Self Help Groups - A Support System for the Needy

BY Sidharth Garg:

Self help groups are essentially tiny clubs : around 10 to 20 folks get together & have a system where they pool their resources - and at times of need - they're able to lend to one of their own at a significantly lower interest rate. This setup really took off in the 1990s thanks to NABRD's SHG-Bank Linkage Programme which launched back in 1992 & allowed groups to borrow from banks without needing collateral. These little 'cliques' mostly made up of women, achieve a lot - they help women to become financially independent, contribute to community development & reduce people's reliance on loan sharks in rural areas. They also foster a sense of saving & self reliance, and give women and disadvantaged groups a leg up in both social & economic terms.

These types of groups have sprung up because of poverty & a lack of female involvement in the financial sector. One of the main reasons they've come about is because people can't get access to formal credit.

SHGs have been successful in boosting the income & confidence of poor families. They've also increased women's participation in the workforce & helped to kick start small businesses & entrepreneurial ventures. To really make the most of SHGs though, banks & NGOs need to do a better job of supporting them - & get more women trained up in financial literacy.

All in all SHGs are a vital tool for helping people lift themselves out of poverty & achieve more inclusive growth. They've driven growth & change in the rural economy.