Does Federating Help Self-Help Groups?:An Empirical Study

The Self-Help Group (SHG) Bank Linkage programme has during last two decades covered more than 8.06 crore Indian poor households, making it the largest community based microfinance programme in the world. However, in spite of its considerable outreach, successful savings mobilisation, and high loan-repayment rates, the sustainability of SHG banking has not been clear. To address this problem, a number of SHG Federations have emerged in recent years. Networking of SHGs into Federation has been inspired by the felt need of the SHGs that are not able to deal with issues that are beyond their reach. SHGs having a membership of 10- 20 women are too small and informal to deal with larger issues to realize the needs and aspirations of women members. Inter-group lending, ability to negotiate with higher level structures and to gain greater bargaining power are some of the reasons for formation of SHG Federations, which have been promoted by the NGOs and the Government since mid 1990s. The present study attempts to assess the influence of SHG federations on constituent SHGs by comparing groups belonging to federations with those groups which are not part of any federation in terms of a number of governance/ system related and financial management related variables.