83

INTEGRATING EMPOWERMENT IN MICROFINANCE: CASE OF A SELF-HELP GROUP (SHG) BASED ORGANISATION

Kishore Bhirdikar and H.S. Shylendra1

1. Introduction

By design or default, women constitute bulk of the microfinance participants.

Given the widespread gender bias in socio-economic development, many see in

microfinance a potential for overcoming the gender discrimination and ability to

bring about women’s empowerment. The proponents argue that the participation

in microfinance groups can play a transformational role for women, both socially

and economically. The access to savings and credit helps a woman member to

take care of her family’s financial needs which can enhance her standing in the

family leading to better gender relations. The continued participation in group can

enhance the awareness, skills and other abilities of the woman resulting in

building of her individual self-esteem and in getting due social recognition.

Moreover, the group based models require self-management. The women

members are expected to manage on their own the affairs of the groups including

their linkages with the external agencies. The rigours of such self-

management not only can develop their abilities at individual level but can

increase the scope for exercising control and ownership over financial

resources and institutions. Increase in such control over financial resources

with the ability for self-management can be enormously empowering for the

women.

However, there are contrary views that microfinance may not be an easy

panacea for solving problems of poverty and gender discrimination. Access to

financial services may not directly lead to empowerment of women. Given the

existing social realities, women may not be able to exercise full control over the

1 MFMI Chair in Microfinance, Institute of Rural Management Anand (IRMA), Anand

84

newly acquired resources. As a result, women may become more vulnerable to

gender related conflicts in the family. Microfinance interventions can at best

have only a limited impact in empowering women. Interventions like microfinance

are constrained by the existing socio-cultural structures like patriarchy in order for

them to make any significant impact on women. Moreover, it is argued that

women’s empowerment is a more complex issue having social, economic and

political underpinnings which cannot be addressed solely by a microfinance

intervention.

2. Gramin Mahila Swayamsiddha Sangha (GMSS)

The Gramin Mahila Swayamsiddha Sangha (GMSS), is a self-help group based

women’s federation set up in 1993 and based in Rajgurunagar of Pune District

in Maharastra state. Dr. Sudha Kothari, the founder trustee of Chaitanya, the

promoting Non Governmental Organisation (NGO) said “Participation in

decision making is a key element of any empowerment process. We are trying to

achieve this through GMSS. The idea from the beginning was not to replicate

the already existing institutions promoted by the government but to create

institutions which can act in response to the needs of the women. Our exposure

visits to Andhra Pradesh and interactions with the microfinance practitioners

over there in the initial stages helped us articulate our ideas of development

through women’s institutions. We realized that thrift by women and for women,

facilitated through these institutions would be an empowering tool to achieve

these goals. Since the women in this area have only limited resources, our

microfinance model makes credit and saving facilities available to them as a

means of building their resources for development.“ Adding further, Dr. Kothari

said, ”The process of coming together for sharing information and regular

review provide opportunities for women to take forward and implement their

ideas. These opportunities contribute to their empowerment. The central idea is

that women will take development process in their own hands and manage it to

address their needs. In the process, they become the agents of their own

development. The guiding vision is to ensure equitable distribution in the society.”

85

Ms. Kaushalya, the coordinator of GMSS said, “GMSS is a SHG based

women’s federation promoted by Chaitanya. It is registered under the Societies

Registration Act, 1960. The process of GMSS establishment began when Dr.

Sudha Kothari came to Khed block of Pune district to pursue her PhD study in

social work sometime in 1988. Dr Kothari’s study was on understanding the

role of different institutions in meting various needs of the rural population.

During the course of her study, Dr. Kothari came in contact with the staff

(Anganwadi workers) of Integrated Child Development Scheme (ICDS). She was

invited by these Anagawadi workers to visit their villages and start some work.

Dr. Kothari initiated savings activity by women in seven villages. Each woman

saved one rupee and eventually the women in these villages together were able

to mobilise one hundred thousand rupees. However, one of the important

limitations faced in the process was the low rate of interest offered by banks on

the savings generated by women. The interest rate received on savings was

way below the rate the women were paying on the loans borrowed from the

informal credit markets. The savings generated were returned to the women

with a plan to start a new programme more systematically. This was followed

by a bigger programme organized to promote more SHGs. The bank officials

were also involved in this programme. This gave a boost to the formation of

SHGs. At the beginning, fourteen SHGs were formed, and this was the

beginning of the GMSS.”

Explaining further Ms. Koushalya said, “In 1991, the process of formation of the

federation was initiated. The need to federate the SHGs emerged as some of

the SHGs faced shortage of funds for their internal lending. On the other hand,

some SHGs had unutilized savings lying with them. These circumstances led to

the idea of facilitating inter-lending between the groups. The leaders of the 14

SHGs were meeting regularly and in these meetings the formation of an informal

federation of SHGs cropped up. Two leaders from each SHG were selected to

represent their SHGs. Rules of the federation pertaining to membership fee

and meetings were framed. In the initial stage, only four SHGs had agreed to

86

be part of the federation, but by 1993 the number of SHGs increased to 20.

With the increase in the number of SHGs, the funds pooled were found

insufficient to meet the credit demand of all the SHGs. To overcome the

challenge, linkage with external agencies for accessing additional funds was

thought of. The Friends of Women’s World Banking (FWWB), an apex

agency, lent money to the informal federation by taking a third party guarantee.

In order to facilitate further borrowing, FWWB suggested the need for creating

a legal entity by the groups. Thus, the informal federation was formalised in

1993 by registering it as a society.”

Dr. Kothari and her associates who were involved in this process realised that

SHGs could be an effective way of unleashing the processes of community

empowerment and development. This realization led to the establishment of an

organization that could promote and nurture SHGs and work on issues

specifically focusing on women. Thus, Chaitanya, was established as an NGO

simultaneously along with GMSS in 1993 by registering it as Trust under the

Bombay Public Trust Act, 1950.

3. Evolving Nature of GMSS

Ms. Kalpana, the Programme Coordinator at Chaitanya said, “The broader

approach in this model is to achieve social and financial integration. Within this

broader framework, negotiating and creating new spaces for women by women

becomes the key to their empowerment. Conducting regular meetings of SHGs,

taking responsibility for implementing the local level programmes, acting as a

representative at the cluster or federation level, forming linkages with external

agencies and negotiating with them to access better services and taking

decisions about various processes can all contribute to the process of

empowerment. The process helps in building self-image and articulating an

empowered identity besides increasing the choices available to women. For

example, women now have choice of borrowing from different sources like bank,

federation or their SHG.”

87

Explaining the evolving nature of the organizational structure of GMSS Ms.

Kalpana said, “At present, the individual members of the SHGs are affiliated

through clusters to GMSS as general members. The SHGs have an

institutional membership with GMSS. Each SHG pays Rs.100 and each

individual member of the SHG pays Rs.2 as membership fee to GMSS. Earlier,

each SHG selected two representatives on the general body of the GMSS. Out

of this general body, the Executive Committee(EC) of GMSS was elected. With

the increase in the number of SHGs and the area of the operation, it became

unwieldy for the GMSS to keep in touch with the SHGs and manage the affairs.

To overcome this challenge in 1995 GMSS decided to divide the entire area of

operation into three regions, and in 1997 a number of SHG clusters were formed

under these regions.

Ms. Kalpana added further, “The clusters are middle tier organizations that are

informal in nature like the SHGs. They serve as a link between the SHGs and

the federation and are also delegated to handle some roles and responsibilities

being earlier handled by the federation (see Diagram 1). Each cluster is made up

of 5 to 30 groups. The representation of membership at the cluster level is from

the SHGs. Each cluster also has an executive committee. The size of the

committee depends upon number of SHGs in that cluster. Three representatives

from each SHG attend the cluster meeting. Out of these three members, one

member has a long-term membership and two members attend by rotation. With

the introduction of clusters, the representation mechanism at the EC of GMSS

has also changed. Now, an EC member of the federation represents a cluster.

Each cluster forwards a name to the federation. However, the formal approval is

given in the annual general meeting of GMSS. One of the important criteria for

selction is the time that a women member can devote for management.

Within the cluster, discussion is held to identify a member who will represent

them in the federation. The Chaitanya staff facilitates the discussion in the

cluster. The process begins three or four months prior to the annual general

meeting. With the increase in the area of operation and consequently number of

clusters, a representative in the EC of GMSS sometimes represents more than

88

one cluster. Recently, the idea of sub-federation has been mooted. These sub-

federations are not yet registered but are potential federations which would

function like GMSS in the future.”

At present, GMSS has on its EC 18 members representing different clusters.

The EC also has some associate members who are either from Chaitanya or

outsiders who are invited to be on the committee of GMSS. Apart from this,

there are three representatives from Chaitanya who are associated with GMSS

as advisors. There are also two experts who help the EC informally. The experts

are well known development practitioners, one guiding the EC on livelihood

issues and the other on microfinance and management information system. The

advisors and experts associated with the EC do not have any voting rights.

GMSS Staff

With the growth in the operations, GMSS has also been appointing staff to

manage its day-to-day affairs. Ms. Koushalya explaining how she came to be

appointed as the coordinator of GMSS said “I have been part of the whole

process of GMSS evolution right from the beginning. My role also has been

evolving. In the very beginning I was part of an SHG. In the SHG I was a leader

and looked after the SHG’s functioning. Then I worked as a GMSS federation

leader. Since 1995, I have been a federation staff. Now my role is of a fund

manager and giving inputs to GMSS.” Adding further, Ms. Koushalya said,

“Seventy five percent of my salary at present comes from the Chaitanya and the

remaining twenty five percent from GMSS. Apart from me, GMSS has appointed

15 Karyakartis (workers) whose salary is entirely met by GMSS. Some of the

clusters also have their own staff. Presently, there are six cluster level staff.”

Outreach

About incresing the outreach of GMSS, Ms. Koushalaya opined that “Initially

there was no conscious plan to increase the outreach. The main objective was to

89

consolidate the existing SHGs. In 1995, Chaitanya became a partner in a

externally aided credit project called Maharashtra Rural Credit Project (MRCP).

The MRCP was helpful in increasing the outreach. New blocks came to be

included under this project. In 1999, another project on health also helped in

increasing the outreach. So the outreach increased due to involvement of

Chaintanya in the implementation of these projects. Since 1999, the work of

increasing outreach is entirely taken over by GMSS. With support from projects

routed through Chaitanya like Oxfam Community Abroad (OCA) which gives

specific funding to work on stabilizing and improving the functioning of the

federation, the entire work of increasing the outreach is managed by GMSS

staff. The emphasis has always been on linking the new SHGs to GMSS.”

Dr. Kothari on the question of outreach said “Increasing the outreach was never

the main aim in the design. The idea was always to respond to the demand.

However, the goal of achieving the targets under externally aided projects

contributed to the increase in the outreach. At times this also creates problems

for building sustainable clusters. For example, there was a bank linkage program

under MRCP in a block. With the requirement to link SHGs solely with the

banks for credit, it was difficult to form clusters.”

In terms of targeting the women Ms. Kalpana said, “Chaitanya’s strategy is to

reach out to women across various social strata. We consciously start the work

in the interior villages where women are ready to come together and federate.

The promotional cost of reaching out to poor women becomes an issue. It takes

more efforts and costs to form and sustain SHGs of the poor. However, this

gets partly addressed as the women from SHGs themselves increase the

outreach, including reaching out to the poor in their locality. This happens

because the clusters in their endeavor to achieve financial viability make efforts

to increase the outreach. Since there is no subsidy in this model, the real

motivation for the new SHGs lies in getting federated”.

90

Diagram 1: Orgaisational Structure of GMSS

GMSS Executive Committee

(Elected and Nominated)

Chaitanya

(Supporting Role)

SHG

Cluster Cluster Cluster Cluster Cluster

SHG Members

SHG SHG SHG SHG SHG SHG SHG SHG SHG

Institu

tio

na

l M

em

ber

Indiv

idu

al

Mem

ber

Mem

ber

GMSS

91

4. The Microfinance Model of GMSS

Explaining the characteristics of the microfinance (MF) model of GMSS Ms

Kalpana said, “This is primarily a savings backed model as it is primarily using

the savings mobilized from SHGs to meet the credit demands of the members.

GMSS also borrows from external agencies to facilitate lending to the SHGs.

GMSS offers regular savings, excess savings and fixed deposits facilities. While

the regular savings are compulsory for each SHG, fixed deposits and excess

savings are done more on a voluntary basis. Savings mobilized in SHGs are

used for internal loaning by the SHGs. Depending upon the ability to save, an

SHG decides to save some amount regularly with the cluster. Keeping a part of

the savings with itself a cluster transfers monthly Rs.100 from each SHG to the

federation as regular savings. Credit is available to SHGs from GMSS through

the clusters. The SHGs in turn lend it to their individual members. Currently, an

SHG is eligible to access credit up to seven times of its savings. The model

does not insist that the SHGs should borrow only from the federation as the

SHGs have the option of accessing loan funds even from a nearby bank.

Recently, the clusters have also started lending to the SHGs on their own.

These are referred to as financial clusters. In the case of financial clusters, the

SHGs can access funds from both GMSS as well as from their clusters. These

clusters use their own funds for on lending to SHGs. The leaders of one of the

clusters initiated this kind of lending in their cluster. The Chaitanya staff

observed this in a meeting. This was a great learning for Chaitanya and was

then taken up for systematic promotion in other clusters of GMSS. Currently

about 11 clusters are into their own lending. In all, the clusters have lent about

Rs. 1.46 million from their own funds.”

GMSS lends to the clusters at the rate of 1.5 percent per month. The clusters on

lend this amount to SHGs at the rate of 2 or 3 percent per month. For GMSS, a

spread of 0.5 percent is available to cover its costs, and the clusters earn 0.5 to

1.5 percent from their lending operations. With regards to savings, GMSS pays

92

4 percent per annum interest on the regular deposits and 11 percent per annum

interest on the fixed deposits.

Table 1: Achievement of GMSS (Position as of November 2007)

No. of SHGs 1,097

No. of Members 16,562

Total Savings (Rs. in Million) 1.97

Savings per SHG (Rs.) 1,798

Savings per Member (Rs.) 119

Total Loan Disbursed (Rs. in Million) 21.64

Loan per SHG(Rs.) 19,726

Loan per Member (Rs.) 1,307 Note: The saving and loan amount given above pertains to SHGs which are directly dealing with GMSS.

Some SHGs under GMSS deal with banks under the SHG-Bank Linkage model.

GMSS has also lent money to another federation in Amaravati district of

Maharashtra. An amount of Rs1.25 lakh at the rate of 3 percent per month was

lent this federation in Amaravathi.

GMSS has also tried linking itself with the Life Insurance Corporation to facilitate

insurance coverage of its members. Around 400 women were insured. However,

at present this facility is discontinued as GMSS is still figuring out the best way

to go ahead with facilitating insurance.

5. How the Women Decide ?

The EC of GMSS meets every month to discuss the functioning of GMSS,

review the progress of various activities and identify strategies to tackle various

problems. About the process of loan sanctioning adopted by GMSS, Ms.

Kalpana informed “Once the demand for loan is raised in an SHG and if the

demand cannot be met through the internal pool of SHG, the SHG forwards the

93

loan application to its concerned cluster. The cluster representatives do the first

level of screening and forward the application to the EC of GMMS. The EC of

GMSS finally sanctions the loan in its monthly meeting. The cluster leader on the

EC appraises about the demand of the SHGs from her cluster and suggests

whether to sanction a loan or not. The Karyakarta from the area is also involved

in giving information and opinions while approving the loan.”

A Meeting of the EC

Presented below are the proceedings of a meeting of EC GMSS capturing

the deliberative process adopted by the leaders in thrashing out various issues.

The meeting was held at the GMSS office located in Chaitanya’s head office

premises and was attended by 18 leaders (Padadhikari) and the federation

staff including the coordinator.

The meetings began with reading of the minutes of the clusters. The members

then discussed the functioning of SHGs in each cluster along with the overall

performance of the cluster. After reading the minutes of a cluster, the issue of

electricity connection in a village under the cluster was raised. The electricity

connection in the village has been cut due to non-payment of tax by the Gram

Panchayat (GP). The people in that village are not paying their house tax and

therefore the GP is unable to pay the tax to the State Electricity Board. At least

70 percent of the village households are defaulters of house tax. The tax

committee constituted in the village has become defunct. A member of the EC

opined that that just raising the issue is not enough. One needs to make sure

that the SHGs take some action to address the problem. In another cluster

called Wada, there are 32 SHGs but there is a need to build discipline in the

functioning of SHGs as it is a new cluster. The cluster also has recovery

problems. The discussion then focused on a loan given in the Wada cluster. A

cluster staff (Sadhanvyakti) had facilitated sanctioning of a loan of Rs. 20,000

to an SHG by the cluster. She was asked as to how she could facilitate the loan

94

to an SHG when that cluster has loan overdue to GMSS. Ms. Koushalya, the

coordinator of GMSS said, “If the cluster has overdue to the federation, the

SHGs in that cluster can get loan from GMSS. But if the cluster wants to give

loan from its own funds to the SHGs then GMSS cannot stop that. The question

is what should be the role of GMSS in such cases.”

Some members in the meeting broached the issue of paying salary to the cluster

level staff. The members identified that the salary is being paid from the

interest spread earned by the clusters. If this income is not sufficient then a

cluster can collect individual contribution from SHGs to pay the salary. The

clusters have to explore if the staff is really necessary or not. Since it is a paid

position and if the staff is not effectively contributing then there is no point in

continuing with the staff. Ms. Koushalya mentioned that the challenge is one of

attaining self-reliance by the clusters and the EC should not have

recommended the salary without taking into account the cost.

The EC also discussed the following issues in the meeting :

1. Is the EC receiving the minutes from all the clusters about their meetings?

The EC need to take a review of it. From the EC also the minutes need to

go to all the clusters. It is necessary that the details of the financial

transactions have to be attached with the minutes being submitted to the

federation. There was an argument as to who should take this responsibility.

However, the issue was not resolved.

2. The cluster meetings have too many items on the agenda. This leaves very

little time for discussing microfinance related activities.

3. By 27th of every month all the income and expenditure statements of the

clusters should be ready. Some of the details in the cluster reports are

incorrect. The new staff cannot fill these financial statements properly as yet.

As some of the SHGs do not send the income and expenditure statements,

consolidation becomes a problem for the clusters. In one of the clusters, out

95

of 180 SHGs, 26 SHGs have not given their financial statements. What

penalty should GMSS levy on the clusters for improper and incomplete

financial statements?. Who should visit the SHGs for monitoring? It was felt

that the cluster representatives on the EC should take the responsibility for

the SHGs in their cluster.

4. The EC needs better system to monitor the loans to SHGs. Some SHGs do

not repay the loans. The EC should have some new strategy for the follow

up. It was felt that releasing loans through cheque would make SHGs more

responsible. But this would involve increase in the transaction cost. GMSS

may initiate a voucher system wherein both the husband and wife will sign.

The husband could also be held responsible for the repayment. The main

problem is that SHGs are not able to visualize their role in loan recovery.

The loan recovery should be the responsibility of the SHG and the cluster.

Only then, the federation can sanction the loan.

5. The recovery position is varying across clusters. The minimum repayment

rate should be 95 percent. In some clusters the overall recovery position is

as low as 36 percent. Some SHG members say they are paying the interest

on loan. But if recovery does not come in time, the circulation of money

reduces. Moreover, paying only interest is not a good idea as it imposes lot

of burden on the poor woman. Giving loans to men also causes more

overdue.

6. Ms. Koushalya mooted the idea of GMSS starting an insurance scheme on

its own instead of giving the business to ICICI bank.

A Cluster Meeting

The clusters also hold their monthly and annual meetings (melava). A brief

description of an annual meeting of the Wada cluster held on 25th July 2005 is

given below.

96

The melava was attended members of SHGs, cluster leaders and staff of GMSS

and Chaitanya. The meeting started with the reading of the agenda. One of

the cluster leaders said “The clusters were started so that SHG members do

not have to go to Khed often. This has reduced the transaction cost. Earlier one

had to forego one day wage to visit Khed. Accessing timely credit was also not

possible. Now accessing loan is quicker and even less costly. Apart from the

financial benefits, the members have regular access to health and legal

information through the clusters.” After this, members of the SHGs were invited

to share their experience of the microenterprises started by them. A member

narrated her business enterprise on the chilli powder. She was a casual

labourer but now has an own business. On a good day, she is able to make a

business of even up to Rs. 400. However, during rainy season she returns to

labour work as making the chilli powder is not possible. She has borrowed Rs.

10,000 from her SHG to buy a grinder for the business and has already repaid

Rs. 5000.

It was emphasised in the meeting that SHGs need to keep regular deposits with

GMSS to access loans. The members were informed about the need for

construction of household toilets along with the suggestion to insist with their

husbands to get it done. There was a concern that women still do not participate

in gramasbaha (village assembly) meetings to raise their demands.

In the meeting, the annual work plan for the cluster for the year 2005-06 was

presented. The major activities included in the plan were:

1. Activities to increase the unity in the cluster.

2. Holding Health camp.

3. Holding sessions on legal advice for women.

4. Training sessions for members.

5. Formation of new SHGs in the cluster

6. Going on a study tour

97

7. Arranging more experience sharing meetings

8. Increasing the loan turnover and improving recovery of loans

9. Source wise outlay for loan disbursement was shared:

GMSS : Rs. 1,00,000 Bank : Rs. 50,000

Cluster : Rs. 25,000 ---- ------------

Rs. 1,75,000

6. Signs of Empowerment ?

Are the women feeling the difference ?

A discussion with a group of the staff of GMSS revealed the following

perception about empowerment. The staff felt that empowerment is more about

uniting women for some collective cause. This could be achieved by giving

information to women and increasing their respect in the village. Abilities like

solving their own problems, taking part in deciding how to manage the

family, what work to do, what crops to grow in the field, and take decision on

education of the children and marriage of the daughter would translate into

empowerment. A girl should not give away to the pressure from parents to get

married. Women should be able to articulate and firmly put across their opinions

and raise voice against atrocity. Freedom to think and form own opinions is

necessary for empowerment. In fact women are better decision makers and their

participation in taking important decisions would help in improving the society.

The staff felt that there are signs of changes now. Women have started talking

and voicing their needs. Women have also learnt new skills like management of

SHGs and started participating in the decision making. Further, women in the

villages now mobilise other women and talk to the outsiders. It is also a rule

now that girls will not be married off before they are 18 years of age and the

women are now involved along with husband when a boy is to be finally selected

for a daughter.

98

What are the views of the SHG members themselves?

The members of the SHG affiliated to GMSS opined that empowerment for them

means freedom to think and be independent. A woman should get more freedom

at home. A woman should not be scared and should be able to steer through

any problem on her own. If she needs money she should be able to get it. This

will increase her confidence. She should be able to go and work outside, speak

to the outsiders, work along with men, and take decision, be it about the

education of the children or things to be bought for the house. The women

should also be part of the political process.

The SHG members felt that empowerment happens through building unity

among women, sharing of information and through participation of women in the

village level affairs and institutions. A woman should be part of the federation

so that she can learn new things and access information. Empowerment

becomes important for a woman to take her own decisions, improve the

standard of living of the family, bring improvement in her own health and access

loans to meet the financial needs. In this way, individual, family, the village and

ultimately the whole country would improve.

About the process of empowerment unfolding in their SHGs, the members

opined that since a SHG has some money the immediate problems of women

are taken care of. Once the smaller problems get solved the women start

thinking about other things. In the SHGs women are able to solve even

problems of domestic nature like marriage. Earlier only men were involved in

these issues. Now since women are able to get loan from SHGs, men listen to

them. A woman in a SHG now does not have to take permission from her family

before going out.

The SHG members felt that they are more empowered now as they have got

information about bank and can now access loans in case of some needs. There

99

is also more unity amongst women. For example, the members of SHGs buy

grocery collectively in bulk at cheaper rates. They can talk to the visitors

confidently. Earlier they would feel shy and were not able to tell even their

names properly. They are also getting practical knowledge. Their leaders are

very good and have initiated these processes. Over the years, there is an

increase in the awareness. A member said, “Now we do not get scared. Our

husbands have also changed and they only tell us about the SHG meetings.”

Box 1: Some Individual Experiences

I Sanghamitra Shankar Gaikwad, from Chas cluster is a crèche worker. Her husband is a tailor and their sons are looking out for a job. She has been with the SHG for the last four years. She said, ”I have borrowed three times (Rs.5000, Rs.7000 and Rs.11000). The purposes for which I have borrowed are education of the children, health and other consumption needs. I have no overdue with the cluster or SHG. Being a member I can now borrow from the SHG for my needs and do not have to go to the moneylender. In the SHG, there is a chance to meet and interact with others.”

II

Vimal. J. Gaikwad Kalubhai an SHG member from Chass cluster said “Earlier I was a labourer. My daughter started a small business and was earning Rs. 30 to Rs. 40 per day. Then we increased the business and started keeping more items for sale. Now I have a handcart of my own. I brought it by taking a loan of Rs. 5000 from the SHG. Before joining SHG, I did not have access to credit. I was the one who initiated the SHG. My first loan was for Rs. 10, 000. I then borrowed Rs. 5,000 to improve my business and bought a handcart. I have borrowed from SHG several times for different purposes like business, consumption and children’s education. Earlier I had borrowed once from a moneylender by pledging my jewellery. I feel that the federation will support me if there is a need. I feel the federation is standing behind us. I was unable to interact with outsiders earlier but now I am a cluster representative and I can easily talk to the outsiders.”

III

Parvatabai Garud is from Wada cluster. She is a physically challenged person and is not able to use one hand properly. She also has difficulty in walking. She neither owns any asset nor has a family to fall back upon. She lives alone and mainly depends on others for food and place to stay. A woman from Parvatabai’s village said “We allow her to sleep in our house and also give her food. Parvatabai said “I am able to get wage labour for just one or two days in a month. I own a hen and sell the eggs to earn some money. I have been able to save Rs.10 per month in the SHG regularly. In the last three years I have accumulated about Rs.400. I have not borrowed from my SHG even once.” She ended saying “How can I borrow as I have no earning to repay the loan? However, I have saved regularly and the savings would be useful if I fall sick and unable to do any work.”

100

7. Challenges of the Promoting Agency

What has ben the role plyed by Chitanya in the past and what role it would like to

play in the future?

Ms. Kalpana explained “The main role is to see whether the program is moving

in the right direction. When we realise that in a particular area effective

monitoring is not happening, Chaitanya staff intervene to improve the situation.

The staff members of Chaitanya are very clear that GMSS is a women’s

program and needs to be managed by the women themselves for sustainability.

Chaitanya plays an important role in capacity building. Chaitanya gets involved

at every level of the federation starting from the SHGs. We realised that SHG

level training is a must. The quality sufferes unless proper attention is paid to

capacity building. Chaitanya has to be vigilant all the time and intervene

whenever there is a problem. Chaitanya spends for keeping this vigilance.

Chaitanya as a part of this process also carries out some studies and shares it

with GMSS.” Adding furhter Ms. Kalpana said, “We have handed over the the

operational responsibility of microfinance to GMSS. The federations is capable

and the systems are in place and functioning. Chaitanya has to see that power

is not getting concentrated and the process is democratic and participatoty.

The functioning of any federation, obviously, entails some power dynamics,

especially when the staff are involved . It is necessary to see that any such

developments do not take us away from our overall objective of empowermnet.

Recounting the process adopted by Chaitanya Ms. Kalpan said, “Decentralisation

and its needs were clearly spelt out in a series of workshops. The initial

meetings with the cluster representatives were very crucial. This was followed by

formation of cluster general body and the executive committee. Discussions were

held with the cluster executive committees on the appointment of the staff and

about cost sharing. It was decided that after six months the costs would be met

from their own resources. The strategy is to make the federation sustainable.”

101

About some of the specific challenges encountered by Chaitanya in the process

Ms. Kalpana said, “Lack of adequate professional capacities within the structure

to manage the affairs efficiently is a very important challenge. Staff capacities

need to be improved. Since the model places emphasis on the processes, the

time taken in increasing the outreach is rather slow. This affects the scale of

microfinance operations and in turn the financial sustainability. Further, a

process oriented approach involves high promotional cost in building people’s

institutions. Ms. Kalpana further added, “Another challenge is about the

workload on women which does not allow them to give adequate time for SHG

and cluster activities. The women are constantly raising the issue that due to

poverty and heavy workload they do not get time to attend the meetings. In

terms of other operational challenge there is a need to bring more clarity in

system. Given the informal nature of the GMSS structure and the work not

necessarily being linked to monetary benefits, fixing roles and expecting outputs

at times become a difficult task.”

8. Way Forward

What is the way forward for GMSS and Chaitanya ?

Ms Kalpana said, “Due to many problems encountered, GMSS has now

stopped promoting the idea of clusters. One of the main problems was the

slack in the monitoring of loans given directly by clusters. The process of loaning

mechanism was not proper. Some cluster leader’s disbursed loans directly

without proper process being followed. However, the non-financial clusters are

very much part of the entire federation structure. GMSS wants to give more

emphasis on capacity building. A cadre of trainers (Jankars) from SHGs has

been created. These trainers would work on issues like SHG management, legal

aid to women, building linkages with government machinery, promotion of

livelihood, and on health. GMSS has realized that capacities need to be built

102

across the entire structure, moving beyond the SHG leaders to include all the

members. Chaitanya and GMSS will work together in taking this forward.”

At the same time, Ms. Kalpana said “We carried out a study on GMSS and

found that the overall savings to loan ratio was just 1:2. We realized that there is

a need to bring in more funds into the structure. In order to achieve this, there

is an idea of creating a regulated structure by forming a non-banking

financial company (NBFC).” Kalpana added further, “The GMSS members are

happy about the idea of promoting an NBFC and feel that they will have their own

bank. The modalities of promoting the NBFC are being worked out. However we

are sure that it will be a community owned institution. Within the structure of

NBFC, the GMSS will be an important stakeholder and the funds would be routed

through NBFC to the federation to SHGs. We will soon be holding deliberations

to take forward this issue.

Dr. Kothari said, “In the initial stages we worked predominantly with the women.

But now we feel the need to work with the government. We have to make SHGs

and their institutions more visible. Building linkages with the government and

improving the ability of people’s institutions to negotiate is very important.

Further, issues such as domestic violence against women and women’s

ownership of land and other assets influence the SHG functioning, and these

issues need to be addressed as we go along. We also realised that the political

right is an important issue. Activating the gramsabha (village assembly) is an

essential step in the process of empowerment. However, it is also important

that the SHG movement is not politicised or used to meet political ends. The

SHG movement needs to move forward from its group development and should

have a say in the overall village development.”

103

Questions for Discussion

1. Identify the approach and methods adopted by Chaitanya in promoting

empowerment of the women through microfinance ?

2. What are the strengths and weaknesses of the approach ?

3. Can the approach be advocated for a wider replication ? Argue with

reasons.?