1. Lessons from Self Help Group-Bank Linkage Program as a Medium for Formal Financial access in India
May 22nd, 2018
By: Suraj Jacob

2. What is a Self-Help Group?
Lessons from India – SHG Bank Linkage Program
What is a Self-Help Group?
A self-help group (SHG) is a financial intermediary owned by the poor.
Usually comprising of women, it acts as a way of facilitating informal financials services to rural poor.
It is an intricate social design in which people participate by making themselves socially and financially accountable to each other.
Similar to ROSCA’s in several other countries , wherein homogeneous group members start similar financial initiatives.

3. Lessons from India – SHG Bank Linkage Program
State of SHGs in India
Total SHG coverage of 100 million households
8.5 million SHGs with savings
4.8 million SHGs with outstanding loans
SHG acts as a tool for financial inclusion in India, especially rural India.
In 1992, National Bank for Agriculture and Rural Development (NABARD) launched the Self Help Group Bank Linkage Programme (SBLP).
This facilitates financial transactions between formal rural banking system in India and informal self help groups, formalizing the institution of SHGs.

4. Developments in the Indian SHG Space
Lessons from India – SHG Bank Linkage Program
1992: NABARD launches SBLP
2006: RBI launches BC initiative
2008: Increased emphasis on SHG credit requirement
2011: NRLM starts as SHG platform
2011: SHG members authorized as BCs
2012: Introduction of SHG-2
2013: Simplification of SHG KYC norms
2014: SHGs to share credit information with CICs
2015: Digitization of SHGs via E-Shakti

5. SHGs are Used to Facilitate..
Lessons from India – SHG Bank Linkage Program
Credit Linkage
Delivery of Insurance and Pension Product
Financial Literacy
Hand Holding and Training
Enterprise Development/Business Creation
Community Participation

6. Study Context
Lessons from India – SHG Bank Linkage Program
IFMR LEAD in partnership with HIH India conducted a study on evaluating the impact of SHG based microfinance and entrepreneurship training program
Impact was assessed on the socio-economic livelihoods of rural-low income households in Tamil Nadu (a state in India)
Impact was assessed across outcomes such as financial behaviour, business creation and expansion and women empowerment indicators
The SHG program was implemented by HIH India
The program consisted of three main components: Group Formation, Business Training and Loan Disbursement
HIH India managed the monitoring and tracking of program implementation that roughly covered 3000 beneficiaries.

7. Lessons from India – SHG Bank Linkage Program
Research Objectives
Is micro-credit combined with entrepreneurial training effective? Does it help poor households increase their well-being, consumption and business profits, and does it have positive impacts on education, health, and women empowerment?
To what extent is the program effective and how do impacts differ for different segments of the population, in particular the poorest, the least educated, and those without a business?
What are households’ characteristics that explain why some take-up micro- credit, while others don’t?

8. Lessons from India – SHG Bank Linkage Program
Research Methodology
Randomized Controlled Trial (RCT) approach to evaluate the impact of SHG program
Helps isolate causal impact of the program
Minimizes bias in the study
Identifies nature and extent of impact
Randomization was done at the village level
Some villages received the treatment, while others did not

9. Sample Size and Geographical Context
Lessons from India – SHG Bank Linkage Program
Sample Size and Geographical Context
Study Geography
Study was conducted in 3 districts of Tamil Nadu- Sivagangai, Virudhunagar and Tuticorin
Study Sample
303 villages were covered under the study and were randomly assigned into treatment and control groups
5061 households were selected from these villages as final study sample
TREATMENT GROUP
N= 3482 household
Group Formation
Training
Loan Disbursement
CONTROL GROUP
N=1579 households
Did not receive intervention

10. Study Timeline Lessons from India – SHG Bank Linkage Program
Village Panchayat Level Survey: June 2010
Baseline Survey: July 2010 to October 2011
Implementation of HIH-SHG Program: Jan 2012 to Jan 2015
Midline Survey: February to May 2015
Endline Survey: March to November 2016

11. What do the Study Participants Look Like?
Lessons from India – SHG Bank Linkage Program
What do the Study Participants Look Like?
Avg. Household size is 4.5
73% of Individuals had formal schooling
52% of employed adults work as casual laborers
Avg. annual Household income is INR 96,135
73% of Households have at least one outstanding loan
On avg., 34% of Household expenditure is spent on food

12. Key Results Variables which showed an effect of the program
Lessons from India – SHG Bank Linkage Program
Key Results
Variables which showed an effect of the program
Likelihood to Save and Savings Amount
Likelihood to have loans and Number of outstanding loans
Business profits in lean/off-season months
Notable Variables which did not show an impact – Null Results
Income
Consumption and Expenditure
Asset Accumulation
Women Empowerment Indicators
Key
Text
Study in line with Lit.
Study exhibits some differences, but not to a large extent
Study outcomes not in line with Lit.

13. Savings Lessons from India – SHG Bank Linkage Program
Treatment Households were 9% more likely to save and also reported higher savings amounts
Treatment Households were 9% more likely to save and were more likely to invest their savings towards asset building and business expansion

14. Loans Lessons from India – SHG Bank Linkage Program
Households with SHG membership have more instances of loans from formal sources
Treatment Households were 14% more likely to acquire loans, had higher outstanding loan amounts and were more likely to have insurance policies.

15. Household Business Lessons from India – SHG Bank Linkage Program
In lean months treatment households earn ~ 33 % more profits as compared to their control counterparts
Businesses run by households in the treatment sample have significantly higher average profits for months in their lean period when compared with their counterparts in the control sample.

16. SHG Dissolution Lessons from India – SHG Bank Linkage Program
Downward trend in the proportion of SHGs dissolving as module trainings and loan cycles progress
Use the other IFMR Financing SHGs study to substantiate this.

17. Households Types which Benefitted Most from the Program
Lessons from India – SHG Bank Linkage Program
Households Types which Benefitted Most from the Program
Households with Businesses
Households in higher income quartiles
Households with Heads having higher education levels
Households with Female Heads
Are more likely to save with SHGs
Program helps secure women's decision making power

18. Households Characteristics Influencing SHG Participation
Lessons from India – SHG Bank Linkage Program
Households Characteristics Influencing SHG Participation
Households with Businesses
Households in higher income quartiles
Households with Female Heads

19. Conclusion Need for greater hand holding
Lessons from India – SHG Bank Linkage Program
Conclusion
Positive impact of the program on the savings and loans behaviour of households.
No transformational effects
Need for greater hand holding
Better quality of SHG interaction could lead to greater impact of SHG membership on women’s livelihoods.
Digitization holds promise for more transparency and accountability
Leverage SHGs for livelihood promotion as well
Results show a positive impact of the program on the savings and loans behaviour of households. However the findings also suggest that being part of SHGs might not have transformational effects on income and overall economic conditions of households.
Results highlight the need for greater hand-holding of SHGs to ensure their sustainability in the longer term.
Better quality of SHG interaction could lead to greater impact of SHG membership on women’s livelihoods.
Need for developments in the SHG space towards making the SHG movement more inclusive and transparent- Towards this end, Digitization of SHGs holds promise.
SHGs in general have demonstrated the ability to transform lives of rural women across India and greater efforts should be made to make it a holistic platform for livelihood promotion rather than a mere financial inclusion tool.

20. Lessons from India – SHG Bank Linkage Program
Findings on Saving Group models (SGs & SHGs) from other research studies
High
Savings
Credit
Resilience
Food Security
Self-confidence
Medium
Asset Accumulation
Consumption
Medium to Low
Education expenditures
Income
Female decision-making power
Leadership
Collective Activities
Low
Health expenditures
Business profits
Business ownership
Poverty Level
Key
Text
Study in line with Lit.
Study exhibits some differences, but not to a large extent
Study outcomes not in line with Lit.
Not captured in study analysis
Green – Study in Line with Literature
Orange – Study exhibits some differences from literature but not to a huge extent
Red – Study not in line with lit.
rature
Source: Understanding the Impact of Savings Groups: SEEP Network, 2017

21. Thank you Lessons from India – SHG Bank Linkage Program
Panelists Agnes Svensson, Head of Programs, Hand in Hand International Dr. Tara Nair, Professor, Gujarat Institute of Development Research A. Umarani, CEO, Kalanjiam Foundation Moderated by: Sayan Kundu, Research Manager, IFMR-LEAD

22. Lessons from India – SHG Bank Linkage Program
Bibliography
Status of Microfinance in India 2016–17. Mumbai: NABARD, 2017
Inclusive Finance India Report, 2016: Access-Assist, 2016
Understanding the Impact of Savings Groups: SEEP Network, 2017
The Evidence-Based Story of Savings Groups- A Synthesis of Seven Randomized Control Trials: Gash & Odell, 2013
Self-Help Groups in Development-A Review of Evidence from South Asia and Sub-Saharan Africa, EPAR Brief No. 283, Anderson et al, 2014
Self Help Group Bank Linkage- Through the Responsible Finance Lens: IFMR- LEAD, Agarwal, Sharma & Champ, 2013