Significance of the Self Help Groups: A Critical Evaluation

Abstract

The Self Help Group and its Bank linkage programme has assumed a pivotal role in the process of empowerment of women both socially and economically. At the same time various researchers and authors have glorified the SHG movement as the ultimate path for empowerment of women. However, the SHG is nothing more than an informal group of people (generally women) coming together for a common cause. The survey and the article aims at finding out whether the promotion of such groups actually serve the purpose in a holistic way or, is the society following a model which is constrained by itself. It is understood that the empowerment of women is extremely important, but the Governments in question cannot shrug away from their responsibilities by simply promoting the idea of SHG's and pressurising the banking system to get linked with these SHGs. The article aims at finding out the level of education and other qualities amongst SHG members, the promotion of which should be a priority of the State and Central Governments.

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SIGNIFICANCE OF THE SELF HELP
GROUPS : A CRITICAL EVALUATION
Abstract:-The Self Help Group and its Bank linkage programme has assumed a pivotal role in
the process of empowerment of women both socially and economically. At the same time various
researchers and authors have glorified the SHG movement as the ultimate path for empowerment
of women. However, the SHG is nothing more than an informal group of people (generally
women) coming together for a common cause. The survey and the article aims at finding out
whether the promotion of such groups actually serve the purpose in a holistic way or, is the
society following a model which is constrained by itself. It is understood that the empowerment
of women is extremely important, but the Governments in question cannot shrug away from their
responsibilities by simply promoting the idea of SHG's and pressurising the banking system to
get linked with these SHGs. The article aims at finding out the level of education and other
qualities amongst SHG members, the promotion of which should be a priority of the State and
Central Governments.
Keywords:Self Help Group, Empowerment, Informal credit.
INTRODUCTION :-
The “defining event” in the building of a financial architecture in India was the nationalisation of the
commercial banks. Significant progress was made in terms of coverage of the rural population by formal credit
institutions with nearly 70% of all commercial bank branches and approximately 100000 co-operative outlets at
present operating in rural India. However, notwithstanding the concerted and multipronged efforts to extend credit to
all sections of the society, the dependence on informal sources of credit has not decreased in rural areas and has
increased in several regions in the country. (Kumar & Golait,2009). In the process of promoting self employment,
lack of credit has been a major constraint and is estimated that only 20% of the households have access to credit from
the formal sector. In the case of women, particularly those who belong to low socio economic groups have to go
through a very difficult phase in course of meeting the financial crisis during emergency family needs. These women
being economically and socially vulnerable often fall victim to the money lenders debt trap. (Krishnan et al, 2008).
The emergence of the SHG strategy evolved as a shift from development to empowerment and began focusing on
socio-political, economic and educational uplift of the women. The strategy of SHG emerged as a promising one and
has been adopted by the banking system in India, the NGO's of India, the MFI's of India and nevertheless by the
women population, especially the rural women. The present structure of microfinance sector in India emerged in the
early nineties when the RBI issued guidelines to the nationalised commercial banks encouraging them to lend to
informal Self Help Groups (SHGs). Since then such groups have been actively promoted by a number of different
agencies and the National Bank for Agriculture and Rural Development (NABARD) has provided the banks with
subsidized credit for SHG lending.
However, it is also important to understand that in spite of the phenomenal growth in the number of SHGs
and total loans advanced to them, there is little systematic evidence on their internal functioning. The nature of
governance in this sector has a major role to play in this matter. Statistical figures on Indian SHGs have emerged
because the organisations promoting these SHGs have to provide to their donors with figures relating to the new
Arup Mukherjee and Ratnesh Chaturvedi , “SIGNIFICANCE OF THE SELF HELP GROUPS : A CRITICAL EVALUATION”,
Golden Research Thoughts | Volume 4 | Issue 2 | Aug 2014 | Online & Print
Arup Mukherjee and Ratnesh Chaturvedi
Assistant Professor, Xavier institute of Social Service, Purulia Road, Ranchi.
1
GRT
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groups created and also because of the fact that the commercial banks are required to report to the RBI about their
lending to the SHGs. However, in neither of the case, the details of the usage of funds and their internal distribution
within a group need to be reported. Hence, there is very little knowledge about the group demographics, about
whether groups once formed continue to function effectively or how many members leave the group that they
initially join. Although the SHGs primary role appears to be provision of credit but the SHGs are supposed to play a
greater role and engage in a variety of other social activities. (Baland et al, 2008). In practice, however, real effects are
much more limited than what is usually presented. How far and under what conditions can microfinance and the SHG
movement combat poverty and contribute to grass roots still remains a question to be answered.(Fouillet &
Augsburg, 2007). This paper intends to examine the benefits from formation of such SHGs and critically examine the
idea that whether such SHGs do promote the idea of thrift, empowerment, self employment, social uplift, political
involvement and other features of development and empowerment in general.
1.1 Significance of Self Help Groups and their organisation culture
Liberalization, privatization and globalization growth maximising strategies have virtually isolated the
poor, especially the poor women, who bear the pain of development in the neoliberal focus on macro economics.
(Singh et al, 2011). The term “development” inevitably refers not only to economic growth, but also to that of local
society and its capacity for self governance directed at the promotion of individual and collective well being. Hence,
the importance of the formation of SHGs acquires a greater significance in this day and age. In India SHGs are small
and economically homogenous affinity groups or rural poor who voluntarily come together for achieving common
goals such as (a) To save small amount of money regularly (b) To mutually agree to contribute to a common fund (c)
To meet their emergency needs (d) To have collective decision making (e) To solve conflicts through collective and
mutual decision making and (f) To provide collateral free loan at terms decided by the group at market driven prices.
Thus the SHGs are necessary to overcome exploitation, create confidence for the economic self reliance of rural
people, especially among women who are mostly invisible in the social structure. These groups enable them to come
together for a common objective and gain strength from each other to deal with exploitation, which they face in
several forms. A group becomes a basis for action and change. It also helps in building of relationship for mutual trust
between the promoting organization and the rural poor through constant contact and genuine efforts.
SHGs play an important role in differentiating between consumer credit and production credit, analyzing
the credit system for its implication and changes in economy, culture and social position of the target groups,
providing easy access to credit and facilitating group activities for effective control, ensuring repayments and
continuity through group dynamics; setting visible norms for interest rates, repayment schedules, gestation period,
extension, writing of bad debts and assisting group members in getting access to the formal credit institutions. Thus
SHGs disburse micro-credit to the rural women for the purpose of making them enterprising women and encouraging
them to enter in to entrepreneurial activities. The credit needs of rural and urban poor women are fulfilled through the
SHGs. SHGs enhance the equality of status of women in participation, decision making and shared benefits in the
democratic, economic, social and cultural spheres of life. The rural poor are in-capacitated due to various reasons
such as; most of them are socially backward, illiterate, with low motivation and poor economic base. Individually, a
poor is not only weak in socio-economic term but also lacks access to the knowledge and information, which are the
most important components of today's development process. However, when in a group (SHG), they are empowered
to overcome many of these weaknesses, hence there are needs for SHGs. Generation of funds in these groups may be
substantially low in the initial stages. However, such funds though meagre have a possibility of being supplemented
by external sources mainly, loans from banks or grants given by NGOs, which promote them. SHGs offer to the
members preliminary banking services characterised by cost effectiveness, flexibility and freedom from defaults.
Assessment of the credit needs of members is done periodically at group meetings. The claims for default are settled
within the group by consensus. In case of any surplus, the amount is deposited in the bank or post offices. Defaulters
are subject of severe penalties but such occurrences are unusual. There is always a peer group pressure on those who
avail loans which to a very large extent prevents default. The influence of the group members is quite powerful
because it can put actions against defaulters and monitor the behaviour of members in order to forestall default.
However, despite the considerable outreach of the SHGs the small size of these groups both in terms of finance and
human resource often makes them not very effective. (Nair, A., 2005).
2.RESEARCH OBJECTIVE
On the basis of the above mentioned features of SHGs, it is obvious the formation of such groups along with
intervention of the NGOs, banks and NBFCs, for economic and social empowerment of rural/poor women is
extremely important. However, the research article intends to move away from the theoretical framework and make
observations on the following areas :
(a)Socio-economic background of the SHG members.
Significance Of The Self Help Groups : A Critical Evaluation
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(b)Access to external credit facilities of the group apart from their own contribution.
(c)Social and economic empowerment of members of SHGs.
(d)Enhancement of self esteem of members through SHG formulation.
(e)Attrition rate of SHG members.
(f)Longevity of groups.
(g)Identification of the dormant groups.
(h)Administration and conduct of group members.
3.RESEARCH METHODOLOGY AND SCOPE
The study is confined to two blocks of the district of Ranchi among 18 blocks. These blocks are namely :
Block Chanho and Block Ratu. The population of Chanho block is 1.07 lacs with 18989 households. Similarly, the
population of Ratu block is 0.76 lacs comprising of 14454 households. (Census data 2011). The female population in
these blocks are 0.52 lacs and 0.37 lacs respectively. Discounting the female population further on the basis of age the
female population of these blocks who are above the age of 16 is tentatively 0.29 lacs and 0.20 lacs respectively.
Since, it is a general phenomenon that the SHGs are normally formed by adult women the population size for the
research is 0.49 lacs. An initial survey conducted for finding out the number of SHGs in these two block shows that
there are approximately 1300 SHGs have been formed by the initiatives of the NGOs and Banks till now, which may
or may not be active as on date. Twenty five SHG's were randomly selected from the entire population of the SHGs
and from each SHG four members were selected randomly therefore avoiding any kind of bias in the study. A
questionnaire was developed, keeping the objective of the study in mind, which was again randomly distributed
among members of the SHG's. The respondents were allowed to carry the questionnaire to their homes and fill them
up with ease and sufficient time. A structured research technique has been used for this study. The technique entails
use of a structured questionnaire and face to face interview. The questionnaire is the main research instrument used in
collecting data for the study, taking in to consideration the specific objectives of the study and the sample size.
Majority of the items in the questionnaire are close ended questions, requiring a Yes or No response with some few
likert type items. This is because it is easier for respondents to answer and also facilitates interpretation of data by
standardising alternative responses. Thus the questionnaires were administered to 100 respondents. However, a face
to face interview was also facilitated to gather further information. As indicated above the source of data used in this
research is primary in nature. Data collected for the study has been analysed using descriptive statistics such as
frequencies and percentages. The results are presented using tables and bar and pie charts. The statistical package for
social sciences (SPSS) is used to process the data set.
4.PRESENTATION AND DISCUSSION OF RESULTS
It is generally believed that that the success of any SHG programme is best measured by its continued
growth and its ability to keep clients and also the latter's ability to repay their loan. (Titmus,1962). However, the
growth and performance of micro-finance programmes under the SHG scheme may be accepted as proxies for
impact and probably tells us more about the lender than it does about the borrower. Since the focus of the study is the
socio-economic empowerment of women, it becomes necessary to know the socio-economic back ground of the
SHG members. Although it is not always an outlined objective of microfinance or a self help group, it is one of the self
evident objectives since SHG programmes have generally and mostly targeted women as clients. This could be
explained by the fact that microfinance aims to help the poor and that most of the poor are women. (Khawari, 2004).
There are numerous studies which have shown that empowerment of women in one area does not necessarily mean
that they would also be empowered in other areas of life or for that matter they would be capable of empowering
others. One of the fundamental reasons for this is the constraints of the SHGs because of their structural inequalities.
(Kumar,A., 2007)
4.1 Socio-economic background of respondents
It was absolutely necessary to know the background of the respondents in terms of their age, gender, marital
status, level of dependants, level of education, religion, main business activity, size of working capital and other
important indicators. Age influences the degree of poverty and the level of socio-economic development. Data from
table 1 shows the ages of all the respondents interviewed.
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Table 1 : Age of respondents :
Source : Field data 2014
Table 1 shows that most of the respondents to the questionnaire are between the ages of 36-50. Only 15
respondents representing only 15% of the total sample are between the age of 20 to 35 years. This shows that most of
the respondents are in their active age (ages of 20-35 and 36-50) and have potential for growth and development if
they are provided with some form of empowerment. As we already know that the respondents were all women, it
becomes imperative to know the marital status of the respondents, since that also has some influence on women
empowerment and their socio-economic development.
Page 5
Table 2 : Marital status of respondents
Source : Field data 2014
Table 2 indicates that 60% of the sample responded that they were married. However the remaining 40% are
without partners. Out of this 40%, 5% were singles who had never married, the other 7% were widows and the 28%
left are those who are divorced for one reason or the other. The data implies that women have much more
responsibility towards themselves, their families and the nation at a large. Married women, who are a greater portion
of the study have responsibility towards taking care of their homes, those divorced have greater challenge of taking
care of themselves as well as their children and hence need financial liberation.
Table : 3 Level of formal education of respondents
Source : Field data 2014
The data in Table 3 depicts the level of education of the respondents. It is observed that amongst the sample
respondents most women have no education or very little education. 65% of the sample has so little education that
they cannot be employed with dignity in the organised business world. Moreover, an alarming finding is that only 5%
have vocational education. This is important as because in a developing economy like India vocational training has
been assumed to be one of the key steps in promoting employment as well as self employment. When only 35% of the
sample respondents of the SHGs have received education at matriculation level or above then it is obvious that such
phenomenon will definitely have an adverse impact on the administration and management of the SHGs. This is also
very likely to have impact on the socio-economic empowerment of the women population, because the quality and
dignity of employment or for that matter self employment depends on the education level of the respondents.
It is evident that many covered under the category are of illiterate background which makes them dependant
on others for the sake of information regarding government schemes and programmes. Thus the role of MFIs and
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Golden Research Thoughts | Volume 4 | Issue 2 | Aug 2014
Age Frequency
20 to 35 15
36 to 50 74
51 to 65 10
66 and abov e 01
100
Marital Status Frequency Percenta ge
Married 60 60
Single 05 05
Widow 07 07
Divorced/Separated 28 28
Total 100 100
Level of education Frequency Percentage
Never gone to sch ool 20 20
Only primary schoolin g 45 45
Matriculate 25 25
Graduate 5 5
Post Grad uate 0 0
Vocational 5 5
Total 100 100
Significance Of The Self Help Groups : A Critical Evaluation
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others especially the government becomes all the more important in educating the masses by adopting policies like
compulsory education and learning through evening learning centres located at village level. (Ramakrishna et al,
2013)
Table 4 : Main business activity of respondents
Source : Field data 2014
Table 4 indicates the various business activities of the respondents. 85% of the respondents are engaged in
trading, agriculture and animal husbandry. Only 15% of the respondents are involved in other business activities.
This tells us that the common sector is over loaded and there seems to be very less scope for the service or rural
manufacturing business.
Table 5 : Initial start-up capital of respondents
Source : Field data 2014
Table 5 indicates that majority of the respondents started their business activity with a start-up capital of
Rs.1000 to Rs.5000/-, while only 10% of the respondents had a start-up capital of Rs.10000 or more. The percentage
for start-up capital up to Rs.1000/- is merely 16%.
Table 6 : Access to credit facilities
Source : Field data 2014
Table 6 speaks for itself that only 13% of the respondents actually got the credit facility through the SHG
bank linkage schemes. In sharp contrast, 39% of the respondents availed the credit facility offered by local money
lenders. 44% of the respondents started their business activities out of family and personal savings. Hence, the impact
of SHG programmes with respect to credit facilities in this area as per the respondents is not very strong.
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Sector Frequency Percentage
Trading 20 20
Agriculture & Food industry 35 35
Animal husbandry 30 30
Service 4 4
Others 11 11
Total 100 100
Size of initial ca pital Frequency Percenta ge
Rs.100 – 500 5 5
Rs.501 - 1000 11 11
Rs.1001 - 5000 55 55
Rs.5001 - 10000 19 19
Rs.10000 & above 10 10
Credit facility Frequency Percentage
Commercial b anks 0 0
Rural Banks 4 4
Through family savin gs 44 44
Loan from S HG bank linkage 13 13
From money lenders 38 39
99 100
Significance Of The Self Help Groups : A Critical Evaluation
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Table 7 : SHGs as client empowerment tool
Source : Field data 2014
Table 7 however, depicts a very dismal scene. In the question of further improvement or diversification of
their business 90% of the population had negative outlook. Similarly, 95% of the respondents said that they did not
generate more employment through their business. Only 40% of the respondents had expectations of improvement in
business activities in the future. The overall scenario projected by the respondents seems to be quite dismal. Here, it is
important to mention that even though the government/banks/NGOs/MFIs may make available funds to groups of
such women community, the state may do little or nothing to promote women's use of such funds. Without
methodological access to such funds, the SHGs may fold after an initial fledgling period. (Vanegas,M.R., & Pruitt,
L.R.,2012).
Table 8 : Impact survey of SHG performance at family level
Source : Field data 2014
According to Table 8, 80% of the respondents had negative outlook when they compared their house hold
income to the expenses. 65% of the respondents had negative outlook regarding improvement in standard of living.
Most appalling is the fact that 90% of the respondents (women) had negative opinion on the question of
empowerment for decision making within the family. However 40% of the respondents had positive outlook
regarding the future of the family.
Table 9 : Self esteem and level of empowerment BEFORE joining the SHG
Source : Field data 2014
Data collected regarding self esteem and level of empowerment of women before they joined any SHG,
depicted by table 9, creates a dilemma. 55% of the respondents reported that they had a positive outlook on their
ability to take personal decisions as well as family decisions as well as on the matter of socialising 50%. However, on
the other fronts the greater part of the respondents had negative outlook, before joining the SHG programme.
Therefore, it becomes essential to have a look at the position of the respondents after joining the SHG programme.
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Golden Research Thoughts | Volume 4 | Issue 2 | Aug 2014
Impact indicator Positive outlook Negat ive outlook
Improvement/ diversificati on in
business perf ormance
10 90
Employing more hand s 5 95
Improvement in business practices
thro ugh acquisition of
entrepreneurial skills
20
80
Positive dream about proje cts
(expansion, div ersification, higher
sales & profits)
40
60
Impact indicators Positive outlook Negative outlook
Increase in ho use hold inco me as
compared to expenses.
20
80
Improvement in standard of living
(education, health, food etc.)
35
65
Ability/opp ortunity for decision
making in the family.
10
90
Future as pirations about the family. 40
60
Impact in dicators Positive outlook Negative outlook
Level of self confiden ce 40 60
Level of socialising 50 50
Aspirations for future leadership 20 80
Ability to make personal and
family decisions
55 45
Perception about women 30 70
Significance Of The Self Help Groups : A Critical Evaluation
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Table 10 : Self esteem and level of empowerment AFTER joining the SHG
Source : Field data 2014
The analysis of table 9 and table 10 throws light on some very significant factors of the level of self esteem
and empowerment of the respondents. 25% of the respondents who earlier had negative outlook towards self
confidence have admitted that they have generated a positive outlook after joining the SHG programme.
Similarly,40% of the respondents who earlier had negative outlook towards level of socialising have admitted that
their outlook has become positive after joining the SHG programme. Only 6.25% of the respondents have said that
their aspiration for leadership has increased. On the matter of decision making on personal as well as family level,
there seems to be no impact of the SHG programme. However, on the point of perception about women there seems to
be a radical change i.e, around 43% of the respondents who earlier (before joining the SHG programme) had negative
outlook have changed their opinion, giving credit to the SHG programme. The respondents confessed that their
perception about themselves (women community) in general has changed from those days when they had to sit back
and watch the men make all the decisions and cater for the development of the family, community and the nation. On
a whole, results from the study on clients self esteem and empowerment have shown that they have experienced
empowerment within themselves. However, on the matter of access to credit facilities and the SHG programme as a
client empowerment tool, the SHG programme in these two blocks of Ranchi district do not show any signs by virtue
of which one can conclude that the SHG programme has been a success. Moreover, in the course of discussions
evidences of members switching groups has been a common phenomenon. Data presented under table 11
demonstrates the rate and reason for such switches from one group to another.
Table 11 : Attrition rate of group members
Source : Field data 2014
Very surprisingly, data collected and tabulated under table 11 shows that at an average the respondents have
changed their SHG at least 3 times in their life till date. This figure is quite alarming and raises serious doubts on the
formation and functioning of the SHGs. 30 respondents admitted that they had changed the SHG because the group
stopped functioning. In the absence of further query regarding why the group stopped functioning, it may be
construed that the organisation of the group was improper or there was absence of homogeneity. Similarly, 50
respondents declared that they changed their SHG because of lack of faith on the group members or group leaders.
Since, these SHGs are involved in monetary affairs of the community and at the same time they do not require to be
registered, such observations can be construed to be negative in nature. The absence of any regulatory body/authority
makes the situation even worse. Such attrition rate of SHG members actually defeats the purpose of the SHG
programme. Among the respondents 30 claimed that they had changed their SHG because of the absence of bank
linkage programme. This tells us that there are many SHGs which do not get the assistance of formal credit and are
dependent on their own resources in the time of need. Under such a situation the respondents are rightful in believing
that the SHGs offer no great opportunity to them. It is predominantly the poorer and the socially marginalised
communities and people that leave the SHG network and this makes it unlikely that women moving out of SHGs
enter in to individual contracts with the lending institutions. It also means that some of those in desperate need of
credit cannot obtain it from within this sector. (Balland et al, 2008)2 . Moreover, lack of knowledge about
government schemes and technical know-how have been major cognitive constraints in the SHGs. Increased work
burden and responsibility of small children or dependant in-laws have been major personal constraints because of
which the SHG movement gets stagnated.(Sharma,P & Varma, S.K., 2008).
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Golden Research Thoughts | Volume 4 | Issue 2 | Aug 2014
Impact in dicators Positive outlo ok Negative outlook
Level of self confiden ce 55 45
Level of socialising 70 30
Aspirations for future leadership 25 75
Ability to make per sonal and
family decisions
55 45
Perception about women 60 40
Average num ber of switches per responden t 3
Reason for such switch Number of respondents
(a) Group st opped functio ning 30
(b) Respondent not gelling with the group
leaders.
10
(c) Bank linkage of the SHG not available. 30
(d) Lack of faith on the group members 50
(e) Favourit ism amongst mem bers 10
Significance Of The Self Help Groups : A Critical Evaluation
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CONSLUSION
Self help groups are definitely complimentary to the Governments role in the area of empowerment of
women. However, it all depends on the demanding reasons for the formation of such groups. In the absence of
homogeneity of cause, status, income level and aspirations such groups may not add anything to the society.
In such cases many of them would end or end up performing like fancy clubs of people. However, the
analysis done above is restricted to randomly selected SHGs and their members as respondents. Hence, it is also
important to observe that such phenomena may or may not exist in other parts of the district or the state. Moreover,
the role of the government cannot be overshadowed by multiplying number of self help groups. All that a self help
group would aspire to do in the area of socio-economic empowerment of women is actually the basic responsibility of
the governments in question. For example creation of employment opportunities is the job of the government which
would get complimented by organisations like SHGs. Similarly, promotion of education and literacy among the girl
child is a fundamental responsibility of the government, in which SHGs could serve as catalysts. Hence, too much of
importance and glory which has been assigned to the SHG movement in the process of socio-economic
empowerment of women by many agencies and authors creates an atmosphere where the government becomes
complacent by witnessing the number of self help groups, as is the case in the above case study of the two blocks of
Ranchi district and their SHG members selected randomly.
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8
Golden Research Thoughts | Volume 4 | Issue 2 | Aug 2014
Significance Of The Self Help Groups : A Critical Evaluation
Arup Mukherjee
Assistant Professor, Xavier institute of Social Service, Purulia Road, Ranchi.
Electronic copy available at: https://ssrn.com/abstract=2483080

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