Self-Help Group (SHG)

Self-Help Group (SHG)

 

Introduction

It is a group of people who face similar problems and join together to find solutions to better living conditions. They are popularly made for the purpose of doing collective economic activities and earning collective profit out of these activities with the help of Microfinance. These groups are typically made up of individuals who lack access to official financial institutions. They can exist with or without registration. Kudumbashree in Kerala is one of the most successful SHGs in India.

 

Self Help Groups - Concept

  • These groups can be defined as a self-governing, peer-controlled informal network of people with comparable socioeconomic backgrounds who want to work together to achieve a common goal.
  • To foster self-employment and poverty alleviation, SHGs use the concept of "Self Help."
  • These groups form together to create a group in order to solve their shared problem and raise their living standards.
  • Any local resident who needs education or skill development may assist in the formation of the Self-Help Group.
  • They are known as Facilitators or Animators. They are well-known in the neighbourhood. A female facilitator may contribute significantly to women's empowerment in rural India.
  • In India, SHGs are not governed by a specific law. They are created on the basis of Article 19(1) of the Indian Constitution, which states that citizens have the right to organize any organization or group with mutual consent.

 

Historical background of SHGs

  • In India, SHG began with the formation of the Self-Employed Women's Association (SEWA) in 1970.
  • NABARD'S SHG Bank Linkage Project, which began in 1992, has grown to become the world's largest microfinance initiative. NABARD along with RBI permitted SHGs to have a savings account in banks from the year of 1993. This action gave a considerable boost to the SHG movement and paved the way for the SHG-Bank linkage program.
  • In 1999, Government of India, introduced Swarn Jayanti Gram Swarozgar Yojana (SGSY) to promote self-employment in rural areas through formation and skilling of SHGs.
  • The programme evolved as a national movement in 2011 and became National Rural Livelihoods Mission (NRLM) world's largest poverty alleviation programme.
  • NRLM facilitated universal access to the affordable cost- effective reliable financial services to the poor like financial literacy, bank account, savings, credit, insurance, remittance, pension and counselling on financial services.

 

What is the SHG?

  • SHGs, or Self-Help Groups, are small voluntary associations of individuals, predominantly women, who come together for a common purpose.
  •  In India, SHGs have gained significant importance as a grassroots-level institution for poverty alleviation, women's empowerment, and community.

 

 Some characteristics and features of SHGs in India:

  • They typically consist of 10 to 20 individuals who belong to a common socio-economic background and reside in the same geographical area. While women are the primary members, some SHGs also include men or are exclusively composed of men.
  •  Participation in SHGs is based on voluntary membership, where individuals join the group willingly to address their socio-economic needs and challenges collectively.
  •  One of the primary functions of SHGs is to encourage members to save small amounts regularly. These savings are pooled together and used to provide internal loans to group members. SHGs also facilitate access to formal financial services and credit linkages from banks and microfinance institutions.
  •  They provide a platform for members to share experiences, seek advice, and provide social and emotional support to each other. They act as forums for discussing and addressing issues related to health, education, gender equality, and other social concerns.
  • They offer training and capacity-building programs to members, focusing on various aspects such as financial literacy, bookkeeping, entrepreneurship, skill development, and leadership. These initiatives aim to enhance members' knowledge and skills, enabling them to effectively manage their group activities and pursue livelihood opportunities.
  • They operate democratically, with members actively participating in decision-making processes. They engage in discussions, develop internal rules and regulations, and make collective decisions related to savings, loans, and other group activities.
  • They encourage members to engage in income-generating activities to improve their livelihoods. This may include activities like handicrafts, agriculture, animal husbandry, small-scale enterprises, and entrepreneurship. SHGs often provide support in terms of skill development, market linkages, and access to credit for such activities.
  • They often form federations or larger networks at the village, district, or state levels to amplify their collective voice, negotiate better deals, and access additional resources and opportunities. These federations enable SHGs to undertake larger-scale initiatives and represent their collective interests.

 

FUNCTIONS OF SHGs

  • They have emerged as the most effective mechanism for delivery of microfinance services to the poor.
  • It looks to build the functional capacity of the poor.
  • The existence of sound community networks in villages is increasingly being recognised as one of the most important elements of credit linkage in the rural areas.
  • They help in accessing credit to the poor and thus, play a critical role in poverty alleviation.
  • They empower women and inculcates leadership skills among them.
  • Improving efficiency of government schemes and reducing corruption through social audits.
  • It encourages and motivates its members to save and act as a conduit for formal banking services to reach them.

 

Need For Self Help Groups (SHGs)

  •  They offer financial services. They include savings and credit. These services are for those excluded from formal banking systems.
  • They promote savings, entrepreneurship, and skill development. They empower members. This empowerment helps generate income. It aids in lifting members out of poverty.
  • They often prioritize women’s participation, providing them with a platform for decision-making, skill-building, and economic independence.
  •  SHGs foster a sense of community and solidarity among members, strengthening social bonds and mutual support networks.
  • They undertake community-driven initiatives that address local needs and contribute to overall development in their areas.
  • They provide access to information, markets, and resources. They help members improve their livelihoods. They enhance quality of life.
  • They offer opportunities for capacity building through training programs, workshops, and educational sessions, enhancing members’ skills and knowledge.
  • They encourage entrepreneurship. They provide microcredit and support. They stimulate economic growth at grassroots level.
  • They often prioritize health and education initiatives, raising awareness and promoting preventive healthcare practices and educational opportunities.
  • They promote inclusive development. They empower marginalized groups. These include women, rural communities, and low-income individuals. They enable participation in decision-making. They help benefit from development interventions.

 

Significance of the SHGs

  • People’s participation through SHGs ensures social justice and it also gives voice to the marginalized section of society.
  • It eradicates the dependency on agriculture by providing support in setting up micro-enterprise like grocery or pickle or papad-making enterprises.
  • It empowers the women and inculcates leadership skills among them which also help them to participate more actively in gram sabha and other political processes.
  • It plays an active role in women’s life by rising their living conditions and enhancing their self-esteem.
  • It encourages collective efforts for combating practices like dowry, and alcoholism.
  • At the time of the pandemic, many women SHG came forward to meet the shortfall in masks, sanitizers, protective equipment, running community kitchens, running help desks, delivering essential food supplies and medicines to elderly, and quarantined and even providing financial and banking solutions to far-flung communities.

 

Issues of SHGs

  • They are not making use of new technology innovation and skills because of their limited awareness of new technologies and they also don’t have adequate skills to use the technology.
  • It has also been observed that the fund received is not used in the business process rather than it is used for personal and domestic purposes like marriage and construction of the house.
  • There is no stability in the unit as many married women are not in a position to associate with the group due to the shift of their place of residence as well as there is no unity among members owing to personal reasons.
  • Politicization of the SHG groups and poor coverage in urban areas.

 

Challenges Of Self Help Groups (SHGs)

  • Financial sustainability is challenging in areas with limited economic opportunities or where loan repayments are difficult.
  • Ensuring members have necessary skills is a challenge. These skills include group and financial management. Also, entrepreneurship.
  •  Social stigma can hinder SHG participation. This is especially true for marginalized groups like women. It affects recruitment and involvement.
  • Managing internal conflicts, maintaining group cohesion, and addressing power imbalances among members are persistent challenges within SHGs.
  •  SHGs face challenges in accessing markets. This is especially true in competitive environments or remote areas. Securing fair prices for products or services can be difficult.
  • Inconsistent government support, bureaucratic hurdles, and delays in disbursing funds or providing assistance can hinder SHG initiatives.
  •  Scaling up successful SHG models is challenging. It aims to reach more communities. This includes achieving broader impact. Maintaining quality and effectiveness remains a significant challenge.
  •  They are often vulnerable to external shocks such as natural disasters, economic downturns, or changes in government policies, which can disrupt operations and affect members’ livelihoods.
  •  Limited access to resources such as land, credit, technology, and infrastructure can constrain the growth and sustainability of SHG activities.
  •  Establishing robust monitoring and evaluation systems to track progress, assess impact, and identify areas for improvement requires ongoing attention and resources.

 

Role of Government Schemes in Growth and Development Of SHG’s

Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM)

  • The scheme, launched by the Ministry of Rural Development, is a flagship program that focuses on promoting self-employment and organizing rural poor, especially women.
  • It has mobilized millions of women into SHGs, providing them with financial inclusion, livelihood opportunities, and social empowerment.

 

NABARD’s SHG Bank Linkage Program

  • Initiated by the National Bank for Agriculture and Rural Development (NABARD), this program aimed to link SHGs with formal banking institutions, facilitating credit access for the rural poor.
  •  It played a crucial role in mainstreaming SHGs into the formal financial sector, ensuring sustainable financial support for their activities.

Rashtriya Mahila Kosh (RMK)

  • The scheme, under the Ministry of Women and Child Development, provides microfinance support to women’s groups and NGOs, encouraging the formation and growth of SHGs.
  • It has been instrumental in extending financial aid to SHGs, particularly in areas where formal banking penetration is limited.

 

Mahila Kisan Sashaktikaran Pariyojana (MKSP)

  •  This scheme initiated by the Ministry of Agriculture and Farmers Welfare, targets women in agriculture by forming SHGs and providing them with the necessary resources and training.
  • It addresses the specific needs of women in the agriculture sector, promoting their participation in farming activities and enhancing their income.

 

National Urban Livelihoods Mission (NULM)

  • It focuses on urban poverty alleviation, promotes the formation of SHGs among the urban poor and provides them with skill development and livelihood opportunities.
  •  It extends the SHG model to urban areas, catering to the unique challenges faced by the urban poor.

 

Way Forward

  •  This involves connecting SHGs with technology, processing, and marketing organizations to ensure a comprehensive support system that addresses various aspects of their livelihoods.
  • This suggestion highlights the need to offer credit for a diverse range of activities that contribute to income generation, livelihood enhancement, housing, consumption needs, and even emergencies.
  •  To improve the functioning of SHGs, the delivery system should be proactive and responsive to the financial needs of the members, particularly farmers.
  •  These programs could cover topics such as financial management, record-keeping, production techniques, marketing strategies, and other skills that contribute to successful entrepreneurship.
  • Recognizing the important role of women in SHGs, it’s suggested to provide gender sensitization training to bank staff who interact with SHG members.
  •  Protect SHG-promoted businesses with adequate insurance against unforeseen losses.