Self Help Groups

INTRODUCTION
Self Help Groups (SHGs) are small, community-
based organizations that empower marginalized
individuals, particularly women, by pooling their
savings and providing interest-free loans.
Typically consisting of 10-20 members, these
groups foster financial stability, skill
development, and social cohesion. SHGs are
especially impactful in rural and semi-urban
areas where access to formal financial
institutions is limited.
By coming together, members of SHGs can
address their financial needs, start small
businesses, and support each other in times of
emergency. SHGs play a vital role in promoting
financial inclusion and community
development.
This project will explore the formation,
functioning, and impact of SHGs, highlighting
their contributions to individual empowerment
and community growth
Structure:-
A self-help group (SHG) typically consists of 10-25
members with similar social and economic
backgrounds. Leadership roles rotate among
members to ensure equal participation. Meetings are
held regularly, following a structured agenda that
includes introductions, discussions, and educational
segments. Financially, members contribute small
amounts of money regularly, which is pooled for
loans within the group. This structure fosters a sense
of community, mutual support, and personal growth,
empowering members to take control of their lives
and make positive changes. SHGs promote financial
stability and provide a supportive environment for
sharing experiences and strategies.

History:-
The history of self-help groups (SHGs) is rich and
varied, reflecting their evolution over time to address
different social and economic needs.
The concept of self-help groups can be traced back
to 1935 with the formation of Alcoholics Anonymous
(AA) in the United States. AA was created to help
individuals recover from alcoholism through mutual
support, as many felt that medical professionals
were not adequately addressing the issue. This
model demonstrated the power of peer support and
inspired the formation of other self-help groups.
In the 1970s, Nobel laureate Muhammad Yunus
pioneered the SHG model in Bangladesh, focusing on
poverty alleviation and women's empowerment
through microfinance. This approach gained
momentum in India in the 1980s, particularly with
the efforts of the Mysore Resettlement and
Development Agency (MYRADA) in promoting thrift
and credit among rural women.
The SHG movement in India received a significant
boost in 1992 when the National Bank for Agriculture
and Rural Development (NABARD) launched the SHG-
Bank Linkage Program. This initiative connected
SHGs to formal financial services, enhancing their
economic impact.
Today, SHGs play a crucial role in promoting
economic development, social empowerment, and
community cohesion across various regions.

NARBAD-
1. SHG-Bank Linkage Programme (SHG-BLP): Initiated in
1992 to link SHGs with banks for financial services.
2. Financial Support: Provides refinance support to banks
for lending to SHGs.
3. Capacity Building: Conducts training and capacity-
building programs for SHG members.
 4. Monitoring and Evaluation: Regularly monitors and
evaluates SHGs for effective functioning.

Evolution-
The evolution of self-help groups (SHGs) has been
significant, adapting to various social and economic
needs. The concept began in 1935 with Alcoholics
Anonymous (AA) in the United States, which
highlighted the power of peer support. In the 1970s,
Nobel laureate Muhammad Yunus pioneered the SHG
model in Bangladesh, focusing on poverty alleviation
and women’s empowerment through microfinance.
This approach gained momentum in India during the
1980s, particularly with the Mysore Resettlement and
Development Agency (MYRADA), which promoted
thrift and credit among rural women.
The SHG movement in India was significantly
boosted in 1992 when the National Bank for
Agriculture and Rural Development (NABARD)
launched the SHG-Bank Linkage Program, connecting
SHGs to formal financial services. Today, SHGs play a
crucial role in promoting economic development,
social empowerment, and community cohesion,
addressing a wide range of issues including health,
education, and disaster response.

How To form Self Help Groups

First, gather a small group of like-minded individuals,
typically 10-25 people, who share similar social and
economic backgrounds. Clearly define the group’s
purpose and objectives, such as financial savings,
mutual support, or addressing specific issues like
health or education.
Next, establish rules and regulations for the group.
This includes deciding on meeting frequency, savings
contributions, loan terms, and roles within the group.
Regular meetings should be held, which can be
weekly, bi-weekly, or monthly, to discuss progress,
share experiences, and plan future activities.
Encourage members to contribute a small amount of
money regularly. This pooled fund can be used for
internal lending to meet members’ financial needs. If
possible, connect the SHG to formal financial
institutions for additional support and resources,
enhancing the group’s financial stability and access
to credit.y
Finally, document the group’s activities and progress
for your project. This can include meeting minutes,
financial records, and personal stories from group
members.

Needs of Self Help Groups

Self Help Groups (SHGs) are formed to provide
financial services to those in rural and semi-
urban areas, empowering marginalized
individuals, especially women. They foster
financial stability, skill development, and social
cohesion. SHGs also promote income
generation through small businesses and
address social issues collectively, creating a
strong support network for their members.

Consequences OF Self Help groups

Self-help groups (SHGs) have a range of consequences,
both positive and negative. Here are some key points:
Positive Consequences:
- Sense of Community: SHGs provide a sense of belonging
and camaraderie, allowing individuals to connect with
others who share similar experiences or challenges.
- Support and Encouragement: They offer a safe and
supportive environment for individuals to receive
encouragement and motivation from their peers.
- Personal Growth: SHGs can help individuals develop new
skills and insights, leading to personal growth and
development.
- Empowerment: They give individuals the opportunity to
take control of their own lives and make positive changes.
Negative Consequences:
- Limited Availability: SHGs may not be readily available in
all areas, making it difficult for individuals to access this
form of support.
- Dependence on Group Participation: They rely on the
active participation and commitment of group members,
and may not be effective if attendance is sporadic.
- Potential for Groupthink: The group dynamic can
sometimes lead to groupthink, where the desire for
harmony within the group supersedes the consideration of
alternative viewpoints.
- Varying Effectiveness: The effectiveness of SHGs can vary
depending on the specific group and the individuals
involved.

Self Help Groups a boon

Sense of Community: SHGs provide a sense of
belonging and reduce feelings of loneliness.
- Mutual Support: Members offer empathy and
encouragement to each other.
- Personal Growth: Participation can lead to
increased self-awareness and personal development.
- Improved Coping Skills: SHGs help members
develop better strategies for managing issues like
anxiety and depression.
- Empowerment: They empower individuals by
giving them control over their lives and decisions.
Mental Health:
  Peer Support: Sharing experiences and coping
strategies.
 Workshops: Stress management and
mindfulness techniques.
Addiction Recovery:
 Relapse Prevention: Strategies to avoid
triggers.
 Emotional Support: Encouragement during
tough times.
Grief and Loss:
 Shared Experiences: Feeling less alone.
 Memorial Activities: Honouring loved ones.
General Well-being:
 Healthy Lifestyle: Promoting wellness
practices.
 Social Connection: Reducing isolation.
 Goal Setting: Helping achieve personal goals.
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Various stakeholders and effect on each of

them
Members: Gain financial stability, access to credit, and skill
development.
Families: Benefit from improved income and better living
conditions.
Communities: Experience social cohesion and collective
problem-solving.
Financial Institutions: Expand customer base and reduce
loan default risks.
Government and NGOs: Implement development
programs effectively.
Local Businesses: Boost local economy and create jobs.

Advantages of Self Help Groups

Key Benefits: -
Sense of Community: SHGs provide a sense of
belonging and reduce feelings of loneliness.
- Mutual Support: Members offer empathy and
encouragement to each other.
- Personal Growth: Participation can lead to
increased self-awareness and personal development.
- Improved Coping Skills: SHGs help members
develop better strategies for managing issues like
anxiety and depression.
- Empowerment: They empower individuals by
giving them control over their lives and decisions.
Disadvantages Of Self Help Groups-
Self-help groups (SHGs) have several disadvantages:
- Limited Availability: Not all areas have SHGs,
making access difficult for some individuals.
- Dependence on Participation: The effectiveness
of SHGs relies heavily on active participation, which
can be inconsistent.
- Lack of Professional Guidance: SHGs typically
do not include trained professionals, which can lead
to inaccurate information and coping techniques.
- Potential for Groupthink: The desire for harmony
within the group can sometimes suppress alternative
viewpoints.
- Confidentiality Concerns: There may be risks
regarding the privacy of shared personal information.

Self-help groups (SHGs) employ various

economic strategies that have both short-term
and long-term implications on their validity and
effectiveness.
Short-term Implications:-
Immediate Financial Relief: SHGs often provide
quick access to credit, helping members meet urgent
financial needs.
- Increased Savings: Members are encouraged to
save regularly, which can lead to improved financial
stability in the short term.
- Skill Development: Training programs can quickly
enhance members' skills, leading to immediate
improvements in income-generating activities.
Long-term Implications:-
- Sustainable Economic Growth: Over time, SHGs
can contribute to sustainable economic development
by fostering entrepreneurship and small business
growth.
- Social Empowerment: Long-term participation in
SHGs can lead to increased social capital and
empowerment, particularly for women.
- Community Development: SHGs can drive
community-wide improvements in health, education,
and infrastructure through collective action.
- Economic Resilience: By diversifying income
sources and promoting savings, SHGs help build
economic resilience among members.

Principles of Self Help Groups

The principles of Self-Help Groups (SHGs) are
fundamental to their success and effectiveness. Here
are some key principles:
Principles of Self-Help Groups (SHGs)-
Self-Reliance:- SHGs are based on the idea of self-help,
where members rely on their own resources and efforts to
improve their socio-economic conditions.
Mutual Support:- Members support each other through
shared resources, knowledge, and experiences. This mutual
support fosters a sense of community and collective
responsibility.

Participation and Decision-Making:- All members

actively participate in the decision-making process. This
democratic approach ensures that every member has a
voice and contributes to the group's activities.
Regular Savings:-Members are encouraged to save
regularly. These savings form a common fund that can be
used for lending to members in need.
Transparency and Accountability:-SHGs maintain
transparency in their operations, including financial
transactions. Regular meetings and record-keeping help
ensure accountability among members.
Capacity Building:-SHGs often focus on building the
capacities of their members through training and skill
development programs. This helps members become more
self-reliant and capable of managing their finances and
businesses.
Social Empowerment:- Beyond financial benefits,
SHGs aim to empower members socially by addressing
issues like health, education, and gender equality.
 Working of Self Help Groups
1. Formation:
o SHGs are formed by 10-20 members from similar
socio-economic backgrounds.
2. Savings and Fund Creation:
o Members contribute regular savings to create a
common fund.
3. Internal Lending:
o The common fund is used to provide loans to
members at agreed interest rates.
4. Bank Linkage:
o SHGs establish linkages with banks to access
larger loans.
5. Capacity Building:
o SHGs provide training in financial literacy and
entrepreneurship.
6. Social and Community Activities:
o SHGs engage in social initiatives like health
awareness and education.
 7. Record Keeping:
o Proper records of meetings and financial
transactions are maintained.

Importance of Self Help Groups

1. Sound community networks in villages are crucial for
credit linkage in rural areas.

2. Access to credit through community networks plays a

critical role in poverty alleviation.

3. Community networks help build social capital,

particularly among women, empowering them and
giving them a greater voice in society.

4. Financial independence through self-employment has

positive externalities such as improved literacy levels,
better healthcare, and enhanced family planning.

Objectives of Self Help Groups

1. Financial Inclusion: Provide access to financial
services.
2. Women Empowerment: Promote gender equality and
empower women.
 3. Community Development: Engage in social
initiatives for overall development.
4. Capacity Building: Offer training and skill
development.
5. Mutual Support: Foster a sense of community and
collective responsibility.
6. Economic Stability: Help members achieve financial
stability through savings and credit.
7. Social Awareness: Raise awareness about social
issues and rights.
8. Entrepreneurship: Encourage and support small
business ventures.
9. Health Improvement: Promote health and hygiene
practices.
10. Education: Support educational initiatives for
members and their families.

Features of Self Help Groups

Self Help Groups (SHGs) are small, voluntary associations of
people, typically from similar socio-economic backgrounds,
who come together to address common issues and improve
their living conditions.
- Voluntary Membership: SHGs are formed voluntarily by
individuals who share common economic and social
backgrounds.
- Small Size: Typically, an SHG consists of 10-20 members,
making it easier to manage and ensure active participation.
- Regular Meetings: Members meet regularly to discuss
and decide on various issues, including savings, loans, and
social activities.
- Collective Savings: Members contribute to a common
fund through regular savings. This fund is used to provide
loans to members at reasonable interest rates.
- Mutual Support: SHGs foster a sense of mutual trust,
cooperation, and support among members. They work
together to solve common problems and improve their
socio-economic status.
- Financial Inclusion: SHGs help members access financial
services, such as savings accounts and credit, which they
might not be able to obtain individually.
- Empowerment: SHGs empower members, especially
women, by providing them with financial resources,
livelihood opportunities, and decision-making power.
- Skill Development: SHGs often organize training and
workshops to enhance the skills and capacities of their
members.

Function of Self-Help Groups

 Building functional capacity in employment and
income-generating activities for the poor and
marginalized.
 Resolving conflicts through collective leadership and
mutual discussion.
 Providing collateral-free loans with terms determined by
the group at market-driven rates.
 Acting as a collective guarantee system for members
seeking loans from formal financial institutions.
 Encouraging savings among group members, which are
deposited in banks.
 Facilitating easy access to loans with low interest rates
for starting micro-enterprises.
 Serving as an effective mechanism for delivering
microfinance services to the poor.
 Promoting financial inclusion and empowerment among
group members.