The Kudumbashree Story

Community Network

Neighbourhood Groups (NHG)

Neighbourhood Groups (NHGs) are the primary units of the Kudumbashree community organisation. Ten to twenty women from a neighbourhood form a NHG. The membership, structure, and functions of the NHGs are bound by the byelaws of Kudumbashree CDS.


Membership is open to all adult women, and limited to a single membership per household. If a woman leaves the NHG, another woman from the family can be given membership. Even though membership is limited to one woman per family, other women can also participate in the discussions held at the NHG; they can also attend the training and development programmes that the NHG or ADS organises.

All the poor families are to be members of the NHG formed in that neighbourhood; the economic state of families – whether they are poor or not – is decided based on the standards that the government fixes from time to time.

While membership is open to women of all families, the benefits under government programmes or programmes of other agencies including financial assistance meant for poor families and families belonging to Scheduled Castes (SC) and Scheduled Tribes (ST) are limited to women from families belonging to these categories. Women whose families have come out of Below-Poverty-Line (BPL) status after taking membership can continue with the membership.

Special NHGs can be formed for the people with impaired speech and hearing, visually challenged persons, physically or mentally challenged persons, people who have been tested HIV positive (or AIDS affected), and destitute families. These NHGs are to be formed with the permission of the government and once formed, will enjoy the same status as any NHG.

Special NHGs can be formed for Scheduled Tribe (ST) communities. If necessary, special ADS covering such special NHGs can also be formed with the permission of the State Mission. Special NHGs can also be formed for mothers of mentally-challenged children or those living with people with special needs.

Women Self-Help Groups formed under central and State government schemes such as Swarnajayanti Gram SwarozgarYojana (SGSY) are accorded the same status as that of NHGs under the Kudumbashree community network and affiliated to the CDS subject to the following conditions.

  1. Such groups agree to abide by the Kudumbashree byelaws.
  2. The groups democratically elect their Executive Committees.
  3. The groups open bank accounts before applying for affiliation.
  4. The groups agree to accept the leadership of local governments.
  5. The groups accept the right and authority of the local governments and CDS in examining the utilisation of the funds that the local governments or CDS allot to the groups.

Activity groups for taking up economic/ business activities are formed by drawing in members from one or more NHGs; these members will continue to hold their memberships in the respective NHGs and continue to function as other members of the NHGs. The activity groups, however, can claim support under eligible programmes including subsidies.

Membership is given to any woman from the neighbourhood desiring membership in a NHG subject to agreeing to work with the NHG, accepting the byelaws. Once a woman gets membership, she signs in the Membership Register of the NHG.

NHG Structure

The NHG general body includes all its members. NHG elects a five members Executive Committee consisting of the following positions.

  1. President
  2. Secretary
  3. Volunteer (Income generation)
  4. Volunteer (Health and Education)
  5. Volunteer (Infrastructure)

Every NHG elects its Executive Committee in special ‘election general body meeting’ in which only members can participate.

Either president or secretary of an NHG has to be compulsorily a member of a poor (BPL) family. Members from APL families can assumeboth the roles only in case of absence of members from BPL families. Eligibility for election to the position of president and secretary is limited to two consecutive terms.

NHG – Functions

  • Regular weekly meetings; secretaries of NHGs are expected to keep updated minutes-books showing details of all meetings.
  • Running thrift and credit scheme; NHGs decide on an amount which members should bring for weekly meetings. This money is added to a thrift account. NHGs run an internal lending programme using the money thus saved.
  • Maintaining bank account: Every NHG opens a bank account operated jointly by the president and secretary of the group; NHGs can open savings accounts in nationalised, commercial or cooperative banks. All receipts including those of savings are deposited in the bank account on the next working day.
  • Account keeping and records: NHG keeps minutes-book, membership register, finance register, consolidation register, passbook, documents relating to affiliation, and other files in formats prescribed by the Mission.
  • Participation in Gram Sabha and general neighbourhood group meetings: NHGs take part in the Gram Sabha and related meetings.
  • Working with local governments: NHGs work closely with the local governments in its general administration, planning, and plan implementation.
  • Gender awareness: NHGs take up studies and awareness programmes on gender and women empowerment.
  • Social audit: NHGs ensure participation in Gram Sabha to facilitate social audit.
  • Social action: NHGs take initiative to organise Balasabha and similar other programmes.
  • Implementation: NHGs plan and implement programmes proposed by the State government and Kudumbashree State and district Missions.
  • Basic units of CDS: NHGs work as the basic units of CDSs in realising the objectives of CDSs.
  • Bank linkage: NHG establish bank linkage and avail loans for onward lending to members.
  • Training: NHGs organise training programmes to equip members in running thrift and credit and micro enterprises.

Weekly Meetings

In the meeting which decided on the formation of a neighbourhood groups, decisions are taken on the day and time for weekly meetings. NHGs are expected to hold the weekly meetings at the houses of members in rotation. All members are to attend meetings regularly; even though a quorum of 75% attendance has been fixed for meetings, 100% attendance is expected.

Thrift and Credit

In the weekly meetings, members deposit the pre-fixed thrift amount with the secretary and get the corresponding figure entered in the passbook and signed. NHG can issue small loans from the group’s savings to its members as per requirement. All decisions are to be taken by consensus or through majority support. All loans are subject to decision of the NHG.

The weekly thrift amount for members is fixed as equal to the weekly savings that the poorest member of the NHG can afford to make. Even though this is the general rule, NHGs may decide to allow reasonable levels of variation in the weekly thrift amount among members. Members who do not have source for savings at all are exempted from weekly savings. However, the exemption is not applicable for membership fee.

In the case of those who have been exempted from weekly savings, their exemption does not prevent them from availing subsidies, financial assistance, and other support provided by the government and other agencies.

Once an NHG is formed, it works for three months with regular meetings and savings by members before it starts internal lending. Loans are approved by consensus or majority decision by the group after examining the demands by members put forward in weekly meetings. It is the prerogative of the group to decide on priority. NHG charges interest on loans at rates decided by the group.

Members are expected to keep high level of discipline in repaying their loans in instalments as fixed by the NHG. In case of default in repayment, the NHG could resort to the following methods.

  • Motivating the members to make repayment; CDS members may visit the group to discuss the matter.
  • Charging penal interest from defaulters.
  • Effecting repayment from the defaulting member’s savings.
  • Legal steps

In exceptional circumstances when NHGs face financial crisis due to factors beyond their control, CDS may consider steps to support the NHG.

Bank Linkage

NHGs initiate steps to establish bank linkage on completing six months of functioning with regular meetings and savings. The NHGs undergo grading to qualify for bank linkage. Once an NHG is linked with banks, it can avail loan and use the funds to lend to its members. For loans extended to members out of bank loans, repayment terms are fixed based on the repayment requirements of the bank.


NHGs have their own working fund generated from entry fee, membership fee, monthly subscription, interest on internal lending, penal interest, donations, and grants. All the funds are included in the accounts of the NHG and money is kept in the bank account.

“There were different kinds of social organisations in existence across Kerala at the time of Kudumbashree's formation. Kudumbashree saw deprivation as a binding factor for women to come together. It (deprivation) is a stronger binding factor than caste, creed, or religion”.

- T.K. Jose IAS, former executive director, Kudumbashree