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A Study of SHG-Microfinance Initiative in Purbo Midnapore District of West BengalEconomic Affairs Vol. 56 No.2 June 2011 (Page 107-116)

A Study of SHG-Microfinance Initiative in Purbo

Midnapore District of West Bengal

Sudhin Kumar Bera

Assistant Professor, Department of Commerce, Raja Peary Mohan College Uttarpara, Hooghly, West Bengal, India

Email: [email protected]

Receipton 04-05-2011 Accepted10-06-2011

Abstract

Providing easy finance and micro credit has always been the primary objective of Micro Finance Linkages.

Micro finance in the form of SHG Linkage model has been able to inspire hope in the lives of thousands of rural

people, women in particular and enable them to contribute to their families well being through savings and

borrowings. Microfinance influences the quality of life and is considered a powerful tool for positive socio

economic changes in modern society. It is well known to us that West Bengal is one of the important states in

the Eastern Region in respect of SHG-Bank linkage programme. During 2009-10, the number of SHG formed in

W.B. under SGSY scheme was 35123, which are second highest among all the states of India. Further, the

erstwhile district of Midnapore was divided into Purbo Midnapore and Paschim Midnapore on 1st January

2002. The present study is a modest attempt to analyze the performance of microfinance activities and to

explain the socio-economic impact of microfinance on the SHG members of Purba Midnapore District based

on primary data collected from two villages taking from two different blocks. The objective of the study is to

identify and assess the socio economic condition of the member beneficiaries during pre and post SHGsituation and to examine the utilization of microfinance services provided by the SHGs on income and

employment levels of the beneficiaries. The study was conducted by canvassing structured questionnaire to

88 sample households taken from 20 SHGs through random sampling method and results are interpreted by

tabular analysis. The study identified the remarkable improvement in the income level and employment

generation by the member beneficiaries and found significant increase in savings of the member households.

At the end, the study highlighted the issues concerning the functioning of SHG groups.

Keywords: Microfinance, Beneficary

Introduction

Financial inclusiveness and providing easy access to credit has

always been the primary objective of Government of India. Several

models have been tried to make this successful and Self-Help Group

(SHG) movement is the most successful one. The success of Self-

Help Group movement was well recognized and it has proved to be

a success in South Asian countries and particularly in south India.

It has also provided a pathway for broader issues like empowerment

and growth among various societies.

A series of research studies conducted by NABARD during the

early 1980s revealed that despite having a wide network of rural

bank branches which took different programmes like poverty

alleviation programmes, creation of job opportunities through bank

credit etc., a very large number of the poorest of the poor still

remain outside the scope of the formal banking system. It is found

that the poor really needed the better access to the financial services

and products rather than cheap subsidized credit. The urge for


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Sudhin Kumar Bera

improving the access of the poor to the existing banking network

has led to innovative / alternative credit systems such as Self Help

Groups set up with the help of NGOs and banks.

Microfinance services in India are provided mainly by two different

models viz. SHG-bank linkage model and MFI- bank model. Out ofthese two models, SHG-bank linkage model has emerged as the

more dominant model due to its adoption by formal financial

institutions namely, Commercial Banks, Regional Rural Banks and

Cooperative Banks. The MFI-bank model is also gaining importance

due to its massive supports by various private sector and foreign

funding agencies (Karmakar,K.G, 2010)

This paper is designed as follows: Section II presents concept of

microfinance and self-help groups, review of literatures, brief

objectives of the study and data and methodology. Section III

analyses status and performance of SHGss in West Bengal. In

section IV, assessment of SHGs in the district of Purbo Midnapore

is made. Finally, section V presents concluding observations.

Concept of Microfinace

Microfinance is defined as the provision of thrift, credit and other

financial services such as money transfer and micro insurance

products for the poor, to enable them to raise their income levels

and improve living standards. It refers to the entire aspect of

financial services such as savings, money transfers, insurance,

production as well as investment credit and includes the need for

improvement in skill and entrepreneurial development that would

help them to overcome poverty. Micro finance programs have

significant potential for contributing to economic and social

empowerment to members of SHGs. Access to savings and credit

can initiate or strengthen a series of interlinked and mutuallyreinforcing virtuoso spirals of empowerment (Niranjana Babu

Reddy, 2010). Micro finance development has emerged as major

strategy to combat the twin issues of poverty and unemployment

that continue to pose a major threat to the polity and economy of

both the developed and developing countries. So micro finance is

a way of financing to poor for their business, to alleviate their

poverty, empowering them, giving socio economic benefits of

sustainable way.

The concepts of microfinance have existed long back since 1904,

when the Co-operative Societies Act was passed for ensuring

production credit loans to the farmers through Primary Credit

Societies. The formation of long-term co-operative credit institutionsto meet investment credit needs of the farmers started in 1928.With

the various priority sector targets under social banking in1967 and

after bank nationalization in 1969, microfinance concepts in banking

institutions once again came to the forefront. However it is found

that rural credit market was still dominated by the rural moneylenders

and traders who offered loan at a high rate of interest even for

consumptions purposes. The Integrated Rural Development

Programme (IRDP) and the revamped programme named as

Swarnajayanti Grameen Swarozagar Yojana (SGSY) laid emphasis

on investment credit needs only. The rural poor did not receive the

subsidized and low interest credit rather the same were channeled

to the better-off sections of the rural people. Further, poor

monitoring and follow-up by the bankers resulted in poor repaymenof loan. Under the above circumstances, NABARD launched a

pilot project named as Self-Help Group Bank Linkage programme

in 1992. The major emphasis was given to disburse loans without

collateral, 100 percent repayment norms and lending to groups

instead of an individual alone who would also invest their savings

and regulate their groups and group loans, thus reducing

transaction costs for the borrowers and the banks. Thus

microfinance as a means of meeting the credit requirements of rura

poor is not a new concept and was met both by formal as well as

informal credit agencies. As the SHG-bank credit linkage programme

is now a decade old, it is high time, to review and analyse the

lessons learnt the SHG movement.

Concept of Self-Help Group (SHG)

Theorists consider SHG as a homogeneous affinity group of poor

villagers, voluntarily formed, with not less than five members. The

group in its formulation does not have very strict guidelines and

the decision as to the period of loan rests solely on the group

members. Credit is given both for consumption and production

purpose. The loan lending process would be channelized from

NABARD, re-financed to banks and banks would further lend it to

groups. It is assumed that groups thus formed would gradually

become viable to meet credit needs of their members.

Thus a SHG basically comes together to:

Save small amounts regularly

Mutually agree to contribute to a common fund

Meet their emergency needs

Have collective decision making

Resolve conflicts through collective leadership and mutua

discussion

Provide collateral-free loans on terms decided by the group

at market rates

SHG is formed and groomed by a NGO or a bank branch or a

government agency called a Self-Help Promoting Institution (SHPI)

The members of the group are encouraged to collect regular thrift

on a weekly or fortnightly or monthly basis and use the pooled

resources to give interest bearing small loans to their members. A

savings bank account is opened with a bank branch and regular

thrift collection and loaning to members builds up financia

discipline among the members.


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A Study of SHG-Microfinance Initiative in Purbo Midnapore District of West Bengal

Review of Literature

In India, the rural credit system has undergone radical changes in

respect of focus, structure and approach. The changes may be

considered under three headings. Changes during the first phase

pursued developmental objectives of providing agricultural credit

through cooperatives. Later, agricultural demands shifted and the

government adopted multi-agency approach in catering to the

needs of the rural sector. Regional rural banks were created and

the proportion of rural credit increased from 29.2 percent in 1971 to

61.2 percent in 1981 and ended at 56.6 percent in 1991. The third

phase began in 1990s and the government appointed the

Narasimham committee to examine all aspects relating to structure,

organization, function and procedures of the financial system. The

recommendations included deregulation of interest rate policy,

restructuring of rural credit delivery system, consolidation of the

governments self-employment schemes and other such measures.

The implementation of financial liberalization measures are regarded

as the entry point for microfinance revolution.Paul Mosley and David Hulme (1993) compared the changes in

household income from each of thirteen MFIs in seven countries.

The study found that all schemes had positive measured effects

on income.

Albert Park and Changqing Ren(2001) examined the impact of

microfinance on household welfare by using data from 449

households in China. The study reported increase in consumptions

by about 97 percent of the sample, indicating that credit access

could help increase the ability of households to smooth

consumption when incomes are variable.

Zaman Hassan (2001) examined the extent to which microcredit

reduces poverty and vulnerability through a case study of

Bangladesh Rural Advancement committee (BRAC), in Bangladesh.

The data collected from 1072 households found that there are

several channels by which microcredit services can reduce

vulnerability and also poverty.

Saundariya Borbora and Ratul Mahanta (2001) assessed the role

of SHGs in inculcating saving habits among the poor and the

contributions of the program in the social and economic

empowerment of the poor. 80 percent of the beneficiaries could

also expand their income generating activities.

Naila Kabeer (2005) examined the impact of microfinance and

concluded that a variety of basic needs are being met and it alsopromotes improvements in standards of living. As far as womens

empowerment is concerned, the evidence reported is positive and

there are exceptions and variations in the nature and strength of

impact by context and by organization.

Sridhar Seetaraman (2005) assessed the socio-economic impact of

SHGs through field level data. Study revealed that creation of

income-generating activities through loans availed of from banks

has made a significant impact on the overall economic status of

the group members. Additional employment generated through

the groups collective functioning has provided scope for increase

in the household income.

Franes Sinha (2005) examined the impact of microfinance serviceson clients dependence on informal sources of credit. The study

found a lower incidence of borrowing from informal sources and

the percentage of households borrowed at high interest rates is

comparatively lower.

The review of literature has highlighted the benefits of microfinance

SHG linkages. However, it is noteworthy that each study is

explained in a context and to arrive at a broad framework, more

studies would be helpful.

In this background, the present study is undertaken in Midnapur

(East) district of West Bengal to examine and evaluate the

microfinance interventions and the role of SHGs in the process of

development. Accordingly, the following objectives wereformulated for the study.

Objectives of the Study

The objectives of the present study are as follows:

To identify and assess the socio economic conditions of

members of SHGs from Midnapur (East) District

To examine the utilization of microfinance services provided

by the Self-Help groups on income and employment levels

of the beneficiaries in the district.

To study the functional issues related to SHGs.

To achieve the above objectives the study area selected is West

Bengal, since there is a widespread movement of SHG and

microfinance programs. West Bengal is one of the leading states in

Eastern India. Further, field survey study is conducted in two

villages taken from two different blocks of Midnapur (East) district

of West Bengal to understand and evaluate the impact o

microfinance services provided to the SHGs of the district.

Data and Methodology

Collection of Data: The study is based on both secondary and

primary data. Secondary data was collected from various

publications of NABARD, Banks and other governmental and non-

governmental organizations, Microfinance institution reports andalso from internet. Further, primary data are collected by conducting

field survey in two villages taken from two different blocks of

Purbo Midnapur District. The primary data are collected by

canvassing specially designed questionnaire for the purpose of

the study. The socio-economic impact of the study has been done

on the basis of primary data collected.

Methodology:The structured questionnaire was circulated among


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the members of Self-Help groups of these two villages selected

through random sampling method. Thereafter, tabular analysis is

done to understand the socio economic impact of the study. The

following questions were addressed in the analysis.

How is the microcredit utilized by the beneficiaries? Whether borrowings were used for income generating

purpose or not?

How effective are the SHGs in their functioning?

Since the questionnaire elicited information on the various socio-

economic dimensions of the beneficiaries, simple statistics like

percentages and bar diagrams, pie charts etc., are used to analyze

the data.

Status and Performance of SHGs in West Bengal

From the above table it is evident that during the year 2009-10

number of SHG formed in West Bengal was 35123 which are second

highest in India. The number was much higher than the groups

formed in many of Southern States namely Andhra Pradesh (21991)

Tamil Nadu (30000), Karnataka (7016), Kerala (1678) etc. Even the

state of Maharastra lies below W.B. Thus, it can be concluded that

in W.B., the process of forming SHG under SGSY scheme going on

at a faster rate across the country. Further, in respect of quality of

the groups formed it is found that more than 80 percent (80.51%) of

the groups formed in W.B. passed Grade-I and the number of Grade-

I groups formed during 2009-10 was also second highest among al

the top ten states under study.

Table 1: Statewise (Top Ten) Physical Progress of SHGs under SGSY

State No. of SHGs Formed No. of Grade I SHG No. of Women SHG No. of SHG taken up

Economic Activities

Total since During Total since During Total since During Total since During

1.4.99 2009-10 1.4.99 2009-10 1.4.99 2009-10 1.4.99 2009-10

Andhra Pradesh 933693 21991 768808 17761 846362 59528 251302 84837

Uttar Pradesh 409605 60088 235305 32055 99553 13827 134118 18832

Tamil Nadu 323218 30000 255095 55513 313714 29904 29886 506

Madhya Pradesh 291152 16202 116090 12199 141577 9103 50182 7922

West Bengal 273738 35123 220374 42235 229551 32178 178017 47304

Maharastra 240173 33424 162247 26204 196720 30943 77252 12541

Orissa 218265 20780 135266 17793 176526 18879 23335 5841

Assam 208212 22327 149857 23765 135123 13993 107187 19081

Rajasthan 207475 2846 38531 9176 116929 2843 2320 801

Bihar 154371 30696 83261 25027 94655 19810 55361 17378

National Total 3708410 320178 2446485 308380 2651422 261635 1026350 237953

Source: Official Website, GOWB

Table 2: Physical Progress of SHGs in Three States in the Eastern Region

State No. of SHGs Formed No. of Grade I SHG No. of Women SHG No. of SHG taken up

Economic Activities


1.4.99 2009-10 1.4.99 2009-10 1.4.99 2009-10 2009-10 2009-10

West Bengal 273738 35123 220374 42235 22955 32178 178017 47304

(7.38%) (10.97%) (9.0%) (13.7%) (8.66%) (12.30%) (17.34%) (19.88%

Orissa 218265 20780 135266 17793 176526 18879 23335 5841

(5.88%) (6.49%) (5.53%) (5.53%) (6.66%) (6.66%) (2.27%) (2.45%)

Bihar 154371 30696 83261 25027 94655 19810 55361 17378

(4.16%) (9.59%) (3.40%) (8.12%) (3.57%) (7.57%) (5.39%) (7.30%)

National Total 3708410 320178 2446485 308380 2651422 261635 1026350 237953



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Table 3 represents physical progress of SHGs in three important

states of Eastern Region namely, West Bengal, Bihar and Orissa. It

is interesting to note that out of the three states, position of West

Bengal is significant in respect of number of SHGs formed, grade I

groups, Number of women SHGs formed and Number of SHGs

taken up economic activities. The percentage share of all the aboveaspects in respect of national total is highest in West Bengal.

Thus, it can be concluded that in West Bengal, Self-Help Group

formation and its progress of work is much better than the other

two neighbouring states.

Assessment of SHGs in the District of Purbo Midnapur

The erstwhile district of Midnapore was divided into Purbo

Midnapore and Paschim Midnapore on Ist January 2002. Purbo

Midnapore district is located in the southern part of West Benga

surrounded by Rupnarayan and Hooghly rivers in the East, Paschim

Midnapore district in the West and North and Bay of Bengal in the

South. Its total area is 4151.64 sq.km predominantly under

agriculture and partly under industries. It has four Sub-divisions

namely Tamluk, Haldia, Contai and Egra. Its number of Blocks is

25, police stations 21 and 5 Municipalities.

Table 3: District wise Physical Progress of SHGs in West Bengal

District No. of SHGs Formed No. of Grade I SHG No. of Women SHG No. of SHG taken up

Economic Activities


1.4.99 2009-10 1.4.99 2009-10 1.4.99 2009-10 1.4.99 2009-10

24Parganas(North) 15318 1856 11937 2640 13443 1809 7605 4245

24Parganas(South) 14016 1800 10044 1502 11214 1438 7534 344

Bankura 14379 1470 9084 2910 11704 1159 6901 3757

Birbhum 17075 2130 12806 2181 11592 1815 10393 2413

Burdwan 16994 1752 13925 1540 11384 1379 13247 984

Coochbehar 12544 2173 11463 1418 12169 2173 9066 1418

Darjeeling 2700 344 1930 348 1169 318 1873 329

Dinajpur(Dakshin) 9746 244 8855 2061 8813 242 7659 7145

Dinajpur(Uttar) 10327 1677 6614 1049 9041 1592 4857 991

Hooghly 6816 1529 5249 1201 4952 1458 3723 968

Howrah 6876 1559 5959 1071 6017 1519 5747 1071

Jalpaiguri 21444 1199 20109 2304 20904 962 18014 1919

Maldah 15414 1346 12763 3060 12460 1163 9625 4312

Murshidabad 28899 5818 24089 6453 24410 5643 17881 6064

Nadia 12729 2333 9299 2199 10450 2202 9273 2089

Midnapur(Purbo) 27800 3561 22236 4427 23298 3286 17641 3694

Midnapur(Paschim) 17692 2162 14662 2420 16742 2162 13591 2342

Purulia 20150 1697 17311 2974 17612 1517 11844 2579

Siliguri 2819 473 2039 477 2177 341 1543 640

Total 273738 35123 220374 42235 229551 32178 178017 47304


Note: Figures in parentheses represents percentage of national total Table 2

Table 3 exhibits that there was a large inter-district variation in the

growth and expansion of the SHGs formed under SGSY since its

inception. However, it is found from the above table that in thedistrict of purbo Midnapur, there was significant growth in respect

of number of SHGs formed (10.16%), Number of SHGs passed

grade I (10.09%), Number of women SHGs formed (10.15%), as well

as number of SHGs taken up economic activities (9.91%). In fact,

the position of Purbo Midnapur district was second highest, just

after the district Murshidabad out of all the districts in West Bengal.

It is found that there are two types of SHGs formed in the study

district. They are i) Direct beneficiaries of SGSY and ii) Beneficiaries

of SHG formed by the co-operative society. However, due to time

constraint we have collected information and discussed the detailed

activities and performance of type-I group only.

The Primary data were collected from 21 SHGs (out of these one

group is defunct) and 88 individual beneficiaries under SGSY

scheme. The survey was conducted in two villages namely Ururi

village of Chandipur Block and Chaklalpur village of Haldia Block


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We have selected the blocks with the advice of District Level

Authorities. However, the implicit logic behind choosing these

two villages is that, first of all, these two villages are very close to

my native place and secondly, the SHGs in these villages are

functioning for a longer period of time.

Of the 21 SHGs, about 67 percent have been linked for more than

five years, while the remaining 33 percent have obtained bank

linkage in the last five years. Further, we found 8 groups formed

under SGSY in Ururi village working since 2004 and 13 Groups

formed under SGSY, (out of these one group is defunct) in

Chaklalpur village, working since 2001. We selected 43 members

from Ururi village and 45 members from chaklalpur village under

random sampling method. So, altogether, we have 20 SHGs and 88

respondents. The economic and social impact of micro-finance

and its impact on savings and borrowings are analyzed by

canvassing specially designed questionnaire and results are

interpreted through tabular analysis.

Demographic Interpretation

Table 4: Percentage distribution of Education Level

Education Level Villages

Ururi Chaklalpur Total

Sample % Sample % Sample %

reported reported reported

Illiterate 1 2.33 2 4.44 3 3.41

Primary 26 60.46 31 68.89 57 64.77

Middle 8 18.60 4 8.89 12 13.64

Secondary 7 16.28 7 15.56 14 15.91

H.S 1 2.33 1 2.22 2 2.27

Graduate & above - - -

Total 43 100 45 100 88 100

Source: Field Survey data

Table 4 represents education level of the beneficiaries. It is observed

that in two villages, majority of them completed primary, middle,

and secondary level of education. Out of the samples reported,

only 2.27 percent have completed higher secondary and none have

completed graduate courses. The rate of illiteracy is very low. This

in fact, helped the members to understand and evaluate the rulesand regulations of the groups.

Table 5: Caste-wise SHG Members in the sample villages

Caste Villages

Ururi Chaklalpur

Sample % Sample %reported reported

General 36 83.72 40 88.89

SC 7 16.28 5 11.11

ST - - - -

Total 43 100 45 100


The literature study revealed that in most of the places across the

country, mainly backward classes of people formed groups to have

access to the micro-finance so as to uplift their financial conditions

However, we find that in both the two villages under study

percentage of general-caste SHG members is highest. The concep

of empowerment of poor rural women across the country has

inspired not only the backward classes of people but this has

insisted general caste people too. Formation of group has united

all categories of people to come closer. In fact, people from all

sections have evinced interest in joining SHGs for availing benefits

This indeed a great achievement so far concept of Self Help Group

and microfinance is concerned.

Table 6: Reason for Joining SHG

Sl. No. Reason for Joining No. of Respondent

1. To get loan 54

2. To get loan and save 25

3. To get help to start business 4

4. To get training 2

5. To get self-confidence & dignity 3

Total 88


The above table clearly describes the major reason for joining the

SHG was to get loan. In addition, they want to save too. In fact, the

concept of Self-Help Group has forced the members to save in

order to obtain loan for meeting various economic activities. The

number of respondents joined the group for obtaining loan together

with the members having intention to save become 79 out of total

respondents of 88. However, to our surprise, we found 3 members

who opined for joining SHG to get self- confidence and some sor

of dignity from the society and found 2 members who were looking

for training. This demonstrates the sign of empowerment of rural

women.


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Table 7: Source of Inspiration for Joining SHG

Sl. No. Source No. of Respondents

1. Gram Panchayat (G.P) 59

2. Neighbours & Group members 23

3. Others 6

Total 88


Table 7 shows that most of the members got the information about

formation of group and its nomenclature from Gram Panchayet.

The information of SGSY first came to their knowledge through G.P.

The information of group formation is then circulated through their

family members and friends. This in fact establishes sound

Panchayet Raj System of West Bengal.

Economic Impact

Table 8: Percentage Distribution of Occupation of Households

Occupation Ururi Chaklalpur Total

Sample % Sample % Sample %

Reported Reported Reported

Agriculture 12 27.90 18 40.00 30 34.09

& Allied

Self-Employed 21 48.84 16 35.56 37 42.05

Other Labour 9 20.94 10 22.23 19 21.59

Service 1 2.32 1 2.22 2 2.27

Total 43 100.00 45 100.00 88 100.00


Table 8 depicts the various occupations of the beneficiaries. It is

found that 34.09 percent of the samples are engaged in agriculture

and allied activities like fishing, cattling, dairy, poultry farming etc,.

Forty-two percent are self-employed and 21.59 percent are doing

other type of labour. When sources of income of beneficiaries are

analysed, we found substantial increase in household incomes

from livestock and self-employment in non-farm activities. In fact,

there was a shift of activities from agriculture to allied farming.

Table 9: Monthly Household Income Before and After Joining SHG

Monthly Income Before Joining SHG After Joining SHG

No. % No. %

Upto Rs.1000 45 51.14 16 18.18

Rs.1001-1500 29 32.95 46 52.28

RS.1501-3000 8 9.09 17 19.32

Rs.3001-5000 4 4.55 7 7.95

Above Rs.5000 2 2.27 2 2.27

Total 88 100.00 88 100.00


Table 9 depicts the various income categories of the members

before and after joining the SHG. The comparison clearly shows

that the levels of income have changed during post-SHG situation

The number of members having monthly income below Rs 1000

has been reduced from 51.14% to 18.18% revealing the fact that

their monthly income has been improved after joining the SHGSimilarly, percentage of members having monthly income ranging

Rs. 1001-Rs.1500 has also been improved during post-SHG stage

It is found that before joining SHG the percentage of members

having monthly income Rs 1001-1500 was 32.95 and the said

percentage becomes 52.28 after joining SHG. Likewise, the other

income levels have also been increased during post-SHG situation

While interviewing, the members answered that after joining SHG

they have been able to explore more avenues for their earning. In

fact, almost all members opined that their income level has been

improved after joining the SHG. Thus, it can be said that formation

of group has indeed helped the rural poor households to improve

their level of income.

Table 10: Monthly Savings of the Respondents Before and After Joining

SHG

Monthly savings Before Joining SHG After Joining SHG

No. % No. %

No Savings 62 70.45 nil -

Upto Rs.50 12 13.64 48 54.55

Rs.51-Rs.100 8 9.89 22 25.00

Rs.101-Rs.200 4 4.55 11 12.50

Above Rs.200 2 2.27 7 7.95

Total 88 100.00 88 100.00


The basic aim of SHG is to develop thrift among the marginalized

sections of the society. Thrift, particularly among rural women

reduces dependency on non-institutional sources and develops

self-reliance. Hence, an attempt has been made to collect

information about savings of members.


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It is found that in both the villages the benchmark amount of

monthly saving of members was Rs. 30 p.m. However, some of the

sample respondents saved Rs 50 p.m and even a few saved Rs.100

p.m. Table 10 shows that whereas 70.45 percent of sample

respondents had no savings before participation in SHGs, the

same percentage become nil after forming SHG, which explainedthat they have been able to save at least some amount after joining

SHG. Further, percentage of respondents, saved upto Rs 50 p.m.

has also been increased from 13.64 percent to 54.55 percent during

post- SHG period. The field study further revealed that in order to

build more fund of the group , the group lend their own fund

(savings) to the members (and sometimes other households of the

village) @ 2% p.m. which in their opinion much less than the rate

offered by rural moneylender. Thus, it can be said that SHG helped

the poor rural households particularly the rural women to save and

consequently helped them to build self-reliance in the family as

well as in the society.

Table 11: Average Loan Amount per Member Household during 2010-11

Particulars Loan Amount (Rs)

Ururi Chaklalpur Combined

Pre-SGSY Missing Missing Missing

Post-SGSY 5972 5889 5926

Source: Field Survey Data

The information presented in this section shows that average loan

amount per member before-SGSY is missing, as the members

interviewed could not give the amount of borrowings they had in

Pre-SGSY situation. However, a majority of members about 76

percent told that they had started borrowings in Post-SHG situation.This established the credit widening of the programme. Further,

we find there was a shift in the composition of activities due to

SGSY. The members interviewed, answered that, while in Pre-SHG

situation loan was taken mainly for consumption and cultivation

the same was taken mainly for business and allied activities in

post-SHG situation. They admitted that due to increase in income

in post-SHG situation, their need for loan for consumption purpose

had substantially reduced. While examining sources of borrowings

we find that rural moneylender was the most important source in

the pre-SHG period. About 65 percent of the households obtained

loans through moneylenders before becoming SHG members. Apart

from moneylenders, other sources were friends, relatives, bank,

and co-operative societies. Interestingly, we find that loan from

moneylenders were reported to be taken by only 4.5 percent of the

households after joining SHGs. The repayments of loans were

also observed to be satisfactory. There was 95 percent recovery of

loans by the groups in the sample villages.

Table 12: Income and employment generation of sample respondents

Income and Employment Number of Percentage

generation Respondents

Increase 76 86.36

Not-increase 12 13.64

Total 88 100

Source: Field Survey Data

Table 12 shows that out of 88 respondents, 86.36 percent of

respondents felt that Self-Help Groups are helpful to improve the

income level and has caused increase in employment generation

of the sample respondents. In fact, we have computed this

percentage on the basis of increase in the number of working days

they had reported to us. Further, we felt that the number of

respondents gave negative views, were in fact, recently joined in

the group and were not actively utilized the loan they had taken at

that moment.

Social Empowerment: It is found that beside economic

improvement the social outlook of rural women has undergone a

radical change. The involvement in the group significantly

contributed in improving the self-confidence of the members. Abou

95 percent of beneficiaries believed that, they receive recognition

in respect of various decision making process in the family. The

members were more assertive in confronting social evils and

problem situation. As a result, there was a fall in the incidence of

family violence. Further, female SHG members were asked abou

various aspects of their public participation, like attending village

meetings, fight against drug, attending health care forum etc

Significant improvement was observed in post-SHG situation. In

fact, some degree of transformation of social outlook is observed

Problem faced by the members: While askingabout the problems

faced, if any, 67 percent members pointed that they need more

information for exploring profitable avenues. Training for marketing

and technical skills is lacking. It as found that in most of the SHGs

the members had taken up individual income-generating activities

Only a few had taken up group activities successfully. From their

conversation, it seems that lack of coordination among the group


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members is responsible for it. Further, SHGs are not satisfied with

the activities of bank officials in respect of clarifying various issues

like project repayment term, interest on project loan etc. Knowledge

in financial management and bookkeeping is found to be inadequate

and weak.

Governance of SHGs: It has been seen that SHG leaders are

nominated instead of being elected in all the groups in the sample.

The group meetings are held regularly at least twice in a month.

The percentage of members attending the meetings is nearly 90

percent and is participated in the discussions. Interestingly, 95

percent of the group members reported that the rules and

regulations of the group are accessible to them. So far keeping of

records are concerned, it was found that although the books are

maintained properly in most of the cases, the other types of

documents e.g., bank statement etc., are not filed up properly.

Conclusion

The major conclusions that emerge from our study can be

succinctly outlined as follows.

First, there have been significant growth and expansion of Self-

Help Group Bank linkage across the different regions of the country

over the years. It was found that the growth of Eastern Region was

second highest, just after Southern region in respect of the number

of SHG linked as well as percentage share. Further, it was found

that among the states of Eastern region, West Bengal ranked first.

Second, we find a large inter-district variation in the growth of

number of SHGs formed in West Bengal. However, the growth of

SHG in Purbo Midnapur district is significant. In fact, in respect of

number of SHGs formed under SGSY, Purbo Midnapur district is

second highest, just after the district Murshidabad.

Third, the analysis of annual household income of sampled

respondents for both pre-SHG and post-SHG situation revealed

that there was substantial increase in the annual income of the

households in post-SHG stage. Further, when sources of income

of SHGs are analysed, we find substantial increase in household

income from livestock and self-employment in non-farm activities.

In fact, we find there was a shift in the composition of activities

due to SGSY i.e., from agriculture to allied farming.

Fourth, we find that a significant number of members started savings

only after joining the groups and the rests have been able to increase

their savings in the post-SHG situation. In fact, a majority ofmembers having no savings in pre-SHG era were turned to be

having substantial amount of savings in the post-SHG stage.The

study found that apart from savings in SHG the other major saving

instruments used by the households are LIC, post offices savings

and savings in co-operative societies.

Fifth,it is found that the annual household expenditure of majority

of members have been increased due to increase in their annual

income. Thus, it is plausible to conclude that SHGs definitely

helped in improving the purchasing power of the rural households

Sixth, we find there was a shift in the purpose of loan taken. While

previously the loan was taken mainly for consumption and

cultivation, the same is taken mainly for business and allied activitiein post-SHG situation. It is found that due to increase in income of

the members in the post-SHG situation, their need for loan for

consumption purpose had substantially reduced.

Seventh, the study revealed that, formation of group has helped

credit widening of the programme. It is found that majority of

members started borrowings after joining the group.

Eighth, it is found that beside economic improvement the socia

outlook of rural women has undergone a radical change. The

involvement in the group significantly contributed in improving

the self-confidence of the members. The members were more

assertive in confronting social evils and problem situation. As a

result there was a fall in the incidence of family violence. In factsome degree of transformation of social outlook is observed.

Finally, the study revealed that training for marketing and technica

skills hindrance to make the ventures undertaken by the sample

respondents more profitable one. Efforts are absent from the group

members to carry out group-activities successfully.

Thus, it can be concluded that SHG-Bank linkages is a successfu

step in providing access to finance to the rural needy people of

purbo Midnapore district subject to some difficulties faced by the

members as highlighted above. The process has enabled a large

number of people to exercise various options to challenge poverty

The programme, indeed, helped in improving the household

conditions of the beneficiaries. However, on observation thefollowing issues were identified.

Regional Imbalances Various reports show that there has been a

concentration of SHGs in southern states. The share of cumulative

SHGs linked in southern states has been at about 60 percent of the

total SHG-credit linked in the country. In order to correct this

anomaly, NABARD had taken up intensification of SHG-bank

linkage programme in 13 identified priority states, which account

for 70 percent of the rural poor population. We find that there is

wide inter-district variation in respect of promotion of SHGs in

West Bengal (Table 3.3). In some of the districts, namely Howrah

Hooghly, Nadia, Dinajpur (Uttar & Daksin), Darjeeling Coochbehar

etc, the rate of promotion of SHGs is very low. It is suggested thathe State Government should also take up intensification of SHG-

bank linkage programme in those districts where the situation

strongly demand for it.

Sustainability of SHGs: Availability of large-scale finance to mee

the demand for growing microfinance clients is an area for concern

Add to this, availability of quality manpower in banks, NGOs

government and other support levels is a critical issue in


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Sudhin Kumar Bera

sustainability. Proper nurturing and training provided to SHGs

also important for their survival. Further, availability of need based

services e.g., maintenance of records, conflict resolution etc., also

required for smooth operation of the group.

Post-linkage follow-up: Continuous monitoring by banks is neededto maintain the quality of groups. Number of groups per branch is

increasing rapidly. Therefore, post linkage monitoring of groups is

a critical requirement.

Business development services: Apart from financial intermediation,

provision for right guidance as to profitable ventures, marketing,

input supply, knowledge in management, human resource

development etc., is the need of the hour. Various government

agencies, NGOs and voluntary agencies are to come forward to

provide these services so that the members could take up

remunerative economic activities and indeed improve their quality

of life.

Supervision and Regulation: The rapid expansion of thisprogramme and the large numbers give rise to concerns about the

continued stability and integrity of the movement. The Reserve

Bank of India should look into the supervision and regulation

aspects of the sector in the interests of millions of the poor who

access financial services through this mode.

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