WHAT IS SHG?

SHGs (Self Help Groups) are informal associations of people who choose to come together to find ways to improve their living conditions. It can be defined as self governed , peer controlled information group of people with similar socio economic back ground and having a desire to collectively perform common purpose. Villages face numerous problems related to poverty , illiteracy, lack of skills, lack of formal credit etc ,these problems cannot be tackled at an individual level and need collective efforts . Thus SHG can become a vehicle of change for the poor and marginalized . SHG rely on the notion of "Self Help" to encourage self-employment and poverty alleviation.

Functions

• Build functional capacity
• Resolve conflicts
• Provide collateral free loan
• Work as collective guarantee scheme
• Delivery of micro finance services to the poor

Need for SHGs

• One of the reason for rural poverty in our country is low access to credit and financial services.
• A committee constituted under the chairmanship of Dr. C . Rangarajan to prepare a comprehensive report on" Financial Inclusion in Country" identified four major reasons for lack of financial inclusion.

1. Inability to provide collateral security.
2. Poor credit absorption capacity.
3. Inadequate reach of the institutions .
4. Weak community network.

• The existence of sound community networks in villages is increasingly being recognized as one of the most important elements of credit leakage in 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 poor, especially women. This empowers women and gives them greater voice in society.
• Financial independence through self - employment has many externalities such as improved literacy levels, better health care and even better family planning.

Genesis of SHGs

The genesis of SHG in India can be traced to formation of self employed women's association (SEWA) in 1970. The SHG bank linkage project launched by NABARD in 1992 has blossomed into world's largest microfinance project. NABARD along with RBI permitted SHG to have savings account in banks from the year 1993. Today , state Rural Livelihoods Mission (SLRMs) are operational in 29 states and 5 UTs .

Benefits of SHGs

• Social integrity
• Gender equity
• Pressure groups
• Voice of Marginalizes section
• Financial inclusion
• Improving efficiency of government schemes
• Alternate source of employment
• Impact on housing and health
• Banking literacy

Challenges

• Lack of knowledge
• Patriarchal mindset
• Lack of banking facilities
• Lack of sustainability and quality in operations
• No security

Way forward

• Government should play a role of facilitator and promotor.
• Expanding SHG movement to credit deficient areas.
• Rapid expansion of financial infrastructure.
• Extension of SHG s to urban/peri urban areas
• positive attitude.
• monitoring.
• Need based approch
• Examples ; Kudumbashree in Kerala, Mahila Arthik Vikas Mahamandal (MAVIM) in maharashtra.