Thursday, 19 September 2019

Self Help Group-1 , Banking Fundamentals to Know for Students.

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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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