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Understanding Self Help Groups (SHGs)

Self-help groups (SHGs) originated in Bangladesh as a way for rural poor to organize and alleviate poverty through regular savings and lending. In India, SHGs were promoted starting in the 1980s by organizations like NABARD to provide credit and financial services. SHGs are small voluntary associations of 10-20 people from similar socioeconomic backgrounds who save regularly and use those savings to provide loans. They empower women economically by increasing access to financial resources which can boost household income, expenditure, and women's status and decision making power. A case study in North Tamil Nadu found that while women's incomes and expenditures rose after joining SHGs, savings increased slowly due to higher consumption spending.

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Manoj Kumar N
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216 views14 pages

Understanding Self Help Groups (SHGs)

Self-help groups (SHGs) originated in Bangladesh as a way for rural poor to organize and alleviate poverty through regular savings and lending. In India, SHGs were promoted starting in the 1980s by organizations like NABARD to provide credit and financial services. SHGs are small voluntary associations of 10-20 people from similar socioeconomic backgrounds who save regularly and use those savings to provide loans. They empower women economically by increasing access to financial resources which can boost household income, expenditure, and women's status and decision making power. A case study in North Tamil Nadu found that while women's incomes and expenditures rose after joining SHGs, savings increased slowly due to higher consumption spending.

Uploaded by

Manoj Kumar N
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd

SELF HELP GROUPS

BY
[Link] KUMAR
DEFINITION
• SHG is group of rural poor who have
volunteered to organize themselves into a group
for eradication of poverty of the members.
• They agree to save regularly and convert their
savings into a Common Fund known as the
Group corpus(collection of written works).
• The members of the group agree to use this
common fund and such other funds that they
may receive as a group through a common
management
Origin
• The origin of SHGs is from the brainchild of
Grameen Bank of Bangladesh, which was
founded by Mohammed Yunus.  SHGs were
started and formed in 1975.  In India NABARD
is initiated in 1986-87.  But the real effort was
taken after 1991-92 from the linkage of SHGs
with the banks. 
CONCEPT

• Small voluntary association of people

• From the same socio-economic background

• With a purpose of solving their common


problems through self-help and mutual help

• Major activities: saving & credit activities


SGH CAPACITY
• Generally a self-help group may consist of 10 to 20 persons.
• in difficult areas like deserts, hills and areas with scattered
and sparse population and in case of minor irrigation and
disabled persons, this number may be from 5-20.
• Generally all members of the group should belong to
families below the poverty line.
• People from APL and BPL are also work together in some
cases.
• APL are group leader ,treasurer etc and BPL are workers,
labors.
GROUP WORKS AND FUNCTIONS
• The group should devise a code of conduct (Group management norms)
to bind itself.
• This should be in the form of regular meetings (weekly or fortnightly),
functioning in a democratic manner, allowing free exchange of views,
participation by the members in the decision making process.
• The group should be able to draw up an agenda for each meeting and
take up discussions as per the agenda.
• The members should build their corpus through regular savings.

• The group should be able to collect the minimum voluntary saving


amount from all the members regularly in the group meetings. The
savings so collected will be the group corpus fund.
• The group should develop financial management norms covering
the loan sanction procedure, repayment schedule and interest
rates.
• The members in the group meetings should take all the loaning
decisions through a participatory decision making process.
• The group should operate a group account preferably in their
service area bank branch, so as to deposit the balance amounts
left with the groups after disbursing loans to its members.
• The group should maintain simple basic records such as Minutes
book, Attendance register, Loan ledger, General ledger, Cash
book, Bank passbook and individual passbooks.
GOVERNMENT POLICY
Apart from other activities focusing on women’s empowerment, health and
educational attainment.
• Increased participation of women in SHGs and saving & credit activities will
empower women economically.

Economic empowerment will –


• empower women’s status in family & in the community
• help women to access and utilize better health services &facilities
• contribute towards improving women’s health & empowerment
• help in achieving ‘Millennium Development Goals’ in developing countries.
Women Empowerment Through Self Help
Groups:
A Case Study in the North Tamil Nadu
Objectives
The overall objective of the present study is to
analysis the economic empowerment of
women through SHGs in the north districts of
Tamil Nadu.  However more specifically:
1. To study the income, expenditure and savings
of the members after joining SHGs.
2.  To know the role of SHGs in providing rural
credit.
Reasons for Joining SHGs
• The major aim of the SHGs is to promote savings and to credit for the
productive and consumption purposes. 
• This is true because many people in the study area joins the SHGs for
getting loan and promote their personal savings, in addition to get social
status
• In the study area many people (43.28%) joins the SHGs for getting
financial assistance, 32.84% of the respondents joins the SHGs for the
social status, because SHGs give the identify to the members. 
• 14.92% of the respondents join for improving their savings.   For social,
cultural and political improvement (other reasons 8.96%) some
members join in the SHGs.
Income level
Conclusion
• The study was undertaken the women
empowerment through SHGs in the north Tamil
Nadu. 
• It is found that the income of the women has
been increased after joining the SHGs.  So that
the monthly household expenditure also has
been raised considerable level. 
• But the savings is increasing at slow rate, because
the incremental expenditure is higher.  Mostly
they are spending for present consumption.  The
members should change it.  The good practice of
the women SHGs in the study area is repayment
of the loan in time. 

Common questions

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Policy initiatives bolster SHGs by emphasizing women’s participation in savings and credit activities to spur economic empowerment. These policies aim to improve women's status both within the family and community by facilitating access to financial resources and decision-making processes. Increased participation helps women utilize better health services, contribute to community development, and achieve social equality goals. Government support through frameworks catering to women's needs in SHGs promotes sustainable economic and social empowerment .

SHGs typically consist of 10 to 20 members from the same socio-economic background, although in certain areas, the group size may vary from 5 to 20. Members establish a code of conduct and meet regularly to discuss agendas and make decisions democratically. Key activities include accumulating savings into a group corpus and managing loans through participatory decision-making. They maintain financial management norms and track finances with basic records. Group decisions are made collectively in meetings, ensuring that all members contribute and agree on loan disbursement and repayment terms .

In North Tamil Nadu, SHGs have led to increased income for women, which has positively impacted household economics by raising monthly expenditures. Despite this improvement, the study noted challenges such as slower growth in savings due to higher spending on present consumption. SHGs have encouraged timely loan repayments, suggesting a shift towards responsible financial behavior among women. Overall, SHGs have expanded women's financial opportunities and influence within their households .

The primary objective of SHGs is the eradication of poverty among its members by promoting savings and providing access to credit for productive and consumption purposes. SHGs achieve this by organizing individuals from similar socio-economic backgrounds into groups, where they agree to save regularly and create a common fund from their savings. Members make collective decisions on loan disbursement and use the common fund and additional funds received to support each other's financial needs, managed through a structured group process with democratic participation .

Having a diverse SHG membership that includes both APL and BPL members can enhance group dynamics by fostering leadership skills among APL members, often taking roles such as group leader or treasurer, while providing BPL members opportunities for financial growth. This mix encourages knowledge-sharing, greater social cohesion, and mutual support, helping uplift BPL members economically while allowing APL members to engage in community service and leadership, leading to a more inclusive and integrated development process .

SHGs face the challenge of increasing savings at a slow rate as members experience a rise in household expenditures after joining. The study in North Tamil Nadu found that although women's income increased, the incremental expenditure was higher than the savings rate. Members tended to use the increased income for present consumption rather than long-term savings, highlighting the need for encouraging savings practices to balance expenditures .

Individuals primarily join SHGs to access financial assistance and promote personal savings. In the study area of North Tamil Nadu, 43.28% joined for financial assistance, while 32.84% sought social status. SHGs fulfill these needs by providing loans, enabling savings, and improving members' social identification in the community. Additionally, SHGs offer cultural and political improvement opportunities for members, fostering a supportive environment for personal and collective development .

The organizational structure of SHGs is designed to facilitate effective financial management and decision-making through democratic participation. SHGs are comprised of members who meet regularly to discuss and decide on group matters, guided by established norms. They maintain financial records like loan ledgers and cash books, and develop norms for loan procedures, repayment, and interest rates. This structure ensures transparency, accountability, and collective responsibility, empowering members to participate equally in financial decisions and manage resources effectively .

SHGs contribute to women's empowerment by increasing their economic status through engagement in saving and credit activities, which enhances their influence within their families and communities. Economic empowerment allows women to access and utilize better health services, improve their health and educational attainments, and contribute to achieving Millennium Development Goals. As women's economic contributions grow, they gain social status and recognition, strengthening their role in community development and decision-making processes .

SHGs originated as a concept from the Grameen Bank of Bangladesh, founded by Mohammed Yunus in 1975. In India, the initiative started in 1986-87 with NABARD, but significant growth occurred post-1991-92 due to the linkage of SHGs with banks. This evolution highlighted the importance of credit access and financial inclusion in poverty eradication, leading to widespread SHG adoption across rural areas, further integrating women and economically disadvantaged groups into the development process .

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