Question

Explain the role of Self-Help Groups (SHGs) in rural society.

Answer 1

1. The plan is to form small Self Help Groups (SHGs) for the rural poor, especially women, and pool (collect) their savings.
2. A typical SHG has 15 to 20 members who meet and save on a regular basis, usually from one neighbourhood. Depending on the member's capacity to save, the amount saved per member ranges from Rs 25 to Rs 100 or more.
3. To meet their needs, members may borrow a small amount of money from the group.
4. Even though the group adds interest to these loans, it is still less than the moneylender does.
5. If the group maintains regular savings after a year or two, it qualifies for bank loans.
6. The loan is approved in the group's name and is intended to give the participants opportunities to work for themselves.
7. For the members' need for working capital and to release mortgaged land, small loans are made available.
8. The group members make the majority of the crucial decisions regarding savings and loan activities.
9. The group makes decisions regarding the loans that will be given, including the purpose, amount, interest rate, and repayment schedule. Additionally, the group is in charge of paying back the loan.
10. Any instance of a member not repaying a loan is taken seriously by the other members of the group.