Self Help Group in India

A Study of light and Shades

Presented By-
Anshul Upadhyay
Arun Singh Yadav
Shruti Goyal
MBA- Rural Management
Semester II
Self Help Group

A Self Help Group (SHG) is a village –based financial

intermediary usually composed of between 10—15 local
women.
The popularity of Self Help Groups is seen all over in
South Asian countries and also the countries like UK and
west of America, which are capitalizing the funds and
taking initiative for actively participating and also the
countries in western areas, where the programme is
effective due to the demand and condition.
SHG focuses on organization of the poor grassroot level
through the process of self mobilization for poverty
alleviation.
Self Help Group
SHG is approach to organize the poor stems from the
conviction that there is tremendous potential within the
poor to help themselves and that the potential can be
harassed by organizing them.
Social mobilization enables the poor build their own
organizations (Self Help Group {SHG}) in which they
participate fully and directly and take decisions on all
issues concerning poverty eradication.
Members make small regular savings contributions over a
few months until there is enough capital in the group to
begin lending.
Self Help Group
Funds then may be lent back to the members or to
others in the village for any purpose. In India, many
SHGs are ‘linked’ to banks for the delivery of
microcredit.
SHG are the member-based micro finance
intermediaries inspired by external technical support
that lie between informal financial market actors like:
moneylenders, collectors, and ROSCAs on the one hand,
and formal actors like microfinance institutions and
banks on other.
Other organization in this transitional zone in financial
market development include CVEAs and ASCAs.
Self Help Group
SHG is registered group of micro entrepreneurs, having
homogenous social and economic background, voluntarily
coming together to save regular small sums of money,
mutually agreeing to contribute to a common fund and to
meet their emergency needs on the basis of mutual help.
The group members use collective wisdom and peer
presure to ensure proper end-use of credit and timely
repayment.
To make the book- keeping simple enough to be handled
by the members, flat interest rates are used for most
loan calculations.
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SHG are started by the non-government organizations
(NGOs) that generally have broad anti-poverty agendas.
SHG are seen as instruments for a variety of goals
including empowering women, developing leadership
abilities among poor people, increasing school enrolments,
and improving nutrition and working on birth control.
Advantages of financing through SHG
An economically poor and individual gains strength as part of
group. Besides financing through SHG, it reduces the
transaction costs for both lenders and borrowers.
Self Help Group
Self Help Group in association with National Bank
for Agriculture and Rural Development
Normally the SHG is conducted by an respective NGO of
the country and help cater the financial services, while
reaching to the remotest and deprived areas.
This is a gist of the formulation of SHG in a area.
Please Note: The area’s name is not mentioned and neither
the implementation is exact. The below information will
only state the performance of the SHG in villages.
 The first and foremost step is to visit the very poor
families in the selected village.
Self Help Group
 Talk to the family and explain the reason of visiting
their place, while not imposing your thoughts to them,
but rather conveying in convincing manner.
 It’s important to be known to the people and to win the
trust.
 The best way to convince your matter, is to communicate
with the elders in the village, explain the manner
according to their level and please them while putting
the request for the bright future of their village.
 The second best option is, to interact with the
womenfolk and encourage them for self-dependence and
raising the important issues of their family.
Self Help Group
 After the procedure of interaction, and once getting the
positive response, you will find that some kind of mutual
liking has been existed between many of them.
 Before the commencement of SHGs, hold a meeting of
the community leaders and elders of the village. Explain
them your plan to form SHGs. Once getting support, the
participation involvement seen will be much-much upbeat.
 After the meeting, you are now ready to push forward
your thoughts to the participants (SHG members).
 You can only call one member of the family for the
meeting.
 Be prepared with the back up of loads of questions and
also comfortably explaining according to their language.
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 Characteristics and results, which you will be observed, will
be of mixed response and thus accordingly react on the
same.
 The ideal size of an SHG is 10-20 members.
 The group need not be registered.
 From one family, only one member.
 The group consists of either only men or of only women.
 Women’s groups are generally found to perform better.
 Members have the same social and financial background.
 The group should meet regularly.
 Compulsory attendance.
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Functions of SHGs:
a) Savings and Thrift:
 The amount may be small, but with all the members.
 ‘Savings first – Credit later’ should be the motto of every group
member.
 Group members learn how to handle large amounts of cash
through savings. This is useful when they use bank loans.
b) Internal leading:
 The savings to be used as loans for members.
 The purpose, amount, rate of interest, etc, to be decided by the
group itself.
 Proper accounts to be kept by SHG.
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 Opening savings bank account with bank.
 Enabling SHG members to obtain loans from banks, and
repaying the same.
c) Discussing problems:
 Every meeting, the group will discuss and try find solutions to
the problems faced by the members of the group.
 How can one spread the message of SHG?

One can involve effectively in formation, nurturing, and linking

the SHGs to a local bank. Also, it’s advisable to get connected
with NBARD Regional Offices that present in 32 cities in
India.
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“Lets bring the Change and

shape the nation prosper”.

Thank You