Self Help Groups

Simranjeet Singh MBA-926

‡Need For SHGs ‡Introduction ‡History ‡Functioning ‡Goals ‡Present Status & Spread ‡Government Policy ‡Linkages ‡Structure Of SHG Movement ‡Future prospects ‡Conclusion ‡A Remarkable SHG story: Kudumbashree

Need for SHGs  The overwhelming majority of people who earn less than $1 a day. . especially in the rural areas.  Money management services allow us to lessen the curse the poverty for the millions in its grasp.  Financial services have been identified as a crucial tool to prevent financial distress and implosion of the lives of the people with no safety cushions. continue to have no practical access to formal sector finance.


 SHGs are formed by NGOs. micro entrepreneurs who have volunteered to organize themselves into a group for eradication of poverty of the members.  It is a village-based financial intermediary. whose members agree to save regularly and convert their savings into a Common Fund known as the Group corpus.Introduction  Self Help Groups:-is group of rural poor. Government agencies or Banks. .

.  Funds may then be lent back to the members or to others in the village for any purpose. many SHGs are 'linked' to banks for the delivery of microcredit.  In India.Continued  Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending.

and formal actors like microfinance institutions and banks on the other. .In Other Words  SHGs are member-based microfinance intermediaries inspired by external technical support that lie between informal financial market actors like moneylenders. Other organizations in this transitional zone in financial market development include CVECAs and ASCAs. and ROSCAs on the one hand. collectors.

the GoI launched the Integrated Rural Development Program (IRDP). which provided government subsidized credit through banks to the poor. a large poverty alleviation credit program.  There were several objectives for the bank nationalization strategy including expanding the outreach of financial services to neglected sectors.  In the early 1980s. witnessed a substantial amount of resources being earmarked towards meeting the credit needs of the poor. circa 1969.History  The post-nationalization period in the banking sector. .

 The mandate of SGSY is to continue to provide subsidized credit to the poor through the banking sector to generate self-employment through a self-help group approach .  To answer the need for microfinance from the poor.  In 1999. the GoI merged various credit programs together.Continued  But studies showed that what the poor needed was was better access to financial services and products. the past 25 years has seen a variety of microfinance programs promoted by the government and NGOs. refined them and launched a new program called Swaranjayanti Gram SwarazagarYojana (SGSY). rather than cheap subsidized credit.

 It is closely related to that of solidarity lending.  This system eliminates the need for collateral. . flat interest rates are used for most loan calculations.Functioning  The group members use collective wisdom and peer pressure to ensure proper end-use of credit and timely repayment.  To make the book-keeping simple enough to be handled by the members. widely used by microfinance institutions.

Empowering women by improving economic status. Developing leadership abilities among poor people.  Self-help groups are seen as instruments for a variety of goals: 1.Goals  Self-help groups have a varying emphasis on microfinance or may be seen as microfinance + . 2. .

as well as their efforts to aggregate locally controlled pools of capital through federation. .  It should be noted that financial intermediation is generally seen more as an entry point to these other goals. 5. 4. rather than as a primary objective. as was historically accomplished by credit unions. Increasing school enrolments.Continued 3.  However this can hinder their development as sources of village capital. Use of birth control measures. Improving nutritional status.

Present Status & Spread  Not all states are created equal when it comes to SHGs  Maximum SHGs are found in southern states of TN. Kerela. AP. . Karnataka(44%)  Northern states have shown higher failure rates.

The policy environment in India has been extremely supportive for the growth of the microfinance sector in India. the GoI merged various credit programs together. In 2005. SHGs are networking themselves into federations to achieve institutional and financial sustainability. the GoI allowed MFIs to be eligible for external commercial borrowings which would allow MFIs and private banks to do business thereby increasing the capacity of MFIs. significant policy announcements from the GoI and RBI have served as a shot in the arm for rapid growth. . In many Indian states. Particularly during the International Year of Microcredit 2005.     refined them and launched a new programme called Swaranjayanti Gram SwarazagarYojana (SGSY).Government Policy  In 1999.

.  This model has attracted attention as a possible way of delivery microfinance services to poor populations that have been difficult to reach directly through banks or other institutions. borrow from banks once they have accumulated a base of their own capital and have established a track record of regular repayments. under NABARD's SHG-bank-linkage program.Linkages  Many self-help groups. especially in India.

Present Status: SHG-Bank Linkage Model In Rs Crore Source:NABARD .

Structure Of SHG Movement .

 It has been estimated that double the current no.  GoI & RBI have formulated policies keeping this view in accordance.Future Prospects  NABARD has identified MFIs as a core strategy for expanding credit access. are needed to bridge the credit supply gap in the next 10 years. SHGs. . the most successful MFI model.(NABARD study).

 There is still considerable scope for this model to grow and provide access to its members to a whole slew of financial services unavailable to them before.  However significant challenges remain in terms of legal status and governance structures left undefined.Conclusion  There is no doubt that SHGs have created a quiet revolution in the lives of millions of the poorest people across the world. .

It has diversified and expanded into initiatives like catering services. It was conceived as a collaborative venture of the state government. t was initially conceived as a community based women oriented initiative with Neighbourhood Groups (NHG) as its base. started on a modest scale in 1998.A Remarkable SHG story: Kerala s Kudumbashree        This self-help chain. . NABARD and State Poverty Eradication Mission. Besides the social impact. has grown over the period as one of the mighty women s movements in Asia with a fulltime membership of 3. budget hotels and group farming & even IT services. 53 municipalities and 5 city corporations. The units started small and micro enterprises & cottage industries by pooling individual savings and with support of rural or co-operative banks and civic bodies. The NHGs' number has increased within a short time exceeding 2. the product and services of Kudumbasree have been able to achieve a brand-like status.03 lakh with their presence in all 999 village panchayats.7 million. engaged in an array of gainful activities.



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