Tools & Resources Smart Saving and Lending: Member Protection in SHG Model

Smart Saving and Lending: Member Protection in SHG Model

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This tool is aimed at SHGs, Banks and NGOs (SHPIs) that want to incorporate good protection for SHG members. Since, the majority of SHG linkages with banks are based on Model II of the bank linkage program (Bank –Facilitating Agency –SHG Members) in this tool an attempt has been made to map the process of the SHG linkage with the bank with NGO acting as a facilitator.

This tool, “Smart Saving and Lending: Member Protection in SHG Model ” is aimed at SHGs, Banks and NGOs (SHPIs) that want to incorporate good protection for SHG members. Since, the majority of SHG linkages with banks are based on Model II of the bank linkage program (Bank –Facilitating Agency –SHG Members) in this tool an attempt has been made to map the process of the SHG linkage with the bank with NGO acting as a facilitator.

SHG is promoted by Government, NGOs, SHG federations and in a few cases banks also promote SHGs. In the recent years, the government has become the largest SHPI. However, for simplicity and easy understanding we assume that the SHG Bank Linkage process is divided in simple seven key phases and SHGs have only one internal and one external loan. The Campaign recognizes that there is significant diversity and complexity in the SHG Linkage Program and that the processes outlined in the tool may differ across states or regions, however, we hope that the generic process and benchmarks for member protection mapped up in this tool will be helpful for SHG Models to enhance their member protection practices within SHGs in India. Within these seven phases in the SHG process, the Campaign has identified ‘Service Points (SPs)’ which are points of interaction between the member and the institution. The table below clearly maps out the phase, what happens there and the number of service points in each phase.

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Smart Lending Member Protection in SHG Management