Up-scaling & Deepening SHG movement: Issues & Challenges

1. Up-scaling & Deepening SHG movement: Issues & Challenges APMAS Presentation by CS Reddy, creddy@apmas.org31st October 2008, NABARD - CMF Workshop

2. 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

3. 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.

4. 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??

5. 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???

6. 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.

7. 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.

8. SHG – 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.

9. 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.

10. SHG FEDERATIONS IN INDIA

11. APMAS GRADES: APMAS Federation Rating Tool

12. 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 SHGs • Matured federations serving as a model for others. • SHG federations effectively manage insurance, distribution of pensions • SHG Federations are able to offer services to their members for a fee • Responding to natural disasters • Concerned about sustainability • Mobilize funds to meet their cost, at least partially • Performing roles such as SHG monitoring, social audit

13. 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

14. 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)

15. APMAS Open for discussion &Thanks For further details contact: APMAS Plot No. 20, Rao & Raju Colony Road No-2, Banjara Hills, Hyderabad Ph: +91-40-23547952/27; Fax: +91-40-23547926 Web: www.apmas.org; www.shggateway.in email: info@apmas.org