SELF HELP GROUPS
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This document provides an introduction to self-help groups (SHGs) in India. SHGs are informal associations of poor people who come together to improve their living conditions through collective efforts. They are formed to tackle problems related to poverty, illiteracy, lack of skills and access to formal credit that individuals cannot address alone. The goals of SHGs are to build trust between rural poor communities and bankers and encourage banking in hard to reach populations. SHGs function by members contributing small regular savings to a common fund and taking short term loans for economic activities. This empowers women and improves access to financial services, consumption, housing, health and government programs for marginalized groups. However, challenges remain regarding skills development, patriarch
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SELF HELP GROUPS
- 1. SELF HELP GROUPS (SHGs) – An IntroductionDr.C.Rajalakshumi, Asst. Professor, VVV College, Virudhunagar.
- 2. What is SHGs? Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions. They are small groups of poor people. The members of an SHG face similar problems. They help each other, to solve their problems.
- 3. Why SHGs are formed? 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. It can be defined as self governed, peer controlled information group of people with similar socio-economic background and having a desire to collectively perform common purpose.
- 4. AIM OF SHGs • To build mutual trust and confidence between th e bankers and the rural poor people. • To encourage banking activities in a segment of t he population in which formal financial institutio ns fell difficult to cover.
- 5. Functioning of SHGs • The SHGs create the common fund by contributing their small savings. • Every member of the group actively participates in the functioning of SHGs and they meet re gularly. • Their accounts and proceeding are maintained by the leader and leader is selected or elected among the group members. • Amount of loans are small and for short period. • Loan is sanctioned on ‘trust’ with minimum documentation and without any security. • The rate of interest differs from group to group. It is generally little higher than that of char ged by banks. • Repayment of loan amount is generally on time.
- 6. Benefits of SHGs • Social integrity – SHGs encourages collective efforts for combating practices like dowry, alcoh olism etc. • Gender Equity – SHGs empowers women and inculcates leadership skill among them. Empow ered women participate more actively in gram sabha and elections. • 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 impac t 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 ensur es social justice. • Financial Inclusion – Priority Sector Lending norms and assurance of returns incentivize banks to lend to SHGs. • Improving efficiency of government schemes and reducing corruption through social audits. • Changes In Consumption Pattern – It has enabled the participating households to spend mo re on education, food and health than non-client households. • Impact on Housing & Health – The financial inclusion attained through SHGs has led to redu ced child mortality, improved maternal health and the ability of the poor to combat disease th rough 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.
- 7. Opportunities of SHGs • SHGs often appear to be instrumental in rural poverty alleviation. • Economic empowerment through SHGs, provides women the conf idence for participation in decision making affairs at the househol d-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 in itiatives. • Active involvement in different SHG-initiatives helps members to grow leadership-skills.
- 8. Challenges in SHGs • 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 cos t 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
- 9. THANK YOU .