What are Self-Help Groups

Self Help Groups and Their Origin

Self-help groups came into the origin as an effective mechanism to deliver effective financial services to the poor. Self-Help Groups, or SHGs, are groups of people who informally come together to find different ways to improve their living state. The people in this association have the same social-economic background, and they usually come together collectively and work towards one common purpose.

A village can face several problems: illiteracy, poverty, lack of getting credit or lack of learning skills, etc. Such issues are difficult to resolve individually, and collective effort can help tackle these problems better.

What Are Self-Help Groups and Their Genesis?

The origin of self-help groups in India dates back to when the Self Employed Women’s Association(SEWA) was formed in 1970.Self Help Groups and their origin helped the SHG Bank Linkage Project launch in 1992 by NABARD. This project has come to be the biggest microfinance project in the world.NABARD joined the RBI and permitted SHGs to get banks to give them savings accounts in 1993. Self Help Groups and their origin also provided a substantial boost that the SHG needed, leading to the SHG Bank Linkage Program.

In 1999, the Swarn Jayanti Gram Swarozgar Yojana (SGSY) was introduced by the Government of India to help rural areas with self-employment. By forming SHGs and providing them with skills, this program emerged to be a movement in 2011 to become the National Rural Livelihoods Mission (NRLM), the biggest poverty eradication program in the world.Today, State Rural Livelihood Missions (SRLMs) operate in all the states and Union territories (except Chandigarh and Delhi).NRLM also facilitated the universal availability of cost-effective, reliable, and affordable financial services for the needy such as financial literacy, savings, bank accounts, insurance, credit, remittance, counselling, and pension on monetary benefits.

The Statistics of SHGs in India

Presently, India has more than 6.6 million Self Help Groups with approximately 70 million members. According to the statistics of SHGs in India, it includes the SHGs set up even before the NRLM, government data states. The NRLMs goal is to reach at least 70-75 million needy households by 2025, which is the government’s implementation plan.

What are Self Help Groups(SHGs) and Their Benefits?

Social integrity

Self Help Groups encourage collective efforts to combat practices such as alcoholism and dowry. There is sufficient evidence in India and elsewhere that the emergence of Self-Help Groups tends to have an impactful role in enhancing the status of women in society and in their families, which leads to improved socio-economic conditions. This can also improve their self-esteem and confidence.

Pressure Groups

The marginalised section gets a voice with SGHS. Many beneficiaries of schemes by the government are from marginalised and weaker communities, and therefore their participation in SHGs ensures social justice and fairness.

Financial Inclusion

Priority Sector Lending return assurance and norms encourage banks so that they lend money to SHGs. The Self Help Group -Bank Linkage Programme initiated by NABARD made it easier for them to get credit. It lessened their dependence on conventional non-institutional sources and other money lenders.

They improve the government schemes’ efficiencies and lessen corruption in social audits. Alternate employment sources ease dependability on agriculture as they provide support in the set up of micro-enterprises—for instance, personalised small-scale business ventures such as tool repair, tailoring, and grocery.

What are Self Help Groups(SHGs) and Consumption Pattern Changes?

It enables the participating households to spend extra on health, education, and food than households that are non-client.

Impact on Health and Housing

The monetary inclusion attained by SHGs has given rise to lessened child mortality, enhanced maternal wellness, and the capability of the needy to combat diseases through proper nutrition, health, and housing, especially among children and women.

The Need for Self Help Groups

The primary reason for poverty in the rural areas in India is limited access to financial services and credit.

Dr C Rangrajan constituted a committee, and under his chairmanship, he prepared a detailed report on the financial inclusions in India. He identified four primary reasons why economic inclusion is lacking.

• Incapability for providing collateral security.
• Insufficient institution reach.
• Poor capacity to absorb credit and weakened community networks.

When community networks are sound in villages, they will be recognised as an important element in credit linkage in the rural parts of the country.

They ensure that the poor and the needy get access to credit. Therefore they play an essential role in elevating poverty. They also assist in building social capital, especially among the needy and women, which encourages women’s empowerment and gives them a very important voice for them in this society.

Self-employment provides financial independence, and it has other benefits as the literacy levels improve, health facilities become better, and family planning also becomes important.

Conclusion:

Self Help Groups are a vehicle to change the plight of the marginalised and the poor. SHG banks on “Self Help” for encouraging poverty alleviation and self-employment. It builds the operational capacity so that the marginalised and the poor can generate income and have employment. It also helps resolve conflicts with the help of mutual discussion and collective leadership.

It gives loans free of collateral, and the group members decide the terms at a reasonable market-driven percentage. These groups work collectively, especially for members, and guarantee that they can borrow money from organisations. The needy can collect the savings in a bank. Also, in return, they get a fair amount of interest so that they can start a micro-unit enterprise.