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Review of Literature

The role played by Self Help Groups (hereafter SHGs) in empowering women

has become most intriguing enquiry among academicians, policy makers,

development theoreticians and activists of Non Government Organisations. As the

growth of SHGs are phenomenal not only in India but also in most of the developing

countries, the literature on SHGs and their contribution either in development of

women or in empowering women is abundant. Columns of national level journals

like Kurukshetra, Southern Economist, and Journal of Rural Development etc., are

regularly filled with the success stories of SHGs. An attempt is made in this chapter

to review selected literature on SHGs and their contribution in empowering women.

Zaman (2001) extensively studied the performance of Bangladesh Rural

Advancement Committee. The author collected data on household consumption from

1,072 households, and concluded that micro-credit played valuable role in reducing

the vulnerability of the poor. According to him this was made possible through asset

creation, income and consumption smoothing, provision of emergency assistance, and

empowering and emboldening women. Using 16 female empowerment indicators

developed from data on 1,568 women, the author argued that there was some

reduction in female vulnerability in a patriarchal society like Bangladesh. According

to him empowerment of women was achieved by giving them control over assets and

increased self-esteem and knowledge.

Canadian International Development Agency (CIDA,1998) identified three

main benefits of microcredit to rural women. According to it the microcredit

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empowered them by improving their role in the household (i.e. through the provision

of economic resources, a woman may gain a greater voice in expenditure decisions),

it increased confidence in women not only through the economic success of their

business but also through increased access to community services and finally the

collective action with other women which changed their role at the community level.

It also brought new perceptions about women's role in community and as well as in

society. Thus CIDA argues that microcredit contributed not only to the economic

development of women but also empowerment.

Scoggins (1999) studied the performance of women's savings and credit

organisations in Nepal. The author argued that income-generating activities raise

women's decision making power in the household and community. Other observations

of the study are, involvement in a credit program does have the potential to empower

women and women developed self identity and status. This paper argues that there is

sufficient evidence to conclude that women still consult with men - who claim to

confer with their wives on important issues, loans have been mainly used for livestock

raising, poultry etc., in most cases the responsibility for loan repayment was also felt

by husbands and defaulting was rare.

Hashemi et al. (1996) studied the performance of micro credit programmes

run by the Grammen Bank in Bangladesh. They have concluded that Women�s

accesses to credit have significantly increased their economic contributions to the

family and have increased the likelihood of assets being bought in their name.

Niaz Hussain Malik and Muhammad Lugman (2005) made an extensive

review of literature on micro credit programmes and concluded that micro finance and

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micro-credit programmes had the potential and powerful impact on women's

empowerment. According to the authors empowerment is a complex process of

change experienced by all individuals somewhat differently and varied from culture to

culture and hence difficult to achieve. Precisely for this reason, these programmes

could not always empower all women, but at the same time most women did

experience some degree of empowerment. Authors have also argued that the micro-

credit programmes had both positive and negative impacts on women's empowerment

and eradication of poverty throughout the world. The positive impacts were

enhancement in women's ability to influence family affairs and decision making;

increasing self-confidence; improvement in their status, increased gender relations in

the home, reduction in domestic violence, improvement in status within the

community and acceleration in economic empowerment. The negative impacts of

microcredit were highly restrictive environment for women along with the increased

workload and responsibilities as a result of their involvement in income generating

activities other than their traditional responsibilities. The authors felt that the

microcredit programmes have sufficient potential to change the age old gender

equation and economic development.

Abhijit Banerjee et.al.(2009) made a study on the impact of microcredit on

the 52 randomly selected slums of Hyderabad city of Andhra Pradesh State, where the

microcredit programme was introduced. After 18 months of observation they

concluded that, while microcredit succeeds in affecting household expenditure and

creating and expanding business, it appears to have no discernible effect on education,

health, or women�s empowerment. However, they predict that there will be some

effect on these factors also in the long run when the returns on the investment in

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business will increase. They sum up their findings in the following words:

�microcredit therefore may not be the �miracle� that is sometimes claimed on its

behalf, but it does allow households to borrow, invest, and create and expand

business.�

Reddy, C.S. and Sandeep Manak (2005) on behalf of Andhra Pradesh

Mahila Abhivruddhi Samakhya studied 400 selected self help groups in Andhra

Pradesh. They concluded that self-help groups are promising and proving to be an

effective method of poverty reduction. The formation of these groups, which share

common-interest, consisting primarily of women has had a substantial impact on their

lives. The impact of women�s empowerment and social security has been invariably

an improvement. . According to them the status of women has generally improved as

they have developed stronger confidence which has changed gender dynamics. Their

role in the household has also changed. In south India, significant improvements in

fertility rates, female literacy, participation in development programmes and

economic independence are evident. Women are able to fight for their rights and

entitlements and have emerged as a force to be reckoned with. Further, SHGs are

becoming more than just financial intermediaries. They have emerged into a more

political and social unit of society. However, they felt that the penetration of

microfinance to the poorest of the poor is still weak and needs a wider reach. They

have also identified some key weak areas in the movement, such as financial

management, governance and human resources. They felt that the performance of

self-help groups ranges from weak to average in quality.

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Wen Cong Lu and Hasan (2011) have conducted a study on the performance

of members of self help groups in Monirampur subdistrict of Jessore district in

Bangladesh. They have concluded that borrowers of microcredit programs are better

off in terms of food consumption and household income generation. Their sample

shows that the programme enhanced the income and social status of the members of

the self-help groups. The Non Governmental Organisations (NGOs) played a

commendable role in popularising and promoting the programme. Not only that, the

NGOs motivated the members to invest the money in productive activity, instead of

using the loan on some other non-productive activity, but also guided the members in

the selection and operation of the selected activity. However, the authors felt that the

NGOs shall show some more concern in generating more interest in borrowers to

invest the money in profit earning business areas and take up the responsibility of

training the members with more seriousness. They have recommended that the

NGOs should consider some important points such as a repayment system, interest

rate and proper training program to generate borrowers� household income.

Basher, Md. Abul (2007) made an interesting study on the affects of self-

help groups on non-economic aspects of member�s life. His study was based on the

data from the Grameen Bank of Bangladesh. The author wanted to study whether the

achievements or empowerment of the microcredit borrower remained limited only to

the economic activities or did it reflect or influence the non-economic activities also.

The data proved that the self help activity helped the members to reduce the fertility

rate, an important achievement in a thickly populated country. The author also

concluded that the Grameen Bank transformed �its participants from a passive

recipient of credit to a well responsive and active agent in economic and non-

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economic aspects of life. This transformation sets up an encouraging context for the

effective public policies for economic and social changes at a reduced transaction

cost�.

Gaiha and Nandhi (2005 and 2007) made two studies on the impact of self-help

groups in Pune district of Maharashtra. They observed that though in terms of income

earned by the members the performance was unsatisfactory, it was better in terms of other

indicators of deprivation such as caste, landlessness and illiteracy. The noteworthy point

is that the loans were used largely for health and education of children and for

production-related expenses-especially by the group members. Though it is difficult to

ensure their sustainability, the rates of return on such investments were high. Savings

mobilisation through self help groups was highly effective, especially �in a context of

vulnerability of rural households to a range of idiosyncratic and covariant risks, and

ineffectiveness of informal social networks in protecting them against such risks�. The

authors feel that the self-help groups contributed to empowerment. According to them

the domestic violence was also reduced. Though achievement meant longer hours of

work, the experience proved to be more positive and contributory. The authors

concluded by saying that, �to confine impact assessment of microfinance to

conventional economic criteria of rates of return, and financial sustainability, the

impact of microfinance institutions would not be just narrow but misleading as well.

The benefits through women�s empowerment are substantial and reinforce the case

for microfinance through self help groups on both equity and efficiency

considerations�.

Thankom Arun, Katsushi Imai, and Frances Sinha (2006), analysed the

effect of micro finance institutions including self-help groups on poverty of

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households. For this purpose they depended upon a national level cross-sectional

household data in India as it was available in 2001. Their study proved that the

effects are positive, and the micro finance institutions played an important role in

poverty reduction. When the data collected from rural and urban households was

separated and studied, some interesting results emerged. First, for households in

rural areas, significant results are observed only in the case where the access to MFIs

is defined as household taking loans from MFIs for productive purposes and not in the

case of simply having access to MFIs. The result implies that monitoring the use of

loans as well as increasing the productivities is particularly important in helping the

poor escaping from poverty and protecting them from various shocks. In urban areas,

such significant poverty reducing effects are observed in both cases. The authors felt

that, as the large section of poor households is not only poor but also vulnerable a

stronger emphasis should be placed on microfinance schemes as a policy means of

poverty reduction in both urban and rural areas in India.

Joy Deshmukh-Ranadive (2004) observed that �SHGs have lead to an

expansion in the economic spaces of members�. However, the author added that, the

data on the economic conditions of the members reveals that the coverage of the

poorest of-the-poor is low, while the coverage of non-poor is considerable. The

financial status of households and savings capacities has improved due to access to

formal credit institutions. Access to credit has enabled majority of women to expand

or strengthen their existing traditional activities and a smaller proportion of women

have taken up new occupations. Wherever the activity is diversified to nonagricultural

activities, it has enhanced the quality of income of the households by reducing the

dependency on risk-based agriculture. The extra income is spent on better nutrition

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for the children and on health care for the family. Kitchen gardens have enhanced the

overall nutritional status of children and mothers. Self-help groups had an impact on

poverty alleviation, empowerment, social inclusion and participation in the political

process. However, gender poverty measured in terms of gender bias with respect to

norms of eating, male preference in distribution of food and access to clothing has not

declined significantly. But food security of member households improved after

participation in groups. There are improvements in school enrolment, attendance,

drainage facilities, toilet facilities and access to electricity and gas.

Fernandez, Aloysius P. (2006) narrated the experience of Self Help Affinity

Group (hereafter SHAG) run by Mysore Resettlement and Development Agency

(hereafter MYRADA), a mysore based voluntary organization. According to him

most SHAG members have been able to ensure adequate food for 12 months after

three to four years, if their SHAG is well functioning one. However, the income-

generating activities that the members can take up are largely part time, add

supplementary income and help tide them over times of urgent consumption needs

without becoming bonded to money-lending families. The author felt that as majority

SHAG members� desire is to move further, they need larger amounts of credit and

much more support than SHAGs can provide. They require technology, electricity,

skills, a regular flow of credit and stable markets so that their income-generating

activities, which are usually off-farm, can become full-time occupations. According to

the author (who represents MYRADA), the MYRADA had been trying to develop a

suitable strategy which realizes the dream of the members who want to move up.

The author concludes that the SHAGs and the NGOs who support these SHAGs, need

different approaches for economically empowering members depending upon their

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will and capacity. The author says that SHAGs are involved in setting up and helping

school management committees, which also include village leaders and prominent

local people. Gender issues are regularly dealt with in SHAG meetings, and concerted

action is taken to resolve the problem of domestic violence. SAGs exercise social

pressure on men regarding drinking, gambling and womanizing, which are often the

cause of arguments leading to such violence. The ability of women to bring in credit

and income has enhanced their status both at home and in the community, and the

SHAGs have given them a space within which to grow in skills and confidence.

Fernandez, Aloysius P. (2006a) argues that most of the members of SHGs

may not like to want to graduate to micro enterprises because of various reasons. If at

all some members want to shift to micro enterprises, they need another different

structure other than SHG because the loan pattern and the structure of SHG do not

suit. According to him, �it will be necessary to develop/test a new form of community

based organisation other than SHGs which may be more appropriate to support

members who engage in micro enterprises. Those members of an SHG who opt to

graduate to micro enterprises could be formed into Joint Liability Groups (JLGs) or

into some similar organisation. Banks may be more inclined to lend to individuals in

this group based on the performance of each member in the SHG as well as on the

assumption that a JLG will provide some degree of mutual guarantee�. However, the

available evidence shows that, the relations of mutual trust and support which is

described as affinity in a SHG tend to be weaker in a JLG, and hence new forms of

collateral or guarantee has to be worked out.

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Smith G. Sabhlok (2011) examined the importance of trust in women�s

collective efforts for development through self-help groups. Author argued that

community building efforts cannot ignore the importance of trust among group

members and, between group members and organisational members. The study

explored the manner and forms in which trust manifests itself during periods of

formation, activity and defunct stages of selected SHGs in India. Personalised trust,

argues the author, forms the centre of the radius of trust in SHGs. Once this

personalized trust is established then and it gets extended to generalised and

institutionalised trust. Development interventions for communities often aim to build

social capital which is an important corollary of trust. Community and group

development efforts aimed at building social capital must take into consideration the

factors associated with building and generating trust.

Frank Tesoriero (2006) evaluated the SHGs in South India, not in terms of

their success as microcredit schemes from a financial perspective, but in terms of

their contribution to gender development. She came to the conclusion that women

perceived changes in their identity by working collectively. This resulted in

influencing and changing the decisions at the village and panchyat level. They have

also engaged themselves in community and social action programmes. The SHGs

contribution was significant in gaining empowerment, and participation in

democratic processes. Author regarded this change as a modest but significant

contribution to broader transformations of oppressive structures.

Gordon Knowles (2011), on the basis of the review of literature on self help

groups, argued that the contribution of women to their communities is enlarged

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through their group participation and enhanced empowerment. One of the significant

implications that flow from group activity is that women enjoy a higher degree of

respect and credibility in their own communities. This was resulted from the growth

of trust and bonding through self help group facilitation and has seen an increased

confidence in participation by women in the affairs of the community. Group activity

was reflected in the new interest and involvement of women in the otherwise male

domains of civic budgets and panchayat elections. An enhanced level of social capital

in the community is demonstrated by women �who took control of their lives,

becoming conscious of their own situation and position, setting their own agendas,

gaining skills, building self confidence, solving problems and developing self

reliance. The regular group meetings held in the villages focus on topics relevant to

social issues concerning them and the community.� Another positive achievement of

group members and their families was escape from the clutches of moneylenders who

charge exorbitant rate of interest. Women have realized the seriousness of high cost of

credit. Women�s access to loans helped their husbands to start new businesses or

improve already existing businesses. The savings influence of the group has also

spread to adolescents who have commenced savings groups.

Ranjula Bali Swain and Fan Yang Wallentin (2012) studied the

performance of self help groups in five Indian states. Their sample was 810 members.

The authors evaluated the effect of economic and non economic factors on the

empowerment of women. They found that economic factors have the greatest direct

impact on empowering women. This confirms that programs such as SHGs, which

focus on the income generation by women in low-income households, have the

double advantage of leading to an improved economic situation of the respondent and

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being the most effective factor in empowering women. However, they add that greater

autonomy and changes in social attitudes also lead to the empowerment of women,

although the magnitude of their impact is, relatively, smaller than the economic

factor. They further argued that participation in an economic activity, the opportunity

to access credit and arrange crucial inputs play a significant role in empowering

women. Greater confidence to meet the financial crisis and having independent

savings is also a factor that contributes to empowerment. Thus, the provision of

�minimalist� microfinance through its economic impact remains the most important

cause for promoting women empowerment of SHG members.

Bill Lucarelli (2005) was highly critical about the way the microfinance

programmes are implemented. The author cautions that there is a risk of microcredit

initiative, which was introduced to combat poverty, getting imperiled by an

indiscriminate flow of resources to programmes that are not ready for rapid growth.

She also warns that the original limited objectives of targeting the poorest of the poor

could be skewed and redirected toward the more privileged, capitalist sectors of petty

producers. She foresees the possibility of the programme getting derailed.

Robinson (2001) is one of the much quoted writers in the academic circles of

micro finance. On the basis of extensive review of case studies from Indonesia,

particularly from the records of the Bank Rakyat Indonesia, she identified some

limitations of micro finance. She wrote that commercial microfinance is not meant

for �core poor or destitute�. It is meant for those who are �economically active poor�.

In her opinion providing credit to poor people who do not know how to use it

effectively helps neither the borrower nor the lender and such credit policy would

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only lead to �increasing debt burden and erosion of self confidence�. She suggests

that this �segment should not be the target market for financial sector but of state

poverty and welfare programmes�. In addition to this, irrespective of socio economic

status, credit can be put to little productive use in resource deficient and isolated

areas. In such areas, credit flow has to follow public investments in infrastructure and

provision of forward and backward linkages for economic activities. A uniform

service delivery without taking situational context and client needs into account will

continue to have limited impact

Devaraja (2011) observed that the extension of credit in infertile local

context has negligible chances of leading to productive investment. Similarly

inclusion of �core poor�, which had little experience of economic activities, in the

programme also limits productive use of capital. Hence, he recommends segmentation

of credit demand based on economic and social status as the key to optimum

utilization of scarce resources. After studying self help groups in western and central

parts of India he made the following observations. All clients were saving regular

amounts of money at monthly/bimonthly intervals. The internal loaning of group

funds was very high resulting in significant waiting time for members interested in

borrowing. Social awareness of group members showed a definite positive trend

after joining the group. Reliance on moneylenders for credit was either eliminated or

decreased in case of 2/3 of clients. However, only 6% clients had taken up any

economic activity after joining the groups and availing credit. Other group members

were not willing to take up economic activity on account of credit risk and absence of

skills. One more interesting observation of the author was that the bank credit to

group often a result of banker�s zeal to achieve targets rather than based on group

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demand and the bank credit as well as loans used overwhelmingly for consumption

purpose. A high rate of interest in internal lending among group members was

observed by the author.

Singh, Y. K., Kaushal, S.K. and Gautam, S.S. (2011) studied self help

groups in Moradabad District of Uttar Pradesh. They observed that caste had a

negative but highly significant relationship with participation, task function,

interpersonal trust and group cohesiveness. At the same time it had a positive and

significant relationship with style of influence. In other terms, participation, task

function, interpersonal trust and group cohesiveness were low among the members of

lower castes. The member ship in groups and interaction in the capacity of group

members had a positive and significant relationship with education, participation,

maintenance function, interpersonal trust and group cohesiveness. The authors also

found that economic, political and legal empowerment had a positive and significant

relationship with education, family occupation, annual income, task function,

maintenance function, interpersonal trust and group cohesiveness. The authors

concluded that a greater percentage of women were impacted positively by being

members of SHGs. Women's participation in SHGs enabled them to discover their

inner strength, gain self confidence, social and economic empowerment and capacity

building.

Nabavi (2009), after reviewing the then literature on self help groups, argued

that these groups need a particular environment to function successfully and in the

absence of this environment, their performance and the results would be

disappointing. According to the author, providing access to micro-finance through

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SHGs is considered as a precondition for poverty alleviation. In order to function,

self-help groups require a basic enabling environment such as a stable social structure

and a functioning basic welfare system offering a minimum standard of quality. The

presence of these two factors is a prerequisite for self-help activities. Self-help groups

can help to achieve some degree of synergy between welfare providers and users

when the prerequisites mentioned above are met. Author warned that as long as this is

not the case the transfer of a concept that originated in Western, individualistic

societies to very different societal context will bring disappointing results. As a part of

the existing neo-liberal agenda, it might further result in shifting the responsibility of

welfare from the State to the individual, which would have serious implications for

equity and justice in every aspect. The author concluded that SHGs can play an

important role for solving social problems, in promoting education, in generating

employment, in meeting credit requirements, in bringing about people's involvement

in solving their problems.

Pokhriyal, A.K. and Vipin Ghildiyal (2011) studied the SHG-Bank Linkage

Programme using secondary data. The authors opined that the SHG programme is

the most successful model in the world in terms of its outreach. The SHG Bank

Linkage program has a positive impact on the participants in terms of formation of

groups, team efforts and own small savings. While accepting the data provided by

National Bank for Rural Development (NABARD), the authors argued that this

programme has changed the lives of almost 15 percent of the people by helping them

in moving above poverty line. However, the authors were highly critical of the

coverage achieved. According to them there are wide spread disparities among

various regions in the spread and progress of banking and the supremacy of the

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southern region is evident. Banking network and services have grown better in

southern, northern and western regions and other regions are lagging behind,

particularly northeastern region. The authors suggested that efforts must be made for

the financial inclusion of the people living in north eastern, eastern and central

regions. According to the authors, adequate banking network, intensification and

enhancement of banking net work is the only solution for this. they also suggested

that the banks should expand their services to suggest various income-generating

activities to the NGOs and self-help group members and provide them assistance in

training. A special drive by NABARD to provide special funds to the banks is also

necessary to fulfill financial inclusion in these areas. Authors felt that the loans are

not adequate and suggested that loans per person should increase so that it can be

better used for removal of poverty.

Maria Costanza (2020) made a detailed study of the Gram Mooligai Limited

Company (GMCL), a community-based enterprise based in Tamil Nadu. The GMCL

was led by of Tamil Nadu women and formed by a network of SHGs. The author

argued that while the group and social forms of entrepreneurship have inherent

benefits, it must never be allowed to become the paradigm in developmental policies

for women. According to the author factors like caste, religion, individual domination

etc., led to the failure of groups. The author argued that, in a context where women�s

autonomy and physical mobility are generally restricted by gender inequalities within

the family, differences in economic roles and power, preference for male child,

oppressive cultural traditions, and lack of encouragement further penalizes a

woman�s participation in the public forum.

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A study by Anjali Sharma, Bikash Roy and Deepa Chakravorty (2012),

focused on the effects of the SHG strategy on women�s economic activities and

possible occupational change. They have also tried to analyse its impact on asset

creation, the degree of participation of women in decision-making process in domestic

issues and group activities. Their study showed that after joining SHGs women

experienced a great change in their attitudes and capacity. About 94.9 percent women

had taken decisions on the domestic matters. Women took part in organizational

activities and participated in group discussion. The authors concluded that SHGs not

only mobilize micro- finance and provide micro-credit to the needed members but

also provide self-employment training, awareness programmes, promote the

leadership qualities and give confidence to their members. The SHG activity will

empower women. Providing adequate financial support, guidance to start small

business, technical support can uplift their standard of living. The authors felt that if

women can utilize this efficiently, they won�t face poverty. Their activity will also

increase the productivity of the nation resulting in growth of Gross Domestic Product

and per capita income.

A study was conducted by Voluntary Operation in Community and

Environment (VOICE, 2008) for the Planning Commission. This study covered five

states viz., Andhra Pradesh, Uttar Pradesh, Gujarat, Chhattisgarh and Bihar. This

study observed that the necessity of training was completely ignored. As a result of

this women�s traditional roles and traditional ideas about sexual division of labour are

being reinforced. Another purpose behind the idea of revamping poor people's

activities was to reduce the enormous workload that poor women especially carry in

their multiple roles as reproducers and producers. It was hoped that the new activities

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would be sufficiently productive for them to earn better income with less physical

labour. Instead, after joining the SHGs the workload of the women increased. This

was mainly because joining the SHGs had provided them with some supplementary

work, but the new activities could not generate enough income for them to give up

any of their earlier activity. The criteria to decide the poverty are sufficiently vague.

This gave an opportunity to the people in power to bring all their sympathizers into

the list of poor. As a result in most of the cases rich people are also getting the

benefit. This study made two recommendations. The first one is decentralization of

the scheme, so that each region gets the authority to use the funds in a suitable way

and take into account the organizational facilities that are locally available. Secondly,

there must be more publicity about them scheme and its contents as well as the

authorities in charge and their responsibilities. This helps the targeted population to

seek help and question authorities if the latter fail to deliver.

Prakash and Nehru (1998) described the initiative of the Kerala Horticulture

Development Programme which was set up in co-operation between the European

Union and the Government of Kerala in 1993. The programme builds on SHGs,

which select master farmers who are trained and act as facilitators. Horticultural crop

production is one of the two activities of the programme. The second activity is

assisting the SHGs in processing and marketing of products. The marketing

infrastructure at site level includes establishing field centres for collecting the produce

from 10 to 15 SHGs. The concept of these centres envisages creating farmers' markets

and benefiting from agglomeration advantages - both in terms of sale to wholesalers

and commission agents, and in terms of market information. The programme is

considered as a highly successful one in bringing SHGs closer to the market.

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The Ninth Report of Second Administrative Reforms Commission

(ARC,2008) showered all praise on SHG programme. According to it, the SHG

programme has contributed to a reduced dependency on informal money lenders and

other non-institutional sources. It has enabled the participating households to spend

more on education than non-client households. Families participating in the

programme have reported better school attendance and lower drop-out rates. The

financial inclusion attained through SHGs has led to reduced child mortality,

improved maternal health and the ability of the poor to combat disease through better

nutrition, housing and health � especially among women and children. However, this

Report identified some weaknesses as well in the programme. They are:

1. contrary to the vision for SHG development, members of a group do not

come necessarily from the poorest families;

2. the SHG model has led to definite social empowerment of the poor but

whether the economic gains are adequate to bring a qualitative change in

their life is a matter of debate;

3. many of the activities undertaken by the SHGs are still based on

primitive skills related mostly to primary sector enterprises. With poor

value addition per worker and prevalence of subsistence level wages,

such activities often do not lead to any substantial increase in the income

of group members, and

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4. there is lack of qualified resource personnel in the rural areas who could

help in skill upgradation / acquisition of new skills by group members.

(Fourth Chapter, �Third Sector Organisations At The Local Level � Self-

Help Groups�, 4.5.6. to 4.5.9)

A study made by Mahendra Varman (2005) on the impact of Self-help Groups

on banking habits revealed that microfinance SHGs in India inculcate banking

habits in rural people, especially the women. They intentionally or unintentionally

help formal banks by increasing the number of accounts. Analysis of the data

collected by the author revealed that being a member in SHGs and, more importantly,

having leadership experience in SHGs greatly influences the bank account holding.

Leadership experience in SHGs would improve an individual's banking habits

much more than simply membership. The author concluded that if the leadership

position of each SHG is systematically rotated over appropriate time, people will have

more exposure to formal banking systems. This will inculcate banking habits at a

higher magnitude, thereby enhancing the advantage of banks in acquiring large

numbers of deposit accounts.

Vasanta Kannabiran (2005) is one of the few lone voices to argue that the

microcredit strategy cannot eradicate poverty and it is used to political gains.

According to her, credit cannot serve as a single solution for all problems faced by the

poor. More over to call it �a self-help movement that is successfully eradicating

poverty and emancipating women would be misleading.� (p.3716). She argues that

Self-help as it is understood today is a project that aims to provide relief while

masking the causes of the malaise. She proposed that �Women need to be organised

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to understand and confront the violence of their reality; a violence based on gender,

caste, community. political corruption and a failure of governance. Women need the

information to question and call to account their governments for failures of vision

and performance. They need to be empowered to understand and act against the

fundamental factors responsible for their subordination.� She comes very close to the

Gender and Development approach by saying that �regardless of what popular

understanding of feminism may be, this does not mean viewing women in isolation,

separating them from the problems confronting their households and their men and

providing them with micro solutions to a macro reality.� She categorically states that

measures like self help and micro-credit may satisfy the immediate practical gender

needs of women but the short-term relief without a long-term political, social and

cultural vision will only serve to perpetuate the subordination of women. The

champions who argue that women need credit to put their children in schools and pay

for private health services conveniently forget to question the state about its

responsibility in providing good education and healthcare free of cost remains

unasked. She concluded her argument by asserting that measures such as micro credit

and self-help serve to distance women from citizenship and political action while

retaining their utility as vote banks.

Frances Sinha (2005) had all praise for microfinance and SHG model. The

author selected a large sample 4,235 self help group members from 3,908 house holds

spread over eight Indian states viz., Andhra Pradesh, Tamil Nadu, Karnataka, Kerala,

Uttar Pradesh, Rajasthan, Assam and Manipur. The author found that a number of

positive aspects in the programme. According to the author, microfinance is making a

significant contribution to both the savings and borrowings of the poor in the country.

96

Though the main use of microcredit is for direct investment, there are some deviations

depending on household credit requirements. The performance of the SHG model is

exceptional in providing a savings-based mechanism for internal group credit to meet

household needs, and also serves to facilitate access to credit by poorer clients, who

are more likely to need small amounts of credit for immediate household purposes.

The author felt that even the presence of other microfinance organisations could not

affect the SHG model because it is more flexible, accessible, available without any

security and wider in outreach.

Purna Chandra Parida and Anushree Sinha (2010) examined the performance

and sustainability of three different types of SHGs, viz., all-male, all-female, and

mixed SHGs. Their analysis was based on data from a primary survey from six states

in India - Andhra Pradesh, Karnataka, Maharashtra , Orissa, Uttar Pradesh and

Assam. The authors observed that the female SHGs are performing better than other

types of SHGs. Not only that the female SHGs performed better in terms of loan

recovery, than other types of SHGs but also the per capita savings of female SHGs

was also much higher than other types of SHGs. The female SHGs did extremely well

in financial management practices such as maintaining book accounts and passbooks

and updating them regularly. The authors also observed that the female SHGs were

more sustainable. The factors that determined their sustainability were loan recovery,

per capita savings of SHG members, linkage with SHG federations, and formation

and financing of SHGs by banks. The all-female SHGs were sustainable because they

were more focused and united, adhere to basic objectives of groups, utilize borrowed

funds for different productive activities, and are highly concerned about the well-

being of their children and family members. Further, female SHG members took

97

membership in the group as a means to educate themselves and confront social,

political, and economic problems. On the other hand, observed the authors, the

members of all-male SHGs have ego problems, work for their own interest, and do

not follow the basic objectives and goals of group formation.

Bouman (1995) had all praise for self help groups. In his opinion all case

studies of financial self-help groups in Cameroon, Senegal, Nigeria and The Gambia,

illustrate that the influence and the achievements of these African-styled associations

go far beyond the frontiers of the financial landscape. Their achievements penetrate

into other fields, such as social security and insurance, physical and institutional

infrastructure, recreation, community development, health, and education. The author

concluded that these self help groups helped the members �to ease the transition of

young migrants from a rural to an urban economy and lifestyle, and helped them to

gain some independence from a traditionally powerful village elite�.

Sangeeta Arora, and Meenu (2011) studied the role of microfinance in socio

economic empowerment of women in the Jalandhar district of Punjab. The authors

felt that the microfinance was effectively contributing to women empowerment. It

was also significantly contributing to the development of their families in terms of

getting credit for housing repairs, education and marriage of their children and also

for consumption purpose. The study found good saving habit among females.

However, they found a number of obstacles in the way of financial inclusion of

women such as the lack of awareness regarding micro financing services being

provided by the banks. Most of the respondents were dissatisfied with services

provided by the banks. Particularly issues like requirement of collaterals, procedural

98

formalities, loan utilization checks and repayment terms were found to be

inconvenient and difficult. Because of this, significant proportion of the rural women

preferred informal sources of finance. Authors felt that there was a need of attitudinal

change on the part of respondents and the banks shall help the respondents in this

regard. According to them the banks should introduce some proactive strategies to

create more awareness about the micro financing services available with the banks

and encouraging the use of such services. The study also found that very negligible use

of the SHGs services by the respondents. Authors concluded that women should be

encouraged to take up entrepreneurial activities by giving them proper guidance and

developing their business skills. Women empowerment to a great extent depends upon the

economic empowerment of women and microfinance can prove to be a very powerful

instrument of women empowerment in the times to come.

Chowdhury, Md. Al-Amin (2008), drawing upon the studies made by various

authors, maintained that there is a negative dimension in micro finance. The facility

may contribute to more burden, stress, and declining status of women. The author

concluded that, �Microfinance is not a panacea to tackle all the causes of poverty and

it may take a long time to bring about gender equity and women�s empowerment.

Therefore, it needs a comprehensive strategic and long-term policy package to reduce

poverty and gender inequalities with the involvement and strong commitments from

all pertinent stakeholders like government, non-governmental organizations, private

sectors, donors etc.,�. The main suggestion of the author is that, �donors should not

support MFIs unconditionally rather than with pro-poor conditionality for financial

viability and corporate social responsibility�.

99

Harper (2007) was very critical about the role played by the micro finance. He

argues that women loose control over the loans that have been taken in their names.

This loss of control increases not only their vulnerability but also becomes a further

burden. This loss of control takes place more in rural areas where their mobility,

occupational choice is limited. The author also argues that pressure of repayment and

fear of social sanctioning from other members in the group contributes to lessen their

courage and entrepreneurship.

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