Meaning of Self Help Groups

SHG is a holistic programme of micro-enterprises covering all aspects of

self-employment, organization of the rural poor into self help groups and
their capacity building, planning of activity clusters, infrastructure build
up, technology, credit and marketing, occupational skills of the people
and availability of markets.

Self-Help Groups (SHGs) have emerged as a powerful tool for

community development and empowerment, especially in developing
countries. They are voluntary associations of individuals who come
together to address common social, economic, or personal challenges.
This essay aims to explore the significance and impact of self-help
groups in promoting social and economic transformation, fostering
empowerment, and addressing various socio-cultural issues.

Self-help groups have a long history, with roots in various forms of

collective action and community cooperation. Examples can be found in
ancient civilizations such as the guilds in medieval Europe and the
"tontines" in West Africa. However, the modern concept of SHGs gained
prominence in the 1970s and 1980s, particularly in India, as a response
to poverty, gender inequality, and the lack of access to financial
resources among marginalized communities.

Self-help groups not only address economic and socio-cultural

challenges but also have a positive impact on the health and well-being
of their members. SHGs serve as platforms for disseminating health
information, promoting hygiene practices, and raising awareness about
various health issues such as maternal and child health, HIV/AIDS, and
sanitation. Additionally, by providing a supportive network, SHGs
contribute to the psychological well-being of their members, reducing
feelings of isolation and providing emotional support during challenging
times

Explanation of Self Help Groups

Self-Help Group refers to a self-governed, peer controlled, informal
group of people with the same socio-economic background and
having a desire to collectively perform common purposes. Here
poor people voluntarily come together to save whatever amount
they can save conveniently out of their earnings, to mutually agree
to contribute to a common fund and to lend to the members for
meeting their productive and emergent needs.

SHGs have been able to mobilize small savings either on a

weekly or monthly basis from persons who were not expected to
have any savings. They have been able to effectively recycle the
resources generated among the members for meeting the
emergent credit needs of members of the
group.

SHG is a group formed by the community of women, which has a

specific number of members like 15 or 20. In such a group the
poorest women would come together for emergency, disaster,
social reasons, economic support to each other, have ease of
conversation, social interaction and economic interaction.

A SHG is an informal association to enhance the member’s

financial security as primary focus and other common interest of
members such as area development, awareness, motivation,
leadership, training and associating in other social inter-mediation
programmes for the benefit of the entire community.

Beyond economic empowerment, SHGs have a significant socio-

cultural impact. They challenge traditional gender roles by
empowering women and providing them with a platform to voice
their opinions, make decisions, and engage in income-generating
activities. This newfound agency leads to increased self-confidence
and enhanced social status for women within their families and
communities. SHGs also act as spaces for education, awareness,
and capacity-building, enabling members to tackle social issues
such as gender-based violence, child marriage, and discrimination.

Evolution of Self Help Groups In India

Every Self-help group usually goes through 3 stages of evolution stated
below:

1. Formation of group
 2. Funding or Formation of Capital
3. Development of required skills to boost income

generation

Various types of self help promoting agencies are stated

below :

1. Non-governmental agencies
2. Government
3. Poverty management programmes
4. State & commercial banks
5. Microfinance institutions
6. SHG Federations
7. SHG leaders/Entrepreneurs

The emergence of Self Help Groups –

Origin and Development in India

1. The origin of SHGs in India can be traced back to the

establishment of the Self Employed Women’s
Association (SEWA) in 1972.
2. Even before, there were small efforts at self-organising. For
example, in 1954, the Textile Labour Association (TLA) of
Ahmedabad formed its women’s wing in order to train the
women belonging to families of mill workers in skills such as
sewing, knitting, etc.
3. Ela Bhatt, who formed SEWA, organised poor and self-
employed women workers such as weavers, potters, hawkers,
and others in the unorganised sector, with the objective of
enhancing their incomes.
4. NABARD, in 1992, formed the SHG Bank Linkage Project,
which is today the world’s largest microfinance project.
5. From 1993 onwards, NABARD, along with the Reserve Bank of
India, allowed SHGs to open savings bank accounts in banks.
6. The Swarn Jayanti Gram Swarozgar Yojana was introduced in
1999 by GOI with the intention of promoting self-employment in
rural areas through formation and skilling of such groups. This
evolved into the National Rural Livelihoods Mission (NRLM) in
2011.

Functions of Self Help Groups

1. They try to build the functional capacity of poor and
marginalised sections of society in the domain of employment
and income-generating activities.

2. They offer collateral-free loans to sections of people that

generally find it hard to get loans from banks.

3. They also resolve conflicts via mutual discussions and

collective leadership.

4. They are an important source of microfinance services

to the poor.

5. They act as a go-through for formal banking services to reach

the poor, especially in rural areas.

6. They also encourage the habit of saving among the poor.

7. Self-Help Groups strengthen local governance by promoting

participatory decision-making and encouraging members to engage in
community development initiatives. SHGs often collaborate with local
authorities, NGOs, and government agencies to implement projects
related to health, education, sanitation, and infrastructure development.
Through their collective efforts, SHGs contribute to the democratization
of decision-making processes, ensuring that the needs and priorities of
the community are addressed effectively.

Need for Self Help Groups

One of the chief reasons for rural poverty is the lack of access or
limited access to credit and financial services.
The Rangarajan Committee Report highlighted four major
reasons for lack of financial inclusion in India. They are:
a. Inability to give collateral security
b. Weak credit absorption capacity
c. The insufficient reach of institutions
d. Weak community network
It is being recognised that one of the most important elements of
credit linkage in rural areas is the prevalence of sound community
networks in Indian villages. SHGs play a vital role in giving credit
access to the poor and this is extremely crucial in poverty
alleviation.
They also play a great role in empowering women because SHGs
help women from economically weaker sections build social
capital.
Financial independence through self-employment opportunities
also helps improve other development factors such as literacy
levels, improved healthcare and better family planning.
Beyond economic empowerment, SHGs have a significant socio-
cultural impact. They challenge traditional gender roles by
empowering women and providing them with a platform to voice
their opinions, make decisions, and engage in income-generating
activities. This newfound agency leads to increased self-
confidence and enhanced social status for women within their
families and communities. SHGs also act as spaces for education,
awareness, and capacity-building, enabling members to tackle
social issues such as gender-based violence, child marriage, and
discrimination.
Self-help groups not only address economic and socio-cultural
challenges but also have a positive impact on the health and well-
being of their members. SHGs serve as platforms for
disseminating health information, promoting hygiene practices,
and raising awareness about various health issues such as
maternal and child health, HIV/AIDS, and sanitation. Additionally,
by providing a supportive network, SHGs contribute to the
psychological well-being of their members, reducing feelings of
isolation and providing emotional support during challenging
times.
Advantages of Self Help Groups
Financial Inclusion – SHGs incentivise banks to lend to poor
and marginalised sections of society because of the assurance
of returns.
Voice to marginalised – SHGs have given a voice to the
otherwise underrepresented and voiceless sections of
society.
Social Integrity – SHGs help eradicate many social ills such
as dowry, alcoholism, early marriage, etc.
Gender Equality – By empowering women SHGs help steer
the nation towards true gender equality.
Pressure Groups – SHGs act as pressure groups through
which pressure can be mounted on the government to act
on important issues.
Enhancing the efficiency of government schemes – SHGs help
implement and improve the efficiency of government schemes.
They also help reduce corruption through social audits.
Alternate source of livelihood/employment – SHGa help people
earn their livelihood by providing vocational training, and also
help improve their existing source of livelihood by offering tools,
etc. They also help ease the dependency on agriculture.
Impact on healthcare and housing – Financial inclusion due to
SHGs has led to better family planning, reduced rates of child
mortality, enhanced maternal health and also helped people
fight diseases better by way of better nutrition, healthcare
facilities and housing.
Banking literacy – SHGs encourage people to save and
promote banking literacy among the rural segment.
One of the key benefits of SHGs is their impact on
economic empowerment. By pooling their resources,
members can access affordable credit for entrepreneurial
activities, agricultural investments, and other income-
generating ventures. SHGs often receive financial support
from government programs, NGOs, or microfinance
institutions, which further enhances their economic
potential. These groups enable marginalized individuals,
especially women, to break free from the cycle of poverty,
achieve financial independence, and contribute to
household income and economic growth.
 Self-help groups can play a vital role in promoting
environmental sustainability at the community level. They
can initiate and implement eco-friendly practices such as
organic farming, waste management, and conservation of
natural resources. By raising awareness and engaging in
collective action, SHGs contribute to environmental
protection and sustainable development. Furthermore,
these initiatives enhance the resilience of communities in
the face of climate change and environmental challenges.

Problems of Self Help Groups (SHGs)

Patriarchal mindset prevailing which prevents many women from
coming forward.
There are about 1.2 lakh branches of banks in rural areas as
opposed to 6 lakh villages in the country. There is a need to
expand banking amenities further.
Sustainability and the quality of operations of such groups have
been questionable.
There is a need for monitoring cells to be established for SHGs
across the country.
The SHGs work on mutual trust. The deposits are not safe or
secure.
Despite their many benefits, self-help groups face certain
challenges. These include limited access to credit, lack of
training and technical support, and dependence on external
funding. Additionally, sustaining the motivation and
participation of members over the long term can be a
challenge. To address these issues, it is crucial to strengthen
support systems, provide capacity-building programs, and
ensure the sustainability of SHGs through income-generating
activities.

Conclusion

Self-Help Groups have proven to be a powerful tool for

community empowerment and development. By addressing
socio-economic challenges, fostering gender equality, and
promoting grassroots democracy, SHGs contribute to the
overall well-being of communities. However, it is important to
recognize and address the challenges faced
Self-help groups have proven to be effective mechanisms for
community empowerment, economic upliftment, and social
transformation. Through their collective action and participatory
approach, SHGs address a wide range of challenges faced by
marginalized communities. They enhance economic
opportunities, challenge gender norms, strengthen local
governance, and contribute to the overall well-being of their
members. However, to maximize their impact, it is important to
overcome challenges such as limited access to resources and
sustainability issues. Governments, NGOs, and other
stakeholders should continue to invest in the development and
support of self-help groups, ensuring their long-term viability
and impact. By doing so, we can foster inclusive and
sustainable development, empowering communities to take
charge of their own destinies.
Numerous case studies and success stories highlight the
transformative power of self-help groups. For example, in India,
the Self-Employed Women's Association (SEWA) has
empowered millions of women in the informal sector by
organizing them into SHGs, providing them with access to
credit, skill development, and market linkages. Similarly, the
Grameen Bank in Bangladesh, founded by Nobel laureate
Muhammad Yunus, has demonstrated the potential of
microfinance and self-help groups in poverty reduction and
women's empowerment. The SHG played a significant role in
challenging social norms and transforming the community.
Women who were once confined to their households gained
recognition, respect, and a platform to voice their concerns.
The SHG became a space for discussing social issues,
spreading awareness about women's rights, health, and
education, and actively participating in community development
activities.

+Self Help Groups in India

1. Kudumbashree in Kerala

The Kudumbashree project was started in Kerala in 1999, as a

community action to eradicate poverty. It has become the largest
women-empowering project in India. There are 3 components namely,
microcredit, entrepreneurship and empowerment. Kudumbashree is a
government agency.

2. Mahila Aarthik Vikas Mahamandal (MAVIM) in Maharashtra

SHGs in Maharashtra were unable to cope with the growing

volume and financial transactions and needed professional help.
Community managed resource centre (CMRC) under MAVIM was
launched to provide financial and livelihood services to SHGs.
CMRC is self-sustaining and provides need-based service.

3. Self-Employed Women's Association (SEWA)

SEWA is one of the largest and most well-known SHGs in India. It

was established in 1972 and has been instrumental in empowering
women in the informal sector. SEWA organizes women workers,
provides them with access to credit, trains them in various skills,
and assists in marketing their products. It has played a significant
role in improving the livelihoods of countless women in India.

4. Bandhan-Konnagar in West Bengal

Bandhan-Konnagar is a microfinance institution in West Bengal,

India, that began as an SHG and later transformed into a formal
institution. It provides financial services to low-income individuals,
particularly women, through SHGs. Bandhan-Konnagar offers
microcredit, savings mobilization, and livelihood support, helping to
improve the economic conditions of its members.

5. Bharatiya Yuva Shakti Trust (BYST)

BYST is an organization that supports young entrepreneurs in

India. It helps young people establish their businesses by providing
them with mentoring, training, and financial support through SHGs.
BYST operates in various states across India and has contributed
significantly to youth entrepreneurship and employment
generation.

6. Friends of Women's World Banking (FWWB)

FWWB is an organization that promotes financial inclusion and

empowerment of women through SHGs. It operates in various
states across India and works closely with partner organizations to
establish and strengthen SHGs. FWWB provides capacity-building
support, access to financial services, and market linkages to help
women entrepreneurs flourish.

7. Lok Swasthya Mandali in Gujarat

Lok Swasthya Mandali is a grassroots organization based in

Gujarat, India, that works in the field of healthcare and community
development. It operates through SHGs and mobilizes
communities to address health issues, promote hygiene practices,
and ensure access to quality healthcare. The SHGs play a crucial
role in disseminating health information and providing support to
community members in need.

8. Velugu in Andhra Pradesh

Velugu is a community-driven initiative in Andhra Pradesh, India. It

focuses on rural development and poverty alleviation through the
formation of SHGs. Velugu promotes sustainable agriculture
practices, rural employment generation, and women's
empowerment. The SHGs under Velugu engage in various
activities such as organic farming, livestock rearing, and handicraft
production

9. Deendayal Antyodaya Yojana-National Urban Livelihoods

Mission (DAY-NULM)

DAY-NULM is a flagship program of the Indian government aimed

at poverty alleviation and urban development. It focuses on the
formation of SHGs in urban areas, particularly among the urban
poor. These SHGs engage in income-generating activities, skill
development, and access to microcredit, thereby promoting
sustainable live hoods and economic empowerment

10. Sewa Bharat

Sewa Bharat is a national-level organization that focuses on

community development and empowerment. It works through
SHGs and mobilizes marginalized communities, particularly
women, to address social and economic challenges. Sewa
Bharat's SHGs engage in various income-generating activities
such as handloom weaving, handicraft production, and organic
farming.
These examples highlight the diverse range of self-help groups
operating in India and their impact on various aspects of
community development, including women's empowerment,
poverty reduction, entrepreneurship, and livelihood enhancement.
These SHGs have made significant contributions to the socio-
economic well-being of their members and have become
successful models for replication and scaling-up in other regions.

Bibliography
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