A self-help group (SHG) is a peer-controlled, informal association of people who come together voluntarily to address common problems and improve their living conditions through mutual support. These groups are often composed of individuals with a similar socioeconomic background.
Objectives and activities
The purpose of SHGs can be both social and financial, and they are especially prominent in promoting economic development and empowering marginalized communities.
- Poverty alleviation: SHGs empower the poor, particularly women, by building their capacity for employment and income-generating activities.
- Financial inclusion: Members pool their savings to create a fund from which they can provide each other with loans at low interest rates, especially in areas with limited banking access.
- Skill development: Many groups facilitate training for members in areas like financial literacy and livelihood activities such as tailoring or small business ventures.
- Social empowerment: SHGs act as a platform for discussion, collective action, and resolving conflicts. This process enhances members’ self-esteem and helps them address shared social issues.
- Capacity building: Through regular meetings and activities, members develop management skills and gain the confidence to engage with public and private institutions.
Common features
- Group size and composition: An SHG typically consists of 10 to 20 members, often exclusively women, from a similar social and economic background. Homogeneity within the group helps members feel more comfortable expressing themselves and interacting freely.
- Voluntary formation: Members come together voluntarily, guided by a principle of collective action, to achieve a common purpose.
- Self-governance: Groups are self-governed and peer-controlled, making decisions collectively. They often rely on five “cardinal principles,” or Panchsutra: regular meetings, regular savings, internal lending, regular repayment, and bookkeeping.
- Facilitation: While self-governed, SHGs are often initiated and supported by NGOs, government agencies, or financial institutions, which help with formation, credit linkage, and training.
Examples of SHGs in India
- NABARD’s SHG-Bank Linkage Programme: Launched in 1992, this program connects SHGs with formal banking services, promoting financial inclusion for the rural poor.
- Kudumbashree: A poverty eradication and women’s empowerment program initiated by the government of Kerala, which encourages the formation of neighborhood groups that become SHGs.
- SEWA (Self-Employed Women’s Association): This trade union organizes women in the informal sector into SHGs to provide them with training and access to financial services
Deendayal Antyodaya Yojana-National Rural Livelihood Mission (DAY-NRLM) is a flagship poverty alleviation program implemented by the Ministry of Rural Development, Government of India. It aims to reduce poverty by enabling the poor household to access gainful self-employment and skilled wage employment opportunities resulting in sustainable and diversified livelihood options for the poor. This is one of the world’s largest initiatives to improve the livelihoods of the poor. The Mission seeks to achieve its objective through investing in four core components viz., (a) social mobilization and promotion and strengthening of self-managed and financially sustainable community institutions of the rural poor women; (b) financial inclusion; (c) sustainable livelihoods; and (d) social inclusion, social development and access to entitlements through convergence.
The Mission seeks to reach out to around 10 Crore rural poor households in a phased manner by 2022-23 and impact their livelihoods significantly.
