Case7-July-2017
The National Bank for Agriculture and Rural Development [NABARD] celebrated its 36th Foundation Day on 11 July 2017, at Vigyan Bhavan in New Delhi. NABARD dedicated this 36th Foundation Day celebration to commemorate the 25th year of Self-Help Group (SHG) Bank linkage. The 25years of SHG Bank Linkage Programme initiated in 1992 has reached more than 10 crore rural families across India. The SHG movement has not only helped to achieve the goal of poverty reduction on a large scale, it has also acted as a tool to leverage women empowerment.
NGOs have been instrumental in spearheading the concept of SHG and subsequent bank linkages. NABARD make the most of the occasion by acknowledging the contributions of the NGOs. NABARD honoured the partners and stakeholders, who were part of spearheading the SHG-Bank Linkage Movement in the country. Union Finance Minister, Arun Jaitley presided over the function and gave away citations of special recognition to select organisations.
On the event, DHAN Foundation was honoured for its contributions over 25 years to the SHG Movement. On behalf of DHAN, its Executive Director M.P. Vasimalai, and the Kalanjiam Movement’s leaders Chinnapillai from Tamil Nadu, Suganya from Karnataka and Rukshana Misra from Maharashtra received the award. DHAN was part of the SHG-Bank Linkage pilot initiated by NABARD in the late nineties. The first SHG linked by DHAN was Azhagu Kalanjiam in Azhagapuri village in Appanthirupathi block. Today, the Kalanjiam Community Banking Programme has transformed into a movement spread over more than 10,000 villages reaching out to over one million poor women with close to 49,000 Kalanjiam SHGs. The members have savings of Rs. 466.59 crores and have mobilised Rs. 1530 crores through bank linkages.
DHAN team members including A. Umarani, Chief Executive, DHAN Kalanjiam Foundation N.K. Vasanthakumar, Team Leader, Bangalore; and M. Kalyanasundaram, Chief Executive, INAFI India were present at the function.
SHG-Movement has signalled a paradigm shift in the development approach of the country with focus on gender-based social capital. Organising the unorganised poor communities for holistic development and poverty reduction has been the primary objective of the SHG movement. We have a mixed bag of results; it is a pity that over time the SHG movement has been reduced to a narrow narrative of bank linkage, access to credit and recoveries. Though access to financial services is critical and important to aid and abet development, SHGs have not still graduated from savings and credit to insurance and pension services, even in southern states where SHGs have advanced well. The social security schemes (PMJJBY, PMSBY and APY) have brought great opportunities and it is the responsibility of all the stakeholders to enable the SHGs to access the entitlement schemes.
SHG programme depends on the enabling environment for its effectiveness in addressing poverty and its sustainability as has been demonstrated by a few successful NGOs and civil society groups. DHAN’s experience has reinforced this need more forcefully through networking of SHGs as federations which sets a platform for larger development. There needs to be a national acknowledgement of this critical element and consequential long-term support for enabling a process which calls for public investment, not to mention great engagement in the regions where the movement is weaker like in North India.
There must be a freedom of expression for diversity of SHG models and approaches with core principles being kept intact. At this juncture of celebrating 25 years of SHG movement, it is more important that the governments (central/state) and other policy making bodies should critically look at successful stories of development outcomes in addressing all dimensions of poverty through SHG movement across the country and devise such policies and programmes to support and expand such initiatives and interventions.
A quarter century is not a long time in the history of a nation that is many millenniums old. But, for 100 million rural women, the last twenty-five years of SHG movement have been like a leap through centuries. A small step in innovative banking turned out to be a giant step for women empowerment. For those of us, who have been part of the SHG movement, it has been an exhilarating and satisfying journey that has taken us through the huts and hamlets of India. It gave us moments of both joy and occasional despair, but in the end, there was the determination to take the movement forward from strength to strength.
The initial action research project of NABARD with MYRADA in 1987 convinced us that what the poor wanted was primarily to safe keep their thrift and that loans for livelihoods can be better appraised and customized by the members of the group. It also established that timely and hassle-free access to micro credit was more important than the rate of interest on such loans. A lot of preparation and research went into the launching of the pilot project in 1992. RBI became possibly the first central bank in the world to allow opening of savings bank accounts of informal groups.
A home grown microfinance model, way different from the other models adopted and practised world over, was about to unfold. A unique savings’ led, self-managed, doorstep financial inclusion and bank outreach programme with least transaction costs and participation of community at its core was mainstreamed in April 1996. At NABARD, we dreamt of providing financial services to more than a third of India’s rural poor through 1 million SHGs in ten years, beginning from the year 1998. But, within a period of eight years of mainstreaming, 10.79 lakh groups were credit linked.
Being the largest coordinated programme with participation of more than 30,000 bank branches, more than 5,000 NGOs and numerous foot soldiers spread over all nooks and corners of the country it required anchoring on a scale never done before. Those were the days of hectic activity filled with massive promotional campaigns, capacity building and training exercises, exposure visits driven by the innate belief that this microfinance product could change millions of lives. The success of a programme can also be adjudged from the fact that SHGs not only got recognition from banks and the RBI but became a vehicle for convergence. A large number of stakeholders started using SHGs as vehicles of social sector services. There are numerous examples of NGOs and government departments using the SHG platform for delivery of social sector interventions. Many governments later also utilised the SHGs for poverty alleviation interventions. NABARD salutes all these stakeholders of the SHG movement.
This synergy between all the stakeholders has resulted in a vibrant community of 8.6 million SHGs today with savings balance of Rs. 16,114 crores. During 2016-17, bank loans worth Rs. 38,781 crores were disbursed to 1.9 million SHGs taking the credit outstanding to Rs. 61,581 crores. The year-on-year increase shows the fundamental strength of the concept. NABARD has taken upon itself to rejuvenate the SHG programme with focus on digitisation of SHGs through its e-Shakti initiative in 24 districts, besides other steps. The GOI’s flagship poverty alleviation programme viz. National Rural Livelihood Mission has made large strides and taken up more than half the country’s blocks for intensive implementation, emerging as a major player in the SHG space.
On the occasion of the silver jubilee of the SHG movement, I thank all these champions of SHG movement for continuing to guide the upscaling of this women-centric financial inclusion and livelihood movement.