Role of NGOs in Self Help Groups (SHG)
Movement in India
Suveer Malhotra - 109
Rupesh Jain - 83
Shruti Patra - 73
Ruchi Gupta - 133
SELF HELP GROUPS
• Self Help Group is a group of 12 to 20 members of women
who come forward voluntarily to work together for their
• The group creates social capital, self esteem and dignity
among its members.
• It also creates a sense of
discipline, responsibility, cooperation and above all a strong
mutual trust and human relations.
• About 2 million SHGs have taken bank loans.
• Total membership around 26 million people.
• 94% women; growth around 30% + per year
• A Self-Help Group may be registered or unregistered.
• It comprises a group of micro entrepreneurs having
homogenous social and economic backgrounds.
• Everyone voluntarily come together to save regular small
sums of money, mutually agreeing to contribute to a common
fund and to meet their emergency needs.
• The group members use collective wisdom and peer pressure
to ensure proper end-use of credit and timely repayment.
• Self-help groups are seen as instruments for empowering
women, developing leadership abilities among poor people,
increasing school enrolments, improving nutrition and the
use of birth control.
NGO’s role in SHGs
• To motivate the rural people to organise themselves and to form
• To educate, train the group members in managing the group
activities like maintenance of books of accounts, conducting
meetings, management of funds etc.
• To promote savings habit among the group members and to help in
institution building along with the development of individual.
• To help the SHG in identifying raw materials and local resources.
• To help the group members to upgrade their skills and technology
to make best use of resources.
• To make available credit facilities and to act as a link between the
rural poor and the bank.
• To educate and train the group members to utilise credit properly
and to improve their economic conditions.
• To help the group members in exploring markets for their products.
• To work as facilitator in the meetings of the SHG.
ROLE OF NGOS
• NGOs are Self Help Promotion Institutions (SHPI) with a
special task of promoting, nurturing, strengthening and
monitoring the SHGs.
• Many studies reveal that the groups promoted by NGOs are
relatively perform better than other agencies.
• They are a catalyst in between SHGs and Funding agencies like
banks and MFIs.
BENEFITS OF SHG MODEL
SHG movement created an institutional framework.
Participation of women in SHGs improved their access to credit.
Culture of thrift and disciplined loan repayment.
Winning confidence of mainstream financial sector as credit
• Interest rates in the informal credit sector decreased.
• Consumption needs and certain production needs met.
CRITERIA FOR SHGS BORROWING FROM
• The borrowers must be a member of SHGs, which is
promoted by the NGO.
• Group or members of the SHG should act as the Guarantor
for the Loan.
• Loan amount should be used for the purpose for which it has
• Limit of loan depends upon the purpose for which the loan is
BENEFITS OF NGOs
• NGOs’ supported SHGs are more successful in functioning and
• NGOs conduct more trainings for SHGs.
• SHGs supported by NGOs are very prompt in repayment of
• Capacity planning is a key role played by NGOs
• The SHGs are turning out to be quality clients in view of
better credit management, low transactions cost and full
repayments because of NGOs involvement in this programme.
• Regular meetings and savings are compulsory ingredients in
the product system.
• Faster and shorter repayment schedule ensure faster
recycling of funds.
TRAINING PROGRAMMES BY THE NGOS
• NGOs conduct periodical trainings to its SHG members to promote
leadership qualities and income generating activities.
• SHGs that are getting trainings from NGOs are performing better
• NGOs conduct two types of trainings.
▫ (i) Trainings to SHG members and
▫ (ii) Trainings to SHG leaders.
Orientation and social awareness
Identifying and training in income generating activities
SHG Federation Concept and Panchayat Raj
Leadership training in SHGs
Record Maintenance and
Marketing SHG Products.
REASONS FOR SHGs PREFFERING NGOs
Facilitates in Formation
Getting Loan from Banks
Leadership and skill training
Coordination in conducting meeting
Helping in Marketing SHG products
Easy Access to Banks
Record Maintenance/ Accounting/Auditing
Savings and Repayment
• Lack of follow –up by the NGOs .
• There is sometimes no dedicated authority to take care of the
needs of the SHGs.
• Many members show lack of involvement and commitment
towards group activities.
• Absence of effective leadership in SHGs.
• Lack of motivation to start up a group enterprise.
• Lack of wider market prospects. SHGs sell their product only
• Resistance to women’s entry in local market and political
• Family resistance to changing power relations
• Damage to ‘credit discipline’ because of high interest rates and
political reactions to incidents of coercion
• High handed recovery of loans
• Lack of skills/experience for advisory/technical support services
to promote livelihoods and build market intervention
• Internalised notions of vulnerability of women affecting their
confidence and performance.
• Social norms inhibiting women from articulating personal needs.
• Women experience Invisible barriers to entry in economic &
• Interior and tribal villages have not benefited.
• SCs and women headed households have not benefited.
RECOMMENDATIONS TO NGOS
• Leadership development activities are essential. There should
be rotation or change in leadership.
• A workable business strategy should be generated for SHGs.
• “Savings first and credit later” this concept should be given
• NGOs should give more priority for capacity planning.
• Market oriented approach is essential for SHGs’ continuity
• The transaction cost may be reduced.
• NGOs should examine whether the loan amount has been
used for good purpose.
• Role of non-governmental organisations in micro finance through shgs –a
study in vellore district of tamil nadu - Dr. K.Rajendran, Dr.R.P.Raya.