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When India picks up a technology or an idea, because of the sheer
scale and diversity of the country, the world sits up and takes
notice. This is the case not only in information technology, but now
too in microfinance. India is brimming with Self Help Groups who are
part of a bank linkage programme supported by the National Bank for
Agriculture and Rural Development (NABARD). This programme, involving
banks, NGOs and Government agencies throughout the country, is now the
largest microfinance movement in the world, with 2 million Self Help
Groups and over 25 million members.
Self Help Groups or SHGs represent a unique approach to financial
intermediation. The approach combines access to low-cost financial
services with a process of self-management and development for the
women who are SHG members. SHGs are formed and supported usually by
NGOs or (increasingly) by Government agencies. Linked not only to
banks but also to wider development programmes, SHGs are seen to
confer many benefits, both economic and social. SHGs enable women to
grow their savings and to access the credit which banks are
increasingly willing to lend. SHGs can also be community platforms
from which women become active in village affairs, stand for local
election or take action to address social or community issues (the
abuse of women, alcohol, the dowry system, schools, water supply).
But
there are also some questions. On the financial side, how effective
and transparent are the groups in managing their financial
transactions? Are the groups sustainable? Are they equitable? What
happens if a member defaults on her loan? On the social side, what
does it take for SHGs to mobilise for social or community action? How
effective are such actions? On both sides, financial and social, who
is really benefiting? Do the poorest benefit, do they not join at all
or if they do join, are they more likely to drop out?
This study explores these questions, based on field research carried
out during 2004-05 in four states of India. It presents a reality
check of ‘what is really happening’, uniquely exploring both social
and financial performance in the SHG movement.
As the title indicates, the findings are that there are significant
achievements in the SHG programme, but also a number of aspects that
need more attention, more resources and more transparency.
The full report is published
by CARE for the Microfinance India Conference, 30-31 October 2006
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