After SKS has selected a village and conducted informational sessions with its residents, interested women form self-selected five member groups to serve as guarantors for each other. This process is called Group Formation. Experience has shown that a five-member group is small enough to effectively enforce group peer pressure and, if necessary, large enough to cover repayments in case a member needs assistance. Group members must be between the ages of 18 and 59, cannot be related and must live close to one another.

Once a group is formed and meets the minimum requirements, it begins Compulsory Group Training (CGT). CGT is a five day program consisting of hour-long sessions designed to educate clients on the processes and procedures of SKS and build a culture of credit discipline.  Using innovative, visual and participatory teaching methods, SKS staff introduces clients to SKS’ financial products and delivery methods. In addition, CGT teaches clients the importance of collective responsibility, how to elect group leaders, the SKS pledge and how to sign their name. During the training period, SKS staff also collects quantitative data on each client to make sure they qualify for the program and record base-line information for future analysis. On the fifth day, clients take the Group Recognition Test and are officially accepted as a SKS’ client after successfully completing the test. 

As additional groups are formed within a single village, a Sangam (Center) emerges. During Sangam Formation, groups are combined to form a center of 4 to 12 groups or 20 to 60 clients. The Sangam is responsible for the repayment of all groups, creating a dual joint liability system. If one group defaults the rest of the Sangam must repay. Once a Sangam is formed, Financial Transactions  begin the following week.