Self Help Groups (SHG’s ) are informal groups that consist of people from similar socio economic background who come together voluntarily to overcome their common problems.
Villages face numerous problems related to poverty, illiteracy, lack of skills, lack of formal credit etc which cannot be tackled at individual level & need collective efforts.
SHG’s can play a vital role to encourage self-employment and poverty alleviation.
NEED OF SELF HELP GROUPS
- They help in accessing credit to the poor and thus, play a critical role in poverty alleviation.
- They also play a great role in empowering women because SHGs help women from economically weaker sections build social capital.
- Due to diverse culture, customs & traditions etc in India, it becomes difficult for the government to solve all the socio- economic problems by itself. With self help groups people come together & can collectively solve their common problems.
FUNCTIONS OF SHG’s
The following are the main functions performed by these groups –
- Lending of loans – The savings made by the members of the groups are used to provide loans to other members as per the terms decided upon.
- Initiate & maintain savings – The self help groups inculcate the savings and banking habits among the members which allow them to get future credits for their group.
- Bank Loans – SHGs must work on getting a collective guarantee system so that they can avail loans from official sources.
- Resolve the Conflicts – They also resolve conflicts via mutual discussions and collective leadership.
- Source of Micro finance – These groups act as an important source of microfinance services to the poor.
PROBLEMS FACED BY SHG’s
The main problems which restrict the growth & promotion of self help groups are listed below –
- There is a lack of qualified resource personnel in the rural areas who could help in skill upgradation or acquisition of new skills by group members.
- 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.
- Many SHGs are dependent on the promoter agencies for their survival. In case these agencies withdraw their support, the SHGs are vulnerable to downfall.
- SHGs are mostly not registered. The SHGs work on mutual trust and confidence of the members. The deposits of the SHGs are not secured or safe .
The government should play the role of facilitator & promoter for the effective growth of self help groups by expanding the SHG movement in credit deficient areas & ensure the constant monitoring of their functioning.
Thus, in simple words self help groups can be defined as a group of 5-15 people, usually women, who come together voluntarily to accumulate their savings which can be used to lend to the members as per their needs.