Call Us Now

+91 9606900005 / 04

For Enquiry

Self-Help Groups (SHGs) 


Government is aiming at raising the annual income of each woman in Self-Help Groups (SHGs) to Rs 1 lakh by 2024.


GS III- Indian Economy

Dimensions of the Article:

  1. What are SHGs?
  2. General Issues related to SHGs
  3. Socio-Cultural Hurdles in Penetration of SHGs in Rural Areas
  4. Measures Taken by the Government to Promote the SHGs
  5. Suggestions to Improve the Working of SHGs

What are SHGs?

Self-Help Groups are informal associations of people who choose to come together to find ways to improve their living conditions. They help to build Social Capital among the poor, especially women.

 The most important functions of a Self-Help Groups are
  • To encourage and motivate its members to save
  • To persuade them to make a collective plan for generation of additional income
  • To act as a conduit for formal banking services to reach them.

Self-Help Groups have emerged as the most effective mechanism for delivery of micro-finance services to the poor. The range of financial services may include products such as deposits, loans, money transfer and insurance. 

General Issues related to SHGs

  • Agricultural Activities: Most of the SHGs work at local level and engaged in agricultural activities
  • Lack of Technology
  • Access of market: Also the goods produced by SHGs do not have access to larger market place.
  • Poor Infrastructure: Most of these SHGs are situated in rural and far reach areas that lack connectivity via road or railways. Access to electricity remains an issue.
  • Lack of training and capacity building
  • Politicization: Political affiliation is also a major reason for group conflicts.
  • Credit Mobilization: A study has shown that about 48% of the members had to borrow from local money lenders, relatives and neighbours because they were getting inadequate loan from groups. Also issues like hoarding of money was witnessed.
  • System of monitoring: The general reports on the progress of SHGs show statistics of growth and spread of SHGs without questioning the process and internal health of the SHGs.

Socio-Cultural Hurdles in Penetration of SHGs in Rural Areas

  • There has been uneven distribution in the spread of SHGs in India. Socio-cultural factors along with government support and presence of NGOs have been major reasons for that.
  • In March 2001, 71% of the linked SHG, were from southern region consisting of Andhra Pradesh, Karnataka, Kerala and Tamil Naidu.
  • These are also the states where society is deeply entrenched in patriarchy with limited financial and social role for women.
  • Due to family responsibilities, majority of the women members cannot give their attention to their enterprises.
  • One of the major hurdles in lack of support from family members.
  • Due to male dominated society, women members could not uplift their business followed by lack of social mobility.
  • In many SHGs strong members try to earn a major share of the profit of the group, by exploiting the ignorance and illiterate members.

Measures Taken by the Government to Promote the SHGs

Self Help Group-Bank Linkage Programme:
  • On the recommendations of SK Kalia Committee, the SHG-Bank linkage programme was started at the initiative of NABARD in 1992 to link the unorganised sector with the formal banking sector.
  • Under this programme, banks were allowed to open savings accounts for Self-Help Groups (SHGs). Banks provide loans to the SHGs against group guarantee and the quantum of loan could be several times the deposits placed by such SHGs with the banks.

Banks should consider entire credit requirements of SHG members, namely,

  • income generation activities,
  • social needs like housing, education, marriage, etc. and
  • debt swapping”.
  • It is being implemented by commercial banks, regional rural banks (RRBs), and cooperative banks.
Priority Sector Lending:
  • GOI has included SHG as a priority sector to mandate and enhance banks focus on them.
  • Bank credit to members of SHGs is eligible for priority sector advance under respective categories viz., Agriculture, Micro, Small and Medium Enterprises, Social Infrastructure and Others.
Deendayal Antodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM):
  •  It seeks to alleviate rural poverty through building sustainable community institutions of the poor.
  • Mission closely works with the Department of Financial Services (DFS), Reserve Bank of India (RBI) and the Indian Bank Associations (IBA) to provide bank credit to SHGs.
Mahila Kisan Shashaktikaran Pariyojana:

In order to promote agro-ecological practices that increase women farmers’ income and reduce their input costs and risks, the DAY-NRLM Mission has been implementing the Mahila Kisan Shashaktikaran Pariyojana (MKSP).

Suggestions to Improve the Working of SHGs

  • Credit needs to be provided for diversified activities including income generating livelihood activities productions, housing consumption loan and against sudden calamities.
  • The delivery system has to be proactive and should respond to the financial needs of the farmers.
  • Training programmes relating to management of finances, maintaining accounts, production and marketing activities etc. should be given.
  • Simplify the process of giving loans, i.e. reduce the number of questions to important non repetitive ones.
  • Provide gender sensitization training to bank staff so that they are sensitized to the needs of rural clients especially women.
  • Adequate insurance coverage should be provided to the business units promoted by SHG against the financial losses to safeguard the interest of the entrepreneurs.

-Source: Indian Express

December 2023