Self Help Group in Detail

Self Help Group that is SHG model was developed by NABARD in 1992 to evolve a supplementary credit strategy for reaching the rural poor and to encourage banking activities, both thrift as well as credit.

Common goal of social and economic empowerment.


  • Size: Preferably between 10 to 20 members (difficult areas-5 to 20).
  • Under SHG all the members of the group must be from BPL, however, a maximum of 20% in general and 30% in exception can be from marginally above poverty line.
  • One person from one family in one SHG and also one person cannot be member in more than one SHG
  • SHG must follow “Panchsutras”
    • Regular meetings
    • Regular saving
    • Regular inter-loaning
    • Regular repayment
    • Maintenance of books of account/ book keeping
  • Group registration is optional.

Consumer Loans


  • NABARD promotes SHGs and provides 100% refinance at concessional rates to banks for SHG credit linkage.

Credit linkage of SHG

Financing of Self Help Group is recommended by Kalia Committee and was launched by National Bank for Agriculture and Rural Development (NABARD) in 1992.

  • Group should have been in active existence at least for a period of 4-6 months. The group may be informal or formal (registered).
  • The group should have successfully undertaken savings and credit operations from resources for a period of four to six months.
  • Revolving Fund: SHG can be sanctioned revolving fund where there is bank linkage of at least for 6 months in the ratio of 1:1 to 1:4 ratio.
  • Subsidy: Minimum Rs.5000 and max Rs.10000, being equal to corpus. Additional subsidy of Rs.10000 is available as 2nd dose for SHG showing promise.
  • Margin: Savings are considered as margin. No requirement of collateral security.
  • Repayment: 3-10 years.

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