Question

Imagine you are a part of a ‘Self Help Group’ (SHG). Explain the working system of the Self Help Group (SHG) to the new member.

Answer 1

Self Help Groups (SHGs) are small, voluntary associations, mainly in rural areas, where people come together to save money, provide credit, and support one another financially.

1. Regular Savings: Each member deposits a fixed amount regularly into a common fund, encouraging financial discipline and creating collective savings.
2. Internal Lending: Members can borrow small amounts from the group’s savings for personal or income-generating needs at low interest rates, protecting them from exploitation.
3. Bank Linkage: SHGs are linked with banks under various government schemes, enabling members to obtain loans to start small enterprises and improve their livelihoods.
4. Decision-Making: Regular meetings are held to discuss savings, loans, repayments, and group activities, ensuring transparency and shared responsibility.
5. Empowerment: SHGs support economic independence, social empowerment, and skill development,especially for women,by promoting self-reliance and financial security.