This document discusses the Self Help Group (SHG) model, which involves forming small voluntary groups of 10-20 local women or men who save small amounts regularly and make small collateral-free loans to members. The summary discusses the key stages and functions of SHGs, including regular meetings, savings, credit, income generation, empowerment, formation of federations, and bank linkage. It also outlines the costs, impact, sustainability challenges, and limitations of the SHG model, such as inadequate training, poor record keeping, leadership issues, and delays in bank linkage. Overall, the SHG model aims to provide socio-economic development through community-based self-help and mutual cooperation.

1. The SHG Model

2. What is an SHG?
▫ Affinity
▫ Homogeneity
▫ self-help, mutual
cooperation and
collective action for
social and economic
development

3. Functions of an SHG
• Regular meetings
• Savings and credit
• Income generating activities
• Empowerment

4. Stages
• Savings
• Internal Lending
• Federations at village, panchayat and block level
• Bank Account Opening
• Bank Linkage (Grading, Banker’s visit)
• Investment in livelihood activities
• Initiatives in others areas

5. Records
• Savings and Credit Register
• Attendance Register
• Minutes Book
• Individual pass book (with the SHG)
• Bank Pass Book

6. Rules and regulations
• Membership
• Frequency of meetings
• Quorum
• Savings
• Loan (criteria, interest rates, penal interest rates)
• Office bearers
• Distribution of profit/ surplus
• Dissolution of group

7. • Advantages of SHGs?
• Limitations of SHGs?

8. • SHG scheme is not just a mechanism of financial intermediation
but also a unique process of socio-economic engineering

14. Building federations at different levels for sustaining collective
action
An SHG federation is a democratic body formed with certain
number of SHGs functioning in a specific geographical area, with
the objective of uniting such SHGs for common cause and for
achieving these causes, which an individual SHG would not be
able to do. In short, an SHG federation has to be necessarily of
SHGs, by SHGs and for SHGs (APMAS, 2005)

16. OLM Model

17. Self-help Groups as Financial Intermediaries in India
• SHG- Bank
• SHG- NGO- Bank
• SHG- MFI- Bank
• SHG- Govt Schemes
• SHG- Clusters/ Federation- Govt Schemes
• SHG- Clusters/ Federation- Bank

18. COSTS OF SHG PROMOTION
• Promotion cost per SHG for different projects, NGOs and banks
• Lack of uniformity about what costs to include, how staff time is
imputed for development workers partially engaged in SHG
promotion along with other functions, and whether and how
overhead costs are allocated.
• The period of support and the nature and purpose of SHGs
promoted is also varied. Some SHGs are brought together in
federations, which requires in turn the building of further capacity
and incurring of costs in respect of these institutions.

19. • Distance and time taken to reach interior villages and to motivate
communities bypassed by development is greater than for
mainstream villages.
• The cost of SHG promotion is a particular concern of the donor
community that is keen to ensure the productive and effective use
of grants provided for this purpose.
• Cost Components ??

20. Impact and Sustainability
• social and development issues less focus
• savings mobilization and effective utilization of the savings
• SHG records are kept with the leaders
• unpaid book writers may not be accountable
• leadership rotation is a concern

21. • no strict enforcement and adherence to these norms
• equal distribution of bank loan
• no internal lending with own funds
 SHGs are unable to use their own funds optimally, they are dependent on
traditional credit sources for small loans and less interest income on
group funds; but the groups have been getting large loans.
• trainings on on-farm, off-farm and nonfarm activities are limited

22. • micro credit plans not adding much value
• considerable amount of time and funds for bank linkage
• delay in linkages
• inadequate SHG bank linkage
• poor book keeping, internal dynamics at SHG level and
inadequate human resources and other priorities of banks (Banks)
• bankers’ attitude(NGOs and federations)