It's Easier to Save Now - The Bihar Experience II

Nagasubramanian G August 26, 2011

A regular weekly meeting of a Community Based Savings Group

Image Credit: AKRSP(India)

This is the second part of the series on experiences from the field in the Hindi heartland.

Savings Groups

While the agriculture programme was going steady with its efforts to popularise the SRI methodology, the savings team was struggling. The initial set of observations during the pre-launch phase indicated that formation of savings groups of women had a huge potential. Such efforts need to be made, if not for any major income jumps but at least to stabilise the incomes and expenditures. Most households were indebted to local money lenders who charged interest rates to the tune of 10 % per month. Typical reason for this debt burden was some health related ailment in the recent past. Hence, savings groups’ formation appeared to be the right approach. Moreover, these were all virtually women headed households as the men were away in search of labour for major parts of the year. So the advocacy of formation of savings groups and that too of women seemed vindicated. But this is theory. In practice, the team faced several hurdles and hence the struggle.

Self Help Groups were a much abused term in this area. Every time we had a focussed group discussion with the women in a tola1 they would recall of some past experience in some of them having got together to pool in their savings on a regular basis at the instance of a local organisation and then having ended up quarrelling over the haphazard manner of loan disbursal, irregular repayment and worse still the representative of the local organisation vanishing with the money saved. The few ones that were supposedly working were mostly promoted by the current mukhiya or his / her predecessor to access the SGSY subsidy. Such was the negative reinforcement the term Swayam Sahayata Samuh2 created in them that it was difficult to get women back to save again as a group. They say failure is a stepping stone to success but talking to these women revealed that failure has oozed out the last ounce of belief left in them to get together and bring about a change in their lives. To break this jinx was the task at hand.

The task was getting difficult by the day. Just to maintain staff motivation levels so that each day they could try once more was by no means an easy task. The really worse days were so disappointing that it gave us little hope of any success. There was a particular day when Joyshree3 came back from the field so frustrated by the cynicism and lack of response that she started crying. Staff members rallied around to comfort her, to egg her on and soothe her by saying that it was a matter of the initial breakthrough. That is when Ramkumar4 mentioned about the women’s group that he tried to promote a year back in his tola. He informed us that for lack of proper guidance, a good start is now losing steam and on the path to destruction. He wanted us to talk to the women and try and figure out a way for revival. This was a big lease of life. Here was a group that had begun in right earnest just a year back, still to be affected by the swindling bug yet on the verge and ready to trust us outsiders and newcomers on matters of money thanks to Ramkumar. We accepted the offer gleefully and formed the first savings group – Maa Lakshmi Mahila Mandal. Certain ground rules were agreed upon savings groups are to be named as Mahila Mandal and definitely not Swayam Sahayata Samuh, groups to be formed within a tola in order to retain the affinity advantage, form groups of women only, target would be the Scheduled Caste communities and the Other Backward Communities, the methodology adopted would be similar to a normal SHG that we promote in Gujarat with the aim of linking it to a Bank over a period of time and build group capacities so that they eventually are on their own. All that Sweta Mohan5, Joyshree Mondal and Ramkumar6 wanted was a toehold and having got that marched ahead step by step. Soon other groups were formed and the word spread.

Formation of groups is one thing but building their capacities another. The young team hardly had any experience on this front. Pankaj Dave, Area Manager, Surendranagar programme area, came in handy. He responded to the call for immediate help on the training/capacity building front by deputing two of his staff members – Meram Dangar and Pravin Rohit – for a week to Pusa. That Pankajbhai was able to visualise the situation that we were in and chip in with the right reinforcement that too with immediate effect shows that the idea of exposing senior Gujarat staff to Bihar was having an effect and also more importantly their willingness to be counted in for any kind of help. The training and handholding sessions helped immensely and boosted the confidence of the team manifold. More groups were formed and more training conducted. The SHG programme was gaining a momentum.

Meeting in a Tola A typical ice-breaking meeting in progress in one of the tolas Image Credit: AKRSP (India)

A closer scrutiny of the savings group database yielded one glaring gap. While a majority of the groups being formed were of the Dalit community, our target group, followed by the OBCs, the lack of even a single Muslim group was indeed intriguing. We were working in the villages where their in large numbers and were successful in initiating savings groups in tolas surrounding theirs yet we were unable to decipher the lack of success. Repeated efforts but similar results finally prompted us to engage with the community much more deeply. We realised that the reason could be a combination of the following two – the religion bars lending of money on interest and also that the Muslim women whom we were reaching out to were largely housewives and hence had to depend on their husbands for money to save unlike their Hindu counterparts who were earning on their own as they were forced to work owing to their poor living conditions. That meant that we had to tackle this issue at two levels – one, to reframe the terminology at use from interest levied to profits gained and two, to go a rung lower on the socio-economic ladder where the women are similar in position to their Hindu counterparts as mentioned earlier. But to gain acceptability with this stratum of the community was not easy.

To a large extent, the education programme broke that ice and then to a much lesser degree the women’s day celebrations. While we would focus on the former when we dwell on Education, the March 8 celebrations were by any means an unprecedented success. Over 500 women participated in the Women's Day programme organised on the 8th of March, 2009 at Pusa. Not only did the members of the existing savings groups participate but women within the vicinity of each of these groups who evinced some interest in this activity also ended up taking part. This opportunity was well utilised by the Muraul team to expose some of their newly formed groups to a function of such a scale. This helped us in further establishing our credibility in the area and also gave the team the confidence to organise things on a bigger scale. The pace of formation of new groups picked up drastically soon after and the programme was finally at ease on the credibility quotient.

Another interesting but a quiet revolution was taking place simultaneously.

A Quiet Revolution

Joanna Ledgerwood7, AKF Geneva and Somnath Bandopadhyay8, AKF India together conducted a study on the state of the various SHG federations in select states where the AKDN has interests in India. Elite capture of the group/federation and over reliance on the promoting organisation came about as two critical aspects of the classical SHG Federation model. Over the years, AKRSP (India) in its wisdom promoted the SHG – Bank linkage and the federation of SHGs model in Gujarat and Madhya Pradesh with a fair amount of success. The savings programme in Gujarat was several notches better than the one in Madhya Pradesh probably owing to two critical reasons – the nationalised banks in Gujarat were themselves aggressive on linking up with the SHGs and the literacy levels of the state was much better than in MP. The Joanna - Somnath study and the AKRSP (India) experience shows that for the SHG – Bank linkage model, a unique one of its kind anywhere in the world, to succeed there should be an environment consisting of the following necessary features:
i. fairly decent literacy levels to avoid elite capture of the group and also over reliance on the promoting agency
ii. a responsive bank branch network with reasonable outreach Literacy levels of SCs and the lower rung of OBCs and that too women were appalling. As to bank responsiveness of the rural branches, the urban experience of getting a simple savings bank a/c opened for a Section 25 company stands a testimony9. Thereby, it was felt that alternatives need to be found. AKF, Geneva had come across the CARE experiment in Africa10 and a small story in Bangladesh11 and this came in handy. A consultant, Paul Rippey12, was arranged to give the Bihar team a quick overview of the alternative models available on the savings group front. It was soon followed by an exposure visit to Bangladesh to take a look at the Community Based Savings Group model for the concerned Bihar staff member handling the theme and other senior AKRSP (India) staff along with representatives from select RSPs13 of other countries.

The CBSG model talked about a different take on the savings group concept from the established and entrenched SHG model. At its core, some of its principles were in variance to the one of SHGs.
i. CBSGs have a life span of a year, operating in annual cycles unlike SHGs that can operate for as long as the group wishes
ii. No external infusion of credit, thereby ruling out bank linkages iii. Doing away with written cash books and ledgers and instead using symbolic representation of amount transacted
iv. CBSGs are to remain isolated and these platforms at best can be utilised only for promotion of other activities

These caused ripples within the organisation. There weren’t many takers in spite of the exposure visit to Bangladesh and consultancy workshops by David Panetta, consultant. The SHG vs CBSG debate raged on for some time with AKF (India) convinced that for Bihar, CBSG makes sense and AKRSP (India) divided with people in the field buying it and the senior management remaining sceptical. Finally Apoorva14 nailed the coffin of the debate by stating that “many an innovative ideas can best be evaluated when tested on ground. Grand theories and debates around them are always never ending and the way forward is how the community responds”. It was then decided that the existing SHGs would be converted to CBSGs and the fresh ones formed would take the latter route. To make the transition required handholding of the field staff and the managerial team. George Norkek, a consultant was hired full time and a week long exposure for the team to Bangladesh was the initial steps taken. Much needs to be done before all the existing 80 odd groups make the transition. But they say, a job well begun is a job half done.

And today, a year and a half into the programme, a total of 412 groups (231 of which are supervised and 181 that are into their second annual cycle and managing all this on their own) have been formed covering 8107 members of which 97% are female members with around 19 % rate of return.

  1. Tolas are habitations in Bihar, like falias / mohallas in other North Indian states; typically about 12-15 tolas constitute a village and these are largely constituted by people of a single caste 

  2. Self Help Groups 

  3. Joyshree Mondal, 24, a fresh Post Graduate in social work from Shantiniketan 

  4. Ramkumar Paswan, 38, a Matriculate from one of the villages where we are working 

  5. Sweta Mohan - 28, a fresh PG in NGO Mgmt from EDI 

  6. Sweta Mohan , Joyshree Mondal and Ramkumar were 3 employees of AKRSP (India)'s first 11 member crack team in Bihar 

  7. Joanna Ledgerwood - Director, Enterprise Development, AKF (Geneva) 

  8. Somnath Bandyopadhyay - Senior Programme Officer, Rural Development, AKF (India) 

  9. The experiences regarding this incident shall be published as part of another story 



  12. Paul Rippey, Senior Fellow, Energy Links (centre for Financial Inclusion, Accion International), is a microfinance specialist and climate change activist with twenty years of experience in Africa. 

  13. RSPs - in short for Rural Support Programmes of the AKDN. (for more details, visit

  14. Apoorva Oza, the Chief Executive Officer, Aga Khan Rural Support Program (AKRSP), India, started his career as a Deputy Manager with Gujarat Dairy Development Corporation. In 1988, he joined AKRSP(India) as a Field Manager transitioning to the position of Senior Programme Executive in 1994. He was appointed as the Chief Executive Officer (CEO) in 2001, and, in this role, has expanded AKRSP(I)’s work to the poorest states in India, including Madhya Pradesh and Bihar. 

Agriculture, Bihar, Development, micro credit, micro finance, Self Help Group, SGSY, women, Experience, Struggles Share this Creative Commons Attribution-ShareAlike 3.0 Unported


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A well narrated experience.

A well narrated experience. Whether the groups are functioning under CBSG or SHG model now? If CBSG whether renewal takes place annually? Will it not be better to make a transition to SHG if the initial hiccup is over? As for the muslim community, it is only to be expected that they would have a reluctance to accept/pay interest. In one of the muslim dominated areas in TN, I have heard that people would queue up before the bank on the day of interest credit to their SB accounts, withdraw the interest amount(which may be huge sums ) and immediately donate it to the less fortunates, since the bank can not be persuaded not to credit interest in their accounts. This was 25-30 years back. I am not sure whether the practice continues. Whether the change of terminology to profit/gain worked with them? Generally since the target group is women their family will start supporting once they realise the benefits of saving and internal lending.

@ Vijayalakshmi Still in the

@ Vijayalakshmi Still in the CBSG model now. As CBSGs, these groups are sources for 'Savings' and at best for consumption credit purposes. But, 'Development' as is defined by the experts is about channelising livelihood finances. The erstwhile SGSY and all its brothers and sisters programme has now been rechristened under a flagship programme called the National Rural Livelihood Programme (NRLP). And each state shall have a separate autonomous 'society' implementing it. This is based on the successes of the Andhra Model of SHGs and the Kudumbasree programmes.

The institution model for channelising resources is the savings group. So, to maintain a separate identity is out of the question as these groups then shall miss the government bus. So we plan to transition these groups to the SHG world. Every new group shall function in the CBSG mode in the 1st year (no external linkages at the start) and hopefully become mature enough not to be lured by access to 'subsidised credit' straightaway.

This transition is a work in progress. But coming back to basics, there are 2 reasons that I cited as to why we went for CBSGs - high illiteracy levels and poor bank response. While the NRLP initiative might address the latter by pushing the banks, the former shall continue to remain an issue. Si it remains to be seen how 'our style' of 'symbolic' record keeping be acceptable to the 'banks' who need a minutes book, a cash book, a general ledger and individual pass books all containing numeric data entry !!

Interesting times ahead.

But what this shows us is that there's a huge demand for 'savings' based products amongst the very poor. Remember, essentially SHGs are credit led. The whole SAHARA (Sahara Financials) jamboree is such a big hit amongst the rural public because it caters to this latent demand for savings products. MFIs in their current form as NBFCs are barred by law to receive deposits and that leaves only banks, which has no time or patience for small savings holders.

Coming to our work with the Muslims, yes it's working. I think essentially poverty has no religion. This new terminology of 'service fee' for loans and share out of profits has helped them overcome that problem. And they have responded in troves.

And your point on women, can't agree more. Basically, most of the poor households are 'women headed', as the able bodied male is more likely than not a migrant to all parts of the country. She's to run the household and the CBSG is such a transparent facility, right at her door step.

Naga, very well written!

Naga, very well written! Congrats!

SHGs and Savings Effort

Nicely put together piece! I suppose,there is the issue of critical mass even in this context. Clustering and the idea of 'multi-linked-factor-markets' too could help, i presume! Credibility of the group has seemingly been achieved, it looks as if - it would not otherwise have made any dent, more so given the peculiarity of the social terrain. It now could be intensified by linking to activities with that are central to the peoples lively hood and also clustering and interlinking..