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Empowering women is paying off in rural India, literally

Author: Moin Qazi @moinqazi123
Publication: Dailyo.in
Date: December 20, 2016
URL:   http://www.dailyo.in/business/rural-india-self-help-groups-microfinance-women-empowerment-mfi-nrlm-nabard/story/1/14644.html

Self-help groups, of 10-20 poor women from similar backgrounds who pool their savings into a fund, are the biggest generators of social capital in villages.

Pride and dignity would belong to women if only men would leave them alone.

- Egyptian proverb

Gender inequality is not only a pressing moral and social issue but also a critical economic challenge. India has a larger relative economic value at stake from advancing gender equality than any of the ten regions analyzed in a McKinsey Global Institute report - The Power of Parity: How Advancing Women’s Equality Can add $12 Trillion To Global Growth.

The report says that if all countries were to match the momentum towards gender parity of the fastest-improving countries in their region, $12 trillion a year could be added to global GDP. Further, India could add $700 billion of additional GDP in 2025, boosting the country’s annual GDP growth by 1.4 percentage points.

In this backdrop, the findings of a parliamentary panel on women empowerment make good news.  The committee on empowerment of women, which tabled its report in Parliament on December 16, reported that the number of self-help groups (SHG) have grown 70 per cent in an 18-month review.  

SHGs remain the primary unit of National Rural Livelihood Mission (NRLM), the country’s flagship poverty alleviation programme. According to the annual Bharat Microfinance Report for 2015-16 of Sa-Dhan, India’s premier body of development finance institutions, there are 79.03 lakh SHGs with savings  of Rs 13,691 crore and 46 lakh SHGs have a gross loan outstanding of Rs 57,119 crore.

A bulk of the deposits of these groups is in savings accounts, on which banks pay nominal interest. Thus these women collectives also provide huge low-cost funds to banks.

In the blitzkrieg of the new microfinance movement, SHGs have been overshadowed. It is a case of the stars being obscured by the moon. But the beauty of the night sky is never complete without the constellation of twinkling stars.

Despite early success, the growth of self-help groups had slowed in the last few years. The microfinance scene in the Nineties was dominated entirely by SHGs. And they became a key armour for banks in draining the swamps of poverty before microfinance institutions (MFIs) started swarming and courting them and made them their darlings for a purely business goal.

They introduced a new idea of do-goodism and a touchy-feely morality to smokescreen a mega business of making profits off the poor. MFIs selectively plucked the most honeyed self-help groups to pad their portfolios and profits. These groups have actually blossomed through the efforts of public banks, government and the not-for-profits, and sadly no one is talking about it.

This was the point when the original character of these self-help institutions got destroyed. It is sad that microfinance institutions used this precious social capital built by community volunteers for a narrow    commercial agenda. The focus shifted from thrift to credit. It became an irresistible tale of chasing money. Barring some socially conscious players like SEWA and BASIX, most of these institutions lapped on the Bottom of Pyramid bandwagon.

Herein lies the nemesis of the great microfinance crisis of Andhra Pradesh and the obituary of the original philosophy of self-help groups.

However, the original concept of self-help groups is being stoked up from the embers and the NRLM is a powerful programme for repositioning these groups as core to India’s approach to women empowerment and poverty alleviation.

Unlike the new microfinance paradigm, where credit is the sole function of self-help groups, the emphasis of SHGs in its pure avatar is on savings - loans come later. Savings are integral to poor households’ risk management strategies; they constitute the first line of defence to help poor households cope with the external shocks, emergencies, and life-cycle events to which they are so vulnerable.

The self-help groups have their origin in the self-help affinity groups facilitated by the Mysore Resettlement and Development Agency (MYRADA) that were adapted by the National Bank of Agricultural and Rural Development (NABARD) for lending by commercial banks. The adapted version, which underwent modifications to suit the needs of formal financial laws, started in 1992 as a pilot project and was soon upgraded to a regular banking programme.

The common characteristics are: self-selected and unrelated members, small size, regular attendance at meetings, regular savings by members, peer pressure to enforce repayment of loans and simple and transparent procedures.

A typical Indian self-help group consists of 10-20 poor women from similar socio-economic backgrounds who pool their savings into a fund from which they can borrow  money to buy medicine, start a business, purchase animals, pay school fees, buy clothing and food during the lean season, and invest in agriculture.

They meet once a month and discuss issues of mutual importance, thereby enriching each other. The women cross guarantee each other’s debts. Astonishingly few default. By transferring tasks normally undertaken by well-paid bankers to poor people, the cost of administration comes down drastically. Although the value for members is not just in finance, credit remains an important element. You can’t change social dynamics without women’s involvement in the economy.

The group is linked to a public bank which supervises it and oversees its money management. Over time, the bank begins to lend to the group as a unit, without collateral, relying on self-monitoring and peer pressure within the group.

What’s most significant about these groups is that they are designed to be wholly managed by villagers themselves. The phenomenon of “regular meetings” is an important enabling force which gives the woman courage to “lean in”, in multiple household and community settings.

Together, the women create a critical mass and change the perception of what women can do. It is an amoeba model - and each group has the DNA within itself to self-replicate.

The self-help groups are seen as an entry point for many other social activities - school committees to watershed councils. As they mature, the groups spark and spearhead meaningful and enduring changes by addressing community issues such as abuse of women, the dowry system, alcohol, educational quality, inadequate infrastructure, etc.

Self-help groups are the biggest generators of social capital in rural India. Best practitioners in communities become community professionals (CPs) and catalysts for mobilisation, health, literacy financial management, agriculture, leadership livestock, and more.

The vast majority of women leaders in Panchayati Raj institutions have come from self-help groups and most successful sarpanches have had their grooming in these collectives. It is not that women are purer than men or immune to the pull of greed. But there is almost a certainty that women will channel money into solving more fundamental issues. 

According to a Harvard Business Review study, women in emerging markets reinvest 90 per cent of their earning into “human resources” - their families’ education, health and nutrition - compared to only 30 to 40 per cent of earnings by men

But loans of microfinance institutions to women from these groups have come in for a lot of flak. Some borrowers squander money or start businesses that fail. There’s need for strong discipline. Loans can be malignant. Some businesses are too risky. And the temptation is always present to spend the loan on white goods. And the stark truism is that most loans to these women from MFIs are pipelined to their husbands.

Yet, when done right, microfinance can make a significant difference to the lives of impoverished women, particularly when used as a cover against sudden emergencies and for smoothening consumption.

There are still millions of self-help props wedded to the original mission and creed. Through them, women are transforming their own lives and that of their communities. The sisterhood is so close knit and persuasive and sorority so intense that women have begun to think of themselves in a different way.

Beginning in the benign area of health, the women slowly gained confidence and moved on to other social areas. They began asking for change from the bus conductor, introducing new farming practices, saving enough money to engage banks and acquiring simple irrigation equipment like water tanks, agitating for an improved road (and getting it), mapping the village land and rethinking what’s planted to produce year-round yields and income, demanding the presence of the school teacher, negotiating with local officials for providing services to which they were entitled. Like termites they have burrowed into male bastions and have enabled women to find new confidence, agency, and purpose.

For poor women, it is a journey towards the second freedom or the real freedom, as Mahatma Gandhi said, when he talked of unfinished agenda at the time of independence.

More than two decades back, when I joined the self help group movement as a banker, we didn’t have an NGO at the centre. It is non-government organisations which form groups, and bankers do the job of managing money. In the absence of a experienced NGO, we had to perform both tasks.

I was skeptical about the success of the initiative. Several questions kept nagging at me. Would the village women talk to us? Would their husbands not dissuade them from meeting us? Would they trust us, given their past record of having been misled by outsiders? How would we communicate with these illiterate women? Should we really experiment with them and in case we fail, make them suffer the wrath of local interests?

At first nothing went right; but we persisted.

Women used to shy away from loans, having personally witnessed the shame their husbands suffered at the hands of moneylenders. Villagers would dissuade me, saying a woman would hand the money over to her husband who would fritter it away.

I knew when these women said “no”, it was not their own voice. It was the voice of their history, the way they were treated, that took away all their confidence. But I was aware that once we purged their mind of all those fears we could nudge them to move out of the shadows.

A demure woman, Nirmala Geghate, was the one I chose for launching the first self help group in Wanoja village in Chandrapur district of Maharashtra and also later the first loan. Nirmala’s reputation for honesty made people adore her. In a village where honesty was in short supply, I was glad to see a woman who was respected just because her only wealth was honesty. In a life bound to realities beyond the grasp of man, there was little room for her to let her identity emerge.

Nirmala blushed at the thought of what a bank and its manager might mean for her and her group, but her husband tried to dispel what he considered her silly notions that any bank would actually help them. “I don’t want to have anything to do with the bank,” he said at first, with a dismissive toss of his hands to his wife who he felt was being taken for a ride by a charlatan banker.

All the group women sat hunched, looking down into their laps. They were looking frightened because, they said, they were afraid they couldn’t pay the loans back. One of them was so dazed that she wanted to know the name of the person who had recommended her for the loan.

Feeling desperately sorry, I asked Nirmala to believe in us. I assured her that if she made a serious attempt and yet failed, we would not divest her of her bare belongings in the way a moneylender does. Nirmala scratched her head, did quick mental math and decided to give the loan a try. There was nothing to lose. And her courage paid off. Her decision transformed her life.

Two months back I visited the village and was wonderstruck with eye popping changes in the village. Nirmala is now the sarpanch. She showed off the new brick lanes, electrical poles and street lights installed under her supervision and checked on the progress of a new water supply scheme she is working on with the help of CSR funds given by power plants in the nearby town. 

Giving women the tools to run businesses of their own unlocks the entire grid of their talents.

I found that the villagers had now put a premium on educating girls. This was in contrast to the trail of unkempt, unwashed children who would circle me during my visits in the village. I overheard a group of children in school singing a series of wonderful nursery rhymes.

The concern for development fluttered everywhere. Hope had begun coursing through communities once shackled by fatalism and low expectations. Moneylenders had vanished. Local officials no longer sniffed for bribes. Notions of purity of caste were no longer evident. Village elders no longer darted out distasteful looks at women going to towns without a male chaperone.

An exposure to the empowerment cycles that her involvement with the self-help group entailed enabled Nirmala to unlock and hone the rich seam of her inner talents.

Empowerment has many dimensions - social, economic, cultural, political and personal. When every part is treasured, the good unleashed is greatest. This is the unique philosophy of every self-help group. Membership of a self-help group has made men alter their perception of women.

Men may fret that they lose when women win, but history tells us that when women advance, humanity advances. This lesson is best embodied in the words of Nirmala herself which she keeps repeating whenever I visit her: “My father always believed that it would have been far better if I were born a son. But today he realises how lucky he is to have me as a daughter.”

Centuries ago, a king, while travelling through his domain, came across people living in dark caves. He was horrified at the gloom and ordered every family to be given lamps and oil to fuel them. Fifty years later, he visited the area again and found the caves in darkness. The lamps had been forgotten or were broken. The oil had run out.

The king ordered more oil, new lamps. But when he returned to the area the following year the caves were dark once more. The king summoned his minister, a wise old man, and asked for an explanation. "Ah," said the minister, "You gave the lamps to the men. You should have given them to the women."

The king followed his minister’s advice and the lamps have kept burning ever since!
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