Question

What are Self Help Groups? How do they work? Explain.

Answer 1

A self-help group is a financial support group that is formed at the village level. It consists of around 15–20 members who meet and save their money regularly. They pool together their savings until the capital is sufficient to begin lending. The interest charged on these loans is less than what is charged by moneylenders. Regular savings may entitle the group for bigger loans from a bank. These loans are utilised to generate self-employment. Self-help groups function as a source of access to micro credit for women in village. They are also instrumental in ensuring community-based decision making. Self-help groups also reduce transactional costs associated with lending.