Self Help Groups (SHG), Joint Liability Group (JLG)

Self-Help Groups (SHGs) refer to the small groups of underprivileged people that get together to help one other. SHGs members confront similar challenges. They assist one another in resolving their issues. SHGs encourage their members to save tiny amounts of money. The money is held in the bank. In the name of the SHG, this is known as the common fund. The SHG uses its shared fund to make modest loans to its members. Because an SHG is such an informal group, it is not required to register under the Societies Act, partnership business or the State Cooperative Act.

Functioning of Self Help Groups

• Membership

Only one individual from each family is allowed to join an SHG. (By doing so, more families will be able to join SHGs.) The group is usually made up of either all males or all women. Mixed groups are seldom a good idea. Women’s organisations consistently outperform men’s groupings. (They are better at saving and are more likely to use loans properly.) Members should come from similar social and economic backgrounds. (Advantage: This allows members to interact more freely with one another.) If there are members from both the affluent and poor classes, the poor may have limited opportunities to speak for themselves.)

• SHG Dimensions

An SHG should have between 10 and 20 members. (Benefit: In a larger group, people are unable to engage actively.) In addition, it is permitted to limit an informal group to no more than 20 persons.) The group doesn’t need to be registered. 

• Accounting

All transactions must be kept in transparent and straightforward books. If no one in the SHG can keep track of the books, it can seek outside assistance. (It has been observed that a rural lad or girl with some educational qualifications happily does this task.) After a few months, the organisation may consider offering him a little prize for his efforts.) An animator can also assist. 

Advantages of Self Help Groups

SHGs have several advantages when it comes to funding. As a member of a group, an economically disadvantaged individual acquires strength. Furthermore, SHG lending reduces transaction costs for not just both lenders and also the borrowers. While lenders only have to deal with a single triple SHG account rather than a significant number of tiny individual accounts, borrowers who are members of an SHG reduce or eliminate travel for paperwork and workdays lost canvassing for loans. SHGs have considerably empowered impoverished people in rural regions, particularly women, where they have been effective. In rural areas, SHGs have made a significant contribution to lowering the impact of informal lenders. Many large corporations are also supporting SHGs in various parts of India. SHGs assist borrowers in overcoming their financial difficulties.

Functions of the Self Help Groups

• Savings and thrift: 

Every SHG member saves a tiny amount on a regular basis. Even if the sum is little, all members must make saving a regular and ongoing habit. Every SHG member should live by the slogan, “Savings first, and then credit afterwards.” When SHG members begin tiny saves, they ensure they practice self-sufficiency. Savings, as well as internal lending, teach them financial discipline. (Advantage: This comes in handy when they take out bank loans.)

• Internal lending: 

The SHG should utilise the money saved to make loans to its members. The committee will decide on the purpose of the required sum, interest rate, and payback period, among other things.

• Problem-solving: 

Individually, the impoverished are powerless and unable to tackle their issues. When a group strives to assist its members, it is simpler for them to confront problems and find answers. At each meeting, the group must be motivated to discuss and try to solve the difficulties that the group members are experiencing.

• Obtaining a loan from a bank: 

The SHG obtains a bank loan and distributes it to its members as a loan.

Conclusion

We have now reached the end of this article. In this article, we learnt what a self-help group and the proper way of its functioning is. Women self-help groups help in rural development by managing finance and leading to the country’s economic growth.