Chapter Eleven

THE ROLE OF INSTITUTIONS AND THEIR

EFFCTIVENESS AND DEVELOPMENT OF THE
MICROENTERPRISES
11.1 Introduction:
This chapter tries to discuss the effectiveness of the institutions that are presently
involved in development of Microenterprises. Globalization has made it imperative to
have competent, vibrant and responsive institutions. This chapter is composed in
three parts- a discussion on the institutions, their roles, and their effectiveness and
challenges faced with specific reference to the microenterprises.
SHG are now proving to be an effective strategy for participatory development to
fulfill the socio-economic objectives of poverty alleviation, watershed development
and management, community resource development and management, forest
development and also effective delivery and recovery of microfinance. The SHGs
help their members to develop various kinds of small businesses and trades which are
UHIHUUHGDV0LFURHQWHUSULVHV
Enterprise development requires innovation of various types, and the management of
risks. Enterprises fulfill a market need as well a social need to something new or
different. Usually, enterprises are taken up by educated, trained people who are not
economically disadvantaged. They are driven by the urge to be independent and
innovative. These traits of entrepreneurship are, however, not seen in the businesses
run by SHGs.
Government schemes and support motivate poor and underprivileged to start their
enterprises. Often, this is the only livelihood option. Most members of the SHGs
studied were just above, at or below poverty line. These people start with several
disadvantages- they lack education, wide exposure, capabilities and experiences,
assets and resources, support etc. Setting up an enterprise in such adverse
circumstances is a matter of curiosity and interest; and more so on how they are run.

311

Chapter Eleven

,WLVWKHDXWKRUVRQWRORJLFDO EHOLHI, that such enterprises can neither be successful

nor sustainable, without strong and supportive institutions. In this study, the author
studied the roles played by the various stakeholders/ institutions to support SHGs in
their efforts at setting up and running their enterprises. Also examined were the
achievements, and the challenges and constraints faced by them with the object of
enhancing their usefulness and effectiveness. The major institutions involved in the
process in Sindudurg district are DRDA a government promoted NGO, banks,
NGOs and other voluntary organizations, resources providers like NABARD,
KVICs, KVIBs, etc. The author has interacted with all of them. The chapter is
discussed in two part A& B. Part A- is about present institutions and part B-is about
the need of developing a new institution.

3DUW,8QGHUVWDQGLQJ,QVWLWXWLRQV
Institutions are an essential part of social order and all members of society have
some relationship with one institution or the other-knowingly or otherwise.
Institutions influence our lives and existence. They could be of several kindsformal or informal, social, political and economic; or a combination of these. There
influences could be positive or negative. Hence, it is necessary to understand the
roles they play and their influence. It is important to understand what institutions
are.
Definitions of the institution
6RFLDO LQVWLWXWLRQV DUH RUJDQL]HG HVWDEOLVKHG ZD\V RI VDWLVI\LQJ FHUWDLQ EDVLF
KXPDQQHHGV
Social institutions are the means for getting certain things done. Institutions carry
out certain functions and activities which are important to life, have the influence to
bring about or prevent changes. They have structure, norms, and roles, function to a
set of rules and procedures. Institutions are made up of people, and have a
hierarchy.
There are Social, Economic, Political, Technical, Governmental, non governmental
DQG SHRSOHV LQVWLWXWLRQV (DFK LQVWLWXWLRQ SHUIRUPV D GLIIHUHQW IXQFWLRQ
complementing the role of other institutions and together serve the needs of
312

Chapter Eleven

individuals and society. Their potential to affect our lives is vast and they play a
very important role in bringing about changes.
Institutions can also be referred to as mechanisms to perform specific functions for
individuals, groups, communities or society. These functions may be financial,
religious, economic, educational, health, security, judicial, government etc. Some of
these institutions are family, banks, police, court, schools, hospitals, government
etc.
Well functioning and effective institutions bring about qualitative changes to our
lives. They help in enhancing prosperity, increase the feeling of satisfaction and a
sense of well-being. They are necessary and indispensable part of us because our
way of living is complex.
Here, the institutions that are discussed are those which influence the
microenterprises development process of the Self Help Groups.

11.2. ,QVWLWXWLRQV5ROHDQG0LFURHQWHUSULVHV'HYHORSPHQWRI7KH SHGs:

Enterprise development is mostly an economic function that includes production,
marketing and distribution, and consumers. The enterprise needs legal sanctions and
approval for its establishment and operations. Thus, government and institutions
play an important role in controlling, supporting and developing the enterprises.
Since 1960s and70s governments in many countries have started to play active roles
in promoting and developing enterprises. This was included in their policies for self
employment and enterprises. To support the efforts of the citizens to be selfHPSOR\HGHQWHUSULVHGHYHORSPHQWSURJUDPPHVZHUHLQVWLWXWHG
To exist and thrive, enterprises required certain resources, support and services that
would enable to perform effectively. All enterprises, whether big or micro have
structure, policies, goals and functions. They offer products or services that are the
purpose of their existence and operations.
Big businesses or macro-enterprises have the intrinsic strength to influence policy,
create a support system for their benefit. This could include associations, chambers
of commerce and business, or such collectives as may be necessary to project their

313

Chapter Eleven

strength and protect their interests. The scale of their business and the reach brings
them he money afford services and other inputs to grow.
However, microenterprises are upcoming phenomenon and have none of these
advantages. They are encouraged chiefly to give the poor, marginalized and the
unemployed population of the society a chance to develop themselves. These
groups of underprivileged do not have the support system and the resources big
businesses have. Hence, it is necessary to create an infrastructural and institutional
support system to address their development needs. The support must ensure that
the function well enough to sustain themselves and earn a decent income and profit.
The SGSY program was started in April 1999 with the objective of providing
opportunities for self employment through SHGs with the aim of poverty
alleviation6*6<HPSOR\VDSXVKDQGSXOODSSURDFK6+*V PHPEHUVDUHSXVKHG
to with the SHGs achieve the objective of creation of self employment
opportunities. The process involves many functions and stages like organizing the
members into a group, trained and awareness, savings and applying for and getting
financial support to start an enterprise. These functions involve several
organizations and institutions.
7KHVH LQVWLWXWLRQV SOD\ D YLWDO UROH LQ WKH 6+*V HVWDEOLVKPHQW DQG SURJUHVV 7KH
roles influence their success in meeting the desired objectives. Different
organizations are involved in different stages: organizing individuals into SHGs,
WUDLQLQJ IRU FDSDFLW\ EXLOGLQJ WUDLQLQJV WR LQFUHDVH WKH PHPEHUV DZDUHQHVV
educating them on the rules and regulations, record maintains, accessing finance
and subsidy support, technical guidance and supports, legal support, marketing
support, production improvements and guidance, networking support etc. Without
cooperative, coordinated and integrated efforts the SHGs will face many difficulties
in getting their enterprises established and making them sustainable. Institutions
with good governance, trained and committed professionals, , and their timely
intervention make the difference.
But, in the SHGs studied, institutional support was largely lacking and was seen as
the major constraint to the development of the SHGs. The author made efforts to
interact with the concerned institutions to understand their roles related to helping
the SHGs. The general feeling among the stakeholders was that the institutions
314

Chapter Eleven

lacked the skills to deal with microenterprise issues and the commitment to work
with SHGs.
As stated earlier SHG itself is a new strategy and is the SHG movement is still
maturing. Thus, the experiences of institutions constitute an important knowledge
base and are a useful feedback system for making course corrections and systemic
changes. The following table shows the institutions concerned with the SHGs and
their microenterprises. There are government and non government institutions who
support the SHGs.
Table No. 11.1
Institutions Involved and Their Functions in the District
Sr.No.

Institutions

Status
of
Institution

the

DRDA

District
government
department

level

NABARD

NGOs

Banks

A
National
pioneering resource
organization
on
SHGs
- 5%,V
representative
Voluntary
developmental
organization, made
up of civil societies.
Formal
financial
institutions - credit
provisions

Resource
organization-

Program,
infrastructural,
funding
support
organization mostly
government based.

Functions

SGSY
Programme
implementation, coordination,
subsidy support, infrastructure
development, funding
SHG Bank linkage programme,
partnership with NGOs and
support to form SHGs,
trainings to banks, refinances
support to bank.
Close to people and informal
ways to connect with people
and built the SHGs.
Microfinance provision to
SHGs, financial inclusion
programmes
Trainings and capacity building
support- skill development

These organizations play complementary roles according to their objectives,

strengths, resources, expertise and capacities to support the SHGs microenterprises
promotion and development.
315

Chapter Eleven

11.2.1. Non Government Organizations (NGOs):

Since the Eighth five year plan, NGOs have been formally accepted as partners for
LPSOHPHQWLQJ WKH JRYHUQPHQWV GHYHORSPHQW SURJUDPPHV ,Q WKH SDUWLFLSDWRU\
development approach, NGOs help to take the process further because they are
closer to grassroots than government machinery. NGOs are voluntary organizations
and come forward to make ethical contributions towards the development of poor,
marginalized as well as downtrodden sections of the society. Earlier, NGOs would
function solely with their resources raised from donations and fill the gaps where
JRYHUQPHQWV ZHUH XQDEOH WR UHDFK 2IWHQ WKH 1*2V LQQRYDWLYH ZRUN ZDV
accommodated or incorporated by governments over a larger area. SHGs are
outcomes of a similar process - WKH*UDPHHQ*URXSVLQ%DQJODGHVKDQG6$*VRI
MYRADA in India were the initiatives of NGOs.
6*6<DQG1$%$5'V6+*VSURJUDPPHVKDYHDOORZHGDIRUPDOUROHIRU1*2VLQ
the promotion and formation of SHGs. Their informal working approach with the
SHRSOH KHOSV LQ LQFUHDVLQJ SHRSOHV SDUWLFLSDWLRQ DQG LQYROYHPHnt in projects. In
ERWK SURJUDPPHV WKH 1*2V UROH LV VHHQ DV D FUXFLDO HYHQ WKRXJKWKHLU H[SHFWHG
roles and responsibility differs .
NABARD allots projects to NGOs. Each NGO is responsible for forming a fixed
QXPEHU RI 6+*V 7KLV QRUPDOO\ WDNHV WZRWRWhree years. But NGOs with SGSY
have different norms and expectations from the DRDA. The DRDA in Sindhudurg
is not consistent with its policy of involving NGOs. The work and responsibilities
differ from NGO to NGO. Collaboration and coordination levels are not
satisfactory.This affects the implementation of SGSY programs. All NGOs admit to
this problem.Furher many NGOs have goals and objectives different from that of
SGSY.The table No. 11.2 shows the NGOs and SHGs formations work in the study
areas.

316

As per

35
-

49
648

JSS (Skill building

66

39

19982000
2007
2003

20042008
20032006

DMRC

35

Mauli Mahila
Mandal Shiroda (
MMMS)
MAVIM

2007

KONIM

209

2002

Gomukha

654

SHGs
bank
linkage
APL
349

2006

2000

Lupin

SGSYBPL

100

Jal-swaraj

156

Tejaswini

SHGs under the Different Programmes

HSSP
(Technical inputs
and trainings on
fruit processing
activity)
Nirmalgiri

Since
year

Name of NGOs

159

Special
component
plan
(SCP)
-

SHGs Formation by NGOs in the Study Area

Table No.11.2

120

105

Independent
programmes
funding agency

317

No compiled data base

Presently not working

with these SHGs
84
963

105

80 (Presently not
working with SHGs)

73

74

309

1003

Total

Chapter Eleven

2006

Mahila industrial
co-operative (coir
processing and
product
development ,
training and job
work to SHGs)

2003

2003

2006

'5'$FRQ
tract
-

CONBACK( Skill
trainings in Bamboo
)

Bhagirath
Poultry and biogas
installation training
inputs to SHGs.
Chetana

/trainings )

120
(Yashasvini by
Rashtrawadi
Congress party)

318

Data was not shared

with the author and
NGO was reluctant to
disclose the
information. NGO
provides own
microfinance to the
SHGs but accounts are
opened in the banks
For the interested
SHGs and the SHGs
nominated by the
DRDA under the
SGSY.
No compiled data base
available with the
NGO

--------------------

available with NGO

Chapter Eleven

Chapter Eleven

11.2.1.1. NGOs in the District and their Role with SHGs:

Some NGOs in the district have not continued to work on SHG formation with
SGSY and NABARD. There are various reasons, chiefly non-payment by the
government, delays in payments, too much paper work, frequent changes in areas of
work, lack of respectful relationship etc. Directly or indirectly, these affect the
NGOs involvement with SHGs on a sustainable basis.
There are several organizations involved in SGSY programme besides NGOs.
There are AWWs, VDOs and even the elected representatives. They have a contract
ZLWKWKH'5'$WRSURYLGHWUDLQLQJLQSXWVRIYDULRXVNLQGV1*2VZKLFKIDFLOLWDWe
formation of SHGs are required to carry out handholding for as long as the SHGs
need them. However, the DRDA changes the allocation of the place of work every
year for the NGOs. As a result, NGOs are unable to make a long term commitment
to their association with the SHGs.
On occasions, government staff and politically influential persons in the village
create hurdles in the formation process. This attitude hurts the NGOs and reduces
their motivation and commitment. NGOs working with NABARD are also hardly
interested in continuing their work. One of the reasons is that SHGs are increasing
LQ QXPEHUV DQG 1$%$5'V VFKHPHV GR QRW RIIHU DQ\WKLQJ PRUH WKDQ ORDQV WR
APL-SHGs. The loan amounts are not sufficient for the groups to do any
meaningful work. Thus the NGOs feel constrained by circumstances beyond their
control.
As stated earlier, NABARD does not provide for training and any capacity building.
This is left to the NGOs to manage with the funds they are given. It is difficult for
NGOs to provide quality training with limited resources. Thus, the programme
conditions are not conducive to meaningful work by committed organizations.
11.2.1.2. Capacities of the NGOs:
NGOs in the district lack local talent and trained professional staff. Attracting the
right skills requires liberal funding, which is something that is just not available. As
WKHGLVWULFWVEDVLFVRFLDOGHYHORSPHQWLQGLFDWRUVDUHJRRGLWGRHVQRWDWWUDFWIXQGV
from foreign agencies. NGOs in Sindhudurg are also located at a considerable far
319

Chapter Eleven

from the source of funds ( Mumbai and Pune are nearly 450 km away). The NGOs
are unable to build a proper infrastructure for their operations which are constraints
to provide quality training and support to the SHGs. There are very few
development programmes at present that provide for infrastructural development
support to NGOs. Clearly, the Government has failed in facilitating this aspect.
Both the programmes lack the necessary training needed to build capabilities of
1*2V DV ZHOO DV WKH '5'$ VWDII 7KH SODnners have assumed that the skills and
competencies already exist. The consequence is lack of knowledge and the skills
required to guide SHGs competently , particularly microenterprise functions .
11.2.1.3. Functions of the NGOs:
The functions of NGOs are related to soft inputs like awareness creation, training
and education, organization and mobilization, referrals and developing linkages,
providing guidance and support. The role is comprehensive but their performance is
not quantifiable. This is not so with the DRDA and banks. Their performances are
quantified in terms of the amount sanctioned, disbursed, and the subsidy sanctioned
and disbursed. Hence among the stakeholders, the status of NGOs is seen at a lower
level and their work often goes unrecognized. There is a need to change this attitude
as soft inputs are just as important as the hard ones.
The following table shows in brief the nature of the functions of the NGOs involved
in the both programmes.

320

SGSY,

Yes

Yes

Lupin
HWRF

Gomukh

Jalswaraj
,

SGSY,

NABAR
D- SHGBank
credit
linkage
program

Project

SHGs
forma
tion

Name of
NGOs

Seven
block
s

Kudal
,
Sawa
ntwadi,
Malwan,
Devgad,
Kank
a-vali

Both

Work
ing in
No.
of
Block
s

Both

BPL/
APL
SHGs

Banks

Banks

Saving
s
Linkag
e

No

Don
e

Gra
dati
on

Banks

Bank/ Own
microfinance
support up to
Rs 25000/per group for
economic
activity

Credit
Linkage

Occasion
ally

No

Business
Guidanc
e Cell

Yes

Yes

Training

No

Some
times
support
for
participat
ion in
exhibitio
n

Marketi
ng

Functions Performed by the NGOs Related to the SHGs

1*2V6XSSRUWLYHFunctions in SHGs Microenterprises Development in the District

Table No.11.3

No

No

Netw
orks/
feder
ation

No

No

Infrastruc
ture
Support

321

Chapter Eleven

-------------

By the
field
workers;
initially
monthly
then
after two
years
when
asked by
SHGs .

Monitor
ing

Organic
farming
promotio
n
internatio
nal funds

SGSY,
NABARD

Yes

Mauli
Mahila
Mandal
Shiroda
(
MMMS)

Both

Both

Vengurla
and
Sawa
ntwadi

Kudal

Banks

Banks

No

Bank
and
own
microf
inance
at 4%
interes
t rate
up to
Rs
50000/
- per
SHG.
Banks

No

Banks

Yes

Yes

Nirmalgiri

Banks

Earlier working with SHGs for some years but now currently has stopped working

Kudal
and
Vengurla

Banks

HSSP

APL

No

---------

Banks

Yes

Kank
a-vali

DMRC

APL

NABAR
'V
SHGsBank
credit
linkage

Yes

KONIM

No

Yes

Provided

Yes

Yes

No

Yes
exhibitio
ns
support

Yes, two
model
CFC
stalls .

No

No

No

Yes

No

No

Started
but
now
stopped

No

No

No

No

Marketing
stall

322

Chapter Eleven

By field
ZRUNHUV
visit

12 field
workers

Monthly
meetings
and
reports ,

One
field
worker

By 4
field
worker

No

JSS

Donor
agency
IGSSS

No

Yes

Chetana

SCP

Tejaswee
n-i ,

SGSY,

Bhagirath (
training
on
biogas
and
animal
husband
-dry)

(Skill
building
inputs)

Yes

MAVIM

Both

Both

Both

Veng
urla
,Kank
avali

Kudal

All
block
s

All
block
s

Banks

Banks

Banks

Some
times

No

No

Not from
banks but
own
microfinanc
e provision

Banks

Occasion
ally

Some
times not
regular

Training
on
poultry,
dairy and
biogas

Trainings
to SHGs

Yes

No

Sometim
e through
exhibittions

Yes
sometime
s

No

No

Cluster
level
feder
ations
are
gettin
g
form
ed

No

Exhibitions

For
exhibitions
and block
level hall
for SHGs
meeting
and for
functions

323

Chapter Eleven

Field
workers
and
supervis
ors

NO

By
project
appointe
d staff.

Chapter Eleven

11.2.2. Role of Banking Institution and SHGs in The District:

The role of the banks has been mandated by the Reserve Bank of India. Once a Self
Help Group is formed it must open a savings account with a bank. This is necessary
to qualify for finance from the bank. This service is offered by the nationalized
banks, District credit cooperative banks (DCCs) and Regional Rural banks (RRBs).
Thus, banks are an important stakeholder group in the promotion and development
of the SHGs. They providing saving and credit facilities to the SHGs, and by doing
so, financial literacy and inclusion the poor and marginalized takes place. The
*UDPHHQ%DQNRI%DQJODGHVKKDVSURYHGWKDWJURXSILQDQFLQJLVSURILWDEOHZKHQ
the beneficiaries are poor. They also proved wrong the notion that the poor are not
creditworthy. The Success of Grameen Bank model in Bangladesh and its work
with the poor has influenced RBI to formulate policy to include the poor and
marginalized. RBI adopted SHG as a strategy for financial development of poor.
Now microfinance is seen worldwide as a panacea. It is believed that delivery of
microfinance to the poor will alleviate poverty. Banks are the instruments to
provide the needed microfinance.
11.2.2.1. 7KH6+*V3URJUDPPHVDQG%DQNV
The opening of a savings account is treated as registration of the SHG. The pass
ERRNLVOHJDODFNQRZOHGJHPHQWRIWKHJURXSVVWDWXV6RPHEDQNVOLNH\HJ%20
SBI, BOI, RRBs form SHGs as it is a part of their policy. The RRBs and SDCC
work as SHPIs (Self Help group Promotion Institutions) under the NABARD
scheme in the villages of their service area. (When there are not enough NGOs ,
RRBs and DCCs are encouraged to form SHGs in their respective districts).
NABARD provides refinance funds to banks, to lend to SHGs at a concessional rate
of interest. SHPIs receive better funding support than the NGOs working with
NABARD on the same programme).
Banks usually help to open bank accounts, carry out gradation of the SHGs and
lending to SHGs. Under the SGSY program, banks are asked to provide training
inputs on BPL-SHGs by the DRDA. In reality, most bank managers are not
interested to provide these inputs and rarely do it. Working with SHGs is not a
traditional role for banks; it is considered to be an unwanted work for the staff who
324

Chapter Eleven

are more used purely commercial transactions. However, the senior managements
of some banks have understood the potential of the SHGs. They have changed their
policy vis--vis SHGs and have instructed their branches to form SHGs in their
service areas. SDCC bank had formed a federation of SHGs who bank with it.
However, conflicts among the SHGs and the absence of knowledge of how to
manage a federation by the bank staff resulted in its abandonment. The bank had
provided a place to the federation for marketLQJ WKH PHPEHU 6+*V SURGXFWV EXW
that, too, is not functioning.
11.2.2.2. Data base of SHGs:

Many banks do not maintain data on SHGs. Only the SDCC bank was able to
provide data about the number of SHGs that had accounts with the bank. But the
bank does not maintain a separate record of BPL and APL SHGs. The NABARD
RIILFHDQG/'0VRIILFHDOVRFRXOGQRWSURYLGHDQ\EDVHOLQHGDWDRQ6+*VLQWKH
district. The management of records was very poor and this deficiency came as a
surprise to the author; and more so as SHGs are considered a priority sector.
11.2.2.3. Credit to SHGs and Banks:
Before SHGs came into existence, the poor, marginalized and even those just above
the poverty-line had little or no access banking. SHGs made available the platform
to GRVRIRUWKHH[FOXGHGJURXSV7KHEDQNVSULPDU\IXQFWLRQLVWRSURYLGHVDYLQJ
and credit linkage facility to SHG members. As SHGs grew and in an increasing
position of strength, they have influenced the various changes, that took place in the
institutions. Without exception, banks have also felt the need to bring the changes
ZKLFKDUHGLVFXVVHG IXUWKHU LQWKLVFKDSWHU7KHRYHUDOOSHUIRUPDQFHRIWKH6+*V
has moved bankers. They have responded positively .Ten years ago, banks were
hesitant to even allow SHGs to open a savings account. Today, SHGs do not face a
problem or resistance from the banks in opening an account. Timely repayment by
the groups has motivated banks to adopt a positive approach when dealing with the
poor. The following table provides types of banks in the district who work with
SHGs.

325

Chapter Eleven
Table No.A 11.4
Types of Banks and No. of Branches Working with SHGs
Sr.No

Banks

No of Branches

Nationalized

71

DDC-SDDC

70

RRBs- WKGB

15

6RXUFH/HDGEDQNV%2,DQQXDOUHSRUWRI- March 2010

Table No B.11.4
Bank Wise Distribution of the SHGs in The Study
Banks

Nationalized

WOMEN
BPL
APL

M
EN
AP
L
4

MIXED
BPL
APL

Tot
al

17

2
Co-operative
(SDCC)
Rural banks
(RRBs)

2
-

1
-

1
-

11.2.2.4. - Experiences of Bank Personnel with SHGs in the District:

The author could not interview the managers of all banks with which the groups had
their accounts. However, all the district coordinators of the banks and the Lead
District Manager of the district were interviewed by the author. They discussed
their concerns regarding SHGs at length. The discussions included microenterprise
experiences, and their own role and performance, as well as the challenges faced in
the district. The author categorized the discussions and explains in the later part of
the chapter.
11.2.2.5. Discussions with the Lead District Manager (LDM) of (BOI):
Every district has a lead bank, which is the host commercial bank to monitor and
regulate the work of banking institutions. It also prepares a yearly business plan for
the district and assigns targets to various banks in the district so that the collective
goals are achieved. The Lead District Bank (LDB) also conducts review of the work
326

Chapter Eleven

RI EDQNV DV ZHOO DV GLVVHPLQDWLQJ 5%,V JXLGHOLQHV DQG SROLFLHV EDQNV LQ WKH
district. There are Block Level Bankers Committee (BLBCs) at block level and
District Level Bankers Committee (DLBCs) at district level. These are organized on
DTXDUWHUO\EDVLVWRUHYLHZDQGXSGDWHWKHEDQNVZRUNLQWKHLUVHUYLFHDUHDVE\WKH
Lead Bank. SHGs are one of the important review areas for the LDM, particularly
the BPL-SHG and APL-SHGs. Thus the author has made efforts to interview these
SHUVRQQHODQGXQGHUVWDQGWKHEDQNVH[SHULHQFHVZLWK6+*V
As should be the case the LDM was a senior, experienced and committed bank
oIILFHU 7KH /'0 KDG D JRRG H[SRVXUH WR WKH GLVWULFW 'XULQJ WKH DXWKRUV
interaction, he discussed the various concerns about SHGs and banks in
FRQVLGHUDEOH GHWDLO +H DJUHHG WKDW ,W ZDV HDVLHU IRU EDQNV WR OHQG WR D JURXS RI
individuals as in a SHG than to individuals. It is a more effective and safer way of
UHDFKLQJPRQH\WRWKHSRRUDQGWRVHFWLRQVH[FOXGHGIURPDFFHVVWRILQDQFH
7KH/'0V9LHZV

SHGs help the process of financial inclusion on a large scale. In view of the
positive experience with SHGs, banks are now moving to encouraging group
members to open individual accounts. There is awareness of financial matters.
Banks now accept the poor with little reservation. Bank staff are also more sensitive
to the needs of the poor. But more needs to be done. Following are the systemic
issues which were discussed by the LDM of Bank of India
a- Staff Slection Procedures:
The Human resource aspect of organizations helps in the realizations goals. Thus,
the quality and capabilities of human resources are found to be important factors.
Staff appointed to work in rural areas is not suitably trained for the work. It is
important that staff know the background of SHGs and the issues involved.
However, posting in rural areas is viewed by the staff merely as a service
obligation. Most of the personnel are just interested in seeing through their tenure
and return to an urban posting. It also happens that staff who acquire experience of
working with SHGs are posted to a different section in which their experience is not
of much use. These are some of the demotivating factors. Thus, banks must have

327

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better selection and transfer policies. The selection process must keep in mind, the
specifics of the job. Potential recruits must show an interest in rural development.
Presently, staff selection of locals is for clerical positions. State Bank of India has
recently started a special recruitment drive to appoint personnel with professional
degrees and interests in rural and agricultural development. The move was
influenced by the potential revealed from the work done with SHGs in rural areas.
The LDM also said that the such recruits must be ready and able to work in villages,
travel on motorcycles (many areas do not have roads fit for cars) to the interiors.
The challenging working conditions are made clear during the selection process.
Evidently, banks view rural areas a growth sector for their businesses.
b-Training and Capacity Building of Banking Staff:
The LDM also dwelt upon the present skills among the staff. He was of the opinion
that every bank must have the policy to appropriately train its personnel before they
are transferred to rural areas. SHG work should be made compulsory in their job
SURILOH 7KLV LV WKH EUDQFK PDQDJHUV UHVSRQVLELOLW\ DW SUHVHQW 1$%$5' KDV D
training module on SHGs, for bankers. But banks rarely depute staff to attend the
course inspite of being paid by NABARD. It is left to the branch manager to deal
with SHG issues without support from the staff. This is not a desirable state of
affairs; as managers cannot devote all their time to SHG work and the staff are not
properly trained for the work. Thus, this gap is a systemic deficiency which must be
addressed on an urgent basis because of the increasing number of SHGs.
c- 0DQSRZHU3ODQQLQJRI%DQNV6WDIIDQG,QFHQWLYHIRU&ontribution:
The LDM also suggested that banks plan their manpower before the staff is posted
in rural areas. The staff should be compulsorily trained and oriented towards rural
development. There tenure in rural areas must be in phases of three, five and eight
years. Their commitment and performance must be rewarded with promotions,
monetary incentives, etc. In brief, bank staff must not feel that they are losing on
career advancement due to their rural posting. On the contrary, there must be an
incentive to work there.

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d- Lack of Uniform Approach by Banks:

Although declared a priority area, banks still do not deal with micro financing with
the seriousness it deserves. Different banks give different weightage to
microfinance in their policies. There is a lack of consistency within the same bank
in different states. For example, Syndicate Bank has a strong presence among SHGs
in Karnataka, but do not do much work in Maharashtra. Acceptance of the
Microfinance bill will bring about uniformity in approach to micro financing of
SHGs. However, at the same time, policy formation and implementation must be
taken seriously. Often, it happens that policies and programs are drafted with good
intentions, but implementation is half-hearted.
Today, different banks charge different rates of interest. Some banks insist on a
mortgage, which is against the guidelines. The type of financing also varies with
banks. Some banks offer a Cash- Credit arrangement, some give Term loans.
Repayments could be fixed monthly amounts or at the discretion of the local
management. The non-uniformity results in confusion. Thus, there is a need to
adopt a uniform approach to interest and repayments.
e- 7KH0RWLYHVRI*URXS0HPEHUV0atter:
This was a concern voiced by the LDM. SHGs in Sindhudurg lack, long term vision
and goals. Rather, they are more interested in the (small) benefits. This is one of the
reasons why some bankers are reluctant to get involved with SHGs. He also
explained that banks must make profits; and they would show greater interest in
SHGs, only if these earn profits.
Presently, there are more BPL-SHGs than APL. in the district. The banks hold the
opinion that the BPL-SHGs will disband after the loan is repaid and the subsidy is
disbursed. The assumption assumed i.e. the subsidy holds greater attraction to the
BPL-SHGs than making the efforts to set up and run an enterprise. For this reason,
banks do not consider financing of BPL-SHGs as an attractive long term prospect.
Financing

has not been considered of much important aspect of banking. To

FRPSOHWH WKH JRYHUQPHQWV WDUJHW JLYHQ WR EDQNV LV DQ DLP DQG QRW VXVWDLQDEOH
customers relations with the BPL SHGs. But the researcher could see that the BPL6+*V DUH IXQFWLRQLQJ HYHQ DIWHUWKH GLVWULEXWLRQ RI VXEVLG\ XQGHUWKH 6*6< EXW
329

Chapter Eleven

hardly those are encouraged by the banks for further continuation of credit for their
economic activities e.g SHGs -Dungeshwer, Rosario and Ganesh SHGs.
f- Profitability and Commercial Views are over Emphasized:
Another issue mentioned by the LDM was that most of the banks at present, those
are asked to work on SHGs and microfinance are the commercial banks and not the
development banks. And so there is a major difference comes in their working
strategies with SHGs. Profit earning is the motive in globalization era; banks are not
an exception for it. Hence, it is considered most important than the development of
the poor or of marginalized in the society. And if this is so, then country need to
develop another system of banking or new section in banks- where the
development, poverty alleviation and finance for it can be more focused attentions
IRUEDQNVVHUYLFHVDQGQRWRQO\WKHSURILWPD[LPL]DWLRQ$WSUHVHQWERWKDVSHFWVRI
aim are getting clashed with one another.
Due to the present strengths and opportunities in rural development it has to be
looked after differently not just by adding to the present banking system which may
hardly give justice to the cause. For SHGs and microfinance activity there is a
special need of having right persons with certain qualities and knowledge to deliver
the banking services. Such person can be appointed for three to four branches and
can look after the monitoring, guidance and direction to SHGs in their business. At
present, banks do have technical staff, that provide such specialized services to
branches for industries and on agriculture sectors financing and similar mechanisms
can be developed or can be created for microfinance and microenterprises financing
related work too. The government and RBI should be taking such initiatives. Banks
are hardly having any independence for doing anything on these matters at present.
g- Infrastructural Constraints:
Banks have to work with shortage of infrastructure. This is an obstacle in their
efforts to serve SHGs better. For example banks do not provision for a vehicle, even
a motorcycle, which their personnel can use when visiting villages. The training
given to bank staff for SHG work is not adequate to respond to challenges of
microenterprises

development.

Professional

and

technical

support

for

330

Chapter Eleven

microenterprises development is absent. This is also a major constraint in the

development of microenterprises.
,Q)HEUXDU\5%,KDVDFFRXQWHGVHWXSRID5XUDO6HOI(PRO\PHQW7UDLQQLQJ
,QVWLWXWH 56(7, ,W ZDV WDVNHG ZLWK EXLOGLQJ VNLOOV IRU 6+* LQ DOO GLVWULFWV RI
India. The responsibility was devolved upon the Lead district banks. However,
related infrastructural needs like class rooms, technology, equipment, machinery,
vehicles, program content and personnel needs were not addresses. The lead district
bank has to collaborate with the DRDA to develop a training center for SHGs in
the district. About 70% BPL-SHGs and 30%APL-SHGs members are expected to
benefit. However, the lead bank still does not have a clear idea about its role and
how to go about performing its task.
The District Coordinators expressed their concerns which chiefly revolve around
staff shortage. Most rural banks have just one or two officers. It is difficult to
manage both banking duties and outdoor work. The staff of the banks has little or
no experience of business development. As a consequence they are unable to offer
any guidance to SHGs.
Banks have some relationship with NGOs, but these are in the nature of a short
term arrangements. They also not have the funds to outsource some services to
NGOs. Thus, institutional collaboration is not possible in the circumstances. DRDA
staff also are not competent to make viable proposals for BPL-SHGs. This makes it
more difficult to bank to make sanction decisions.
%DQNV GR QRW YLVLW 6+*V HYHQ RQFH DQQXDOO\ 7KH JHQHUDO YLHZ LV WKDW EDQNHUV
visits to SHGs can have a positive influence on the SHGs in encouraging them to
pursue their work more seriously. This view was expressed by Omkar SHG.
%DQNVDUHLPSRUWDQWDQGODVWLQJILQDQFLDOVXSSRUWLQVWLWXWLRQVIRU6+*VDQGWKH\
need new adoptions of functioning at various levels as the LDM has discussed and
shared. Accordingly, the changing needs and roles, the institutions need to undergo
a change, which may be wanted or unwanted by the functionaries but which has
hardly left for choice.

331

Chapter Eleven

11.2.3. Sindhudurga DRDA:

The DRDA is a government agency. It is basically an NGO created by the state
government and administered by government staff. It implements rural
development and poverty alleviation programmes at district level. The funds and
grants of state and central government are given directly to the DRDAs. DRDAs
work as the nodal NGO in the district with the other concerned departments and
organizations. Although DRDA is an NGO, government appoints its staff and runs
the organization as a government department.
The DRDA can appoint or make contracts with other NGOs and organizations to
partner the implementation of government funded programme like SGSY. DRDAs
are not directly involved in the formation of SHGs, but with the help of village level
development officers (VDOs), elected panchayat members, Anganwadi workers
(AAWs) etc., they facilitate the formation of SHGs.
The names of possible BPL members are drawn for the list of BPL families and
they are encouraged to form SHGs to avail of SHG benefits. Group members
coming from similar backgrounds form a homogeneous SHG. In certain exceptional
circumstances, APL persons are allowed to join BPL groups provided their numbers
do not exceed thirty percent of the total strength. Although they can participate in
group activities and enterprises, they are not entitled to a share of the subsidy
amount.
11.2.3.1.Capacities of staff at DRDA:
The DRDA does not accomplish much due to the limited capabilities of its staff.
The staff comprises mostly of persons who have not studied beyond high school
and poorly trained. Thus they are unable to give quality inputs to enable SHGs to
develop. In comparison, NGOs perform better. Informal capacity building inputs
have hardly done of these kinds of SHGs in general by government staff e.g.
Ganageshwer SHG in the present study. Even loan utilization by these SHGs has
not done up to the satisfaction, sanctioned loan amount under the SGSY. The reason
given lack of direction and attention provided by the DRDA staff because this

332

Chapter Eleven

SHGs mainly depenGHQWRQ JRYHUQPHQW VWDII QR1*2 OLQNDJH IRXQG $QG EDQNV
distance and location is too difficult to take regular guidance.
The staff has not attended any training program for ten years. They have not had
any exposure to current thoughts and practices in rural development work It is
believed that SHG formation and management can be easily managed by the
present staff. The DRDA Project director agreed that a capability gap exists in the
district. Often, planning and the implementation authorities are misled on the
capabilities of the staff.
6RPHRIWKH'5'$VWDIIDUHPRWLYDWHGHQRXJKWRPDNHH[WUDHIIRUWVIRUWKH6+*V
They arrange support from outside or at least refer them persons/ agencies, who can
help. SHGs which have received such support are better motivated. They also
become eligible for subsidies and are able to sustain their work. The success of
SHGs depends largely on collaborative and coordinated efforts all the stakeholders
in the program. Collective efforts by all stakeholders bring dynamism to SHGs.
11.2.3.2- Administration:
The DRDA has a Project Director and three assistant project officers for
implementing and monitoring the SGSY program at the district. They have been
allotted certain functions and responsibilities. They are supported by clerical and
statistical staff for administration and reporting. The DRDA has two extension
officers in each block to monitor the implementation of the SGSY work. One
extension officer is usually from the DIC, with sound technical abilities. The DIC
do not have right personnel with them in the district to do the justice.
The DRDA performs tasks and functions like appointing NGOs, allocation of areas,
organizing training for SHGs, grading BPL-SHGs, sanction of subsidy and transfer
of money to banks, marketing support to SHGs through exhibitions, infrastructure
VXSSRUWGHYHORSPHQWHWF7KHDXWKRUVXQGHUVWDQGLQJRIWKHIXQFWLRQVRIWKH'5'$
is given below.

333

Chapter Eleven

11.2.3.3. Trainings and Capability Enhancement:

DRDA is responsible for providing quality training and inputs to upgrade the skills
and capabilities of BPL- SHGs. Lack of skills restricts earning opportunities for group
members. Thus, skill building and upgrading are important components of self
employment programmes such as SGSY. As Sindhudurg is under developed, it does
not have the institutions to support skills improvement efforts.
,GHQWLI\LQJJRRGUHVRXUFHRUJDQL]DWLRQVDQG OLQNLQJWKHPWR6+*VQHHGWRXSJUDGH
their skills and capabilities is one aspect of SGSY programme. The DRDA, a district
level implementing and monitoring agency, does not have any facility or
infrastructure of its own to impart the desired training to the SHGs. Physical and
software resource are not available in the district. Thus, all training is conducted by
resource persons from other agencies and paid for by the DRDA. Due to low
remuneration and excessive paper work, most NGOs and even other government
agencies do not like to get involved in DRDA work
DRDA does not have a mechanism for monitoring the training processing and
verifying the quality of training provided by the resource organizations. Some NGOs
complained about the poor quality of training and the basic inputs provided to the
SHGs. The DRDA does not have the infrastructure in the district. There is very little
post-training follow up. This work must be performed by the DRDA within a
timeframe; otherwise the benefits of training will be lost.
11.2.3.4-Marketing Support:
The DRDA has some funds to create marketing support for the SHGs. It organizes the
visits of groups for participation in various exhibitions in different cities organized by
the rural development ministry. The DRDA has deputed SHGs to exhibitions in Delhi,
Mumbai and Panjim. However, these exhibitions do not help in getting the SHGs, a
regular market; rather they give the groups a good exposure to what is happening
outside to immediate community. The DRDA also organized block level and district
level exhibitions, in which there were more participating SHGs. It is a good
opportunity for the common public to know about the work done by SHGs and also
for the SHGs to understand customer preferences.
334

Chapter Eleven

In Kudal and Malvan, block panchayats have constructed a few stalls for SHGs to
market their products. The stalls are offered to SHGs on rent. However, the stalls are
inconveniently located and do not attract customers. SHGs mostly stock and sell only
what they produce and do not offer products made by other SHGs. Thus, customers
do not have a choice. They must visit the shop only if they are interested in a
particular product. With some networking and coordination by the DRDA, it should
be possible for SHGs to stock more than just their products. The DRDA has started to
form village level federations of SHGs. It is possible that this arrangement will be of
such help in the near future.
Sindhudurg district is recognized as having considerable tourist potential. The DRDA
is constructing block level malls, so that BPL-SHGs can offer their products to a
wider customer base. The project has been sanctioned but funds have not been
UHOHDVHG $FFRUGLQJ WR WKH '5'$V 3URMHFW GLUHFWRU WKUHH VXFK PDOOV ZLOO EH
constructed at a cost of Rs 25,00,000/- each. A district level mall is planned at Kudal
near the Mumbai-Goa Highway at a cost of Rs. one crore . The site has been selected
and land acquisition is in the process. The mall is expected to be completed by 2012.
11.2.3.5-Subsidy Disbursement:
The DRDA is authorized by the central government to sanction subsidy to the
beneficiaries. The subsidy is the share that beneficiaries can claim after they have
repaid the loans. This is done after the second stage of the gradation and the amount is
deposited in the bank account of the SHG. The subsidy disbursement takes place on
basis of loan used for the years completed by the SHGs- i.e 20%, 30%, 40%, 60% and
80% for each progressing year and 100% get covered on completion of five years. On
getting the subsidy the family is listed as APL family. Subsidy cannot be disbursed
before three years of the sanction of the loan. However, one group, Dungeswar, repaid
the loan in one year and claimed the subsidy amount immediately. The money was
also distributed among the APL members even though they were not entitled to it.
This was brought to the attention of the bank manager who said he was not aware
about this. He also said that a single officer cannot manage such a large number of
SHGs.

335

Chapter Eleven

The second gradation is done by DRDA as per the availability of funds. There are
many BPL-SHGs who have not received the gradation because funds were not
available. Subsidy must be disbursed to SHGs in a five year time frame.
11.2.3.6. Innovations by the DRDA under the SGSY:
SGSY is regarded as one of the progressive programmes of the government and the
first of its kind. It is open and inclusive. As it was being implemented, it was changed
and modified to suit existing needs and conditions. There is room for improvement,
innovation and experimentation. The DRDA Sindhudurg is open to considering
innovative implementation strategies. The modifications are in training, development
of common facility centers for fruit processing, SHG clusters, exhibitions at block and
district level etc.
a-Trainings:
Since January 2010, the DRDA has increased the number of days for training for
skill development. The maximum duration of training for one skill is 45 days with
a stipend of Rs 50/ per member, per day. This is sufficient incentive for a
participant to complete training with full concentration. The second innovation is
training for skills upgrade. The training is given in phased manner and can go up to
forty five days. In exceptional cases, the training can be extended to sixty days.
The next innovation is basic training at the village itself. These are conducted at the
6+*Vplace of work. This helps all SHG members to participate and learn.
b- Infrastructure Development
There are infrastructure constraints due to which the stakeholders face various
GLIILFXOWLHV1*2VGRQRWKDYHWKHUHVRXUFHVDQGEDQNVUROHLVOLPLWHGWRSroviding
ILQDQFH 7KXV LW EHFRPHV WKH JRYHUQPHQWV UHVSRQVLELOLW\ WR FUHDWH WKH QHFHVVDU\
infrastructure for SHGs.
As reported earlier also, BPL-SHGs face problems in getting suitable places for
their activities. This is needed so they are able manage their businesses better and
take a long term view. It also facilitates investment decisions for sustainability.
Considering this, the DRDA has accepted the CFC model developed by KONIM336

Chapter Eleven

1*2 IRU .9,& 7KH &)& PRGHO ZDV GHYHORSHG XQGHU WKH 6IXUW\ FOXVWHU
development project for fruit and food processing in Sindhudurg. The DRDA will
replicate the cluster model in ten villages for SHGs engaged in fruit processing.
%XW SROLWLFDO LQWHUIHUHQFH DQG YHVWHG LQWHUHVWV PD\ WKUHDWHQ WKH &)&V 7KH 6+*V
must develop the capability to manage and control the CFCs. The CFCs must be
XVHGE\WKH6+*VRQO\7KH&)&VZLOOEHZHOOHTXLSSHGZLWKUHTXLUHGPDFKLQHU\
and technology. The CFCs will charge processing costs from the SHGs who use the
facility. The charges will meet the operations and maintenance costs of the CFCs.
c- Federations
It is widely believed that federations and networks of SHGs may help in improving
the strength and sustainability of SHG movement. The DRDA took up this work for
SHGs in April 2010. Those included were BPL-SHGs. Federations are formed at
the village, block and district levels federation. A General Resolution (GR) has
EHHQSDVVHGIRUFUHDWLQJWKHVHIHGHUDWLRQV9LOODJHIHGHUDWLRQVZLOOEHFDOOHG*UDP
9LNDV 0DQGDO 7KHVH ZLOO EH UHJLVWHUHG ERGLHV XQGHU WKH 6RFLHW\ DQG 7UXVW DFW
'XULQJ WKH DXWKRUV YLVLW 20, Gram Vikas Mandals (GVMs) were formed. A
village with ten BPL SHGs can form GVMs. Registration has not been completed
DV \HW 7KHVH *90V ZLOO EH XVHG DV LPSOHPHQWLQJ DJHQFLHV IRU JRYHUQPHQWV
programmes in the villages.
The DRDA has not done much in respect of insurance cover for SHG members.
*RYHUQPHQWRI ,QGLDV LQVXUDQFH SROLF\ -DQVKUHH %LPD ZDV QRW LPSOHPHQWHG E\
WKH'5'$ LQ6LQGKXGXUJ,WLVWKHEDQNVUHVSRQVLELOLW\WRDVNWKH'5'$DQGWKH
SHGs to take insurance cover for the loan sanctioned to SHGs. Most stakeholders
have very little information on the insurance needs and safety measures for SHGs in
WKH GLVWULFW 7KH DXWKRU LV KRSHIXO RI '5'$V IXWXUH FRQWULEXWLRQV +RZHYHU WKH
low emphasis placed on insurance remains a matter of concern

11.3. Emerging concerns:

These are connected to the sustainability of the role of institutions and their support to
SHGs. The concerns are related to the limitations of the present institutions to
perform their roles effectively and ability to respond to the challenges ahead.
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Governmental, non governmental and financial institutions are directly involved in

the development of SHGs and their microenterprises. They must constantly interact,
cooperate and coordinate with each other in the performance of their functions.
Teamwork will help in achieving the goals. It will not be possible for one
organization, institution or stakeholder to bring about the changes on its own. It is
also difficult from the costs and resources point of view.
In reality, at present, there is no coordination among the agencies. This is a matter of
great concern as the SGSY has been ten years in its implementation. Sindhudurg has
two NGO networks. One of them is non-functional. The other meets once in six
months with no fixed agenda for SHGs. The NGOs cite manpower and resource
constraints as the reason. Some reasons are provided by the NGOs for lack of
networking are like lack of man power with institutions, lack of resources with the
institutions, lack of earlier experience on networking and on developing group
microenterprise of SHGs or guiding an income generational activities by NGOs.
Difficulties in availing supportive infrastructural and funding etc. are shared
commonly by the networking NGOs .
11.3.1. Holistic and Comprehensive Programmes:
The NGOs also shared their concerns on the limitations of the SGSY and NABARD
programs. The programmes are less comprehensive than they should be and do not
provide for funding NGOs. The guidelines are loose and contracts open to
misinterpretation. In the circumstances, the NGOs are the losers. As mentioned
before, government officers lack adequate knowledge and professionalism. They lack
the confidence to work with the NGOs who are partners in implementing SGSY
scheme. The government controls the funding and the absence of qualified and
dedicated personnel results in improper deployment of the funds.
To give an example, two block extension officers have not completed their
graduation. One of them has passed the tenth and the other passed the twelfth
standard. They were not trained in any way or SHG work. The only training and
orientation that DRDA staff received was in 2001-2002, when LUPIN conducted a
two day workshop for the DWACRA groups for move them to SHGs. It is not
surprising, then, that today DRDA does not have comprehensive knowledge of SHGs
338

Chapter Eleven

DQGWKHVWUDWHJ\ IRUSRYHUW\DOOHYLDWLRQ,QWKHDXWKRUVRSLQLRQDUHDV LQZKLFKWKH\

have to improve are inducting qualified and knowledgeable manpower, prudent use
technical and financial resources, facilitate long term sustainable involvement with
SHGs, infrastructural development, establishment of networks and linkages between
institutions inside the district and outside. These aspects are further explained by the
author.
11.3.2. Qualified and Knowledgeable Staff:
As matters stand today neither government nor nor-government organizations have
qualified and experienced professionals. The present flexible strategy helps the
participants and beneficiaries to think and act without any bias or preconceived
notions. They can explore opportunities and find non-traditional ways to earn an
income or profit. This is a challenge for staff and institutions who have not updated
their knowledge and capabilities. They are not in a position to help the beneficiaries
who, in some ways, are more aware and knowledgeable. This is observed in NGOs as
well as DRDA at both staff and executive levels. Thus, their capacity to work and
contribute meaningfully to the SHG movement is limited. They must be encouraged
to constantly update their skills and knowledge.
11.3.3. Technical and Financial Resource Allocations:
Economic development cannot take place without proper allocation of technical and
financial resources. There must also be available adequate competencies to compete
in the global markets. The institutions that work with SHGs must be qualified to
guide them to compete in bigger markets. This will not be possible without proper
allocation and use of financial resources, and planning. As things stand today, the
required

infrastructure does not exist. There are deficiencies in product testing

laboratories, information access centers, IT applications, etc.

11.3.4. Long Term Involvement and Commitment:
Development is a continuous process. Development happens in phases and there is a
seamless transition from one phase to another. Individuals and institutions must share
the same vision and have a long term commitment. This view applies to the
339

Chapter Eleven

development of the microenterprises by SHGs also.All stakeholder organizations

PXVW EH HTXDOO\ FRPPLWWHG 2WKHUZLVH WKH VXVWDLQDELOLW\ RI 6+*V PLFURHQWHUSULVHV
will be a challenge.
11.3.5. Infrastructural Development:
Development is not possible without appropriate infrastructural support. A person
having a car and knowing to drive cannot go anywhere if his car does not have fuel.
The analogy holds good for the development process also. Poor infrastructures limit
the capacity and motivation to deliver the desired results. Sound processes, marketing
outlets, institutional support for product testing, consultancy and guidance services
for enterprise development must be made available.
The investments required are high and it may not be possible for one institution to
accomplish the objectives. In contrast to big businesses SHG's do not have access to
resources. Thus, the government has to play a crucial role in the circumstances.
Financial institutions, who make profits from their SHG activities may be encouraged
to contribute as part of their Corporate Social Responsibilities (CSR) obligations.
Other institutions like development donors or other funding agencies can invest their
funds for this cause. NGOs and other development organizations can be encouraged
to jointly share their resources and facilities. SHGs should be made aware and
motivated by banks. NGOs, and the concerned government departments should be
encouraged to participate in providing regular qualitative and sustainable support to
SHGs in areas like training, consultancy, product development, technological support
etc. This will help in bringing about improvement in standardization and quality
microenterprise products and services.
11.3.6. Establishing Networks and Linkages:
Network and linkages with various organizations involved in SHGs programmes are
necessary. The DRDA must coordinate and network among all stakeholders. This will
bring in team spirit which is absent today. The Project director must play a visionary
role in motivating the networking partners to work together to achieve the goals of the
programmes.(Coordination meetings do not take place even once a year. Only the
block staff meet at the DRDA office once a month. Even this is not communicated to
340

Chapter Eleven

NGOs). The feeling that the DRDA does not encourage the participation of the NGOs
must be dispelled. Government officials must not behave like bosses; they must treat
NGOs as equal partners to achieve a positive outcome.
The DRDA must facilitate networks and linkages. One possibility is to encourage
SHGs to sell each he products of other SHGs. This will encourage SHGs to work with
each other, increase their market reach, give customers more choice and introduce
healthy competition.

Part II:Felt Need for Creating a New 'HYHORSPHQW,QVWLWXWLRQ

A new approach is needed in which the collective strengths, resources and

capabilities of the institutions can be used to achieve maximum benefits for the
SHGs. This approach would be one of cooperation and collaboration. This will avoid
duplication of efforts and optimal use of resources. To achieve this end, institutions
must be motivated to come together. One possible way of achieving this is by the
creation of a common facility centre that can be used as resource sharing facility.
Physical infrastructural facilities could be created at block and district level in which
SHGs may able to get the required guidance, consultancy, information, help in
capacity building, technical support and whatever they need to develop their
microenterprises or livelihood activities.
The functions and modalities such an institution may be decided by the partnering or
collaborating institutions. SHGs can be registered as partner members of such
institutions. The center will work like a OLJKW KRXVH to direct and guide SHGs
microenterprises development to attain sustainability. The efficient and effective
management of such a center is of critical need. The institution must be apolitical and
facilitate collaborative efforts.

11.4. Proposed Functions of the Institution (as derived from the

experiences of this study):
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derived from the findings of this study. These are points for reflection.

341

Chapter Eleven

1. Identifications and selection of the viable opportunities for microenterprises

(Institutions like bankS, DRDA and NGOs are not competent to perform the task).
2. Creating an Information Bank- Identify and collect information, and knowledge of
marketable products and services, markets information, raw material prices,
technology available, equipment, innovations, access to resources access, and other
needs of SHGs.
3. Build an ongoing capacity and skill development center- Skills development and
upgradation in business management, accounts and record maintenance, marketing
and delivery, recovery of dues, receipts and payments, documentation and auditing,
use of information technologies etc.
4. Support networks and promote linkages: Organizing visits, exhibitions and
demonstrations, promote institutional networks and facilitate sharing of resources
among partners and members.
5. Resource and research center for microenterprises development and promotion.
6. Business Development Services Providers resources center. The centre will offer
inputs for business planning, maintenance, monitor changes, quality management
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If properly systemized, planned and executed, the Center can provide the kind of
support that is missing today.

11.5. Conclusion:
Collective and planned efforts by all stakeholders are necessary to serve SHGs and
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diversified, multiple and multidimensional services and products could be made
available for the beneficiaries. This will guide the development process better. Such a
centre may not necessarily run by the government. All stakeholders must be equally
involved. It is also possible to consider Public-Private partnership for promoting and
developing the microenterprises. Sindhudurg is rich in natural resources and there is
huge potential for their use.

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