Self Help Groups (SHG) are an important component of the Graduation Approach implemented by The/Nudge. In India, the SHG movement began in the 1980s, when several non-government organisations mobilized and organised poor communities in rural areas and offered them formal channels for social and financial support. This programme gained momentum with the National Bank for Agriculture and Rural Development (NABARD) linking a small number of such groups with banks. 

According to the National Rural Livelihood Mission reports, there are 7.9 Million SHGs in the country. Ultrapoor households being socially excluded are typically not members of any SHGs - The/Nudge End Ultra Poverty program addresses this gap by connecting the didis in the program with an SHG in the adjacent village. When that is not possible, the program facilitates the creation of a new SHG and getting it recognized by the State Rural Livelihood Mission (SRLM). Below is the story of one such SHG.

Sachiv Didi (Secretary of the group) initiates the meeting and each member contributes an amount commensurate with their savings - this can be as small as Rs 10 or even Rs. 1000. The Lekhapal (or the accountant) of the group, collects the money and records it in the book of accounts which is meticulously maintained. The money is stacked in a 10”x10” tin box, locked and handed over to a member didi and the key is handed over to another member didi. The responsibility for the safekeeping of this Savings Box is taken on a rotational basis and changes each week, to avoid any misappropriation of funds.

SHGs thereby encourage the habit of saving by nudging each member to save some amount each week, creating a larger corpus of funds over time which can be used to provide small loans to the members who need funds. 

SHGs are regulated by the respective SRLMs and have to follow 5 guiding principles called “Panch Sutras” which are: 

• Regular Meetings,
• Regular Savings, 
• Regular internal lending, 
• Regular Recovery and,
• Maintenance of Books of Accounts.

When the SHGs follow the panchasutras consistently for six months or a year, they get additional funds from the SRLM to build their corpus. The capital base can be used to disburse loans to its members or to apply for loans from the banks, in addition to getting a credit line of Rs 5,00,000 from the bank.

In 2020, The/Nudge started working with the SHGs in the Lohardaga, Gumla, and Latehar districts of Jharkhand. Working with these groups demonstrated the potential of SHGs in helping didis graduate from the vicious cycle of poverty and the debt trap. All the didis from EUP are now part of an SHG. 

SHGs come together to form a Village Organisation (VO) and VOs come together to form Clusters, with a didi representing each SHG. The VOs and Clusters are becoming a vehicle of social change with local Block Development Officers (BDO) approaching these units to assist them with the construction of village roads, toilets, and drains or to build other social infrastructure facilities.

SHG lending is emerging as one of the popular options among the didis to pay off their “Dadans” (informal loans). SHG’s lending facility was a huge respite during COVID, when loans from other sources became difficult due to lack of collateral and security.

SHGs also work amazingly well to solve social problems. The mandatory weekly meetings provide a space for didis to put their opinions and discuss issues, providing them with the much-required motivation and confidence to speak up. 

Last year in Semardih Village in Lohardaga district, a similar instance happened when 19 SHGs came together to help in the packaging of grains that were to be distributed under the Dakiya yojana (which is a Public distribution Scheme in Jharkhand. This allowed these SHGs to earn some extra income, which could then be trickled down to benefit its members as dividend distribution (distribution of interests or other sources of income among the members). 

Small steps lead to bigger change - the SHG model is truly inspiring in the sense that it not only helps women to take charge of their family's finances but also provides much greater authority to them to be a part of the social development process.