An Approach towards Self-Reliance and Sustainability of the Shg Sector:SHG Sector Own Control

Initiated by NABARD in 1992, SHG banking had enabled 7.5 million SHGs, with 100 million members, to open bank savings accounts; 4.8 million SHGs had a bank loan outstanding (31/3/2011). This has been paralleled by the emergence of 163,730 SHG federations, 97% of them village organisations (31/3/2010). While providing an institutional framework to informal groups, the potential of the federations is far from being fully utilised. This paper reports on a project piloting self-regulation and self-supervision of the SHG federation system, or SHG Sector Own Control, in Andhra Pradesh, with some 40,000 SHG federations licensed as Mutually Aided Cooperative Societies (MACS). In interaction with SHGs two support activities have been designed: (i) establishing a cooperative SOC system (standardised bookkeeping, reporting, auditing, rating, annual planning; annual elections; legal compliance as per MACS Act; delegation of representatives from SHGs to all federation levels); (ii) capacity building as the social capital formation process by which the SOC system is inculcated in the minds and practices of SHG members, selecting all trainees (bookkeepers, auditors, supervisors, financial literacy facilitators) from within the SHGs and building their capacity as internal service providers. The SOC pilot has demonstrated that building the capacity of SHG members to manage and govern village organisations and higher-level federations is feasible. Upscaling in Andhra Pradesh and other states has been initiated. Research across several states is proposed, examining the experience and capacity of village organisations as the emerging "mother organisation" of SHGs, with a wide spectrum of services, including collection of voluntary savings and financial intermediation.