SELF HELP GROUPS : A CATALYST FOR ECONOMIC, SOCIAL AND POLITICAL

EMPOWERMENT OF WOMEN.

Ms. Alpa Parmar1 and Ms. Hetal Parmar2

Lecturer at AISW,Anand

Abstract: Till recently, women belonging to the economically and socially weaker sections of
society were more repressed. Women’s participation in the decision making process was
either nil or negligible. The development of Indian women will be the biggest source of
enrichment for our country’s development. Empowering of women pre-supposes a dynamic
and democratic change in the perception and expectation from women in our society. In this
regard, the emergence of self-help group to seek economic independence for every woman is
a welcome change and given the assistance and guidance these self help group is bound to
make not only a sea change in empowering women but also ignite the fire inside her to
channelize their powers for development of the society as a whole. Microfinance is emerging
as a powerful instrument for poverty alleviation in the new economy. In India, Microfinance
scene is dominated by Self Help Group (SHGs)-Bank Linkage Programme as a cost effective
mechanism for providing financial services .The SHG leads to socio economic development,
which had faith in social justice and equality, would provide self respect to women, initiate
and strengthen the empowering of women and the resultant sustainable development. Today
women are in the process of enriching themselves through Self-Help Group. The Self-Help
Group has concentrated on social mobilization of women giving them awareness of their
legal and political rights. Education for women is necessary for an understanding and
control over social, economic and political force and also to improve their quality of life.
Based on the above discussion, this paper concluded that economic, social and political life
of women is linked with SHGs and it is an enabling factor for women’s empowerment and
sustainable development.

Introduction:

This paper is divided into two sections. In the first section we shall discuss the concept of
Self-Help Groups (SHGs) as an instrument of economic, social and political empowerment.
In section II we shall present the progress of the SHG-Bank led model of micro-financing in
India.

Self – Help Group (SHG) is a small voluntary association of poor people, preferably from the
same socioeconomic background. They come together for the purpose of solving their
common problems through self-help and mutual help. The SHG promotes small savings
among its members. The savings are kept with a bank. This common fund is in the name of
the SHG. Usually, the number of members in one SHG does not exceed twenty.

The concept of SHG is based on the following principles:

 • Self-help supplemented with mutual help can be a powerful vehicle for the poor in
their socioeconomic development;
• Participative financial services management is more responsive and efficient;
• Poor need not only credit support, but also savings and other services;
• Poor can save and are bankable and SHGs as clients, result in wider outreach, lower
transaction cost and much lower risk costs for the banks;
• Creation of a common fund by contributing small savings on a regular basis;
• Flexible democratic system of working;
• Loaning is done mainly on trust with a bare documentation and without any security;
• Amounts loaned are small, frequent and for short duration;
• Defaults are rare mainly due to group pressure; and
• Periodic meetings non-traditional savings.

SELF-HELP GROUPS (SHGS) AS AN INSTRUMENT OF ECONOMIC, SOCIAL AND POLITICAL

EMPOWERMENT:

Economic empowerment results in women’s ability to influence or make decision, increased

self confidence, better status and role in household etc. Micro finance is necessary to
overcome exploitation, create confidence for economic self reliance of the rural poor,
particularly among rural women who are mostly invisible in the social structure.

Empowerment implies expansion of assets and capabilities of people to influence control and
hold accountable institution that affects their lives (World Bank Resource
Book).Empowerment is the process of enabling or authorizing an individual to think, behave,
take action and control work in an autonomous way. It is the state of feelings of self-
empowered to take control of one’s own destiny. It includes both controls over resources
(Physical, Human, Intellectual and Financial) and over ideology (Belief, values and attitudes)
(Batliwala, 1994).

Empowerment can be viewed as a means of creating a social environment in which one can
take decisions and make choice either individually or collectively for social transformation. It
strength innate ability by way of acquiring knowledge power and experience.
Empowerment is a multi-dimensional social process that helps people gain control over their
own lives communities and in their society, by acting on issues that they define as important.
Empowerment occurs within sociological psychological economic spheres and at various
levels, such as individual, group and community and challenges our assumptions about status
quo, asymmetrical power relationship and social dynamics. Empowering women puts the
spotlight on education and employment which are an essential element to sustainable
development.

Economic independence or access to an inherited or self-generated income is considered to

be the major means of empowerment of women. The Equal Remuneration Act, 1976 (India)
was a major step towards protective legislation and establishing the principles of equality, as
it provides for equal remuneration to men and women workers and prevention of
discrimination against women in the matter of employment.

Since women’s empowerment is the key to socio economic development of the community;
bringing women into the mainstream of national development has been a major concern of
government. The ministry of rural development has special components for women in its
programmes. Funds are earmarked as “Women’s component” to ensure flow of adequate
resources for the same. Besides Swarnagayanti Grameen Swarazgar Yojona (SGSY),
Ministry of Rural Development is implementing other scheme having women’s component
They are the Indira Awas Yojona (IAJ), Integrated Rural Development Programme (IRDP),
Development of Women and Children in Rural Areas (DWCRA) and the Jowahar Rozgar
Yojana (JRY).

Three types of empowerment:

Economic empowerment: As majority women lack assets that help contribute to their
empowerment and well-being, economic independence through self-employment and
entrepreneurial development must be paid attention to. So, the Government of India has
provided for Self-Help Groups (SHGs). Women’s access to savings and credit gives them a
greater economic role in decision-making through their decision about savings and credit.
When women control decisions regarding credit and savings, they will optimize their own
and the household's welfare. The investment in women's economic activities will improve
employment opportunities for women and thus have a 'trickle down and out' effect. The
financial sustainability and feminist empowerment paradigms emphasize women's own
income-generating activities. In the poverty alleviation paradigm, the emphasis is more on
increasing incomes at the household level and the use of loans for consumption. In the
feminist empowerment paradigm, individual economic empowerment is seen as dependent on
social and political empowerment.

Level of Empowerment
Empowerment is measured by the degree of economic independence, decision making at
household level, decision making within the group and self-perception. These individual
factors influence the overall level of empowerment. Overall, group members in Andhra
Pradesh (68%), Assam (73%), Kerala (78%), Mizoram (68%), Tamil Nadu (77%), and West
Bengal (72%) are relatively more empowered than others. In all these states, their role in
decision-making at household-level is much lower when compared to decision making at the
collective group level. This is quite understandable as the women are in a better position to
take decisions as a collective than at the household level, where the individual woman is
confronted with other family members and might not always have the decision making
power.

Increased well-being: access to savings and credit facilities and women's decision about what
is being done with savings and credit strengthens women's say in economic decisions of the
household. This enables women to increase expenditure on the well-being of themselves and
their children. This is the main concern in the poverty alleviation paradigm. Women's control
over decision-making is also seen as benefiting men through preventing leakage of household
income to unproductive and harmful. Other welfare interventions are advocated in addition to
micro-finance, typically nutrition, and health and literacy campaigns to further decrease
vulnerability and improve women's skills.

Social and political empowerment: a combination of women's increased economic activity

and control over income resulting from access to micro-finance with improved women's
skills, mobility, and access to knowledge and support networks .Status within the community
is also enhanced. These changes are reinforced by group formation, leading to wider
movements for social and political change. The financial self-sustainability paradigm and the
poverty alleviation paradigm assume that social and political empowerment will occur
without specific interventions to change gender relations at the household, community or
macro-levels. By contrast, the feminist empowerment paradigm advocates explicit strategies
for supporting women's ability to protect their individual and collective gender interests at the
household, community and macro-levels.

Political Empowerment of Women

Mahatma Gandhiji would have insisted upon women’s equal participation and devotion of
power to the institutions of local Self-Governance and the Village Panchayat.The Panchayat
Raj Act provides for people’s active participation in the local administration by granting them
power to question and by requesting their participation in planning for development of their
villages. The Self-Help Group women are mentally ready now and have moral courage to
contest the local and Legislative election. There is every possibility that the growth of Self-
Help Group in the future will provide large number of women leaders in India.
The Government of India, the State Governments and many international agencies like the
International Labour Organization (ILO) and UNICEF have been involved in developing
programmes to deal with child labour. Using the Self-Help Group to empower the mother and
the child for the eradication of child labour is being given serious thought. The processes
have been going on for the last few years and as of now 384 Self Help Groups have been
formed for eradication of child labour. The 73rd and 74th Amendments (1993) to the Indian
Constitution is considered as a breakthrough towards ensuring equal access and increased
participation in political power structure for women. The Constitution (84th Amendment) Bill
relating to women’s reservation even last year. The Congress party, led by a woman and
supposedly pushing for reservation for women, has only 10 per cent of women among the
candidates announced so far. For the BJP the proportion of women candidates is even lower
at 7 per cent.
WOMEN EMPOWERMENT PROCESS: (FIGURE 1)
SHG-BANK LED MODEL OF MICRO-FINANCING IN INDIA:

Model I: - Banks provide micro finance to non-governmental organisation (NGOs) for

lending to SHGs and ultimately to the micro entrepreneur (It covers about 27% of SHGs)

Model II: - Banks provide direct financing directly to SHGs for on landing to micro
entrepreneur (It covers 17%)

Model III: - Banks finance directly to SHGs for on lending to micro entrepreneur with the
intervention of NGO as social mobilizers and facilitators (It covers 56% of SHGs).

Model IV: - The fourth model envisages bank loans directly to individual members of SHGs
upon recommendations of the SHGs and NGO. In this case, the NGO assists the Bank in
monitoring supervising and recovery of loans.

A pilot project for linking SHGs with banks was launched by NABARD in 1992. The
Reserve Bank of India persuaded Commercial Banks, Regional Rural Banks and Cooperative
Banks to actively participate in the linkage programme. Under the RBI’s guidelines, banks
were given permission to open saving bank account in the name of SHG, and relaxation of
security requirements. Thus, an informal credit system was evolved with assistance from
formal financial institutions. The agencies involved in the schemes were NABARD, Banks,
NGOs and SHGs members.
The main objectives were to provide the following:
• Supplementary credit to SHGs
• Reductions in transactions cost for both banks as well as SHGs by reducing paper work.
• To mobilize small savings among poor rural women.
• To build mutual trust and confidence between Banks, NGOs and rural poor
• To create healthy relations between SHGs members and linking agencies
• Constant supervision and monitoring by banks through NGOs.

In March 1999, about 0.56 million families engaged in micro enterprises were financed under
the scheme through 33000 SHGs (of which 84% were women SHGs 2. In all 202 banks
consisting of 129 (64%) RRBs 38 (19%) Commercial Banks and 35 (17%) Cooperative
Banks participated in the programme. A total of 550 NGOs, were involved. The aggregate
loan outstanding was Rs. 570 million. The average loan outstanding per SHG and per micro
entrepreneur worked out to Rs. 17297 and Rs. 1019 respectively. The average number of
micro entrepreneurs per SHG is 19. The number of SHGs linked to banks has increased to
7,17,360 as on March 31,2003. This translates into an estimated 11.6 million very poor
families brought within the fold of formal banking services. About 90 percent of groups
linked with banks are exclusive women groups Cumulative disbursement of bank loans to
these SHGs stood at Rs. 2048.7 crore with an average loan of Rs. 28,560 per SHGs.

The SHG-Bank Linkage Program: SHG Bank Linkage Program and nourish their life as well
society...
By March 2006, banks had cumulatively lent Rs 113.97 billion to 22, 38,565 SHGs,
providing with access to the formal banking system. Now a day, the SHG-bank linkage
model is one of the world's largest microfinance initiatives in terms of outreach (Kropp &
Suran, 2002). NABARD is the pioneering agency of the SHG-Bank Linkage Model. It partly
finances the cost of SHG promotion, provides 100% refinancing to participating banks and
offers revolving fund assistance on a selective basis to NGOs, SHG Federations, credit
unions and other organizations providing microfinance for on-lending. NABARD also
provides capacity building support to bank officials, NGO staff, government officials and
SHG members. In addition to NABARD, several other apex bodies or wholesalers provide
loans to financial intermediaries for on lending to SHGs.
Table: shows regional shares in SHGs linkage.
REGION SHGs Linked SHGs Linked SHGs Linked
March 2006 March 2007 March 2008
areas No.of shg % No.of shg % No.of shg %
groups share groups share groups share
Western region 1,66,254 7 2,70,447 9 3,74,561 10.8
India level 22,38,565 100 29,249,73 100 3,477,965 100

These include the Small Industries Development Bank of India (SIDBI), Rashtriya Mahila
Kosh (RMK), Housing and Urban Development Corporation (HUDCO), Housing
Development Finance Corporation (HDFC) and Friends of Women's World Banking
(FWWB). Some donors and banks (e.g. Rabobank) also provide grants and loans to
microfinance institutions for on lending to SHGs and SHG federations (Tankha, 2002).

Conclusions:
Micro finance and SHG intervention have brought tremendous change in the life of women at
the grass root. Unlike the other kind of micro finance, self help group have savings as a base
which created a binding on the part of the women and also the financial partners, say banks,
to extend credit to the hitherto unreached poor, women. It has succeeded in bringing several
women to compulsory savings and through some committed women in the group and NGOs
support they have been able to avail micro credit in the form of revolving credit and
economic assistance.
• Economic, social, cultural and political empowerment and feeling of gender equality
and promotion of the same is the way out.
• Equal employment and recognition of women’s work at home, at work place, etc.
• Self employment to those who do not wish to be employed.
• Control over resources, freedom to spend the income earned.
• Increase in WPR in non-farm sector, in non-wage operations

References:
1. Dr.Basu P.J.**Microfinance and Women Empowerment:An Empirical Study with
special reference to West Bengal.
 2. Bisnath, S. and Diane El son.( 1999) : Women's Empowerment Revisited. Background
paper,Progress of the World's Women. UNIFEM. www.unifem.undp.
org/progressww/empower. html.

3. Biswas T., Women Empowerment Through Micro Finance: A Boon for Development

4. Dadhich, C.L. Lessons from the Micro Credit Experience of India,

www.aproacha.th.com

5. Everett, J.( 1991) : The Global Empowerment of Women. Summary of the annual
conference of the Association for Women in Development, November 17-19, 1989,
Washington DC.Framework. www.unicef.org/programme/gpp/policy/empower.html

6. Kamesan, Vepa (2003), “ Indian Economic Scenario – yesterday – today – tomorrow.

Inaugural Address at seminar on Banking – Agriculture – Industry – IT- New Hopes –
New challenges organized by Telugu Vaibhavam at Hyderabad, Sep. 16

7. Matheswaren.V.P, Women empowerment for sustainable development through self-

help group movement in Tamilnadu.

8. Purohit, Sheela, “Micro Credit and Women Empowerment, http://www.gdre.org

9. Prasadarao.M, Dr.R. Gopal, Impact Of SHG Based Microfinance On Women

Empowerment.

10. Srinivasan N. (2008), Microfinance India- State of the sector report 2008.SHG-Bank
linkage programme(SBLP): entering a phase of consolidation.
11. Sriraman P.V, Faculty, Bharathidasan Institute of Management, Tiruchirapalli, Micro
Finance, Self Help Groups and Women Empowerment – current, issues and concern
12. Thakur G.S.1 and Tiwari M.A, Whether SHG-based Micro-credit Programmes can
Remove Poverty? A case study of SHG-based programmes in Patan District of
Gujarat

Webiliography:

1
• www.col.org/pcf3/Papers/PDFs/Ghadoliya_MK.pdf -
• www.indg.in/social.../microfinance-self-help-groups-shg
• www.unicef.org/india/education_2794.htm
• www.isical.ac.in/~wemp/Papers/PaperTiyasBiswas.doc
• www.igidr.ac.in/.../Jyotish%20Prakash%20Basu_submission_55.pdf
• www.ignou.ac.in/.../V.P.%20MATHESWARAN-1.pdf –
• http://researchtube.info/analysing-the-current-scenario-of-women-status