Impact Of Self Help Groups Economics Essay

Impact Of self-importance Help pigeonholings Economics bear witnessSelf-Help Groups means a assembly of 10-20 members which may or may not be registered representing financial intermediation, but the financial intermediation is not the unless primary objective of the multitudes. The motive is to combine the access to busted-cost financial services with a process of self caution and learning. NGOs or political relation agencies usually form and support these SHGs. The members of these convocations save the amount which is commitd for loans. Inspite of abundant expansion in the branch network, a large sh ar of Indias nation continuous to remain outside the formal confideing carcass. Due to simplespread plain curse branch network, the SHG- border gene gene linkage syllabus is very suitable to the Indian context. Although various alternative ways atomic make finger 18 being experimented in set up to meet the objectives of financial inclusion. The SHG-Bank linkag e design is considered a most successful, bright and astray accepted object lesson in India. Self Help Group Bank gene linkage Programme- a pilot project started by NABARD is widely accepted model as one of the largest and successful one in the world. The present study is analytical and based upon secondary information which has been quiet from different published reports, journals and existing available literature. The objective of this study is to tax the furtherance and impact of self help group avow linkage course of instruction.Key Words Growth, exercises, Self-Help Group, SHG-Bank gene linkage Programme.IntroductionThe Self-Help Group (SHG) movement originated in Bangladesh on a lower floor the Leadership of Noble Laureate Mohamed Yunus. It is a noble mission- an modernistic concept that has its roots in Bangladesh and has touched every part of the globe. In order to achieve the mission of reaching those families who did not access to opinion by any formal fina ncial institution and, at that placefore, were dependent on informal sources and moneylenders, the National Bank for Agriculture and Rural training (NABARD) introduced the SHG Bank gene linkage Programme as a pilot project in 1992. Thereafter, RBI had advised commercial banks to participate actively in this class. Subsequently, this computer course of studyme was advertize extended to all Regional Rural Banks (RRBs) and cooperative banks. SHGs through and through the network of commercial banks, RRBs cooperative banks, NABARD and NGOs has been largely supply driven as well as a recent approach in the prep of financial services to the brusk. This paper is an attempt to analyse the SHGs movement in India as these are helpful in order to alleviate distress and women empowerment. The present study is analytical and based upon secondary data which has been collected from different published reports, journals and existing available literature. The objective of this study is to label the progress of self help group bank linkage programme.Self Help GroupSelf Help Group means a group of 15-20 members which support become a common vehicle of development covering various development programmes. Financial intermediation is not the whole objective but the purpose slowly this is to combine the access to low cost financial services with a process of self management and development. SHGs are usually form and supported by NGOs or political science agencies. SHGs are fiddling, informal and homogeneous groups of not more than20 members each. Any group larger than the size of 20 members has to be registered under Indian sub judice governance. So it is recommended to be informal to keep them away from bureaucracy, corruption, unnecessary administrative expenditure and profit motive. Groups are in any case expected to be homogenous so that members can participate freely without any fear as well as conflicting divert. SHGs entertain also emerged as a powerf ul device and an effective medium for delivering opinion to the execrable in the rural economy. It helps in penury reliever and women empowerment. Self-help groups (SHGs) movement has triggered off a silent revolution in the rural quotation delivery system in India.SHG Bank linkage ProgrammeThe Self-Help Group Bank gene linkage Programme (SHBL) which started as a pilot programme in 1992 has essential at a very fast rate with time. SHG-Bank Linkage Programme was started on the basis of the recommendation of S K Kalia Committee. While the SHG-bank linkage Programme has experienced exponential growth over the past decade, on that point remain large kingdomal disparities in the growth of the SHG movement with moderate progress in certain regions. though the SHG-Bank Linkage Programme contributed to remediate economic conditions, social change was not as apparent, and thither are concerns of sustainability and further development of self reliance of the institutions. The SHG-B ank Linkage Programme has the quest objectivesTo develop mutual faith and confidence between the rural poor and bankersTo combine sensitivity, flexibility and responses of the informal credit system with the strength of administration capabilities, technical strength and the financial resources of the formal financial institutions.To expand credit flow/ financial services to the rural poor with less feat costs.To alleviate poverty and empower the women.Models of SHG-Bank Linkage ProgrammeThe strategy behind these models is to form small, cohesive and participative groups of the poor and encourage them to pool their nest egg on a regular basis and use the pooled frugalitys in order to make small interest bearing loans available to the members. Bank credit also becomes available to the group to augment its resources for the purpose of lending to its members. The SHG-bank linkage program has proved to be the major supplementary credit delivery system with a wide acceptance by banks , NGOs and various political science departments. There are cardinal models of SHG-bank linkages that have evolved over time, especially in India.MODEL I. SHGs formed and payd by banksIn this model, banks themselves take up the work of forming and nurturing the groups, opening their bank accounts and providing them with bank loans after satisfying themselves as to their maturity to absorb credit. Upto demo 2006, roughly 20% of the check number of SHGs financed was from this category. This shows an increase of 61.63 percent in bank loan to SHGs over the position as on frame in 2005 reflecting an change magnitude role of banks in promoting and nurturing SHGs. Here, the banks act as the SHGPI.MODEL II. SHGs formed by NGOs and formal organisations but directly financed by the banksIn this model, groups are formed by NGOs (in most cases) or by the government agencies. The groups are nurtured and prepare by the agencies. The bank then rears credit directly to the SHGs after disc over their operations and maturity to absorb credit. While the bank provides loans to the groups directly, the facilitating agencies continue their interactions with the SHGs. virtually linkage experiences begin with this model, where NGOs play a major role. This model has also been popular with and more acceptable to banks, since whatever of the difficult functions of social kinetics are externalized. This model continuous to have a major percent. just about 70 percent of the heart and soul number of SHGs is financed under this model.MODEL III. SHGs financed by banks using NGOs and other agencies as financial intermediariesFor various reasons, banks in some areas are not in a position even to finance SHGs promoted and nurtured by other agencies. In such cases, the NGOs act as some(prenominal) facilitators and microfinance intermediaries. First, they promote the groups, nurture and train them and then they approach banks for bulk loans for further lending to SHGs. In other w ords, banks take the sole responsibility for promoting, develop and financing SHGs. In fact, this programme requires considerable effort by the bank staff towards the formation of SHG. This model is not so encouraging.Models of SHG LinkagesBank LoansModel Number of Linkages % of Total beat (Rs. In jillion) % of Total1. 13561 14 339.79 182. 65636 70 1339.95 693. 15448 16 250.10 13A major share of population in India continuous to remain outside the formal banking system inspite of considerable expansion in the branch network. And various alternative models are being experimented in order to meet the objective of financial inclusion. The SHG-Bank Linkage model is considered a most successful, promising and widely accepted model in India. This model was introduced in 1991-92 with a pilot project of linking euchre SHGs with banks and this figure has gone up to more than 34 lakh by the end of March 2008.Cummulatively, these SHGs have assessed credit of Rs. 22,268 crore from banks du ring the period. About 4.1 crore poor have gained access to the formal system through the programme. The number of SHGs associate to banks has change magnitude from 32995 during 1998-99 to 3477965 during 2007-08 during the period of last about ten social classs. It means there is an fulgurant 68 percent deepen annual growth rate. But the compound annual growth rate is almost double each year for the cumulative bank loan to SHGs which is 94 percent. The faster growth in bank loans to SHGs has led to almost a four-fold increase in the second-rate loans per SHG from Rs. 16,816 in 1999-2000 to Rs. 63,926 in 2007-08. These figures reflect the keen success of the programme in the Chart 1 given below.Chart I Growth of SHG-Bank Linkage Programme4Progress of the SHG-Bank linkage ProgrammeNABARD introduced an effective SHG-Bank Linkage Programme in order to provide credit to very small borrowers. The introduction of the SHG-Bank linkage Programme to discard the general perception of ba nkers that customers with no formal education or source of income or of no use to the bank and thus are not welcome. Since the year 2000, the statistical data show the rate of growth in SHGs linked under the programme is gradually falling in the year 1999-2000 the growth rate was more than 245% whereas it fell below 38.3% in 2005-06. However, the high growth in the advanced nineties may be due to initial penetration of SHGs under the programme. With the formation of new SHGs, the scope is widened which will improve the condition of the poor households and it should be worked upon. circumvent 1 shown below the cumulative progress of SHG-Bank Linkage Programme.Table I Cumulative Progress of SHG-Bank Linkage Programme (INR in crores)YearSHGs LinkedBank LoanRefinance Assistance1992-932550.290.271995-9647576.065.661998-993295557.0752.092002-034614782048.67796.502005-06223856511397.464159.702006-07292497317967.465452.562007-08347796526816.727068.062008-09455944339070.239688.09 tonicity From 2006-07 onwards, data on number of SHGs financed by banks and bank loans are inclusive of Swarnajayanti Gram Swarozgar Yojna(SGSY) SHGs and existing groups receiving repeat loans.Source NABARD Annual Report 2008-09The higher up table shows the cumulative progress in this area with the amount of finance assistance during the respective periods.Disparity in the SHG-Bank linkage ProgrammeSHG-Bank Linkage Programme was started with the objective of extending the outreach of banking the poor, who mainly comprise the marginal farmers, landless labourers, artisans and craftsmen and others occupied in the small businesses such as vending and hawking. Now the authorised point is that whether the programme has really made inroads into the regions where concentration of poverty is relatively higher. And this can be found if we compare the poverty ratio at all India level with the ratio of various regions.Earlier, during 2004-05, the all-India poverty ratio stood at about 27.6 per cent while the Northern (15.7 per cent), North- eastern (19.2 per cent), southern (19.8 per cent) and occidental region (25.8 per cent) had lower than the all-India poverty ratio, Central (35 per cent), and Eastern Region (36.2 per cent) had higher poverty ratios than at the all-India level. Now this variation is comparatively changed with the expansion of number of SHGs. Similarly, there has been skewed development of SHG-Bank linkage programme on geographic basis in India.There is wide regional disparity both(prenominal) in terms of the spread of SHGs linked to banks and cumulative bank loans disbursed under the programme. In March 2008, while the Confederate Region accounted for 48.2 per cent of the total SHGs, the share of North- Eastern Region was just 3.4 per cent as render in table 2. In terms of share in the total bank loans to SHGs, the region-wise differential gets further magnified.So far, the SHG movement in the state is mostly south-centric and it is yet to take off in the real sense in other regions of India.Table II Region-wise Progress of SHG-Bank Linkage Programme (As on March 31, 2008)RegionsShare (%) in ProgrammeNo. of SHGsLoans to SHGs (Rs. crore) clean Loans per SHG (Rs.)No. of SHGsLoans to SHGsSHGs per Lakh PopulationNorthern2,30,74085136,8996.63.8156North Eastern1,19,52032727,3643.41.5283Eastern6,72,6262,37235,26819.310.7274Central4,05,7071,50136,99011.76.7142Western3,74,5611,32035,25410.85.9229Southern16,74,81115,89694,91548.271.4703All India34,77,96522,26864,027100.0100.0310Source NABARDWhile the Southern Region accounted for 71.4 per cent of the total loans to SHGs, the share of North-Eastern Region was just about 1.5 per cent. For all regions excluding Southern Region, even though the share of total SHGs linked to banks was close to 51.8 per cent, their share in total loans to SHGs was only 28.6 per cent implying that fitting credit is not being routed through SHGs in these regions. As the regions take off in geographical area a nd population, the number of SHGs is normalized by the population of the region and SHG per lakh population has been taken as a better index finger of SHG spread in the respective regions. The number of SHGs per lakh population for the Southern Region is 703, which is more than double the average at all-India (310) and almost atomic number 23 times of the Central Region (142).All these data given in the table shows an impressive growth in southern region followed by eastern, central and others.The SHG Bank Linkage Model has made considerable progress since its inception in the early 1990s and agency wise salient number of credit linked SHGs and amount of loans with Banks is presented in Table3 given below.Table III Bank Loans verbotenstanding under SHG-Bank Linkage Programme room2008 092009-10No. of SHGs (in000)Amount(Rs. In Crores)No. of SHGs (in000)Amount(Rs. In Crores) mercenary Banks283116149323720165Regional Rural Banks978522411046144Cooperative Banks41513065101729Total4224 22679485128038Source Status of Microfinance in India 2009-10Banks have financed 15.87 lakh SHGs, including repeat loan to the existing SHGs, with bank loans of Rs. 14,453 crores during 2009-10. Out of the total loans disbursed during 2009-10, SHGs financed under SGSY accounted for 2.67 lakh (16.9%) with bank loan of Rs. 2198.00 crore (15.2%). As on March 2010, the average loan amounts expectant per SHG and per member were Rs. 57795 and Rs. 4128 respectively. The estimated number of households cover under the Self Help Group (SHG)-Bank Linkage Programme was 9.7 crores up to 31 March 2010.Current Position of SHG-Bank Linkage ProgrammeThough there are different models for purveying micro finance, the Self-Help Group Bank Linkage Programme has emerged as the major programme in the country. It is being implement by commercial banks, regional rural banks (RRBs), and cooperative banks. In 2009-10, 1.59 million new SHGs were credit-linked with banks, and bank loan of 14,453 crore (includi ng repeat loan) was disbursed to these SHGs. Further, about 6.95 million SHGs retained savings accounts with banks at the end of March 2010. On an average, the amount of savings per SHG was 8,915 as compared to the amount of credit with child(p) of 57,795 in 2009-10. While there was a continued increase in the amount of credit outstanding per SHG, there was a fluctuating trend in the amount of saving per SHG in the recent years.According to the Status of Micro Finance in India 2009-2010 released by National Bank for Agriculture and Rural Development (NABARD) there are 69,53,000 SHGs in the country savings linked with banks and 48,51,000 SHGs having loan outstanding as on 31 March 2010. The estimated number of households covered under this model is about 970 lakhs. The total savings amount of all the SHGs with banks as on 31 March 2010 amounts to Rs.6198.71 crore and the total amount of loans outstanding against SHGs as on 31 March 2010 is Rs.28038.28 crore.Table IV New SHGs Financ ed by Banks during the YearYearNew SHGs Financed by Banks during the YearNo. (lakh)Amount (Rs. crore)Growth (%)2007-0812.288,849.262008-0916.0912,256.5138.502009-1015.8714,453.3017.902010-1111.9614,547.730.65Source National Bank for Agriculture and Rural Development (NABARD)Under the SHG-Bank Linkage Programme as on 31 March 2011, 74.62 lakh SHGs held savings bank accounts with total savings of Rs. 7,016 crores as against 69.53 lakh SHGs with savings of Rs.6, 199 crores as on 31 March 2010. By declination 2011, another 2.98 lakh SHGs have come under the ambit of the programme, winning the cumulative number of saving-linked groups to 77.60 lakh SHGs. As on 31 March 2011, 47.87 lakh SHGs had outstanding bank loans of Rs. 31,221 crores, as against 48.5 lakh SHGs with bank loans of Rs. 28,038 crore as on 31 March 2010. This represents a decline of 1.3 percent in the number of SHGs and a growth of 11.4 percent in bank loans outstanding to SHGs as per table 4 given above. During 2011-12 , (upto December 2011), 4.51 lakh SHGs have been financed with an amount of Rs. 6,791.46 crore. Thus, the SHG-Bank Linkage Programme is considered as the largest financial inclusion programme in the world.ConclusionSHG-Bank Linkage Programme is developed in India to provide finance to the vast rural poor. In this programme, the informal SHGs are credit linked with the formal financial institutions. The SHG-Bank Linkage Programme has emerged as a dominant, relevant and effective prorgramme in terms of borrowers and loans outstanding in India. It is flexible, liberty creating, and imparts freedom of savings and borrowing according to the heterogeneous needs and requirements of the group members.Through this program, the Reserve Bank of India and NABARD has tried to promote relationship banking, i.e., up(p) the existing relationship between the poor and the bankers with the social intermediation of the NGOs. The SHG-bank linkage program in India is rapidly expanding its outreach unde r the pioneering initiative of NABARD, the monitoring and watch of RBI, and the promotional policies of the government of India. At the grass root level the program is being implemented by the commercial banks, cooperatives, and regional rural banks, with government agencies. Self-help groups (SHGs) play today major role in poverty alleviation in rural India. SHGs have changed the life of a particular individualistic or group for the better. This is considered not only a tool for poverty alleviation but also has proven to be relevant in offering women the possibility to break gradually away from the exploitation and closing off in India. The SHG-Bank Linkage Programme has provided a more favorable purlieu for enhancing Indias potential for greater equitable growth with empowerment while considering the affirmatory signs in their performance.