Significance of Establishing Linkages with Self-Help Groups and Banks


Y.S.Nanda, NBARD, India

Study Report - SHG: Tamil Nadu

Highlights of Findings

I. SHG per se

  1. Savings by members serve as the main bond for being together in the group. Average annual increase in savings was 25% over the previous year.
  2. Pattern of savings differs from one group to another mainly on the basis of income generating activities of the members.
  3. Flexibility in norms for lending with least importance for documentation was found in all the groups. While some groups charge penal interest for delayed payment of principal, some others waive the same.
  4. The groups which kept longer repayment period and high flexibility in the amount of instalment to be repaid show a little higher percentage of overdues than the groups which keep more regulated and shorter loan period.
  5. Members of the SHGs were not very much aware of the NABARD scheme of linking the groups with banks.
  6. Only one loan is generally allowed to a member at a time. However, in case of emergency, second loan is also considered if the group agrees for such assistance.
  7. Group activities by the SHGs are encouraged b the VA through its 'Seed Money Assistance' programme.
II SOCIO-ECONOMIC BENEFITS
  1. There was a definate shift in the loan pattern of the members from non-income generating activities to income generating activities. 70% of loan availed was for productive purposes, while only 30% of the loans were for non-income generating activities.
  2. Some of the members of Women SHG availed of IRDP, Sericulture loans etc. and were confident of increasing their activities through bank credit. The groups act as facilitators in recovering the dues of the members and remit to the banks.
  3. Most of the purposes financed by the groups were for unconventional activities not covered by traditional banking.
  4. The new groups show greater awareness of the need to graduate out of the present level and look for new opportunities through bank assistance.
III. BANK LINKAGE
  1. Recovery of loans by banks is excellent without any default. Other loans issued to the members are also repaid without any delay. Only 4% of the loans was found to be overdue at the groups level.
IV. ROLE OF VA
  1. NGO has been playing a pivotal role in ensuring proper training, coordination to the groups and putting them on a scientific approach.
  2. VA plans to withdraw from the existing group by creating an apex body in each of the areas it is operating. This 'Apex body' was expected to provide umbrella support the SHGs in future.
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