Recording Member Contributions to a Shared SHG Unit
Pooling money in a shared SHG shop or unit? How to record cash, equipment and labour, share profit fairly and handle exits, with a ₹ example.
In this article (8 sections)
When several SHG members pool money, equipment or space for a shared shop or production unit, record every contribution in a signed contribution register, agree its value in writing on the day it comes in, and keep one account per member showing contributions, withdrawals and profit share. Put the profit-sharing and exit rules on paper before the first sale. This prevents the most common reason group enterprises break up: arguments about who put in what. Practices here are as of November 2026 and general; the legal form you choose and any scheme you take support from may have their own rules, so check with your SRLM, block office or bank.
Keep the enterprise separate from SHG savings
Your SHG's books (meeting minutes, savings register, internal loan register) track thrift and lending among members, as the DAY-NRLM Panchasutras require. A shop or production unit is a business with sales, stock and risk. Mixing the two means a business loss can eat into members' savings. Keep the enterprise in its own register and, ideally, its own bank account, the same principle explained in separating household and SHG business expenses.
The legal form also matters. A few members may run a unit informally or under a partnership deed; larger collectives under SRLMs often form producer groups, cooperatives or producer companies. Scheme eligibility can depend on that form; see does business structure affect scheme eligibility.
Types of contribution and how to record them
| Contribution | How to value it | Proof to keep |
|---|---|---|
| Cash | Amount received | Receipt, bank deposit slip or UPI reference |
| Equipment (machine, fridge, weighing scale) | Agreed current value, not the original price | Photo, original bill if any, signed valuation |
| Raw material or stock | Cost price agreed by members | List with quantities and rates |
| Shop space or room | Usually a monthly rent, not capital | Rent note signed by members |
| Labour | Wages or per-piece rate, unless all agree to treat as capital | Attendance or production register |
| Loan taken by a member and brought in | Record as a loan to the unit, with repayment terms | Loan papers and a signed note |
The last row matters. If one member takes a bank or SHG loan in her own name and puts the money into the unit, decide whether it is her capital (she bears the repayment) or a loan the unit repays. Write it down.
The contribution register
| Date | Member | Type | Description | Agreed value (₹) | Receipt no. | Signatures |
|---|---|---|---|---|---|---|
| 1 Nov | Asha | Cash | Bank transfer | 20,000 | 001 | Asha, President, Treasurer |
| 1 Nov | Lata | Equipment | Flour mill, 2 years old | 15,000 | 002 | Lata, President, Treasurer |
| 2 Nov | Rukmini | Cash | Deposit slip | 10,000 | 003 | Rukmini, President, Treasurer |
Read the register out at a meeting each month and have members sign the monthly total. That makes later disputes much easier to settle.
Member capital accounts
For each member, keep a running account:
Closing balance = Opening balance + New contributions + Share of profit − Withdrawals − Share of loss
Total all member balances each month and check they equal the unit's net worth (cash + bank + stock + equipment − loans owed).
Worked example: a five-member flour and spices unit
Five members start a unit. Contributions:
| Member | Cash | Equipment | Total capital | Share of capital |
|---|---|---|---|---|
| Asha | ₹20,000 | ₹20,000 | 25% | |
| Lata | Flour mill ₹15,000 | ₹15,000 | 18.75% | |
| Rukmini | ₹10,000 | Weighing scale ₹5,000 | ₹15,000 | 18.75% |
| Sita | ₹15,000 | ₹15,000 | 18.75% | |
| Kamla | ₹15,000 | ₹15,000 | 18.75% | |
| Total | ₹60,000 | ₹20,000 | ₹80,000 | 100% |
They agree in writing: members who work in the unit get ₹150 per working day as wages, recorded as an expense; remaining profit is shared 50% equally and 50% by capital share.
In the first quarter, after wages, material, rent and electricity, profit is ₹24,000.
- Equal part: ₹12,000 ÷ 5 = ₹2,400 each
- Capital part: ₹12,000 × 25% = ₹3,000 for Asha; ₹12,000 × 18.75% = ₹2,250 each for the other four
- Asha: ₹2,400 + ₹3,000 = ₹5,400
- Each of the others: ₹2,400 + ₹2,250 = ₹4,650
- Check: ₹5,400 + (4 × ₹4,650) = ₹5,400 + ₹18,600 = ₹24,000
They decide to keep half of the profit in the unit for stock. Each member's account is credited her full share, and her withdrawal is recorded as half of it, so Asha's balance becomes ₹20,000 + ₹5,400 − ₹2,700 = ₹22,700.
If the unit later borrows to buy a packaging machine, the instalment comes out before profit is shared. Check the instalment in the EMI calculator and agree in writing which members guarantee the loan.
The written agreement: what to include
- Names of members and the unit's name and address
- Each member's initial contribution and how it was valued
- Who signs on the bank account (at least two signatories)
- Wages or payment for work, separate from profit
- Profit and loss sharing rule
- How often accounts are presented and who keeps them
- Rules for new contributions and new members
- Exit rule: how a leaving member's share is valued (book value from the register or an agreed revaluation), what is deducted, and the payout period
- What happens to equipment contributed by a member if she leaves
- How disputes are settled (VO or CLF mediation first)
For a formal partnership, a partnership deed is usually stamped and may be registered under state rules; ask a local practitioner. If the unit plans to seek a grant that needs an own contribution, see how to prove your own contribution.
Common mistakes
| Mistake | Fix |
|---|---|
| Valuing an old machine at its original price | Agree a current value in writing on the day it is brought in |
| Cash contributions without receipts | Use a numbered receipt book or bank transfer |
| Using one member's personal account for the unit | Open an account in the unit's or group's name |
| Mixing wages and profit share | Pay work separately, then share profit |
| No exit rule | Write it down before the unit starts |
| Office bearers keeping books without review | Read the register aloud monthly and get signatures |
Key takeaways
- Record each contribution with date, type, agreed value, receipt and three signatures.
- Keep the shared unit's money and books separate from the SHG savings account.
- Maintain a capital account per member and reconcile it with the unit's net worth monthly.
- In the example, a written 50:50 equal-and-capital rule split ₹24,000 into ₹5,400 for Asha and ₹4,650 for each other member.
- Agree wages, profit sharing, loans and exit terms in writing before the first sale.
Related guide: SHG Digital Bookkeeping: Who Approves Entries and Access.
Related guides: Shared Farm Machinery Loan: Split Costs and Repayment, FPO Loan vs Member Loan: Who Is Liable for What.
Frequently asked questions
How should a group record what each member puts into a shared unit?
Keep a contribution register with date, member name, type of contribution (cash, equipment, raw material, space or labour), agreed value, and signatures of the member and two office bearers. Give each member a receipt and total each member's account every month.
Should labour be counted as a contribution?
Only if all members agree in writing beforehand. Many groups pay labour as wages or a fixed rate per piece and keep capital contributions separate, which is simpler and avoids disputes.
How is profit shared in a group enterprise?
It follows whatever the members agree and write down, for example in proportion to capital, equally, or partly by work done. Without a written agreement, disputes are common, so record the rule before the unit starts.
What happens when a member wants to leave?
The written agreement should say how her share is valued, whether any loan balance is deducted first, and how long the group has to pay her out. Pay by bank transfer and record it, so the remaining members' shares stay clear.
Is the SHG savings account the right place for a shared business?
Usually not. The SHG savings account holds the group's thrift and internal lending money. A shared enterprise is better kept in its own account and books so business profit or loss does not mix with members' savings.
This article is for general education and is not personalised financial, tax or legal advice. Rates and rules are as of 4 Nov 2026; confirm current terms with your lender, AMC or a qualified adviser.
