ORIGIN OF SHGs IN INDIA
In
1976, Prof. Mohammed Yunus of Bangladesh
started women’s groups in Bangladesh
With
the success of BGB and similar organizations elsewhere, the concept of Micro
credit has gained momentum in India
Self- help groups (SHGs) play today a major
role in poverty alleviation in rural India India
In
our country the pioneer in this field is Self-Employed Women's Association
(SEWA). Without the Grameen model SEWA was started in 1972. Though started as
Trade union for women in the unorganized sector, today SEWA boasts of running
the first Women's Bank in the country. By the year 2000 Self Employed Women’s
Association (SEWA) has a membership of 209250. The SEWA Bank has 87263 depositors,
and 41757 borrowers whose loan outstanding us Rs.887 lakhs 4 as on March 1998.
SEWA has also networked many co-operatives and emerged as the largest
federation of co-operatives in the country.
In
Southern India organizations like PRADAN,
MYRADA, ASSEEFA, MALAR etc. have entered into this rural credit system. PRADAN
has a membership of 7000 women who have availed 40000 loans worth $ 600000 as
on March 1997. MYRADA has 62769 members who have saved RS.48 lakhs and availed
loan to the tune of Rs.2.90 crores. MALAR has a membership of 15000 women who
have saved RS.86 lakhs and availed loan to the tune of Rs.2.23 crores.
NABARD
refinances the banks, which lend to SHGs. As per NABARD's Annual Report
1998-99, banks have financed 30447 SHGs with a finance of Rs. 53 crores as on
31st March 1999. The repayment is excellent. The Finance Minister in his budget
speech has asked NABARD and SIDBI to increase the number of SHGs to 100000.
Even this number will be minuscule as it will cover only 2000000 people in our
country which has nearly 38 crores of people below poverty line.
MALAR
has emerged as a new self-reliant model for our nation. An offshoot of the
Total Literacy Campaign in Kanyakumari District, MALAR has emerged as an
organization of poor women who share the interest income to sustain a full time
structure, office and training schedule. This has kindled a new hope. Already
10 districts in Tamilnadu have undergone training at MALAR and started similar
organizations for micro-credit.
Revamping
of the rural credit system has already started. The banks Regional Rural Banks,
Co-operatives and SHGs linked with Non-Governmental Organizations (NGOs) have a
role to play. There is need for closer study to support the system. So that the
country can eradicate poverty at least in the beginning of the next millennium.
NABARD introduced a Pilot Programme for starting and lending to SHGs in 1992
based on the experience of BGB and MYRADA. Now seeing the success in repayment
many banks are eager to lend to SHGs and because of the pressure from Govt.
NABARD has started giving targets to Banks.
NABARD
also provides training support, Grant cum Aid support for micro credit under
it's different schemes. SIDBI has entered this field late but now SIDBI has
formed a Micro-credit foundation, which gives loans to NGOs after rating them
by an external agency. The minimum loan is Rs.50 lakhs and it is to be used
only for micro enterprises.
Rashtriya
Mahila Kosh - an organization promoted by Govt. Of India
The
Government of India, which is under IMF and WB guidance, has launched schemes
scrapping Integrated Rural Development Programme, Scheme for Urban Micro
enterprises, Prime Ministers, Urban Poverty alleviation programme and TRYSEM.
The Schemes are known as (1). Swarnajeanthi Gram Swarozhar Yojana – SGSY. (2).
Swarnajeanthi Sahahari Swa Rozhar Yojana – SJSRY The former is for Gram
Panchayats and the latter for Town Panchayats, Municipalities and corporations.
According to this scheme, the Panchayats will select the good group with
assistance from BDO, Bank and NGOs and provide Rs.10000/- as revolving fund -
free of Interest and then banks will provide loan to the group - seeing the
performance. There is an individual subsidy of 30% for those who do individual
enterprises and 50% subsidy for Group enterprises. After the introduction of
this scheme NGOs and Panchayat are forming groups or trying to get control of
the Groups and funds. The scheme has a trap. If the repayment under this scheme
is less than 70% in a Panchayat, nobody will get loan in this panchayat.
After
the Micro Credit summit held at Washington WB, IMF and many foreign funding
agencies have directed their projects towards micro-credit. Now Govt. of India
has also directed CAPART and other funding agencies to focus on micro credit
because of which all NGOs are running after people to for SHGs so that they can
get funds.
Thus
a slow and steady SHG movement started during 1990s in India
In
Govt. of India also helping to Self Help Groups from concerned Zilla Panchayat
from releasing a sum of amount to qualified SHG’s for increase there business
or other activities.
CONCEPT OF SHGs:
A group
consists of people, sharing a common interest, working together to achieve a
common goal, knowing each other by face and having intimate interaction with
each other.
The Self-Help Group is an informal association of people in
a village, hamlet or urban neighborhood with the following characteristics:
• The
size of the group is in the range of 10-20.
• The
members share similar characteristics such as same sex, caste, occupation,
poverty attributes etc (homogeneity).
• Members
are bound by trust, mutual respect and affection (affinity).
• Though
informal, the group follows sound organizational management principles such as
agreed rules and regulations, frequent meetings, maintenance of accounts Etc.
• Mutual
help (one for all and all for one) is the guiding principle of the
group.
• Members
are guided by the principle of self-help rather than dependence on External
help.
• Members
are bound together by the collective goal of improving their income and Social
status primarily through the organizational strength of working together.
• As
the first step towards the above, members make small savings every month.
• The
group opens a saving bank account in a financial institution (bank, Cooperative
society) in which all cash balances, except those that are needed for
Day-to-day expenses are deposited.
• During
its meetings, the group also discusses other common issues and takes up
Collective action to solve problems of their own members as well as of the
Community.
• The
group also becomes capable to access support from ongoing development
programmes sponsored by government and non-government organizations.
RESPONSIBILITIES OF THE FILD
WORKERS WHEN THE SHG IS FARMING ITS RULES:
Help
the group members to arrive at their rules and regulations through extensive
discussions, help them to write them down and keep the document safely and
educate them about their strict observance. Within two months all group members
should be fully aware of them.
WHY IS BANK CREDIT NEEDED:
The rural poor need to borrow money
for a variety of purposes like meeting emergencies and hardships, for
social obligations like marriage, festivals and childbirth, for income
generating activities and for working capital for their enterprises. One
of the important objectives of SHGs is to meet their need for credit for consumption
as well as for income generation through their small enterprises. If they go
to the money-lender they have to mortgage their land or pledge their
ornaments and pay very high interest. If they go to banks individually,
they may not be able to give security and will not be able to meet
procedural requirements of banks.
The
poor need credit which is:
•
Flexible
• Timely
• Adequate
• Non-exploitative
• Available
at any time (even in the night)
• Graduated
(small loans to larger loans)
• Repeated
The
SHG can provide credit with the above qualities to its members. But the amount
they save in the group may not be sufficient to meet the needs of all members.
Taking loans may also increase their costs, as they have to forgo wages when
they go to the bank. Giving small loans is quite expensive for banks also and
the banks fear to give small loans to numerous borrowers, as past experience
shows that many small borrowers do not repay their loans. This has landed banks
in heavy losses. To reduce costs to the borrower and to the banks, to ensure
proper utilization of credit and timely repayment and to avoid cumbersome
procedures, banks are willing to give loans to Self-Help Groups of the poor.
The group will lend to the members.
It
will assess the credit needs of the members and whether the purpose is suitable
for generating an adequate income to the borrower. The group will pay normal
interest to the bank and charge a slightly higher level of interest from
members. This higher interest is the profit of the group, which goes to the
common fund and can be distributed to members.
HOW BANKS ASSESS SHGs:
Banks
apply the following criteria to assess the eligibility of the SHG for a loan:
• All
group members must be contributing the minimum savings regularly.
• In
the first 6 months of its existence, the group should lend its saving fund
among members for their consumption or production requirement
• The
amount lent to members is repaid to the group regularly (at least 90% of the
amount due for repayment must have been paid back to the group).
• The
group shall not owe any overdue amount to any other financial institution or
agency.
• The
group must hold its meetings regularly and at least 80% of the members
must attend the meetings.
• The
group’s accounts should be audited periodically.
• Some
banks insist that the group should not have any member whose family members are
defaulters of loans taken from any financial institution.
• The
group’s minute’s books and account books must be maintained properly.
• The
group’s minute book and account book must be open for inspection.
• The
NGO or the sponsoring agency must certify that the group is working well.
BANK PROCEDURE:
• The
group should apply for credit in the prescribed application form (this can be
done in the 5th month after formation, as the bank will take some time to
process the application). The form must be signed by the President and
Secretary and be attested by the sponsoring agency.
• The
amount applied for must be based on the group’s assessment of its capacity to
repay the loan, the demand for loans from members and the willingness of
members to repay.
• The
group collectively stands guarantee for repayment.
• The
required documents are attached with the application form (these may include
details of date of formation, bye-laws, photographs of signatories, and
resolution authorizing the President and Secretary/ Cashier to apply for the
loan in the name of the group).
• The
bank gives loans to the group and not to individual members. The group in turn
will lend the money to members.
• The
group will pay interest on the loan amount to the bank.
• The
group will repay the principal in the installments agreed upon.
• The
bank sanctions a cash credit limit to the group. This will be two times the
common fund initially, which can go up to 5 times or higher later, depending on
the repayment performance.
• The
group needs to draw only the amount required by it on any specific date, so
that it needs to pay interest only on the amount actually withdrawn. For
example, suppose the credit limit is Rs. 1 lakh. In February the group needs
Rs. 20,000 and it needs to withdraw only that much. In March it may need Rs.
30,000, it can draw that amount then.
ADVANTAGES OF
ENTREPRENEURSHIP AMONG RURAL WOMEN:
Empowering women particularly rural
women is a challenge. Micro enterprises in rural area can help to meet these
challenges. Micro – enterprises not only enhance national productivity,
generate employment but also help to develop economic independence, personal
and social capabilities among rural women. Following are some of the personal
and social capabilities, which were developed as result of taking up enterprise
among rural women.
·
Economic
empowerment
·
Improved
standard of living
·
Self
confidence
·
Enhance
awareness
·
Sense
of achievement
·
Increased
social interaction
·
Engaged
in political activities
·
Increased
participation level in gram sabha meeting
·
Improvement
in leadership qualities
·
Involvement
in solving problems related to women and community
·
Decision
making capacity in family and community
Economic empowerment of women by micro
entrepreneurship led to the empowerment of women in many things such as
socio-economic opportunity, property rights, political representation, social
equality, personal right, family development, market development, community
development and at last the nation development.
CONCEPT
OF ENTREPRENEURSHIP:
Entrepreneurship is the backbone of national
progress. Any country cannot achieve higher levels of development without
entrepreneurship. It is one of the catalytic forces that propel economic growth
by fostering initiative, innovation, accumulation and distribution of wealth.
Entrepreneurial development plays an important role in industrial production,
employment generation and exports. This Unit aims at defining entrepreneurship,
condition of women in India
as entrepreneurs, women in micro-finance institutions, and Self Help Groups,
and problems faced by women as entrepreneurs in India
The word
„entrepreneur‟ is derived originally from the French word “entreprendre”
which means an organizer of musical or other entertainment. Oxford
According to
Schumpeter, “Entrepreneurship is based on purposeful and systematic innovation.
It includes not only the independent businessman but also company directors and
managers who actually carry out innovative functions”. David H. Hold observes,
“An Entrepreneur seeks to reform or revolutionize the pattern of production by
exploiting an invention or more generally an untried technological possibility
for providing a new commodity or providing an old one in a new way, by opening
up a new source of supply of material or a new outlet for problem. It
essentially consists in doing things that are not generally done in the
ordinary course of business.”
In a conference on Entrepreneurship
held in United States
ILO (1982)
describes that “entrepreneurs are people who have the ability to see and
evaluate business opportunities; to gather the necessary resources to take
advantage of them; and to initiate appropriate action to ensure successes”.
WOMEN ENTREPRENEURS:
The
Government of India has defined Women Entrepreneurs based on women’s
participation in equity and employment of business entrepreneurs. Accordingly,
a woman’s enterprise is defined as “an enterprise owned and controlled by a
woman having a minimum financial interest of 51 percent of the capital and
giving at least 51 per cent of employment generated in the enterprise to
women”. The clause of giving at least 51 per cent of employment generated in
the enterprise to women was dropped in 1891.
For becoming
a successful entrepreneur, women should explore the prospects of starting new
enterprise, undertaking risks, introducing new innovations, coordinating
administration, controlling business and providing effective leadership in all
aspects of business. “Today, women entrepreneurs represent a group of women who
have broken away from the beaten track and are exploring new avenues of
economic participation. Women’s entrepreneurship is the process where women
take the lead and organize a business or industry and provide employment to
others. Women endowed with high drive, creativity, innovations and desires for
achievements take up the challenging role of entrepreneurship.”
Across the
world, the number of women starting their own business is on the increase. In
the West, women are increasingly turning to entrepreneurship as a way of coping
with the “glass ceiling‟ that seems to prevent them from reaching top managerial positions in
organizations. They find that entrepreneurship provides them with greater
satisfaction and flexibility. “Women with higher education view
entrepreneurship as a challenge, while women with no education background find
entrepreneurship merely a means for earning money.”
Entrepreneurship
among women is as old as women themselves. In villages it is a well known fact
that women supplement the family income by maintaining dairy, kitchen garden,
poultry, tailoring etc. Women often posses adaptability, patience and
dependability - the three essentials for attaining success. Since the turn of
the century the status of women in India
The
emergence of women entrepreneurs is to be viewed in terms of socio-economic
emancipation of women. This entry of women into the world of business and
entrepreneurship is an auspicious sign, which should be encouraged at all
levels. The flexibility of the entrepreneurs‟ work schedule and the possibility
of working from home improve the viability of women-run enterprises.
WOMEN ENTREPRENEURS IN INDIA
In India India
In the early 70's women who entered
into entrepreneurial activities mainly got involved in producing traditional
items like handicrafts, food processing and food products. Participation of
women as industrial entrepreneurs is comparatively a recent phenomenon. In 1875
after the declaration of International Women's Year the approach towards women
entrepreneurs began to change. Today we can see that women are taking risks and
entering into every industry and competing with their male counterparts. They
are constantly looking out for new and innovative ways which lead to strong
economic participation. Their adeptness, skill and knowledge, their acumen in
business and desire to do something positive are among the reasons for women to
establish and manage organized industries and take up challenging ventures.
In India India
The 1991
Industrial Policy has envisaged special training programmes to support women
entrepreneurs. Accordingly women entrepreneurs are receiving training through
Entrepreneurship Development Programmes conducted by various institutions and
organizations both at central and state levels. IDBI is one of the major
promoters of women entrepreneurship development in India
MICROFINANCE, SELF-HELP GROUPS AND WOMEN:
Microfinance through self-help
groups has proved to be a strategic measure for organizing women in groups and
promoting savings and thrift habits to gain access to institutional credit for
their socio-economic development and empowerment. The entire process of forming
a group, of functioning in a sustained manner, of regulating finances, and
being mutually accountable, is in itself projected as empowering. Microfinance
institutions (MFIs) reach a high percentage of women. Out of total microfinance
clients, 73 per cent in Latin America, 70 per cent in Africa and 88 per cent in
Asia are women clients. Micro-loans not only
empower women through group formation, they also have beneficial effects on the
satisfaction of basic household needs. Research has shown that for every dollar
earned with a micro- loan, a male borrower would spend 47 cents on food, health
and child education, while a woman would spend 84 cents.
In India
MENTORING ROLE OF MICROFINANCE INSTITUTIONS AND SHG:
This section is adopted from the
work of Prof. Vibhuti Patel on Microfinance. Micro-finance Institutions have
used several methods of mentoring to evolve women’s leadership for development
of organization, efficient governance and human resource development. Some of
these innovative methods are as follows:
1.
Exposure
Trip
2.
Vocational
Training
3.
Creation
of Awareness about Women’s Causes
4.
Intervention
in Cases of Wife-beating, Bigamy and Other Restriction
5.
Monitoring
schools
6.
Help
in Getting Mortgaged Land Released
7.
Environmental
Sustainability and Social Empowerment
Strengths
and Weaknesses:
The
main strength of the SHG is that it is a cohesive group of women of similar
backgrounds. Its main weaknesses are: (a) complete lack of planning skills,
especially livelihoods’ micro-planning, (b) low awareness of government’s
programmes (SGSY, etc), (c) Lack of vision, or lack of ability to conceptualize
KEY FACTORS FOR SUCCESS:
1. Shared goals,
concerns, values, and culture.
2. Presence of a
change agent with long-term commitment to the community;
3. Belief that
the transition to higher value-added or desirable activities will not threaten
survival;
4. Belief that
transition from “non-sustainable coping livelihoods” to “sustainable”
livelihoods is qualitatively as well as economically superior;
5. Accept change
as a constant, rather than the status quo
6. Perseverance
and ability to work hard towards success;
7. A “product”
or “trade” or “process” that confers defendable competitive advantage on the
group, that cannot be easily replicated by others;
8. Complete transparency in financial
dealings;
9. Activities
satisfy the expectations of key stakeholders; and
10. There is
substantial satisfaction of “belonging needs” even if improvement in the
quality of life of members is not substantial.
MICRO-FINANCE
AND WOMEN EMPOWERMENT:
Links
between microfinance and women's empowerment are viewed as optimistic, limited
by design, cost effective in eliminating poverty, and a misplaced diversion of
resources. Microfinance programs range from small scale self-help groups to
large poverty-targeted banks. One model may vary in delivery, group functions
and structures, and complementary services. There could be 3 contrasting
approaches to microfinance and women's empowerment: the financial
sustainability approach, the integrated community development approach, and the
feminist empowerment approach. However, program evaluations revealed the need
to question the assumptions underlying all 3 approaches. In most programs,
women benefited to a limited degree. Many women did not control the loan use.
Most women were engaged in low paid, traditionally female activities, and
increases in income were small. Resources and time invested in economic
activity were limited by responsibility for household consumption and unpaid
domestic work. Microfinance programs sometimes created domestic tension between
spouses and loss of spousal income and support. Group repayment pressures
sometimes created pressures between women. Many women focused on personal rather
than social objectives.
SHG-Bank
Linkage:
Under
the SHG-Bank linkage programme, In 2004, 16.7 million poor households were
accessing credit through 35,000 branches of 560 commercial and cooperative
banks. The GoI made linking SHGs with banks a national priority from 1999 and
Nabard continues to nurture the expansion of the outreach of the programme by
providing umbrella support to various stakeholders. The programme is growing at
a pace of about 2.5 million households annually. It is the largest and fastest
growing microfinance programme in the world in terms of its outreach and
sustainability.
The
credit linked rural entrepreneurial development programme of NABARD is Gaining
in rural Karnataka and has helped promote entrepreneurship, particularly among
women. During 2003, of 75000 SHGs that received financial assistance, 3628 have
become micro-entrepreneurs (< 5%). Of 3628 micro-entrepreneurs, 2476 were
women (68%). Almost all the people involved in various activities were earning
over Rs.10,000 per month and had enhanced their business and marketing skills.
To provide financial assistance to artisans and small entrepreneurs in
investment and working capital requirement, NABARD had formulated a special
credit card scheme called Swarojgar Credit Card (SCC). Under the scheme,
Rs.25000 could be borrowed.
There is a long way to go and a very
conservative estimate suggests that, in India, at most, just 20% of all the
eligible low-income people have access to financial services from formal
financial institutions, MFIs and other such stakeholders.
Considering
the increased competition in micro-credit and the pressure to reduce. Interest rates, it is time to move to
considering moving beyond group lending. The primary reason for group lending
are the inability of the takers to offer collateral, and hence the group
mechanism was looked as collateral. The commonly stated advantages of group
lending are that the problems of adverse selection, moral hazard and
enforcement are sufficiently addressed.
In
India
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