Scribd
Upload
145 views16 pages

Microfinance Management: Chapter - 3 Self-Help Groups: Institution Building, Operations

This chapter discusses self-help groups (SHGs), including their formation, management, and organizational structure. Key points: - SHGs are small informal groups of 10-20 people from the same vicinity who participate in collective thrift, credit and other activities. - The purpose of SHGs is to empower members through collective effort and development activities like regular savings and loans, enterprise development, and addressing social issues. - SHG promotion occurs in four phases: formation, strengthening, enterprise development and bank linkage, and eventual withdrawal of the facilitating organization. - SHGs maintain records like meeting minutes, attendance, cash books and loan records. They establish rules for membership, savings, loans, meetings and office

Uploaded by

sunit das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
145 views16 pages

Microfinance Management: Chapter - 3 Self-Help Groups: Institution Building, Operations

This chapter discusses self-help groups (SHGs), including their formation, management, and organizational structure. Key points: - SHGs are small informal groups of 10-20 people from the same vicinity who participate in collective thrift, credit and other activities. - The purpose of SHGs is to empower members through collective effort and development activities like regular savings and loans, enterprise development, and addressing social issues. - SHG promotion occurs in four phases: formation, strengthening, enterprise development and bank linkage, and eventual withdrawal of the facilitating organization. - SHGs maintain records like meeting minutes, attendance, cash books and loan records. They establish rules for membership, savings, loans, meetings and office

Uploaded by

sunit das
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Microfinance Management

by
Pradeep Kumar Mishra
Cengage Learning (2019)

Chapter – 3
Self-Help Groups: Institution Building, Operations
Learning Objectives
• To discuss the process of SHG formation and management
• To provide an overview of the rules and regulations of SHG
management
• To provide an idea of the organisation structure of SHG based
programmes
What is SHG
• 10-20 members
• From the vicinity
• Self-managed institution
• Not registered – informal
• One member from a household
• No duplication

SHGs are formed on the basis of Homogeneity, Self-decided norms, and


Affinity. In MYRADA, they are called AFFINITY GROUPS
Purpose of SHG
• The purpose of an SHG is
• to make collective effort for the development of its members.
• The ultimate goal of an SHG is to empower its members.

• Activities
• Meeting at regular frequency (say weekly or monthly)
• Thrift and credit activities
• Promoting enterprising activities directly or indirectly
• Raising voice in the interest of members

• Enterprising activity is not necessary.


• SHGs can limit themselves to issues like education and health
• Role of SHGs
• Simple thrift and credit (Access to finance)
• Enterprise development (livelihoods)
• Basic unit for social mobilization (empowerment)

• SHG as an instrument for development


• SHG as institutional strength which itself is the development
Phases of SHG promotion
• Organizing the community
I.SHG Formation • Formation of SHGs
• Opening of Bank Account

II. Strengthening • Internal lending


of SHG • Capacity building

III. Enterprise • Linkage with Bank for credit


development and • Capacity building / livelihood
bank linkage activities

IV. Withdrawal • Federations


phase • Withdrawal
Phases
Phas duration Activity
e
I 3-6 months Identification of members,
meeting, group formation

II 6-9 months Internal lending


Capacity building

III 12-18 months Bank linkage/Enterprising


activities
IV 6-12 months Withdrawal/ Federating
Records Maintained by SHGs
1. Proceedings register/Minutes register
2. Attendance register
3. Cash book
4. Savings register
5. Loan register
6. Ledger
7. Bank passbook
8. Individual passbooks
Rules
• Membership
• Savings per month
• Frequency and location of meeting
• Quorum
• Criteria for loan approval
• Rate of Interest on Internal Loan, Bank Loan.
• Penalty (non-attendance, delay in deposits, non-repayment)
• Election, term and role of office bearers
• Distribution of profit/surplus
• Dissolution of the group
Good practices
• Regular meetings
• Regular savings and repayment
• Provision of penalty
• Rotational leadership
• Platform for resolving problems
• Medium for raising social issues
Advantages and Disadvantages
• Advantages
• Economy of Scale
• Cost-effective service delivery
• Collective learning
• Promotes democratic culture
• Confidence building

• Overall, a platform for empowerment


• Disadvantages
• Time consuming
• Needs a lot of resources
• Needs continuous hand holding - After withdrawal the
group may not function well
Banks’ apathy
• Dependence on facilitating agency
• Self help spirit is not followed – benefit driven
SHG Programme
• Facilitating Agency: SHPI
• A small programme can be run with 50-60 SHGs
• Functionary at field level
• Community Organiser /Field Executive/Field Officer
• One person at field level can deal with 15-30 SHGs depending the
stage of project. Initially it requires more attention.
• At cluster level, there has to be one such functionary
• At block and district level specialists should be there if the programme
is large
SHG Federations
• Purpose
• The SHPI cannot continue in the project forever. SHGs still would require
support from time to time.
• The federation can takeover the role of the SHPI.
• Being a federation of cooperative nature, it can also undertake lending and
other financing activities.
• It provides a platform for SHGs for raising their issues at higher level.
• It enhances the bargaining power of SHGs.
• It helps in promoting and providing a platform for local leadership.
• Federations can undertake on-lending or can become an MFI
• Weakness of Federations
• Adding another layer (Harper, 2003)
• Should be formed only when necessary
• Can be exploited politically – routing freebies during elections
Thank You

You might also like