A microcredit scheme in an Indian village

training self-help group members about their rights

The SGSY "self-help group" programme began in August 2000. SGSY stands for Swarn Jayanti Gram Swarozgaar Yojna. This is a scheme sponsored by the Indian Government which aims to help those below the poverty line by encouraging them to form small groups and apply to banks for credit and for government subsidies. Our NGO was chosen by the Indian Government to run the scheme in three nearby "blocks" (Indian administrative areas): Bilari, Asmoli and Panwasa.

There are nearly 200 groups at present, with an average of 12 people per group, many of them women. Thus over 2000 villagers below the poverty line are being helped to get capital to use to generate income for their needs.

This programme involves organising self-help groups of the very poor. A group is deemed to have been formed when between 10 and 17 poorest families join together and open a joint acount in a local bank to deposit their regular monthly savings. They elect two of their group to operate the account. The Indian Government transfers an amount of ten thousand rupees (around Ł170) into the account. For the next 6 months, the group members may use this money for small loans. After the account has been run successfully for 6 months, and if the bank considers the group to be credit-worthy, then the bank itself allows the members of the group a credit limit of twenty thousand rupees (around Ł350).

There is then a further 6-month period, during which the members use credits to perform their urgent small jobs. After this period, the group agree on a business and present a project proposal. If the proposal is accepted, the group is then given a Rs100,000 subsidy, plus a Rs100,000 loan, to establish the business. Businesses which have had some success so far are dairies, and rug-making. The group members market their produce collectively, and thus gain from being part of a group.

The progress is monitored closely and assistance in written work is provided by Facilitators, trained and appointed by the APK project.

Mr Mukat Singh, the APK project director, says "I feel this work is very important because it is aimed at the very poorest people".

Helping the very poorest can be difficult; they may have a fund of traditional knowledge, but lack the education and skills required to compete in the modern marketplace. They are reluctant to take risks which could easily ruin them. In their lives, they have often been discriminated against and even cheated. They are afraid to stand before bank officials and government officials and ask for the grants and loans which are theirs by right. Thus, the role of the SGSY staff is a very important one.

The role of the SGSY staff is to persuade people to form groups in the first place, to continue to monitor the groups closely, and to support the group representatives in their dealings with the banks and with government officials. The SGSY staff keep in close contact with their groups, visiting the villages frequently. This has meant the project has not had problems such as the dishonest use of group funds by elected group representatives.

There are seven staff on the SGSY programme, all able and hard-working, including their enthusiastic supervisor Mr Adil Hussain. They have shown their commitment by continuing to work hard in spite of problems with late payment of government grants, which has affected their wages. They have succeeded in an area where other agencies are having great difficulty in operating the scheme.

One of the success factors has been the existing reputation of the APK project. The poor people in the villages have heard of the project's work already, and feel they can trust it.

New training for self-help group members

Since September 2004, the project has begun a new kind of training for the beneficiaries of the micro credit scheme. Great care has been taken to ensure that the training is appropriate to people who are illiterate or semi-literate and lacking in confidence. Numbers are restricted to forty at a time, and the course uses a mixture of teaching methods. The emphasis is on building the trainees' self-confidence, finding out what problems they have encountered with the scheme and giving them simple, workable solutions for dealing with those problems. One of the project staff said "We make a special effort to treat them with the kind of respect they deserve but never normally get".

The project receives no government funding for this training programme.

Progress report for the microcredit scheme

This programme has now been running for three years in three blocks of Moradabad. We are one of six voluntary organisations in the district running this programme with support from the District Rural Development Agency. Our performance is regarded as the best in the district.

Number of SHGs formed:

Name of Block	2000/01	2001/02	2002/03	Total
1. Asmoli Block	14	11	15	10	50
2. Bilari Block	17	42	31	12	102
3. Panwasa Block	15	07	23	10	55
Total	46	60	69	32	207

Information for Supporters

Although the main scheme is funded through the Indian Government, there is no government funding available for the special training which the project now provides. Click here to find out how you can support the project.

Under the IVCS volunteer scheme you can stay as a guest of the project and learn more about microcredit in rural India, and about grass roots development work in general.