Some Major Roles of Self Help Groups for upliftment

1. Income generation for the poor

The distribution of average annual per capita income among SHGs reveals that prior to the formation of SHGs the region’s members’ average annual per capita income was very low, with the majority of them falling below the poverty line. Members’ salaries have increased slightly since the formation of SHGs, though.

SHG implementation can provide chances for the rural poor to engage in a variety of self-employment activities. With an effective distribution micro-credit system, the self-help group is nothing more than an excellent tool for giving self-sustaining vocations to rural poor women.

2. Formation of a Group

Generally, the group’s overall size is between 12 and 20 people and for self-employment and financial independence, poor sections need credit. Bank credits are not easily accessible to individuals poor, but by forming an SHG, there are make better prospects for bank credits. Hence, the chances of successful income generation are high with SHGs than individual attempts to ensure its long-term viability. 

3. Women empowerment:

• Women’s income contribution has risen. It provided them more power over the decisions that influenced their life. Women’s participation in decision-making has risen as a result of this.
• It has boosted their understanding of various assistance systems and organizations, as well as their ability to access them.
• In addition, member households’ expenditure on girl education has grown.

4. Resolve the collateral problem:

The collateral problem can be solved through a self-help group. Members can borrow money from the group without putting up any collateral to suit their requirements. On their loans, the Group charges interest, but it is lower than what money lenders charge. The group members make the majority of the choices for savings and loan activity. The group agrees on the kind of loans to be given, as well as the quantity of money to be borrowed, the interest rate to be paid, and the payback schedule, among other things. The repayment of the loan is the group’s responsibility. 

Self-help groups are made up of disadvantaged individuals from rural areas (especially women). The objective is to assist them in organizing themselves, providing financial assistance, providing jobs, and assisting them in other areas, including domestic concerns. These groups are informal gatherings of people who are dealing with similar issues. These folks band together to form a group to solve their mutual concerns and raise their living standards. They are typically from the same socioeconomic background and are involved in little savings between themselves at banks. This sum serves as the SHGs’ fund and is utilized to make loans to its members. It is a critical instrument for lifting people out of poverty and improving social standing by encouraging self-employment.

The Self-Help Group (SHG)-Bank Linkage Program has emerged as the country’s most important microfinance program. Commercial banks, regional rural banks (RRBs), and cooperative banks are implementing it. As of March 31, 2012, the SHG-Bank Linkage Program had 79.60 lakh SHG-held savings bank accounts in operation, totaling Rs. 6,551 crore in savings.

A self-help group is a financial intermediary in a community made up of 10–20 local women. Self-help groups are most common in India, but they can also be found in other countries, especially in South and Southeast Asia. Over the course of a few months, members make tiny recurring savings contributions until the organization has enough funds to begin lending. The funds can then be re-loaned to members or others in the community for any purpose. Many SHGs in India are ‘connected’ to banks in order to receive microcredit.