How Self Help Groups in India is Transforming Lives
Self Help Groups are the association of financially weak people or members, which are solely created for the benefits or common interests of the group members itself.
All the members of Self Help Groups have one common interest i.e seeking the financial well being of their members belonging to the group.
In this post, you would learn What are Self Help Groups or SHG? What are the Features of Self Help Groups or SHG in India? What are the functions of Self Help Groups in India? How do Self Help Groups in India work? Importance of Self Help Groups in India. Advantages of Self Help Groups in India.
In India, there is an old saying that “God help those who help themselves”. I found this myth quite true for these Self Help Groups. Is not it?
In line with this, the Self Help Groups or SHGs started helping themselves on their own by creating self-employment and have been successful to eradicate their basic common problems by a great extent so far.
Generally, Self Help Groups are formed by taking 10 to 20 local people or members. This SHG is an informal association with a view to addressing their common problems or issues ideally form the homogeneous background.
The main reason for the creation of the Self Help Groups is the development of socio-economic conditions of the members within the group.
They are much more self-reliant and seek to enhance their current financial situation which would not have been possible without forming this group.
What are Self Help Groups or SHG?
Self Help Groups or SHG can be defined as a voluntary organisation of financially downtrodden local people working within defined rules and regulations with common socio-economic objectives.
It has been a constant endeavour of the Government towards women empowerment and economic development through Self Help Groups in India.
Before 1992 there was a huge supply of credit facilities to the formal sectors across India. But no one was even bothered to supply the same credit facilities to the informal sector like SHG.
Then the NABARD came to the rescue of these informal sectors and launched the Self Help Groups scheme as one of the informal credit facilities.
This SHG also acts as a medium for earning bread and butter for the unemployed and low-income groups who don’t have usual access to the formal credit systems.
Therefore, Self Help Group can be summarised as below:
1. Self Help Groups or SHGs are informal groups or association of a small number of people,
2. This SHG is a mutual group and the members help each other mutually,
3. Members of SHGs have similar kind of common financial problems. So, the formation of the group takes place to overcome these common problems,
4. The common interests of the SHG group are to make a better standard of living by uplifting their current social and economic conditions.
5. The members of the SHG group save a little amount of money equally each and every month and deposit the corpus in a Bank.
6. After 6 months or so, the group members can take a loan from the bank with the help of their group.
What are the Features of Self Help Groups or SHG in India?
The main features of the Self Help Groups are as follows:
1. Self Help Groups are formed with a small number of members say 10 to 20 members,
2. All the members are homogeneous in regards to socio-economic conditions,
3. All the members of the Self Help Group have one common interest i.e. upliftment of socio-economic conditions,
4. All the SHG members have equal rights and privileges within the group,
5. SHG is controlled and operated in a democratic manner,
6. SHGs are enrolled or registered by the financing Primary Credit Cooperative Society, District Central Cooperative Bank, State Cooperative Bank as an individual member of the society,
7. Self Help Groups in India is enrolled and treated as an individual,
8. Self Help Groups are considered to be a part of the Micro Finance class,
9. An SHG provides finances to their members primarily for production purposes such as pickles, papad, dairy products, animal husbandry, ornamental fishing, jewellery and many more,
10. Loans are also given to individual members for consumption purposes but the liability to repay the loan lies on the entire group itself,
11. Most importantly members of the SHG Group must maintain the monthly thrift amount,
12. Either women only or men only SHG group is formed in India. Mixed SHG group is not preferable.
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What are the functions of Self Help Groups in India?
The main functions of a Self Help Groups in India are discussed below:
The intending members first should call a meeting for the formation of the SHG. In that meeting, certain points are decided such as:
- The name of the group;
- Applicable rules and regulations that should be followed;
- Who will be the group leader;
- Who will be the signatory authorities;
- Thrift amount to be deposited by each member per month;
- What will be the financing activity of the group;
The main functions are:
saving a small amount of money equally each month and building a corpus. Deposit the corpus at group level into a bank. Later utilisation of the funds taken from the bank for different skill set.
Creation of self-employment and upliftment of financial conditions. The group intensely works for leading a comfortable financial life and fulfilling the common interests of financially downtrodden members.
The other functions are:
1. The Self Help Groups in India must consist of minimum 10 and maximum of 20 members,
2. Also, the SHG should not allow more than one member from each family,
3. Ideally, the Primary Agricultural Credit Societies or PACS are the main enrolling and financing authority. Thus, Self Help Groups in India is called a co-operative under co-operatives,
4. Being the main financing authority the PACS act as the regulator for the SHGs,
5. PACS decide the deposit(Thrift) rate, financing and other activities for the SHG,
How do Self Help Groups in India work?
1. Once an SHG is enrolled with a particular PACS, it starts depositing small amount equally every month at the group level,
2. Thereafter, the SHG deposits the entire amount in a single account maintained with the affiliated credit society,
3. Once the SHG in India is more than 6 months old, the group members are admissible to take loans from the credit society,
4. Here, the group leader has the sole discretion to decide which members to get such loan,
5. Though the group leader has the discretionary power, the decision on loan disbursement among the members must be taken in a meeting where all the group members must be present,
6. SHG members who availed loan should repay the amount to the group and the group, in turn, remits the entire amount from all members to the respective credit societies,
7. The SHG in India is held responsible for loan repayment and not the individual members. Since, the identity of a group is that of an individual,
8. The most interesting part of Self Help Groups in India is that the borrowing of funds is for the requirements of the members but the loan is granted in favour of the group leading to repayment onus on the group itself,
9. It is a joint responsibility of all the group members to monitor and supervise the functioning of their group,
10. The SHG must call mandatory weekly and monthly meetings. This brings the group members closer to each other and the chances of it being successful enhance,
11. In each and every meeting, the group members discuss their problems and all group members jointly come together to solve these problems,
12. In the monthly meetings, the group members put in different ideas, exchange different entrepreneurship ideas so that they can utilise their corpus and live a better life.
Are Self Help Groups in India for the poor?/ Why is SHG important?
India is a country with diverse culture, religion, language and cast. In a single word unity in diversity. Therefore, it is not being possible for the Government itself to offer jobs to all in Govt. sectors alone.
Thus to ensure food for all, to eradicate poverty and for the upliftment of social and economic conditions of the people, the Govt. has allowed the formation of SHG Group of the people having common problems.
Therefore, in the form of SHG in India, the motto of the Government is the eradication of poverty, the betterment of economic conditions, women empowerment, reduction of suicidal incidents and providing an impactful social status.
As I mentioned earlier, the Govt. is not indeed in a position to offer jobs to all the people from the informal sectors across the country, therefore, Govt. is putting enormous efforts to bring microfinance or microcredit facilities to the members of the SHG.
Different State Governments as well as Govt. of India is coming up with new ideas for the overall betterment of the SHG in India like Skill development, capacity building, marketing of SHG products, organising fairs and setting up of exclusive SHG sales counters.
These projects of the Govt. have been successful to a great extent across India to enhance the economic conditions of the poor people, especially in rural India.
Importance of Self Help Groups in India/ Role of Self Help Groups
Self Help Groups in India are playing a significant role in uplifting the socio-economic conditions of the backward classes, poor and unemployed people across India.
SHG group ensures self-employment by raising the standards of living and the income level of rural people. It has transformed many lives towards a better living.
More and more women, youths and backward classes are joining their hands together in forming a better tomorrow and a better India through SHG group.
Studies have shown that with the increase in the number of SHG in India, there has been a substantial reduction in the incidents of torture on rural women, number of suicides, child marriage.
Therefore, SHG in India is not only helping in self-employment but also helping in women empowerment. It is also a proven fact that women SHG in India is more successful than any other groups. As women are more patient and flexible towards any worse conditions.
Advantages of Self Help Groups in India
1. Capacity building: Self Help Groups in India is generally an association of 10 to 20 members. Thus this SHG group can transform the lives of many people at a time.
Millions of poor and people from the marginalised sections are transforming their lives, their families, their societies through Self Help Groups.
This SHG in India obtains various skill, knowledge and apply them in discharging their duties within the group itself.
2. Self-confidence & self-esteem: Solving the most basic problems by earning a reasonable amount provides self-confidence and enhances self-esteem.
They feel the sense of having their heads in high and becomes a part of the better society and a better India.
3. Mutual help: The most crucial advantage of the SHG groups is that they are eager to help each other mutually. Instead of going alone they just give priorities to the groups.
Though the group is treated as an individual, it ensures mutual help.
4. Use of skill: With the constant help from the Govt. in terms of skill development, the SHG groups are now well equipped to apply their earned skill in different areas such as tailoring, beautician course, producing food products such as Jam, Jelly, Pickles, dairy products, Junk jewellery, soft toys, incense sticks, showpiece and many more.
Self Help Groups Project
The Govt. of West Bengal has introduced many projects for the benefits of the SHG groups in India like Swami Vivekananda SwanirbharKarmasansthanPrakalpa(SVSKP).
This project or scheme helps in the creation of self-employment opportunities for the backward classes, unemployed persons, minorities and especially women of rural areas. This leads to better socio-economic conditions for them.
Types of Self Help Groups in India?
Primarily a Self Help Group can be categorized into 3 types such as Type-1 SHG Group, Type- 2 SHG Group and Type 3 SHG Group.
Type 1 – SHG which is formed and financed by banks fall in this category;
Type 2 – SHG is formed by NGO and formal agencies, but it is financed by banks directly;
Type 3 – SHG is financed by banks with the help of NGO which acts as financial intermediaries.