In 1982-83, during her research study exploring c ommunity based organizations in the Khed block of Pune district, Dr. Sudha Kothari observed that in most villages the government had made an effort to organize women under the Integrated Child Development Services into Mahila Mandals (women’s collective at the village level). However, in most villages these mandals were registered just as a formality. Dr. Kothari made an attempt to revive these groups through a number of community awareness programs. She strongly believed that the success of any development process required sustained active involvement of community based organizations, such as mahila mandals and youth groups.

In 1985, Dr. Sudha Kothari took the initiative to organize awareness programmes on various social issues such as dowry, domestic violence, early marriage, and alcoholism. Through this experience, Dr. Kothari was able to identify several issues that adversely affected women’s participation in programmes - such as harvest times during the agricultural cycle, persistent unemployment leading to migration, illiteracy, lack of health facilities, lack of essential necessities (e.g., drinking water), bad roads, and a lack of transportation. In addition, Dr. Kothari realized that without a local institution that could channel and structure development effort, these programs could only have a marginal impact.

As her work progressed, more issues came to the forefront, such as right to ownership of assets, lack of control over savings, land, and livestock. Though some women were nominal beneficiaries under the Integrated Rural Development Program, it was observed that mostly men controlled the assets.

In 1986, Dr. Kothari got an opportunity to observe women’s groups from Andhra Pradesh who were involved in operating saving and credit accounts. She saw that savings were a powerful motivation for women to come together and address their practical needs. It was here that she decided to use a similar strategy to organize the women of Khed block.

In 1988-89, National Bank for Agricultural and Rural Development (NABARD) offered an opportunity for the rural women to interact with banks through Vikas Volunteer Vahini programme - also know as Farmer’s clubs. Under this scheme, women members of Mahila mandals were motivated to save Rs. 1/- per week, and within a year more than 700 women saved Rs. 1.25 lakhs (125,000).

This activity provided new opportunities for women; the women soon realized that it was not enough to just save money, but it was also essential to provide access to credit via loans. However, when eight groups attempted to access loans through NABARD, the banks refused claiming that the women were not credit worthy.

In the year 1990-91, women of 14 SHGs started inter-lending within the groups from their own savings. They use this pooled resource to make small interest bearing loans to their members. The process helped them imbibe the essentials of financial intermediation including prioritization of needs, setting terms and conditions, and accounts keeping. This gradually established financial discipline and credit history within the group, as the money involved in the lending operations were their own money saved over time with great difficulty. They also learned how to handle resources of a size much beyond their individual capacities, which enabled them to build a strong foundation and link with banking institutions, while simultaneously maintaining autonomous decision-making. In the absence of positive government response, SHGs members started exploring the idea of inter-group loaning system.

Initially, six groups came together as an informal association in 1991; by 1993, this association was registered as a charitable society, Grameen Mahila Syamsiddha Sangh (GMSS) with the membership of eight SHGs.

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