COM BOOK - IV

SELF HELP GROUP

CONTENT

S.No. Title Page No.

1. Formation of Self Help Groups 3

2. Affiliating the SHGs with Village Poverty Reduction Committee 8

3. Responsibilities of the SHGs 10

4. Financial Activities of the SHGs 13

5. Strengthening the SHGs 17

6. Monitoring the SHGs 22

7. Grading, Credit rating, Credit Linkages, Auditing 27

8. Supporting for the development of SHGs at the village level 37

1. Forming Self Help Groups

1. Self Help Group

These are groups formed by group of poor people from a particular area for their own development.

Very poor, poor, disabled and the

vulnerable people are the target people of

Vazhndhu Kattuvom Project. By

networking as a group, these poor and

vulnerable people can together raise their voice

out for their rights. They can resolve their

problem by themselves; through this, we can

see in the long history of Tamil Nadu that the Self Help Group is been an effective tool in

bringing people together, and making them very effective.

‘Saving, credit and insurance’ are very important for sustainable livelihood and to mitigate

poverty. Self Help Groups are very important to ensure that these services are provided to

people.

Hence, Vazhndhu Kattuvom project is continuously working to form the left out target

population into groups.

The Self Help Group related activities that is being implemented by Vazhndhu Kattuvom

project is as detailed below:

1. Forming new groups from among target people who are left out, affiliating the old SHGs

with the village poverty reduction committee and activating those groups which are not

functional.

2. Training all the SHGs that are affiliated

with the VPRC. Arrange for community

grading for SHGs that has completed 3

months, and providing seed money to

groups that has 80 – 100% target people

3. Arrange for bank rating for SHGs that has completed 6 months, and facilitate linkages to

eligible SHGs with banks.

4. Restructuring of the Panchayat Level SHG Federations

5. Monitoring and strengthening all SHGs through Panchayat Level SHG Federations

The VPRC should ensure that the Panchayat Level SHG Federations (PLF) monitors and

controls all the activities. The livelihood and monitoring sub committees of VPRC plays a major

role in this.

Forming Self Help Groups

A. Eligibility

Qualified target people who are not part of any SHG People living in the same area

B. Types of Self Help Groups

S.No Types of Group Age limit1 Women Self Help Group 18 – 602 Youth Self Help Group 18 - 353 Disabled Self Help Group Up to 60 years4 Tribal Self Help Group 18- 60

Generally a SHG will have 12 – 20 members But disabled people and people living in tribal areas, where population is very low,

groups can be formed with minimum 5 members In the special group for the disabled, the parents (or) guardian of mentally retarded and

disabled who are younger than 18 years of age, can act as representatives of the group The new self help groups should be formed only with 100% target people If there are very few target population in a particular area, they can be linked with the

already existing SHGs

C. Method of forming a Self Help Group

Collecting information about target people among members who are already part of existing groups and including them in the Participatory Identification of Poor (PIP) list

Conduct panchayat level target people meeting

Identification of target populations who are eligible to become part of group but are left out from the existing groups

The village poverty reduction committee and federation of SHGs jointly plan for the formation of new groups

Clearly understanding the reason why target people are left out and their actual status

Explaining to them about Vazhndhu Kattuvom Project and the need to join SHGs (social development, economic development, etc.,)

Mobilizing eligible people who are willing and forming them into groups

Convening minimum 2 meetings every month continuously after formation of the new group

Project Facilitation Team to check the quality of group formation

Starting SHG bank accounts

D. The following benefits of joining the group should be explained to left out target

people during the village meeting

Two types of benefits can be received by joining the self help group. They are financial benefits and non-financial benefits A) Non financial benefits

o Unity among people will be strengthenedo Self confidence increaseso Transparency in all activitieso Equal rights and be given equal opportunitieso Leads to self developmento Can get different kinds of informationo Social security and recognition receivedo Can participate in the social development o Women empowerment

B) Financial benefits o Saving habit starts. People can save the maximum they cano Emergency financial needs fulfilledo Avoid from being stuck with high interest rates of local money lenderso Can get benefits of insurance through the group

o It’s helpful to improve existing business and can grow through new business ventures

o Can start new and profitable livelihood activitieso Can easily get linkage with banks and other welfare schemes

E. Activities to be followed after the formation of group

1. Deciding the name for the group2. Selecting the representative – 1, representative – 2, and book keeper3. Formation of the important rules for the group (things like criteria for

members,meeting date, time, frequency of meeting, saving methods, credit system etc., )

4. Maintainence of records from the first meeting itself5. Starting bank account within one month of formation of the group6. In order to assess the quality of the group, the project facilitation team making use of

the following checklist

Checklist for the newly formed self help group

Name of the group:Name of Panchayat and habitation:Meeting date: 1. ........................ 2. .............................. 3. .......................... 4..........................

S.No Factors to be verified

1 Whether the objective of the group was clearly explained and accepted by all the members?

2 Whether all members are participating in the group meetings? 3 Whether the group has been named? 4 Whether the office bearers, book keeper selected?

5 Whether it is ensured that the group members are not part of any other group?

6 Whether rules have been formed regarding group membership, meetings, leadership, savings, credit and book keeping?

Members details Very poor ---------Poor ---------Others ---------Total ---------

Percentage of target people ---------Name of the person who formed the group ---------

Name and designation of the person who verified the group

---------

Date of verification of the group ---------

Signature of the person who verified

F. Who forms the group

Only the VPRC is responsible for the formation of new groups Groups could be formed by the VPRC members, SHG federation or community SHG

trainers who volutneer themselves The project facilitation team will guide the VPRC

G. Expenditure for forming a group

The expenditure incurred while forming a group (bank deposit, making seal, taking photos, transportation charges)

Expenditure for field visits Experience sharing by members of the group which is functioning very successfully

These expenditures can be met from the capacity building fund of the VPRC.

2. Affiliating the SHGs with VPRC

A. Advantages of affiliating with the VPRC

The support need for the development of the SHG will be available in the village itself o Training (members, office bearer, book keeper)o Book keepingo Gradingo Seed fundo Credit ratingo Support to get credit linkage (bank, Amudha Surabhi, other institutions)o Monitoringo Provide the required information on timeo Support to start livelihood activitieso Support to prepare SHG finance plano Support in proper utilization of fundo Audit

All types of groups in the village (old and new women groups, youth, disabled, tribal

groups) can be affiliated with the VPRC The SHGs that does not have target people can get all types of support except financial

support If there are 80% – 100 % target people in the old groups and there is no linkage with

the banks, they can be given seed money All members can be included in the insurance scheme

B. Steps to be taken to affiliate the SHGs with VPRC

The SHGs should pass resolution to be affiliated with the VPRC A copy of the resolution to get affiliated with VPRC, basic information about the group

and the application to be affiliated with the VPRC, bank pass book copy - all these documents need to be submitted to the VPRC

C. Special camp for affiliating all the groups with the VPRC

Once the VPRC received its first installment, it should organize the special camp to affiliate all the groups during their committee meeting.

The day of the camp should be finalized and informed to all the habitation villages through “thandoora”

Before the camp date, all the habitation representatives should be given application forms to affiliate SHGs.

On the day of the camp, the SHGs will bring the filled forms, submit it to the VPRC and will affiliate itself with the VPRC.

Benefits of conducting camp

All the groups will come to know about the activities done by the VPRCs for the self help groups

All the people becoming aware of the activities of the VPRC Ensure the selection of community SHG trainers (CSTs) from all areas (or) newly

selecting them in order to train the SHGs and for book keeping In case there is nobody who can read and write in the group, CSTs may help the group

for book keeping Identification of needs and problems of the SHGs All the groups in the village panchayat gets affiliated with the VPRC at one instance

D. Things to be followed by the groups that gets affiliated with VPRC

The Key principles of the Vazhndhu Kattuvom project need to be followed without fail.

The group rules should be followed SHG MIS report to be submitted to

VPRC/PLF All the members should participate in the

general body meeting of the federation, Gram Sabha and panchayat meetings.

The VPRC should have written the details of all the groups that are affiliated with them in their resolution

Affiliated SHGs should submit the monthly progress report to the VPRC for review.

3. Responsibilities of the groupA. Meeting

Convene minimum 2 meetings in a month (once in 15 days) It is best to have weekly meetings It is essential for all the members to participate in the group meeting activities All the members should sit in a circle Meeting agenda should be prepared and the meeting should be convened accordingly A minimum of 90% members should participate in the meeting The decisions should be taken only with the support of 2 third of the members

participated in the meeting Only the group members should participate in the meetings It is important to form rules to conduct the meetings The decisions should be written in the resolution book, read to all the members and only

then their signatures should be received in that.

B. Office Bearers

Representative 1, Representative 2. Once in two years the office bearers should be compulsorily changed. The books need to be maintained by the person who can read and write very well In the case of members unable to maintain the books of accounts, they can get the

help of people like SHG Members, CSTs or children of the SHG Members

Responsibilities of office bearers

1. Representative 1 1. Represent SHG in external forum 2. Convening the group meetings regularly 3. Jointly operating the bank account (along with representative 2)4. Documenting the decisions taken and implementation of the decisions made5. Ensure the internal audit and annual audit process6. Linking with bank and other departments at appropriate time

2. Representative 21. Monitoring the financial status2. Monitoring the repayment of loans by the members3. Jointly operate the bank account (along with representative 1)4. Ensure proper documentation of all the registers at the end of every meeting5. Ensure the entry of individual pass books in the meeting itself6. Ensure minimum cash in hand7. Ensure that financial activities only takes place during group meetings

3. Responsibilities of the book keeper

1. Maintaining the books of accounts2. Documentation of the decisions made3. Making entries in the individual pass book

and handing it to every member4. Ensure the submission of activity report to

the VPRC5. Preparing for the internal audit and annual

audit processes

4. Responsibilities of the self help group members

1. Participating in the group meeting, saving and other related activities without fail2. Approve the addition and removal of members3. Elect and recall office bearers 4. Approve loans and take action on loan delinquency 5. Increase the fund sources (linking the SHG with different external agencies)6. Approval of the expenses after the completion of every internal and external audits7. Continuously evaluate the group activities at periodic intervals. 8. Surplus / profit sharing (if there are surplus income for the SHG, allocating such

accumulated profit to different reasons as per the rules and guidelines of the group)

C. Bank

The bank account should be started only in the name of the SHG

Representative 1 and representative 2 will be jointly operating the bank account

For the bank activities, group members should go on rotation

Whenever the office bearers change, it should be informed to the bank

The savings and loan repayments should be promptly (after the meeting is over or on the next day) deposited in the bank

Expenditures should be done only based on decisions made Bank pass book should be updated.

4. Financial Activities of the Group

A. Subscription The money paid to ensure the continuance of the members in the group The group members can decide the subscription amount and periodicity (whether

monthly / yearly subscription) This could be used for the administrative expenses of the group

B. Savings All members should compulsorily pay the minimum amount The members can themselves decide

on the minimum saving amount based on their wish and their ability

Once the group has grown well (say for example after five years), if there is surplus funds above the requirement of the group, based on the requirement they can make decision in the group and share the surplus as profit.

Apart from this, individual savings for festivals and for educational needs can also be done. The members can get back the amount based on the rules of the group.

Group should annually calculate the interest over savings. The rate of interest could be decided based on the income of the group.

Calculating the interest on savings The interest on savings needs to be calculated on the average savings. While calculating the average savings, the initial savings and the final savings should be added and divided by 2.

Interest on savings - Average saving X Annual rate of interest Average saving - (Initial saving + final saving) 2

Example

Pasumai self help group is paying an interest on savings at the rate of 12 percent per annum for its members. In that group the initial savings of a member Nandhini is Rs.1000/- as on April 07. She is saving Rs.50/- per month. The interest over her savings could be calculated in the following method.

Average saving Initial saving + final saving / 2 (1000+1600)/2 = 1300

Interest for average saving

Average X Annual saving interest rate

For Rs.1300 at 12% interest, its Rs. 156/-

. This interest will be credited in the members account. It should not be paid as cash for

a minimum period of 5 years. The maximum amount that could be given as internal loan to one individual member is

based on the savings amount of the group, which should be planned well in advance.C. Loan

Internal or external loan could be given based on the members requirements and financial status of the group

Providing loans should be prioritized based on the reason for taking the loan and the financial status of the member

Member’s attendance, savings without any break, repayment of loan done, number of loans received and repayment capacity should also be considered

Only after making the decision regarding payment of loan, the money should be withdrawn from the bank

Once the money is distributed in the meeting, it is important to get the signature of the person who received loan in the minutes register

The members should not equally share the loan fund (revolving fund, bank loan, EA loan, Amudha Surabhi) among themselves. Loan should be distributed to the members based on the SHG finance plan

The group should take action against those members who are utilizing the loan for a purpose different from the one for which it was received and members who default.

If the loan amount is Rs.5000/- and above Rs.5000/- then the group should get ‘Promissory Note’ from the member

A member should not be given another internal loan, while one internal loan is pending. If there is an emergency need, the group can themselves decide on that.

The interest rate on loan should be within a maximum of 15% per annum. The calculation of interest on loans should be done as detailed below:

Calculation and collection of interest on loans

1. Generally interest will be calculated only for loan outstanding. The interest should be calculated for the outstanding mentioned in loan register.

Let us consider that the interest rate is between 12% to 15% per annum(ex.) if the loan outstanding for a member is Rs.1200/- and interest is 12% means, then the interest for that month is Rs. 1/- (Rs. 1200 X 1/100) = Rs. 12/-

2. If the member who received loan has not paid the interest on that particular date, then the interest can be calculated from the date the interest was paid previously.

From the following example let us see how to collect the interest Name of the person who took loan - Manju Loan outstanding - Rs. 4500/- Monthly installment - Rs. 500/- Interest rate monthly 1% - Yearly – 12% Installment date - 15th of every month

But Manju is paying the money on 29th that month.Calculating monthly interest (interest should be calculated for 44 days).

12 x 44 x 4500 / (100 x 365) = 65 = Rs.65/-

While calculating the interest, if the interest is Rs. 12.30 (1 – 49 paise) then it can be calculated as Rs. 12/- and if the interest is Rs.12.82 (50 – 99 paise) then it should be calculated as Rs. 13/-.

D. Training

All the members should participate without fail in all the trainings, that is conducted for the development of the group.

E. Registers

The self help group should properly maintain the following registers 1. Attendance and minutes register2. Cash and general ledger3. Savings and loan register4. Members pass book

The registers should be written immediately after the meeting The members pass book should be updated immediately and given to the members The person who supervises/ monitors the registers should sign in the register. The VPRC should maintain the basic details of the group community grading, bank

rating details and monthly progress reports in separate files for every SHG and hand over this to the PLF once they are formed and grading process is done for them (after 6 months) in order to monitor the development of SHGs and suggest changes.

The loan monitoring format (DCB- Demand, Collection and Balance statement) Banshould be maintained after getting the first linkage. This will help to collect the default loan amount by taking necessary action without leaving it to become ‘bad debts’ and help to grade the functioning quality of the group and to build the confidence over the group

F. Planning

Planning is very important for the economic development and social development of the group, members and the village.

Hence, at the beginning of every year the group should properly do the SHG finance plan for its members

development Member wise financial requirement should be planned and consolidated as the financial

need of the group.

6Creating linkage with bank and other institutions

1Providing registers only for the first time

3Monitor groups through the federation and support them to function successfully5

Provide seed funding for eligible groups

2Making arrangement for training

4Organizing for grading and auditing at periodic intervals

7Livelihood training and providing guidance for economic development

5. Strengthening the Self Help Groups

The efforts taken to make the self help groups self reliant instead of being dependent on others, is called strengthening of SHGs.

By providing the following support to the SHG, the VPRC can make the groups successful

A. Training for the groups

Training means knowing about unknown things. By continuously providing the required training to the self help groups, we can make the group and the group members very efficient. VPRC will organize different trainings that are needed for the SHG.

(1) Planning for the training

VPRC is responsible for making arrangements for the training of the groups. That is Finalize the Place, content and date Arrange for the trainer

Ensure the attendance of trainees Arrange for the funds required for the training Rent for the training venue (if required) Training materials (chart, pen, paper, note) Food and Tea expenditure for the trainees Evaluating the quality of training Honorarium for the trainers (after the successful completion of every stage of the

training) The VPRC fund under the head ‘capacity building’ should be used for the trainer

charges

All the above should be done by VPRC. The guidance can be received from the Project Facilitation Team.

(2) Types of training (A) Members training

TrainingTraining duration and timing

(from the formation of the group)

Details

First phase 3 days theoretical training (within one month)

Necessity of group Explanation of the group Duties and responsibilities of

the group Linking groups with the

project Second phase 3 days theoretical training (within

4 months) Characteristics of a good

group Financial management of the

SHGs Rules and regulations

Third phase 3 days theoretical training (within 6 – 9 months)

Vision Planning Audit Commitment Insurance

Fourth phase 2 days theoretical training (within 12 – 15 months)

Self reliant Ensuring sustainability Participating in social

development

It is important that all the members of the group undergone the training The community SHG trainer and project facilitation team members can give this training Members training manual will be provided from the project

(B). Office Bearers training

Representative 1 and Representative 2 will receive office bearers training

TrainingWhen (from the formation of the

group)

Details

First phase Within 3 months – 1 day theoretical training

Commitment Skills needed for the office bearers Duties and responsibilities

Second phase Within 6 months – 2

days theoretical training

Loan application assessment Linkage with Bank Leadership Monthly report

Third phase Within 12 months – 2 days theoretical training

Audit report Linkage with government and other

institutions

These trainings could be given by the community SHG trainer and project facilitation team member

(C) Book keeper training

The book keeper and one member who can read and write well will receive this book keeper training

TrainingTraining duration and

timing (from the formation of the group)

Details

First phase Within first month (3 days theoretical training)

Importance of book keeping Book keeping methods

Second phase Within 6-12 months (3 days theoretical training)

Budget statement Maintenance of loan monitoring

register Preparation for audit

The trainer allotted by the district office and project facilitation team member will give the training

(D) Field visit

The VPRC can make arrangement for the SHG members and office bearers to go for field visit to other groups / federation that is functioning extremely well.

The details of places to be visited for the field visit can be received from the project facilitation team.

(3) Training methods

The VPRC should plan to train all the groups that are linked with the project All the trainings for the new groups, and need based trainings for the old groups can be

given The VPRC can develop this training plan along with community SHG trainer and

members of the panchayat level federation. The help of the project facilitation team can be received for this.

Model training plan Training

no. Group name

Training type

Number of members

Period Trainer Place

1 SembaruthiMalligai Member 15

13April 20-22

1. Kannagi 2. Manjula and3.One project staff

VPRC office

2

RojaMullaiPeriyarGandhi

Office Bearers 26 June 1

1. Sumathi 2. Malathi and 3.One project staff

VPRC office

3

SembaruthiMalligaiRojaMullaiPeriyarGandhi

Book keeper 25 June 5

1. One project staff 2. Kannagi

VPRC office

We should ensure that there is at least 25 participants in a training The groups strengthening sub-committee of the federation should observe how the

training is conducted and should submit its report during federation meeting By the end of every theoretical training session, it will be evaluated by a project staff

who is not a trainer The project staff should give the grading report to the VPRC

According to the quality assessment report (at the end) if the training needs to be provided again, the VPRC should take necessary action for that.

(4) Trainers

Community SHG trainers Trainers allotted by the district office Project staff All the training sessions should be handled by a team of minimum 2 trainers The new community SHG trainers will be a co trainer for the first set of all SHG trainings.

They will also be the independent trainer for the next level of all trainings. The project staff will monitor and make the quality assessment of the training.

(5) Training fees / honorarium for the trainers

For the allotted trainers in the district, training fee can be paid without exceeding the amount decided by the district project management unit.

When the community SHG trainers are acting as co trainers, they won’t be given honorarium.o When they are trainers, for a complete training day, they can be paid a maximum

of Rs.100/-o Apart from that their food and travel expenditure will be borne by the VPRC

By the end of the training, only if it is represented as ‘Satisfactory’ in the quality assessment report, then the honorarium can be paid.

(6) Continuously supporting the groups

Helping in conducting group meeting, book keeping, activation of the bank account, preparing report, grading, bank linkages

The community SHG trainers can provide this support by continuously participating in the group meetings (for a minimum of two years)

Community SHG trainers can help the book keeper in the maintenance of books of accounts For the community SHG trainer who helps the SHGs, an amount of Rs.50/- per SHG can be

paid as honorarium from the VPRC capacity building fund.

6. Supporting and monitoring the SHGs

(1) Roles of VPRC and PLF

It is the responsibility of the VPRC to support the SHGs for a specific period until they have developed according to their age and become self reliant

VPRC will monitor the SHGs through the community SHG trainers until the grading of PLF.

Every community SHG trainer can monitor 8 to 10 SHGs in all group activities and book keeping

VPRC/PLF must convene the review meeting for the community SHG trainers at least once in 15 days.

During this review meeting the community SHG trainers, VPRC, PLF and project facilitation team should all together discuss about the development and needs of the SHGs

Every month the review meeting for the community SHG trainers should be convened in the cluster office.

Monitoring through Reports Every SHG/CST should prepare the monthly progress report and submit it to the

VPRC/PLF Before grading of PLF:

o These reports will be consolidated by the VPRC book keeper and will be reviewed in the VPRC meeting. Suggestions will be given to SHGs through CSTs to improve the group activities

After grading of PLF:o These reports will be collected by the HLF and consolidated by the SHG

formation and strengthening subcommittee in the PLF. It will be reviewed during the PLF EC meeting and suggestions will be given to SHGs through CSTs. Based on this, the status of the SHGs and community SHG trainers activities will be monitored

The PFT will collect the SHG progress reports from the VPRC/PLF and submit to the district unit. By reviewing these reports the development of the SHGs will be monitored

Before Grading PLF After Grading PLF

State Project Office

District Project Manager

Project facilitation team

VPRC

State Project Office

District Project Manger

Project facilitation team

Panchayat level federation

Habitation level federation

CSTs

Self Help Groups

Livelihood and monitoring sub committee

SHGs strengthening sub committee

Form – 1 Tamil Nadu Vazhndhu Kattuvom Project

-------Month 20 - Basic details of the Group

1. District 2. Block3. Area 4. Panchayat5. Name of the habitation 6. Name of the group &

number of members 7. Date of formation of the group

8. Bank account number / date / name of bank and branch

Basic details of the members

No. NameFather / husband

nameAge Religion

SC / ST /

MBC / BC /

others

Education qualification

#

Disabled / vulnerable status @

Whether target people? If so, PIP list

number

V.poor Poor other

123456789101112131415161718

1920

Religion – Hindu / Muslim / Christian

# Educational qualification: 1. Illiterate / 2. Literate / 3. Less than Tenth standard / 4. More than Tenth standard @ Vulnerability status – Disabled / vulnerable (like deserted, widow, affected by chronic disease etc., )

Form - 2 Monthly progress details

Month -------------- Year -------------1. Panchayat 2. Habitation

3. Name of the group 4. Number of members 5. Name of the book keeper / community SHG trainer who maintains the books

6. Training (with phase) Members training Office bearers training Book keeper training

7. whether grading has been done ? (grade details / date)

8. Whether seed fund provided? (date of release and amount)

9. Whether credit rating has been done? (rating details / date)

10. Whether linked with bank? (Date and credit linkage RF/DL/AS details with amount)

11. Number of members insured (and) type of insurance / institution

12. Whether audit has been done? (with audit date and time)

13. Whether field visit done? With details

14. Details about the business done by the group

1. Meeting activities and loan detailsNumber of members

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