SUBJECT: ECONOMICS

TOPIC: SELF HELP GROUP

DONE BY:

ARPIT JAIN

XII-E

12506
 BONAFIDE CERIFICATE

REGISTRATION NUMBER:

INTERNAL ASSESSMENT:

ROLL NUMBER:

CERTIFIED TO THE BONAFIDE PROJECT IN

ECONOMICS DONE BY ARPIT JAIN OF CLASS XII
SECTION E OF DAV BOYS SENIOR SECONDARY
SCHOOL DURING THE ACADEMIC YEAR 2021-2022.

SIGNATURE OF PRINCIPAL

SIGNATURE OF TEACHER

SCHOOL SEAL DESIGNATION SUBMITTED FOR

PRACTICAL EXAMINATION

HELD ON AT DAV BOYS SENIOR SECONDARY

SCHOOL ,CHENNAI - 600086 DURING THE ACADEMIC
YEAR 2021-2022.
 ACKNOWLEDGEMENT

I WOULD LIKE TO EXPRESS MY SINCERE GRATITUDE

TOWARDS, THE PRINCIPAL, MRS CHITRA RAGAHAVAN
AND MY ECONOMICS TEACHHER, MR KUMAR FOR
GIVING ME THE OPPORTUNITY TO UNDERTAKE THIS
INFORMATIVE PROJECT ON THE TOPIC ‘SELF HELP
GROUPS’. THE PROJECT INVOLVED EXTENSIVE
RESEARCH WHICH HELPED ME GAIN A LOT OF
KNOWLEDGE ON THE TOPIC .I WOULD ALSO LIKE TO
THANK MY SIBLINGS AND PARENTS WHOSE
GUIDANCE AND SUPPORT, HELPED TO IMPROVE, MY
PROJECT.
 INDEX

 INTRODUCTION
 EVOLUTION
 CONCEPT OF SHGs
 HOW TO FORM SHGs
 WORKING OF SHGs
 OBJECTIVES OF SHGs
 FEATURES OF SHGs
 ADVANTAGES OF SHGs
 CHARACTERISTICS OF SHGs
 CONCLUSION
 BIBLIOGRAPHY
 INTRODUCTION
A self-help group (commonly abbreviated SHG) is a financial
intermediary committee usually composed of 10 to 25 local women between the
ages of 18 and 40. Most self-help groups are in India, though they can be found in
other countries, especially in South Asia and Southeast Asia. A SHG is generally a
group of people who work on daily wages who form a loose grouping or union.
Money is collected from those who are able to donate and given to members in
need.

Members may also make small regular savings contributions over a few months until
there is enough money in the group to begin lending. Funds may then be lent back
to the members or to others in the village for any purpose. In India, many SHGs are
linked with banks for the delivery of micro-credit.

A SHG is a community-based group with 10-25 members. Members are usually

women from similar social and economic backgrounds, all voluntarily coming
together to save small sums of money, on a regular basis. They pool their resources
to become financially stable, taking loans from their collective savings in times of
emergency or financial scarcity, important life events or to purchase assets. [1][2] The
group members use collective wisdom and peer pressure to ensure proper end-use
of credit and timely repayment. In India, RBI regulations mandate that banks offer
financial services, including collateral free loans to these groups, on very low
interest rates. This allows poor women to circumvent the challenges of exclusion
from institutional financial services. This system is closely related to that of solidarity
lending, widely used by microfinance institutions.[3]Beyond their function as savings
and credit groups, SHGs offer poor women a platform for building solidarity. They
allow women to come together and act on issues related to their own lives including
health, nutrition, governance and gender justice.
 EVOLUTION

The SHG movement as provider of social capital has taken centre stage in the last
twenty years of India's rural development. The grassroots rural institutions have
played key role in the capacity building of SHGs. The SHG as organisational
mechanism has the potentials to contribute to the poverty eradication initiatives as
initiated by Government and Non Government Organisations in rural India. The
savings and credit mechanism has also reached grassroot level through SHG
movement. The growth stories of Indian economy have given the Indian government
the challenges and responsibilities to pull its 400 million of rural population out of
poverty. The institutional initiatives include running micro finance, interacting with
the government to help poor people access different poverty eradication programs
and in implementing small livelihood based programs for the poor and
disadvantaged community. The present book captures the evolution of SHGs as
triggered by public sector organisation, peoples' organisations and NGOs in the rural
ambience of West Bengal, India through Case Study approaches.
 CONCEPT OF SHGs

Self help groups are voluntary association of people formed to attain certain
collective goals, both economic and social goals. Self help groups are normally
formed of the poor coming from rural or semi-urban areas. Each group consists of
10 to 20 members of small and marginal farmers, landless agriculture laborers, rural
artisans, women folk, and micro-entrepreneurs. A group could be exclusively male
or female, or even mixed. However, majority self help groups are female groups.

Self-help groups are started by non-governmental organizations (NGOs) that

generally have broad anti-poverty agendas. Self-help groups are seen as
instruments for goals including empowering women, developing leadership abilities
among the poor and the needy, increasing school enrolment and improving nutrition
and the use of birth control. Financial intermediation is generally seen more as an
entry point to these other goals, rather than as a primary objective. [5] This can hinder
their development as sources of village capital, as well as their efforts to aggregate
locally controlled pools of capital through federation, as was historically
accomplished by credit unions.
HOW TO FORM SHGs

This handbook has been prepared for local animators or group promoters for
helping the poor to form self-help groups (SHGs) that can be linked to a local bank.
It has been written by the National Bank for Agriculture and Rural Development in
India and is thus particularly focused on the Indian context. However, it provides
excellent advice for the creation and function of SHGs, which can be applied in any
environment where the establishment of SHGs are legally and culturally appropriate.

All self-help groups are based on the fundamental principles of “helping each other”
and “unity is strength”. You can use this handbook to develop questions to ask
potential SHG members in order to gain a sense of the feasibility of establishing a
SHG in the area; and the methods to use in promoting SHGs. The handbook will
help you assist the members in defining the division of responsibilities within their
SHG. It will also help you to explain the purposes and different types of books that
an SHG must learn to keep. Example pages from savings and loan account
registers and a cash book are provided in an annex.
1. The opening of a bank account. The SHG presents the bank with a resolution
stating its intent to open a bank account, the authorisation of at least three
members to jointly operate upon their account, and a copy of the rules and
regulations of the SHG if available.
2. Internal lending. The handbook stresses how it is important for the SHG to
practice internal lending before opening a bank account, as it is through
internal lending that the SHG will learn to properly manage, utilise and repay
their SHG loans.
3. Assessment of the SHG. A clear and simple checklist is provided for a bank
manager to use to determine whether an SHG is functioning well and is
creditworthy. Example values for each criterion in the checklist are given under
the heading of very good, good and unsatisfactory.
4. Sanction of credit facility to the SHG. The group is collectively responsible for
the repayment of the loan. NABARD accepts this as security, instead of the
traditional collateral.
 WORKING OF SHGs
(i)A typical SHG has 15-20 members, usually belonging to one neighbourhood, who
meet and save regularly.

(ii)Saving per member varies from Rs 25 to Rs 100 or more, depending on the ability
of the people to save. Members can take small loans from the group itself to meet
their needs.

(iii)The group charges interest on these loans but this is still less than what the
moneylender charges. After a year or two, if the group is regular in savings, it
becomes eligible for availing loan from the bank.

(iv)Loan is sanctioned in the name of the group and is meant to create self
employment opportunities for the members.

(v)Most of the important decisions regarding the savings and loan activities are
taken by the group members. The group decides as regards the loans to be granted
— the purpose, amount, interest to be charged, repayment schedule etc. Also, it is
the group which is responsible for the repayment of the loan.
 OBJECTIVES OF SHGs
 Self-help groups work to achieve several objectives collectively as well for its
members individually which are as follows:-

 To develop the habits of saving and banking among the members

 To ensure the availability of loan for productive purposes
 To help the members uplift their social in economic status and gain economic
prosperity through credit facilities
 To secure the members from financial, moral and Technical strengths
 To initiate a group feeling among the members and enhance the confidence
and capabilities of them
 To instil the values of collective decision making and problem-solving among
the members
 To sensitize the women of the rural and urban poor areas and its relevance in
their strengthening of the status
 To make them learn the organisation and management of finance and
distribution of benefits
 To motivate the members, especially women, to take up the social
responsibilities related to the development
 To develop a forum for the members to provide them with space and support
for each other
 FEATURES OF SHGs
1. The motto of every group members should be “saving first – credit latter”

2. Self Help Group is homogeneous in terms of economic status.

3. The ideal size of a Self Help Group ranges between 10 and 20 members.

4. The groups need not be registered.

5. Groups are non-political, voluntary associations and follow a democratic

culture.

6. Each group should have only one member from one single family.

7. A group is to be formed with only men or only with women.

8. Self Help Group holds weekly meetings mostly during non-working hours,
and full attendance is made mandatory for better participation.

9. The groups have transparency among themselves and they have

collective accountability in respect of financial transactions.

10. Every group provides a platform to its members for exchange of their views
and ideas freely.
 ADVANTAGES OF SHGs

 The SHGs help the borrower to overcome the problem of

lack of collateral.
 They can get timely loans for a variety of purposes and at
a reasonable interest rate.
 SHGs are the building blocks of organisation of the rural
poor.
 Not only do they help women become financially self-
reliant, the regular meetings of the group provide a
platform to discuss and act on a variety of social issues
such as health, nutrition, domestic violence, etc.
 CHARACTERISITICS OF SHGs
The features and characteristics of the Self-Help groups are as follows:-

The ideal size of Self-help groups is 10 to 20 members. This limit is set as in

bigger groups, active participation cannot be experienced by all the members.

Self-help groups are informal and voluntary associations. They need not be
registered under any Act or law of the government.

Only one member from each family shall join. This ensures the participation of
families in the groups.

Self-help groups either consist of men or women. The mixed group are not
given preference. This owes to the mindset of individuals in rural areas where
women participation is restricted.

Reports have stated that as compared to men’s groups, women’s group

function and perform better.

Every member of the Self-help groups belongs to the same socio-economic

background. This is done to ensure a hesitation-free environment and
comfortable communication among the members.

The members of the group conduct meetings and meet regularly. Generally,
they should meet weekly or monthly. This helps the member in understanding
each other better and form better relations.

Full attendance is required during the meetings. The purpose of complete

attendance is the larger and better participation of the members.

Self-help groups follow the principle of collective leadership. It promotes group

cohesion and effective goal integration.

There are mutual trust and confidence among the members of the group. This
is the key to successful and prolonged functioning of the groups.
 CONCLUSION

 An economically poor individual gains strength as part of a group.

 Besides, financing through SHGs transaction costs for both

lenders and borrowers.

 While lenders have to handle only a triple SHG account instead of

a large number of small-sized individual accounts, borrowers as
part of an SHG minimize or travel (to and from the branch and
other places) for completing paper work and on the loss of
workdays in canvassing for loans.

 Where successful, SHGs have significantly empowered poor

people, especially women, in rural areas.

 SHGs have helped immensely in reducing the influence of

informal lenders in rural areas.

 Many big corporate houses are also promoting SHGs at many

places in India.

 SHGs help borrowers overcome the problem of lack of collateral.

Women can discuss their problem and find solutions for it.
 BIBLIOGRAPHY

https://www.drishtiias.com/to-the-points/Paper2/self-help-groups-shgs

https://vikaspedia.in/social-welfare/rural-poverty-alleviation-1/self-help-
groups/overview-of-shgs

https://shodhgangotri.inflibnet.ac.in/bitstream/123456789/1261/2/02_introd
uction.pdf