Self Help Groups in India and West Bengal Discussion Forum Organized by: Institute of Social Science and Self Help Group Promotional Forum 2 nd February, SHGPF: SHG in India and West Bengal

Outline of this presentation 1.Genesis of SHGs 2.Finance Focus 3.Strategy of SHGs 4.Characteristics of SHGs 5.Progress of SHGs 6.What is the impact 7.Supply demand mis-match 8.Visible changes in the environment 9.What is the way out – a strategic framework 10.Foreseeing the future – financial, livelihood, social and governance scenario 11.What is the way out - an operational framework 2SHGPF: SHG in India and West Bengal

Genesis of Self Help Groups As part of supplementary developmental approach - SHG-bank Linkage Program in 1992 – financial access 1.Linkage between informal groups like SHG and formal banking sector 2.without any security or collateral 3.without any scheme 3SHGPF: SHG in India and West Bengal

Finance Focus …. why 51.4% of farmer households are financially excluded from both formal / informal sources. Overall, 73% of farmer households have no access t0 formal sources of credit. 4SHGPF: SHG in India and West Bengal

Progress on Self Help Groups The SHG - Bank Linkage Programme can be regarded as the most potent initiative since Independence for delivering financial services to the poor in a sustainable manner – Rangarajan Committee on Financial Inclusion 5SHGPF: SHG in India and West Bengal

6 The major strategy of MC through SHG to provide easy credit for poor people to generate income through various self employment means

Characteristics of SHGs a strong feeling of affinity relationships of trust, non-exploitative relationships homogeneity among members, voluntarism self reliance willingness to support one another in need on certain structural features - common origin / same livelihood base / gender bond 7SHGPF: SHG in India and West Bengal

Characteristics of SHGs Strong feeling of affinity vis a vis Peer Pressure in the case of Grameen Model 8SHGPF: SHG in India and West Bengal

Status on Self Help Groups … coverage SLRural HH coverage range % No. of states States Bihar, Jharkhand, J&K, UP, Sikkim, … Assam, CG, Guj, HP, Raj, Uttaranchal… Maha, Tripura, WB. (57% and 150%) … Goa andOdisha 5> 1007AP (150%& 765%), Karnataka, Kerala, TN. 9

Status on Self Help Groups … Savings SLState / Country No. of SHGs (lakh) Amount (Crores) Savings / SHG (Rs.) 1 AP TN WB India SHGPF: SHG in India and West Bengal

Status on Self Help Groups … Credit SLState / Country No. of SHGs (lakh) Credit disbursed (Crores) Credit / SHG (Rs.) 1 AP TN WB India SHGPF: SHG in India and West Bengal

Status on Self Help Groups … Outstanding SLState / Country No. of SHGs (lakh) OS (Crores) OS / SHG (Rs.) 1 AP TN WB India SHGPF: SHG in India and West Bengal

Status on Self Help Groups … linkage SLState / Country % of SHGs – Credit received during this year % of SHGs – Credit outstanding during this year 1 AP TN WB India SHGPF: SHG in India and West Bengal

Status on Self Help Groups … NPA SLState / Country NPA – 2012 (%)NPA – 2011 (%) 1 AP TN WB India SHGPF: SHG in India and West Bengal

Few other observations …. 1% of sample SHGs having a loan outstanding to Banks 59 2SHG Savings and Loan Ratio1:3.5 3Inadequate quantum of loan (%)43 4Bank loans are not timely27 15SHGPF: SHG in India and West Bengal

Few other observations …. 1Learnt to sign88 % 2SHG women attends (alone) meetings outside the village 66 % 3Casting of vote – independent decision 52 % 4Husband shares the household work68 % 5Women taking up non-traditional works 30% 16SHGPF: SHG in India and West Bengal

17 What is the impact ‘Strikingly, 30 years into the microfinance movement we have little solid evidence that (microfinance) improves the lives of clients in measurable ways’ A study shows “..on net, 1.8 million microcredit client households, including 9.43 million household members, crossed the $1.25 a day poverty threshold between 1990 and 2008” * This study made no attempt to establish causality between microcredit and poverty alleviation. Instead, it simply estimates the change in status of microcredit client households between 1990 and 2008, when compared with their status during the time of the first loan received by any member of the household. Microcredit is a tool for unlocking human dreams. But microcredit, by itself, is usually not enough. That may seem like an unusual way to start an annual report from an organization named the Microcredit Summit Campaign, but we recognize that we cannot achieve our goals, especially the goal to see 100 million families move above the US$1.25 a day threshold, with microcredit alone. SHGPF: SHG in India and West Bengal

18 Supply demand (mis) match What ever your types of business venture, the repayment schedule is weekly. At the same time, even if one embarks upon long term economic venture, the repayment period is not more than one year. The demand side has to comply with the delivery and to the advantage of the supplier SHGPF: SHG in India and West Bengal

19 (mis) match means the repayment is not from the economic activities for which the credit is supposed to be used and yield economic surplus. But it is very useful for trading / vending type of activities where business cycle is very short and likely to be less than or match with the credit repayment period. It is true that most of the categories of credit recipients of MCs are either engaged in trading and small traditional economic activities. And some cases, they have to repay from the incomes of other activities. SHGPF: SHG in India and West Bengal

20 Visible changes in the environment National Conference on CBMF Community Based Approaches for Inclusive Growth “.... we need to focus on the last theme--empowerment and less on the NABARD/Velugu obsession with credit” -- Deep Joshi “I asked how many of you have toilets at home “ – a question asked to SHG members in AP by Mr. Jairam Ramesh, Union Minister It is really nice to see that this conference is discussing something outside credit” … opening remark by Dr. Chakraborty, Dy. Governor, Reserve Bank of India NRLM – Social Mobilisation, Institution Building, Financial Inclusion, Livelihoods Promotion and Convergence SHGPF: SHG in India and West Bengal

21 SHGPF’s strategy From the very beginning – SHG is micro development unit, not a MF delivery units and Therefore the key functional areas for SHG movement are 1.creating organizations of poor and marginalized women (SHG, Clusters, Federations, etc.) 2.ensuring facilities for financial services (savings, credit, insurance, pension, provident fund, and remittance) 3.addressing income enhancement through various livelihood measures 4.addressing social, gender and women empowerment issues, and finally and very importantly 5.strengthening governance locally and globally SHGPF: SHG in India and West Bengal

22 What is the way out SHGPF: SHG in India and West Bengal

23 The process needs high level of performance in financial management, in institution building, in making use of financial services for obviating the supply-demand gap at the subsistence level along with treading into investment for income generation by sustainable use of resources through participation in the market. Coupled with this, there is a need to understand the environment they live in, to identify the immediate and long term and wherever possible micro and macro level linkages that are severely affecting to wreck their lives to strengthen their own internal institutional systems, they also need to understand the relative position of theirs vis a vis the other institutions and mechanisms in order to change the relationships in favour of them SHGPF: SHG in India and West Bengal

24 Foreseeing the future.... Financial Scenario SilverBleak SHG members deposit multiple types of savings with Formal FI / Banks Limited scopes like compulsory savings SHG members getting adequate and multiple loan from Banks Losing the battle with MFIs SHG members getting adequate and multiple insurance / remittance / pension products from Banks Almost absent Financially sustainable own institutionsWeak Institutions Local Cooperative Banks / BCC / German Cooperative - as owner As clients and vulnerable SHGPF: SHG in India and West Bengal

25 Foreseeing the future.... Livelihood Scenario SilverBleak Some members engaged in self employment - production, manufacturing and trading Only trading through MFI’s loan Skill for JobsUnskilled Market - own and externalExternal market Wage Employment with negotiable skill and voice Unskilled wage eraner – unorganized Own collectives

26 Foreseeing the future.... Social Scenario SilverBleak Rights and entitlement - control and access ensured At the receiving end of the delivery Social EquitySocial inequality Gender EquityGender inequality Strong Institution and capacity to engage Lack of voice Inclusive with necessary positive discrimination Exclusive / discriminating SHGPF: SHG in India and West Bengal

27 Foreseeing the future.... Governance Scenario SilverBleak Institutions with participatory governance No institutions of poor /vulnerable Engagement with and Participants in Elected governance Engagement not possible – one sided Synergy between Participatory governance and Elected governance : a case for people’s governance Elected governance affords to ignore people’s needs and voice Constituents ‘ interest preservedElites prevail people’s governance controls / manages economic principle Economy driven by corporate interest SHGPF: SHG in India and West Bengal

28 Way out – an operational frameowrk the promotion of local micro-savings for accumulation of capital promotion of genuine community-owned and controlled financial institutions, such as credit unions, Explore local markets and build own strangth Macro policies that promote local sustainable businesses SHGPF: SHG in India and West Bengal

29 Thank you for your patience And Requesting you to debate …… SHGPF: SHG in India and West Bengal