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Self
Help Groups in India: Key Points to Know
ADVANTAGES
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Self
Help Groups in India: Key Points to Know
DEFINITION: A self-help group is a group
of 10-20 women or men, mostly women of a village, who make small savings over a
period of time. The members of the group mutually contribute to a pool of
resources and then lending can begin from that fund. Bookkeeping and peer
pressure ensure that the money is used properly and is timely repaid by the members.
NEED
o Availability of
micro-credit and funds
o For upgrading their
standard of living
o For providing self
employment
o For emergency
situations
STRUCTURE
o 10-20 members
o Generally, all members
belong to Below Poverty Line(BPL)
o Maximum 30% in a group
maybe marginally Above Poverty Line(APL)
o Flat interest
rates
o Only one member will
be allowed per family
o A person will be
strictly a member of one group only
STAGES
OF SHG
o Formation of
group
o Pooling of funds
o Getting self-employed
for becoming financially strong
CHARACTERISTICS
o It is a self-governed
body
o A code of conduct is
followed
o It is linked with a
bank for lending small amounts of loans
o No need for
collateral
o Everyone in the group
get self-employed through the financial assistance given.
o Withdrawal of money
can also be done in an emergency like in a disaster or a major health
problem
o Mayor may not be
promoted by government
institutions
o Contributes to the
financial stability of the group
o Helps those who don’t
have a bank account
o Also, help in members
becoming an entrepreneur and in community development
 |
| High-Level Reasoning |
ADVANTAGES
o Provides social and financial
support
o Helps women to develop
a sense of leadership
o Helps invoke
confidence and self-confidence
o An individual feels
strong along with the other members of the group i.e strength in numbers
o Empowerment of poor
rural women
o To incorporate decision
making among women
o To inculcate the habit
of banking
o For development of
women as they take up social responsibility
o Reduces dependence on
informal lenders
o To inculcate the habit of
savings
NABARD- SELF HELP
GROUP BANK LINKAGE PROGRAM
o Once a base fund or
capital is created by an SHG and it also has a good track record of payments,
the SHG is allowed to borrow from banks.
o Hence, formal
financial services are granted to the members
o This further escalates
entrepreneurial opportunities
LIMITATIONS
o Lack of training
support
o Lack of support to
stabilize the enterprise
o Group discussions may
upset some members
o Less than ideal
average loan size
o Limited funds
o Lack of proper time
given to various group meetings
o NPAs of SHGs with
banks
o Hence, SHGs are
important for garnering economic and social support for people living in
villages. Such groups prove to be vital for the less privileged in our country
and help in providing strength and hope to them.
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