Self-Help Groups
By Moin Qazi
A silent revolution is taking place in remote crannies of the country, sans the Jan Dhan Yojana. Poor women are pooling their talents and resources to build a new synergy of collective empowerment to transform their lives. These small clusters or collectives of women are known as Self-Help Groups (SHG). Through their association with these Groups rural women have been able to hobble entrenched patriarchal cultures and brought a new level of transparency in rural governance. They have also generated enormous social capital, which has enabled women to become active partners in the Panchayat Raj institutions. Most of the country’s women pradhans are drawn from them.
Self-Help Group is a made up of a few individuals, usually poor and often women, who pool their savings into a fund from which they can borrow as and when necessary. Such a group is linked with a bank—rural, cooperative, or commercial–where they maintain a group account. For a period of time in the beginning, the women only save money. They deposit a small sum, ranging from Rs 20-50. After six months, they are eligible to take small loans. These loans can either come from the group savings account or through the bank. The group helps determine if the loan is appropriate for each member and serves as a screening point for the bank. Because the liability of the loan is shared among the group, it is in each member’s interest to ensure that all other members are capable of paying back a loan on time.
Loans are then given out to individual members from these funds upon application and unanimous resolution drawn at a group meeting. The bank permits withdrawal from the group account on the basis of such resolutions. Such loans, fully funded out of the savings generated by the group members themselves, are called ‘inter-loans’, and have a short repayment period, usually three to six months.
After recording regular loan issuance and repayment for a minimum period of six months, the bank begins to lend to the group as a unit, without collateral, relying on self-monitoring and peer pressure within the group for repayment of these loans. The maximum loan amount is a multiple (usually 4:1) of the total funds in the group account. Once the group matures, and graduates to a business enterprise, the financing is more need-based and is directly linked with the capital needs of the business.
These women have now traversed a long path and are now part of the development landscape. Many of them have become panchayat leaders and village pradhans and are active. The SHG revolution which is also known as India’s indigenous microfinance movement has redefined the contours of women’s empowerment in the grassroots institutions that are engaged in village planning and development. The SHG movement which is India’s indigenous model for financial, social, and political empowerment of poor village women has proved to be a game changer for women’s destiny. The women of SHGs have brought about a new transparency and imparted vibrancy to rural governance. They serve as watchdogs to safeguard the development agenda of the grassroots government administration.
My hopes for the Self Help Group model for microfinance have, however, been only partially fulfilled. More than half of our borrowers have not experienced continuous development. Many made progress only to slip back into poverty. We need to understand why they go on and on taking small loans. Some of the poorest villagers, whom I knew as malnourished children have, against the odds, grown into adulthood, married and had children of their own. I marveled at their endurance and resilience.
According to observers, these changes are in sharp contrast to the previous marked absence of women in public spaces and the despondency, dependency, and at times apathy that defined the Vidarbha region in Maharashtra. These changes have not occurred overnight and the process involved has not been simple. Women, eager to share their experiences and accomplishments, unanimously attribute the source of their transformation to their new-found access to ‘mahiti’ (information) and a subsequent growing awareness of and ability to act on their rights. Further, they also assert that they derive their primary strength from their emergence as a collective based on their enhanced economic status.
As bankers who strive to bring about wholesome development, we must remember that all women, regardless of their marital status, need access to education, good jobs, and support for domestic duties. Both widows and married women deserve freedom from culturally entrenched marital practices that degrade and commodify them, as well as legal protection from their husbands’ debts. Although transforming long-held laws, beliefs and practices may be difficult, it is the only way to keep price tags off women and ensure that they have dignity as well as true economic agency. It has been said that women who are closest to the world’s most pressing issues are best placed to solve them.
In many countries, women are adjusting to large-scale economic changes through community-based grassroots organizing efforts. But can women be expected to use local solutions to clean up and compensate for larger economic problems without also being allowed to influence larger decisions? The idea that small loans enable millions of poor people to pull themselves up by their bootstraps has captivated liberals and conservatives alike. Yet no one should be lulled by this livelihood finance boom into believing that it is a cure-all for global poverty. The problem is that not everyone is ready or able to take on debt. Some people struggling to feed their families require more basic help and financial training.
Poor women’s struggle for empowerment and participation in India’s economic growth has been a revolutionary saga. Surprisingly, the media and the public intellectuals, who have been so strongly and convincingly gunning for transparency at the higher levels, missed the enormous grassroots movement that is not only reducing the trust deficit but imbuing the grassroots public institutions with greater transparency and stronger governance. For poor women, it is a journey towards the second Freedom or the real Freedom, as Mahatma Gandhi said when he talked of the unfinished agenda at the time of independence.
Many years ago, Pandit Jawaharlal Nehru made a speech that is often quoted by our co-operators. It was the speech in which he spoke of “convulsing India in cooperation”. Less noted, but far more important, were other words he spoke that day, words that were highly relevant in 1993: I do not accept the statement often made that the Indian peasant is so frightfully conservative that you cannot make him come out of [his] rut. He is a very intelligent person—given the chance—only a little cautious, only wanting some proof, some evidence of what he is asked to do…and not taking too much for granted. Now that makes cooperation in India for the rural people absolutely essential.
Nehru expressed his faith in our rural people and remarked: …theirs will be the decisions and if they make mistakes, they will suffer for them, and learn from them. He must have had village men folk in mind when he dreamt of a participatory financial democracy in rural India. Nehru was right in his assumption but he was wrong on the constituency from which he expected this change. He would never have imagined that the revolution would be ignited by an almost mute constituency—the leadership of the women of rural India. — INFA