Self-Regulatory and Self-Governance Frameworks of Microfinance Programme in Kerala

Abstract

We assess the constitution, mode of operation, and self-governance and self-regulatory frameworks of Self-Help Groups (SHGs) Federation in a microfinance programme in a Coastal region in Kerala. This article uses the individual data of 100 microfinance participating households and the data of 15 credit delivery groups in the Evantualic Social Action Forum (ESAF)-MFIL/ESAF-SHG federation in Kerala, India during 2011 and 2019. The data collected from the Trikkunnapuzha, a coastal region of Kerala and the family members of SHGs are mainly Fishermen. This study shows that formation of sample SHGs have been carried out by the field staff (credit officers) of ESAF-MFIL, by utilizing local information networks to mobilize members of new SHGs. This study also shows that SHGs operate with the help of a hierarchy of organizations, namely, branches of ESAF-MFIL and tiers of ESAF-SHG federation. We find that the presence of SHG members in the weekly meetings of SHGs and the participation of members in the discussions at the meetings are crucial for ensuring the smooth functioning of SHGs. We also find that members’ compliance with the ‘rules’ and ‘norms’ of SHGs, and various other governance attributes are important for the smooth operation of SHGs and delivery of financial services by an MFI. We also find that various governance attributes, such as attendance of respondents, maintenance of transparency, awareness of members about the bye-laws of the group, equal treatment of SHG members, verification of accounts, maintenance of accounting standards of SHGs, responsiveness of SHGs and consensus among the members, are interdependent and crucial in the operation of sample SHGs.