Self Help Groups (SHGs) serve as important community-based organizations that play a vital role in empowering individuals, especially women, and promoting socio-economic development at the grassroots level. The need for SHGs and their key functions are as follows:
Need for Self Help Groups (SHGs):
- Financial Inclusion: In many rural and economically backward areas, a large segment of the population lacks access to formal financial services. SHGs bridge this gap by promoting savings and providing microcredit to members, thereby fostering financial inclusion.
- Empowerment of Women: SHGs predominantly consist of women members, and they provide a platform for women to come together, discuss issues, and take collective action. This leads to increased social awareness, improved decision-making abilities, and empowerment of women in various aspects of life.
- Poverty Alleviation: Poverty is a significant challenge in rural areas. By promoting livelihood activities, entrepreneurship, and access to credit, SHGs help uplift the socio-economic status of their members and contribute to poverty alleviation.
- Promoting Savings Habit: SHGs inculcate a habit of regular savings among their members. Regular savings not only help in meeting emergency needs but also lead to a sense of financial security and stability.
- Social Capital Formation: SHGs promote social capital by encouraging mutual trust, cooperation, and solidarity among their members. This enables communities to come together, support each other, and address common issues effectively.
- Access to Government Schemes: SHGs act as a link between government welfare schemes and their members. They help members understand and access various government programs, leading to increased benefits and opportunities.
- Skill Development: SHGs often organize capacity-building programs, vocational training, and workshops for their members. This helps enhance their skills and knowledge, making them more employable and economically self-reliant.
- Awareness and Education: SHGs promote awareness about health, sanitation, education, and other essential aspects of life. They also educate their members about their rights, entitlements, and legal provisions.
Functions of Self Help Groups (SHGs):
- Group Formation: The primary function of an SHG is to bring together like-minded individuals from the same community to form a cohesive group. SHGs typically consist of 10 to 20 members.
- Savings Mobilization: SHGs encourage regular savings by their members. Each member contributes a predetermined amount to the group’s savings fund, which is collectively managed.
- Microcredit Provision: One of the key functions of SHGs is to provide microcredit to their members. The group collectively decides the loan amount and terms for each member based on their needs and repayment capacity.
- Loan Utilization and Monitoring: SHGs ensure that the loans provided to their members are utilized for productive purposes. They monitor the progress of income-generating activities and ensure timely repayment of loans.
- Skill Development and Training: SHGs organize skill development workshops, training sessions, and awareness programs for their members. This helps in capacity-building and knowledge enhancement.
- Bank Linkages: SHGs establish linkages with formal financial institutions like banks to access additional credit and financial services for their members. This helps members access larger loans and expand their livelihood activities.
- Social and Community Development: SHGs actively participate in community development activities, such as promoting health and sanitation, organizing social events, and addressing local issues.
- Empowerment and Decision-making: SHGs encourage women to actively participate in group discussions and decision-making processes. This boosts their self-confidence and leadership abilities.
- Conflict Resolution: SHGs act as platforms for conflict resolution and dispute settlement within the community. They facilitate discussions to resolve conflicts amicably.
In summary, Self Help Groups address the needs of financial inclusion, empowerment, and poverty alleviation by mobilizing savings, providing microcredit, and promoting socio-economic development at the grassroots level. They foster a sense of community, cooperation, and mutual support, leading to positive changes in the lives of their members and the overall community.