Question : Explain the role of Self-Help Groups (SHGs) in the rural society.
The correct answer is-
i. The idea is to organize rural poor, in particular women, into small Self Help Groups (SHGs)
and pool (collect) their savings.
ii. A typical SHG has 15-20 members, usually belonging to one neighbourhood, who meet and
save regularly. Saving per member varies from Rs 25 to Rs 100 or more, depending on the
ability of the people to save.
iii. Members can take small loans from the group itself to meet their needs.
iv. The group charges interest on these loans but this is still less than what the moneylender
charges.
v. After a year or two, if the group is regular in savings, it becomes eligible for availing loan
from the bank.
vi. Loan is sanctioned in the name of the group and is meant to create self-employment
opportunities for the members.
vii. Small loans are provided to the members for releasing mortgaged land, for meeting working
capital needs
viii. Most of the important decisions regarding the savings and loan activities are taken by the
group members.
ix. The group decides as regards the loans to be granted — the purpose, amount, interest to be
charged, repayment schedule etc. Also, it is the group which is responsible for the repayment
of the loan.
x. Any case of non-repayment of loan by any one member is followed up seriously by other
members in the group.
xi. Any other relevant point
