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Thursday, 7 May 2015

Microfinance and Self Help Groups: A Non Financial Perspective

Title: Microfinance and Self Help Groups: A Non Financial Perspective
Author: Pandya Viral
ISBN: 978-93-82395-91-1
Language: English
Category: Management
First Edition: January, 2015
Binding: Hard Cover

About the Book:

Globally, poverty eradication has always been a priority in the agendas of the policy makers and development specialists. ‘Eradicate extreme poverty and hunger’ is one of the eight Millennium Development Goals set by United Nations. A large number of government and non-governmental organizations and international funding agencies have started many flagship programs to eradicate poverty using various strategies and instruments. Microfinance is one of the mechanisms by which the opportunity is provided to poor people who have been deprived from formal banking and have potential to uplift their vulnerable life. The mechanism gives poor people a boost to have own small scale economic activity that will help them to break the vicious circle of poverty.

Today, microfinance has been accepted as one of the very effective tools for poverty eradication. The tool works with different mechanisms in various countries depending on related socio economic parameters.  In India, among various models of credit delivery, Self Help Group is the most widely used mechanism. Majority of government, non-government agencies and banks have adopted the SHG model for their microfinance program. However, it is important to note that providing assistance in terms of credit to poor through accepted mechanism will not merely bring success. The core of microfinance is not to earn profit but to eradicate poverty. Hence, primarily it becomes very essential to ensure that the main objective of poverty alleviation has been attained and at the same time the system remains sustainable enough as an ongoing process instead of one time success and then perish.  To evaluate the impact of microfinance, various assessment tools have been developed. Similarly different methodologies have been adopted to measure the financial viability of delivery mechanisms including Self Help Group. However, it is observed that majority of analysis regarding sustainability of SHGs have been focusing upon only financial parameters of the mechanism. Very little focus has been given to equally important parameter that is non financial aspects. No doubt, financial viability is crucial for the success of microfinance delivery model but at the same time, non financial aspects, like organizational dynamics, especially - structure, framework and group attributes play very crucial role in sustainability of SHGs.

As the study of microfinance from various dimensions is still emerging and it has been observed that there is limited research carried out to understand non financial aspects responsible for sustainable development of SHGs in India. Therefore, the chief objective behind the study was to understand and analyze parameters responsible for sustainable development of SHGs.

The study has focused on two important factors: increasing importance of microfinance in today’s developmental agenda in government efforts and the dearth of literature of non financial sustainable aspects of SHGs in India. In the present study SHGs have been selected from various NGOs and government flagship programs as representative sample from all the ten talukas of Ahmedabad district. Primary data have been collected with the help of structured questionnaire by using non-probability sampling method. Total 316 respondents have been selected on the basis of judgmental sampling. The data has been duly compiled and analyzed with the help of descriptive and inferential statistics, independent sample t test and factor analysis.

The results of the analysis indicate that overall, the SHGs promoted by NGOs and government programs are relatively sustainable. However incorporation of some important aspects like cultivating & promoting habit of income generating activities and emphasis on systematic marketing activities in support will help the sector to generate the desirable benefits.

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