Longma Yanger
In recent times the various stories we come across in the development perspective is the success stories of Self-help groups (SHG’S). Self help group are homogeneous, informal group of people having equal socio-economic background, common perception of need and collective action towards uplifting the socio-economic status of its group members and to encourage non group member in developing the rural areas. Each SHG consists between 5-20 members.The size 20 has been made mandatory because any group larger then this would have to be registered under the legal system. The informal nature of the group helps suppress unnecessary administrative expenditure and profit constraints and free from corruption and bureaucracy. Likewise, groups are expected to be homogeneous so that its members do not have confliction interest and all members participate freely without any fear and adverse consequences. A common bond affiliates its members like communities, tribes’ men place of residence or activity linkages. Self help groups are not static but grow on the resources and management skill of its members and increasing confidence helps them participate in public and private sphere.
For SHG formation some external help is required this development agency must have the experience in identifying those common bonds or binding forces called natural affinities that exist in the locale condition. The whole process can be done following 3 stages.
The first stage is the identification of natural affinities and formation of self help groups which usually takes 4-6 months; this is avery critical stage as the sustainability of the group will depend on how well the activities are performed. As a first activity towards group formation process, the developmental agency has to launch awareness campaign in the area (cluster of 2-4 villages) to sensitize the people/household about the concept and rational of self-help groups.
They should have a menu of benefits which could be demonstrated to the people and have adequate competence to explain and convince the farmers/household. At this stage no differentiation should be made between resource-rich and resource-poor as the basic concept should be made widely acceptable. Moreover, the agency should abstain themselves from making any kind of allurement to the people. Here they should function in pure “mission mode” such campaign may require repetition once or twice, depending on the requirement which should be decided on the basis of neutral assessment of the level of sensitization of people towards the concept.
Once the agencies are confident that adequate sensitization of the people towards the concept of self help groups has been attained, the next step should comprise sharpening the focus on disadvantage section such as backward class, educated unemployed, women and school drop outadults. If required additional campaign should be launched.
The second stage is the stabilization of groups which takes 6-15 months. At this stage the groups is linked with banks as per the guidelines issued by the National bank for agricultural bank and rural development (NABARD) where group members obtain advanced loan from the banks. However, they should be properly guided about the maintenance of account and investment. The external agency should access the entrepreneurial skill of group members and their interest area for starting income generating self employment programme. The members should be provided suitable training in combination with other programmes in which there is provision of training. The entire period of this stage should be emphasized upon capacity building and skill development of the members.
The third stage is the withdrawal of intervention which takes 15-24 months. At this stage the agency need to integrate/build in withdrawal in their strategy right from the beginning of the process in order that intervention will support the growth of self-reliant people’s institution and not increase their dependency. Technical service for asset management and productivity, all round support for off-farm activities, especially for design, quality and marketing and fosterbuilding up apex body should be the major intervention and the need for regular feedback and analysis of situation be done continuously.
After help setting an SHG, the important of linking these groups with banks arises. During the earlier stages several innovative approaches in financing the poor in sustainable manner had been experimented in various developing countries. However, the Bangladesh experiment carried out by Prof. Mohammad Yunus changed the whole perception of Self Help Groups (SHG’S) by establishing the Grameen Bank (GB) in 1983 thereby linking SHG’s with the Bank’s after this successful experiment several countries followed suite and have branched its concept by setting SHG in most of the villages of Nagaland too, and therefore, Prof. Mohammad Yunus is today known as the father of SHG.
The necessity of linking SHG with the banks is that a large section of the poor population is yet to get access to the credit from formal banking system and depends upon conventional private source like money lenders, village shopkeepers etc. for their credit needs. Even though the Government has undertaken various poverty alleviation programmes, yet a substantial portion of the very poor and the most vulnerable sections of the society have continued to remain out of the realms of such programmes. The illiteracy of these poor people further compounds their problems.
Therefore to overcome such situation the banks which has SHG’s as its members lends out loan without fixing a ceiling of interest rates to such SHG. The group are to determine the rate of interest as close to the market rate as possible. Secondly, this interest amount goes back to the group fund, which is owned by the members themselves. So this interest amount can be considered as deferred income, which is forced saving in the current account. This act as an insurance substitute for the group.
The benefits of forming SHG’S are that they are self-sustainable system of community organization. They are promoted by NGO’s/State Government/ Banks etc. and provide proper training to the group members which helps build a sense of responsibility. The sponsoring agency lends at the group level and so no collateral security are required at the individual level and better recovery for the banks as the loan repayment mechanism is at the group level. Financial deepening in terms of coverage is achieved through small scale savers and borrowers.
Thus, in conclusion self help groups (SHG) acts as an intermediary to transform the economic conditions of the village folks. The old concept of various schemes not reaching the grass root level can now be reassured by coming voluntarily to form such group at the village level. The policy of various schemes under the central/state government is now being implemented at the villages through these SHG’s in different fields. It is the right time your area should organize/form SHG if a level in the socio economic status is desired.
(The writer is an Extension worker)
