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A group is a
collection of five women who come together to gain access to
credit. Groups are the building blocks of the peer-lending
model, and strict credit discipline begins with strong groups.
In forming groups, it is important that groups are
self-selected since each member of the group serves as a
guarantor for all other members. If SKS staff were to dictate
group membership, collective responsibility would be difficult
to enforce. SKS does, however, recommend to interested
individuals that they select those in whom they have trust and
those belonging to similar social and economic backgrounds to
minimize unequal bargaining strength and power struggles.
With respect to requiring a group of five versus a group with
fewer or more members, experience has demonstrated the
following:
- a five member group is small
enough to effectively exert group peer pressure and
enforce collective responsibility on a unanimous basis
- a five member group is large
enough for the guarantors to collectively handle
repayments of missed installments should one member
default
- a five member group is the minimum
required to maintain an adequate balance in the group
fund savings for the day to day subsistence needs of its
members
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