OPERATIONAL MANUAL FORPROMOTIONG SHGs

Dr. Ravindra Pastor

THE INSTITUTIONAL MODEL The model should satisfy need of

multiple programmes as envisaged in ILP

The model must draw form the success and failures of various institutional models within and outside the state

The model should be contextual for MP in terms of specific need, suitability, applicability, operationalization and long-term sustainability.

EXPERIENCES AND LEARNING OFOTHER APPROACHES The traditional SHG model Institutional Model of SGSY Hariyali (Watershed) Model Velugu Model of Andhra Pradesh Kudumbashree Model of Kerala DPIP Model of Madhya Pradesh

THE BASIC DIFFERENCE OF VARIOUS APPROACHES IN THE FOLLOWING CRITERIA:

Assumptions on poor peoples' escape from poverty

Starting activity in the village, organizing the Primary Group and process of group formation

Group strengthening processes Associative tiers Linkage with Livelihoods Social-political empowerment People control on organization Assumptions about and initiative towards

achieve sustainability of the organization

SUCCESSFUL EFFORTS IN MADHYA PRADESH: DPIP

o Demand Driven.o Decentralized decision making.o Group Based - "Collective".o Transparency and Accountability.o Placing funds at people's disposal. o Flexibility.o Emphasis on HRD.o Interdisciplinary project facilitation

teamo Learning from feed backs/mistakes.

POLICY ADOPTED BY GOMP1. Integrated Livelihood Programme

An Integrated Livelihood Programme in which all the livelihood schemes of Rural Development Department will be integrated and implemented through PFT model

2. SHG Strengthening Policy, 2007Under SHG Strengthening Policy, the activity-based federations of SHGs will be promoted by providing:- Handholding & Operational support Financial assistance for working capitalSupport for infrastructure development

3. Employability Training Policy, 2007Under the Employability Trainings policy educated/un educated, skilled/un skilled members/youth will be registered and trained according to the existing demand of services in industry, tourism, hotel, construction etc. and placed.

THE STRUCTURE OF THE PROPOSED MODEL Group based approach Livelihoods-centrality Affinity in the Group Self Help Groups and Activity Groups Building Social Organization Associative tires

Member

T-SHG

T-SHG

Member

Local Service Centre (up to 3-4 villages)

Services• collection,•Storage•extension

Cluster Producer Organization

~ Scale and Size determined by viability

Services-Integration (input procurement, technology extension, marketing, processing),- SHG support services,- Business Planning;- Bank Linkage

T-SHG

Service Providers

Value Chain Infrastructure

Professionals

Value Chain Infrastructure

Common Theme/Activi

ty

Member

Implementation / Federation in Primary / Secondary sector:

Follow up Visits;Job Satisfaction SurveysEmployer Feedback

Job Postings through:T-SHGS,Schools, and GPs

Market ScanIdentification of Sunrise clustersPrepare ESAV profiles (education, skill, attitude and value) of Jobs

Placement

Post-Placement Support

Skill Training

Market Scan and Pathways

Identification

Modules onSoft and Technical SkillsUse existing resources (bldg, equipment and staff of ITI and schools)Trainers from IndustryApprenticeshipCertification

Negotiation with IndustryPlacement WebsiteJob Mart/ Fairs

Employment generation after training:

Community Organizations:

VDC

Community Financial Organization (CFO)

Financial Institutions

SHG group

Producer Organization

SHG group

SHG group

SHG group

VDC VDC VDC

UNDERSTANDING SHGS

WHAT IS A SELF HELP GROUP (SHG)? A small homogeneous group (similar socio-

economic conditions) Consists of 10-20 members Members should live in close physical

vicinity - the same village or neighbourhood,

Members should come together on a self-selection basis for sharing their common concerns, pool their own resources (both financial and non-financial) and are willing to work together for their personal, social, economic and political development.

SOME GENERAL CHARACTERISTICS OF SELF HELP GROUP : Different families Regular Meeting Savings and Credit activities Flexible Savings Loans from Banks / mainstream FIs Group Accountant MIS Flow and Computer Munshi Participation and rotational leadership

SOME NECESSARY STEPS FOR FORMATION OF SHGS: Village Meeting Choosing Members Concept Seeding The benefit of group formation is

restricted toi. Saving,ii. Inter-lending / easy credit,iii. Low interest rate (depends on the

situation),

SOME NECESSARY STEPS FOR FORMATION OF SHGS

iv. The interest distributed in the group,

v. Recognition by mainstream financial institution and availability and accessibility to bank credit,

vi. Mutual help and support,vii. Power of unity, group strengths and

joint action and strengthening voice of poor through social mobilization etc

SOME KEY FEATURES OF A GROUP Vision: Any group starts from a common

vision. The group functions well till the time a clear vision exists in the mind of each of the members and they see the group as a way to realize that vision.

Stake: All members of the group should have shared stake in the group. Higher the stake, higher will be the strength of the group.

Owning the Group: Members should own the group. The ownership comes as there is a joint vision shared stake.

SOME KEY FEATURES OF A GROUP INCLUDE Roles and responsibilities of members:

Each member should be very clear about her / his roles and responsibilities. They should be capable of executing that and comfortable with the responsibility distribution among members.

Leadership: Aspect of leadership is very important in a group. Many times natural leaders evolve in a group.

SOME KEY FEATURES OF A GROUP INCLUDE Decision-making: The decision-making in

the group is an important aspect. Groups having more democratic decision making systems leads to higher participation.

Conflict Resolution Mechanisms: Conflicts are inevitable in any group. Positive conflicts are better for group cohesion and are important to increase the bonding.

Norms and values of the group: Norms and values of the group are very important for their effective functioning. Instead of externally imposed norms, norms evolving during group processes may have higher ownership of group members on these norms.

GROUP FORMATION STAGES: Bruce Tuckman (1965) developed a 4-stage

model of group development:: 1. Forming: Members come together and form

the group. 2. Storming: A chaotic vying for leadership

and trailing of group processes 3. Norming: Eventually agreement is reached

on how the group operates and creation of group norms

4. Performing: The group practices its craft and becomes effective in meeting its objectives.

All groups including Self Help Groups pass through the first three stages before the performing stage. Length of these stages may vary for groups.

ROLES AND FUNCTIONS OF SELF HELP GROUPS Mutual Help: Affinity and Solidarity Financial Intermediation Empowerment Livelihoods Action

PREPARING FOR SHG FORMATION• • For understanding the area collect following For understanding the area collect following

information:information: Map of Block Villages, population & other demographic

data Information regarding Panchayati Raj

Institutions Banks and their service areas List of registered SGSY SHGs, groups. Other agencies involved in SHG promotion

and their operational area Information regarding functional SHGs in the

area.

PREPARING FOR SHG FORMATION

• • Supplement it with following information:Supplement it with following information: The approach road and distances of

villages Location of banks, service area of bank Important Haat places with numbers of

villages in the catchment area Mapping potential of SHG formation in

the cluster, baseline data about area and sample Hh

PREPARING FOR SHG FORMATION

• • Prepare a SHG promotion planPrepare a SHG promotion plan federation office and proposed system

of data inflow-outflow. Identify the cluster for initiating the

group formation. Identify the well functioning SHGs and

select the leaders of these SHGs who have the potential to become Community Resource Persons (CRPs) for SHG formation.

PROMOTING AN SHG: THE PROCESS& DIFFERENT PHASES The fist phase: pre-formation phase The second phase: Concept Seeding phase The third phase: formation phase The fourth phase: strengthening phase The fifth phase: bank linkage phase The sixth phase: livelihood planning phase The seventh phase: graduation phase

The final aim is to graduate groups or withdraw from active promotion within one year.

BASIC PROCESSES IN SHGS1. SETTING NORMS Savings Attendance Meeting frequency and time Cash box management Accountant / record keeper Savings withdrawal Disciplining (allowable fines) rules Implementing disciplining rules

BASIC PROCESSES IN SHGS2. ATTENDANCE What is quorum? What implication does quorum have on

financial transactions? What should the quorum level be? What happens if the quorum is not

satisfied? What if quorum falls during the course

of meeting?

BASIC PROCESSES IN SHGS3. MEETING FREQUENCY AND TIME What frequency? At what time? Meeting duration Annual meeting after audit of accounts Special meetings

BASIC PROCESSES IN SHGS4. CASH BOX MANAGEMENT Why does the SHG need to hold cash? Why is cash box needed? How to maintain the cash box? Minimum and maximum cash in the

box? Withdrawal from or deposit of cash from

the box outside the meeting?

BASIC PROCESSES IN SHGS5. SAVINGS WITHDRAWAL How is withdraw-able saving different

from the previous savings? What is the advantage of withdraw-able

savings? Will withdraw-able savings earn

dividend if not withdrawn? How will interest be computed on

savings?

BASIC PROCESSES IN SHGS6. SETTING DISCIPLINING RULES What do disciplining norms mean? Why have disciplining norms? What behavior does it seek to

discipline? How are these disciplining norms set?

Do we proactively facilitate or wait for some occurrence to generate?

How to facilitate discussion? What should the amount be?

CONDUCTING SHG MEETINGS: Step 1: Step 1: Assembly and Start Step 2: Step 2: Discussion of Wider Issues Step 3: Step 3: Opening Cash Tally Step 4: Step 4: Verification of Loan Use Step 5: Step 5: Collections

CONDUCTING SHG MEETINGS: Step 6: Step 6: Savings Withdrawal Step 7: Step 7: Loan Vetting and

Disbursements Step 8: Step 8: Closing Cash Tally Step 9: Step 9: Reminders to Borrower of

Principal and Interest Due Step 10: Step 10: Attendance and Closing

Actions--Keepers of Box, Key and Registers

SETTING UP MAINTENANCE SYSTEM1. ACCOUNTING SYSTEMo General Accounting Norms for

Financial Transactions in SHGso Savings Transactionso Loanso Withdrawalso Interest on loans

SETTING UP MAINTENANCE SYSTEM1. ACCOUNTING SYSTEMo Interest on Depositso Bank Transactionso Rules for Penalty, Other Collection and

Payment of Expenses for Running of the SHG

o Sharing of Profits / Loss of the SHG

SETTING UP MAINTENANCE SYSTEM The Minimum Financial Information to

be Available in Each SHG at All Times Departure of Individual Member from

the Group Entry of New Member Splitting / Merging of Group Dissolution of Group

SETTING UP MAINTENANCE SYSTEM2. SELECTION OF ACCOUNTANTSo Track Record and Availability of the

Persono Social Maturity of the Persono Emotional Maturity of the Persono Motivationo Literacy and Numerical Ability

SETTING UP MAINTENANCE SYSTEM3. BOOKS OF ACCOUNTS AND RECORDS

OF SHGo Design Considerations for the

Accounting Systemo Layout of the bookso General Featureso Bookso Member Pass-Bookso Minutes and Attendance Registero Pass Book

A COMPUTERIZED ACCOUNTS SYSTEM Need for Strong Systems Computer Munshi

IDENTIFICATION AND CAPACITY BUILDING OF COMMUNITY RESOURCE PERSONS Educated upto 10th standard Have good communication skills Should be mobile Socially accepted personality Comfortable in working with women Should not be of dominating nature Encouragement should be given to

women candidates and persons from marginalized section

TRAINING AND CAPACITY BUILDING -TEAM & GROUP MEMBERS Basic Concept of SHGs & Facilitation

Technique Roles and Responsibility of facilitators Group processes and group dynamics Understanding Roles and Responsibility

of members Roles and Responsibility of accountants

TRAINING AND CAPACITY BUILDING -TEAM & GROUP MEMBERS Leadership in SHGs Decision making Conflict resolution Credit appraisal Understanding Book keeping Understanding Fund management Understanding Marketing

ONGOING MONITORING AND TROUBLE SHOOTING Regular visit of groups Monthly meetings of CRP Monthly Cluster meetings Keeping the track of group health

through computerized data Self assessment and Grading

SHG HEALTH INDICATORS1. Financial Health Indicators On time repayment Operational cost ratio Net income Credit Savings ratio Portfolio at risk Credit relationship with Bank Savings regularity

SHG HEALTH INDICATORS2. Non-financial Health Indicators… Composition of group- Coverage of poor

and disadvantaged section, Homogeneity

Meeting regularity Attendance regularity No. of members shared a savings plan

and started following it up Benefit distribution

SHG HEALTH INDICATORS2. Non-financial Health Indicators Quality of book keeping Process for the conduct of the meeting Process for credit appraisal Sharing and listening in the meeting How the group involves the silent

members

SHG HEALTH INDICATORS Sharing of group responsibilities Decision making process Leadership and influence exercised by

number of members The process of dealing with problem Awareness among members of their

own and others’ savings and loan balances

SHG HEALTH INDICATORS Numbers of members have a plan for a

better and sustainable livelihood Members pursuing their livelihood plans

and enhancement in wellbeing of the households

Members’ identification with the group Extending mutual support Extent of collective action eg: Number

of social issues handled by the group up to the logical end.

SHGS: LINKAGES AND GRADUATIONTO LIVELIHOODS The approach to SHG based livelihoods Livelihood Orientation of the Members in the Initial

Stages Livelihood Planning Using the Internal Learning

System Achievement Motivation Inputs Implementation of the Plan

ENGAGEMENT WITH SOCIOPOLITICALINSTITUTIONS Collective action towards the Social

challenges Streamlining the basic services Impacting governance and political

scenario

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