SHGs in India & West Bengal – a narration of facts
India’s Self Help Group (SHG) movement
India’s Self Help Group (SHG) movement has emerged as the world’s largest and most successful network of community based organizations (CBOs). It is predominantly a women’s movement. As some experts have pointed out, it is a development innovation in its own right.
As per NABARD’s microfinance report, as on March 2012, about 79.6 lakh SHGs, with an estimated membership of 9.7 crores, have savings accounts in the banks, with aggregate bank balance of Rs. 6,551 crores. Increasing NPAs and reducing percentage of SHGs that have bank loan outstanding may adversely affect the prospects of newer SHGs being promoted.
The SHG bank linkage program (SBLP), which is the India’s own innovation, has proved to be one of the most effective poverty alleviation and women empowerment programs. The SBLP had a modest beginning with 255 credit linked groups and loan amount of Rs.29 lakh in 1992-93. Since then the program has grown exponentially. In the process, SHGs emerged as a mass movement across the country and largest community based microfinance model in the world. As per NABARD’s microfinance report by March 2012, 79.6 lakh SHGs, with an estimated membership of 9.7 crores, have savings accounts in the banks, with aggregate bank balance of Rs. 6,551 crores. Over 43.54 lakh SHGs have loan accounts with total loan outstanding of Rs. 36,340 crores. However, there remain regional disparities in the growth of the SHG movement with limited progress in eastern and western regions.
In the mid nineties, SHGs became visible across the country. Several NGOs, most state governments, donors and lenders saw in SHGs an opportunity to mobilize rural women to work for their own social and economic betterment. By the late nineties, SHGs were not just savings and credit groups, but were seen as common interest groups. SHGs began sprouting up in many villages, with multiple SHGs being promoted in the same villages.
The important milestones in the evolution of the SHG movement can be classified into six major phases:
- NGOs promote women SHGs as an alternative to mainstream financial services to reach un-reached segments of society;
- NABARD takes the lead in partnering with NGOs, particularly MYRADA, to pilot the well-known SHG-bank linkage model;
- State Governments, particularly in the South, take a proactive role in the promotion of SHGs in a big way, by way of revolving loan funds and other support;
- SHG-Bank linkage reaches the scale of over a million bank-linked SHGs;
- SHG federations emerge to sustain the SHG movement and to provide value-added services;
- SHGs and SHG federations are given widespread recognition to act as implementing agents of various mainstream agencies such as financial institutions, corporate sector, and government.
While the SHG – bank linkage model has experienced exponential growth over the past decade, bank lending to SHG federations is currently being piloted. In the long-term, if the federations acting as ‘business correspondent’, hold considerable potential for financial inclusion, and this financial inclusion if done well, will prove to be a sustainable model. SHG federations will emerge as sustainable institutions of the poor, providing a basket of financial and livelihoods services to their member SHGs and ultimately to the women.