Institutional Alternatives for the Promotion of Microfinance Self-Help Groups in India

This article discusses the institutions that promote the self-help group (SHGs). In India, SHGs are promoted by non-governmental organizations (NGOs), banks and the Government. This paper:

• Looks at one case study of each of these institutions, and their practices in microfinance in India, to see what can be learned from their experiences;
• Attempts to compare the role of these three institutional variants in promoting the SHGs, their strengths and weaknesses, and the best practices.

The article summarizes the learnings for the benefit of the future growth of microfinance SHGs in India:

• Identification of the villages: A pre-identification survey should be done wherein all the statistical and other data is collected;
• Identification of the first lot of the members of the first group in the village;
• Teaching members all the basic rules which govern the functioning of the groups in detail;
• Development of a set of bylaws and rules by the group;
• Possession of a certain set of records by each group;
• Appropriate training that must be extended to SHGs at different points of time;
• Incorporating regularity of the meetings into the functioning of the groups.

Finally the document concludes that:

• An institution can be considered suitable as a self-help promotion institution if it is in a position to foster and nurture the best practices for SHG promotion.