Wednesday, March 19, 2014

Validation and Grading of SHGs

SHGs were formed under Mission Shakti in Odisha. Odisha government started a validation and grading exercise to know SHG status in December 2012. The validation process aimed at confirming the existing status of SHGs, whereas the Gradation Process assessed their eligibility for receiving Revolving Funds.


In an ideal world, Branch Manager/ Representative of Bank, B.D.O/Representative from block and C.D.P.O/Representative from ICDS should visit field and complete the process. This may take from 5-10 days depending on the size of the district. This doesn't happen in the real world  where AWW sits with President/Secretary of SHG for the complete assessment.

DRDA and ICDS Balangir has record of 11097 SHG existing in the district but validation lead to only 7846 functioning groups. Hence, we can easily imagine with these figures, difference SHGs claimed and existing can run in lakhs. Defunct and farzi SHGs form a major part of the numbers claimed by the government.


Grade I and II with A, B and C as three categories of the SHG was the grading format. The format with various criteria is uploaded at Scribd. SHGs having 70% BPL members and passed Grade-I test and categorized as “A” or “B” i.e. Scored more than 60% marks during Grading will only be eligible for Revolving Fund in order of merit as per their scores. The Graded SHGs are assisted under NRLM,as this fund will aim to address the immediate production and consumption needs of members of the SHGs as well as encouraging internal lending practice among the members .

In Non Intensive Block under NRLM, Revolving Fund(RF) of 10,000 or 15,000 depending whether they had already received any prior assistance under any other government scheme. The SHGs who have qualified grade I test but not availed any financial assistance will be provided with revolving fund of ₹.15,000/- in two tranches. In the first tranche ₹.5000/- will be provided and on successful utilization of this amount ₹.10,000/- will be provided to the group directly in 2nd tranche at least after 3 months of receiving 1st tranche. This fund will become a part of their group corpus. The group members can borrow from the group corpus to meet their various needs as decided in the group. However, the groups who have already availed such financial assistance under Mission Shakti or any Govt. programme will not be eligible for 1st tranche and receive only 10,000. I insisted to attach xerox copies of BPL card and Bank Passbook of SHG while working at Bhanjanagar block in Ganjam district. Hence, it created transparency and gives validity to the no. of BPL members by any SHG.


RF/PPIF is distributed in a campaigning mela organized at each block with an objective to sensitize the groups about NRLM. Generally, it is more show of the good work done by the government. In an ideal world, SHG assessment (or rating) should not just be limited to current performance but could also assess credit absorption and repayment capacity. That requires a qualitative information to look for problems faced by each group. It is assumed by government that the SHGs which are found ineligible would be provided hand holding support, to improve their credibility for future assistance. But, there was no staff at field level to do this tedious job. Record keeping at the group level has emerged as a very weak aspect of SHG functioning.

The main problem is that we don't have data on the Life cycle of a SHG. We are unable to understand how many groups are defunct or discontinued so we don’t know the mortality rate of the group. So, the government has no answer of these two questions : What groups worked and what works with groups ?

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