2

Sa-Dhan Patrika

Volume 6

Issue 1

Scaling up issues in SMFIs

O

rganisations of women around thrift

upon as the entry point activity by many

development organisations and the

and credit have emerged as one

government. This, as already discussed

of the more effective methods for

poverty reduction and women's

above, has led to the rapid growth of

empowerment. Today, the self-help

SHGs in the past decade.

group (SHG) methodology is the most

dominant form of microfinance (mF) in

While the growth and numbers in the

India. The organisation of SHGs was

SHG movement are quite impressive,

pioneered by non-governmental

the quality is variable. The focus on

organisations (NGOs) in the late '80s, and

enrolling women into SHGs has led to a

a large number of NGOs across the

spurt in numbers, with greater focus on

country continue to be engaged in SHG

formation and limited efforts on

promotion and strengthening.

consolidation and improving quality. In

some parts of India, competition among

There has been an exponential growth

the SHG promoters has resulted in

duplication of membership, with one

in the number of SHGs since 1997. While

woman being a member of more than

in 2002, close to a million SHGs were

one SHG, based on the benefits on offer

formed in India1, it was estimated that in

2004, the number of SHGs grew to twice

by each promoter institution.

the previous figure. In the late '90s, the

government became a dominant player

Process

in the promotion of SHGs, particularly in

south India through the District Rural

Development Agencies (DRDAs) and

other government corporations and

externally-aided programmes. NABARD's

SHG-bank linkage programme provided

Scaling-up

the initial impetus while currently it is

being driven more by the externally-

aided programmes and commercial

People

Systems

and private sector banks.

It has been observed though that the

development and spread of the SHG

The relationship of the three important

movement has been rather skewed. In

elements in scaling up ­ process, people

2002, almost 80 per cent of the SHGs were

and systems - is portrayed above. All

in south India, though there exists a high

three are equally important and

concentration of poverty in the northern

disproportionate focus on any one

and north-eastern parts of the country.

would lead to unsteady growth in the

Currently, the numbers seem to be sorting

movement.

themselves out with south India now

accounting for around 50 per cent of all

It is pleasant to note that in the SHG

SHGs in the country. This is an indication

movement,  there  is  no  single/

that SHG promotion in other parts of

predominant model of SHG promotion,

India is finally being focused upon, with

and the movement has witnessed a rich

d i v e r s i t y in its models. One pitfall

efforts in the south having moved on to

generally observed in scaling-up is the

the consolidation of the SHG movement.

obsession with replication of the model

This paper attempts to look at the issues

and not the process, wherein the local

related to scaling up, based on the

realities are not taken into consideration.

experiences of the author in the rating of

SHGs being promoted as entry-point

SHGs and their federations and a study

activity and for purposes of sustained

of SHGs in five states of India as part of

social mobilisation also might have

the CGAP report "Financial Analysis of

contributed towards the diversity. Also,

Self-help Groups in India: Value for

SHG promotion being a low-cost

SMFIs are self

Money?"

promotion model allowing the promoter

managed

to experiment and innovate is possibly

microfinance

Efforts to scale up the SHG movement is

one of the prime reasons for the diversity

institutions and

necessitated by the realisation that SHGs

in the SHG models. However, once a

include SHGs,

p r o m o t e r  is  convinced  of  the

a r e a good platform for women's

their federations

` a p p r o p r i a t e ' model, the same is

empowerment activities and an

and thrift co-

replicated when the promoter begins

effective channel for development

operatives

programmes. Hence, SHGs are looked

to scale-up.