Our SHGs

A self-help group (SHG) is a village-based financial intermediary committee usually composed of 10–20 local women or men. A mixed group is generally not preferred. Most self-help groups are located in India, though SHGs can be found in other countries, especially in South Asia and Southeast Asia.

Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. Funds may then be lent back to the members or to others in the village for any purpose. In India, many SHGs are 'linked' to banks for the delivery of micro-credit.

Self-help groups (SHGs) have become a familiar presence in the countryside and have also been successfully promoted in urban areas. Indeed, with the massive social capital embodied in them, SHGs can be considered to have emerged as a significant part of the development infrastructure. It, however, remains an open question whether SHGs were originally intended to fill the institutional gap in the delivery of financial and non-financial services and welfare schemes to the poor. At the same time, SHGs generally have been promoted as an effective channel and means for the delivery of microfinance, which for some time held out the promise globally as a ‘magic bullet’ for poverty reduction. As the number of SHGs has multiplied in the past 20 years or so, so have the types of activities and innovations that have been designed around them. As a result, the SHG movement represents a rich diversity of interventions and outcomes difficult to classify and analyse. Within the larger SHG ‘movement’, however, the programme for linking SHGs with banks has been a core innovation that has been the mainstay of SHG development over time.

The SHG movement in India took shape in the 1980s as several NGOs experimented with social mobilization and organization of the rural poor into groups for self-help. The SHG-Bank Linkage Programme (SBLP) under the leadership of the National Bank for Agriculture and Rural Development (NABARD), the apex bank for agriculture and rural development in the country, which built upon these experiments, completed two decades of existence in February 2012. It is, therefore, time to attempt a comprehensive assessment  of  the  accomplishments  and  shortcomings  of  SHGs  and community institutions built upon them, and to chart their progress in microfinance and other developmental initiatives. The SHG movement has come to mean more than merely the provision of financial services to their group membership, which is composed mainly of poor women. However, it is the role of SHGs in financial intermediation that holds great promise as a means of financial inclusion and mainstreaming of poor families as well as a development model with wider application.

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