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Self Help Groups

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  • Last Updated : 10 Jun, 2022

Self Help Groups are small groups usually consisting of 10-20 local women of rural areas belonging to the same neighborhood perhaps to meet, save and improve their living conditions. People belonging to similar economic and social backgrounds come together with the help of any NGO or any Government agency. It is said that self-help groups took their birth in India with the establishment of the Self-Employed Women’s Association (SEWA) in 1972. The aim of these groups is to help the poor people to enhance their living and help them have a better life. There’s a dire need for such Self Help Groups in rural areas. Their poor economical condition is due to the lack of facilities like limited access to credit and financial services. Thus, these people need some kind of assistance to better their way of living. This is where Self Help Groups come to rescue and assist these people to achieve their dreams. 

People with similar social or economical backgrounds or who belong to the same village come together and collect a small amount of money every week from members of the group and they deposit it in the banks which helps them get some interest. Interest becomes an extra source of income for the members. Then they give loans to the poor needy people from that money. This is how Self Help Groups work.

Some benefits of Self Help Groups

  • The members of Self Help Groups can take small loans to meet their daily needs with a cheap or reasonable interest rate. Self Help Groups induce banks to lend money to these poor or marginalized sections of the society. 
  • SHGs lend loans without collateral security. This is known as a Collateral-free loan. So this also helps these people or borrowers to overcome the problem of lack of collateral and other documentation. Though the group charges interest on these loans, it is comparatively less than what moneylenders charge the poor. Thus, SHGs save people from the exploitation of money lenders. It is not just the individual who is responsible for the repayment of the loan but the whole group. The loan is sanctioned in the name of the group. It’s a great opportunity for them as they find it difficult to get loans from banks without collateral security.
  • Self Help Groups motivate and encourage the habit of saving money among the group members.
  • Self Help Groups play a significant role in giving credit access to the poor.
  • Self Help Groups give self-employment opportunities. 
  • SHGs are empowering women by creating opportunities for self-employment. 
  • This kind of meeting of women every week helps them or provides them a platform to talk and discuss some social issues like health, nutrition, and domestic violence.  
  • They also get a chance to express their feelings or point of view when they are with other women.

Some problems include

  •  Questions of sustainability and the quality of self Help Groups.
  •  The SHGs work on mutual trust. Thus the deposits are not in safe hands.
  • There’s also a need for monitoring cells to be established for SHGs.
  • Patriarchal setup might not let the women go forward and make their living.

Sample Questions

Question 1: What are Self Help Groups?

Answer: 

Self Help Groups are small groups usually consisting of 10-20 local women of rural areas belonging to the same neighborhood perhaps, to meet, save and improve their living conditions.

Question 2: How does Self Help Groups function?

Answer: 

People belonging to similar economic and social backgrounds come together with the help of any NGO or any Government agency. People with similar social or economical backgrounds or who belong to the same village come together and collect a small amount of money every week from members of the group and they deposit it in the banks which helps them get some interest. Interest becomes an extra source of income for the members. Then they give loans to the poor needy people from that money.

Question 3: What is a Collateral-free loan?

Answer: 

SHGs lend loans without collateral security. This is known as a Collateral-free loan.

Question 4: Mention few benefits of SHGs.

Answer:

  • The members of Self Help Groups can take small loans to meet their daily needs with cheap or reasonable interest rate.
  • SHGs lend loans without collateral security. This helps them overcome the problem of collateral. They are saved from exploitation of moneylenders.
  • Self Help Groups motivate, encourage the habit of saving money among the group members.
  • Self Help Groups give self employment opportunities.
  • SHGs are empowering women by creating opportunity of self employments.
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