SHG Plus model helping rural women build homes, educate children, secure futures

Muzaffarpur: Kiran Kumari of Bihar's Muzaffarpur remembers a time when borrowing money at exorbitant rates was the norm for her. Now, a unique community loan system designed to empower rural women has not only provided her with an escape from the debt trap but also a way to secure her family's future.

Women in Bihar who once struggled to make ends meet are now growing strawberries, building homes and investing in their children's education through SHG Plus -- an evolution of the traditional self-help group (SHG) model that is designed to empower rural women through financial inclusion, transparency and collective strength.

The system's evolution was dreamed up by the women themselves. The model was developed with help from the Aga Khan Rural Support Programme India.

"We used to borrow money from lenders at 60 per cent interest. It's only 2 per cent under SHG Plus," Kiran Kumari says. "Now, we don't need to borrow from outside."

In the villages of Muzaffarpur, Kiran Kumari's journey is not unique.

Savita Devi, a member of the Nari Swayam Shakti SHG Plus in Pachal Mubarak, is one of the hundreds of women who have taken loans from her collective.

"I never thought I would grow strawberries. With the loan I got through SHG Plus, I decided to give it a try. If it's profitable, I'll expand my farming," she says.

Alongside the traditional crops, the fields of Muzaffarpur are now adorned by strawberries, solar panels and pucca homes built with savings from SHG Plus.

Unlike traditional SHGs, the SHG Plus model includes mandatory annual share-outs, detailed record-keeping, and an inclusive leadership structure. These features have not only boosted the members' financial confidence but also fostered a sense of ownership and independence.

At its core, SHG Plus operates on a simple model.

Women pool their weekly savings, with each member contributing as little as Rs 20 per share -- 'mohar'.

This corpus is then used to provide small loans to members at minimal interest.

Launched in a Muzaffarpur village, it soon spread to other SHGs, assuming the SHG Plus name. The model operates in several Bihar districts, financially empowering women.

What sets the SHG Plus model apart is its emphasis on transparency and accountability.

"We hold meetings every week and all accounts are handled openly," says Kiran Kumari, a member of the Kiran Shakti SHG Plus in Harpur Mukund.

"We decide everything together -- the loan amount, interest rate, even how to use the profits," she adds.

Record-keeping includes pictorial representations, making it accessible even to semi-literate members.

"We save money through the 'mohar' system. Earlier, it was Rs 20 per week, now it's Rs 30. We're saving more now," Kiran Kumari.

For many women, SHG Plus has provided a pathway out of the perennial debt trap.

It has also enabled them to be ambitious and invest in income-generating activities -- a risk many said they would not have taken with traditional loan schemes due to their high rates of interest.

Shruti Singh used her share-out money to install a solar-powered borewell.

"I spent Rs 1.35 lakh to start a business and made a yearly profit of Rs 17,000," she says, beaming.

SHG Plus' impact extends beyond financial gains.

For Bena Devi, it provided her with a stepping stone to building a better life and gave her a say in her own home.

"Now, I am also a decision-maker at home. What was thought to be a forte of men has now become our business as well. With the share-out money, I built a house, spent on my child's education, and even invested in gold," she says.

Share-out is the money accumulated through the weekly contributions that is then given out as loans to members. The loan amount has to be returned within three months and the money collected as interest is then distributed evenly among the remaining members.

Sameena Khan used her money to pay for her treatment while Pratibha Kumari invested in her children's education.

Aga Khan Rural Support Programme India team leader Mukesh Chandra attributes the success of SHG Plus to its focus on capacity building and financial discipline.

"The programme not only empowers women economically but also strengthens their decision-making abilities," he says.

With higher savings, improved credit discipline and support for asset building, SHG Plus has become a beacon of hope for rural women in Muzaffarpur.