Microfinance Focus, December 12, 2011: The SHG-Bank Linkage programme will soon be completing two decades. Taking stock of the achievements and shortcomings of the programme at the Microfinance India Summit today in New Delhi, Dr B S Suran, General Manager of MCID, NABARD said that it is time to reflect and relook at the products.

“Some view it as empowerment, some view it as poverty alleviation and some view it as financial literacy. It is not only about enabling financial services into the communities but also building leadership. Lesser control and monitoring and multiple borrowing has been raised. SHG is a saving-led initiative. It is a learning enabled process and certainly it takes time”, he said.

B S Suran concluded that “Ladder out of poverty need not come from credit alone. If there are savings, it could come from savings. Savings could play a much bigger role.”

Sharing his experience with the SHG Movement, Aloysius Fernandez, Member Secretary of MYRADA and Chairperson of NABFINS said that the SHG is a business model designed by the people.

Aloysius Fernandez feels that standardizing loans is not suitable for a diverse country like India. “We need to cope with institution at the local level and cope with diversity. Some of the size of loans is correct some are not. Let them decide. Some of the loans taken by a women member could be for their husbands. Therefore look at loans for livelihood strategy of the family.  Look at livelihood as a whole and not just agriculture”, he said.

Vijay Kumar, Joint Secretary of the Ministry of Rural Development, NRLM, who views SHG as an important strategy form the national livelihoods perspective said that the cost of SHG models are underestimated.

“It costs about Rs. 12000 per capita over the period of 9 years for capacity building support. The SHG initiative over the last 10-12 years has been done by state government in AP and Kerala. What we need to scale up is mechanism of more handholding. I have deep disappointment with the role of banks”, he said.

He further added that the poor are being victimized by moneylenders and MFIs. “The poor cannot get out of poverty with 30% interest rates.  There is a limitation on high quality service providers. We need to have a model of people-to people learning”, he said.

He suggested that NABARD should look at two groups, SHGs and the federation of SHGs. “Also look at multiple memberships instead of fragmenting the SHG. There is a big concern of the lack of interest in NABARD and the lack of money they are investing”, he said.

Sharing the findings of the researches done by PRADAN, a pioneer in the promotion of SHGs in India, its Program Director D Narendranath stated that SHGs play a role for savings more than for credit and there is a need to increase the strength of groups as savings bodies.

Prof Dr. Hans-Dieter Seibel from the University of Cologne added that the SHG-bank programme has been savings based but credit driven. “Problem is that if you don’t have access to voluntarily withdrawing your savings, you’ll fall into indebtedness.

To end of the discussion on SHG, Malcolm Harper, Chairman of M-CRIL, Emeritus Professor, Cranfield School of Management, UK, made an interesting presentation called ‘Why I’d rather be an SHG member than an MFI client’. He commented on how SHGs can reassert itself in microfinance and take advantage of the stumble MFIs have come across.