Role of self-help groups in rural development

Role of Self Help Groups in Rural Development

Introduction
 SHG - is a group of people having a
common goal of socio-economic
sustainable development discussing
their problems and resolving it through
appropriate participation decision
making.
(KUMARAN,1997).

SHG- Is a homogeneous group of rural poor voluntarily
formed to save whatever amount they can conveniently
save out from their earnings and mutually agree to
contribute to a common fund from which to lend to
members for productive and emergent credit needs .
(NABARD,1995)
Cont..
Cont..

Objectives
1. To Understand the Concept of SHGs.
2. To Assess the Role of SHGs In Rural
Development.
3. To Review the Research Studies Related to the
Role of SHGs in Rural Development.

Quotations of SHGs
“The motto of every SHG member is saving first- credit
later”.
“The principle of SHG is one for all and, all for one”.
“Benefits of SHGs are based on Co-operation rather than
competition”.

 The concept of SHG at international level was
introduced by Mohammed Yunus 1979.
 Basically, micro-credit system gained the
momentum in the mid 90’s.
 In India , the first effort was taken up by
NABARD in 1986-87.
 In 19991-92 NABARD launched pilot project to
provide micro credit by linking with bank.

“Microfinance as the entire range of financial services
rendered to the poor and includes skill up-gradation,
entrepreneurial development that would enable them
to overcome poverty”.
Puhazhendi and Satyasi (2002)
Micro finance

 A most notable milestone in the SHG movement was
when NABARD launched the pilot phase of the SHG Bank
Linkage programme in February 1992.
 This was the first instance of mature SHGs that were
directly financed by a commercial bank.
SHG- Bank Linkage

 The informal thrift and credit groups of poor were
recognized as bankable clients.
 The linking of SHGs with the financial sector was
good for both sides.

Highlights of SHG- Bank
Linkage Program

•Total savings amount of SHGs with banks as on 31 March
2010 : Rs 6198.71 crore
•Out of total savings of exclusive Women SHGs : Rs 4498.66
crore
•Total amount of loans disbursed to SHGs during 2009-10 :
Rs 14453.30 crore
•Out of total loans disbursed to Women SHGs : Rs 12429.37
crore
Financial

•Total number of SHGs savings linked with banks : 69.53 lakh
•Exclusive Women SHGs : 53.10 lakh
•Total number of SHGs credit linked during 2009-10 : 15.87
lakh
•Exclusive Women SHGs credit linked : 12.94 lakh
Physical

•Total number of SHGs having loans outstanding as on 31
March 2010 : 48.51 lakh
•Estimated number of families covered upto 31 March
2010 : 97 million
Source ;Status of Micro Finance in India 2010 – NABARD Report

 Group approach
 Mutual trust
 Organization of small and
manageable groups
 Group cohesiveness
 Demand based lending
The Basic Principles of the SHG:

 Collateral free
 Peer group pressure in repayment
 Skill training, Capacity building and
Empowerment.

Components of an Effective Group Process
 Understanding relevance and commitment to
goals.
 Communication of ideas and feelings.
 Active participation and distribution of
leadership.
 Flexible use of decision-making procedures.

19
 Equality of power and influence.
 High group cohesion.
 High problem solving strategies.
 High interpersonal effectiveness.

Structure of SHGs
 The ideal size of an SHG is 10 to 20
members.
 The group need not be registered.
Size of the group

Membership
 From one family, only one person
can become a member of an SHG.
 The group normally consists of either
only men or only women.
 Women’s groups are generally found
to perform better.
 Members should be between the
age group of 21-60 years.

Cont..
 Size of group is small
 Informal structure
 Homogeneity in character
 Simple guiding and operational
principles
 Election of bearers for fixed terms
 Majority of them illiterates

 The strong belief by the individual to bring about
change through collective efforts
 Effort is built on mutual trust and mutual support
 Every individual is equal and responsible
 Every individual is committed to the cause of the
group
GUIDING PRINCIPLES FOR
FORMATION OF SHGs

 The belief and commitment by an individual that
through the group their standard of living will improve.
 Savings is the foundation on which to build the group
for collective action.

Roles and Responsibilities of SHG
office bearers

President
Secretary
 Treasurer

Functions of SHGs
 Meeting
 Savings
 Keeping of accounts
 Books to be maintained by SHG
Minutes Book
Savings and Loan Register

Minutes Book: The proceedings of meetings, the rules of the
group, names of the members etc. are recorded in this book.
Savings and Loan Register: Shows the savings of members and
that of the group as a whole separately. Details of individual loans,
repayments, interest collected, balance etc. are entered here.
Weekly/Fortnightly/Monthly Register: Summary of receipts and Payments,
updated in every meeting.
Members Pass books: Individual member’s pass books in which
individual’s savings and loan balance outstanding is regularly entered.

Overall purposes of SHGs
 To empower disabled people,
through collective action.
 To take responsibility for their
development.
 To improve the quality of life
in personal, social, economic
and political aspects.

Role of SHGs in Rural
Development

Characteristics of Rural Poor
1.Socio-personal characteristics of the rural poor
1. They have low education
2.Social and institutional participation is low
3.Low adoption leadership
4.Low socio-economic status
5.Low adoption level.

2.Socio-psychological characteristics of
the rural poor
1.They have low knowledge about new
technology
2. Very low risk orientation
3.Low political knowledge
4.Low aspiration level
5.Traditional value orientation

3.Economic behaviour of rural
poor
1.Invest orientation is low
2.Low farm mechanization
3.Very high utilization of family labour.
4.Very high indebtedness.

1. To generate additional employment
2. To impart and mobilize technical and
entrepreneurial skills
3. Raise the income level of the poor in the
rural system .
4. To create a habit of savings.
Need of SHGs

5. Utilization of local resources.
6. To act as a media for socio-economic development
of the village
7. Create awareness about rights.
8. To assist the members financially at the time of
need.

9. To identify problems, analyzing and finding solutions in
the group.
10. To develop linkages with institutions of NGOs.
11. To help in recovery of loans.
Cont..

12. To gain mutual understanding, develop trust and self-
confidence.
13. To build up teamwork.
14. To develop leadership qualities.

15.Governmental Programmes of family welfare
16.Promoting their nutritional and educational status
17.Awareness on environment
18.Public health through sanitation and clean drinking
water.

 Animal husbandry
 Poultry
 Petty shop
 Flower vending business
 Pickle making
What people can do

 Leaf plate making
 Mushroom cultivation
 Chilly powdering
 Flour making
 Papad making
Cont..

 Selling of bakery items
 Agarbathi making
cont

Problems of SHGs
A. Personal problems
1.Suppport or encouragement from family members
2.Lack of education
3.Lack of knowledge
4.Family problems
5.Lack of interest

B.Social problems
1.Caste
2.Religion
3.Community support
4.Political problems
5.Conflict among the members

C.Economic problems
1.Lack of capital
2.Lack of credit
3.Lack of security
4.Money lenders exploitation
5.Over due

D.Technological problems
1. Complexity of technology
2. High risk
3. Lack of raw material
4. Lack of concerned training
5. Lack of timely technical guidance

E.Marketing problems
1. Lack of established local market
2. Improper price
3. Transportation
4. Storage
5. Difficulty in meeting quality

54
Criteria for Grading Self-
Help Groups
1. Vision, mission and goals
2. Size of SHGs
3. Economic status of members, newer SHGs, older
SHGs
4. Meeting – frequency, time and place
5. Attendance of members at meeting

6.Participation of members in decision making
7.Responsibility sharing
8.Rules and regulations
9.Savings and Cash handling
10.Sanctioning and repayment of loans

12. Rotation of common fund
13. Resource mobilization
14. Book keeping and documentation
15. Training programmes
16. Social and community action programmes
17. Education and literacy

Research studies related to Role of SHGs in
Rural Development

Performance of Self Help Groups in
Karnataka-An Analysis.
BY;B.Narayanaswamy 2005

59
District Taluks No .of villages SHGs No . Of
respondents
KOLAR 1. Mulabagal 12 12 48
2.Gowribidanur 13 13 52
Total 25 25 100
TUMKUR 1. Sira 12 12 48
2. Tiptur 13 13 52
Total 25 25 100
overall 50 50 200
Locale of Study

Performance of SHGs at individual level
0
5
10
15
20
25
30
35
40
45
Low
Medium
High
Percentage
(%)

Performance of SHGs at group level
0
10
20
30
40
50
60
Low
Medium
High
Performance of SHGs at Group based enterprises
Percentage
(%)

Socio-economic Empowerment And Self-
help Groups.
Ramachandran,T. and Seilan,A. 2005

Kanyakumari District
Out of 9 blocks 5 selected
From each block 15 villages selected
From one village 8 SHGs selected
From one SHG one member selected
120 respondents selected
Locale of Study

Major findings of the study
1.Majority (93.3 per cent) of the respondents were able to
contribute towards the family income.
2.Fourteen per cent of them also agree that they got skill up-
gradation.
3. About 64.17 per cent of the respondents agreed that they
understood the banking Operations.

Impact of SHGs in terms of income
Monthly Income Before joining
SHGs
After joining
SHGs
No income 30(25.00) -
Below Rs.300
301-600
22(18..33)
36(30.00)
20(16.67)
25(20.83)
601-900 21(17.5) 48(40.00)
901-1200 9(7.5) 17(14.17)
Above 1200 2(1.67) 10(8.33)
Total 120(100) 120(100)
Figures in bracket denote percentage

Benefits Received by the Self Help Members
Benefits of SHG
Opinion Total
Agree No
opinion
Disagree
Development of saving habit
among the poor
98
(81.67)
22
(18.33)
- 120
(100)
Access to larger quantum of
resources
75
(62.5)
17
(14.17)
28
(23.33)
120
(100)
Window for better
technology
68
(56.67)
19
(15.83)
33
(27.50)
120
(100)
Access to various
promotional assistance
83
(69.17)
25
(20.83)
12
(10.00)
120
(100)
Figures in bracket denote percentage

Women Empowerment Through
Self Help Groups: A Case Study in
the North Tamil Nadu.
Vinayagamoorthy ,A., 2007

Sl.no Name of village Number of
SHGs
Total
members
1 Ponneri (vellori district) 6 130
2 Koodamalai (T.V. Malai
district)
8 138
3 Papparpatti(Dharmapur
i district)
6 130
Total 20 398
Locale of Study

Monthly Income of the Members Before and After Joining
SHGs
Before Joining SHGs After Joining SHGs
Sl.
No.
Monthly
Income Rs.
No. of
Respondents
Percentage No. of
Respondents
Percentage
1. Less than 1000 16 11.95 5 3.73
2. 1000-2000 25 18.66 26 19.40
3. 2000-3000 42 31.34 45 33.58
4. 3000-4000 4 2.96 14 10.45
5. 4000-5000 10 7.46 33 24.63
6. 5000-6000 5 3.75 6 4.48
7. Above 6000 2 1.49 3 2.23
8. Non-earning
members
30 22.39 2 1.49
Total 134 100.00 134 100.00

Monthly Family Expenditure of the Members Before
and After Joining SHGs
Before Joining SHGs After Joining SHGs
Sl.
No.
Monthly
Income Rs.
No. of
Respondents
% No. of
Respondents
%
1. Less than
1000
45 33.58 21 15.67
2. 1000-2000 56 41.79 35 26.12
3. 2000-3000 25 18.66 44 32.84
4. 3000-4000 5 3.73 25 18.65
5. Above 4000 3 2.24 9 6.72
134 100.00 134 100.00

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Role of self-help groups in rural development