Why Women Self-Help Group Members Make for Good Bank Agents

Recent pilot projects conducted by the Rural Financial Institutions Programme (the RFIP, a cooperation program between GIZ India and NABARD) demonstrated that engaging female community members in village financial services can be more effective than using typical customer service representatives as banking agents. The RFIP supported two Regional Rural Banks to engage members of local Self-Help Groups (groups of 10-20 women who come together to save, lend, help each other financially, and optionally receive bank credit as a group) as banking agents (Customer Service Providers or CSPs) to bring financial services to low-income customers in villages. This proved to be an effective approach that resulted in higher numbers of active accounts handled by CSPs and higher activity rates in savings accounts.

Activity Type of CSP
SHG Members Conventional
% of saving accounts that are active 93% 54%
% of non-dormant accounts per CSP 87% 38%
# of transactions per month per CSP 448 101
Data source: Gramin Bank of Aryavart, Uttar Pradesh, as of Sept. 30 2015

Working as agents, the SHG members are trained in several areas:

  • Using a handheld device to conduct financial transactions;
  • Understanding basic banking procedures, such as KYC, enrolling into a Recurring Deposit, applying for an agricultural loan
  • Raising community awareness about financial services
  • Enrolling and transacting with customers in 3 to 5 villages;
  • Providing customers in these villages with a suite of financial services such as savings accounts, deposit services, remittances, insurance, agricultural credit and loans for purchasing solar lamps.

As of September 2015, 72 SHG members were working as CSPs in Uttar Pradesh and Madhya Pradesh states in India.

A woman working as a bank agent takes stock of the day's transactions
A woman working as a bank agent takes stock of the day's transactions. Photo by GIZ.

The motivation for this project was to improve the last-mile delivery of financial services in rural and underserved areas. RFIP sought to answer four primary questions:

  • Is it more cost effective to leverage existing SHG members with their support systems as CSPs rather than to build a new network from scratch?
  • Can financially experienced women improve customer take-up and usage rates and have lower attrition rates?
  • Does digitizing SHG group transactions through technology help banks gain better information about their customers?
  • Does the combination of these actions improve the business case for the banks?

We suspect that a big reason for these successful pilots is that all members of the SHGs are women, while typical CSPs are men. The women CSPs were better placed to attract more first-time women customers, including elderly women (who are usually illiterate or semi-literate) and youth. The women customer service representatives also seemed more amenable and successful at reaching out to potential customers from varying castes, which increases the number of active customers they could serve.

In a survey of customers, both men and women reported preferring a woman SHG member as their CSP. Being more financially experienced and having higher than average education levels was also helpful in increasing their knowledge levels. The bank finds that women CSPs are more motivated to provide liability products to low-income customers at low commission rates while men are more motivated to work with richer customers with more lucrative credit products.

While employing women SHG members as CSPs had benefits for customers and brought more customers into the financial system, it also benefitted the CSPs themselves. Having this job helped them gain employment, sometimes for the first time, and helped them become more respected in their communities. It is also less common for these women to migrate away from their village than men, so the women employed through the Self-Help Groups gained more experience and became more reliable at their jobs over time.

Until now, transactions between SHG members were generally cash-based. Moving forward, Self-Help Groups are working to digitize more transactions to increase the transparency of this program, to help the group members as CSPs perform better at their jobs, to monitor the quality of their work and to reward good performance. The use of PoS devices for these transactions in the villages is gradually proving to be one stepping stone towards digitization of group based transactions and improving record keeping.

Early results from the pilots are promising. The project evaluation, due soon, will shed more light on what explains the improved key performance indicators, client impact as well as the business case for the bank.


30 November 2015 Submitted by Jose Linares Fontela (not verified)

Dear Prakash Choudhary: In regard to your comment to associate to implement microfinance activities, no problem this has been my job all my career, I send you before my approval through this blog, but I had no response. In any case it will be an interesting experience. Very best Linares

05 November 2015 Submitted by Jitendra Balani (not verified)

Indeed a good read! It would have been great if you had briefly put analysis on income/commission earned by these CSPs:
-Are they able to earn sufficient income out of this business?
-What was their income previously?
-Will they be able to sustain themselves from this business?
-What can we do to improve commissions of these CSPs?
In addition, brief information on challenges faced under this pilot project would be good for other important stakeholders in the industry. Looking forward to findings from the project evaluation phase1

06 November 2015 Submitted by Dr V.RengarajanR (not verified)

Some valid conjectures in RIFP
The attempt for Making SHG members for good bank agents appears to be comfortable for the banking industry for bringing financial services(CSP) to low- income customers in villages in the supply front.. However some apprehensions are shared here from demand side perspectives in the first followed by a few conjectures in the supply front.
First, SHGs with poor women members are organized by SHPIs to form social capital with the focus on multi disciplinary empowerment viz., social, economic, political and cultural empowerment to enjoy their entitlement or rights in the given community and ultimately to attain graduation from poverty line . In such process of holistic empowerment , economic empowerment through financial inclusion is one among them . In such case, if these SHG s are made bank agents for CSP apart from its own group members to cover other low income customers and attracted by incentives and accessibility to bank finance through them, to what extent the process of comprehensive women empowerment being the main focus of group formation is getting derailed leading to mission drift? Hypothetically assuming , whether the fact that these group members would prefer to act as more as bank agent dealing with more money lending services rather than acting as social change agent for ushering in empowerment of poor women is true ? This rationale is construed with a lesson from transformation of NGO from social agent to become as MFI/NBFC later on as banker or money lender one hand and unabated attrition and group mortality by and large as a fallout of enforcement of rigorous money related services dealings to the member customers by the group leaders on the other evidently in some cases . Will these negative outcome not affect the credibility of those SHPIs who have nurtured these groups at some cost?
Second, as a corollary to the above , reportedly when SHG leaders find hardship for enforcing financial discipline effectively to their members itself without causing dropouts or defunct accounts, will these groups could prudently function as bank agent for the said purposes? Further eventually is it not such move ie making the banks . the principle provider of any financial products in the supply side , to distance from the ultimate customers without any accountability ?
Last, Under RIFP the experiment with RRB branch is debatable in the context of its failure in its original mission and started amalgamated with its sponsoring banks of late.
In principle, no value judgment is made on this RFIP venture but the above logical assumptions and conjectures merit the attention of GIZ for doing further probing the realities in the process of exploring innovative institutional delivery mechanism in the given eco system prevailing in Indian rural financial landscape.
Thank you for sharing my views
Dr Rengarajan

13 November 2015 Submitted by Raj Kumar (not verified)

I agree with you Dr Rengarajan. I think the question really is who might be a good banking agent. The question needs to be gender neutral. That women are brought up in a certain manner and that SHGs (women members) are trained in a certain manner unfortunately does not seem to help answer the question of who can be an effective agent. I think what needs to be answered is who makes a good banking agent and if an SHG member happens to meet the desired profile, nothing beats it - given the attributes gathered by a woman as a SHG member as brought out by RFPIP pilot projects. SHGs play a very useful social economic role for their members. I would argue for strengthening these groups for making the lives of their members better by a better social and economic inter mediation. Selecting a handful of SHG leaders for donning the role of bank agents might do good for a few bank branches but would cost dearly to the morale and cohesiveness of the groups. There has been a trend of using SHGs as vehicles of delivery of government social and economic programmes and the ones who have worked with SHGs would agree that this has done more harm than good to the groups not without compromising the programmes. Perhaps one needs to be more objective in selecting banking agents.
The second question is who is the banking agent from a SHG - a woman who is a SHG member or a SHG who nominates a member. These are two very different answers to the question and can impact the group differently.
Thirdly, could we explore about how banking agents can help the SHGs intermediate with banks in a hassle free manner? This might actually fortify the salience of SHGs. Perhaps RFPIP will attempt to answer these questions as well.

06 November 2015 Submitted by Lavesh Agrawal (not verified)

I think that there are other pilots also going on in other states too. I think a comprehensive study will help in showcasing the overall progress. With the introduction of Payments Banks, I think SHG women CSP would be bigger help in spreading the reach of these new banks.


07 November 2015 Submitted by Jose Linares Fontela (not verified)

No wonder, after working in 27 countries for 45 years I found that women are more intersted and more disciplined in money matters. This has a psychological base, women are taught by their mothers from very early to manage their home and live with that example, they have the outlook and perception based on small money budgets that are present in the mayority of World's homes, included middle class homes, and have also the practical focus on how to run yhe budgets, even if they do not know how what a budget is, it is a matter of common sense for them, so as a psychologist I find this the natural trend. When they have to manage small money they do it as thaugt and it works smoothly.

12 November 2015 Submitted by Prabhakar (not verified)

I am interested to know if such women-led SHG experiences have indeed helped in reducing the vulnerabilities of communities to various natural and economic forces and if there is any strong evidence for it, apart from mere increase in income.

30 June 2016 Submitted by Shalini kumari (not verified)

You can see such evidence in Bihar with running project BRLPS Jeevika. Where women shgs very populer in banks because these are the big customer of credit linkage and their repayment rate is so gud.
Through this bank linkage poor illiterate or semi illiterate women starts the petty shops, agri culture with scientific approch and many more things. I give u one exmple of purnia district where shg members sold 1000 mitric ton maize with the help of NCDX and this year they make a target of 5000 mitric ton. Their smiling and happy faces say thanks to banks and brlps.

12 November 2015 Submitted by Jose Linares Fontela (not verified)

My experience has been intense in Latin America and Africa, in these cultures the women are more matriarch in their families than maybe in other cultures, and as rule women have more business habilities and freedom to do succesfull business. They like to show their status with particular symbols: For example in El Salvador the level of success of the women microenterpriesers is shown by the luxury and complexity elaboration of their aprons (There is where they keep the money when are selling) and to have a Toyota pickup (Mind you not, another brand) that use it to move their cooking equipment or merchandise. Frequently their couple migrates to USA and sends money through international remittances that are invested in their microbusiness. As pshycologist and marketing expert I am more interested in the practical issues to impulse Microfinances, satisfying first the Microenterpriser's (Customer's) needs to make and sell usefull and attractive financial products, which I found in my lonsg experience to be a secondary issue in the MFIs, which is not so strange because it has been and continue to be in great extent the position of banks. But these last are starting to give it a second thought. Unless the MFIs start centering their focus on market research (Not necessarily with the academic strictness. cost and time consuming, sometimes in marketing the speed of response is more important that precision, in fast changing markets) to find out what the women demand on finances, become creative and innovative, and balance the ladie's needs with the MFI needs to make profitable and attractive products, we will be of little help to impulse the microentrepeneur women to be succsesful.

12 November 2015 Submitted by Dr,V,Rengarajan (not verified)

Dear Jose Linares Fontela
Do you refer the women in the groups (like Self Help Group SHG) or individual women in LA and Africa ? This fact is useful to link with the post topic 'making women SHG as bank agent.'
I feel that in matriarchal society , individual women is capable of acting as successful entrepreneur while in patriarchal one, collective strength of group of women in the form of SHG facilitates them to become successful business women
Dr Rengarajan

16 November 2015 Submitted by Prakash Choudhary (not verified)

We want to associate with you for Implement micro finance activities in backward part of Rajasthan, M.P.and Nighbour part of Gujarat. If you would like our colibration request to send more details at .With regards

16 November 2015 Submitted by Jose Linares Fontela (not verified)

Prakash Choudhary
No problem in collaborating with you, I am in Toledo, Spain and my email is as it is better to keep in touch directly and keep the CGAP blog updated as there are advancements on the issue

Very best regards


04 July 2016 Submitted by Jose Linares Fontela (not verified)

Dear Shalini kumari. My experience in 27 countries were I worked in Latin America, Asia and Africa is that women have definitive more advantages to do business in small scale (Microentrepreneurs). It does not matter the ethnic profile or the economic situation all are the same. As a marketing expert, I do frequent market research to valuate, in the very short term, the advancement of the projects in terms of helping and teaching MFIs employees to address the customer's needs and in such a way to find a balance between the satisfaction of those needs and the sustainability of the MFI. Because, like or not the MFIs are financial institutions and therefore they must prevail to give service to the customers. Now it is a tragedy for the customers to loose a credit access channel because their leadership loose their north and place before the social purpose to the financial one, because the poorest loose a significant tool to try progressively to scale out of poverty.
How many times I was terrified when I was told in an MFI that financially everything went wrong, but the social balance sheet was extraordinary: I ask them: And now what?, what is the value of an extraordinary social balance sheet if the MFI went broke. There is a significant difference between lending and subsidizing and many ONGs never learn that difference. I feel myself more confident when a woman manages an MFI, because due to their similar role in all the countries where I worked. They are tutored along their lives to manage the home economies, this sounds a little silly, but I see no difference between managing a home and any other enterprise, to me is just a matter of size and to have access to the tools and teach the methods to do it right. In this sense, academic level is not essential and it can be attained through practical training because good management is just common sense. The women learn form their mothers, grandmothers and aunts the importance of the small cash and how to make the ends meet at the end of the month. They are able to change financial strategies and tactics to adjust on the run, keeping in mind the future consequences of their small financial decisions. I taught the Indian Andean lady’s in Bolivia and also the Rwanda’s ladies in Africa, and even with very difficult language barriers they learned the basis of marketing to motivate their communities to join the MFIs. I had no difficulty to better they performance, even to learn from them. So, empowering their leaders in the self groups does bring results.
The last comment it has an incidental relation to the article, except in the “self help” issue in MFIs. Along more than 46 years of professional practice I never understood and still fighting to have the MFIs to understand the “Financial Intermediation” concept. All the regulated by the banking authorities MFIs with which I worked as consultant talk and offer loans to their customers and the market, you only listen about loans and lending, but nothing about from were the lending money will come from, no one talks about this. So when I ask the: It is fine to lend, everyone likes lending to others but; were the money to lend will come from?. The invariable answer is we ask for loans and then lend it to our customers. Here come the paradigmatic questions: At what price do you lend to your customers?, Are there always loans available to lend the customers?. I did not understand why these MFIs do not compete in the market place attracting savings and term deposits in an infinite market in which in all the countries the commercial banks control over the 85% of the savings and term deposits. Oh, that is too difficult because we are small and weak. Let me tell you that is a fallacy when you compare the service quality between banks and MFIs, the excessiveness, the better rates and more and the best the lower rates that it can be charged their customers. Nonsense, I have proven that any MFI with an aggressive marketing effort can be more attractive than banks, to any type of customer, visit the Web pages of these two MFIs: Card Bank, in Philippines, that attract deposits from pure savers and lend only to poor rural women. Banco Fie in Bolivia,, this last learned saving marketing with me in an International Cooperation project. These two institutions in very different countries and today they fund over 80% of their loans from the market. THIS IS “SELF HELP” in an MFI. We have to learn from the “self help groups and apply it to our MFI, more when the credit crunch has reduce the funding of depressed advanced countries.

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