Unit 14

NGOs as Catalysts and Animators

General Objective
After studying this Unit, you should be able to help participants in your training
session to build the capacities of trainees to describe the role of NGOs as
catalysts and animators in promoting formation, functioning and stabilization
of SHGs for credit and income generation.

Specific Objectives
This Training Unit will help you to enable trainees to:
l describe the steps involved in promoting self help groups;
l discuss the functioning of groups and the role of NGOs;
l describe growth paths of SHGs and development of SHGs

Planning

Time : 3 hours
Training Methodology : Participatory discussions, group exercises
Training Materials : Charts, markers, flip charts
Trainer’s Preparation : Reading through the background material and
other references
Preparing training aids or identifying existing
training aids available

Background Material
Steps Involved in Promoting Self Help Groups
Building rapport with the
people
l Making regular home visits
l Organizing informal meetings
l Participating in programmes
l Discussing with target group(s)
l Identifying the problems
l Helping them in availing
Government Schemes
l Sharing concerns of mutual
interest
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Assisting Group Savings
and Credit
People coming together l Identifying the common interest
issues, problems etc.
l Making the people organize
around common interest
l Motivating them to undertake
small action programmes to
address the problem
l Motivating them to form SHGs
l Training them in modalities to
promote the groups
l Training in leadership, book-
keeping etc.
l Helping them to open bank
accounts
l Encouraging them to start
savings
Consolidation l Encouraging them to start
lending from their own
sources after 6 months
l Encouraging to them take up
other development
programmes
l Building-up close relations with
Banks
l Linking the group with bank
advance

Functioning of the Groups and the Role of NGOs

Bye-laws

SHGs, like any other organization, frame rules to be followed by the members.
NGOs may facilitate the group in framing the rules. The rules, also known
as Bye-laws, relate to:
a) Objectives of the group;
b) Time and periodicity of meetings;
c) Amount and periodicity of savings and rate of interest applicable to these
savings;
d) Procedure for sanction of loans, amount of loan purposes, rate of
interest to be charged, repayment period, etc;
e) Fines, in case of default in attending meetings, savings or credit
repayment. Group may also levy fines for undesirable behavior such as
Pan chewing, Bidi smoking, etc;
f) Election of leaders and their rotation; and
g) Personal/social improvement—minimum literacy level to be achieved,
social work to be done, etc.

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The norms should be written. They may be decided in the initial meetings NGOs as Catalysts and
Animators
or they may evolve over a period of time. The important aspects to be ensured
are:
l They should be framed with the consensus of all the members.
l The members should be aware of and understand the bye-laws.
l There is in-built flexibility to change the rules as and when the group
decides.
l The bye-laws are implemented in spirit.

Objectives of the group

A large number of SHGs are mainly involved in savings and loans. There
are, however, some SHGs which are formed for sharing of knowledge,
development of natural resources, improving status of women, fighting social
evils affecting women or for women’s empowerment. An SHG can, initially,
start with a few limited objectives and as it grows, it can take up more
activities.

Meetings

The group decides the periodicity of the meetings, i.e, weekly, fortnightly or
monthly. It also decides on the time of the meeting. Decision on time and
periodicity helps in regular conduct of meetings.

The facilitator has to ensure that the:

l meetings have been held regularly;
l attendance rate of members in the meetings is high;
l members are punctual and stay till the end of the meetings; and
l defaulting members are dealt with appropriate disciplinary measures as
specified under bye-laws.

Maintenance of books

The number and types of books to be maintained are normally suggested

by the NGO or by specifications made in the case of projects. It is important
to ensure that the basic books are maintained which will indicate the healthy
functioning and accountability in the group. The details of number of meetings
held, decisions taken in the meetings, amount of savings of the members
and loans taken by the members should be verifiable. NGOs normally impart
training to literate members of the groups in maintenance of books. If the
groups consist of only illiterate members, either the NGOs or other literate
villagers can maintain the books on behalf of the group members.

The facilitator has to ensure that:

l details of meetings, proceedings and attendance are maintained;
l member-wise record of savings and credit are maintained;
l records are up-to-date;
l all the members are kept informed of their savings and credit balances
from time to time;
l in case of illiterate groups, a system is followed by the group members
or NGOs to verify the books maintained by an outsider; and
l systems have been developed to ensure safe custody of cash. 3
Assisting Group Savings Leadership
and Credit
Two or three group members are elected as the leaders. Initially the opinion
leaders may be selected as the leaders and over a period of time they are
expected to be rotated. The group leaders are expected to:
l regularly convene and conduct the meetings;
l help the group members in taking decisions;
l resolve conflicts;
l maintain books of accounts;
l travel to bank branch for operation of accounts; and
l represent the group in any outside forum.

The facilitator should ensure that:

l leaders have been elected and rotated;
l leaders aid democratic functioning of the group; and
l there is a conscious attempt to prepare other members to take up
leadership.

Awareness of the Group

Apart from meeting the emergent credit requirements of the members, the
SHGs also help in awareness raising and empowerment of the group
members by joint action. Members are expected to:
l know the purpose and philosophy of group formation;
l know the operation and activities of the group;
l participate in group decisions and decision making;
l help solve the problems that are raised in the meetings;
l have transparent dealings; and
l work as a cohesive group to solve problems. The awareness level of
the members helps in proper functioning of the groups and also helps
them to address the problems that are affecting their day-to-day life.

Activities of the Group

Savings: The group decides on the amount of savings as also its periodicity.
The facilitator has to ensure that the savings, as decided upon, are regularly
made, the defaults are dealt with and the system is modified according to
the requirements of the members.

Credit: The following aspects have to be ensured in the credit functioning

of the group:
l The decision making process of selecting loanees is fair and need-based;
l The system followed in assessing credit, the requirement of individual
members and the amount to be sanctioned is well laid down;
l The system of monitoring the credit is in place;
l The repayment performance of the members is high, incidence of
defaults is minimal, the effectiveness to deal with such defaults is good
and the peer pressure is working.

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Other Activities: The group should have some other socially relevant activities. NGOs as Catalysts and
Animators
These activities are such which benefit a large number of members. They
are selected through consensus and the group should have an action plan
to implement these activities. The nature of these activities should vary from
area to area.

Support of the Facilitator

The role of the facilitator in functioning of the group is to:

l train the members in group dynamics, cash management and book-
keeping;
l provide awareness and information to members on the activities which
are being performed by the group;
l watch the performance of the group; and
l facilitate linking of the groups with banks.

The facilitator is expected to act as a friend, philosopher and guide for the
SHGs. In the beginning the SHGs may depend on her in conducting meetings,
keeping the account of cash, maintaining books of accounts, etc. However,
in the long run they should develop their own capabilities for handling their
activities.

What is the process of SHG formation? What is the role of NGOs at each
stage?

Process of Development of SHGs

Groups pass through various stages to get stabilized. The process is
influenced by various factors such as age of group, awareness of members,
cohesion, leadership, interaction among members and other activities.
Groups move from total informality to framing of rules and bye-laws and
following them regularly. The leadership gets established and most of the
conflicts are managed internally. The financial systems are established and
the lending process is refined and takes care of the requirements of the
members. The group networks with other groups in the area and also with
other development agencies.

Each SHG goes through different stages in the process of development.

These stages are discussed now.

Pre-formation (1-2 months)

The villages, which need development, are identified. Through the use of
Participatory Rural Appraisal (PRA) methods like wealth ranking, village
mapping and rapid appraisal of local savings and credit systems, NGOs are
able to identify the potential group members in the village.

Formation (2-6 months)

Fifteen to twenty women self-select each other. They are motivated to form
a group. They select the group leaders and develop rules and norms for the
group. Groups are encouraged to begin savings immediately after the group
accountant is identified. The salary for the accountant is initially borne by the
NGOs. Group records and the accounts are maintained with the assistance
of a group accountant. NGO assists in the group processes, promotes an
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Assisting Group Savings understanding of savings and credit concepts and operationalizes the
and Credit
procedures and activities.

Stabilization Phase I (6-12 months)

Groups meet and save regularly. They increase the amount of savings once
they gain confidence. They issue loans among themselves and repay the
loans. Repayment ethics are instilled in the members. Individual members
who have difficulty with repayments are held accountable by the group. The
group often responds by adjusting the repayment schedule or providing
financial support to the member until she is capable of paying off her debt.
Group leaders informally interact with the leaders from nearby groups. At this
stage of interaction, the group learns various aspects such as rules and
regulations, problem solving, systems and procedures from the groups in
the same village or area. After one or two months of interaction, a cluster
association is formed, consisting of 15-20 groups from the nearby villages.

Box 14.1
Cluster Association

It is an institution promoted by 10-20 SHGs which are in nearby villages.

The major function of this association is promoting and strengthening
the SHGs and giving longs term sustainability to groups by mutual
support and cooperation. The association helps/guides the groups to
mobilize funds from banks and strengthens the financial and managerial
capability of the groups.

Stabilization Phase II (12-18 months)

Groups handle savings and credit transactions on their own. Norms of savings
and lending become routine. Norms are framed to regulate the behaviour of
members — penalties are levied for any irregularity. Groups pay the salary
of the group accountant.

At this stage, the group will have gained enough experience and discipline
to manage the finances but the funds available in the group will be inadequate
to meet the increasing demand. The group requires additional funds for
supporting income-generating activities. The funds will be mobilized by linking
the groups with banks. Some of the groups can get loans from the revolving
corpus of the Swa-Shakti project, a project of the Department of Women
and Child Development, Government of India. Groups begin to address
common issues in their community. These include improving living conditions
such as accessing water and electricity, or improving the conditions of the
roads leading to the village.

The interactions between the groups are formalized and the cluster
association is formed. Regular meetings of the cluster association are held
and attended by the leaders of the groups. The association appoints workers
to implement their various activities and support the systems at group level.

NGOs reduce their direct interaction with the groups and the responsibilities
are transferred to the group and cluster association as much as possible.
However, the NGOs are available as resource persons for the groups and
continue to provide training and capacity building inputs for leaders and local
6 cadres appointed by the cluster associations and groups.
Growth and Role Transformation (18-24 months) NGOs as Catalysts and
Animators
During this phase, the linkage with the bank is intensified. If the group
effectively utilizes and repays the first loan taken from the bank, it can take
the second loan or increase its cash credit limit. Since the limit of the loan
amount is high, more numbers of members are encouraged to take loans
to improve their economic activities. NGOs help in identifying suitable
activities and suggest measures for stabilizing existing activities. The Cluster
association will initiate special support activities for social and financial
development of member groups. Leaders take on greater responsibility to
manage the activities of the cluster association.

Box 14.2
Federations

Federations are formed, owned and managed by the primary groups.

At the Block level 100-200 groups will form a federation. The purpose
of forming a federation is to ensure sustainability of the groups and to
provide continuity and economics of scale for the programme.
Federations also establish alternate channels for credit support,
especially for satisfying special credit needs of members such as
housing, bigger income generation activities, etc.

Groups focus on stabilizing the income generation activities of individual

members. Groups form into a block level federation. The federation will appoint
its own staff to extend support to the member groups. It will initiate
collaboration with external institutions like RMK (Rashtriya Mahila Kosh) and
HUDCO (Housing and Urban Development Corporation Ltd.) for resource
mobilization to lend to the member groups and with the government agencies
to address the social and community development issues.

Each group independently manages its activities and interacts with banks
and cluster level institutions. The older groups extend support to new groups
in the nearby villages. They are a source of inspiration for the new groups.
NGOs extend support for stabilization of federation of SHGs and formalize
linkages with other institutions.

Growth Path of an SHG

S.No. Stage of Time Focus

Development
1. Pre-formation 1-2 months Identifying the poor
through participatory
methods in small villages.

2. Formation 2-6 months Evolving group names

and bye-laws;
Regularizing group
Meetings; pooling of
savings, lending and
collection of small
loans; group cohesion
and adjustment;
systems of accounts. 7
Assisting Group Savings 3. Stabilization-I 6-12 months Leadership and
and Credit
stabilization;
Handling of group
level transactions
independently or
with less support;
cluster interactions.

4. Stabilization-II 12-18 months Initiation of Income

Generation Programmes
(IGPs); linkages with
banks, cluster
association initiation;
Support for new groups.

5. Growth 18-24 months Establishing Linkages

with banks; cluster
association;
Expansion of IGP;
Addressing community
issues
6. Expansion and
diversification >25 months Creation of assets
for the group and the
members. Spreading
concept and promotion
of new groups; Creation
of block level federation.

Stages of SHG Development in Swa-Shakti Project

The stages and activities under each of these stages have been slightly
rearranged in the Swa-Shakti project. This was done keeping in view various
components of the project.

The revised stages are mentioned in the table which follows:

Interventions as per the age of the group (in months)

0-12 12-18 18-24 >24

Group formation On-farm activities Networking Creche

Literacy Health check up Capacity building Drinking

of cluster water
associations.

Group training Revolving corpus Convergence with Withdrawal

and bank linkage other programmes
Community asset Linkage with
creation Panchayati Raj
institutions
Awareness Non-farm activities
generation
Soil and water
conservation

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Role of NGO at each stage NGOs as Catalysts and
Animators
The role of NGOs has to change continuously in tune with the growth of the
group. In this process, the NGOs have to delegate their old roles and
responsibilities to others and take on new ones. NGOs have to help in the
process of transferring roles and ensure that each partner plays its own role
effectively. This needs protection and facilitation. The facilitator continues her
role as a supporter, although her visits to the village become less frequent
with each stage of development.

SHG Promotion and Development: Change in the Role of Development

Partners

Phase of SHG NGOs SHGs Bankers

Pre-formation Explorer and Observer Onlooker

initiator

Formation Promoter and Passive participant Observer

facilitator

Stabilization I Coach Passive owner Experimenter

Stabilization II Resource person Active owner Financer

Growth Advisor and Manager Collaborator

income generation
programme initiator

Expansion and Business support Self-managed Collaborator and

Diversification financial advisor

Work Plan for Your Training Session

Activity 1
Organize a brainstorming session on promoting self help groups and factors
affecting functioning of groups. You can use metaplan charts or chalkboards
allowing participants to note or write their points.

Activity 2
Ask participants to list the important aspects to be kept in mind in
implementing bye-laws.

Activity 3
Divide the participants into four groups. Ask each group to depict one of the
following stages in SHG development through a skit.
(a) Formation
(b) Stabilization-I
(c) Stablization-II
(d) Growth and role transformation
The skit should be short (10-15 minutes) and should depict the key features
of the stage.