Sustainability Guidelines by Rashtriya Mahila Kosh for Strengthening SHGs

When a Self-Help Group (SHG) is formed, the initial energy is usually high – women gather, savings flow in, and the group feels full of promise. But what happens six months later? Or three years in? The difference between an SHG that thrives and one that quietly dissolves often comes down to whether the group has solid sustainability practices in place from the start. Rashtriya Mahila Kosh (RMK), established in 1993 as an autonomous body under the Ministry of Women and Child Development, dedicated decades of its work to answering exactly this question. Its guidelines for SHG sustainability aren’t just administrative checklists – they’re a practical framework for keeping women’s collectives strong, democratic, and genuinely self-reliant.

What RMK’s sustainability guidelines set out to do 🔗

RMK was designed as a single-window facilitator for financial services for women in the unorganized sector, channeling micro-credit through Intermediary Micro-Finance Organizations (IMOs) and Women SHGs rather than lending directly to individuals. This model placed the SHG at the center of everything – which meant the quality and stability of each group directly determined whether the entire system worked. Weak groups meant poor repayment, poor repayment meant less credit flowing down the chain, and less credit meant women losing access to financial resources they had no other way to obtain.

RMK’s sustainability guidelines therefore addressed something deeper than loan recovery. They were concerned with what makes a group function well as a group – the internal mechanics of membership, leadership, communication, decision-making, and the gradual building of independence from external support. These guidelines covered three interconnected pillars: group stability, conflict resolution and participation, and autonomy.

Group stability indicators 🔗

A stable SHG, in RMK’s framework, is not simply one that hasn’t collapsed yet. Stability has specific, observable markers that indicate a group is functioning with genuine cohesion rather than just going through the motions.

Consistent membership 🔗

Member dropout is one of the earliest warning signs that an SHG is in trouble. When women leave a group – whether because of personal conflicts, disillusionment, or external pressures – it disrupts savings cycles, creates gaps in loan repayment chains, and erodes the collective trust that holds the group together. RMK’s guidelines stressed the importance of maintaining consistent membership as a core stability indicator. SHGs typically comprise 10 to 25 women from similar socio-economic backgrounds, and keeping that core intact over time is essential for building the track record that enables bank linkages and larger credit access.

Consistent membership isn’t just about numbers staying the same. It also means ensuring that the same women are showing up to meetings regularly, contributing to savings, and remaining engaged with the group’s activities. High absenteeism, even without formal dropout, signals weakening commitment – and RMK’s guidelines treated regular meeting attendance as a direct proxy for group health.

Regular meeting attendance and record-keeping 🔗

RMK emphasized that SHGs must hold meetings at fixed, predictable intervals and maintain proper records of those meetings. SHG members typically meet weekly for one to two hours to deposit savings and discuss topics of common interest – a rhythm that, when sustained, builds discipline, accountability, and the institutional memory that keeps a group functioning even as individual circumstances change.

Record-keeping – minutes of meetings, savings registers, loan ledgers – serves a dual purpose. Internally, it creates transparency that prevents disputes over who borrowed what and when. Externally, it provides the documentation that banks and funding agencies require before extending credit. An SHG that cannot show a clean, well-maintained record of its activities is effectively invisible to formal financial institutions.

Shared and rotating leadership 🔗

One of the structural risks in any small group is over-dependence on a single leader. If the group’s most educated or assertive member handles all financial decisions, manages all records, and leads all negotiations with banks or NGOs, the group is one departure away from dysfunction. RMK’s guidelines specifically addressed this by encouraging rotating leadership – a model in which positions like president, secretary, and treasurer change hands among members on a regular basis.

Strong leadership, democratic decision-making processes, and the active participation of all members create a positive group environment – but rotating that leadership ensures no single person becomes a bottleneck or a point of failure. It also builds skills across the membership, so more women are capable of managing financial records, speaking to bank officials, and navigating bureaucratic processes independently.

Conflict resolution and participation 🔗

No group of people – especially one managing shared financial resources – operates without disagreements. The question is not whether conflicts arise in an SHG, but whether the group has the tools and culture to resolve them without fracturing.

Open communication as a group norm 🔗

RMK’s sustainability framework placed significant emphasis on open communication as a foundational group norm. This means creating an environment in which members feel safe raising concerns, questioning decisions, and voicing dissent – without fear of social ostracism or retaliation. In practice, this is harder to achieve than it sounds, particularly in communities where women’s voices are routinely marginalized in both domestic and public settings.

Well-run SHGs function as spaces for collective leadership and mutual dialogue, which fosters community cohesion and a sense of shared ownership over the group’s decisions. When members are genuinely heard – even when the decision doesn’t go their way – they are far more likely to remain committed to the group’s functioning over time. Open communication is also the earliest intervention against corruption, favoritism, or elite capture, where one or two dominant members steer group resources in their favor.

Consensus-based decision-making 🔗

RMK’s guidelines highlighted consensus decision-making as a key feature of healthy SHG governance. Rather than having decisions imposed by a single leader or a small committee, the group arrives at decisions that all members can broadly accept – even if not all agree entirely. This process is slower than top-down decision-making, but it produces outcomes that members feel ownership over, which directly affects loan repayment rates and group longevity.

This approach is particularly important for loan allocation decisions, which are among the most sensitive matters an SHG handles. When a member requests a loan, the group collectively evaluates the purpose, the amount, and the repayment capacity. Decisions made transparently and collectively carry social weight – members who took part in approving a loan have a shared stake in seeing it repaid.

Structured conflict resolution 🔗

Regular communication, conflict resolution training, and leadership development programs can help strengthen the internal cohesion of SHGs. RMK recognized this by recommending that SHGs establish clear internal procedures for handling disputes – whether about loan repayment, unequal participation, or interpersonal tensions – before conflicts escalate to the point where they threaten group cohesion.

The idea is to keep conflict resolution internal wherever possible, since groups that routinely escalate disputes to outside mediators never develop the internal capacity to manage their own governance. SHGs resolve conflicts through collective leadership and mutual discussion, which, when practiced consistently, becomes a group competency rather than a crisis response.

Building autonomy and independence 🔗

Perhaps the most forward-looking aspect of RMK’s sustainability guidelines was its emphasis on building genuine autonomy in SHGs – reducing reliance on external NGOs, government programs, and funding agencies over time. This isn’t about withdrawing support prematurely, but about designing the support itself in ways that build internal capacity rather than dependency.

The dependency trap 🔗

Many SHGs, particularly in their early stages, receive substantial guidance from NGOs or government-appointed organizers who help with meeting facilitation, record-keeping, and bank liaison. This support is essential during the formation phase. The risk, however, is that groups become so accustomed to this external scaffolding that they cannot function without it.

Many SHGs, especially in the initial stages, are heavily dependent on external support from NGOs, government programs, or microfinance institutions. This dependency can become a barrier to the group’s long-term sustainability. RMK’s guidelines were alert to this risk and structured support to be time-bound and skills-transferring – with the explicit goal of enabling groups to take over those functions themselves.

Capacity building as an exit strategy for dependency 🔗

RMK invested in capacity-building programs for SHG members covering financial literacy, enterprise development, and leadership training. The objective was not simply to train women in useful skills, but to build the internal human capital of the SHG to the point where external facilitation was no longer necessary for basic operations. RMK enabled women to achieve economic independence by going beyond credit delivery, providing services for integrated development concerned with the needs of poor women.

This approach mirrors what researchers have observed in sustainable SHG programs more broadly: SHG federations involved in financial intermediation are likely to achieve sustainability when member control is strong – meaning the members themselves, not the promoter agency, are the ones making decisions and running operations. Federating into larger structures like Area Level Federations (ALFs) is one mechanism for this – it pools the resources and management capacity of multiple SHGs while reducing each group’s dependence on external institutions.

Financial independence through income generation 🔗

Autonomy is not only about governance – it is also financial. An SHG that can generate its own income through member savings, interest on internal loans, and collective income-generating activities is far more resilient than one entirely dependent on external credit. RMK’s guidelines pushed SHGs to focus on income-generating activities and manage loans responsibly, building a financial base that could sustain the group through periods when external funding was unavailable or reduced.

More mature groups advance from regularizing savings and credit to stabilizing livelihoods – moving from subsistence to income generation. This trajectory, from basic savings group to economically productive collective, is precisely what RMK’s sustainability framework aimed to support – not by doing it for the group, but by equipping the group to do it for itself.

Minimal reliance on a single external actor 🔗

RMK also recommended that SHGs diversify their institutional relationships rather than relying entirely on a single NGO or government program. Groups with multiple linkages – to banks, to market networks, to government welfare schemes, to other SHGs through federations – are far more resilient when any one of those relationships weakens or ends. This diversification is itself a form of autonomy, because it gives the group options rather than locking it into dependence on one external actor’s continued goodwill or funding.

Why these guidelines still matter 🔗

RMK was officially wound down by the Indian government after 2020, as alternative credit facilities became available through initiatives like Jan Dhan Yojana and PM Mudra Yojana. But the sustainability framework it developed for SHGs remains relevant – because the challenges it addressed haven’t gone away. Groups still face member dropout, leadership conflicts, over-dependence on NGO support, and difficulty transitioning from savings clubs to genuinely productive economic collectives.

The National Rural Livelihoods Mission (NRLM) now reaches over 9 million SHGs with nearly 100 million women members – a scale that makes internal group quality more important, not less. At that scale, the difference between a stable, autonomous SHG and a fragile, externally-dependent one is multiplied across millions of women’s financial lives. RMK’s insights on what makes groups hold together over time are as applicable within NRLM and other current frameworks as they were in the 1990s and 2000s.

The core insight behind all three pillars of RMK’s sustainability guidelines is simple: an SHG is only as strong as the trust, participation, and self-reliance of its members. Credit is the vehicle, but the group is the engine – and engines need regular maintenance, shared ownership, and the capacity to run on their own.

What do you think? If you were designing a support program for a newly formed SHG, at what point would you begin reducing external facilitation – and how would you know the group was ready to operate independently? Do you think rotating leadership is realistic in communities where formal education is unevenly distributed among members, or does it risk undermining group stability?

References

1. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1742800
2. https://www.indiafilings.com/learn/rashtriya-mahila-kosh/
3. https://en.wikipedia.org/wiki/Self-help_group_(finance)
4. https://www.tandfonline.com/doi/full/10.1080/00220388.2022.2154151
5. https://uppcsmagazine.com/challenges-before-self-help-groups-shgs-and-measures-to-make-them-effective-and-beneficial/
6. https://www.cgap.org/sites/default/files/CGAP-Occasional-Paper-Sustainability-of-Self-Help-Groups-in-India-Two-Analyses-Aug-2007.pdf
7. https://www.drishtiias.com/to-the-points/Paper2/self-help-groups-shgs
8. https://documents1.worldbank.org/curated/en/390771468771327388/pdf/wps3516.pdf
9. https://www.shankariasparliament.com/current-affairs/gs-ii/gs-ii-govt-policies-interventions/self-help-groups