APMAS

Up-scaling & Deepening SHG movement: Issues &

Challenges

APMAS

Presentation by CS Reddy, creddy@apmas.org 31st October 2008,

NABARD - CMF Workshop

APMAS

About APMAS

Vision: Sustainable Women Self Help Movement in

India• A public society began work in July 2001

• A national level Resource Institution for strengthening SHGs & SHG Federations

• Areas of work include capacity building, rating, livelihood promotion and research & advocacy.

• Services provided for a fee.

• Focus on SHPIs and SHG Federations

APMAS

Evolution of SHG movement in India

• Phase I: NGOs promote women SHGs as an alternative to mainstream financial institutions to reach un-reached segments of the society.

• Phase II: NABARD takes the lead in partnering with NGOs, particularly MYRADA, to pilot the well-known SHG-bank linkage model.

• Phase III: 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.

• Phase IV: SHG-Bank linkage reaches the scale of over a million bank-linked SHGs.

• Phase V: SHG federations emerge to sustain the SHG movement and to provide value-added services.

• Phase VI: SHGs and SHG federations gained widespread recognition to be partners of various mainstream agencies such as financial institutions, corporate sector, and government.

APMAS

India SHG movement

• SHG model for poverty reduction & women empowerment

• More than 50 lakh SHGs in the country – Quality???

• More than 35 lakh have loan outstanding with banks

• SHG – Bank linkage - loan outstanding approx. Rs.15,000 crores. Still problems to get bank loans in many states

• Savings of SHGs in banks approx. Rs.4,000 crore

• More than 100,000 SHG federations, nascent??

APMAS

India SHG movement

• Total SHGs in the country could be 1,00,00,000 (future)

• Total SHG federations could be 400,000 (future)

• Promotional funds needed to achieve universalization of SHGs approx Rs.10,000 crores? GOI, NABARD, States

• National Council for strengthening SHG movement established & National SHG fed.

• MFDEF & Financial Inclusion fund to strengthen the SHG movement – SHGs seen as a strategy for financial inclusion

• Capacities of the SHPIs?

• Supportive policy & regulatory environment???

APMAS

SHG – Bank linkage Impact (NCEAR Study)

• The bulk of SHGs, i.e. 80 per cent of SHGs have only women members.

• Distribution of the SHG members by caste indicates that SCs/STs and OBCs account for 22.3 percent of total SHG members.

• The percentage of SHGs that only have SC/ST members is 21 per cent.

• More than 60 per cent of SHGs consist of members belonging to BPL families.

• Changes in net household income between pre-SHG and post-SHG registered a significant growth per year at 6.1 per cent.

• Across different income activities of households, livestock registered highest growth at 11.2 per cent.

APMAS

SHG – Bank linkage Impact (NCEAR Study)

• The annual growth rate of per household consumption expenditure on food and non-food items recorded 5.1 per cent and 5.4 percent respectively.

• Per household annual expenditure on education and health recorded 5.6 per cent and 5.5 per cent growth respectively.

• Net change in the value of consumer durable assets per household was Rs. 4,329 between pre-SHG and post-SHG periods and the annual growth of assets recorded a high growth between the two periods at 9.9 per cent.

• The average level of savings (financial and physical savings) per households registered 14.2 per cent annual growth between base level and 2006.

• On an average, per household borrowed an amount of Rs. 14,640 in the post-SHG period compared to Rs. 5,384 in the pre-SHG situation. The average loan amount per household grew at an annual rate of 20.5 per cent between the pre-SHG and the post-SHG periods.

APMASSHG – Bank linkage Impact (NCEAR Study)• About 93 per cent of households reported that loans were

taken in the post-SHG situation as compared to that of 46.5 per cent.

• On the issue of repayment of loan, the findings show 96.4 per cent of households reported regularity in repayments of loans.

• The share of households living below the poverty line reduced from 58.3 per cent in the pre-SHG period to 33 per cent in the post-SHG situation.

• About 92 per cent of households reported that the social empowerment of women had increased after attaining membership in SHGs over a period of time.

• More than 70 per cent of women respondents reported improvements or even significant improvements in their ability to face health related problems and financial crisis.

• More than 60 per cent of the households indicated that there is an increase in the ownership of productive assets in post-SHG situation as compared pre-SHGs situation.

APMAS

SHG – Bank linkage Impact (NCEAR Study)

• In terms of control over money, about 21.3 per cent of the households reported a significant improvement in control over money with respect to buying of consumer durable assets.

• 27 per cent reported increased decision-making and control over expenditure on children’s education.

• The findings show 22.5 per cent of women SHG members in the households had taken decision in the post-SHG period as compared to 9.1 per cent in the pre-SHG period with respect to children’s education.

• Participation of public sphere show that 49.4 per cent of households had approached government officials to solve problems in the post-SHG period as compared to 13.5 per cent in the pre-SHG period.

• The findings of SHPI suggest that the average cost of promotion and maintenance per SHG incurred by a bank SHPI is lower than that by non-bank SHPIs.

APMAS

SHG FEDERATIONS IN INDIA

RegionType of federations

PF SF TF Total

Northern 121 26 0 147

N. Eastern 291 22 0 313

Eastern 21,371 784 0 22,155

Central 506 334 1 847

Western 713 1 0 729

Southern 67,655 2,285 22 69,962

Total 90,657 3,452 23 94,153

APMAS

GRADES: APMAS Federation Rating Tool

  Category Marks Weight

G Governance 80 16%

R Resources 30 6%

A Asset Quality 50 10%

DDesign and Implementation of

Systems50 10%

E Efficiency and profitability 60 12%

SServices to Constituents or

SHGs30 6%

SHG Performance 200 40%

  Overall Total 500 100%

APMAS

APMAS

Emerging practices

SHG federations by the virtue of their inherent strength and credibility are able to nurture some of the best practices in the process of their evolution.Facilitating bank linkage to SHGsMatured federations serving as a model for others. SHG federations effectively manage insurance, distribution of pensionsSHG Federations are able to offer services to their members for a feeResponding to natural disastersConcerned about sustainabilityMobilize funds to meet their cost, at least partiallyPerforming roles such as SHG monitoring, social audit

APMAS

Is AP Model Replicable?• Almost 15 years of sustained effort with highest levels of

political will & bureaucratic commitment• It is estimated that Rs.25,000/SHG has been the

investment made by GoAP over a 10 year period.• Proactive role & sustained effort of NABARD & the Banks

(thru SLBC) in the state to support SHG – Bank linkage • Almost 80% SHGs are bank linked. Majority of them got

repeat loans from banks.• Interest subsidy (only 3% pa to SHG) to promote timely

repayment to banks.• A very strong & extensive support mechanism to

facilitate bank linkage & to ensure repayment• In 2007-08, in AP alone Rs.5,880 crores bank loan to

SHGs. In 2008-09 it is expected to be over 10,000 crores.• More than 50,000 SHGs got loans under Total Financial

Inclusion to the extent of Rs.3 to 5 lakh per SHG

APMAS

Major Issues in SHG movement

• SHG – Bank linkage: in most states its not happening

• Quality of SHGs will not improve unless they get a bank loan after they have functioned for 6-12 months

• Promotional funds to promote quality SHGs?• Capacity of the Govt./NGOs promoting SHGs?• SGSY implementation not synchronized with SHG model• Livelihood promotion support for matured SHGs????• Women Empowerment? SHGs more engaged in credit

mgt• Many NGOs which traditionally promoted SHGs are

transforming into MicroFinance Organizations (MFOs)

APMAS

Open for discussion &Thanks

For further details contact:

APMASPlot No. 20, Rao & Raju ColonyRoad No-2, Banjara Hills, HyderabadPh: +91-40-23547952/27; Fax: +91-40-23547926Web: www.apmas.org; www.shggateway.inemail: info@apmas.org

APMAS