Poverty alleviation through Self Help Groups

1. OPERATIONAL MANUAL
FOR
PROMOTIONG
SHGs
Dr. Ravindra Pastor

2. THE INSTITUTIONAL MODEL
 The model should satisfy need of multiple
programmes as envisaged in ILP
 The model must draw form the success and
failures of various institutional models
within and outside the state
 The model should be contextual for MP in
terms of specific need, suitability,
applicability, operationalization and long-
term sustainability.

3. EXPERIENCES AND LEARNING OF
OTHER APPROACHES
 The traditional SHG model
 Institutional Model of SGSY
 Hariyali (Watershed) Model
 Velugu Model of Andhra Pradesh
 Kudumbashree Model of Kerala
 DPIP Model of Madhya Pradesh

4. THE BASIC DIFFERENCE OF
VARIOUS APPROACHES IN THE
FOLLOWING CRITERIA:
 Assumptions on poor peoples' escape from
poverty
 Starting activity in the village, organizing the
Primary Group and process of group formation
 Group strengthening processes
 Associative tiers
 Linkage with Livelihoods
 Social-political empowerment
 People control on organization
 Assumptions about and initiative towards
achieve sustainability of the organization

5. SUCCESSFUL EFFORTS IN
MADHYA PRADESH: DPIP
o Demand Driven.
o Decentralized decision making.
o Group Based - "Collective".
o Transparency and Accountability.
o Placing funds at people's disposal.
o Flexibility.
o Emphasis on HRD.
o Interdisciplinary project facilitation team
o Learning from feed backs/mistakes.

6. POLICY ADOPTED BY GOMP
1. Integrated Livelihood Programme
An Integrated Livelihood Programme in which all the
livelihood schemes of Rural Development Department will
be integrated and implemented through PFT model
2. SHG Strengthening Policy, 2007
Under SHG Strengthening Policy, the activity-based
federations of SHGs will be promoted by providing:-
Handholding & Operational support
Financial assistance for working capital
Support for infrastructure development
3. Employability Training Policy, 2007
Under the Employability Trainings policy educated/un
educated, skilled/un skilled members/youth will be
registered and trained according to the existing demand of
services in industry, tourism, hotel, construction etc. and
placed.

7. THE STRUCTURE OF THE
PROPOSED MODEL
 Group based approach
 Livelihoods-centrality
 Affinity in the Group
 Self Help Groups and Activity Groups
 Building Social Organization
 Associative tires

8. Mem
ber
Mem
ber
T-
SHG
T-
SHG
T-
SHG
T-
SHG
Mem
ber
Mem
ber
Local
Service
Centre (up to
3-4 villages)
Services
• collection,
•Storage
•extension
Local
Service
Centre (up to
3-4 villages)
Services
• collection,
•Storage
•extension
Cluster Producer
Organization
~ Scale and Size
determined by viability
Services
-Integration (input
procurement,
technology extension,
marketing, processing),
- SHG support services,
- Business Planning;
- Bank Linkage
Cluster Producer
Organization
~ Scale and Size
determined by viability
Services
-Integration (input
procurement,
technology extension,
marketing, processing),
- SHG support services,
- Business Planning;
- Bank Linkage
T-
SHG
T-
SHG
Service ProvidersService Providers
Value Chain
Infrastructure
Value Chain
Infrastructure
ProfessionalsProfessionals
Value Chain
Infrastructure
Value Chain
Infrastructure
Common
Theme/Activi
ty
Common
Theme/Activi
ty
Mem
ber
Mem
ber
Implementation / Federation in Primary /
Secondary sector:

9. Follow up
Visits;
Job
Satisfaction
Surveys
Employer
Feedback
Follow up
Visits;
Job
Satisfaction
Surveys
Employer
Feedback
Job
Postings
through:
T-SHGS,
Schools,
and
GPs
Job
Postings
through:
T-SHGS,
Schools,
and
GPs
Market Scan
Identification of
Sunrise clusters
Prepare ESAV
profiles
(education, skill,
attitude and
value) of Jobs
Market Scan
Identification of
Sunrise clusters
Prepare ESAV
profiles
(education, skill,
attitude and
value) of Jobs
PlacementPlacement
Post-Placement
Support
Post-Placement
Support
Skill TrainingSkill Training
Market Scan and
Pathways
Market Scan and
Pathways
IdentificationIdentification
Modules on
Soft and
Technical Skills
Use existing
resources
(bldg,
equipment and
staff of ITI and
schools)
Trainers from
Industry
Apprenticeship
Certification
Modules on
Soft and
Technical Skills
Use existing
resources
(bldg,
equipment and
staff of ITI and
schools)
Trainers from
Industry
Apprenticeship
Certification
Negotiation
with
Industry
Placement
Website
Job Mart/
Fairs
Negotiation
with
Industry
Placement
Website
Job Mart/
Fairs
Employment generation after training:

10. Community Organizations:
VDCVDC
Community Financial
Organization (CFO)
Community Financial
Organization (CFO)
Financial
Institutions
Financial
Institutions
SHG
group
SHG
group
Producer
Organization
SHG
group
SHG
group
SHG
group
SHG
group
SHG
group
SHG
group
VDCVDC VDCVDC VDCVDC

11. UNDERSTANDING SHGS
 WHAT IS A SELF HELP GROUP (SHG)?
 A small homogeneous group (similar socio-
economic conditions)
 Consists of 10-20 members
 Members should live in close physical
vicinity - the same village or neighbourhood,
 Members should come together on a self-
selection basis for sharing their common
concerns, pool their own resources (both
financial and non-financial) and are willing
to work together for their personal, social,
economic and political development.

12. SOME GENERAL CHARACTERISTICS OF
SELF HELP GROUP :
 Different families
 Regular Meeting
 Savings and Credit activities
 Flexible Savings
 Loans from Banks / mainstream FIs
 Group Accountant
 MIS Flow and Computer Munshi
 Participation and rotational leadership

13. SOME NECESSARY STEPS FOR
FORMATION OF SHGS:
 Village Meeting
 Choosing Members
 Concept Seeding
 The benefit of group formation is restricted
to
i. Saving,
ii. Inter-lending / easy credit,
iii. Low interest rate (depends on the
situation),

14. SOME NECESSARY STEPS FOR
FORMATION OF SHGS
iv. The interest distributed in the group,
v. Recognition by mainstream financial
institution and availability and
accessibility to bank credit,
vi. Mutual help and support,
vii. Power of unity, group strengths and
joint action and strengthening voice of
poor through social mobilization etc

15. SOME KEY FEATURES OF A
GROUP
 Vision: Any group starts from a common
vision. The group functions well till the
time a clear vision exists in the mind of
each of the members and they see the group
as a way to realize that vision.
 Stake: All members of the group should
have shared stake in the group. Higher the
stake, higher will be the strength of the
group.
 Owning the Group: Members should own
the group. The ownership comes as there is
a joint vision shared stake.

16. SOME KEY FEATURES OF A
GROUP INCLUDE
 Roles and responsibilities of members: Each
member should be very clear about her / his
roles and responsibilities. They should be
capable of executing that and comfortable
with the responsibility distribution among
members.
 Leadership: Aspect of leadership is very
important in a group. Many times natural
leaders evolve in a group.

17. SOME KEY FEATURES OF A
GROUP INCLUDE
 Decision-making: The decision-making in the
group is an important aspect. Groups having
more democratic decision making systems leads
to higher participation.
 Conflict Resolution Mechanisms: Conflicts are
inevitable in any group. Positive conflicts are
better for group cohesion and are important to
increase the bonding.
 Norms and values of the group: Norms and
values of the group are very important for their
effective functioning. Instead of externally
imposed norms, norms evolving during group
processes may have higher ownership of group
members on these norms.

18. GROUP FORMATION STAGES:
Bruce Tuckman (1965) developed a 4-stage
model of group development::
 1. Forming: Members come together and form
the group.
 2. Storming: A chaotic vying for leadership and
trailing of group processes
 3. Norming: Eventually agreement is reached on
how the group operates and creation of group
norms
 4. Performing: The group practices its craft and
becomes effective in meeting its objectives.
All groups including Self Help Groups pass
through the first three stages before the
performing stage. Length of these stages may
vary for groups.

19. ROLES AND FUNCTIONS OF SELF
HELP GROUPS
 Mutual Help: Affinity and Solidarity
 Financial Intermediation
 Empowerment
 Livelihoods Action

20. PREPARING FOR SHG FORMATION
•• For understanding the area collect followingFor understanding the area collect following
information:information:
 Map of Block
 Villages, population & other demographic
data
 Information regarding Panchayati Raj
Institutions
 Banks and their service areas
 List of registered SGSY SHGs, groups.
 Other agencies involved in SHG promotion
and their operational area
 Information regarding functional SHGs in
the area.

21. PREPARING FOR SHG FORMATION
•• Supplement it with following information:Supplement it with following information:
 The approach road and distances of
villages
 Location of banks, service area of bank
 Important Haat places with numbers of
villages in the catchment area
 Mapping potential of SHG formation in the
cluster, baseline data about area and
sample Hh

22. PREPARING FOR SHG FORMATION
•• Prepare a SHG promotion planPrepare a SHG promotion plan
 federation office and proposed system of
data inflow-outflow.
 Identify the cluster for initiating the group
formation.
 Identify the well functioning SHGs and
select the leaders of these SHGs who have
the potential to become Community
Resource Persons (CRPs) for SHG
formation.

23. PROMOTING AN SHG: THE PROCESS
& DIFFERENT PHASES
 The fist phase: pre-formation phase
 The second phase: Concept Seeding phase
 The third phase: formation phase
 The fourth phase: strengthening phase
 The fifth phase: bank linkage phase
 The sixth phase: livelihood planning phase
 The seventh phase: graduation phase
The final aim is to graduate groups or
withdraw from active promotion within one
year.

24. BASIC PROCESSES IN SHGS
1. SETTING NORMS
 Savings
 Attendance
 Meeting frequency and time
 Cash box management
 Accountant / record keeper
 Savings withdrawal
 Disciplining (allowable fines) rules
 Implementing disciplining rules

25. BASIC PROCESSES IN SHGS
2. ATTENDANCE
 What is quorum?
 What implication does quorum have on
financial transactions?
 What should the quorum level be?
 What happens if the quorum is not
satisfied?
 What if quorum falls during the course of
meeting?

26. BASIC PROCESSES IN SHGS
3. MEETING FREQUENCY AND TIME
 What frequency?
 At what time?
 Meeting duration
 Annual meeting after audit of accounts
 Special meetings

27. BASIC PROCESSES IN SHGS
4. CASH BOX MANAGEMENT
 Why does the SHG need to hold cash?
 Why is cash box needed?
 How to maintain the cash box?
 Minimum and maximum cash in the box?
 Withdrawal from or deposit of cash from
the box outside the meeting?

28. BASIC PROCESSES IN SHGS
5. SAVINGS WITHDRAWAL
 How is withdraw-able saving different from
the previous savings?
 What is the advantage of withdraw-able
savings?
 Will withdraw-able savings earn dividend if
not withdrawn?
 How will interest be computed on savings?

29. BASIC PROCESSES IN SHGS
6. SETTING DISCIPLINING RULES
 What do disciplining norms mean?
 Why have disciplining norms?
 What behavior does it seek to discipline?
 How are these disciplining norms set? Do
we proactively facilitate or wait for some
occurrence to generate?
 How to facilitate discussion?
 What should the amount be?

30. CONDUCTING SHG MEETINGS:
 Step 1:Step 1: Assembly and Start
 Step 2:Step 2: Discussion of Wider Issues
 Step 3:Step 3: Opening Cash Tally
 Step 4:Step 4: Verification of Loan Use
 Step 5:Step 5: Collections

31. CONDUCTING SHG MEETINGS:
 Step 6:Step 6: Savings Withdrawal
 Step 7:Step 7: Loan Vetting and Disbursements
 Step 8:Step 8: Closing Cash Tally
 Step 9:Step 9: Reminders to Borrower of
Principal and Interest Due
 Step 10:Step 10: Attendance and Closing
Actions--Keepers of Box, Key and
Registers

32. SETTING UP MAINTENANCE
SYSTEM
1. ACCOUNTING SYSTEM
o General Accounting Norms for Financial
Transactions in SHGs
o Savings Transactions
o Loans
o Withdrawals
o Interest on loans

33. SETTING UP MAINTENANCE
SYSTEM
1. ACCOUNTING SYSTEM
o Interest on Deposits
o Bank Transactions
o Rules for Penalty, Other Collection and
Payment of Expenses for Running of the
SHG
o Sharing of Profits / Loss of the SHG

34. SETTING UP MAINTENANCE
SYSTEM
 The Minimum Financial Information to be
Available in Each SHG at All Times
 Departure of Individual Member from the
Group
 Entry of New Member
 Splitting / Merging of Group
 Dissolution of Group

35. SETTING UP MAINTENANCE
SYSTEM
2. SELECTION OF ACCOUNTANTS
o Track Record and Availability of the Person
o Social Maturity of the Person
o Emotional Maturity of the Person
o Motivation
o Literacy and Numerical Ability

36. SETTING UP MAINTENANCE
SYSTEM
3. BOOKS OF ACCOUNTS AND RECORDS OF
SHG
o Design Considerations for the Accounting
System
o Layout of the books
o General Features
o Books
o Member Pass-Books
o Minutes and Attendance Register
o Pass Book

37. A COMPUTERIZED ACCOUNTS
SYSTEM
 Need for Strong Systems
 Computer Munshi

38. IDENTIFICATION AND CAPACITY
BUILDING OF COMMUNITY
RESOURCE PERSONS
 Educated upto 10th
standard
 Have good communication skills
 Should be mobile
 Socially accepted personality
 Comfortable in working with women
 Should not be of dominating nature
 Encouragement should be given to women
candidates and persons from marginalized
section

39. TRAINING AND CAPACITY
BUILDING -TEAM & GROUP
MEMBERS
 Basic Concept of SHGs & Facilitation
Technique
 Roles and Responsibility of facilitators
 Group processes and group dynamics
 Understanding Roles and Responsibility of
members
 Roles and Responsibility of accountants

40. TRAINING AND CAPACITY
BUILDING -TEAM & GROUP
MEMBERS
 Leadership in SHGs
 Decision making Conflict resolution
 Credit appraisal
 Understanding Book keeping
 Understanding Fund management
 Understanding Marketing

41. ONGOING MONITORING AND
TROUBLE SHOOTING
 Regular visit of groups
 Monthly meetings of CRP
 Monthly Cluster meetings
 Keeping the track of group health through
computerized data
 Self assessment and Grading

42. SHG HEALTH INDICATORS
1. Financial Health Indicators
 On time repayment
 Operational cost ratio
 Net income
 Credit Savings ratio
 Portfolio at risk
 Credit relationship with Bank
 Savings regularity

43. SHG HEALTH INDICATORS
2. Non-financial Health Indicators…
 Composition of group- Coverage of poor and
disadvantaged section, Homogeneity
 Meeting regularity
 Attendance regularity
 No. of members shared a savings plan and
started following it up
 Benefit distribution

44. SHG HEALTH INDICATORS
2. Non-financial Health Indicators
 Quality of book keeping
 Process for the conduct of the meeting
 Process for credit appraisal
 Sharing and listening in the meeting
 How the group involves the silent members

45. SHG HEALTH INDICATORS
 Sharing of group responsibilities
 Decision making process
 Leadership and influence exercised by
number of members
 The process of dealing with problem
 Awareness among members of their own
and others’ savings and loan balances

46. SHG HEALTH INDICATORS
 Numbers of members have a plan for a
better and sustainable livelihood
 Members pursuing their livelihood plans
and enhancement in wellbeing of the
households
 Members’ identification with the group
 Extending mutual support
 Extent of collective action eg: Number of
social issues handled by the group up to the
logical end.

47. SHGS: LINKAGES AND GRADUATION
TO LIVELIHOODS
 The approach to SHG based livelihoods
 Livelihood Orientation of the Members in the Initial
Stages
 Livelihood Planning Using the Internal Learning
System
 Achievement Motivation Inputs
 Implementation of the Plan

48. ENGAGEMENT WITH SOCIOPOLITICAL
INSTITUTIONS
 Collective action towards the Social
challenges
 Streamlining the basic services
 Impacting governance and political
scenario

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