Self-Help Groups (SHGs)

When governance moves from policy documents to people’s lives, one institution stands out at the grassroots level—Self-Help Groups (SHGs).
If NGOs are the hands and feet of civil society, SHGs are its collective strength.

📌 What is a Self-Help Group?

According to the National Rural Livelihoods Mission (NRLM):

A Self-Help Group is a small group of people who pool their savings into a common fund, meet regularly, and use this fund for mutual benefit, thereby promoting financial inclusion, self-reliance, and collective action.

In simple terms, SHGs convert individual weakness into collective power.

🌱 Origin of SHGs in India

SHGs emerged as a grassroots response to poverty, especially among rural and marginalised women.

🔹 Early Evolution

• The idea gained momentum in the 1980s, with support from National Bank for Agriculture and Rural Development (NABARD).
• In 1992, NABARD launched the SHG–Bank Linkage Programme (SHG-BLP)—a turning point in rural finance.

🔹 Role of Civil Society Organisations

• MYRADA
• PRADAN

These organisations demonstrated that poor people are bankable when they act collectively.

📊 Scale Today

• As per NABARD SHG-BLP Status Report 2023:
  • 12+ million SHGs
  • 130+ million households covered

👉 This makes SHGs the largest microfinance movement in the world.

🏛️ Government Recognition and Support

From the 1990s onwards, SHGs became an integral part of India’s development strategy.

• Swarn Jayanti Gram Swarozgar Yojana (SGSY)
• DAY–NRLM – flagship programme for rural livelihoods

🎯 Mission Objective:
Ensure financial inclusion, livelihood promotion, and social mobilisation of the rural poor.

🧩 Role of SHGs in Developmental Activities

1️⃣ Financial Inclusion

SHGs provide:

• Easy access to savings
• Collateral-free credit
• Under DAY–NRLM, 10+ crore women are mobilised into SHGs.

👉 SHGs bring banks to the poor, not the poor to banks.

2️⃣ Women’s Empowerment

Participation in SHGs:

• Builds confidence
• Enhances decision-making
• Improves social status
• Lakhpati Didi Initiative aims to help 2 crore women earn ₹1 lakh annually.
• Self Employed Women’s Association (SEWA) shows how women become leaders in homes and communities (UPSC 2020).

3️⃣ Livelihood Generation

SHGs support → Skill training, Micro-enterprises

Examples → Agri-business, Handicrafts, Dairy and poultry

👉 SHGs convert subsistence activities into sustainable livelihoods.

4️⃣ Social Cohesion and Community Action

SHGs promote → Mutual trust, Collective problem-solving, Local leadership

COVID-19 example:
SHGs stitched masks, ran community kitchens in Odisha and Bihar.

5️⃣ Rural Development & Poverty Reduction

• SHGs reduce rural poverty by:
  • Supporting small businesses
  • Improving money management
• Example: JEEViKA improved livelihoods of 6 lakh households.

6️⃣ Asset Creation and Income Security

Through small loans, SHG members invest in → Livestock, Farming tools, Micro-assets

👉 Assets ensure income stability and shock resilience.

7️⃣ Skill Development

SHGs provide training in → Financial literacy, Record-keeping, Enterprise management

NRLM-trained women often become successful micro-entrepreneurs.

🏦 Government Measures to Promote SHGs

🔹 SHG–Bank Linkage Programme (SBLP)

• Started in 1992 by NABARD
• Links SHGs with banks for → Savings, Credit
• Enables women to start small businesses like farming, tailoring, shops

👉 Microfinance through SHGs addresses poverty, malnutrition, and gender inequality (UPSC 2021).

🔹 NABARD’s Support System

• Training and capacity building
• Skill development initiatives
• Women SHG Development Fund – ₹500 crore
• Special focus on LWE-affected and backward districts

🔹 Rashtriya Mahila Kosh

Provides loans to intermediary agencies that further lend to SHGs, strengthening women-led microfinance.

⚠️ Challenges Faced by SHGs

1️⃣ Poor Infrastructure

• Lack of roads, electricity, connectivity
• Example: Bihar and Uttar Pradesh—difficulty accessing markets

2️⃣ Inadequate Training & Capacity Building

• Many SHGs operate without professional guidance
• NRLM efforts uneven across states

3️⃣ Politicisation

• Political interference affects autonomy and cohesion

4️⃣ Absence of Financial Security

• Informal nature
• No insurance for deposits
• High vulnerability to shocks

5️⃣ Socio-Cultural Barriers

• Gender inequality
• Caste discrimination
• Illiteracy

Examples:

• Caste barriers in Tamil Nadu
• Illiteracy challenges in Rajasthan
• Resistance to women’s participation in Uttar Pradesh

🔧 Measures to Make SHGs More Effective

✅ Government as Facilitator

• Create enabling ecosystem rather than control
• Example: Grameen Bank model (Bangladesh)

✅ Expand SHGs in Credit-Deficient Areas

• Madhya Pradesh
• Rajasthan
• North-Eastern states

International parallel: Kenya’s rural “chamas”.

✅ Strengthen Digital & Monitoring Infrastructure

• IT-enabled tracking
• Separate SHG monitoring cells
• Example: Society for Elimination of Rural Poverty (SERP)
  • Robust ICT platforms
  • Credit grading and transaction tracking

✅ Extend SHGs to Urban & Peri-Urban Areas

• Urban poor remain financially excluded
• Example: Brazil’s Bolsa Família incorporating urban SHG concepts

🌟 Successful SHG Models in India

• Kudumbashree (Kerala)
  One of the largest SHG networks in the world, Kudumbashree focuses on poverty eradication and women empowerment through microfinance, livelihood generation, and community-based initiatives.
• Mahila Arthik Vikas Mahamandal (MAVIM) – Maharashtra
  A state-run initiative that has facilitated the formation of over 65,000 SHGs, enabling rural women to access credit, skill training, and entrepreneurship opportunities.
• SEWA Bank (Self-Employed Women’s Association) – Gujarat
  Established by self-employed women, SEWA supports SHGs by providing microloans, health insurance, and skill development, thereby strengthening women’s financial independence.
• Dharmapuri SHGs – Tamil Nadu
  SHGs in Dharmapuri district have enabled thousands of rural women to transition from subsistence farming to small-scale enterprises such as dairy farming and garment production.
• JEEViKA (Bihar Rural Livelihoods Promotion Society)
  Supported by the World Bank, JEEViKA has organised millions of women into SHGs, significantly improving access to health, education, and sustainable livelihoods in one of India’s poorest states.

🚀 New-Age SHG Initiatives

Lakhpati Didi Initiative
→ Target: ₹1 lakh annual income per SHG woman→ 1 crore+ women already achieved (Aug 2024)
→ Target: 3 crore women

🚁 Namo Drone Didi
→ Announced in Union Budget 2024–25
→ ₹1,261 crore for 15,000 SHGs
→ Women-led drone services in agriculture

💻 e-Shakti Project (NABARD)

→ Digitisation of SHG accounts
→ Enhances: Financial inclusion, Credit appraisal, Transparency

👉 Makes SHGs banker-friendly and future-ready.

🎯 Concluding Insight

Self-Help Groups represent the most decentralised and people-centric model of development—combining financial inclusion, women empowerment, livelihood creation, and social transformation through collective self-reliance.