 2 Every 3
months months
Assam 7.3 12.3 5.2 76.0 3.9 2.6 11.2 12.3 3093.68 10.6 33.4 23.45
Orissa 9.1 2.7 3.4 78.5 5.4 10.1 5.2 7.4 2040.07 11.6 28.1 23.65
Uttar 6.2 8.5 4.6 60.1 6.5 20.3 4.1 5.7 6428.60 7.5 23.2 30.20
Pradesh
Maharashtra 5.4 1.2 1.8 85.6 5.4 6.0 9.1 9.9 6516.27 15.3 21.4 41.33
Andhra 6.0 5.3 33.3 2.0 59.3 3.9 3.6 4754.38 11.1 17.8 24.31
Pradesh
Karnataka 8.2 12.8 0.6 85.5 - 1.2 17.9 8.8 5859.13 11.9 20.6 31.93
All India 7.0 6.3 3.4 70.5 3.8 16.0 8.9 8.0 4833.86 11.4 24.1 29.27
111
A4.7a: Change in the lending activities of SHGs since bank linkage/establishment

Interest
Average Average
Average rate
Distribution of SHGs by number of loan Average
number charge
Distribution of SHGs the periodicity of credit services usage of funds for days amount loan
of loans per
to members (%) providing loan to required for per period in
approved annum
members (%) approving member months
per year by SHG
loan (Rs.)
(%)
Weekly Fortnightly Monthly Every 2 Every 3 Own Borrow Both
months months fund ed fund
Assam At time of Linkage 15.58 4.55 68.18 8.44 3.25 66.67 3.27 30.07 12.8 8.7 1011.97 9.7 33.6
2006 12.34 5.19 75.97 3.90 2.60 6.54 5.88 87.58 11.2 12.3 3093.68 10.6 32
Orissa At time of Linkage 2.65 2.65 75.50 6.62 12.58 44.30 18.35 37.34 6.9 8.3 853.84 9.6 28.2
2006 2.68 3.36 78.52 5.37 10.07 35.48 7.10 57.42 5.2 7.4 2040.07 11.6 28.1
Uttar Pradesh At time of Linkage 6.54 5.88 62.75 3.92 20.92 48.72 14.74 36.54 4.3 4.8 2003.8 6.5 23.3
2006 8.50 4.58 60.13 6.54 20.26 4.46 15.29 80.25 4.1 5.7 6428.6 7.5 23.2
Maharashtra At time of Linkage 1.20 2.41 80.72 5.42 10.24 65.87 2.99 31.14 9.3 6.7 1491.29 10.0 22.7
2006 1.20 1.80 85.63 5.39 5.99 19.16 11.38 69.46 9.1 9.9 6516.3 15.3 21.4
Andhra
At time of Linkage - 4.76 33.33 0.68 61.22 76.51 0.67 22.82 5.5 3.0 2098.6 10.8 18.8
Pradesh
2006 - 5.33 33.33 2.00 59.33 75.66 0.66 23.68 3.9 3.6 4754.4 11.1 16.6
Karnataka At time of Linkage 16.86 1.74 79.65 - 1.74 71.51 16.28 12.21 20.5 6.6 2350.0 12.3 21.2
2006 12.79 0.58 85.47 - 1.16 9.94 8.77 81.29 17.9 8.8 5859.13 11.9 19.0
All India At time of Linkage 7.32 3.61 67.34 4.14 17.60 62.30 9.53 28.17 10.0 6.4 1642.7 9.9 24.6
2006 6.35 3.39 70.48 3.81 15.98 24.71 8.27 67.02 8.9 8.0 4833.86 11.4 23.3
112
A4.7b: Change in the Major Purposes for which loans are used since bank linkage/establishment
Major purposes for which loans are used (%)
Other
Basic Household social needs (e.g.
Repayment of Agro incoming
consumption assets/house health, Agriculture Trade Crafts Total
debts processing generating
needs improvements education)
activities
Assam 2.0 5.3 2.6 3.9 55.5 2.9 21.7 4.5 1.5 100.0
1.5 4.8 2.2 3.9 54.8 2.6 23.6 5.2 1.6 100.0
Orissa 3.6 15.4 5.4 18.9 24.6 5.4 14.9 1.1 10.7 100.0
2.7 10.3 5.6 19.9 30.1 1.9 17.1 0.8 11.6 100.0
Uttar Pradesh 1.2 10.8 6.4 18.6 35.2 14.7 10.6 2.1 0.4 100.0
0.8 10.5 7.2 17.8 33.2 15.5 12.2 2.3 0.4 100.0
Maharashtra 16.4 24.2 6.3 14.1 25.4 0.4 8.4 1.0 3.7 100.0
9.5 17.4 5.8 11.8 38.5 0.8 10.8 1.3 4.1 100.0
Andhra 23.7 11.0 7.7 26.3 17.2 3.9 9.7 0.3 0.2 100.0
Pradesh 23.1 10.5 7.9 26.3 16.3 4.8 10.4 0.3 0.3 100.0
Karnataka 16.9 8.9 4.8 7.1 22.7 0.1 6.0 0.8 32.7 100.0
9.1 7.6 7.3 7.2 25.2 0.5 8.1 1.8 33.3 100.0
All India 10.3 12.8 5.5 14.7 30.3 4.7 11.9 1.7 8.1 100.0
7.6 10.2 6.0 14.4 33.3 4.4 13.7 2.0 8.4 100.0
A4.8: Percentage distribution of SHGs by Development of Skills of their members

SHGs which
have helped
SHGs which have developed the following human development skills
members to SHGs which have developed the following Management skills (%)
(%)
develop skills
(%)
Communic Financial/N Project Time
Leadership Motivation Delegation Negotiation Others Strategy Planning Marketing
ation umeric management Management
Assam 78.6 32.9 65.2 25.2 39.4 1.3 0.0 29.7 51.6 58.1 26.5 3.9 1.9
Orissa 27.2 32.3 39.2 6.3 36.1 22.2 0.0 13.9 17.1 34.2 22.8 12.0 7.0
Uttar Pradesh 20.4 36.9 21.0 17.8 9.6 56.7 1.3 35.0 36.3 11.5 23.6 6.4 18.5
Maharashtra 41.9 35.3 45.5 17.4 30.5 3.0 0.0 22.2 45.5 29.9 26.9 5.4 5.4
Andhra
32.2 34.2 25.7 18.4 28.9 0.0 0.7 20.4 34.9 18.4 25.7 1.3 2.0
Pradesh
Karnataka 88.4 68.0 54.1 34.3 38.4 0.0 2.3 38.4 43.0 48.8 29.1 9.9 16.9
All India 48.6 40.4 42.0 20.1 30.6 13.6 0.7 26.7 38.2 33.7 25.8 6.6 8.7
113
A4.9: Training needs of SHG members

SHGs reporting following Fields in which members require more
Type of problems faced by SHG in developing the skills of members
knowledge and skills for income generating activities (%)
SHGs reporting
facing problems Lack of co- Lack of co-
Lack of
Market operation & operation & Insufficient
No further in developing the literacy & Lack of time
Technical Financial Managem Develop Others training skills of initiative initiative /inadequate among
interest Others
Skills Skills ent Skills ment Skills members (%) from Banks from training
required among members
Skills & Financial NGO/promo facility
members
Institutes ting agencies
Assam 59.4 58.7 48.4 47.1 1.3 0.0 93.5 20.7 2.1 0.0 0.0 69.0 1.4
Orissa 64.6 63.3 58.2 27.8 3.8 3.8 96.8 56.2 8.5 2.6 14.4 16.3 2.0
Uttar Pradesh 59.9 73.2 16.6 21.0 5.1 7.0 98.7 34.8 15.5 0.6 9.0 30.3 9.7
Maharashtra 49.1 70.7 47.9 44.9 2.4 5.4 88.0 8.8 1.4 0.0 34.0 53.7 2.0
Andhra
75.7 37.5 13.8 5.9 1.3 3.9 61.8 7.4 0.0 0.0 91.5 0.0 1.1
Pradesh
Karnataka 54.7 48.3 52.3 48.3 13.4 2.3 75.0 8.5 14.0 0.0 4.7 24.0 48.8
All India 60.2 58.7 40.0 33.0 4.7 3.7 85.6 24.4 7.3 0.6 21.6 34.3 12.0
A4.10: Organisational sustainability of SHGs

SHGs Drop Reasons for members droping out SHGs reporting SHGs reporting
reporting rate (%) joining of new members withdrawing
dropout of members (%) due to non availability of
members (%) loan amount demanded
(%)
Migration Illness Not satisfied Defaulter Others
with SHG
Assam 23.9 5.4 35.6 11.1 46.7 6.7 0.0 20.6 0.0
Orissa 50.0 9.8 14.9 1.1 70.2 13.8 0.0 29.5 3.4
Uttar Pradesh 49.7 10.6 18.8 3.5 24.7 29.4 23.5 36.1 5.0
Maharashtra 38.9 9.3 41.9 4.1 50.0 4.1 0.0 29.2 3.4
Andhra 49.3 8.9 37.4 9.9 44.0 8.8 0.0 26.5 5.5
Pradesh
Karnataka 46.5 5.9 30.6 18.8 24.7 24.7 1.2 31.7 58.3
All India 43.1 8.2 28.9 7.8 43.5 15.4 4.4 29.2 14.6
114
A4.11: Financial sustainability of SHGs

Distribution of SHGs by percentage of loan Causes of non-repayment of loan by members (%) Average SHGs Average SHGs reporting
recovery loan reporting amount repayment
amount loan of arrears (%)
presently repayment arrears
outstanding arrears for the
(Rs.) (%) reporting
SHGs
(Rs.)
100% 95- 90-94 85- 75- 50- <50% Natural Inadequate Blocking Health/illness Others >6 > 12
99 90 84 74% calamity peer of problem months months
pressure payments
from
buyer of
products
sold
Assam 100.0 - 100.0 - - 1.9 - 22.6 12.9 9.7 32.3 22.6 8927.23 2.0 64000.00 3.2 2.6
Orissa 63.6 1.5 3.0 - 10.6 12.0 13.6 14.8 5.7 25.0 33.0 21.6 37818.18 27.3 11937.45 31.6 24.7
Uttar 100.0 - - - - 3.2 - 36.1 8.3 22.2 22.2 11.1 18631.81 2.1 34180.00 5.1 5.1
Pradesh
Maharashtra 71.4 - - - 14.3 4.8 - 33.3 28.1 22.8 10.5 5.3 25400.46 2.9 24264.57 3.0 3.0
Andhra 33.3 - 11.1 - - 10.5 33.3 15.1 20.9 18.6 25.6 19.8 51306.51 3.6 31126.78 6.6 5.9
Pradesh
Karnataka 78.6 - 7.1 - 14.3 2.9 3.5 19.4 16.7 19.4 30.6 13.9 46753.04 5.6 19601.43 6.4 4.7
All India 69.2 1.6 6.0 0.5 8.1 5.8 8.7 21.4 15.7 20.5 26.2 16.2 31598.52 7.2 18897.97 9.4 7.7
115
A4.12: Adequacy/appropriateness of support received from SHPI at the time of establishment/bank linkage
SHGs satisfied with the information provided on by SHPI (%) Average SHGs satisfied Average number
number of times with the of times
SHPI staff frequency of the representatives of
visited SHG visit of SHPI SHG visited SHPI
during last one staff (%) in the last one
year year
Group formation Functions Rules and Planning, Financial Training of Training of
and functioning and regulations management service group book
qualification and provisions, leaders keeper
of office monitoring conditions and
bearers procedures
Assam 66.5 66.5 70.3 67.7 68.4 67.1 66.5 3.8 71.0 13.6
Orissa 47.5 47.5 48.1 45.6 45.6 40.5 34.8 4.5 46.2 9.0
Uttar Pradesh 68.2 61.1 63.1 63.1 67.5 59.2 52.2 4.1 58.6 4.5
Maharashtra 71.9 71.9 75.4 65.9 69.5 59.3 58.1 4.2 67.1 4.8
Andhra 63.2 56.6 57.2 55.3 54.6 44.7 46.7 4.6 58.6 7.2
Pradesh
Karnataka 56.4 55.2 52.9 51.7 52.9 51.2 50.6 3.2 41.9 8.5
All India 62.2 68.5 52.1 58.2 59.7 53.7 51.5 4.1 57.0 7.7
116
A4.13: Adequacy/appropriateness of support received from FI/Bank

Average SHGs reporting support/activities provided by FI/banks SHGs satisfied with the adequacy/appropriateness of services received
number of (%) from FI/bank on (%)
times staff
member of
FI/bank visit
SHGs in a
year
Training checking reviewing Reviewing Appraising Frequency Provisions Conditions Saving FI Accessibility
on book & & & advising SHG loan of visits to of loans for loans services conditi of SHG
keeping advising advising on SHG request the SHGs according to the according ons for representative
on book on SHG financial to the SHGs to the savings to bank
keeping financial health needs of needs of of the managerial
accuracy activities aspect SHGs SHG SHG staff
Assam 2.5 45.5 18.7 18.2 5.7 7.2 12.9 76.1 79.4 81.3 78.06 77.4
Orissa 1.2 17.3 16.2 17.8 9.7 24.9 20.1 48.7 48.1 57.0 56.96 54.4
UP 1.7 24.6 25.4 19.6 10.7 19.2 89.0 43.3 48.4 47.8 50.32 47.8
Maharashtra 2.2 20.9 27.9 24.8 12.0 14.0 20.1 61.7 59.3 64.7 64.67 66.5
Andhra 3.1 16.9 23.3 18.9 22.1 12.9 89.0 72.4 73.7 77.0 72.37 78.9
Pradesh
Karnataka 2.3 22.6 24.7 22.6 8.1 15.2 20.1 52.3 52.9 61.6 59.30 63.4
All India 2.2 24.3 23.2 20.6 11.6 15.3 89.0 58.9 60.0 64.7 63.48 64.6
117
Appendix A5
A5.1.1: The average number of years of bank linkage per household by state
State Years of bank linkages
Assam 4.8
Orissa 5.4
Uttar Pradesh 5.1
Maharashtra 5.6
Andhra Pradesh 5.8
Karnataka 5.3
A5.2.1: The share of income by sources and states

Agriculture Live Stock Wages Salary Self-emp (non farm) Others
Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG Pre-SHG Post-SHG
Assam 34.9 32.2 5.4 7.0 18.4 17.8 17.6 17.5 20.7 22.5 3.0 2.9
Orissa 22.0 22.3 1.6 1.9 42.7 41.9 15.3 14.8 14.4 14.9 4.1 4.2
U.P 27.0 24.6 8.2 9.0 17.7 17.3 17.5 15.6 15.0 16.2 14.7 17.4
Maharashtra 33.6 32.3 10.5 15.7 20.3 16.9 21.5 20.4 11.8 12.5 2.1 2.2
Andhra Pradesh 31.4 30.9 1.8 2.0 28.6 29.3 10.7 10.4 26.1 26.7 1.3 0.8
Karnataka 34.2 34.2 5.2 5.6 35.8 33.8 8.6 9.3 14.9 15.8 1.3 1.3
Model type 1 33.8 33.0 8.3 9.9 25.4 24.1 14.7 13.3 14.9 16.3 2.9 3.3
Model type 2 31.3 29.7 4.6 6.5 26.7 25.8 15.8 15.6 16.1 16.7 5.5 5.8
Model type 3 21.3 22.7 4.9 5.1 27.6 26.3 12.5 12.1 30.6 30.9 3.2 2.9
All India 30.9 29.9 5.7 7.3 26.5 25.4 15.1 14.5 17.4 18.2 4.5 4.7
118
A5.2.2: Annual income per household by sources of income and their growth rates by states and type of model
Agriculture Live Stock Wages Salary Self-emp (non Others
farm)
Base Growth % Base Growth Base level Growth % Base Growth % Base level Growth % Base Growth %
level Annual level % Annual level Annual Annual level Annual
Annual
Assam 9784 4.7 1506 12.3 5151 5.7 4929 6.3 5803 8.3 832 6.2
Orissa 5232 5.8 369 9.5 10127 5.3 3628 4.9 3408 6.4 977 6.0
Uttar Pradesh 10555 3.7 3205 7.4 6926 5.1 6838 3.3 5852 7.2 5735 9.1
Maharashtra 12997 6.1 4069 14.8 7849 3.4 8322 5.8 4573 8.0 828 7.3
Andhra Pradesh 14609 4.6 830 6.8 13299 5.4 4976 4.4 12136 5.3 617 -4.2
Karnataka 11321 7.3 1715 8.9 11830 6.2 2849 8.7 4926 8.5 436 6.6
Model type 1 11759 5.8 2874 10.0 8842 5.2 5123 4.3 5194 8.0 998 9.2
Model type 2 11326 5.1 1654 13.1 9660 5.4 5710 5.8 5808 6.8 1985 7.2
Model type 3 6183 7.4 1422 7.0 8013 5.2 3615 5.6 8857 6.4 920 4.2
All India 10753 5.5 1974 11.2 9201 5.3 5257 5.4 6046 7.0 1557 7.3
A5.4.1: Changes in member household's Children Education

States Increase No change Decrease No Response Total
Percentage distribution of households
Assam 67.7 28.6 0.6 3.1 100.0
Orissa 81.1 15.2 0.8 2.9 100.0
Uttar Pradesh 83.1 10.7 0.8 5.5 100.0
Maharashtra 84.8 10.3 0.1 4.8 100.0
Andhra Pradesh 71.4 23.3 3.0 2.2 100.0
Karnataka 92.2 3.1 3.4 1.3 100.0
Model type 1 79.9 15.1 0.9 4.1 100.0
Model type 2 81.2 14.1 1.8 2.8 100.0
Model type 3 77.4 17.8 1.2 3.5 100.0
All India 80.3 14.9 1.5 3.3 100.0
119
A5.4.2: Changes in member household's Nutrition

Assam 70.1 23.2 0.0 6.7 100.0
Orissa 68.5 26.3 0.6 4.6 100.0
Uttar Pradesh 88.3 11.2 0.0 0.5 100.0
Maharashtra 82.0 16.1 0.4 1.6 100.0
Andhra Pradesh 71.3 26.5 2.0 0.3 100.0
Karnataka 89.2 3.9 4.5 2.5 100.0
Model type 1 76.9 18.9 1.1 3.0 100.0
Model type 2 79.6 16.5 1.4 2.5 100.0
Model type 3 76.9 19.5 0.9 2.6 100.0
All India 78.5 17.6 1.3 2.7 100.0
A5.4.3: Changes in member household's Health

Assam 71.1 22.6 0.0 6.3 100.0
Orissa 70.0 27.2 1.3 1.5 100.0
Uttar Pradesh 84.9 14.1 0.8 0.3 100.0
Maharashtra 84.4 14.6 0.4 0.6 100.0
Andhra Pradesh 84.9 14.0 1.1 0.0 100.0
Karnataka 94.9 2.8 1.5 0.7 100.0
Model type 1 77.6 20.4 0.9 1.1 100.0
Model type 2 83.5 13.9 0.9 1.8 100.0
Model type 3 84.3 13.5 0.6 1.5 100.0
All India 81.9 15.7 0.8 1.5 100.0
120
A5.5.1: Changes in borrowing habits

States Before joining SHG After joining SHG
Loan not taken Loan taken Total Loan not taken Loan taken Total
Assam 87.1 12.9 100.0 29.0 71.0 100.0
Orissa 78.4 21.6 100.0 4.3 95.7 100.0
Uttar Pradesh 28.2 71.8 100.0 5.2 94.8 100.0
Maharashtra 56.8 43.2 100.0 4.7 95.3 100.0
Andhra Pradesh 42.3 57.7 100.0 0.4 99.6 100.0
Karnataka 30.0 70.0 100.0 0.5 99.5 100.0
Model type 1 57.7 42.3 100.0 9.0 91.0 100.0
Model type 2 52.2 47.8 100.0 7.4 92.6 100.0
Model type 3 50.3 49.7 100.0 2.6 97.4 100.0
All India 53.5 46.5 100.0 7.2 92.8 100.0
A5.5.2: Total loan taken per household (Rs.)
States Pre-SHG Post -SHG
Assam 1560 3026

Orissa 890 6842
Uttar Pradesh 7772 19101
Maharashtra 5089 16492
Andhra Pradesh 6885 20675
Karnataka 9802 21186
Model type 1 5229 14282
Model type 2 5636 14922
Model type 3 4645 14202
All India 5384 14640
121
A5.5.3: Percentage distribution of use of loan by purpose by States

Loan taken for production oriented purposes as per cent to total loan Loan used for consumption purposes
States
taken
Pre-SHG Post –SHG Pre-SHG Post –SHG
Assam 39.3 49.2 60.7 50.8
Orissa 36.7 68.9 63.3 31.1
Uttar Pradesh 41.4 54.8 58.6 45.2
Maharashtra 63.6 69.6 36.4 30.4
Andhra Pradesh 26.1 32.4 73.9 67.6
Karnataka 43.9 45.7 56.1 54.3
Model type 1 54.5 62.5 45.5 37.5
Model type 2 37.1 45.9 62.9 54.1
Model type 3 42.3 51.3 57.7 48.7
All India 42.6 51.3 57.4 48.7
A5.4.4: Changes in practices related to drinking water supply by major source

Major source of drinking wa ter Percentage of respondents
Well Hand pump Pond/River Pipe water inside/ within Pipe water nearby No response
house compound street/ within village
Assam Pre-SHG 10.6 49.2 35.2 0.4 4.0 0.6
Post-SHG 9.9 51.9 32.0 0.4 5.2 0.6
Orissa Pre-SHG 20.1 66.2 10.3 1.1 2.2 0.1
Post-SHG 7.1 82.7 5.1 1.4 3.7 0.1
Uttar Pradesh Pre-SHG 1.0 98.2 0.0 0.4 0.0 0.4
Post-SHG 0.9 98.1 0.0 0.6 0.0 0.4
Maharashtra Pre-SHG 7.0 22.3 0.6 35.9 34.1 0.1
Post-SHG 6.5 10.7 0.6 51.0 31.1 0.1
Andhra Pradesh Pre-SHG 21.4 37.0 7.7 10.8 23.0 0.0
Post-SHG 13.8 33.3 4.8 25.3 22.9 0.0
Karnataka Pre-SHG 6.5 9.5 0.6 15.1 68.2 0.1
Post-SHG 3.5 7.2 0.8 27.3 61.1 0.0
Model type 1 Pre-SHG 8.7 47.4 15.1 9.6 18.9 0.2
Post-SHG 6.1 49.7 11.9 13.3 18.8 0.2
Post-SHG 5.5 45.2 4.1 22.7 22.2 0.3
Post-SHG 14.0 45.4 9.1 8.6 22.9 0.0
All India Pre-SHG 10.9 46.4 8.8 10.9 22.6 0.2
Post-SHG 6.8 46.5 7.0 18.1 21.3 0.2
122
A5.4.5: Changes in practices related to sanitary facilities

(in per cent)
Major source of sanitary facilities No response Not available Available Available inside Available within Total
inside house house compound village
Assam Pre-SHG 0.6 16.2 4.4 69.6 9.1 100.0
Post-SHG 0.5 16.2 5.7 71.8 5.8
Orissa Pre-SHG 0.4 73.9 18.2 1.6 5.8 100.0
Post-SHG 0.4 71.8 18.7 3.0 6.1 100.0
Post-SHG 0.3 69.9 19.9 9.4 0.5 100.0
Post-SHG 0.1 46.3 17.5 12.1 23.9 100.0
Andhra Pre-SHG 0.0 36.1 12.0 4.2 47.6 100.0
Pradesh Post-SHG 0.1 35.8 18.9 11.9 33.2 100.0
Post-SHG 0.7 24.7 21.9 26.6 26.0 100.0
Post-SHG 0.5 41.1 20.2 24.4 13.8 100.0
Post-SHG 0.4 45.5 14.9 21.3 17.9 100.0
Post-SHG 0.0 43.8 20.8 22.5 12.9 100.0
All India Pre-SHG 0.4 48.0 12.9 16.6 22.2 100.0
Post-SHG 0.4 44.0 17.2 22.4 16.0 100.0
123
A5.12.1: Changes in abilities of female SHG members to influence decision-making in their households on Children’s Education
Decision – Children's Education Decision taken by
Woman respondent Spouse Jointly Others No response Total
(SHG member)=
Assam Pre-SHG 7.2 9.7 77.1 1.8 4.2 100.0
Post-SHG 11.4 7.7 74.7 2.2 4.0 100.0
Orissa Pre-SHG 5.9 48.4 39.4 2.4 3.9 100.0
Post-SHG 13.4 12.1 69.8 1.3 3.4 100.0
Post-SHG 23.8 36.1 27.7 5.6 6.8 100.0
Post-SHG 23.1 9.0 53.5 1.1 13.2 100.0
Post-SHG 23.0 10.2 46.7 4.8 15.3 100.0
Post-SHG 35.9 24.2 37.8 1.5 0.6 100.0
Post-SHG 21.4 17.2 52.8 2.1 6.6 100.0
Post-SHG 23.2 16.7 49.1 2.8 8.1 100.0
Post-SHG 21.3 10.2 60.6 2.2 5.7 100.0
All India Pre-SHG 9.1 34.4 45.6 2.9 8.0 100.0
Post-SHG 22.5 15.8 51.7 2.6 7.4 100.0
124
A5.12.2: Changes in abilities of female SHG members to influence decision-making in their households on Purchase of Asset
Decision usually taken by
Decision – Purchase of Asset Woman respondent
Spouse Jointly Others No response Total
(SHG member)=
Pre-SHG 3.9 14.9 75.3 3.8 2.1 100.0
Assam
Post-SHG 4.8 12.3 79.1 3.4 0.3 100.0
Pre-SHG 4.1 43.4 46.3 5.6 0.7 100.0
Orissa
Post-SHG 18.0 21.7 58.5 1.5 0.4 100.0
Pre-SHG 10.5 45.1 36.0 8.3 0.0 100.0
Uttar Pradesh
Post-SHG 17.9 42.3 34.3 5.6 0.0 100.0
Pre-SHG 8.3 37.2 45.4 1.4 7.7 100.0
Maharashtra
Post-SHG 15.2 14.6 61.6 0.7 7.8 100.0
Pre-SHG 9.7 36.8 48.0 5.2 0.4 100.0
Andhra Pradesh
Post-SHG 17.7 22.9 54.6 4.5 0.3 100.0
Pre-SHG 8.3 53.0 35.0 3.3 0.5 100.0
Karnataka
Post-SHG 21.2 31.8 44.9 1.9 0.1 100.0
Pre-SHG 6.4 38.8 46.6 5.2 3.0 100.0
Model type 1
Post-SHG 15.3 23.1 55.7 2.9 2.9 100.0
Pre-SHG 8.7 38.5 46.4 4.5 2.0 100.0
Model type 2
Post-SHG 16.5 23.8 55.3 2.9 1.5 100.0
Pre-SHG 4.2 42.9 49.8 2.3 0.8 100.0
Model type 3
Post-SHG 16.7 24.1 57.3 1.4 0.5 100.0
Pre-SHG 7.5 39.2 46.9 4.3 2.1 100.0
All India
Post-SHG 16.2 23.7 55.7 2.7 1.7 100.0
125
A. 5.12.3: Changes in abilities of female SHG members to influence decision-making in their households on Taking Loans
Decision usually taken by
Decision – Taking Loans Woman respondent
Spouse Jointly Others No response Total
(SHG member)=
Pre-SHG 4.7 24.0 63.2 4.7 3.3 100.0
Assam
Post-SHG 15.1 14.9 65.8 2.8 1.4 100.0
Pre-SHG 5.3 56.2 27.5 10.0 1.1 100.0
Orissa
Post-SHG 39.3 8.9 50.3 1.3 0.1 100.0
Pre-SHG 13.9 46.0 31.0 8.7 0.4 100.0
Uttar Pradesh
Post-SHG 24.8 39.8 29.7 5.3 0.4 100.0
Pre-SHG 7.9 36.7 47.1 1.0 7.3 100.0
Maharashtra
Post-SHG 18.6 11.9 61.6 0.6 7.3 100.0
Pre-SHG 15.6 30.2 49.7 4.1 0.4 100.0
Andhra Pradesh
Post-SHG 31.7 12.2 53.2 2.9 0.0 100.0
Pre-SHG 9.1 58.1 30.1 1.8 0.9 100.0
Karnataka
Post-SHG 39.3 24.5 35.7 0.4 0.1 100.0
Pre-SHG 5.6 47.4 37.8 5.6 3.6 100.0
Model type 1
Post-SHG 28.4 18.1 48.6 1.7 3.2 100.0
Pre-SHG 11.3 39.2 43.2 4.0 2.3 100.0
Model type 2
Post-SHG 27.0 18.3 50.9 2.3 1.5 100.0
Pre-SHG 7.4 48.7 37.2 6.0 0.6 100.0
Model type 3
Post-SHG 37.6 14.3 47.0 0.9 0.2 100.0
Pre-SHG 9.3 42.6 41.0 4.7 2.4 100.0
All India
Post-SHG 28.9 17.6 49.8 1.9 1.7 100.0
126
A5.12.4: Changes in abilities of female SHG members to influence decision-making in their households on Use of Loans
Decision – Use of Loans Decision usually taken by
Woman respondent Spouse Jointly Others No response Total
(SHG member)=
Assam Pre-SHG 4.2 18.0 70.2 4.5 3.1 100.0
Post-SHG 13.2 14.2 68.4 3.1 1.0 100.0
Orissa Pre-SHG 6.1 56.4 29.2 6.7 1.6 100.0
Post-SHG 22.0 17.3 59.4 1.3 0.0 100.0
Post-SHG 20.2 40.2 34.3 5.0 0.4 100.0
Post-SHG 15.4 13.0 63.5 0.8 7.3 100.0
Post-SHG 29.6 13.0 54.0 3.4 0.0 100.0
Post-SHG 32.4 27.4 39.9 0.2 0.1 100.0
Post-SHG 18.0 22.3 54.5 2.0 3.2 100.0
Post-SHG 22.9 19.2 54.2 2.4 1.4 100.0
Post-SHG 29.9 19.5 49.8 0.8 0.0 100.0
All India Pre-SHG 9.1 40.6 43.7 4.0 2.6 100.0
Post-SHG 22.7 20.0 53.6 2.1 1.6 100.0
127
A5.13.1: Percentage of female me mbers participating in public issues on village level

Approached Govt officials for Attended community or village
State Members of village/ govt committees
solving problems meetings
Pre-SHG 18.1 36.1 4.4
Assam
Post-SHG 35.2 50.1 9.0
Pre-SHG 4.2 3.4 1.3
Orissa
Post-SHG 18.1 34.0 15.5
Pre-SHG 7.9 1.8 0.2
Uttar Pradesh
Post-SHG 16.4 14.7 1.0
Pre-SHG 21.0 27.5 14.8
Maharashtra
Post-SHG 68.0 63.8 32.4
Pre-SHG 6.5 10.4 3.5
Andhra Pradesh
Post-SHG 47.9 51.4 17.0
Pre-SHG 21.0 13.1 3.7
Karnataka
Post-SHG 90.8 78.4 13.4
Pre-SHG 11.3 17.0 6.8
Model type 1
Post-SHG 46.4 51.3 16.4
Pre-SHG 12.4 15.3 3.8
Model type 2
Post-SHG 51.6 51.1 14.2
Pre-SHG 21.0 13.3 6.0
Model type 3
Post-SHG 45.2 52.9 20.7
A5.14.1: Percentage distribution of hous eholds specifying areas on which they require training on income generating activities
States Fields in which more knowledge and skills are required for further improving income generating activities Total
Technical Financial Management Market development Others No response
Assam 33.6 35.4 18.0 11.2 0.5 1.2 100.0
Orissa 33.8 48.2 13.3 3.5 0.6 0.5 100.0
Uttar Pradesh 59.3 32.5 2.3 4.1 1.3 0.5 100.0
Maharashtra 29.4 37.0 19.4 13.3 0.4 0.5 100.0
Andhra Pradesh 74.6 20.2 1.3 1.5 1.7 0.7 100.0
Karnataka 42.2 26.4 21.4 8.2 0.4 1.4 100.0
Model type 1 35.8 41.3 13.3 8.1 0.7 0.8 100.0
Model type 2 48.0 30.5 13.0 6.7 1.0 0.9 100.0
Model type 3 52.8 28.5 11.5 6.6 0.2 0.5 100.0
All India 45.1 33.3 12.9 7.1 0.8 0.8 100.0
128
A7.1: Major Findings on the Level of SHGs

Model type 1 Model type 2 Model type 3 All Models
Average number of years of Bank Linkage 5.3 5.4 5.5 5.4
Percentage of SHG members belong to BPL category 60.4 61.8 63.8 61.7
Percentage of SHGs updating passbook regularly 77.1 81.9 94.2 82.4
No. of meetings conducted per month 1.7 1.5 1.4 1.6
Member attending meetings (%) 86.8 91.5 92.5 90.3
SHGs havings rules and regulation in written form (%) 85.3 92.8 92.3 90.5
Frequency of updation of rules & regulation
§ Frequently 14.0 18.3 25.9 18.0
§ Rarely 61.8 46.9 70.7 53.7
§ Never 24.3 34.7 3.4 28.3
Average amount of saving per year per member (2006) (Rs.) 1358.69 958.10 1717.5 1176.76
Percentage distribution of external borrowings and own funds of SHGs
§ SHG own Fund 4.1 1.9 16.4 5.0
§ Commercial Bank 36.5 45.3 48.3 43.7
§ Regional Rural Bank 52.4 45.8 22.6 43.3
§ Co-operative Bank 6.6 6.4 1.9 5.7
Percentage of SHGs had 100% loan recovery 79.9 70.5 40.8 69.2
Arrears as a % of loan outstanding 9.78 5.97 3.34 6.60
SHGs which have developed the following human development skills (%)
§ Leadership 37.8 39.6 49.2 40.4
§ Motivation 46.4 40.7 38.5 42.0
Two major Management skills developed by percentage of SHGs
§ Planning 22.3 41.0 29.2 38.2
§ Marketing 21.9 31.5 40.8 33.7
Two most important problems faced by SHGs for developing the skills of members
§ Lack of literacy & interest among members 34.8 17.5 30.5 24.4
§ Lack of time among members 34.0 37.2 21.9 34.3
SHGs reporting dropout of members (%) 42.1 40.7 55.4 43.1
Dropout rate (%) 9.0 7.8 8.2 8.2
Level of awareness of SHGs about objectives of the group among members (%)
§ High 37.0 49.9 25.4 42.8
§ Moderate 59.1 45.7 67.7 52.6
129
A7.2: Major Findings on the Level of SHG Members and their Households
Items Income per househol d (Rupees)
Base Growth rate %
(Rs.) Annual
Changes in annual net household income 34786 6.1
Changes in annual per household consumption expenditure of food 3040 5.1
Changes in annual per household consumption expenditure of non-food 1529 5.4
Annual per household expenditure on education 180 5.6
Annual expenditure per household on health 193 5.5
Average level of savings per household 2834 14.2
Average loan amount per household 5384 20.5
Net change in the value of consumer durable assets 9.9
Average loan amount per household changes between pre-SHG and post-SHG 20.45
Pre-SHG Post-SHG
Number of times loan taken from money lender to total count of loan (%) 60.1 1.2
Net poverty reduction
Model type 1 23.9 -8.74
Model type 2 25.4 -10.7
Model type 3 28 -10.51
All India 25.3 -10.0
Increase No change Decrease Non response
Impact of membership in SHG on social empowerment of women 92.0 6.5 0.8 0.7
130

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Final Report

Impact and Sustainability of SHG

CHAPTER 2: SAMPLE DESIGN AND METHODOLOGY 11

CHAPTER 3: SHPIS AND BANKS 15

CHAPTER 4: FUNCTIONING OF SHGS UNDER BAN K LINKAGE PROGRAMME 21

CHAPTER 5: IMPACT OF SBLP ON HOUSEHOLDS 41

CHAPTER 6: CASE STUDIES OF SHGS 65

CHAPTER 7: SUMMARY AND CONCLUSIONS 94

List of Figure and Tables

Table 2.1: Regions, States and Districts included in the Study........................................................................................................11

Purna Chandra Parida

Rakesh Kumar Srivastava

1.1 A R EVIEW OF EARLIER STUDIES

1.2 OBJECTIVES OF THE STUDY

The specific objectives of the study are:

Table 2.1: Regions, States and Districts included in the Study

2.1.1 Selection of Districts

2.1.2 Selection of SHGs

1. SHGs formed and financed by banks (Model type 1).

Table 2.3: District-wise tehsils and villages by State

2.1.3 Selection of SHG Members

2.2 CASE S TUDIES

3.1 SHPIS : COST OF PROMOTION, M AINTENANCE AND INTENSITY OF S UPPORT R ECEIVED

Table 3.1: Number of SHPIs by State

Table 3.3: Percentage distribution of SHPIs by type of support

Figure 3.1: SHPIs by types of supporting agencies (%)

Figure 3.2 Problems relating to promotion of SHGs (%)

Figure 3.3: Problems relating to bank linkage of SHGs (%)

Lack of guarantee due to non-availability of collaterals

Figure 3.4: Problems relating to Monitoring of SHGs (%)

Illiteracy and Others

Insufficient time Financial

3.2 BANKS : AN ASSESSMENT OF LOAN S ERVICES TO SHGS

Table 3.4: State -wise number of Banks

Table 3.5 Lending activities of banks

Table 3.6: Non-performing assets as percentage of total loan outstanding to SHGs*

Table 4.1: State -wise number of sample SHGs by Model type

4.1 PROFILE OF THE SAMPLE SHGS

Table 4.2: Profile of sample SHGs –Model Type wise

Table 4.2a: Profile of sample SHGs: State-wise

4.1.1 Distribution of sample SHGs by characteristics of its members

Table 4.3: Distribution of SHGs by characteristics of members

4.2 GOVERNANCE ASPECTS OF SHGS

Table 4.4: Governance aspects of SHGs

4.3 G ENERAL M ANAGEMENT PRACTICES

Table 4.5: General management practices

Table 4.5a: Change in the general management practices

4.4 FINANCIAL M ANAGEMENT PRACTICES

Table 4.6: Financial management practices

Model Model Model All Models

4.5 SAVING ACTIVITIES OF SHG M EMBERS

Table 4.7: Saving activities of SHGs members

Table 4.7a: Change in the saving activities since bank linkage

4.6 SOURCE OF FUNDS AND EXTERNAL BORROWINGS FOR THE SHGS

Table 4.8: Source of funds and external borrowings of SHGs

4.7 LENDING ACTIVITIES OF SHGS

Table 4.9: Lending activities of SHGs

4.8 OTHER FINANCIAL S ERVICES O FFERED BY SHGS

Table 4.10: Other financial services offered by SHGs

4.9 TRAINING N EEDS OF SHGS M EMBERS

Table 4.11: Training needs of SHG members

4.10 ORGANISATIONAL SUSTAINABILITY OF SHGS

Table 4.12: Organisational sustainability of SHGs