Topic - Self help groups(SHG)- For the Poor

  • ·      Self-Help Groups consists of certain members who pool their savings and constitute a fund which is further used in making finance and advances to other members.
  • ·      A typical SHG has 15-20 members.
  • ·      The members pool their savings and after some time, it becomes a large amount which is used to give loans to the needy ones at a very normal rate of interest.
  • ·      This helps to reduce the functioning of informal sectors of credit.
  • ·       After a year or so, if such group is regular in its savings, it becomes eligible for availing loan from the bank.
  • ·      Loan is sanctioned in the name of the group and is meant to create self employment opportunities for the members.
  • ·      Loans are provided for releasing mortgaged land, for meeting working capital needs as buying seeds, fertilizers, raw materials, for acquiring assets like sewing machines, hand-looms, cattle etc.
  • ·      Important decisions regarding the savings and loan activities are taken by the group members.
  • ·      The group decides the purpose, amount, interest to be charged, repayment of the loan etc.




Why are the self help groups popular?

  • The Self Help Groups are becoming popular for the following reasons:
  • They help the borrowers overcome the problem of lack of collateral.
  • They can get timely loans for variety of purposes and at a reasonable interest rate.
  • They are the building blocks of the organisation of the rural poor.
  • It helps women to become self reliant.
  • The regular meetings of the group provide a platform to discuss and act on various social issues such as health, nutrition, domestic violence, etc.