Self Help Groups (SHG)

Definition: SHGs are typically small groups of people (usually women) from similar socio-economic backgrounds who come together voluntarily to form a group for mutual support, saving, and lending practices.

Financial Inclusion: SHGs aim to provide access to formal banking systems for marginalised and low-income groups.
Poverty Alleviation: By promoting savings and providing credit for self-employment, SHGs help reduce poverty in rural and semi-urban areas.
Women’s Empowerment: A large proportion of SHGs consist of women, providing them with opportunities for financial independence, leadership, and decision-making in households and communities.
Capacity Building: SHGs encourage skill development, entrepreneurship, and awareness of social and financial issues.

Microfinance and Bank Linkage: SHGs play a key role in India’s microfinance movement, allowing members to access credit from formal financial institutions like banks. The National Bank for Agriculture and Rural Development (NABARD) has been instrumental in promoting SHG-Bank linkage programs.

Social Capital: SHGs help women break free from social isolation, giving them a platform to discuss issues like domestic violence, healthcare, and education.
Entrepreneurship: Many SHG members run small businesses such as tailoring, handicrafts, and dairy, contributing to their financial independence.

National Rural Livelihoods Mission (NRLM): This government program supports the formation and strengthening of SHGs, providing training, financial literacy, and access to credit.

Limited Access to Credit: Many SHGs struggle to access sufficient credit from formal banking institutions, often relying on informal lenders.
Low Financial Literacy: Lack of education and awareness among SHG members about financial management, investments, and government schemes hinders their growth.
Inconsistent Leadership: Leadership within SHGs may be weak due to the lack of proper training, resulting in poor group management and decision-making.
Social and Cultural Barriers: In some regions, especially rural areas, traditional gender roles, and social norms may limit the full participation of women in SHGs.

Improved Standard of Living: SHGs help improve the quality of life for rural households by enhancing access to savings and credit, improving household income, and enabling access to education and healthcare.
Employment Creation: SHGs provide employment opportunities at the local level, reducing migration to urban areas.
Community Development: SHGs are often involved in community-building activities like sanitation drives, health awareness campaigns, and education initiatives.

SEWA (Self Employed Women’s Association): One of the most famous SHG-based initiatives in India, SEWA is a trade union of self-employed women, helping them achieve financial independence and social security.
DWCRA (Development of Women and Children in Rural Areas): An earlier initiative that worked with SHGs to promote income-generating activities for women.