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Microfinance India Summit 2013 - SHG Bank Linkage – Applying the Responsible Financial Lens

Overview: Amulya Champatiray represented IFMR Research at the panel discussion titled, ‘SHG Schematic: Applying the Responsible Finance Lens’ at the Microfinance India Summit 2013. The panel discussed issues and practices in Self Help Group bank linkage with respect to ‘responsiveness and responsibility’ to clients/members, and proposed a way forward. Amulya presented findings from the recently concluded study that attempted to understand the financial and non-financial interactions of SHGs with external agencies, as well as to review the group dynamics in terms of financial transactions, decision making, cohesiveness, transparency and acceptance towards technology and new policies. The study was conducted in three states; Bihar, Madhya Pradesh and Karnataka, with a total of 200 SHGs selected from each of the three study states. They were administered questions pertaining to their activities at different levels. The session was well received by an audience with diverse backgrounds including banking, government, research and practitioners.

(L-R) Frances Sinha, Kalpana Sankar, Jonna Bickel, Amulya Champatiray, Sonali Vayangankar, R.M. Gowda and A. Chandrashekhar

Moderator: Frances Sinha, Director, EDA Rural Systems

Lead Presentation – Amulya Champatiray, CMF 


• Jonna Bickel, Technical Advisor, GIZ-NABARD Rural Financial Institutions Programme, GIZ
• Sonali Vayangankar, Vice Chair and MD, MAVIM
• Kalpana Sankar, MD, Hand in Hand
• Dr R M Manjunatha Gowda, President, Karnataka State Cooperative Apex Bank
• A. Chandrashekhar, Faculty, BIRD


Lead Presentation: 

Project page on CMF's website:

Frances Sinha: These findings were there 8 years ago as well and they are definitely disappointing. We have a very interesting panel to discuss these today– all institutions with a deep experience of working with SHGs.

Jonna Bickel
  • This a realistic situation which we have to face and we have to question – why have we come to this point?
  • I want to start by mentioning the quality of the program. This brings me to the point that SHGs are too dependent on external agencies. I want to ask everyone else here, why is it that we are reluctant to leave these groups and how can we help them get there? Now I see federations coming up but can they really fill this role? There is a huge mismatch because for me the SBLP program is the largest FI program in the world. If we want to make the SHG approach sustained we have to see how it is changing and why it is changing? When talking about responsible finance we always talk about service providers but never talk about what services are being used?

Kalpana Sankar
  • It is a huge effort to ingrain culture in SHGs such as depositing the deposit on the same day. They do not get access to timely credit or savings mechanisms. A lack of transparency also exists as SHGs do not report to credit rating institutions. We have been operating the program for decades and still don’t have a particular apex model. To answer Jonna, where we have missed out is on quality – I feel like APEX institutions should monitor group quality because they have a close tie within the community and they can ensure scale and sustainable social enterprises. Girjah here helped me develop 7 indicators to show that a group is not operating well.
  • Rating institutions should give some sort of weightage to institutions operating in the SHG field, since it is operating in a caste-based community encouraging communal harmony and affecting other indicators which do not reflect financially. Poor people also want their children’s lives to improve so debt should be made available to MFIs for giving loans for sanitation, etc.
  • Grants and funds should be given to MFIs instead of being invested in expensive and unproven govt. development programs.

Sonali Vayangankar
  •  MAVIM works under the WCD Ministry and we are currently running the Tejaswini program. We’ve formed 600000 SHGs in all 3 districts of MH. We do SBLP under this program. We have been emphasizing on capacity building, microfinance and livelihoods. Women’s empowerment, social injustice has been covered as well.
  • To deal with the problem of lack of credit- we moved away from nationalized banks, we went with ICICI, to start with, to 8 districts and now we’re in partnership with them for covering all 33 districts. They charge 14% interest, of which 2% is returned to the community, which is a contribution to making the groups sustainable. ICICI has hired staff for our program, and have increased the average loan size as well. Whenever they face difficulty, they report to the head office. We’ve signed an MOU with NRLM and are also looking to bring convergence to make the groups more sustainable.

R.M. Gowda
  • So Jonna had raised a question I find interesting which is, why is it that we are still standing still after 20 years? And how can we be more responsible? Our repayments have gone down from 97% to 95%. I’m not sure how much of the SHGs in Amulya’s study are from the Coop sector.
  • After a lot of effort, we’ve managed to have the sign up for Aam Admi Bima Yojana.
  • What I found interesting was that the cost of transportation for a HG loan in Karnataka was 8K ….. total amounted to 8000 rupees. If I took 1 lakh as a loan, that’s 8% interest. Where do we stand in the coop sector? 4% is all we pay. Coop sector is somewhere we can make a difference here.

A. Chandrashekhar
  •  Different innovations are being undertaken by NABARD but the stakeholders have to become involved and maybe the banks should fund the capacity building of the SHGs because essentially it’s a business proposition.


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