“When the women are empowered, society with stability gets assured…”
- Dr. Abdul Kalam

“Rural development – the mainstay of the rural population – is surely though gradually acquiring requisite acceleration with the women leadership getting strengthened. For rural development, women empowerment appears to be the best alternative.” (Bhatnagar 2001: 52).
“[Microfinance is] the means by which poor people convert small sums of money into large lump sums.” (Rutherford 1999).
“Micro-financing or group lending is being looked upon as the instrument that can be considered the golden stick for poverty alleviation in India.” (Das 2003: 26).

1The microfinance movement has been gathering momentum, with women at the grassroots organising themselves into self-help groups (SHGs). In 1991-92, the National Bank for Agriculture and Rural Development (NABARD) decided on a coordinated programme for the promotion of linkages between banks and SHGs to mobilise savings in rural areas and to deliver credit to the rural poor. In 1992-93 there were 255 SHGs in India, which increased to 4,16,478 in 2001-2002 (Das 2003: 27). During 2002-2003, over 2.4 lakh SHGs were provided loans by banks, which benefited over 38 lakh poor families, exceeding the Budget (2002-2003) expectations of linking 1.25 lakh SHGs with banks.

2In Tamil Nadu, SHGs have grown in strength from the inception of the concept in 1992. “On March 31^st 2003 there were 1,01,863 SHGs in the rural areas with 17,42,414 members and 24,223 SHGs in the towns with 4,07,779 members. The total savings of SHGs in the State crossed Rs. 356 crores and they had availed themselves of Rs. 522.21 crores in loans” (Kasturi 2003: 41).

3The present study covers 12 SHGs selected at random in Kanyakumari district of Tamil Nadu. The SHG scheme gained momentum in the district only from April 1999. As on September 2003, there were 11,800 SHGs, of which 11,600 are exclusively for women (98%). The present position of SHGs in Kanyakumari reveals that women’s SHGs dominate, compared to the few men’s groups functioning. Though the male and female population is equal, male groups have not been given importance. Besides, of these, 10,022 SHGs (85%) had applied for bank loans though only 5,241 (44%) succeeded in getting them.

Statement of the problem

4SHGs are a forum for the collective voice of the poor against oppression and exploitation. The present study was undertaken to find out whether members of the SHGs in Kanyakumari district are self reliant, economically independent and free from the clutches of moneylenders. The growth of SHGs has made it necessary to study whether they function effectively and help in the development of the villages. The following problems were identified among the women SHGs:

• As SHGs are formed by NGOs and political organisations they lack spontaneous growth.
• The SHGs concentrate on lending money and other activities that create employment are sidelined.
• The SHGs have failed to empower women in a big way.
• The SHGs face acute marketing problems.
• Members of the forward caste have not realised the importance of organising SHGs.
• The administration of SHGs is dominated by non-governmental organisations (NGOs), which affect their independent functioning.

5Based on these preliminary observations, the objectives of the study are:

1. To analyse the working pattern of SHGs in the district.
2. To record the caste, religion and educational background of the members of the selected SHGs.
3. To analyse the financial status of the selected SHGs.
4. To analyse the economic and social activities undertaken by the SHGs and to assess the marketing measures.

Selection of sample

6The random sampling method was adopted to select 12 SHGs, of which six belonged to urban areas and six to rural areas. The study, which covered 229 members, revealed that there is no marked difference in the functioning of urban and rural SHGs, hence the discussion is made on a combined basis. With the exception of two, which had 16 and 13 members, all the other SHGs had 20 members each. Eight of the SHGs were organised by NGOs, two by the Church and two by the government.

1. Characteristics of functioning of SHGs in Kanyakumari district

7The main characteristics of the functioning of SHGs are listed below:

• Groups generate common funds, where each member contributes his/her savings on a regular basis (generally Rs. 10 a week for below poverty line groups and Rs. 25 or Rs. 50 in other groups).
• Groups meet periodically to discuss their transactions. In three SHGs, the meetings are held once a fortnight, whereas the other nine groups met every week. Special meetings are also arranged by the SHGs when the need arises.
• Loans are decided by consensus and depending upon the priority of the need, the group agrees to give a loan.
• Loans cover a variety of purposes such as education, marriage, repair of houses, agricultural needs, to redeem pledged jewels and so on.
• Loan amounts are small and for a short duration i.e. to be paid back in 10 instalments. When the loan amount is more, the duration of repayment is extended, varying from 20 to 36 months.
• Loan procedures are simple. The borrower has to sign in a notebook and get the loan. If the amount exceeds Rs. 500 then they have to affix their signature on a revenue stamp and collect the loan amount.
• Defaults are negligible because members of the group, who are also affected when a loan is defaulted upon, see to it that the repayment is made. Due to the pressure of the group, prompt repayment is made.
• Groups mobilise savings from their members and effectively rotate the same among the members.
• Training in various sectors are arranged by NGOs/NABARD/District Rural Development Agency (DRDA). In three SHGs, members were able to attend, on an average, three training sessions in a year. Training is usually imparted by local and regional experts; but in one SHG situated in Kottaram, the Ministry of Textiles arranged for training for 20 days by professionals from Kolkata in preparing jute products.

2. Background of the members

2.1. Classification of the members according to age

8The highest numbers of members belonged to the 40-45 age group, indicating that these women found the earnings of the male members of their family insufficient to meet their expenditure. Hence, they were able to find an alternative source of earning by joining SHGs. The next highest numbers of women members of SHGs belonged to the 25-30 age group. As these women were unable to find employment, they joined the SHGs in order to explore the possibilities of self-employment.

2.2. Classification of the members according to religion and caste

9The cohesiveness among the members increased due to the homogeneity of the groups in terms of caste and religion. Religion was found to be a cementing force that kept the groups together. Among the 229 members studied 50.22% were Hindus and 49.78% Christians. However, the SHGs included people belonging to different faiths, and religion was not a barrier to group formation in the district.

10Caste also had a bearing on employment and related activities. The members of the SHGs were from a homogeneous socio-economic background, and had common interests and objectives. In many groups, members belonging to the same caste had intimate knowledge of each other and were sensitive and responsive to the needs of each other.

2.3. Educational background

11Improving their educational qualifications was important for the people of the district, and it was surprising that the members of the selected SHGs were not very highly educated. This factor was studied to identify whether the educational background of the members had any relation to their repayment habits.

12The educational status of the members revealed that the majority had studied up to standards VIII or X. Many of the women, who had studied up to Standard V, could only sign their names. Only 11 members had higher education. The study showed that women with higher education did not come forward to join the SHGs even though they were unemployed. NGOs and local governments failed to include these educated women to join.

3. Financial status of the selected SHGs

13The progress of SHGs depends on its financial status. The formation of SHGs at the grassroots level and their group savings served a wide range of objectives other than immediate investment. It improved discipline in savings and enhanced the confidence of the individual owing to group encouragement. It strengthened the unity of members by group savings and it acted as a cover against the individual’s risk against normal business. The SHGs selected were informal groups, where members pooled savings as a thrift deposit. The groups had common needs. The SHGs were able to provide primitive banking service to its members that were cost-effective, flexible, and based on local requirements.

14The per capita savings were highest for the Kanmani group and lowest for the Gnana oli group. The study also showed that women members availed of loans from their SHGs because the interest charged by the SHG was only 24% whereas moneylenders fleeced them by charging interest up to 100%. Moreover, the women were quick to point out that interest payment did not go to any outsiders but remained with the members. The members were happy that they did not need to go from pillar to post in search of a loan and did not have to do any forced labour to get a loan. They were glad that they did not have to mortgage their land or valuables and risk losing their land. In short, they were freed from the debt trap.

15When the SHGs bank deposits reached a certain target it enabled the SHGs to get a bigger loan from the bank, which could be used to start smallscale ventures to increase income. The group appraised the members’ credit needs. The member who needed a loan had top give two weeks notice to the group. Repayments were made in instalments within ten weeks of the disbursement of the loan.

16As the members were reluctant to disclose their income and as moneylending was the main activity in all the SHGs, studied income generated from credit creation was used to calculate per capita income per year. The income was so calculated by deducting the total savings from the credit generated by each group. This per capita income was further divided by the number of years the SHGs functioned to get the per capita income per year for each group. The table below shows that the per capita income per year is low for many groups. Annai SHG tops the list because this group operates a grocery store in a highly congested area of the town. The diversification of activities of this group such as weaving, selling eatables, owning petty shops and money lending had enabled their per capita earning to be high. Thus diversification of activities and income generation go hand in hand. Friends SHG also did well because they met the local needs of the members. A church-run SHG, the Friends group undertook a variety of activities. The per capita income of the Gnana oli group was the least, because the money raised by the savings was small. Though located in an urban centre, the members lacked the push to venture into lucrative activities. 30% of the members belonged to the scheduled caste. To save, one needs an income. These members of the scheduled caste had a poor income, resulting in low savings. The social backwardness of this group can be overcome if successful NGOs come forward to help them.

17Most of the selected SHGs obtained loan from commercial banks. But they felt that the cumbersome procedures and reluctance of the banks to give loans was a hurdle in the beginning. The popular notion that banks are ever willing to give loans to SHGs is a myth. Two of the groups are still looking forward to receiving loans. Many of the groups had obtained loans from Pandian Grameem Bank, located at Valliyoor in Tirunelveli District, because there was no rural bank in Kanyakumari district. Though 10 out of the 12 SHGs selected had obtained loans from commercial banks, as far as all SHGs are considered, there is a big gap between the loans needed by SHGs and the banks lending to them.

Table 2. Financial status of the selected SHGs in Kanyakumari district

4. Activities of the selected SHGs

18The message of sustainability is starting to permeate through the microfinance sector, and as a result a number of activities have been undertaken by the SHGs.

4.1. Economic activities

19The SHGs foster an entrepreneurial culture. SHGs have an inbuilt mechanism whereby emphasis is given on the capacity building of women through developing their skills. SHGs have been useful in organising and motivating the women of Kanyakumari district to play multi-dimensional roles. Empowerment of women requires awareness, access to training, participation in decision-making and the mobilisation of women for economic self-reliance. The economic activities of the 12 SHGs studied are given below.

20The above table shows that the right credit facilities can result in women becoming entrepreneurs. This has enhanced the status of women and led to their empowerment.

21Out of the 12 SHGs studied, the only economic activity of two SHGs was pooling the savings of the members and lending it. Even the loan raised from the bank was used only for this purpose. Disbursing microcredit was the main activity pursued by the all groups. Income generation was the outcome and absolutely no employment generation took place, defeating the purpose for which the SHGs were formed.

22Another feature seen in the activities of the SHGs was the purchase of goods in the wholesale markets, and distribution of it in their respective areas. This allowed them to make some profit. As the members did most of the work, employment generation for others did not arise, but the members were self-employed, resulting in their economic empowerment.

4.2. Social activities

23Most of the SHGs studied were not involved in many social activities, other than joining a demonstration or a rally to protest against the atrocities meted out to women. Creating awareness has been a widespread practice among the SHGs. Topics related to health, hygiene, child rearing, nutritional diet, environmental issues, gender issues, social discrimination consumer rights and other social issues are discussed threadbare during the weekly meetings. All groups subscribe to magazines that highlight issues necessary for women empowerment.

4.3. Marketing of the products

24Marketing precedes and succeeds production. The SHGs directly sell their products. When they are unable to do so, a few (3) SHGs said they make use of middlemen. According to the members, the government helped them to sell their products. Shops have been set up in the local market at Vadasery to sell the products. The DRDA has established a District supplies and Marketing society to initiate the selling of the products during exhibitions and fairs. The members were of the opinion that government should give more publicity for the SHG products by stepping up their advertisements. Many members stated that the government’s role in marketing the SHGs products was not carried out effectively or efficiently.

Conclusion: findings and suggestions

Findings

• The members of the SHGs determine the amount of the recurring savings deposit. Only one SHG saved Rs. 25 a week, while the rest saved Rs. 10 a week per member. This resulted in minimal collections and led to deposits far lower than the members’ capacity.
• The SHGs collect the savings from the members and earn money by way of interest on such savings, but insurance cover has not been provided to the poor.
• In Kanyakumari district out of 11,800 SHGs, only 6,700 are actively functioning, which shows that many SHGs exist only in name.
• The DRDA officials had not visited two SHGs even after a year of their existence.
• SHGs were controlled by NGOs. These SHGs were influenced by the ideology of the NGOs.
• Diversification of the economic activities led to more income generation for the groups.

Suggestions

• As many members expressed the view that bank staff considered them a nuisance, it would be beneficial to SHGs if a separate time and day is set apart by banks to meet members of SHGs. This will go a long way to remove the difficulties encountered by the SHGs in banking activities.
• As Kanyakumari district is a tourist centre, SHGs could cater to the needs of the tourist, in terms of their products.
• The government should be the major buyer of the commodities of the SHGs and can ask them to produce what it need for their government officers. Moreover during government functions, SHG products can be given as gifts to the person presiding over the function. This measure by the government will boost up the sales of the SHGs and rejuvenate them. Employment exchange officers should motivate educated, unemployed women on the rolls of their register to join SHGs in order to make them more effective.