For the Greater Common Good

Ajay Tankha’s Banking on Self-Help Groups presents a well researched study on the existing functioning of self help groups (SHGs) and their future roadmap. Though the book relies heavily on techno-formal narrative in identifying the policy gaps and limited ground available for SHGs, concern for the marginalised stays into the core.

Though, heavily footnoted and dense with references, the author succeeds in his primary aim to produce a factsheet on the working status of SHGs in India. Three core issues are the prime focus of the study — (i) cost-effectiveness, (ii) sustainability, and (iii) impact. 

These assess the development cost of SHGs and related institutions, the sustainability of SHGs and community institutions models, and eventually the economic and social impact on SHG members. The author also covers the work being done under the aegis of National Rural Livelihood Mission and Nabard for the next level development of SHGs.

When the first time SHGs were linked to banks in Udaipur in 1992, no one imagined that this programme will take off on such high scale. Two decades later, the total numbers of SHGs have crossed over 5 million and these groups are partnering with banking in rural areas for achieving greater financial inclusion for more than 75 million households.

Tankha gives ample facts to prove it. In recent years, commercial banks, including regional rural banks (RRBs) and cooperative banks, have found in SHGs their natural clientele. The banks, with some regional variation, are doing exceptionally well with SHGs and causing good socio-economic impact. Because of this experiment, now a sizable number of women are under the fold of institutional banking.

SHGs are taking the membership of primary agricultural credit societies (PACS) and reviving the prospect of cooperative banking in India. This is a high time for these institutions to work more closely and provide an alternative to the exploitative microfinance institutions. 

This will help cooperative institutions, too, in their revival. RRBs are doing remarkably well with SHGs and that giving hope for a better mechanism of microfinance. This will reduce poverty and enhance the entrepreneurial zeal in rural areas. 

The book has lot of success stories and these show how SHGs are becoming important route for government benefit programmes. However, credit support remains the main plank of the SHG movement and that should be in reckoned by the policymakers. SHGs are driven by collective action and peer performance with the financial support of banks — unlike an individual borrower, their response to banks are reliable and decided by the standard of group. 

The focus in last few years has been to strengthen the capacity of SHGs. That purpose seems served by now. So, a bigger model — like an SHGs’ federation — should enter the ideation phase. As SHGs are meant for collective right based credit access, getting strongly organised would be the right step in bringing about financial inclusive in the country.

The book offers a good overview of the actual performance of SHGs in the last 20 years. And it concludes with a detailed discussion of proposals and institutional arrangements that offers the way forward for the continued growth of SHGs as a channel for socio-economic change in rural areas of India. 

( )

comments powered by Disqus