Introduction:

NGOs are difficult to define, and the term 'NGO' is rarely used consistently.
As a result, there are many different classifications in use. The most common
focus is on 'orientation' and 'level of operation'. An NGO's orientation refers
to the type of activities it takes on. These activities might include human
rights, environmental, or development work. An NGO's level of operation
indicates the scale at which an organization works, such as local, regional,
national or international.
The term "non-governmental organization" was first coined in 1945, when
the United Nations(UN) was created. The UN, itself an intergovernmental
organization, made it possible for certain approved specialized international
nonstate agencies—i.e., non-governmental organizations—to be awarded
observer status at its assemblies and some of its meetings. Later the term
became used more widely. Today, according to the UN, any kind of private
organization that is independent from government control can be termed an
"NGO", provided it is not-for-profit, non-criminal and not simply an
opposition political party.

NGOs in India:
Since ancient times, social service has been an integral part of Indian culture.
Soon after Independence, a number of NGOs had emerged in India. Mahatma
Gandhi even pleaded to dissolve the Indian National Congress and transform
it to a Lok Seva Sangh (Public Service Organization). Though his plea was
rejected, but the followers of Mahatma Gandhi started many voluntary
agencies to work on various social as well as economic issues of the country.
This was the first phase of NGOs in India.

The second phase of NGO development started in 1960 when it was felt that
just the government programs were not sufficient to complete the task of
development in rural areas. Many groups were formed whose role was to
work at grass root levels. Moreover, favorable state policies had drastically
affected the formation of NGOs and their roles at that time. Over the years,
the role of NGOs in rural development of India increased. At present too,
their role significantly changes with the change in the policies of the
government through different plans.

1
In the sixth five-year plan (1980-1985), a new role for NGOs in the rural
development had been identified by the government. In the seventh five-year
plan (1985-1990), the Indian government envisaged an active role of NGOs
in developing self-reliant communities. These groups were supposed to show
how the village resources along with human resource, skill, local knowledge
that is greatly underutilized could be used for their own development. As
NGOs were working in close connection with local people so bringing such a
change was not a tough task for them. Owing to this, in the eighth five-year
plan, more importance to NGOs for rural development in India had been
given. Under this scheme, a nationwide NGO network had been created. The
role of these agencies was the rural development at a low cost. In the ninth
five-year plan, it has been proposed that NGOs would play a significant role
in the development on the public-private partnership model. More scope has
been provided to NGOs by the government for rural development
through the agricultural development policies as well as their implementation
mechanisms.

As with every five-year plan, the role of NGOs in the rural development of
India is growing, so NGOs are now attracting professionals from
different fields. NGOs act as planners and implementers of developmental
plans. They help in mobilizing the local resources to be used for
development. NGOs help in building a self-reliant and sustainable society.
These agencies play the role of mediator between people and government.
NGOs are actually the facilitator of development, education and
professionalization.

NGOs and Rural Development in India:

In India, the scope of development is not narrow but very wide, as it includes
not just the economic development but the growth on social front, quality of
life, empowerment, women and child development, education and awareness
of its citizens. The task of development is so huge and complicated that just
implementing government plans is not sufficient to fix the problem. To
achieve this, a holistic vision and collaborative efforts involving various
departments, agencies and even NGOs is required. Owing to such a great
need, the number of NGOs in India is increasing rapidly and, at present, there
are about 25,000 to 30,000 active NGOs in India.

2
Superficially, rural development seems to be a simple task but, in reality, it is
not. Post-Independence era has seen many rural development
programmes through different five-year plans. Alleviating poverty,
employment generation, more opportunities for generating income, and
infrastructure facilities are emphasized through the policies and programmes
of the government. Along with this, the panchayat raj institutions have also
been initiated by the government to strengthen the democracy at grass roots
level. But in spite of all the efforts rural poverty, unemployment rate, low
production still exists. The fight is still on for the basic facilities such as
livelihood security, sanitation problem, education, medical facilities, roads,
etc. Still there is a huge gap in terms of infrastructure that is available in
urban and rural areas. The basic rural development should include all these
apart from employment, proper water supply and other basic facilities. NGOs
or Non-Governmental Organizations have more benefits of working in rural
areas as compared to governmental organizations because NGOs are more
flexible, NGOs are specific to a particular locality and moreover these are
committed towards serving the public and community as a whole. As the task
of development is massive, many NGOs are playing vital role in the rural
development of India in collaboration with the government.

Panchayat Raj Institutions and NGOs

Recently, the revival and strengthening of Panchayati Raj Institutions –
consequent upon the Constitution (73rd Amendment) Act, 1992- the NGO’s
role has become more significant. In order to promote holistic and
integrated development with the range of development schemes and
programmes, the role of NGOs services and their involvement in the
development process will be all the more in demand.

Various Role and Functions of NGOs

Voluntary action stimulated and promoted by voluntary agencies engaged in
development play a significant role at the grass roots level in the Indian
social milieu; the success of rural development depends upon the active
participation of the people through Self Help Organizations. The various
roles of NGOs are described below for better understanding.

3
 a. Catalyze Rural Population
b. Build Models and Experiment
c. Supplement Government Efforts
d. Organizing Rural Poor
e. Educate the Rural People
f. Provide Training
g. Disseminate Information
h. Mobilize of Resources
i. Promote Rural Leadership
j. Represent the Rural People
k. Act as Innovators
l. Ensure People’s Participation
m. Promote Appropriate Technology
n. Activate the Rural Delivery System
The widespread belief that NGOs are more successful in reaching the poor in
poverty reduction also resulted in rapid growth of funding for NGOs by
government and external donors. As far as the government funding is
concerned, there are over 200 government schemes initiated by the central
and state governments through which NGOs can have direct access to
resources for rural development (Reddy and Rajasekhar 1996) . Role of
NGOs in Social Mobilization In recent times, many Non Governmental
organisations have been concentrating social mobilization on contemporary
issues of importance such as women empowerment, human rights, and
implementation of various central and state government development
programmes. The NGOs in India have contributed handsomely towards
social mobilization and social activism through their intensive campaigns,
people’s mobilization programmes and effective networks. The NGO as a
social force facilitates collective action and people mobilization for the
purpose of achieving the desired objectives. The NGOs are deploying various
people-oriented as well as people-centered strategies, and these
organizations build rapport with the people and mobilize them. The NGOs
play in making the people environmentally aware and sensitive to take part
in the development process (Biswambhar Panda et.al -2003) . Role of NGO
in Social Mobilization under SHG & SGSY Alleviation of poverty has
persistently been on the agenda of the government. Various The role of

4
NGOs in socio-economic development of programmes with contrasting
methodologies have been tried, whopping funds expended, yet the poverty
yet the poverty seems indomitable. The Yojana (SGSY) is the latest poverty
alleviation programme integrating six erstwhile rural development
programmes, and it has been in operation since 1st April 1999.The very
sticking feature of this scheme is that it is quite different from earlier
programmes in terms of objective, strategy, methodology and sustainability.
Obviating the loose ends of the earlier programmes, the Yojana intends to
overcome poverty through generation of self-employment opportunities
with a debatable participation, contribution and initiative of the poor
themselves. Doing away with the targeted individual-centric beneficiary
approach, the group approach is adopted, which is by itself a radical
departure. The Yojana attempts to address poverty in all its dimensions
through multi-pronged strategy. Thus, this SGSY scheme focuses on Group
approach by organizing the poor into self help groups (SHG) through social
mobilization process. Against this backdrop of this programme, the SGSY’s
guidelines emphasis on the role of NGOs and their significant participation in
mobilizing people and to creating awareness among the people for the
successful implementation of the SGSY schemes.

Self Help Groups

Self Help Group is a homogeneous group of poor, women, users etc. This
group is voluntary one formed on the areas of common interest so that they
can think organize and operate for their development. SHGs organize very
poor people who do not have access to the financial system in the organized
sector. An SHG is an informal association of 10 – 15 people who voluntarily
come together for the business of saving and credit and to enhance member’s
financial security as primary focus and on the other the common interests of
members such as the area development, awareness, motivation , leadership,
training and associating in other social intermediation programmes for the
benefit of the entire community. An SHG is a group of people that meets
regularly to discuss the issues of interest to them and to look at solutions of
commonly experienced problems. In the present study, the term Self Help
Group is used to understand the same meaning as above. An SHG is
understood as an informal association of a small group of people who have

5
voluntarily come together to think, organize and operate for their
development and the enhancement of their financial security by promoting
savings, credit and the access to the financial system in the organized sector.

Micro Finance
Micro finance refers to the small savings, credit and insurance services
extended to the socially and economically disadvantaged segments of the
society. Micro finance refers to the entire range the financial and non
financial services including the skill up gradation and the entrepreneurship
development rendered to the poor for enabling them to overcome the poverty.
Micro finance is the provision of financial services to the low income
households.
In the present study, the term micro finance has been used to understand
the provision of savings, credit and the other financial services of very small
quantity to the socially and economically disadvantaged and low income
households for enabling them to overcome their poverty.

Role of NGOs in Providing Microfinance

NGOs and their networks have a crucial role to play in microfinance because:
i) NGOs have influenced central banks to take a broader, less formal
approach to the regulation of MFIs, in areas such capital requirements.
ii) NGOs also promote benchmarking and transparency among peers.
iii) NGOs are often more creative in how they establish and fund Micro
finance banks.
iv) NGOs recognize that best practice requires a business approach but NGOs
are able to provide grant funding to 2 Tier and 3 Tier micro finance
institutions to enable them to migrate to the stage of being able to receive
equity and wholesale debt.

6
v) While they must compete in terms of funding, NGOs are often more
prepared to set up discussion groups or conduct research projects, to the
benefit of the industry as a whole.

Role of NGOs as promoter

i) Act as linkage -SHG and Banks (Grameen bank, Co-operative bank or Co-
operative societies)
ii) As promoter of SHG empowered model among villagers
iii) As monitor intra-group credit and savings behavior
iv) As promoter of Co-operatives or Federation
v) As a corporate agent of General insurance or Life insurance
vi) As an agent of micro insurance through Gram panchayet and panchayet
samity.

Role of NGOs as facilitator

i) It has ability to fulfill capacity building, financial management, book
keeping, audit with ensure ownership, self reliance of a co-operative
ii) It may establish forward linkage with state Government, central
Government and other departments
iii) It has capacity to build strategies for empowerment and generating mutual
trust and respect amongst groups.

How Micro finance helped rural economic development

The People of rural India are mainly depending upon agriculture and small
business units like fishing, earning through domestic animals, small business
units etc. They are not making the agriculture and business profitable because
due to lack of monetary resources, poor experience etc. Only few people of
rural India are using capital-intensive method to cultivate their lands. The
most of the rural people are not sustaining in their small business for a long
period of time due to insufficient fund available with them.
Microfinance in one of the important tools that plays a significant role in
poverty elimination and economic development of rural poor. The need
therefore, is to share experiences and materials, which will help not only in
understanding success and failures but also, provided knowledge and
guidelines to strong them and expand microfinance programme. NGOs may
be in this case act as a chief promoter and facilitator. The Development

7
process through a typical microfinance intervention can be understood with
the help of the following chart. The ultimate objective is to attain social and
economic empowerment. Successful intervention is therefore; dependent on
how each of these stages has been carefully dealt with and also the
capabilities of the implementing organizations in achieving the final goal e.g.,
if credit delivery takes place without consolidation of SHGs, it may have
problems of self-sustainability and recovery. A number of Schemes under
different banks, Central and State governments offer direct credit to potential
individuals without forcing them to join SHGs. compilation and classification
of the communication materials in the directory is done based on this
development process.

Performance of NGOs comparing with other Agencies

The performance or trend of NGOs in micro finance activities for financial
years compare with other agencies is showed as under:
Grant support to partner agencies (in lakh) (2013-2014)
Table No.1
Cumulative Cumulative Cumulative Cumulative
Agency sanction up sanction up achievement achievement
to 31-03-14 to 31-03- up to 31-03 up to 31-03-
(amount) 14(SHG 14(amount) 14(SHG
Nos) Nos)
NGOs 23175.34 574866 7220.16 378890
RRBs 764.24 49800 195.81 46164
CO-OPT 1416.98 83069 369.97 52501
BANK
IRVs 460.12 26883 82.27 11228
FARMERS 40.63 2544 20.40 9832
CLUBS
PACS 397.45 8533 4.28 85
SHG 28.61 250 1.85 46
Federation
Total 26283.37 745945 7903.74 498746
[Source: NABARD Report for the year 2013-14]

8
Grant support to partner agencies (in lakh) (2014-2015)
Table No.2
Cumulative Cumulative Cumulative Cumulative
Agency sanction up to sanction up to achievement up achievement up
31-03-15 31-03-15( SHG to 31-03- to 31-03-
(amount) Nos) 15(amount) 15(SHG Nos)
NGOs 26583.53 598387 9362.86 434884
RRBs 1341.44 56148 261.00 43849
CO-OPT 1030.15 67712 437.61 54012
BANK
IRVs 503.26 28910 85.09 12758
FARMERS 45.00 5078 20.27 4464
CLUBS
PACS 593.21 13430 37.13 1522
SHG 32.40 300 15.07 195
Federation
Total 30128.99 769965 10219.03 551684
[Source: NABARD Report for the year 2014-15]

Grant assistance extended to SHPIs as on 31-03-16

Cumulative position as on 31-03-2016(in lakh) (2015-2016)
Table No.3
No. of SHG Amount No. of SHGs Amount
Agency sanctioned up sanctioned promoted up released up to
to 31-03-16 to 31-03-16 31-03-16
NGOs 650132 30475 458033 10308
NGO-MFI 0 0 0 0
RRBs 56048 1341 44344 324
CO-OPT 68762 1072 55126 482
BANK
IRVs 29810 514 14084 88
FARMERS 5098 41 1995 21
CLUBS
PACS 13430 593 1601 57
SHG 300 32 195 15
Federation
Total 823580 34068 575378 11295
[Source: NABARD Report for the year 2015-16]

9
 Regional distribution of MFI loans outstanding (%)
Table No.4
Region 2008 2009 2010 2011 2012 2013 2014
South 61 58 55 48 49 46 39
East 20 20 21 20 23 22 25
North 1 3 3 3 4 4 4
West 7 6 8 12 8 10 12
Central 9 11 9 13 10 11 15
North 1 1 3 3 6 7 5
east
Source: Sa-dhan, MFIN

NGO’s in Jharkhand

ASRA
The Society for Reformation and Advancement of Adivasis (ASRA) is
a Civil Society Organisation (CSO) that works for the welfare and
development of marginalised Adivasis (tribal people) and other
excluded communities. In their work with PACS, ASRA are working in
168 villages in the West Singhbhum district of Jharkhand to ensure
non-discriminatory access to basic education, health and nutrition
services by Scheduled Castes (SC), Scheduled Tribes (ST) and
women.
ASRA and PACS
ASRA’s project with PACS involves:
 Building the awareness, knowledge and capacity of women and
young people on their right to basic services, including the Right to
Education (RTE) Act, the Integrated Child Development Services (ICDS)
scheme, the Janani Surakhsa Yojna (JSY) maternal health scheme,
the Rashtriya Swasthya Bima Yojana (RSBY) health insurance scheme,
and legal literacy, such as the Right to Information (RTI) Act, the Protection
of Women Against Domestic Violence Act and the SC and ST Atrocities
Prevention Act.
 Proactively involving women and young people to address issues of
social discrimination through direct action, evidence-based advocacy and
campaigning.

10
 Establishing strategic links with the government and other
stakeholders, to ensure the participation of socially excluded groups in
decision-making processes.
 Ensuring the representation of excluded groups in Community Based
Organisations, including Village Education Committees, Village Health
and Sanitation Committees and Gram Panchayats (local self-governance
systems).
 Developing information, education and communication (IEC)
materials, such as pamphlets, brochures and handbills for wider
dissemination.

Impact so far…
ASRA’s project with PACS started in February 2012. So far the following
results have been achieved:
 168 Community Based Organisations (CBOs) have been formed, of
which 158 (94%) are led by people from socially excluded groups.
 60 Gram Panchayats have been strengthened and are now holding
regular meetings that involve members from different committees (including
School Management Committees, Village Health and Sanitation
Committees and CBO members).
 60 Anganwadi Centres (AWCs) under the ICDS scheme have been
monitored by communities to become model AWCs. In these centres
attendance of children and pregnant and lactating women is above 95%
and average attendance of the nursery school is above 80%.
 In total, 1160 women have accessed maternal health benefits under
JSY. 1075 of these women (93%) were from socially excluded groups.
 134 RSBY Mitras (Friends) have been selected in PACS villages and
awareness of RSBY has increased considerably. 6720 households have
been supported to register for a RSBY health insurance smart card and
2034 households from socially excluded groups have accessed services
using their smart cards.
 10 village schools are being monitored by communities. Attendance
and punctuality of both teachers and students has improved, and the
District Education Officer has announced that attendance should be
measured twice a day (in the morning and after the Mid-Day Meal).
 2320 children have been enrolled in primary schools. 1856 (80%) of
them are from socially excluded groups.
 31145 children have received hygienic Mid-Day Meals (80% of the
children are from socially excluded groups).
11
 NB – these are figures from December 2014.
About ASRA
The Society for Reformation and Advancement of Adivasis (ASRA) is an
organisation that was formed by tribal youths to work for the welfare and
development of marginalised Adivasis (tribal people) and other excluded
communities in the West Singhbhum region of Jharkhand. “Asra” means
hope in the Ho tribal language.
Its main activities are the promotion of horticulture and watershed projects,
the creation of community assets, the promotion of appropriate technology
and helping to build the capacity and awareness of CBOs on issues of
education, health and nutrition.
Find out more about ASRA’s work on their website (www.asrasocial.org),
which was built as part of the CSO website project (funded by PACS).
Network partners
PACS encourages partners to collaborate with like-minded organisations to
deliver the best results in the designated project area. These organisations
are called “network partners”.
ASRA is implementing their project for PACS with 4 network partners:
 Lokhit Sanstha
 Sahayogi Mahila
 Shikshit Berojgar Mahila Samiti (SBMS)
 Srijan Mahila Vikash Manch (SMVM)

Challenges of NGOs
One of the major problems that face NGOs is lack of resources, both
financial and human. Since most of the activities under taken by them are in
the nature of extension work, they cannot become self-supporting. They are
dependent for funds on the government, whose procedures are often slow and
time-consuming, on foreign donor agencies and industries whose grants may
not be available on regular basis. NGOs have also weaknesses that include (a)
limited financial and management expertise, (b) limited institutional capacity,
(c) low levels of self-sustainability, (d) lack of inter-organizational
coordination, (e) small scale interventions (f) lack of understanding of the
broader socio-economic context. The NGOs faced the challenges and issues

12
of concern about micro finance are skewed growth of the programme in
different regions, lack of approach of the banks, failure of subsidies of
government, political patronage and the resultant pitfalls, lack of handholding
support for livelihood activities, rising Non-Performing Assets (NPAs),
sustainability issues and the need for seamless Management Information
System. There have also been issues of poor quality of SHGs, multiple
memberships, over financing and lack of oversight on the part of banks.

Conclusion
It is observed the above discussion that NGOs have emerged as a key player
in the field of micro credit. They have played the role of intermediary in
various dimensions including creating awareness within a community
,developing resources and tools for communities, micro credit organizations
and opportunities to learn about the principle and practice of micro finance.
but at present time new opportunities and new challenges are felt in the field
of micro finance. In recent years micro finance is in news for bad reasons.
There are a number of suicide cases of micro credit clients all over India for
excess interest charges and high pressure charge of recovery agents in
recovery of loans. It is hope that the government of India has brought out a
legislation to check the high rate interest on micro credit and protect the
marginal people from clutches of greedy MFIs.
Government of India introduced Micro finance institutions (Development and
Regulation) Bill 2012 on may 22 ,2012 to establish a regulator under Reserve
Bank of India to regulate and supervise the activities of NGOs and MFIs. The
main features of the Bills are as follows: The bill allows the central
Government to create a micro finance development council with officers
from different ministries and departments. The bill requires all MFIs to
obtain a certificate of registration from RBI. It is also responsible for
redressal of grievances for beneficiaries of micro finance services. These
initiatives may go long way in strengthening the micro finance status in India.
Government cannot ignore its responsibility of social and economic
development of poor and down trodden. In absence of any special skills with
the clients of micro credit, the fund is being used in consumption and
procurement of non-productive assets.
It is very important to provide skills development training program like
handicraft, weaving, carpentry, poultry, goat rearing ,masonry ,bees farming,
vegetable farming and many other agriculture and non-agriculture training.

13
Government has to play active role in this context. People with some special
skills have to be given priority in lending micro credit. If government, MFIs
and all other agencies specially act together than micro credit can play a great
role in economic growth in India.

References

1.Neelima Kumari (2013): The role of NGOs in socio-economic

development of Jharkhand: An overview. [International journal of business &
management invention, ISSN: 2319-8028(on line) Avail: www.ijbmi.org volume 2
Issue 4.

2.Dr. K Rajendran (2014): “role of non-governmental organizations in micro

finance through SGHs-a study in Vellore district”. Available online at E-ISSN
2229-4686. ISSN 2231-4172

3.Dr. M Rama Mohan Rao and Manju Pathania Biswas (2014): “role of NGO in
empowering women through micro finance: a conceptual study”. Available at e-
ISSN: 2279-0837, p-ISSN:2279-0835. IOSR journal of humanities and social
science (IOSR-JHSS) VOLUME 19, issue 5. www.iosrjournals.org.

4. . https://www.nabard.org/Publication/SMFI_2013_14.pdf

5. Dr. R Uma Devi (2013): An analytical study on the role of NGO in the poverty
reduction of India. [Journal of arts, science & Commerce: E-ISSN 2229-4686 vol-
1V Available at: www.researchersworld.com

6. http://www.pacsindia.org/partners/partners-in-jharkhand/asra

14