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Self Help Groups (SHGS) - Comprehensive Guide

Self Help Groups (SHGs) are voluntary associations aimed at poverty alleviation, financial inclusion, and women's empowerment in rural India, where a significant portion of the population lives in poverty. Established through a historical movement starting in the 1980s, SHGs operate democratically and provide mutual support while facilitating micro-finance access and income generation. Despite challenges such as limited financial literacy and governance issues, SHGs have shown success in creating small enterprises and improving community welfare.

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71 views3 pages

Self Help Groups (SHGS) - Comprehensive Guide

Self Help Groups (SHGs) are voluntary associations aimed at poverty alleviation, financial inclusion, and women's empowerment in rural India, where a significant portion of the population lives in poverty. Established through a historical movement starting in the 1980s, SHGs operate democratically and provide mutual support while facilitating micro-finance access and income generation. Despite challenges such as limited financial literacy and governance issues, SHGs have shown success in creating small enterprises and improving community welfare.

Uploaded by

Magi Webinars
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

7/20/25, 1:25 PM Self Help Groups (SHGs) - Comprehensive Guide

Self Help Groups (SHGs) - Comprehensive


Guide

Key Concept: Self Help Groups (SHGs) are voluntary associations of 10-20 people,
predominantly women from similar socio-economic backgrounds, who come together to
save small amounts of money regularly and mutually agree to contribute to a common
fund to meet their emergency needs.

Introduction

India has ~6.99 lakh villages; 68.2% of the population lives in rural areas

Poverty is widespread; 30% still live under miserable conditions

SHGs enable inclusive economic growth by turning the poor into entrepreneurs

C.K. Prahlad emphasized treating the poor as "creative entrepreneurs," not victims

Objectives of SHGs

Poverty alleviation

Financial inclusion

Women empowerment

Encouraging savings and self-reliance

Promote micro-enterprises

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Background

Historical Development

Year Development

1976 Grameen Bank founded by Muhammad Yunus in Bangladesh

1986-87 SHG movement initiated by NABARD in India

1991-92 NABARD gave SHG movement major boost through funding

1993 RBI allowed SHGs to open bank accounts

Operational Structure

Key Functions

1. Run democratically with elected President & Secretary

2. Hold regular meetings for decision making

3. Maintain transparent financial records

4. Provide mutual support and peer pressure

Bank Linkage Models

Model Description

Model I Banks → NGOs/SHGs → Members

Model II Banks → SHGs → Members

Model III Banks → SHGs with NGO support

Model IV Banks → Individuals (on SHG/NGO recommendation)

Impact Areas

Economic Impact

Micro-finance access

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Income generation activities

Poverty reduction

Financial literacy

Social Impact

Women empowerment

Community development

Better health awareness

Education enhancement

Success Story: In Tamil Nadu, SHG women have successfully established small enterprises
producing agarbattis, handmade paper, and food products, with annual turnovers
exceeding ₹50 lakhs in some cases.

Challenges

Limited financial literacy

Governance issues

Market access limitations

Dependency on external funding

Group dynamics conflicts

Future Prospects
Digital transformation of SHGs

Integration with government schemes

Scaling up successful models

Enhanced market linkages

Focus on quality control

Prepared by: SHG Resource Center | Date: November 2023

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