Self Help Groups Shgs
Self Help Groups Shgs
Self Help Groups Shgs
Functions
It looks to build the functional capacity of the poor and the marginalized
in the field of employment and income generating activities.
It resolves conflicts through collective leadership and mutual discussion.
It provides collateral free loan with terms decided by the group at the
market driven rates.
Such groups work as a collective guarantee system for members who
propose to borrow from organised sources. The poor collect their savings
and save it in banks. In return they receive easy access to loans with a
small rate of interest to start their micro unit enterprise.
Consequently, Self-Help Groups have emerged as the most effective
mechanism for
delivery of microfinance services to the poor.
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A Committee constituted under the chairmanship of Dr. C. Rangarajan
to prepare a comprehensive report on 'Financial Inclusion in the
Country' identified four major reasons for lack of financial inclusion:
Inability to provide collateral
security, Poor credit absorption
capacity, Inadequate reach of the
institutions, and Weak community
network.
The existence of sound community networks in villages is increasingly
being recognised as one of the most important elements of credit linkage in
the rural areas. They help in accessing credit to the poor and thus, play a
critical role in poverty alleviation.
They also help to build social capital among the poor, especially
women. This empowers women and gives them greater voice in the
society.
Financial independence through self-employment has many externalities
such as improved literacy levels, better health care and even better family
planning.
Genesis of SHG
Benefits of SHGs
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Social integrity – SHGs encourages collective efforts for combating
practices like dowry, alcoholism etc.
Gender Equity – SHGs empowers women and inculcates leadership skill
among them.
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Empowered women participate more actively in gram sabha and
There is evidence in this country as well as elsewhere that formation of
Self-Help Groups has a multiplier effect in improving women’s status in
society as well as in the family leading to improvement in their socio-
economic condition and also enhances their self-esteem.
Pressure Groups – their participation in governance process enables
them to highlight issues such as dowry, alcoholism, the menace of open
defecation, primary health care etc and impact policy decision.
Voice to marginalized section – Most of the beneficiaries of government
schemes have been from weaker and marginalized communities and hence
their participation through SHGs ensures social justice.
Financial Inclusion – Priority Sector Lending norms and assurance of
returns incentivize banks to lend to SHGs. The SHG-Bank linkage programme
pioneered by NABARD has made access to credit easier and reduced the
dependence on traditional money lenders and other non-institutional
sources.
Improving efficiency of government schemes and reducing corruption
through social audits.
Alternate source of employment – it eases dependency on agriculture by
providing support in setting up micro-enterprises e.g. personalised
business ventures like tailoring, grocery, and tool repair shops.
Changes In Consumption Pattern – It has enabled the participating
households to spend more on education, food and health than non-client
households.
Impact on Housing & Health – The financial inclusion attained through
SHGs has led to reduced child mortality, improved maternal health and the
ability of the poor to combat disease through better nutrition, housing and
health – especially among women and children.
Banking literacy – It encourages and motivates its members to save and
act as a conduit for formal banking services to reach them.
Opportunities
SHGs often appear to be instrumental in rural poverty alleviation.
Economic empowerment through SHGs, provides women the
confidence for participation in decision making affairs at the
household-level as well as at the community-level.
Un-utilised and underutilised resources of the community can be mobilised
effectively under different SHG-initiatives.
Leaders and members of successful SHGs bear the potentiality to act as
resource persons for different community developmental initiatives.
Active involvement in different SHG-initiatives helps members to grow
leadership- skills. Evidences also show that often women SHG leaders are
chosen as potential candidates for Panchayat Pradhans or representatives
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Empowered women participate more actively in gram sabha and
to Panchayati Raj Institution
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(PR
Weaknesses of SHGs
Members of a group do not come necessarily from the poorest families.
Though there has been social empowerment of the poor, the economic gain
to bring about a qualitative change in their life has not been satisfactory.
Many of the activities undertaken by the SHGs are still based on primitive
skills related mostly to primary sector enterprises. With poor value addition
per worker and prevalence of subsistence level wages, such activities often
do not lead to any substantial increase in the income of group members.
There is a lack of qualified resource personnel in the rural areas who could
help in skill upgradation or acquisition of new skills by group members.
Further, institutional mechanisms for capacity building and skill training
have been lacking.
Poor accounting practices and incidents of misappropriation of
funds. Lack of resources and means to market their goods.
SHGs are heavily dependent on their promoter NGOs and government
agencies. The withdrawal of support often leads to their collapse.
Challenges
Lack of knowledge and proper orientation among SHG-members to take
up suitable and profitable livelihood options.
Patriarchal mindset – primitive thinking and social obligations discourages
women from participating in SHGs thus limiting their economic avenues.
Lack of rural banking facilities – There are about 1.2 lakh bank branches
and over 6 lakh villages. Moreover, many public sector banks and micro-
finance institutions are unwilling to provide financial services to the
poor as the cost of servicing remains high.
Sustainability and the quality of operations of the SHGs have been a
matter of considerable debate.
No Security – The SHGs work on mutual trust and confidence of the
members. The deposits of the SHGs are not secured or safe
Only a minority of the Self-Help Groups are able to raise themselves
from a level of micro-finance to that of micro-entrepreneurship.
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Rapid expansion of financial infrastructure (including that of
adopting extensive IT enabled communication and capacity building
measures in these States.
Extension of Self-Help Groups to Urban/Peri-Urban Areas – efforts should
be made to increase income generation abilities of the urban poor as there
has been a rapid rise in urbanisation and many people remain financially
excluded.
Positive Attitude – Government functionaries should treat the poor and
marginalized as viable and responsible customers and as possible
entrepreneurs.
Monitoring – Need to establish a separate SHG monitoring cell in every
state. The cell should have direct links with district and block level
monitoring system. The cell should collect both quantitative and qualitative
information.
Need Based Approach – Commercial Banks and NABARD in
collaboration with the State Government need to continuously innovate
and design new financial products for these groups.
Case studies
Kudumbashree in Kerala
It was launched in Kerala in 1998 to wipe out absolute poverty
through community action. It is the largest women empowering
project in the country. It has three components i.e., microcredit,
entrepreneurship and empowerment. It has three tier structure -
neighborhood groups (SHG), area development society (15-20 SHGs)
and Community development society (federation of all groups).
Kudumbashree is a government agency that has a budget and staff
paid by the government. The three tiers are also managed by unpaid
volunteers.
Mahila Arthik Vikas Mahamandal (MAVIM) in Maharashtra
SHGs in Maharashtra were unable to cope with growing volume and
financial transactions and needed professional help. Community
managed resource centre (CMRC) under MAVIM was launched to
provide financial and livelihood services to SHGs. CMRC is self-
sustaining and provides need-based services.