Sustainability of Microfinance Self Help Groups in India : Would Federating Help?
The major form of microfinance in India is that based on women's Self Help Groups (SHGs), which are small groups of 10-20 members. These groups collect savings from their members and provide loans to them. However, unlike most accumulating savings and credit associations (ASCAs) found in severa...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2005/02/5642267/sustainability-microfinance-self-help-groups-india-would-federating-help http://hdl.handle.net/10986/8847 |
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okr-10986-88472021-04-23T14:02:42Z Sustainability of Microfinance Self Help Groups in India : Would Federating Help? Nair, Ajai ACCOUNT MAINTENANCE ACCOUNTING AUDITING BANK BRANCHES BANK LOANS BANKS CANCELLATION CENTRAL GOVERNMENT COLLATERAL COMMERCIAL BANKS CONFEDERATION CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATION COOPERATIVE BANKING COOPERATIVE BANKS CREDIT UNIONS DEPOSITS DEVELOPMENT BANKS DRAFTS EMPLOYMENT EXECUTIVE COMMITTEES EXPOSURE EXTERNAL AUDITORS FEDERATIONS FINANCIAL ANALYSIS FINANCIAL INTERMEDIATION FINANCIAL RESOURCES FINANCIAL SERVICES FINANCIAL SYSTEM FINANCIAL VIABILITY GOVERNMENT AGENCIES GOVERNMENT CONTROLS HOUSING HUMAN CAPITAL INCOME INDIVIDUAL ACCOUNTS INFRASTRUCTURE SERVICES INSURANCE INSURANCE COMPANIES INTEREST RATE INTEREST RATES INTEREST RATES ON LOANS INVESTMENT FUNDS LARGE LOANS LAWS LEGITIMACY LIFE INSURANCE LIQUIDITY LOAN REPAYMENT MARGINS MATURITY MICROFINANCE OPERATIONAL COSTS POLICY RESEARCH PRIVATE SECTOR PROFITABILITY PROFITABILITY ANALYSIS REPRESENTATIVES RESOURCE MOBILIZATION SANITATION SAVINGS SERVICE PROVISION SHAREHOLDERS SMALL LOANS STATE REGULATION TRANSACTION COSTS URBAN DEVELOPMENT WORKING CAPITAL The major form of microfinance in India is that based on women's Self Help Groups (SHGs), which are small groups of 10-20 members. These groups collect savings from their members and provide loans to them. However, unlike most accumulating savings and credit associations (ASCAs) found in several countries, these groups also obtain loans from banks and on-lend them to their members. By 2003, over 700,000 groups had obtained over Rs.20 billion (US$425 million) in loans from banks benefiting more than 10 million people. Delinquencies on these loans are reported to be less than 5 percent. Savings in these groups is estimated to be at least Rs.8 billion (US$170 million). Despite these considerable achievements, sustainability of the SHGs has been suspect because several essential services required by the SHGs are provided free or at a significantly subsidized cost by organizations that have developed these groups. A few promoter organizations have, however, developed federations of SHGs that provide these services and others that SHG members need, but which SHGs cannot feasibly provide. Using a case study approach, Nair explores the merits and constraints of federating. Three SHG federations that provide a wide range of services are studied. The findings suggest that federations could help SHGs become institutionally and financially sustainable because they provide the economies of scale that reduce transaction costs and make the provision of these services viable. But their sustainability is constrained by several factors-both internal, related to the federations themselves, and external, related to the other stakeholders. The author concludes by recommending some actions to address these constraints. 2012-06-22T19:59:40Z 2012-06-22T19:59:40Z 2005-02 http://documents.worldbank.org/curated/en/2005/02/5642267/sustainability-microfinance-self-help-groups-india-would-federating-help http://hdl.handle.net/10986/8847 English Policy Research Working Paper; No. 3516 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research South Asia India |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
ACCOUNT MAINTENANCE ACCOUNTING AUDITING BANK BRANCHES BANK LOANS BANKS CANCELLATION CENTRAL GOVERNMENT COLLATERAL COMMERCIAL BANKS CONFEDERATION CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATION COOPERATIVE BANKING COOPERATIVE BANKS CREDIT UNIONS DEPOSITS DEVELOPMENT BANKS DRAFTS EMPLOYMENT EXECUTIVE COMMITTEES EXPOSURE EXTERNAL AUDITORS FEDERATIONS FINANCIAL ANALYSIS FINANCIAL INTERMEDIATION FINANCIAL RESOURCES FINANCIAL SERVICES FINANCIAL SYSTEM FINANCIAL VIABILITY GOVERNMENT AGENCIES GOVERNMENT CONTROLS HOUSING HUMAN CAPITAL INCOME INDIVIDUAL ACCOUNTS INFRASTRUCTURE SERVICES INSURANCE INSURANCE COMPANIES INTEREST RATE INTEREST RATES INTEREST RATES ON LOANS INVESTMENT FUNDS LARGE LOANS LAWS LEGITIMACY LIFE INSURANCE LIQUIDITY LOAN REPAYMENT MARGINS MATURITY MICROFINANCE OPERATIONAL COSTS POLICY RESEARCH PRIVATE SECTOR PROFITABILITY PROFITABILITY ANALYSIS REPRESENTATIVES RESOURCE MOBILIZATION SANITATION SAVINGS SERVICE PROVISION SHAREHOLDERS SMALL LOANS STATE REGULATION TRANSACTION COSTS URBAN DEVELOPMENT WORKING CAPITAL |
| spellingShingle |
ACCOUNT MAINTENANCE ACCOUNTING AUDITING BANK BRANCHES BANK LOANS BANKS CANCELLATION CENTRAL GOVERNMENT COLLATERAL COMMERCIAL BANKS CONFEDERATION CONSOLIDATED FINANCIAL STATEMENTS CONSOLIDATION COOPERATIVE BANKING COOPERATIVE BANKS CREDIT UNIONS DEPOSITS DEVELOPMENT BANKS DRAFTS EMPLOYMENT EXECUTIVE COMMITTEES EXPOSURE EXTERNAL AUDITORS FEDERATIONS FINANCIAL ANALYSIS FINANCIAL INTERMEDIATION FINANCIAL RESOURCES FINANCIAL SERVICES FINANCIAL SYSTEM FINANCIAL VIABILITY GOVERNMENT AGENCIES GOVERNMENT CONTROLS HOUSING HUMAN CAPITAL INCOME INDIVIDUAL ACCOUNTS INFRASTRUCTURE SERVICES INSURANCE INSURANCE COMPANIES INTEREST RATE INTEREST RATES INTEREST RATES ON LOANS INVESTMENT FUNDS LARGE LOANS LAWS LEGITIMACY LIFE INSURANCE LIQUIDITY LOAN REPAYMENT MARGINS MATURITY MICROFINANCE OPERATIONAL COSTS POLICY RESEARCH PRIVATE SECTOR PROFITABILITY PROFITABILITY ANALYSIS REPRESENTATIVES RESOURCE MOBILIZATION SANITATION SAVINGS SERVICE PROVISION SHAREHOLDERS SMALL LOANS STATE REGULATION TRANSACTION COSTS URBAN DEVELOPMENT WORKING CAPITAL Nair, Ajai Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| geographic_facet |
South Asia India |
| relation |
Policy Research Working Paper; No. 3516 |
| description |
The major form of microfinance in India is that based on women's Self Help Groups (SHGs), which are small groups of 10-20 members. These groups collect savings from their members and provide loans to them. However, unlike most accumulating savings and credit associations (ASCAs) found in several countries, these groups also obtain loans from banks and on-lend them to their members. By 2003, over 700,000 groups had obtained over Rs.20 billion (US$425 million) in loans from banks benefiting more than 10 million people. Delinquencies on these loans are reported to be less than 5 percent. Savings in these groups is estimated to be at least Rs.8 billion (US$170 million). Despite these considerable achievements, sustainability of the SHGs has been suspect because several essential services required by the SHGs are provided free or at a significantly subsidized cost by organizations that have developed these groups. A few promoter organizations have, however, developed federations of SHGs that provide these services and others that SHG members need, but which SHGs cannot feasibly provide. Using a case study approach, Nair explores the merits and constraints of federating. Three SHG federations that provide a wide range of services are studied. The findings suggest that federations could help SHGs become institutionally and financially sustainable because they provide the economies of scale that reduce transaction costs and make the provision of these services viable. But their sustainability is constrained by several factors-both internal, related to the federations themselves, and external, related to the other stakeholders. The author concludes by recommending some actions to address these constraints. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Nair, Ajai |
| author_facet |
Nair, Ajai |
| author_sort |
Nair, Ajai |
| title |
Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| title_short |
Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| title_full |
Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| title_fullStr |
Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| title_full_unstemmed |
Sustainability of Microfinance Self Help Groups in India : Would Federating Help? |
| title_sort |
sustainability of microfinance self help groups in india : would federating help? |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2005/02/5642267/sustainability-microfinance-self-help-groups-india-would-federating-help http://hdl.handle.net/10986/8847 |
| _version_ |
1764407006020501504 |