Q. Consider the following statements:

  1. The Self-Help Group (SHG) programme was originally initiated by the State Bank of India by providing microcredit to the financially deprived.
  2. In an SHG, all members of a group take responsibility for a loan that an individual member takes.
  3. The Regional Rural Banks and Scheduled Commercial Banks support SHGs.

How many of the above statements are correct?

  • Only one
  • Only two
  • All three
  • None

Answer: (b) Only two

Self-Help Groups
  • SHGs are voluntary associations of the economically poor, usually drawn from the same socio-economic background and who resolve to come together for a common purpose of solving their issues and problems through self-help and community action.
  • Introduction of SHGs in India:
    • In 1984, the concept of social mobilization through the organizing of SHGs was introduced based on Prof. Yunus’s Grameen Bank model.
    • Initially, NABARD along with impaneled NGOs designed and developed the promotional ecosystem, including the SHGs-Bank linkage program.
    • In the year 1990, the RBI recognized SHGs as an alternate credit flow model.
  • Functions:
    • It looks to build the functional capacity of the poor and the marginalized in the field of employment and income generating activities.
    • It resolves conflicts through collective leadership and mutual discussion.
    • It provides collateral free loan with terms decided by the group at the market driven rates.
    • Such groups work as a collective guarantee system for members who propose to borrow from organised sources. The poor collect their savings and save it in banks. In return they receive easy access to loans with a small rate of interest to start their micro unit enterprise.
    • Consequently, Self-Help Groups have emerged as the most effective mechanism for delivery of microfinance services to the poor.
  • Self-Help Groups Examples in India:
    • Mahila Arthik Vikas Mahamandal (MAVIM): MAVIM is a women’s development corporation in Maharashtra. It works towards the economic empowerment of women through the formation of SHGs, providing them with training, credit facilities, and support for various income-generating activities.
    • SEWA (Self-Employed Women’s Association): SEWA is a trade union and women’s cooperative that aims to improve the economic and social conditions of self-employed women workers in the informal sector. It organizes women into SHGs, provides them with training, and helps them access financial services.
    • Kudumbashree: Kudumbashree is a poverty eradication and women empowerment program initiated by the Government of Kerala. It encourages the formation of neighborhood groups, which eventually come together to form SHGs. Kudumbashree focuses on various income-generating activities and capacity building of women.
    • Bandhan-Konnagar: Bandhan-Konnagar is a non-governmental organization (NGO) that works towards poverty alleviation through the formation of SHGs. It focuses on providing microfinance services, training, and livelihood support to women in marginalized communities.
    • Bhagini Nivedita Gramin Vigyan Niketan (BNGVN): BNGVN is a rural development organization that promotes women’s empowerment and sustainable livelihoods. It facilitates the formation of SHGs and provides training, financial services, and technical support to women for income-generating activities.