Savings Function
- Thrift collection could commence from first meeting itself.
- Periodicity and quantum of thrift be decided by members themselves.
- Minimum compulsory thrift to be made by all members.
- Withdrawals against thrift not allowed.
- Groups must insist on on-time contribution from members.
- Collection of thrift during meetings only.
- Thrift to be used for internal lending and must not stay idle.
- Penal provisions like fines and penalties for late payment.
- Delayed thrift contribution must not be received outside the meetings.
- Chronic thrift defaulters may be disciplined by penalties.
- Return thrift to members withdrawing for genuine reasons
- No discontinuance of thrift due to fund infusion like subsidy/grant.
Credit Function
- SHGs normally offered small short-term loans.
- Internal lending must commence from first pooling.
- Group must have system of priorities based on loan purpose.
- Best member borrower attends meeting regularly and pay timely.
- Overall credit need evaluation should be need based.
- Credit decisions at meetings only.
- Repayment schedule should be rationale.
- SHGs may be allowed freedom in fixing collaterals from members.
- Concurrent loans may be discouraged.
- Loans are to be disbursed in the presence of all group members.
- Group must be taught to monitor end use of loan.
- Late repayments penalized and timely repayment rewarded.
- Internal lending to continue even after receipt of grant/subsidy
Fund Management
- Group fund consists of thrift, interest on internal loans, fines and penalties, loans and grants received, margin and interest payable to bank.
- Groups are not expected to discriminate between the source of fund for meeting loan requirements.
- Idle funds are a drag on the group and should be watched carefully at every meeting.
- Responsibility sharing in Cash Management will ensure (i) Transparency (ii) reduce load on leaders (iii) Enhance fund management (iv) Competence of all members.
- Periodic reconciliation of bank accounts and group’s records.
- Members should take turns in depositing collections and also accompany leaders to bank for withdrawals.
- Initial stages: Encourage short-term loans ranging from 3-12 months. Installments must be weekly to monthly.
- Above measures will increase Loan velocity and Fund Recycling.
- Groups must adopt market-linked policy for interest rates.
- Group must not reduce interest rates in the short run upon receipt of grant or bank loan. Interest charged on loans is a source for raising additional capital to fund the Corpus base.
- Cash balance to meet emergent situations must be encouraged but too big an amount held for long periods constitutes idle funds.
- SHGs upon maturity incur higher amounts for book keeping honorarium and bank transactions. Member contributions may be suitably enhanced.
- Investing entire corpus in a single activity will block internal lending, reduce access of households and enhance risks.
Record Keeping
- Groups must ensure responsibility and members must share tasks.
- Training must ensure recognition of accounts structure.
- Group meetings must necessarily focus on contents of books.
- In case of non-availability of literate members SHGs must be encouraged to hire services of professional book-keepers/literate boys/girls.
- SHGs must inculcate the habit of paying for book-keeping.
- Book writer must read out noting in meetings and updations must be acknowledged by group members.
- Some SHPIs are concerned about audit. At federation meetings peer-audit by other SHG leaders must be encouraged.
- The practice of keeping books with SHPI staff or in the NGO office should be discouraged.
- Cost of books and stationery be met by SHGs.
- In the long run all members must be encouraged to read and write.
- System of confirming entries in member pass-book by 2 other members must be encouraged.
