Banking on Self Help Groups: What Can We Learn For Its Second Stage Strategy

11:15: SHGs introduction by “Srinivasan”. This is a panel discussion, featuring all men, which is pretty ironic given that SHGs are primarily intended for women. This guy is really optimistic about this session, which is an hour and a half long. The video quality makes the panel discussion look like a silent film.

11:16: “Ajay” has written a book on SHGs, and is proceeding to give a speech. He’s starting with a “statement”. What ever happened to the SHG model? I don’t know Ajay, but I think we’re going to find out.

11:18: “53% of rural households have been covered by SHGs” This number sounds really, really large. What does coverage even mean? Now he’s saying coverage is 200% in some states and union territories. I may not know a lot of math, but I know that you can only cover 100% of an area… “In some ways the numbers don’t square”.

11:19: He’s citing some study which found only 51% of SHG households were poor, across all types of SHGs. Though logically, if you just study SHG members after a study, maybe SHG membership reduced poverty? That’s why we randomize!

11:22: SHGs keep taking loans, “rise to their own level of incompetence”, keep lending until they can’t any more. Is he confusing RoSCAs with SHGs?

11:23: “In-house MFI” so that SHGs have some other alternative channel of funds. Structures have become more elaborate & supplement the bank linkage.

11:24: “SHG ceases to be a financial intermediary”, it’s supposed to be a fund manager, vehicle. Apparently some SHGs become dependent on MFIs, other channels of finance are denied to them. SHGs are no longer relevant like they were 15 years ago. I don’t know “Ajay”, I feel like some actual evidence would help bolster that pretty bold claim.

11:26: “Financial inclusion for the poor is all about individual centers, not SHGs.” Then why are joint liability loans such a big thing?

11:30: SHGs as a STATE MOVEMENT in Tamil Nadu. UNDP had something to do with this.

11:32: Next guy just said, “we always inflate statistics”. Oh my god I will never trust data again.

11:33: “There are posters advertising bank loans for students near the airport, basically for the benefit for the finance minister et al, not for students”

11:34: “SHGs are not some kind of silver bullet—they were never intended to do everything/anything! Only the FIRST step to get out of poverty! SHG 2 are baby steps to aggregate & find strength in numbers.”

11:35: SHGs & finance shouldn’t be mixed up. Thanks, I was going to yell about that too. SHGs were not the first institutions—cooperative societies were! Goal was growth, including people in networks. But cooperatives Failed because Indian society is too stratified. It worked in Canada because there was no stratification. I feel like there are other reasons why cooperatives worked in Canada...

11:38: “Group registration wasn’t necessary for operation of SHGs”. Also, you have to invest in SHGs. You can’t build an institution overnight, but you can destroy it! Sadly, money was given to SHGs, but never went to training, went to flying the Chief Minister out.

11:40: The whole macroeconomy changed in the 1990s. “Overfinancialization of the global economy”. I don’t know exactly what he’s getting at here.

11:42: Politicians get money but no power in the gram panchayats.

11:43: “People always ask, should SHGs accept savings? SHGs STARTED WITH SAVINGS!!! Should SHGs diversify products? THEY ALWAYS DIVERSIFY PROJECTS!” People usually do purchase land and gold eventually (though it takes time), which is a clear indicator that they are on their feet.

11:45: NABARD make SHGs official in 1987, and bank linkage started in 1992. Current chairman is really into SHGs. Don’t you people test policy first?!

11:45: Biggest crux is investing institutional capacity building. We’re so impatient, that’s why.

11.47: Basic concepts: Self selection & demand based finance. It’s about members deciding what THEY want. This seems like a great idea!!

11:48: SHGs vs MFIs comes up a lot. The AP crisis really exacerbated this because the AP government promoted SHGs.

11:49: There’s a strong women’s empowerment element in SHGs. YEAH!! But where does the next generation of SHGs go. There’s a bunch of SHG saturation in the South…so we need SHG federations? I have my doubts about bureaucracy’s ability to solve problems.

11:50: “The money is just lying in the bank!!! There is no link to livelihoods, only credit!”

11:51: SHG is a much broader concept than finance & microfinance. “SHGs run Nutrition centers, Manage Gram Sabha, keep NREGA accountable,”. I’m not entirely convinced that SHGs help service delivery, and I’d really appreciate some evidence for this claim.

12:01: “Groups get credit, then fragment.” Isn’t the game theory aspect of group lending supposed to mitigate that? Social pressures/iterated games.

12:04: Auditing can only be informal.

12.06: “When we talk about savings, we talk about compulsory savings, which are what the lowest member of the group can do.” I feel like this is the reason why people don’t join SHGs or something.

12:09: He’s talking about strategies for SHG promotion, like grant assistance from NABARD.

12:11: Q&A has started. Welcoming questions from the audience as well. Sirisha looks eager.

Q&A

12:12: Is customer protection an issue in SHGs w/r/t voluntary savings? Someone says SHGs are incredibly insecure.

12:14: KYC! Know your Customer! “Adding a “C” to that”—know your customer & community.

12:16: Savings are managed much better than loans—“Capacity Building 2012”.

12:18: How do people use savings to loan to each other? Yeah, community lending can be good? But it’s not sufficient! More finance?!

12:23: Where there is infrastructure, SHGs can succeed. We need a deliberate strategy to promote SHGs & governance & the use of credit & growth in these sectors—can’t pump credit in without growth!

12:26: “So many SHGs don’t take loans from banks because they have so much savings! We can’t impose things on SHGs. They are running on their own! There is competition!”

12:28: Vague question on businesses, gender, SHGs. “Trust is a key element which makes SHGs”. Men aren’t excluded…women take loans for things that men are running. I feel like this is not the intent of an SHG.

12:30: Women.  are better at making decisions for the family.

12:30: Computerizing SHGs’ accounts? That’s an interesting thought, but finances seem to be the constraining factor. .

12:36: SHGs are important for empowerment, need to distinguish between empowerment and entrepreneurship. There may be levels of entrepreneurship, the group might not support high risk innovation/investment, that will go to the bank. SHGs won’t solve everything, but will help cope with stuff until a level.

12:38: Ideally, want to fix excessive debt burden for vulnerable people, so SHGs give liquidity?

12:41: DONE.