Question

Answer the following:

Write important features of SHGs.

Answer 1

Important features of SHGs are as follows:

1. Formation: It is generally formed by NGOs or team of the government. It is an informal group. It is recognized by the government and does not require any formal registration, SHGs have well-defined rules and by-laws, hold regular meetings, and maintain records.
2. Membership: As per the National Urban Livelihood Mission at least 5 members are required. It is difficult to manage a bigger group and members cannot actively participate from one family only one person can become a member so that more families can participate. Mixed groups are generally not preferred.
3. Entrepreneurship Development: The poor individuals in rural areas face scarcity of capital and managerial skills. SHGs provide them capital at a low-interest rate which gives them the opportunity to start micro-enterprise. These micro-enterprises use untapped manpower in the area which generates employment opportunities in rural areas.
4. Collateral Free Loan: SHGs provide small loans to poor individuals for undertaking self-employment projects. Loans are given on the principle of mutual trust and either minimum or no documentation is required to get a loan. The rate of interest differs from group to group and it is a little higher than the interest charged by banks. It ensures timely repayment of loans as all members of the group are responsible for collecting repayment amount from the members who borrowed the loan.
5. Democratic Setup: SHG is a group of members, for the members and by the members. It is the group that reflects people’s real participation in the process of development. Members elect or select leaders for the proper functioning of the group. The leader is responsible for holding regular meetings and maintaining records and accounts of the group.
6. Empowerment of Women: SHG is an emerging tool for the socio-economic development of women all over the world. SHGs are working effectively in promoting women entrepreneurs. SHGs empower women by providing their knowledge, finance, and opportunities.
7. Saving Habits: The SHG encourages small saving habits at regular intervals among its members. The Self Help Group inculcates the thrift and savings habit among the members of each group.
8. Mutual trust: Most of the Indian villages are facing challenges such as poverty, illiteracy, lack of skills, health care, etc. The basic philosophy of forming SHGs is to overcome individual shortcomings and weaknesses with collective efforts. Through mutual trust, thousands of the poor and marginalized individuals are building their lives, their families, and their society.