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					DRAFT MANUSCRIPT
  [May 15/27 2009]




Self-Help
 Groups
  -A Handbook
   Daman Prakash
    GC Shrotriya




IFFCO FOUNDATION
    NEW DELHI




         1
                             CONTENTS
Foreword                  …     …      …   …     …       …   …   03
01   Introduction         …     …      …   …     …       …   …   05
02   Self-Help Group Movement in India     …     …       …   …   11
03   Formation of Self-Help Groups …       …     …       …   …   19
04   Financial Management of Self-Help Groups    …       …   …   25
05   Self-Help Group Meetings          …   …     …       …   …   33
06   Performance Assessment of Self-Help Groups …        …   …   38
07   Self-Help Groups and SHG Associations/Federations   …   …   41
08   Capacity Building in Self-Help Groups …     …       …   …   45
09   Self-Help Groups as Sub-System of Cooperatives      …   …   51
10   IFFCO Foundation and Self-Help Groups       …       …   …   53




                            IFFCO FOUNDATION
                        IFFCO HOUSE, 34 Nehru Place
                              New Delhi 110019

                               May 15/27 2009




                                     2
                                     IFFCO FOUNDATION



                                      FOREWORD
BESIDES the cooperatives and other forms of organisations, there is yet another form of
enterprise which is organised voluntarily by the members themselves to meet a variety of
their needs. The Self-Help Groups [SHGs] are such organisations which are formed,
nourished and managed by the members themselves.

The SHGs, people’s voluntary and informal institutions, are organised as viable alternative to
achieve the objectives of rural development and to get community participation in rural
development programmes. These are similar to traditional group activities in all communities.
It is a new form of a movement which aims at reducing the incidence of poverty through the
provision of easy credit. In case of self-movement, thrift and credit are the entry points of
activity. Micro-finance or provision of financial services to low-income households, have
come to be accepted in policy implementation as the most efficacious intervention to
alleviate poverty, enhancing agricultural production and developing local leadership.

A Self-Help Group is an informal organisation of not less than 10 and not more than 20
people from the poorer section of the village society, organised, owned, operated and
controlled by the members in a democratic manner, based on solidarity, reciprocity, common
interest and resource pooling. Self-Help Group is a social design in which people participate
by making themselves socially and economically accountable to each other. All SHGs are
not necessarily linked to lead/focal bank because they do not need external credit except the
support from their sponsoring organisations.

SHGs have been promoted under various programmes and by various development
agencies. It has been found that SHGs can serve the needs of the small farmers better than
the cooperatives. It is believed that Self-Help Groups are a sub-system of cooperatives.

This grouping is a method of organizing the poor people and the marginalised to come
together to solve their individual problems. The SHG is recognised by the government and
does not require any formal registration. The purpose of the SHG is to build the functional
capacity of its members in the field of employment and income-generation activities.

In view of the weak financial situation, lack of business diversification of cooperatives
members often face problems in obtaining farm-related services as well as in credit supply.
SHGs have been considered as an additional support mechanism to assist the farmer-
members. It is in this context that the Foundation has promoted a number of Self-Help
Groups in selected districts of five states. At present there are 1,739 SHGs with a total
membership of 23,503, 70% of them are women.

The Foundation has also enabled the groups to form their own associations/federations and
get themselves registered under the Societies Registration Act-1862 to secure a legal entity
due to which they can transact business with cooperative societies and with private traders.
So far 30 SHG Associations have been formed which are duly registered and linked with




                                              3
nodal/lead banks in their respective areas. The SHG Associations conduct business on
behalf of their affiliate-groups on the basis of a good bargaining power.

To facilitate the formation and management of Self-Help Groups and to motivate
members to join the groups over 20 SHG motivators [most of them are women] were
recruited, trained and inducted. They provided on-the-spot guidance to the groups
and their members and facilitate the process of relationship with the link/lead banks.
They are also expected to support the groups in holding their meetings and upkeep
of relevant books and other documents.

Since the task of organisation and management of the groups and retention of
members’ interest in their groups is of complex nature, it is important and relevant
that the motivators are kept informed and refreshed on the latest market situations
and latest policies on SHGs. The Foundation has embarked upon an intensive
education and capacity building programme for them so that their relationship with
their associations remains cordial and effective.

The present manual has been designed to support the promotion and organisation of Self-
Help Groups and their associations. The main objective of this training material is to
enhance and refresh the knowledge of field level staff, leaders of groups so that members
and groups are aware of their rights and duties and the methods and techniques of operating
their organisations to meet the business and financial needs of the members – men and
women, by holding short-term extension education programmes from time to time.

The training material has been prepared by our two consultants, Dr Daman Prakash and Dr
GC Shrotriya who have rich, varied and wide field experience of working in the field of rural
institutional development. This material has been developed with a view to provide basic and
working knowledge about SHGs, the role and duties of various functionaries involved, and to
enhance the competence of SHGs so that they become viable instruments to improve the
social and economic conditions of rural people. I feel confident that the material would be
found of some interest and use. We will appreciate very much any comments and
suggestions which could contribute to the effectiveness of this material.


                                                                JNL Srivastava, IAS [Retd]
                                                                         Managing Trustee
                                                                        IFFCO Foundation




                                             4
                                      Chapter-01
                               INTRODUCTION

Setting up of an Institution

It is pertinent to take into account the forms, organisation, functions, management
and characteristics of an organisation!

There are various types of institutions/organisations e.g., some as big as Indian
Farmers Fertiliser Cooperative Limited [IFFCO], world’s largest chemical fertiliser
producing and distributing business house with nearly 60 million individual farmers
belonging to over 45,000 member-cooperatives in its fold, and others like national or
state federations, consortium, forum, trusts, groups, societies, cooperative societies
[PACS], Self-Help Groups, SHG Associations, Horticulture Associations, Farmers’
Groups or Clubs. A farmer is also an institution by himself.

The institutions are born out of necessity to serve some cause – economic, social,
cultural, political or military. There are people [stakeholders] and organisations
behind creating institutions and they have some objectives.

People create their own institution. An institution should have some recognition. It
can be an informal group or an institutional group. There are institutions which need
to be registered with some official agency to attain a legal entity so that they are able
to undertake business operations with others.

Building of an institution is an important and complex task. There has to be an
overall Institutional framework; Organisational structure; Design; Statement of
objectives, Methods of management, Implementation; Monitoring or Evaluation.
Institutions, to serve the needs of their members, need to be democratic in which
decisions could be made democratically and ways of implementation be developed
by themselves. In some cases there are institutions which are created only for a
specific purpose and for a limited duration either by the members themselves or
under the direction or guidance of an organisation which may be governmental or
non-governmental.

To be effective and purposeful an institutions must state its main aim, objectives and
possible activities through which the objectives are intended to be achieved.
Institutions which are created under controlled or directed conditions generally work
to achieve the objectives of their sponsoring institutions.

To operate the institutions there is a need for a management system. The
management consists of elected leaders, nominated functionaries and appointed
officials. Members who have purchased shares or remitted fee and admitted as
formal members are the stakeholders. They are assigned specific tasks and they are
expected to take proper decisions which are beneficial to the organisation and its
stakeholders. While the members, as a general body, elect a Board of Directors, the




                                           5
employees are supposed to implement the decisions made by the Board in
accordance with the policies laid down by the General Body. The management has,
therefore, to be professional for which the organisation makes arrangements for their
training and career development.

Management functions in an organisation are of paramount significance. The
management, therefore, develops various means and methods to achieve the overall
objectives. These methods include: Commands and controls, Inputs [Men,
Machines, Money]; Capacity building [of leaders, employees and members]; Outputs
[wealth, accomplishments]; Collaboration and cooperation; Participation of
stakeholders and beneficiaries; Evaluation, Improvements and Modifications.

For the enrichment of an institution, continuous appraisals, monitoring, reassessing
the relevance of the institution are equally necessary.

Type of Organisations

There are various forms of organisations e.g., social, economic, religious, traders,
farmers’ etc. Some of them are formal and some others are informal. Government or
NGOs creates some while the others are organised by the people themselves
without any external support to meet their own needs.

[a]     Cooperative Institutions: These are voluntary in character but still operate
under the legal framework established by the government. The Registrar of
Cooperative Societies regulates cooperatives. There are a number of external
components which require the cooperative to comply with several regulations. There
is a lot of paper work and several returns have to be filed in time with the Registrar.
There is a regular audit, sequencing of meetings, contacts with the bank which keep
the cooperative always engaged in sorting out procedural matters. There are,
however, several merits in organising a cooperative and dealing with it. Such
institutions are run in accordance with the universally-accepted Principles of
Cooperation. Farmers can get into the membership of an agricultural cooperative by
making an application with a small admission fee and by purchasing some shares of
the cooperative.

[b]    Agricultural Cooperatives - Farmers’ Organisations: The largest number
of cooperatives in the world is related to agriculture. Agricultural cooperatives, to be
real and effective enterprises must ensure that they are run on sound business
principles and in conformity with the Cooperative Principles and business ethics and
social norms. They must ensure proper linkages for marketing and supplies and that
they collaborate and cooperate with similar cooperatives and other business
enterprises. They must satisfy the needs of their members by maintaining quality and
quantity standards. They can raise funds for their own business as well as for their
members from the central cooperative banks. Agricultural cooperatives provide a
broad range of services to the members e.g., input supply, credit, marketing and
farm extension.




                                           6
Cooperatives are not social or charitable institutions. They are economic enterprises.
It is the basic principle of a cooperative – more it is used by its members stronger it
becomes to serve the members.



             AGRICULTURAL COOPERATIVES

             THROUGH
             Enlightened Members; Qualified and Trained Managers;
             Conducive Policy Environments

             BECOME
             -Efficient Service Cooperative Institutions
             -Economic Enterprises
             -Extension/Research/Technology Providers
             -Established Links in the Chain Processors

             RESULTING INTO:
             -Higher and quality production;
             -Higher Economic Returns to Members
             -Improved Competitiveness
             -Poverty and Hunger Alleviation
             -Employment Generation



[c]    Other Organisations: 4-H Clubs, Young Farmers’ Clubs, Reading Room
Clubs, Sports Clubs, Savings groups, Workers’ groups, Women’s groups, Water
Users’ Groups are some others which need not be registered but are sponsored,
organised and managed by the members themselves according to the norms
established by themselves. All these informal groups are organised to meet some
specific objectives.

[d]   Self-Help Groups: There is yet another form of organisation which is
organised voluntarily by the members themselves to meet a variety of their needs.
The major requirement of the people at the basic level is of credit. The Self-Help
Groups [SHGs] are such organisations which are formed and managed by the
members themselves.

Credit is one of the accelerators for any development programme and is particularly
true for rural development, which aims at increasing agricultural productivity or
livelihood opportunities as well as improving standard of living of rural people. For
this reason, the availability of credit to the rural masses has remained to be the
single and most important component of rural development.

Despite vast expansion of the formal credit system encompassing spheres of social
and mass banking, the dependency of the rural poor on moneylenders still continues




                                                  7
in many areas, especially for meeting their emergent needs. Under the
circumstances, a non-formal agency for credit supply to the poor, in the form of Self-
Help Groups, emerged as a promising partner to the formal credit system. SHGs are
part of micro-credit system.

SHGs are unique institutions both socially and economically. On the economic front
these groups are providing support to their members. The people obtain loan only in
distress situations. Financial assistance is available only for productive and income-
generating activities.

Several NGOs have organized SHGs of men and women in rural areas. The basic
thinking behind the creation of these SHGs has been to emancipate rural populace
from the vicious exploitation of private moneylenders and landlords. These SHGs
can play an important role in attaining the objective of economic development
through community participation.

The Concept of Self-Help Groups

The SHGs of 10-20 persons from the economically homogeneous strata aim to:

      [a]    Regularly save the amount from out of their earnings;
      [b]    Collectively agree to contribute to a common fund;
      [c]    Meeting their emergency needs;
      [d]    Taking democratic decisions;
      [e]    Resolving conflicts through discussions in open forum; and
      [f]    Providing surety-free loans at market driven rates to members.

The multi-dimensional success that SHGs have met in Bangladesh has prompted
social workers and financial institutions in a country like India to make some serious
attempts in the development of SHGs in this country. It goes to the credit of some
SHGs that they have done appreciable work in the direction of disentangling village
folk from the financial subjugation and exploitation by moneylenders.

The real aim of creating SHGs is to empower persons and their families in such a
way that they may find themselves capable of playing an important role in the socio-
economic development of the community.

It is not proper or adequate to limit the role of SHGs only as alternate agencies for
providing institutional finance. Any attempt to limit the role of SHGs to grant and
disbursement of loans is likely to end up in increasing the economic dependence of
its members on loans.

The aim, in fact, should be to prompt these groups to play an important role in
enhancing the capacity of self-reliance of their members by increasing their
participation in decision-making and raising the confidence of people marginalized in
the course of time.




                                          8
SHGs as Micro-Finance Institutions

The idea of micro-finance is based on the philosophy of organising poorest of the
poor into Self-Help Groups and makes them realise the very basic theory of survival.
Prof Muhammad Yunus of Bangladesh initiated it and the success achieved by
Grameen Bank in Bangladesh gave a new impetus to micro-credit for socio-
economic empowerment of rural poor in the developing countries. The concept of
micro-credit has been praised worldwide. In 1997 a Micro-Credit Summit was
organised at which a decision was taken to extend credit for self-employment
activities to 100 million of world’s poorest families by the year 2005.

The poor do not find the institutional credit delivery system to be sensitive enough to
their subsistence credit needs and hence depends on moneylenders either out of
compulsion or choice. This dependence on credit was more pronounced in case of
landless labourers, marginal farmers, petty traders and rural artisans belonging to
the socially and economically background classes in general and the tribal
population in the resource poor areas in particular.

The concept of micro-financing the self-employment activity in rural areas has
developed considerably over the last twenty years. Strategically micro-finance relies
on rotational investment done to motivate poor to empower themselves and to save
for the future and use those resources during the time of need.

Theoretically, micro-finance or micro-credit or micro-lending means provision of
smaller working capital loans to the self-employed or self-employment seeking poor.
Such loans may be provided even for the activities like cotton and wool to weave raw
material for handicrafts, milch cattle and the like. It is viewed that provision of micro-
finance may be seen more as logical extension of the managerial and programmatic
approach to poverty reduction. But with regard to financial perspective credit is an
effective tool the level of that helps the poor to tackle the problem of deprivation,
improve their welfare and social acceptance and credibility.

Thus micro-finance institutions are those which provide thrift, credit and other
financial services and products of very small amounts mainly to the poor in rural,
semi-urban and urban areas for enabling them to raise their income level and
improve living standards. Even though it includes the initiatives made by both
informal and formal sectors, there is increasing tendency to use the term micro-
finance only by the formal institutions.

SHGs as Instruments of Cohesion

Since the basic philosophy of the Self-Help Group is to provide assistance and
economic security to the poor people in the rural setting, it also serves as a uniting
factor for the people. In the SHG, people get together informally to express their
social and economic problems. These problems can be used as the means to find
out their possible solutions. A clever moderator can help the members to identify the
basic reasons for the origin of problems. Since the members get together to discuss




                                            9
their difficulties the SHG becomes a forum to unite them and make them realise the
importance of getting together without any external pressure, fear or favour.

Record keeping at the group level is very critical for the sustainability of financial
operations and continued mutual trust among members. Good quality of booking
means completeness, accuracy, up to date information and transparency. There is a
need for simple and user-friendly records and books of accounts.

It does not mean that SHGs [or their office-bearers] have to maintain their accounts
themselves. This can be a service to the group, as is being tried out through different
forms of comupterised accounts-keeping.

SHGs represent an opportunity for social action and empowerment through women’s
involvement in considering, addressing and participating in issues that affect their
members and their communities including issues that affect women in particular.


                        --------------------------------------------------




                                               10
                                      Chapter-02
         SELF-HELP GROUP MOVEMENT IN INDIA

In a country like India with a population of over 1.1 billion almost 32% people live
below the poverty line. A majority of people earn their livelihood through agriculture
and agriculture-related vocations. Most of them are landless and marginal farmers.
They remain engaged in their agriculture-related activities for not more than six
months in a year. To meet their agricultural and household requirements they need
money. Most of them are either in the fold of agricultural cooperatives or private
entrepreneurs/moneylenders from where they pick up short-term loans. Since the
cooperative institutions are short of funds and the market interest rates are
considerably higher and they do not have any collateral to raise funds, they find the
institution of Self-Help Groups as the most convenient to raise funds for micro-
enterprises or to meet their immediate farm and/or off-farm needs.

Self-Help Group [SHG] is an unregistered group of micro-entrepreneurs having
homogenous social and economic background; voluntarily coming together to save
regular small sums of money, mutually agreeing to contribute to a common fund and
to meet their emergency needs on the basis of mutual help. The group members use
collective wisdom and peer pressure to ensure proper end-use of credit and timely
repayment. This system eliminates the need for collateral and is closely related to
that of solidarity lending, widely used by micro-finance institutions. To make the
book-keeping simple enough to be handled by the members, flat interest rates are
used for most loan calculations.

Self-Help Groups are started by non-profit organizations [NGOs] that generally have
broad anti-poverty agenda. Self-Help Groups are seen as instruments for a variety of
goals including empowering women, developing leadership abilities among poor
people, increasing school enrolments, and improving nutrition and the use of birth
control. Financial intermediation is generally seen more as an entry point to these
other goals, rather than as a primary objective. This can hinder their development as
sources of village capital as well as their efforts to aggregate locally controlled pools
of capital through federation as was historically accomplished by credit unions in the
United States and Canada.

SHG is a social design in which people participate by making themselves socially
and economically accountable to each other. Some community-based bodies and
field level workers of government agencies are involved in SHG formation as an
essential strategic element to fight poverty in India.

Advantages of Financing through SHGs

An economically poor individual gains strength as part of a group. Besides, financing
through SHGs reduces transaction costs for both lenders and borrowers. While
lenders have to handle only a single SHG account instead of a large number of
small-sized individual accounts. Borrowers, as part of an SHG, cut down expenses




                                           11
on travel [to and from the bank branch and other places] for completing paper work
and on the loss of workdays in canvassing for loans.

Objectives and Functions of SHGs

The Self-Help Group is a voluntary association of those people who are in need of
small funds to establish or to promote their small enterprise. The Self-Help Groups
have been conceived in the form of savings and credit groups, joint farming groups,
social forestry groups, horticulture groups, traders’ groups and the like with emphasis
on thrift-cum-credit.

A Self-Help Group [SHG] is a self-managed institution of 10-20 members, based on
common interest and affinity for socio-economic improvement of its members.
People bound by mutual trust, respect and affection who support one another and
amongst whom exploitative relationships do not exist, form these affinity groups.

Main Objective of SHGs

The main objective of the Self-Help Group is to provide economic opportunities to
the economically disadvantaged groups to establish and gradually improve their
entrepreneurial ambitions through regular and small savings to improve their socio-
economic status by organising and participating in their own voluntary and
democratic association.

A Self-Help Group is an informal organisation of not less than 10 and not more than
20 people from the poorer section of the village society, organised, owned, operated
and controlled by the members in a democratic manner, based on solidarity,
reciprocity, common interest and resource pooling. Self-Help Group is a social
design in which people participate by making themselves socially and economically
accountable to each other. All Self-Help Groups are not necessarily linked to
lead/focal bank because they do not need external credit except the support from
their sponsoring organisations.

It should be clearly understood that the Self-Help Group is a small organisation of
small people with small objectives. It goes to demonstrate that small efforts can be
translated into bigger power. It has a magical strength with a considerably lower
numerical strength.


                         THE MAGIC STRENGTH OF
                     VOLUNTARY & COOPERATIVE ACTION


                       1+1=02=11
                NUMERICAL STRENGTH + MUTUAL TRUST = SHG




                                          12
It is 1+1, which is equal to 2, but it also can be 11 when people get together, work
together and perform their activities in unison with a common objective. ‘Unity of
Action’, ‘Unity of Purpose’ and ‘Mutual Benefit’ are the cornerstones of this
organisation.

SHGs can achieve the following goals:

      -Institutional development at the grassroots level;
      -Economic independence to the poor, especially women;
      -Generation of mutual trust and cooperation;
      -Localised planning and participative decision-making;
      -Financial discipline;
      -Inculcate the habit of savings;
      -Leadership development, and,
      -Economic self-reliance and social solidarity.

Advantages of Self-Help Groups

The advantages of SHGs are:

      -Low transaction cost;
      -Effectiveness in supervision;
      -Easy credit delivery to the poor;
      -Minimum procedures; and,
      -Better recycling of funds.

It has been found that the largest membership of SHGs is from rural women.

It is a Two-Pronged Activity

The organisation of Self-Help Groups is a two-pronged activity – one, members
themselves get together to form their SHGs, and two, the promoters and
implementers of any development programme encourage formation of such groups
in order to achieve their own objectives.

Need for Self-Help Groups

Farmers require institutions which can help meet their requirements – farming or
non-farming. To have such needs fulfilled, they approach the institutions and
individuals which are closest to them. These generally are the cooperatives and the
moneylenders. They can even approach their relatives and friends to borrow some
money to purchase their requirements from the market, or even from the cooperative
society.

Self-Help Groups are, however, such institutions where members with their own
collective small savings try to help the group members. A small group moves forward
towards self-empowerment. The needy persons, the group members, are mostly




                                           13
poorest of the poor and have determination to strengthen themselves economically
and socially. Usually these people individually have no access to formal banking
system. Moneylenders exploit them in the hours of their needs. To overcome both
these situations there is a felt-need to create Self-Help Groups. Members with their
collective resource take up some income-generating activities which will bring
additional income to their household. These institutions thus become powerful tools
for poverty alleviation and social cohesion at the grassroots level.

How are the Needs Met?

Farmers need credit to cover some of their personal requirements. The credit should
be available in time and without much of a botheration. The farmers do not like much
of formalities, like writing out applications, offering collaterals and witnesses.


                       NEEDS OF FARMERS AND HOW ARE THEY FULFILLED

                                         FARMER’S NEEDS

                  CREDIT NEEDS                                  PRODUCTION NEEDS
               [Farming, Consumption,                        [Farm Inputs, Farm Machines,
            Business, Social activities etc.]                  Processing, Marketing etc.]


                                           FULFILLED BY
                     Voluntary Organisations, Personal relationships, Cooperatives,
                      Commercial Banks, Private Moneylenders, Self-Help Groups

In the case of small farmers or traders, the credit needs are also small. The essence
of the requirement is that such a credit is needed quickly. It has now been found that
Self-Help Groups are the institutions of choice so far as micro-finance is concerned.
The SHGs do not deal in long-term or medium-term finance.

The Self-Help Groups are the voluntary action efforts of people of low economic
means. They organise these groups voluntarily to meet some of their economic
needs. The needs are small and the people realise the value of money. Their
programmes are modest and truly need-based. Because the help comes
spontaneously the members are keen to maintain a high level of trust in their own
groups. Because of small and persistent efforts members remain vigilant about the
use of funds.

Such groups also come handy to project promoters because of two reasons: [a]
Promoters feel comfortable to deal with non-governmental institutions which are self-
promoted, self-propelling and democratically-managed; and [ii] Members feel
confident that the funds employed by the promoters are for their own benefit. There
are no bureaucratic hurdles. The decision-making is fast, and members are
accountable to themselves.




                                                  14
                                 Members Feel Confident
                                 Social & Economic Bonds Get Strengthened
                                 Generate Employment
                                 Generate Long-Term Benefits
             SELF-HELP           Strengthen Democratic Traditions
             GROUPS              Improve Technology and Methodology
                                 Inculcate Thrifty Habits
                                 Sustain Ecology and Environment
                                 Create Technicians [Foot Technicians]
                                 Improve Food Security Environment
                                 Develop Business Linkages


The impact of the working of self-help groups is real and truly contributory to the
general social and economic welfare of the local communities.

Functions of Self-Help Groups

In order to achieve the main objective, the SHGs undertake various activities. These
activities are:

-     Savings howsoever small they may be should be made in order to mobilize
      financial resource. The idea is to generate the habit of saving from whatever
      income is earned in the household;

-     Loaning and Repayment in smaller quantities but in time. As a micro-finance
      institution the SHG should be able to provide credit to the members. It is also
      expected that the members return the money borrowed in time, in full, and
      with interest so that other members also benefit;

-     Maintaining Books of Account and Records is the most crucial aspect of
      management of the SHG as well as of confidence building among the
      members. The SHG has to ensure that all accounts and the books of account
      are up to date and maintained to ensure transparency and accuracy. Good
      accounts reflect the goodwill of the organisation and ensure its credibility.
      Properly kept records are not only of reference value but also useful in future
      planning and decision-making;

-     Member-oriented Action Programmes are conceived and implemented
      which are recommended and demanded by the members. Most of these
      programmes are social and economic and even cultural. Such programmes
      are also usually the agenda of the development projects which promote
      SHGs.




                                         15
      Programmes can be educational, additional income-generation, off-farm
      activities, labour-intensive activities, watershed-related and public works
      construction activities, harnessing water resources for drinking and irrigation,
      health, education, vocational training etc. etc. Development programmes can
      be directed at women, youth or farmers;

-     Liaison and Linkages with financial institutions [FIs]/Government
      Organisations [GOs] and other agencies. The SHG considers developing
      relationship with the financial institutions e.g., cooperative bank or the rural
      branch of a commercial bank, or others, and also relationship with the
      governmental organisations and other development agencies;

-     Training and Capacity Building Activities. Self-Help Groups need constant
      support, assistance, guidance and advice from the promoters and other
      development agencies. They need constant monitoring, training and
      education support in order to help them improve their working capacities and
      capabilities. The members might need some exposure and interaction. They
      might also need some equipment and technology support. SHGs need to
      continue improve their capacities.

Income-Generating Activities of SHGs

These can be the following:

      -Agriculture-related [seed multiplication, bee-keeping, nursery raising etc.];
      -Small retail businesses/General Store;
      -Brick-making;
      -Livestock development [animal husbandry, goatery, poultry, piggery etc.];
      -Cattle-feed sales;
      -Bicycle repair shop;
      -Milk procurement and processing;
      -Clay-pot making;
      -Leaf/Paper plate making;
      -Flour-mill and grain shop;
      -Carpentry, Ironsmithing, welding;
      -Garment shop [tailoring, embroidery, knitting];
      -Raw-sugar [gur/shakkar] making;
      -Beauty saloon;
      -Fruit/Vegetable preservation and processing;
      -Motor winding etc.

Self-Help Groups do not thrive and prosper only on one or two activities. They need
to expand the range of their activities by incorporating new methods and techniques
to produce new products. Diversification of business and up-scaling of activities with
the support of SHG association and cooperative society can further add to the
income of members. Self-Help Groups, as members of SHG association, can create
more services and products not only for members themselves but also for the




                                          16
market. Associations, being legal entities, are fully empowered to transact business
with raw material suppliers and end-product consumers and traders. The
associations transact business on behalf of the affiliated Self-Help Groups, and
ultimately for the members of SHGs.

Credit Management in Self-Help Groups

The poor relate more easily to Self-Help Groups than to banks. One of the important
functions of Self-Help Groups is credit management, as discussed below:

-     The groups foster thrift and promote savings;

-     The groups encourage women’s groups in fostering thrift and savings;

-     Groups contribute a part of their savings earned through group action. This
      strengthens the value of group action;

-     Groups mobilise capital through: [a] Savings, [b] From interest at rates
      decided by the group; and [c] From banks and cooperatives;

-     The groups interlink with other groups with similar functions.

Characteristics of SHGs

The guiding principles for formation of SHGs, among others, are:

      -Mutual trust and mutual support;
      -Every individual is equal and responsible;
      -Every individual is committed to the cause of the group;
      -Decisions are based on the principle of consensus.

SHG characteristics are:

      -Bottom-up approach;
      -Homogeneous membership;
      -Self-management; and
      -Need-based activities.

The SHGs have a four-fold character:

      -A moneylender [providing quick and hassle-free loans];
      -a development bank [providing production and investment credit without any
      documentation and security/surety];
      -a Cooperative [full participatory approach without government interference];
      and
      -an independent autonomous institution.




                                         17
NABARD's 'SHG Bank Linkage' Programme

Many Self-Help Groups, especially in India, promoted or operating under the
National Bank for Agriculture and Rural Development [NABARD], a Government of
India’s financing agency, receive organisational and funding support though
NABARD’s SHG-Bank-Linkage programme.

This model has attracted attention as a possible way of delivering micro-finance
services to poor population that finds it difficult to reach directly through banks or
other institutions. By aggregating their individual savings into a single deposit, Self-
Help Groups minimize the bank's transaction costs and generate an attractive
volume of deposits. Through Self-Help Groups the bank can serve small rural
depositors while paying them a market rate of interest. SHG-Bank linkage
programme has made it easy for the poor to rise above the poverty line. This method
has brought small money closer to people of small means.

According to NABARD [2008] there are about 3.3 million Self-Help Groups with a
membership of 48 million which are taking loans from the lead banks under the
NABARD Bank linkage programme. In addition there are about 2.8 million groups
with a membership of about 42 million which are operating on their own strength or
under the patronage of their supporting organisations without taking loans from lead
banks. In all there are 6.1 million groups with a combined membership of 90 million –
75-80% of whom are rural women. The number of groups and their members are on
the increase. A majority of these groups are dealing with thrift and credit.

              ----------------------------------------------------------------------




                                                   18
                                     Chapter-03
           FORMATION OF SELF-HELP GROUPS
Membership of SHGs

A Self-Help Group has a small and manageable membership of not less than 10
persons and not more than 20 belonging to the same village. The members should
preferably be from the lower-income group. Members have the freedom to join the
group and leave it whenever they like after settling their accounts. No member is
forced to join the group. The group can ask any member to leave due to bad
conduct. Smooth and efficient functioning of SHGs depends on mutual trust,
cooperation and social pressures of members. There can be ‘men only’ and ‘women
only’ groups. In some cases, depending upon the interest of individuals there can be
‘mixed groups’. Entry of members, resignations and withdrawals are considered by
the entire group.

Rights and Duties of Members

All members who have agreed to be in the membership of the group have certain
rights and duties.

Rights

-Abide by the rules and regulations of the group;
-Apply for loans and receive loans from the group;
-Seek information on loans/deposit status;
-Participate in all discussions;
-Make suggestions and recommendations;
-Withdraw from the group as per its rules and regulations;
-Raise issues of local development needs etc.

Duties

-Participate in all meetings of the group;
-Repay loans in time and with interest;
-Pay fines/penalties due to defaults;
-Spend the loan money only for the states purpose;
-Encourage other members to repay their loans in time and with interest;
-Observe all rules and regulations of the group;
-Shoulder responsibilities as per decisions of the group;
-Help each other in hours of need.

Features of SHGs

Some of the salient features of the Self-Help Groups are as follows:




                                         19
       -These groups are based on the concept of ‘self-help’;
       -They can become members of a cooperative society;
       -They need not be registered with any official agency;
       -They are fully autonomous and free from official controls;
       -They can form their own associations/federations;
       -Associations are legal entities;
       -SHGs can be gender-biased or mixed groups;
       -They are engaged in thrift and credit activities;
       -They are managed by the members themselves;
       -They have their own leaders and secretaries;
       -They maintain their accounts well and which are clearly understood by all;
       -Very little funds are borrowed from the banks for internal circulation;
       -Almost all their needs are met from out of group’s own funds;
       -Almost all the members use the group funds for their benefit;
       -Whatever loans are taken from the group/bank are returned in time;
       -They generally deposit their surplus funds with the bank or in FDs;
       -A part of the earning from the wages is deposited with the group;
       -All groups hold their meetings regularly and every month;
       -SHGs encourage inter-group lending.

It has been observed that members are more than satisfied to deal with their own
groups and make use of the facilities provided by the Self-Help Groups.

Linkages with the Bank

After the group is formed it starts meeting to build savings and thereafter initiates
inter-loaning. The group can link itself with the lead bank/any bank of the district. The
bank, on evaluating performance and savings, can fix a credit limit for the group.
This amount is usually utilized by SHG for a combined income-generating activity or
for loan to the individuals. This procedure usually takes six months.
The Government of India has permitted Self-Help Groups to open accounts with a
lead/focal bank which is located closest to the Group. The following steps are
needed to open an account with the bank:

-      SHG can open a savings bank account;

-      Resolution from the SHG. The SHG has to pass a resolution in the group
       meeting, signed by all members, indicating their decision to open SB account
       with the bank. An attested copy of the resolution should be submitted to the
       bank along with a formal application;

-      Authorisation from the SHG. The SHG should authorise at least three
       members – any two of whom to jointly operate their account. The resolution,
       along with the filled in application from duly introduced by the promoter, may
       be filed with the bank branch;




                                           20
-     Rules and Regulations. Copy of the rules and regulations of the SHG is to
      be given to the bank along with the application. The rules and regulations are
      generally adopted in the first meeting of the group and are included as a part
      of the proceedings;

-     Savings Bank Passbook. The bank shall issue a savings bank account
      passbook to the group. This should be in the name of the SHG and not in the
      name of any individual;

-     Bank loan to SHG. The bank loan to the SHG can be 1-4 times of the its own
      savings;

-     Loan repayments. All loans should be repaid in time to the bank with
      interest;

-     The group is collectively responsible for the repayment of the loan;

-     Collateral security is not necessary for the loans sanctioned to the SHG.
      The members of SHG know that the bank loan is their own money like
      savings. They are aware that they are jointly responsible for the repayment.
      Group exert moral/social pressure on the members for repayment. In this way
      the bank gets a better repayment from the groups;

-     Interest rate by bank. The bank is free to determine the lending rate of
      interest;

-     Lending rate by the group. The groups decide by themselves on the rate of
      interest for lending to their members.

Functional Features of Self-Help Groups

-     The Self-Help Group is a voluntary association of poor people whose needs
      are limited;

-     The SHGs are not engaged in speculative business;

-     The composition of the group is of the members who belong to similar socio-
      economic status or category, which are bound by affinity, similarity of interests
      and who are willing to work together;

-     There should be separate groups for women since their requirements and
      style of work is different;

-     The SHG does not work under the direction or control of any external agency
      or official;

-     It is completely independent;




                                         21
-     The characteristic of the group is highly participatory.

The idea of micro-finance is based on the philosophy of organising poorest of the
poor into Self-Help Groups and makes them realise the very basic theory of survival.
The SHG aims at breaking this vicious circle and reduces the dependence on
moneylenders and exploiters.

SHG Rules and Regulations

With the assistance and help of the promoters [in any case, not under their direction]
the Self-Help Group should do the following:

-     Create rules and regulations pertaining to its organisation and management;

-     Specify rights and duties of the members;

-     Determine how many meetings to be held, when and where;

-     Determine the minimum amount to be saved by each member per month;

-     Determine the interest on internal loans and bank loans;

-     Determine the period of repayment;

-     Methods of admission and removal/withdrawal of members;

-     Rules for appointing an assistant/facilitator;

-     Determine imposition of fines/penalties for: [a] Not attending the meetings, [b]
      Irregular savings, and [c] Non-repayment of loan on time, etc.;

-     Determine rules for giving loans on savings and bank transaction;

-     Determine responsibilities for various members e.g., handling and retaining
      cash balances, convening of meetings, safe-keeping of books of the SHG etc.

A more elaborate version of these rules and regulations is written down and adopted
by group members and included in the proceedings of the meeting. All members
should sign these rules and regulations and be countersigned by the chairman of the
meeting.

The management of the SHG is similar to a cooperative society, democratically-
based on the principle of ‘One Member-One Vote’. SHGs have their own rules and
regulations which they adopt voluntarily and impose upon themselves and agree to
abide by them. There can be several SHGs in one village.




                                          22
The SHGs can form their own SHG Association which can be registered under the
Societies Registration Act-1862 thereby acquiring a legal status to undertake
business operations. While cooperative societies need to be registered with the
Registrar of Cooperative Societies, there is no need for a SHG to be registered with
any agency. The main business of SHGs is thrift and loan. Cooperative societies,
especially the PACS, are multipurpose in nature. Both of them can transact business
with each other and it is regarded that the SHGs are a sub-system of cooperatives
as the membership of the cooperative is also open to SHGs and the membership of
the two institutions is generally common.

Requirements for Making SHGs Strong

To be successful the Self-Help Groups need to be:

[a]    Homogeneous: All members should be from one economic stratum – those
below the poverty line. If, in addition, they are also from the same occupational
group, it becomes a further contributing factor in successful functioning;

[b]   Small: Preferably between 10 and 20 families, though this could vary slightly
from programme to programme;

[c]    Multipurpose: Involved in an integrated set of activities in order to be self-
sustaining;

[d]    Voluntary: Developed from below and evolving their own rules and
regulations for membership and for all activities;

[e]    Informal and Fully Participatory: Decisions are made by all members and
not through representatives;

[f]   Consensus Decision-making: Decisions must be arrived at through
consensus;

[g]   Non-Political: There is no role and scope for party politics in these groups.

[h]    The group should have its own rules and regulations written down clearly as a
separate document or as a part of the first meeting in its meeting proceedings
register and all members should sign it;

[i]    Selection of Functionaries: Groups are expected to select/elect certain
functionaries to ensure a democratic functioning. These are: President/Chairman,
Secretary, and a Treasurer;

[j]    The main functions of group leaders: Chairman is to conduct meetings in a
democratic manner and keep the group together; In order to avoid any singular
control, the position of the Chairman is generally rotated among the members from
time to time with the consent of the members.




                                         23
The secretary is responsible for the upkeep of the books, maintain a constant
dialogue with the members and have an active coordination with the bank; The
Treasurer is responsible for the management of accounts of the members and of the
group.

            -----------------------------------------------------------------------




                                                 24
                                     Chapter-04
                    FINANCIAL MANAGEMENT
                     IN SELF-HELP GROUPS

The most important activities undertaken by the SHGs are savings and loaning.
Members are expected to regularly save small amounts and use the savings for
internal loaning among the members. The group manages the process of thrift and
credit by itself. In case the loan requirement of members is higher, the group can
borrow from the lead bank.

 It is viewed that provision of micro-finance may be seen more as logical extension of
the managerial and pragmatic approach to poverty reduction but with regard to
financial perspective credit is an effective tool which helps the poor to tackle the
problem of deprivation, improve their welfare and social acceptance and credibility.
Thus, micro-finance institutions including Self-Help Groups are those which provide
thrift, credit and other financial services and products of very small amounts mainly
to the poor in rural, semi-urban and urban areas for enabling them to raise their
income level and improve living standards.

Funds of the Self-Help Groups

The funds of the Self-Help Group consist of:

[a]   Membership Fee – Generally Rs 10 per member;
[b]   Membership Fee is payable only once at the time of admission;
[c]   Minimum regular deposits every month;
[d]   Interest earned;
[e]   Grants from promoters and government;
[f]   Project funds provided by promoters to carry out specific activities;
[g]   Donations and Gifts;
[h]   Development Fund etc.;
[i]   Fines and Penalties due to defaults.

Regular Savings

Every member of the group has to accept to make a minimum saving every month.
The decision as to the amount to be saved depends on the capacity of the member
himself. Members will save a specific amount on fortnightly or monthly basis. This
amount is decided by the group members. Once the amount has been fixed then that
amount must be paid in every month regularly.

The amount to be saved by the member: [a] Can be determined by the member
himself, or [b] By the group as a whole. The defaulting member is required to pay a
penalty if the fixed amount is not paid in time. All incoming funds should be




                                          25
distributed among the members who have applied for loans and the remaining
amount should be promptly deposited into the bank as soon as possible.

Management of SHG Funds

-     Members shall abide by the rules and regulations of the group;

-     Members shall be jointly and severally liable for all the debts contracted by the
      group;

-     All assets and goods acquired by the SHG shall be in the joint ownership of all
      the members;

-     Members shall elect and appoint a certain person to look after and manage
      the day-to-day affairs of the group;

-     This person shall be made responsible to manage all affairs of the group with
      the bank e.g., filling in loan applications, receiving the cheques from the bank,
      loan disbursements to the members, securing repayments for the bank etc.;

-     The appointed person can be removed at any time by a majority vote of the
      members and a new person to be elected or appointed;

-     In the event of the death of any members of the SHG all entitlements shall be
      handed over to the next kin of the person.

Loans to be Granted

-The SHG meeting takes a decision regarding the amount to be loaned out;
-The amount has to be uniform;
-Every member should get the same amount for a particular activity;
-Norms for loan should be fixed for each activity and its size;
-Loan repayment capacity should also be assessed for each activity;
-All the members can revise the amount of loan;
-All decisions pertaining to the value of loan, term of repayment, quantity of penalty
and other terms relating to the loan, deposit and repayment etc. have to be taken by
the group where at least 90% of the members are present;
-No loans are granted to non-members under any circumstance.

Repayment of Loans

Like any other lending institution, Self-Help Group also survives and prospers if the
funds loaned out are returned on time, in full and together with the interest due. If
there is a default, the money which has been put into circulation gets blocked and
other members who are in urgent needs of funds remain deprived of the facility.




                                         26
Since the SHG is based on the principle of mutual trust, cooperation and mutual
benefit, the loans must be returned in time. It has been observed that members of
SHG do not default simply because they know that they would not get the loan next
time if they do not realise the importance of this principle. Regular repayment has
been a special feature of a SHG. In more than 90% cases, members do return their
loans.

However, in a situation where the member finds it difficult to repay in time, a special
request with a specific explanation can be given to the SHG at its half-monthly
meeting. The member must be present in person and must explain the reason for the
default. If the reason submitted is reasonable and acceptable to the rest of the
members, the repayment can be rescheduled, and the member has to pay a penalty
for the default.

Recovery of loans is expected to be 100% in order to make the funds available to
other members. Default in repayment is a serious matter as in the long run the
financial situation of the group gets worse.

The group can receive the repayment either in cash or in kind. Repayment of loan in
kind should be acceptable only in case the group has ventured in marketing and
storage of the product.

Cash repayment is preferable since handling of kind presents a variety of problems.

Creation of Development Fund

The amounts deposited by the members every month and the interest earned
become the Development Fund of the Group. It is from this amount that the group
grants loans to the members. As the repayment gets into a regular mode without any
defaults, the Development Fund continues to increase. The money collected by the
group on account of fines and penalties becomes the income of the group and is
distributed equally among the members.

Meeting Credit Needs

The tradition of thrift and mutual help is very strong in the villages. There are grain
banks and village funds in many villages. At the time of necessity, credit facilities
from such institutions are provided to the villages which are repaid with interest at
the time of harvest.

The interest amount so earned is utilised during village festivals, maintenance of
village schools etc. This is a kind of saving in kind. The traditions of cash savings on
community basis are negligible. All cash savings are individual- oriented. By and
large, people in village belong to the same socio-economic strata. This could help in
group formation amongst people who shared a common ethos and culture.




                                          27
Meeting Emergency Needs

In addition to meeting the economic needs of the members, the SHG can come
forward to cover some of the emergency needs of the members. Emergency needs
include: incidence of disaster like fire, collapse of the dwelling place, death of the
cattle, sudden sickness etc. Such loans can be the half of the regular loan amount
while other conditions remaining the same. The decision is to be taken in the full
meeting of the group.

Withdrawal upon Maturity

The sure test of the sustainability, democratic management and a proper
accomplishment of the objectives of a Self-Help Group is the level of satisfaction
among the members and confidence among the leadership of the SHG. Initially the
SHG is promoted, nurtured and guided by the promoters and the Assistant/
Facilitator.

If the group members and leaders are sure that they can manage their affairs
independently and without any external support, the role and support of the external
agency could cease. The promoters can then withdraw from the SHG in a phased
manner. In case such an assistance, advice and guidance is needed again by the
group, the external agency or the Assistant/Facilitator can be approached.

Categorisation of Loans Given by SHGs

Loans taken from groups are used mostly for the following purposes:

      -Improvement of land;
      -Improvement of water channels and drains;
      -Sinking of a hand-pump;
      -Release from old debts;
      -Education of children and their clothing;
      -Purchase of food grains;
      -Purchase of household goods;
      -Contributions towards traditional community financial contributions;
      -Health care;
      -Purchase of cattle/livestock and their health requirements;
      -Purchase of fertiliser and other farm inputs including implements;
      -Nursery raising;
      -Bee-keeping;
      -Purchase of raw material for handicrafts etc;
      -Any other income-generating activities.

Practically all the Self-Help Groups are engaged in a large-scale activity of improving
soil, rivers, rivulets, laying anicuts, deepening of wells as per development plans
worked out by the development projects in consultation with the groups and villagers




                                          28
themselves. A number of villagers have now begun planting high-value trees e.g.,
teak, fruits, fuel wood etc.

SHGs can also participate in various government-sponsored rural employment
programmes.

Books of Self-Help Groups

Since the Self-Help Group is an organisation, it is necessary to maintain certain
books to keep track of membership, decisions and accounts. The NABARD has
suggested that the following books need to be maintained by all Self-Help Groups:

-      Simple and clear books for all transactions to be maintained;

-      If the group is not able to maintain the books on its own, someone from
       outside can be engaged by the group for the purpose;

-      Minutes Books. This book should contain the proceedings of meetings, the
       rules and regulations of the group, names and full addresses of the members,
       and details of deposits received and loans given, details and comments of the
       visitors and major happenings in the village etc.;

-      Savings and Loan Register. It should contain information on the savings of
       the members separately and of the group as a whole. Details of individual
       loans repayments, interest collected, balance etc. are to be entered in this
       book;

-      Members’ Passbooks. Individual members’ passbooks encourage regular
       savings;

-      A regular correspondence file to be maintained which should have all the
       correspondence of the group with the bank, members and other agencies.

The motivator can provide assistance in the management of these registers/records.

Samples of relevant registers are attached [Annexures-I, II, III].

Reconciliation of Accounts

While the groups continue to collect money from the members and maintain
relationship with the lead bank, it is also necessary to carry on regularly
reconciliation of accounts with the bank.


              -----------------------------------------------------------------------




                                                  29
                                               Annexure-I
                           …….. SELF-HELP GROUP
                                      SAVINGS ACCOUNT
Account Number: -------------------------------------------------------------------------------------
Member’s Name: -------------------------------------------------------------------------------------
Address: ------------------------------------------------------------------------------------------------
 Date     Particulars               Debit/Withdrawal        Credit/Deposit   Balance        Initials
                                    [Rs]       [Rs]         [Rs]      [Rs]   [Rs]    [Rs]




                                                       30
                                               Annexure-II
                             …..SELF-HELP GROUP
                                             LOAN ACCOUNT

Loan A/C No. --------------------------------------------------------------------------------------------
Member’s Name: ----------------------------------------------- SB A/C No.-------------------------
Purpose of Loan: ---------------------------------------------------------------------------------------
Repayment Installment: Monthly/Quarterly/Half-Yearly/Annual. Rs. ----------------------

 Date    Particulars   Loan       Interest       Amount Repaid               Balance          Signature of
                       Amount     [Rs]                  [Rs]                    [Rs]          Member
                       [Rs]                   Principal    Interest   Principal    Interest




                                                     31
                                      Annexure-III
                       ….. SELF-HELP GROUP
                                      Cash book

Date   Particulars   Cheque   Debit      Credit   Balance [Rs]        Total   Signature
                     No.      [Rs]       [Rs]     Cash         Bank   [Rs]




                                           32
                                     Chapter-05
                 SELF-HELP GROUP MEETINGS

Conducting Meetings

Conducting meetings at specified time and venue is of crucial importance. Properly
conducted meetings produce positive results and good decisions. Meetings should
be held regularly and all members should participate in such meetings because the
decisions taken at such meetings influence each and every one of the members.

In the rural setting meetings are usually related to some specific days and are
normally held at a convenient location e.g., the village headman’s house, Panchayat
Chaupal, temple, school or the health centre.

The meetings are to be held on a fixed day and at a common meeting point. If there
is any change, members should be notified sufficiently in advance. The expected
attendance at all the meetings is 90% and above. If any member wishes to be
absent, the group should be informed well in advance.

Still, if the member does not attend the meeting and the group has not been
informed about it, the member has to submit an explanation to the group, and has to
pay some fine [in cash or in the form of refreshment] and promise that such a thing
would not happen in the future. Full and regular participation is the key to the
success of the SHG.

All members must speak during the meeting. All members should share ideas and
understand all the issues that are being discussed. No single member should try to
dominate the discussion. It is thus the duty of the Chairman to stop such domination.
Strong members should encourage weaker members to participate.

Procedures to Conduct Meetings and of Proceedings of Meetings

The meetings of the groups are expected to be informal and conducted
democratically in a congenial atmosphere, which encourages greater participation
and interaction among the members.

All members should sit in a circle so that members can see each other. Before the
commencement of the business, a prayer or a community song should be sung.

The Chairperson should conduct the meeting. A record of the points discussed
should be maintained. Each and every point discussed and on which a decision has
been taken must be recorded and read out to the members for affirmation and
confirmation. Each member should sign the Proceedings Book.

Other points regarding the conduct of the meeting are as follows:




                                         33
-     Review of the proceedings of the previous meeting for confirmation;
-     Follow rules and regulations throughout the meeting;
-     Encourage all members to talk, express their opinions and make suggestions;
-     Record proceedings during the meeting itself;
-     Decide on the date, time and venue of the next meeting;
-     Invite suggestions and topics for the next meeting;
-     Any other matter for discussion, and general information;
-     Secretary should close the meeting with a Vote of Thanks to the Chair.

Frequency of Meetings

Half-monthly meetings are held regularly. In one month normally two meetings are
held – one in the first week of the month and the second in the beginning of the third
week of the month. The meetings are held mainly to take stock of the work done,
grant loans, and receive repayments and interest and future planning.

The idea of holding two meetings in a month is to retain and maintain the interest of
members in the activities of the SHG. These meetings also serve the purpose of
collecting suggestions and fresh ideas from the members which could be
incorporated in the regular plan of action.

All rules and regulations pertaining to the organisation and management of a SHG
are framed in advance with a full consensus.

All decisions should be taken with 90% of the members present.

Group Leaders

The SHG does not encourage having regular group leaders e.g., President,
Secretary or the Treasurer, since such offices create different types of feelings
among the members. All members are equal. It is only for the conduct of the meeting
that the group elects a Chairperson. The principle of rotational leadership should be
adopted to distribute power and opportunity to all the members of the group.

An educated youth, male/female, can be selected to help in writing the minutes of
the meeting and to maintain records and books of accounts. That person, to be
called as Assistant/Facilitator, can be paid some honorarium for such a job, if
needed. This person can look after 10-15 or more SHGs in the area.

Regular Recording of Decisions

All decisions taken by the group must be clearly and accurately recorded in the
meeting register. For this purpose the group may appoint an external person on
terms and conditions as approved by the group.

The format of recording proceedings is attached [Annexure-IV].




                                         34
Resolving Conflicts

The SHG is an ideal institution which can help resolve some of the internal and inter-
personal conflicts through discussions and consensus.


             ------------------------------------------------------------------------




                                                  35
                                               Annexure-IV
                             ….. SELF-HELP GROUP
                               PROCEEDINGS OF THE MEETING

Meeting No.: ………………………………                                     Date: ……………………………………..
Time: ………………………………………                                         Venue: …………………………………….
Chairperson: ……………………………….                                    Secretary: ………………………………….

         Number of Members Present: ……………….
         Number of Members absent: …………………
         Total Members of SHG: ……………….………

MEETING AGENDA
01       Prayer
02       Confirmation of the Minutes of the Previous Meeting
03       Financial Situation of the SHG
04       Savings and Loans
05       Consideration of Loan Applications
                -Discussion
                -Decision
06       Discussion on other Development Issues/Projects
07       Fixing the Date of Next Meeting
08       Vote of thanks

                 -----------------------------------------------------------------

                          PROCEEDINGS OF THE MEETING HELD
-
-
-
-

    Member   Member’s Name        Savings    Penalty    Repayment of Loan      Purpose of Loan   Remarks
    No.                           [Rs]       [Rs]       [Rs]
                                                        Date     Amount




Signature of Chairperson                                      Signature of Secretary




                                                       36
---------------------------Members’ Signatures --------------------------------
01…………………………….                           02 ………………………………..
03 ……………………………                           04 ……………………………….
05 ……………………………                           06 ……………………………….
07 ……………………………                           08 ……………………………….
09 ……………………………                           10 ……………………………….
11 ……………………………                           12 ……………………………….
13 …………………………                            14 ……………………………
15 …………………………                            16 ……………………………
17 …………………………                            18 ……………………………
19 …………………………                            20 ……………………………




                                          37
                                     Chapter-06
                 PERFORMANCE ASSESSMENT
                   OF SELF-HELP GROUPS

SHG Performance Assessment

While assessing the working of SHGs it must be seen whether these units have
emerged as empowered groups, both economically and socially; and whether their
faculties of cooperation and self-reliance have increased through participatory
development or not. It must be clearly understood that the working methodology of
SHGs shall always differ from the functional structure of commercial institutions.

A check-list to assess the performance of Self-Help Group is appended [Annexure-
V].

The appended ranking evaluation is prescribed by NABARD. Any SHG scoring ‘Very
Good’ in 13-16 parameters is eligible for obtaining loan from the bank. SHG scoring
less than 10-Very Good, are not eligible for bank loans, while SHG scoring 10-12-
Very Good will require improving. Groups not seeking bank loan and depending on
their own savings for inter-loaning may formulate their own evaluation parameters in
consultation with their promoters.

SHG Audit

The Self-Help Groups essentially deal with money of poor members. Though it is a
small money yet the apprehensions of members about their money is great. It,
therefore, becomes necessary that the funds are handled in such a way that
members remain assured of the safety and security of their deposits. The SHGs
have, therefore, to be transparent and objective in their financial management.

Though there is no legal requirement to conduct audit of SHGs it is still necessary to
get an internal audit embedded in the system of financial management of these
groups.

The audit therefore requires: better control on funds, better and transparent accounts
keeping, and proper utilisation of loans taken by members, repayments made by the
members, maintenance of proceedings book and other documents. An important
function of audit is to provide guidance and advice to the group leaders and
members. SHG system needs to ensure proper checks and vigilance to generate
greater confidence of members on their groups. All efforts need to be made to
ensure that resource tilting towards group leaders is avoided and all members get a
fair treatment.

The facilitator who looks after the documentation [writing of minutes of group
meetings and accounts] can also be trained to assist in the audit and vigilance




                                         38
activities of SHGs. Wherever needed local experienced or retired accountants or
auditors can be requested to audit 10 to 15 groups of the locality.

The SHG associations, being legal business entities, are, however, required to get
their accounts audited by chartered accountants.


             --------------------------------------------------------------------------------




                                                 39
                                                       Annexure-V

          CHECK LIST TO ASSESS THE PERFORMANCE OF A SELF-HELP GROUP
Name of the Group: ---------------------------------------Location of the Group: ----------------------------------------
Name of Lady Mobiliser: ---------------------------------Name of concerned Motivator: -----------------------------
Date of Assessment -------------------------------------------------------------------------------------------------------------

Sr       Factors To Be
                                 Very Good            Check     Good                   Check     Unsatisfactory        Check
No       Checked
01       Group Size              15-20                          10-15                            Less than 10
02       Status of Members       Only very poor                 2-3 not very poor                Many not poor
                                 members                        members                          members
03       No. of Meetings         4 in a month                   2 in a month                     Less than 2
04       Timings of              Night or after                 Morning between                  Other timings
         Meetings                6.oopm                         7.00 and 9.00
05       Attendance of           More than 90%                  70-90%                           Less than 70%
         Members
06       Participation of        Very high level of             Medium level of                  Low level of
         Members                 participation                  Participation                    Participation
07       Savings Collection      Four times a                   Three times a                    Less than three
         within the Group        month                          month                            times a month
08       Amount to be            Agreed Fixed                   Varying amounts                  -
         Saved                   amount
09       Interest on Internal    Depending upon                 24-36%                           More than 36%
         Loans                   the purpose
10       Utilisation of          Fully used for                 Partly used for                  Poor utilisation
         Savings Amount by       loaning to                     loaning
         SHG                     members
11       Loan Recoveries         More than 90%                  70-90%                           Less than 70%
12       Maintenance of          All books are                  Most important                   Irregular in
         Books                   regularly                      registers [minutes,              maintaining and
                                 maintained and                 savings, loans,                  updating books
                                 updated                        etc.] are updated
13       Accumulated             More than                      Rs 3000-5000/-                   Less than Rs
         savings                 Rs 5000/-                                                       3000/-
14       Knowledge of the        Known to all                   -                                Not known to all
         Rules of the SHG
15       Educational level       More than 30%                  20-30% members                   Less than 20%
                                 of members can                 can read and write               know to read and
                                 read and write                                                  write
16       Knowledge of Govt.      All are aware of               Most of the                      Most of the
         Programmes              Govt.                          members know                     members do not
                                 Programmes                     about Govt.                      know about Govt
                                                                programmes                       programmes
RANKING SCORE
 Note: The findings of this Assessment should be discussed in the Group. Wherever there is any shortfall, the Group should
 be motivated through education to improve its ranking. The ranking influences the link bank to consider loan applications.
 Higher the performance better is the relationship with the link bank.




                                                              40
                                     Chapter-07
                 SELF-HELP GROUPS &
            SHG ASSOCIATIONS/FEDERATIONS

Self-Help Groups [SHGs] are small informal groups of people [men and women] of
small means to satisfy some of their needs – farming and non-farming. They have no
legal recognition. However, when the SHGs are brought under an association they
attain a better bargaining power and legal entity status since the SHG Associations
are registered under the Societies Registration Act-1862. Two or more groups can
form an Association. The associations are local organisations and have no higher
level federation [state or national] of their own.

The Self-Help Group is a simple organisation of people of small means. The group
members depending upon their vision and initiative can elaborate the functions of
their groups individually and collectively [see Annexure-VI]. By forming their own
associations groups can not only expand their services but also strengthen other
institutions. The groups are small economically homogeneous voluntary group of
rural poor with mutual affinity.

Strengthening the Linkage

The SHG Associations are expected to serve as an important link between the SHG
movement and the market. SHGs can survive and grow progressively if the products
are sold in the market quickly and the process of procurement of raw material and
disposal of end-products is sustained. The SHG Association is the focal point for the
business of SHGs. The members shall remain attached so long as they continue to
earn something. Associations provide that economic incentive and advantage.

                    Self-Help Groups, their Association and the
                       Services Provided by the Association
                                                         Pooling of Surplus Fund
           SHG-01
           SHG-02                                        Raw Material Supply
           SHG-03
                              FEDERATION/                Joint Marketing
           SHG-04
           SHG-05             ASSOCIATION
           SHG-06             OF SELF-HELP               Linkages
           SHG-07             GROUPS
                              -A Legal Entity            HRD/Extension Services
           SHG-08
           SHG-09                                        Welfare Activities
           SHG-10                                        ActivitiesHRD/Extension
                                                         Other Activities




                                          41
As can be seen from the illustration, SHGs can develop inter-linkages among
themselves, as a first step. They can then federate themselves into a union,
association or a federation which can undertake activities like pooling of surplus
funds, procurement of raw material on behalf of various groups, joint marketing of
products [e.g., poultry, vegetables, horticulture, handicrafts etc.], development of
linkages with suppliers using the strength of the groups and group members,
development of training, education and extension programmes for all members, and
implementation of various common interest welfare activities.

                   LINKAGES OF SELF-HELP GROUPS WITH FINANCING AGENCIES
                                                    LEAD/LINK BANK
                     Self-Help Group
                                                    COOPERATIVE SOCIETY

                                                    SHG ASSOCIATION

                                                    COMMERCIAL BANK
                     Self-Help Group
                                                    SPONSORING AGENCY


One Self-Help Group can be smaller than the other. They still can form their own
SHG Association and develop working relations with their agencies e.g.,
cooperatives and other banks. A small SHG remains ineffective or confined to thrift
and loaning business if it does not have the support of an association.

It is also possible for the SHGs to negotiate with the local cooperative or the financial
institution e.g., a cooperative or a cooperative bank, on the lending terms, marketing
and procurement of raw supplies. Such groups can also work as pre-cooperatives
using the Principles of Cooperation as the basis of their management.

SHG Capacity Building

IFFCO Foundation, through its Cooperative Development Resource Centres
[CDRCs], and with the support of NABARD, has been organizing education and
training programmes for members of SHGs in order to enable them to:

       -Strengthen organisational matters including proper conduct of meetings;
       -Maintain accounts;
       -Understand objectives and management of SHGs;
       -Participation in SHG Association business programmes;
       -Develop linkages with other agencies at village level;
       -Support government/non-governmental social programmes etc.

The SHG Associations not only undertake business on behalf of their SHGs with
other associations or private enterprises but also have linkages with financing
agencies e.g., the designated lead banks or any other commercial bank. The




                                           42
associations also carry out business with the PACS and cooperative federations
especially in the procurement of fertiliser, seeds, farm chemicals and farm advisory
services.

Operational Problems

Though the implementation and monitoring of SHG is directly under the charge of
Cooperative Development Resource Centres broad guidelines are issued from the
Foundation head office from time to time. As per reports sent by the CDRCs and
based on the interaction with the SHG members and Associations, the following
problems have been noticed:

      -Time-consuming process to establish linkages with lead banks;
      -Lack of guidance in establishing business [production and marketing];
      -Lack of vocational training opportunities;
      -Inadequate and irregular education and extension support;
      -Lack of coordination between SHGs and with PACS;
      -Major emphasis only on credit business;
      -Inadequate evaluation of SHG performance.


               ------------------------------------------------------------------------




                                                 43
                                     Annexure-VI

                       SELF-HELP GROUPS, SHG ASSOCIATIONS,
                        COOPERATIVES, BANKS AND MEMBERS

          SMALL, ECONOMICALLY-HOMOGENEOUS VOLUNTARY GROUP OF
                     RURAL POOR WITH MUTUAL AFFINITY


                                                        Conflict-Solving through
To Save Small                    MEMBERS                Collective Discussions
Amounts Regularly
                                                        & Decisions

To Meet the Emergent                                    Collateral-Free Loans with
Needs of Members                                        Terms Decided by the Group


To Mutually Agree to                                    Mutually-Agreed
Contribute
                              SELF-HELP                 Rates of
to a Common Fund               GROUP                    Interest and Penalty


       Simple and Responsive Rules             Collective Decision-Making


SHG-01          SHG-02         SHG-03         SHG-04         SHG-05            SHG-06


    SHG ASSOCIATION/FEDERATION                COOPERATIVE SOCIETY


                            BANK/FINANCING AGENCY




                                         44
                                       Chapter-08
                         CAPACITY BUILDING
                        IN SELF-HELP GROUPS

Self-Help Groups are to be strengthened socially, economically and professionally.
Since the members are from the group which had limited capacity to manage
themselves and promote their vocation it, therefore, becomes essential to impart
training to them on various aspects of social mobilisation, financial management and
vocational upliftment. This handbook provides enough information which will facilitate
smooth functioning of SHGs. However, the need for different vocational training and
resource mobilisation will continue to persist for achieving higher tier of progress i.e.,
a small dairy farmer may aspire for a milk chilling plant or processing plant for value-
addition. Such aspirations will need capacity building of the members, group leaders
and even of motivators and facilitators.

Capacity Building of Members

Members will need constant education in the following:

       -Maintaining SHG records;
       -Vocational training;
       -Health and Hygiene;
       -Organising groups and associations;
       -Banking procedures;
       -Participation including group dynamics.

Motivators/facilitators and professionals in different vocations will become the
trainers for this purpose.

Professional training consists of:

       -Need-based training aspects;
       -Institutional support;
       -Training material.

Probable subjects to be included:

       -Dairying;
       -Bee-keeping;
       -Nursery raising;
       -Vegetable growing;
       -Handicrafts;
       -Candle making;
       -Embroidery, weaving and knitting;
       -Retail business etc. etc.




                                           45
Training of Motivators/Facilitators

-Human relations;
-Group dynamics;
-‘Hands on’/’Do How’ like writing of minutes, accounts books, calculations of interest,
writing of bank forms and applications, writing loan applications.

Functions of Motivators

In the organisation and management of Self-Help Group there is a need for someone
who could provide motivational and organisational support. This person is an
extension agent who interacts with the prospective members and motivates them to
become members of SHGs. This person should be fully conversant with the methods
and techniques of operating Self-Help Groups. This person need not be a full-time
employee of the group. This person can be given a small remuneration. This person
can look after 10-15 or more groups in the locality.

Main functions of the agent [Motivator/Facilitator/Assistant] are:

       -Explaining the purpose and objective of a Self-Help Group to the target group;
       -Explaining group linkages [among themselves, with other groups and with bank
       etc.];
       -Motivating prospective members to come forward to seek the membership;
       -Holding preliminary meetings with prospective members;
       -Rights and duties of members;
       -Office-bearers of SHGs and their responsibilities and duties;
       -Importance of savings;
       -Identifying the functions which the group are to undertake;
       -Develop a business plan for the group;
       -Collect initial shares from members;
       -Recording the collections made;
       -Assistance in holding meetings;
       -Management of books of accounts and other registers;
       -Procedures of lending and repayment of loans;
       Establishing contacts with lead banks etc.

The group decides who should be the motivator/facilitator, and also takes decision
on the continuity or removal of the person.

Capacity Building of Motivators

In order to perform these motivational functions, motivators need to be trained and
retrained in these areas: group dynamics, participatory character of group
operations, developing a plan of action on the training and development of the group
leaders, preparation of basic teaching material, preparing budgets etc. They are
trained to write minute books, update passbooks, maintain other registers relating to
loan taken from financing institutions, and implementation of the decisions taken by
the groups.




                                           46
For the guidance of the motivators, a sample of a one-day training module and a
suggestive budget is placed as Annexure-VII.

Motivator is the Link

The motivator is an essential and strong link between the members and financing
institutions as well as among themselves and their association.

The motivator also helps in developing business linkages with the nearby
cooperative society and other development institutions.

             ------------------------------------------------------------------

               Training is an important activity in all areas of development.
      It is an integral part of all programmes. Training is different from teaching.
                Teaching means ‘to impart the knowledge’ to tell someone
                 how to do something - training is to form by instruction,
                                      discipline or drill’.




                                                  47
                       Annexure-VII-A

                 REGISTRATION FORM
               [To be filled in the Participant]

             Group Leaders’ Training Course
              Location: ……………………………..
              Date: ……………………..………….

Name of the Group: …………………………………………….………………………
Address of the Group: …………………………..……………………………………..
Name of the Participant: ……………………………….………………………………
Position in the Group: ………………………………………………………………….
Since when in Membership: ……………………………………………………………


                                    Signature of Participant




                              48
                                      Annexure-VII-B

                           BUDGET ESTIMATE
              FOR THE CONDUCT OF ONE-DAY TRAINING CAPSULE

Name of the Training Course: ……………………………………………….………………………
Venue of the Training Course: …………………………………………………….………………..
Date: …………………………………………………………………………………………………..
Motivator In-charge: ……………………………………………………………….…………………

 Sr No                  Item                       Cost                   Remarks
 01        Venue Costs                                 500.00
 02        Training Material Costs                   1,500.00
 03        Resource Persons Costs                    1,000.00
 04        Refreshments                              1,000.00
 05        Transportation                              500.00
 06        Unforeseen                                  500.00
 TOTAL                                               5,000.00
Notes: Costs shown here are indicative costs only. These can vary from case to case.

Regarding Item-01: The venue can be fixed by Motivator in consultation with the group
leaders. Most of the meetings are generally held either in the house of the group leader or at
some common places like the Panchayat Office, School, Village Temple or in a community
centre. Generally there is no rental for such venues. However, some small money can be
allocated for the upkeep and cleaning of the premises;

Regarding Item-02: This material is generally available free of cost from the SHG sponsors.
However, in the case of duplicating sample forms for exercises, chalkboard or whiteboard
pens some costs might be incurred;

Regarding Item-03: There is no need to harness resource persons from far off places.
Resource person can be invited from the local departments who are experts in their fields
e.g., accounting, auditing, agricultural extension etc. There is no need to incur heavy
expenditure on this item. Sponsoring organisations can support groups by sending their own
experts at their costs;

Regarding Item-04: Since the group members would be required to stay away from their
houses and places of work for over 4-5 hours, they may be given some light refreshments;

Regarding Item-05: Extreme care needs to be taken in incurring such costs;

Regarding Item-06: These are unforeseen costs which include items like telephone calls,
postage etc.




                                             49
                                         Annexure-VII-C

                         SUGGESTED ONE-DAY CAPSULE
                     OF SELF-HELP GROUP LEADERS TRAINING

A group of 30-45 group leaders from adjacent localities may be invited to take part in the
training programme. A peaceful central location with proper seating arrangement and
teaching tools like chalkboard, charts etc. may be selected as the training venue. The
following schedule may be suggested:

 Item  Particulars                                                                  Time Frame
 01    REGISTRATION                                                                 30 minutes
       Registration Form; Distribution of Notebooks, literature, pen/pencils etc.
       -By: CDRC Staff
 02    INTRODUCTIONS                                                                10-15 minutes
       of the Participants and Resource Persons.
       -By: Facilitator/Motivator
 03    INTRODUCTORY DISCUSSIONS                                                     20-30 minutes
       Importance of SHGs, Income-Generating activities, SHG Association.
       Sharing of Experiences of SHG. Scope of Development etc.
       -By: Resource Persons, CDRC Staff, Bank Officials,
       NABARD official, NGO
 04    EXPLANATION                                                                  30-45 minutes
       Different SHG Records: Accounts Books; Minute Book etc.
       -By: Motivator/CDRC Staff
 05    WORKSHOP MODE ‘Do How’ Exercises e.g.,                                       15-20 minutes
       Calculation of Interest and Penalties by using exercise note sheets
       -By Facilitator, CDRC Officials
 06    PRESENTATION                                                                 20-30 minutes
       Income-Generating Activities, Sponsors’ Development Plans,
       Government Local area Development Programmes
       -By: Resource Person
 07    DISCUSSIONS                                                                  15-20 minutes
       Social and/or Vocational issue
       -By: Resource Person
 08    FEEDBACK [Oral and Written], Future Action;                                  15-20 minutes
       CLOSING of the Training Course.
 Approximate time used for Training                                                 About 4.00 hrs




                                                 50
                                           Chapter-09
                   SELF-HELP GROUPS
            AS SUB-SYSTEM OF COOPERATIVES

BESIDES the cooperatives and other forms of organisations, there is yet another
form of enterprise which is organised voluntarily by the members themselves to meet
a variety of their needs. The Self-Help Groups [SHGs] are such organisations which
are formed, nourished and managed by the members themselves.

SHGs are Voluntary Institutions

The Self-Help Groups, people’s voluntary and informal institutions, are organised as
viable alternative to achieve the objectives of rural development and to get
community participation in rural development programmes. These are similar to
traditional group activities in all communities. It is a new form of a movement which
aims at reducing the incidence of poverty through the provision of easy credit. In
case of self-movement, thrift and credit are the entry points of activity. Micro-finance
or provision of financial services to low-income households, have come to be
accepted in policy implementation as the most efficacious intervention to alleviate
poverty, enhancing agricultural production and developing local leadership.

The needs of the farmers e.g., agricultural inputs, household requirements,
marketing facilities, credit and advisory services, are met by different organisations.


                                   FARMERS’ NEEDS

            CREDIT NEEDS                                   PRODUCTION NEEDS
                -Farming                                       -Farm Inputs
             -Consumption                                    -Farm Machines
               -Business                                        -Processing
              -Social etc.                                    -Marketing etc.

                                      FULFILLED BY
               Voluntary Organisations, Personal Relationships, Cooperatives,
                Commercial Banks, Private Moneylenders, Self-Help Groups



SHGs as Sub-System of Cooperatives

The strategy to focus on Self-Help Groups in rural development and to provide
services to the farmers rests on the premise that Self-Help Groups are a sub-system
of a cooperative institution. Both the members form the institutions, Self-Help Groups
and Cooperatives, voluntarily and the members operate and manage them on




                                                 51
democratic lines. ‘One-Member One-Vote’ is the principle on which both the systems
operate and the process of consensus rules supreme in decision-making process.

By virtue of provisions in the constitution [byelaws] of a cooperative, members as
individuals and groups [e.g., Self-Help Groups] can become its members. Both the
constituents enjoy equal rights in the management of the cooperative. Self-Help
Groups as well as their associations [or federations] can become the members of the
cooperative. There are, however, some differences:

      [a] Cooperatives are registered. Self-Help Groups are not;
      [b] Have a legal personality. Self-Help Groups have no formal personality;
      [c] Have a larger membership. Self-Help Groups have 10-15 members only;

Self-Help Groups, which are precursor of cooperatives, have been promoted under
various programmes and by various development agencies. It has been found that
SHGs can serve the needs of the small farmers better than the cooperatives. It is
believed that Self-Help Groups are a sub-system of cooperatives.

Self-Help Group is a method of organizing the poor people and the marginalised to
come together to solve their individual problems. The SHG movement is recognised
by the government and hence Self-Help Groups do not require any formal
registration. The purpose of the SHG is to build the functional capacity of its
members in the field of employment and income-generation activities.

SHGs and Cooperatives

While cooperatives are formal institutions working within the State Cooperative Law,
Self-Help Groups are completely independent and do not need any registration. SHG
associations can, however, be registered to be able to undertake business
operations.

Cooperative societies can admit SHGs and thus can make use of the financial
resources and expertise to expand their business thereby giving better services to
the members. SHG members have specialised common interest and thus can be
specialised ‘interest groups’ of the cooperative.


      -----------------------------------------------------------------------------------------




                                                    52
                                         Chapter-10
                        IFFCO FOUNDATION
                      AND SELF-HELP GROUPS

The main objective of the IFFCO Foundation is to strengthen primary level
agricultural cooperatives so that they are able to deliver all the needed services to
their members effectively and efficiently. However, due to legal roadblocks and weak
financial position of the cooperative banks, cooperative federations and of their own,
a quick transformation may not be forthcoming in the near future. The input and
marketing needs of the farmer-members continue to exist but they remain unsatisfied
due to obvious problems.

SHG as an Alternative Tool of Rural Development

It was, therefore, conceived to organise Self-Help Groups as an alternative tool of
service to the farmers. SHGs were formed among women and men and linked with
local banks. SHGs were also federated into associations so that they can obtain
input supplies and undertake marketing on a ‘joint action’ basis. SHGs, as NGOs,
were also linked with the primary agricultural cooperatives in order to source
fertiliser, seeds and farm chemicals. Cooperatives thus get economically
strengthened because they supply the requirements of SHGs, Associations and
members. The Foundation, therefore, works on four parallel institutional lines e.g.,
primary cooperatives, self-help groups, SHG associations, and NGOs.



                                        IFFCO FOUNDATION


           IF COOPERATIVE DEVELOPMENT                 DISTRICT LEVEL NGO
           RESOURCE CENTRE [CDRC]                     Social and Economic
           Advisory and Business Guidance Services    Development Activities


             SHG ASSOCIATION [NGO]                    COOPERATIVE
                                                      SOCIETY [PACS]
             SELF-HELP GROUPS
                                                      INDIVIDUAL COOP
             INDIVIDUAL MEMBERS                       MEMBERS
             [ALSO COOP MEMBERS]




                                               53
IFFCO Foundation’s Role

The IFFCO Foundation was established as a public trust in 2003 by the Indian
Farmers Fertiliser Cooperative Limited [IFFCO], world’s largest producer and
distributor of chemical fertiliser with a membership base of over 45,000 agricultural
cooperative societies with 60 million individual farmer-members in its fold. The main
aim of the Foundation is to strengthen the Cooperative Movement in India through
improving the management and credit delivery systems for the benefit of farmers. It
also initiates various rural development models with a view to enhance the income
not only of their institutions but also of themselves.

In view of the weak financial situation, lack of business diversification of cooperatives
members often face problems in obtaining farm-related services as well as in credit
supply. SHGs have been considered as an additional support mechanism to assist
the farmer-members. It is in this context that the Foundation has promoted a number
of Self-Help Groups in selected districts of five states. The details of the groups and
their membership are given below:

         ORGANISATION OF SELF-HELP GROUPS AND SHG ASSOCIATIONS
       BY IFFCO FOUNDATION IN COVERED DISTRICTS [AS ON MARCH 31 2009]
                           Total     Women Groups            Men Groups     Mixed Groups      Total
 CDRC Unit/State           No. of                                                           Member-
                                    SHGs    Members    SHGs      Members   SHGs   Members
                           SHGs                                                               ship
 01 Aligarh [UP]            342      240      3,102         91     1,053    11      121       4,286
 02 Deoria [UP]             570      570      8,245          -        -      -        -       8,245
 03 Ghazipur [UP]           367      361      4,837          6      137      -        -       4,974
 04 Lalitpur [UP]            50       50       615           -        -      -        -        615
 05 Unnao [UP]              142       87      1,043         15      169     40      446       1,658
 06 Kolar [Karnataka]        87       86      1,505          1       20      -        -       1,525
 07 Sangrur [Punjab]         30       30       466           -        -      -        -        466
 08 Panjkoshi [Punjab]       20       17       260           -        -      3       50        310
 09 Khagaria [Bihar]         92       92      1,056          -        -      -        -       1,056
 10 Narkatiaganj [Bihar]     39       39       478           -        -      -        -        478
 TOTAL.                    1,739    1,572    21,607        113     1,379    54      617      23,503

There are at present over 1,739 Self-Help Groups with a membership of 23,503
[over 75% of them are rural women]. The range of business activities carried out by
the groups, among others, include the following:

         -Bee-Keeping, processing of honey and marketing of the end-products;
         -Delivery of credit and rotation of credit money among members;
         -Rural insurance especially for women under ITGI schemes;
         -Livestock development including promotion of goatery;
         -Management of foodgrain warehousing;
         -Preservation and processing of local agricultural products;
         -Participation in horticulture development programmes;
         -Linkages with other micro-credit agencies;
         -Participation in PACS business diversification.




                                                      54
SHG Associations

Since the Self-Help Groups are not registered with any government agency, they are
informal and do not have any legal entity, but in accordance with the regulations of
the government they are entitled to get themselves registered and enrolled with local
banks [cooperative or designated commercial banks]. The Foundation has also
enabled the groups to form their own associations/federations and get themselves
registered under the Societies Registration Act-1862 to secure a legal entity due to
which they can transact business with cooperative societies and with private traders.
So far over 30 SHG Associations have been formed which are duly registered and
linked with nodal/lead banks in their respective areas.

The Ishara Foundation for Finance and Rural Development [IFFRD], a micro-finance
institution for integrated services, has made use of the SHG network for promotion of
micro-enterprises in Deoria, Ghazipur, Aligarh and other districts. SHG members
have, through this initiative, improved their economic situation. Over 100 varieties of
micro-enterprises have been started by SHG members. This linkage has proved to
be a successful one.

The SHG Associations conduct business on behalf of their affiliate-groups on the
basis of a good bargaining power.

To facilitate the formation and management of Self-Help Groups and to motivate
members to join the groups over 20 SHG motivators [most of them are women] were
recruited, trained and inducted. They provided on-the-spot guidance to the groups
and their members and facilitate the process of relationship with the link/lead banks.
They are also expected to support the groups in holding their meetings and upkeep
of relevant books and other documents.

Since the task of organisation and management of the groups and retention of
members’ interest in their groups is of complex nature, it is important and relevant
that the motivators are kept informed and refreshed on the latest market situations
and latest policies on SHGs. The Foundation has embarked upon an intensive
education and capacity building programme for them so that their relationship with
their associations remains cordial and effective.

The Foundation has also successfully developed business relationships with several
financing and marketing agencies to overcome the problems of credit and marketing.
For this purpose linkages have been developed with agencies like the ISHARA
Foundation, Small Industries Development Bank of India [SIDBI], Cooperative
Central Banks and other commercial financing institutions. The Foundation has also
developed cooperative programmes with NABARD on capacity building and SHG
infrastructure development.

The present manual has been designed to support the promotion and organisation of
Self-Help Groups and their associations in the districts covered by the Foundation.
The main objective of this training material is to enhance and refresh the knowledge




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of field level staff, leaders of groups so that members and groups are aware of their
rights and duties and the methods and techniques of operating their organisations
democratically and professionally to meet the business and financial needs of the
members – men and women, by holding short-term education and extension
programmes from time to time.

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Description: SELF HELP GROUPS sensitive groups