Dissertation Submitted To
Indian Institute of Technology, Guwahati
In partial fulfillment for the award of the degree of
Master of Arts
Kaushal Kishor Kaushal
Under Supervision of:-
Dr. Mrinal Kanti Dutta
Department of Humanities and Social Sciences,
A SHG is a group of about 10 to 20 people,
mostly women, from a similar class and region,
who come together to form savings and credit
organization. They pooled financial resources
to make small interest bearing loans to their
members. This process creates an ethic that
focuses on saving first. The setting of terms and
conditions and accounting of the loan are done
in the group by designated members
To asses and analyze the status and reasons of
default in between members of SHG and bank.
To study the best practices in repayment and
document the mechanisms followed by
organisations, micro-finance institutions and
groups to ensure 100 percent on time repayment
Study is based on primary and secondary data
Primary data collected from the set of
Secondary Data has collected from different
Institutions, organizations, and from various
Randomly selected 30 samples from five
Sample drawn from 2 blocks in Kamrup
A descriptive study
Study is more of qualitative nature
Two blocks in Kamrup® District
1. Sualkuchi Dev. Block
2. Rangia Dev. Block
Randomly selected five SHGs.
1) Khushi SHG- 6 members
2) Lakhimi SHG-7 members
3)Pragatishil Shuba SHG-5 members
4) Milijuli mahila SHG-7 members
5. Jeuti SHG- 5 members
Understanding about SHG, microfinance
issues, default issues. Functioning of SHGs,
origin, issues and challenges and got an earlier
understanding of the study
The origin of SHGs is from the brainchild of
grameen Bank of Bangladesh, which was
founded by Mohammed Yunus. SHGs were
started and formed in 1975.
In india NABARD initiated in 1986-87.
But the real effort was taken after 1991-92 from
the linkage of SHGs with the Banks.
Open and voluntary
Autonomy and independence
Education, Training and skill upgradation
Self-Help and Help to each other members
Sl No.- SHPIs Schemes/Project Remarks
1. Department of women
and child Development
No specific Scheme Groups are organized
by Aganwadi workers
2. Department of Rural
SGSY BPL Group mostly
3. NABARD and Banks SHG-Bank linkage,
commercial Band and
4. Cooperatives The cooperative have
very recently started
Support from Donar
Groups promoted by
programs are often
reported by both (NGO
Assam has a network of 1335 branches of 24
commercial Banks, 2 Regional Rural Banks
(RRBs) and cooperative Banks in the Assam.
There are 850 Rural,282 semi-rural and 203
urban Branches in the state. North East
Development Finance corporation (NEDFI)
also cater to the credit needs of the state
Microfinance providers in assam
A better system of penalizing the members need to be in place. Current
analysis shows that the penalty amount charged is not sufficient enough to
incentivize members not to default indicating a scope of raising the penalty
fee to control defaults further.
Lending by Banks
Considering the loan size and default rates, amount disbursed to SHGs need
to be checked which might currently be too high for MP and Karnataka and a
little low for Bihar.
1. Illiterate 53.33 (16)
2. Can only sign 26.66 (8)
3. Up to 5th class 6.33 (2)
4. 6-8th class 3.33 (1)
5. 9-10th class 3.33 (1)
6. HSC 3.33 (1)
7. Graduation 3.33 (1)
All 100 (30)
Occupation Number/Percentage of
1. Agriculture 20
2. Animal Husbandry 6.3
3. Daily wage worker-Non
4. House hold enterprises 0.00
5. Other/common SHG
7. Housework 53.3
8. All 100
Khushi SHG 16.66 33.33 50.00 100
Lakhimi shg 14.4 42.8 42.8 100
40.00 20.00 40.0 100
Milijuli SHG 28.57 14.28 57.14 100
Jeuti SHG 20.00 0.00 80.00 100
Total 36.66 23.3 40.00 100
Activities Percentage of members
1. Meeting household
expenses, education &
2. Agriculture 13.3
5. Others 26.80
Spending loan in Non-economic Activities
Lack of awareness/information to SHG
Dependence of members to repay the loan is
foremost reason to default
Widespread laxity in writing and absence of basic
books of record
Ad hoc formation of groups
Low incidence of inter-loaning
Appropriation of benefits by the leaders/ office
Credit to group without estimating credit needs of
Lack of effective grading by banks and
Lack of emphasis on group development
Lack of attention to member savings
Motivate individual to invest in economic
Focus on common entrepreneurship
Focus on skill up-gradation training
Priority should be based on saving than credit
SHG should go in evolutionary process
Reduce the dependence
SHG should undergo in an evolutionary process
Separate grading and focus on training
Promoting ‘area centric’ federations of SHGs
Reach out to all poor families, not restrict to
Adopting common approaches
Saving first, credit later
Strengthening SHGs Movement in weaker
Up to 2010, researchers argued, loan
repayment in SHGs is more than 95%, but now
many researcher found that, loan repayment
rate has been decreased and it is now 88%.
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Special Thanks to My Guide
Dr. M K Dutta