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Chittagong University in 1976. On a field trip to a poor village in southeastern Bangladesh, Yunus and his students met a lady named Sufiya Begum who borrowed raw materials for making bamboo stools from a trader. The trader dictated the price that he would pay for the bamboo stools, leaving the poor lady with very little profit for her labor. These examples of a poverty stricken lady being exploited by an unscrupulous trader, made Yunus think of the various ways of empowering the poor. He started by making small loans available to the poorest of the various ways of empowering the poor. He started by making small loans available to the poorest of the poor by giving them $27 from his own pocket to forty-two individual basket weavers. He found out that not only did the poor survive with such help but this also ignited the spark of personal initiative, enterprise, and hope that enabled them to lift themselves out of poverty. Yunus thus began providing “micro loans” to the very poor in neighboring villages. (Robert Eichfeld, Henry Wendt, 2006) In 1983, Yunus founded the ‘Grameen Bank’ meaning a village bank. Its business focused entirely on providing very small loans to impoverished people, mainly women, who organized themselves into small groups of five. To help, reinforce and supervise one another. Prior to these money lenders charging exorbitant interest rates were the only source of finance for the poor. Individuals who were not in absolute poverty could join credit cooperatives, but the amount they could borrow was often too small to meet their needs. Conventional banks were rarely an option since they required collateral security to grant loans, which most poor people did not have. The banks also required a great deal of paperwork, which the poor often found intimidating. Grameen Bank primarily targeted women, as Yunus found they were more likely to use the loans for productive purposes and repay them. Perhaps this was because women in Bangladesh found it much more difficult to access financing from any source and therefore considered this access to credit extraordinarily valuable. In addition, women tended to reinvest their profits as capital for their economic activities and use them to improve the lives of their families, thus multiplying the impact of each loan they availed. Grameen Bank aims to help poor families help themselves to overcome poverty. Only the poor, and especially poor women, qualify as clients. It gives loans for productive income-generating activities and for housing, but not for consumption. The borrower need not produce any collateral as security, mutual trust act as collateral. The borrower joins a group of others poor women from the village or neighborhood and loans are available in sequence. Once a loan is cleared, the borrower is eligible to receive another loan. The interest rate on such loans is kept as low as possible, usually close to the inter bank rate. The salient feature of the whole set up is that bank comes to the borrower rather than the borrower visiting bank. The fundamental principle of Grameen Bank is that nobody should be denied access to credit based on income levels. The Grameen Bank model is being followed in numerous micro finance organizations throughout the world, spanning Latin America, Africa, the Middle East, and Asia and among people of every major religion, cultural identity, and race. The original model of micro finance has been emulated, replicated, and modified to suit local conditions and enhance its acceptability. Bankers and economists in India have tried and tested, evolved, and successfully demonstrated a
Results from Peru showed that clients of MFIs earned $266 more per household member per year than non-clients. The technology boom of the 1900s provided the information systems necessary for managi9ng bigger portfolios and new products. focusing on three of the largest programs in Bangladesh. where 2. Organizing the poor into group mode. According to the study. the Bangladesh Rural Advancement Committee (BRAC). 2006) Initially. The Bangladesh Rural Advancement Committee (BRAC) has been working with the rural poor since 1972. clients of the MFI SEWA (Self-Employed Women’s Association) Bank had reported higher house hold incomes and higher annual growth rates than non-clients. 22 percent of the MFI ASHI’s clients escaped poverty altogether. 2006) The Declaration and plan of Action of Micro Credit Summit. As the years passed. In India organization like SEWA among others with origins and affiliations in the Indian labour and women’s movements identified credit as a major constraint in their work with informal sector women workers. had documented similar successes of micro finance programs in India. (Robert Eichfeld. and two other major micro credit programs namely. The other findings. In the case of India. the Grameen Bank. Zimbabwe. while leading financial institutions and organization gathered funds for micro finance and began to set standards to improve governance within the industry. the first Micro credit Summit was held at Washington DC during 2-4 February 1997. In Philippines. Loans without insistence on collateral. Henry Wendt. government organizations developmental agencies. and the Philippines. a few philanthropic individuals and nonprofit organization funded micro finance projects. Micro Finance Breakthroughs The World Bank commissioned a study of micro finance in the early 90’s. such as those of the Assessing the Impact of Micro enterprise Services (AIMS) project of the United Stated Agency for International Development (USAID). Clients of the MFI Zambuko Trust in Zimbabwe had a higher average monthly household incomes and lower poverty rates than non-clients. and in 1979 it began to provide credit via its 81 branches through the Rural Development Programme (RDP). and some private foundations also began to support the concept. NABARD) • • • • • Targeting the poorest of the poor. micro credit to 100 million of the poorest families in the world by the end of 2005.900 delegates from 137 countries met and set the goal of providing. In 1997. Five percent of cents escaped poverty each year by borrowing and participating in micro finance programs. It is the largest NGO in Bangladesh providing financial services to the poor. Washington included the following (Banking with the poor-A hand book on Self Help Groups. and the Rural Development Project-12 (RD –12). (Robert Eichfeld. .constructive programme based on a ‘linkage programme’ linking self-help groups (SHGs) with banks and other financial institutions under the aegis of NABARD. Peru. women who were clients of these three institutions increased their household consumption by 18 percent. Participation of the poor in neighborhood lending processes. Stimulating habit of thrift among the poor. Henry Wendt. Rural Development Project –12 (RD-12) is a government – run program headed by the Bangladesh Rural Development Board.
Within a three to five year period. Clearly defined responsibilities and accountability of fund managers. and the voluntary sectors of the participating nations initiated a number of steps to enhance the flow of credit and other financial services to the poor. gave a normative definition of micro finance accepted by the RBI. Provision of the package of financial and non-financial services for poor. credit and other financial services and products of very .Lending of the banks and specialized financial institutions to various financial intermediaries in the non-formal sector for further on-lending to ground level groups or individuals.A New Paradigm Micro finance programmes in emerging economies has off late taken center stage of all developmental efforts. Default management through peer and moral pressures. while the a Task Force on Supportive Policy and regulatory framework for micro finance constituted by NABARD (1999). when administered in a systematic and positive manner. Studies have clearly demonstrated that micro finance is the only socioeconomic programme aiming at a broad range of goals promoting the well-being of the poor. Market related interest rates. . and 3. Transparent methods of operation. Governments. India actively participated in the convention and emerged as a leader and role model for the others. financial institutions. and other consumables for the entrepreneurs’ families. defining micro finance as “provision of thrift. transportation. privately owned businesses generate discretionary income that secures education. The main objective behind micro finance is to endow poor with resources and confidence in order to enable them manages their lifestyles and livelihoods on a sustainable basis. groups and cooperatives. health care. Micro Finance and SHGs. 1. 2. Several studies reveal that during the past three decades. these small. In the summit.• • • • • • Quick disbursement of small and short-term loans. the following and emerged as a leader and role model for the others. In the summit. where banks lend to groups with or without the support from NGOs and other SHPIs. The Micro Credit Summit defined the concept basing on its functional characteristics. the following three approaches were emphasized for providing micro finance services to the poor. banks. micro finance has proved that small loans to the poor especially to poor women. can create sustainable economic businesses. This reinvestment of earnings in turn creates a generally rising level of prosperity and social cohesion at the village level. better nutrition. SHG-bank linkage programme. The experience of micro finance clearly shows that savings or thrift is the vital financial service the poor always require and it has come to be regarded as an integral part of all anti poverty programmes today. It has become a process to activate and involve civil societies in nation building on the theme of self-help and mutual trust. Conventional weaker section lending of the banks to individuals. clothing. The summit was an important turning point in the history of micro finance organizations.
and account keeping. especially in rural areas due to the dependence of the poor on non-institutional sources of credit.A Hand Book on Self Help Groups. in other words. SHGs become a link between banks and rural poor.small amounts to the poor in rural. the ARDC was converted into NABARD. This process enables them to imbibe the essentials of financial intermediation including prioritization of needs. semi urban areas for enabling them to raise their income level and improve living standards. and control a micro bank of their own. The greatest contribution of SHG in fighting against deprivation and poverty is that it empowers them by their increased critical self-awareness. They take collective decision on all matters including those relating to terms of credit like purpose. NABARD) SHG is a group of about 15-20 people from a homogeneous class who come together for addressing their common problems. India’s achievements in the development sector are moderate. solidarity. repayment period. The members of SHGs begin to appreciate that resources are limited and have a cost. until the colonial government enacted the Co-operative Societies Act in 1904. The government provided agricultural loans called Takkavi loans. The co-Operatives were the main institutions for disbursement of rural credit. setting terms and conditions. They are encouraged to make thrift on a regular basis and use this pooled resource to make small interest bearing loans to their members. the RBI A ct imposed the r4esponsibility of rural credit to RBI. . eventually leading to gender equality. The agriculture Refinance and Development Corporation (ARDC) was set up by the RBI in 1975 and the Regional Rural Banks were created. Unemployment and poverty pose major challenges. Nationalization of banks in 1969 leads to the expansion of the banking network. exercise close supervision on the utilization of loans and exert peer and moral pressure on members to continue savings and repays loans promptly on time. to secure greater economic and financial strength through mutual help. The SHGs. It gives the poor a feeling of selfconfidence. are a group of poor persons who own. thus building financial discipline in all of them. size interest rate. They also learn to handle resources of a size that is much beyond their individual capacities. This necessitates providing credit support to SHGs by banks for meeting credit requirement of the group members. The growth of micro finance in India is a result of the failure of all institutional initiatives and heavy exploitation of the poor by indigenous moneylenders in the informal credit delivery system. All India Rural Credit Survey (1951) of the RBI showed that the co-operatives were a failure in providing rural credit. After independence. Subsequently. The dynamics of the rural economy in India has been changing rapidly. Micro Finance in India Even after six decades of independence. though they had a vital role in agricultural credit. manage. The amount they mobilize within themselves is insufficient even for the consumption needs of the members and there is hardly any scope for production or investment credit. Rural banking was traditionally a monopoly of the local money lenders. and social security to control and guide their own destinies.” (Banking with the poor. Thus. The evolution and expansion of the micro finance sector in India has proved to be very useful for women coming forward to mobilize their own savings.
Table: 1 SHG-Bank Linkage Programme-Regional Spread of Physical and Financial Progress as on 31st March. Since then. of New Bank loan Cumulative No.003.091 1. 2005-06 2005 A Northern.90 2.51 1.17 1. and a varied range of loan products for consumption.12 10 Sikkim 42 85 0.447.98 8 Meghalaya 249 486 8.05 31.86 5 Jammu&Kashmir 1. The innovations in the area of rural credit included Kisan Credit Cards and bank – SHG linkages introduced in the early nineties. with no collateral required and that credit is given for any activity.214 25.86 11 Manipur 796 672 41.018 47. The private sector in India is now regarding the Micro Finance Institutions (MFIs) and SHGs as a business opportunity.while priority sector lending continued.95 863.122 298. In order to balance the shortage in the priority sector lending. the central part of India.470 93. the Rural Infrastructure Development Fund (RIDF) was initiated and a system of Special Agricultural Credit Plan was introduced. Region/State Cumulative No.516 115. with an Andhra Pradesh scoring the highest.69 34.647 43.19 9 Tripura 1515 481 12.985.No.75 71. production. of SHGs SHGs during 2005. The most important aspect of the SHG movement is that it is based on peer pressure.423. The SHG concept has promoted participative decision-making.165 1. or even some parts of western India. especially for consumption and emergency purposes including non-productive purposes.38 316.079 1. the performance of SHGs and MFIs in the south has been much better than the east.38 . which can be used effectively for recovery. The positive aspects of this informal credit delivery system are that disbursement of credit is easy and relatively quick. savings.48 707 6 New Delhi 125 99 5. northeast. In India.798 5.49 13 Nagaland 94 328 29.44 18.Bank Linkage has been gaining strength and the programme has become the world’s largest in terms of both numbers and outreach.006 38.351 1.94 3 Haryana 3.67 3.215 482. the SHG.590.01 4 Punjab 3.10 238.52 13.bank loan up Provided Provided 06 to 31st with bank with bank March.98 2 Rajasthan 60.58 Total(A) 86.41 16. The strength of the micro finance in India lies in the diversity of approaches and forms evolved over a period.2006 loan up to loan during 31st March.85 12 Arunachal Pradesh 280 66 1. insurance and social security.Region 1 Himachal Pradesh 17.85 B Northern-Eastern Region 7 Assam 31. 2006 S.90 100.
48 27121.994.71 370.015 18.730 29 Kerala 60.251.99 2.14 Mizoram 28 946 Total(B) 34.1563.365 70.95 10.648 42.951.266 69.81 3.13.07 1.146 60.712 9.86 85.No.190 Total(F) 9.87 1.20.927 94.43 33.448 25 Maharastra 71.050.988 F Southern Region 27 Andhra 4.531 9.40 2.25 4.171.87 166.92.53 4.21 5.47 4.75 315.354.51 558.114.86 3184.108.40.206 1. 2006 S.28.18 9.86 1997.179 30 Tamil Nadu 220.127.116.119 26.23 9.236.81 5.288 18 West Bengal 92.52 8.666.455.325.342.60 2.238 28.244. Source: NABARD 61.722 22 Uttar Pradesh 1.698 43.490 Grand Total 1.565 90 545 47 158 44362 31 4 .821.92 1.07 1.035.51 3. of participating banks: (i) commercial Banks (ii) Regional Rural Banks (iii) cooperative Banks Bank Branches participating Cumulative as on 31st March.676.43 Table-2 SHG-Bank Linkage Programme: Performance as on 31st March.927.309 1.38.698 92.424. 686.263 23 Uttaranchal 14043 3.00 2.052.65.569 12.63. 1 2 3 Particulars No..975.19 1.238. 2006 2.311 Pradesh 28 Karnataka 1. of SHGs linked % of women groups No.080 31 UT of Pondichery 1.618.104.22.168 15.618456 6.105 12.09 165.109 @ Includes Rs.426.50 44.56 24.65 1.30 637.300.83 64.39 43.545 Total (D) 1.01 4754.21.502 SHGs.206 17 Jharkand 21.198 61. 44.941 2.75 2.640 16 Bihar 28.553 19 UT of A&N 128 36 Islands Total(C) 2.33 399.723 D Central Region 20 Madhya Pradesh 45.324 26 Goa 408 216 Total (E) 96.990.31 million provided to 3.279 C Eastern Region 15 Orissa 1.87 350.628 1.550 24 Gujarat 24.256 57.020 21 Chattisgarh 18.717.86 8.54 891.13 556.67 55.14 1.23.
dropping over 30 percent in 1990 to 21. The SHG movement has been primary route towards poverty alleviation and growth in AP. of States/Uts No. The Government of India [GOI] started the Development of Women and Children in Rural Areas programme [DWCRA] in 1982 –83. the South Asia Poverty Alleviation programme (SAPAP) Pilot Project was conducted in three districts of AP.6 percent in 2000.) IS India’s fifth largest state. in billion No.P. this programme picked up momentum and DWCRA groups all over the state were strengthened.’ per capita income was about US $ 382. which was rendered highly successful. during late 80s and early 90s. in billion Refinance Rs. According to survey of the IX five year plan (1997-02) carried out by the Government OF Andhra Pradesh (GOAP). of partners Bank loans Rs. in the Andhra Pradesh District . On the other hand.500 rural villages. According to the World Bank. with the implementation of the Integrated Rural Development Programme [IRDP]. with a population of 76 million.As a sub component of the IRDP. Due to the strong performance of the service sector. AP has also been pursuing economic reforms to setup growth and alleviates poverty. The evolution of the SHG movement in AP can be traced to the year 1979. the groups also received training and their products were exhibited in specially created DWCRA bazaars. Besides this. the state is predominantly a rural and one of the poor states in India. The state’s growth rate of 5. women living in neighborhood. Subsequently. of districts covered No.The GOAT included the social mobilization approach in velugu (meaning Light in Telugu). of poor households assisted (in million) Average Loan/SHGs Rs Mode Wise Linkage (Cumulative %) (i)SHGs formed and financed by Banks (ii) SHGs formed by other agencies but directly financed By banks (iii) SHGs financed by banks using financial intermediaries 583 4896 114 42 33 51 20 20 74 6 MICROFINANCE SYSTEM IN ANDHRAPRADESH Andhra Pradesh (A. A.9 percent also exceeded the national average of 5. with similar socioeconomic backgrounds formed into SHGs of 25 members each. In 1996. Over a period. of which three fourths live in 26.compared to the national average of US $446 in 1999.4 percent in the second half of the 1990’s. They collectively took up economic activities according to their skill and resources.P. thus providing them an opportunity to access diverse markets. poverty in the state declined in the 1990s. the state saw a steady scaling in the number and structure of SHGs .5 6 7 8 9 10 11 12 No.Under this programme. The DWCRA groups were provided with a matching grant of Rs15. 000 to be used as a revolving fund in order to undertake economic activities.
March.163 4.99 1645.37 790.814 67.311 16. and lastly schemes for natural resource management and lively hoods. programmes focusing on providing food and nutritional security like PDS and ICDS. ‘Velugu’. loan during with bank 01 up to 31st ST st 01 April. 2006 2006 1 2 3 4 5 6 7 Adilabad Anantapur Chittoor East Godavari Guntur Kadapa Karimnagar 2.94 1269. of SHGs Cumulative Bank loan Cumulative District Provided No. programmes providing basic minimum services like hosing. The poverty alleviation programmes of the (GOAP) can be segregated into five categories namely income enhancement programmes.Poverty Initiatives Project (APDPIP). The developmental agenda of the state has placed people. ‘Girl Child Protection’. to implement poverty elimination project aiming at social mobilization. and enhancement of livelihoods.349 30.001 23. loan up to 2005 TO 31 March.39 1528. and ‘Deepam’. DWACRA and TRYSUM.894 322. March. No Name of the No. The GOAP also established an independent support organization called ‘Society for Elimination of Rural Poverty ‘’ (SERP). SCRP bridges the gap between the government and the people and can be termed as a government NGO (GONGO). The SHG programme of the state is the largest in the whole country both in terms of outreach and in terms of numbers.424 4. health.876 6. Andhra Pradesh also promotes some of its own like ‘Adarna’. maternity benefit scheme and survival benefit scheme. education.39 1476.002 4. most importantly women in focus.82 696.65 300. of SHGs disbursed bank loan with bank provided during disburse d STaPRIL.39 . 2006 31ST . wage employment programmes like JRY and EAS.626 8.57 1181.76 5291.14 2286.District-Wise cumulative Physical & Financial Progress up to 31st March.58 579.239 24. employment generation. which include self e4mployement programmes like IRDP. the state is alone has half of the SHGs existing in the country. The Government of Andhra Pradesh (GOAP) has adopted a multi fold and multi dimensional strategy to eradicate to poverty.78 1112. The district.037 26.018 3. 2006 in Andhra Pradesh Si.wise progress of the SHG-Bank Linkage Programme of Andhra Pradesh is as under Table-3: SHG-Bank Linkage. The SHG movement has been at the fore front of all developmental schemes in AP. Most of the poverty alleviation programmes are designed by the central government and are implemented by the state on fund sharing basis. GOAP has actively taken up empowerment of women as the main strategy to tackle poverty at different levels. 2006 ST 2005 to 31 March .995 19. The programme us State sponsored and is operational in over 860 mandals in 22 districts of the state. sanitation.18 317. which is the major Poverty alleviation programme through which SHGs are being promoted in AP. income maintenance programmes like pension schemes.
decision making process.994.033 24.86 1770.40 2252. Earlier.95 1775.54 2965. AP has been in the forefront of the SHG movement in India.20 356.455 35.97 1241.87.61 1325.530 6. packaging of products etc. This marked the beginning of the SHG-Bank Linkage programme in the state.072 2.42 43.244 20.98 728.083 27.515 3. The state government also provides power and Rs. Development of women and Children in Rural Areas.288 4. NABARD started collaborating with SHG promoters and banks in AP.8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Khammam Krishna Kurnool Mahabubnagar Medak Nalgonda Nellore Nizamabad Prakasam Rangareddy Srikakulam Visakhapatnam Vizianagaram Warangal West Godavari Total 2. by the state government.32 448. community based organizations.01 1048.613 21. The SHG movement of Andhra Pradesh has been the cause for improvement in the socioeconomic status of rural women. 1000 as subsidy for each connection.455.413 1. methods . Various developmental agencies in Andhra Pradesh promoted and inspired the formation of diverse kinds of thrift and credit groups to channelise the various poverty alleviation and social development programmes in the state.238 618.724 6.47 687.08 1236. The state government is also encouraging net working of SHGs to create synergies among them.93 525. Several programmes for capacity building.46 1273.266 27.641 5. The ‘Deepam’ scheme provides LPG connections to SHG members. In addition to all this.008 25.18 Source: NABARD The state government makes conscious efforts to assist these SHGs by providing assistance through revolving fund under various programmes.25 1683.33 597. training and creating awareness through exposure visits has also been taken up all the districts.65 696. size. in addition to gaining exposure to the latest technologies displayed at the Training and technology Development Centers located in all the districts.00 1910.149 29.13 1050.158 5. management of water sheds.844 8. SHGs were popularly called DWACRA groups after the programme. namely state government. Training programmes are organized to help SHG members learn the techniques of marketing. The success of the movement can be attributed collective efforts of the partners in the programme. The SHG women are also being entrusted with raising of nurseries. the state government also provides marketing support to SHGs.056 31.65 2007.31 1733. the SHGs are also being benefited by permanent Rural Housing Scheme of the state government. Since then.319 19.872 3.888 14. the apex institutions like NABARD bankers.914 3.71 15.334 14. construction of sanitary toilets. the SHG members actively participate in the literacy programmes ‘Akshara Sankranti’. They are encouraged to participate in fairs taking place at the national level and in other states.356 1.587 4.41 499. etc.362 29.04 622.149 94.79 1064. In the year 1992. governmental departments like the DRDA.311 33. These groups vary widely in terms of their membership.829 3. Apart from this.53 2840.93 1850. Several services of the state also coverage at the SHG level in the state.625 27.513 1.00 830.46 1682. NGOs and most importantly the people.34 575.
etc. primary education. The clarity in goals and objectives of SHGs determines the peace and direction of their development. the groups must be facilitated for long-term goals rather than for short financial gains. Consequently. peer pressure. Participation in socioeconomic development programmes like literacy. Financing of unique and non-traditional activities. nutrition. SHGs are used to expert peer and social pressure to rehabilitate defaulters. and sustainability of group action. etc. SHGs provide enabling environment for conscious leadership development. Improvement in loan volumes of SHGs through internal capitalization. Near cent percent recovery of loans at SHG level. They envisage a human development out look in their scheme of things. SHGs inculcate thrift habits and increase in level of savings among rural poor. Greater awareness of the need to graduate to higher economic operations. SIGNIFICANCE OF SELF HELP GROUPS There are certain features. Improvement in access credit. Improvement in overall standard of living and empowerment. SHGs are novel approach in developing economies. Definite shift in loaning pattern of the members from consumption to productive activities. Self reliance and sense of dignity. Quality of loan appraisal and supervision improved with increase in loan portfolios.of group action. Interest rates at group level are adjusted to market conditions. which represent the significance of the self-help groups and they are as follows Strength of SHGs is reflected in group cohesion and vibrant behavior. Simplified loaning procedures and documents. Creation of common and community assets. Some of the critical long term benefits are: • • • • • Sustainable access to the financial services. sanitation. Strong livelihood support systems. SHGs help banks to expand good clientele base among rural poor. the characteristic features of various types of micro credit groups operating in Andhra Pradesh. Fungibility of savings and credit cycles in SHGs help consolidate the group behavior. Reduction in transaction cost for banks and borrower alike. housing. Excellent recovery performance loan extended to SHGs. by matured SHGs have contributed to overall empowerment of rural poor. . health. Enhancement of the collective bargaining power. decentralized decision making.
1. But there are certain deficiencies in the banklinkage programme. 6. Securing them with financial. Lack of proper appraisal knowledge of the officials implementing the programme. Widespread illiteracy among the beneficiaries. Lack of training in the banking and government programmes is the rural areas like Sarabhanapalem. MAJOR DEFICIENCIES IN THE SYSTEM The studies conducted by NABARD in Visakhapatnam district have brought out many positive features in the functioning of SHGs. The action has to be taken by DRDA. 3. 4. As such. Gaining economic prosperity. 4. 5. and moral strength. an imperative need was felt to improve the functioning of groups by coordinated efforts and actions of all concerned. Proper group processes and internal concerns were not observed. Negligence in the monitoring of SHGs by the banks and DRDA. Gaining from collective wisdom in organizing and managing their own finance and distributing it among themselves. 8. The other deficiencies as observed by the researcher are as follows. 7. 5. Insufficient past transactions and poor follow up due to inadequate staff in the rural branches. The major district level constraints with regard to SHGs as reported by NABARD are 1. Enabling availing of loan for productive purposes and repaying it over a period of time. mainly in the post disbursement period needs to be avoided. . Irregularity in books of accounts and conduct of meetings was observed. Banks need to insist on micro credit plans for the SHGs for proper appraisal of SHG loans. Inadequate Knowledge of the beneficiaries. Rating of SHGs as per Critical Rating Index (CRI) and standard Accounting Package (SAP) needs to be adopted for maintaining quality of groups. Unsatisfactory recovery assistance to the banks by governmental agencies. 2. 3. misappropriation and misleading of funds.The main objectives of SHGs are to: • • • • • Institute saving and banking habits among the poor. Wrong identification of the beneficiaries and activities leading to mismanagement. about the skills required to run the activities chosen by them. Lack of rotation of leadership in some SHGs leading to domination of one member on the others. 2.
Ankapalli and Lankavanipalem reported that they were not aware of any kind training facilities. SUGGESTIONS TO NGOS AND OTHER DISTRICT LEVEL AGENCIES 1. 5. Active intervention by district administration. 5. The lazy attitude of the respondents regarding adopting activities in which they received training to generate income needs to be changed. Awareness needs to be inculcated in legal literacy. The NGOs and voluntary agencies need to work towards educating these disadvantaged women regarding gender equality and other gender related issues. Strong marketing network is also required for effective and proper marketing of products and services of micro enterprises linked SHGs. In spite of the several advantages experienced by the members after joining SHGs. which are essential to create self confidence in them. the following suggestions are prescribed. majority of them were not independent enough to make their own decisions at home. In this process. designing new products. 10. . Many groups are not being trained in terms of profitable business ventures like tailoring and in banking procedures. social issues like bigamy. rights and gender awareness. and were considered loanable. enabling the SHGs to get a chance to exchange their views and be able to develop their group strength by interactions. child labour. professional bodies and voluntary organization is required which will foster skill training. many of them were bordering near 70 out of 100. 4. Marketing facilities should be improved for the sale of products of SHGs. NGOs could act as facilitations and motivators. etc. SHGs have to evolve as sustainable village level institutions for taking active role in development and governance. Though all the 122 SHGs except two rated ‘A’. providing new technology and access to market and will create successful micro enterprises. Majority of the beneficiaries require training in literacy and numerical ability. Periodical exhibitions at block-level could be organized where the product of SHG can be displayed. 2. 7. SUGGESTIONS TO THE BENEFICIARIES 1. Their participation in governmental schemes should be improved. Such SHGs need to improve further. enabling them to be more involved in the activities of the SHG.According to the observations of the researcher during the survey. discussions with the banker. Meetings and seminars like in seethammapeta should be conducted other places as well. Many SHG members especially in Madugula. NGO staff and officials of the lead bank and NABARD. Networking of SHGs into a federations is required 9. They need marketing support and institutional capacity to handle marketing activities independently. 3. Training facilities and tie ups need to be strengthened. 4. 8. enthusiastic and dynamic in their activities. 6. The office bearers managing the group should be given nominal financial benefits as encouragement for their services. 2. SHG members need to be more active. domestic abuse of women at home.
members of youth clubs etc. Transformation of the repayment culture is required. to promote small savings and women’s active and positive role in development process. The various categories for financial institutions in rural market have exhibited different potentials in serving rural women. it was found that the credit given to the groups are being divided equally among the group members but it is not being distributed according to the priority of the needs of members. There is need to evolve training packages for entrepreneurship development to enable rural women as successful business managers and sustaining organizations etc should be enhanced to impart training. As most of the SHG members are illiterate and ignorant. like in Madugula. Seethammapeta Branch of Indian Bank must improve its SHG base. In some branches. volunteers. Care should be taken to see that the credit is used for the purposes mentioned in the actual plan submitted to the bank. 9. the beneficiaries tend to use them for non-productive purposes. panchayat representatives. The communication has to be in the language and terminology acceptable and understandable by the SHG members. 11. The bankers should ensure that the loans that they provide are going in the right direction. Apart from credit. difficulties and challenges being faced. skill development and technical knowledge. a fixed amount every month. All the rural branches of Indian Bank need to be computerized. The bankers should ensure prompt repayment of loans and interest by the SHG members by explaining the various benefits accrued for promptness in their financial dealings. Branch managers should be close to the communities they serve. 5. . 11. 7. They should be ensured of the existing level and types of group activity and informal . Social capability building programmes should be organized form time to time to train the NGO’s activists. 4. There is need to synchronize their efforts so that their work becomes supplementary and complementary in serving women. 6. and should be alert for any distribution channel through which they can profitably reach new customers. Banks should encourage inter branch convergence of SHGs in order to promote sharing of ideas and experiences among SHGs. the communication gap between the banker and the beneficiaries has to be reduced. SUGGESTIONS TO THE BANKER 1. where the SHG members are paying for their tailoring classes. examined and analyzed scientifically and systematically to resolve the emerging problems. several other financial services like health insurance and life insurance could also be included in the package offered to SHGs. 3. 8.6. The factors responsible for poor performance of micro finance and functioning of SHGs should be investigated. 8. There is need to evolve new products by the banks commensurate with the requirement of rural women. 10. entitlements and due share in developmental benefits. the banker needs to go a step further in order to make them feel comfortable and interact with them at a one to one level. In some cases. As these loans are available easily and at a cheaper cost. ensuring their rights. 9. like in seethammapeta 7. The beneficiaries should be motivated to identify activities of their interest and employ a trainer by paying him or her. 10. 2.
Customer-Contact-Programmes for women should be organized to disseminate the information of various schemes and financial needs of women. Housing Development Corporation.com . Micro Insurance and Micro Finance Institutions. Case Study No. Microfinance And Poverty Reduction: Some International Evidence . Mumbai. Vol. Time to End Poverty. No. there is an urgent need to introduce availability of consumption credit from the formal channel. Annual Edition. World Bank Discussion Papers 320.400 020. Mark M. 3. DC Bulletin on the Eradication of Poverty. CGAP Working Group on Micro Insurance and Bad Practices. 169. and be ready to offer savings and lending products which are appropriate for local communities. In order to ensure proper utilization of the credit. Sadegh Bakhtiari. Roman House.11. 2004. Khandker. Fahad. James Roth and et all. Number 12.International Business and Research Journal. and inhibitions of women.intermediation. 14. 12. 5. Backbay Reclamation. and Shahidur R. Micro Finance Institutions in India.Evidence From India. Household and Intrahousehold Impact of the Grameen Bank and Similar Targeted Credit Programs in Bangladesh.15 Piyush Tiwari and S. 2.5. Washington. There is need to sensitize bank staff towards the needs. Micro Finance and Poverty Eradication. December 2006 Pitt.M. J Effective entrepreneurial skills for SMEs Managing Small Enterprises Problems of SME in the present scenario sudhajawahar@gmail. 4. constraints. 13. References: 1.