SHGs under Atmanirbhar Bharath:


Atmanirbhar Bharat aid package under which collateral-free loans for SHG groups are given to help them overcome financial crises due to COVID 19 pandemic. During Unlock- 2 periods, loan assistance is going to help poor families as most of them are still not having any job. The government is giving free ration including rice, pulses, cooking oil under PM Garib Kalyan Anna Yojana, free cooking gas cylinder under Pm Ujwala, and Rs 500 cash monthly assistance for women Jan Dhan account holders. Under COVID 19 loan scheme, SHG members are given loan up to Rs 5000 with a maximum of Rs one lakh for each SHG group.


Rs 12 crore loan has been targeted to be given to eligible 1500 Self-help groups in the four districts of Tiruchirapalli, Perambalur, Karur, and Ariyalur. Already Rs 62.5 lakh loan amount is disbursed to 65 SHG groups till now. Eligible SHG groups can utilize the loan facility from their nearby banks.


What are Self Help Groups (SHGs)?

  • Self Help Groups are groups of 10-20 people in a locality formed for any social or economic purpose. Most of the SHGs are formed for the purpose of better financial security among its members. SHGs can exist with or without registration.
  • SHGs in India often work in association with Banks (SHG – Bank Linkage Programme). The same is the basis of the Indian Microfinance Model too. SHG – Bank Linkage was started in India in 1992 under the guidelines of NABARD and Reserve Bank of India.


Self Help Groups and Their Origin

  • All problems cannot be solved alone.
  • SHG is a form of enterprise. They perform the role of collective banks. They mobilize savings from the members and perform both debit and credit functions.
  • For external credit, SHG links with the banks ie. SHG- Bank linkages.
  • Now SHGs also link with companies ie. SHG-Corporate linkages.
  • For Women SHGs, Government is providing an interest subvention scheme.


Importance of SHGs – 

  • Increased incomes of the poor through collective performance. Alternate source of employment – it eases dependency on agriculture by providing support in setting up micro-enterprises e.g. personalized business ventures like tailoring, grocery, and tool repair shops.
  • Women’s status in society as well as in the family leading to improvement in their socio-economic condition and also enhances their self-esteem.
  • Social integrity – SHGs encourage collective efforts for combating practices like dowry, alcoholism, etc.
  • Gender Equity – SHGs empowers women and inculcates leadership skills among them. Empowered women participate more actively in gram sabha and elections.
  • Pressure Groups – their participation in the governance process enables them to highlight issues such as dowry, alcoholism, the menace of open defecation, primary health care, etc, and impact policy decision.
  • Voice to marginalized section – Most of the beneficiaries of government schemes have been from weaker and marginalized communities and hence their participation through SHGs ensures social justice.
  • Financial Inclusion – Priority Sector Lending norms and assurance of returns incentivize banks to lend to SHGs. The SHG-Bank linkage program pioneered by NABARD has made access to credit easier and reduced the dependence on traditional money lenders and other non-institutional sources.
  • Improving the efficiency of government schemes and reducing corruption through social audits.
  • Changes In Consumption Pattern – It has enabled the participating households to spend more on education, food, and health than non-client households.
  • Impact on Housing & Health – The financial inclusion attained through SHGs has led to reduced child mortality, improved maternal health, and the ability of the poor to combat disease through better nutrition, housing, and health – especially among women and children.
  • Banking literacy – It encourages and motivates its members to save and act as a conduit for formal banking services to reach them.


Statistics of SHGs in India

  • 80 lakh SHGs with active bank linkages in India.
  • Involvement of 10 crore people of India.
  • The aggregate bank balance of Rs.6500 crores.
  • 90% of SHGs in India consist exclusively of women.

Challenges to SHGs

  • Lack of knowledge and proper orientation among SHG-members to take up suitable and profitable livelihood options.
  • Patriarchal mindset – primitive thinking and social obligations discourage women from participating in SHGs thus limiting their economic avenues.
  • Lack of rural banking facilities – There are about 1.2 lakh bank branches and over 6 lakh villages. Moreover, many public sector banks and micro-finance institutions are unwilling to provide financial services to the poor as the cost of servicing remains high.
  • Sustainability and the quality of operations of the SHGs have been a matter of considerable debate.
  • No Security – The SHGs work on mutual trust and confidence of the members. The deposits of the SHGs are not secured or safe
  • Only a minority of the Self-Help Groups are able to raise themselves from a level of micro-finance to that of micro-entrepreneurship

Steps to Make SHGs Effective

  • The Government should facilitate and promoter, create a supportive environment for the growth and development of the SHG movement.
  • Expanding SHG Movement to Credit Deficient Areas of the Country - such as Madhya Pradesh, Rajasthan, States of the North-East.
  • The rapid expansion of financial infrastructure (including that of NABARD) and by adopting extensive IT-enabled communication and capacity building measures in these States.
  • Extension of Self-Help Groups to Urban/Peri-Urban Areas – efforts should be made to increase the income generation abilities of the urban poor as there has been a rapid rise in urbanization and many people remain financially excluded.
  • Positive Attitude – Government functionaries should treat the poor and marginalized as viable and responsible customers and as possible entrepreneurs.
  • Monitoring – Need to establish a separate SHG monitoring cell in every state. The cell should have direct links with the district and block level monitoring system. The cell should collect both quantitative and qualitative information.
  • Need-Based Approach – Commercial Banks and NABARD in collaboration with the State Government need to continuously innovate and design new financial products for these groups


Kudumbashree in Kerala

  • It was launched in Kerala in 1998 to wipeout absolute poverty through community action. It is the largest women empowering project in the country. It has three components i.e., microcredit, entrepreneurship, and empowerment. It has three-tier structure - neighborhood groups (SHG), area development society (15-20 SHGs), and Community development society (federation of all groups). Kudumbashree is a government agency that has a budget and staff paid by the government. The three tiers are also managed by unpaid volunteers

Mahila Arthik Vikas Mahamandal (MAVIM) in Maharashtra

  • SHGs in Maharashtra were unable to cope with the growing volume and financial transactions and needed professional help. Community managed resource center (CMRC) under MAVIM was launched to provide financial and livelihood services to SHGs. CMRC is self-sustaining and provides need-based services.
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