Self-help groups (SHG’s) are small and economically uniform compassionate groups of rural poor. They are formed with collective comforts and safety nets in order to achieve collective goals- particularly social and economic. These groups aim at conjoint help and assistance, saving a small amount of money regularly so as to meet their emergency needs and jointly approve to make a contribution to a common fund. They have collective decision making so as to solve conflicts through collective leadership and mutual dialogue making. In addition, these groups provide collateral free loan with terms and conditions decided by the group itself at the rates determined by the forces of demand and supply (market determined rates).
An ideal self-help group comprises 15-20 women or men, even though they normally contain women members. The introductory set-up of SHG’s begins with collecting and bringing together savings from its members. These groups develop the habit of thrift and canon of the economy among the members. By collecting and bringing together small savings of members, a huge amount can be raised. In spite of the reputation and distinctive nature of women’s self-help groups in India, evidence of their waves, particularly economic waves, is limited (Deininger &Liu, 2009).
Social capital symbolizes the social relations cum contacts between people that empower productive outcomes (Szreter 2000). Self-help groups generate Social Capital among the poor, especially women. They raise the spirits and persuade its members to save, make a collective strategy for the generation of additional income, and act as a channel for formal financial and banking services to reach them. They work as a joint security system for members who plan to borrow from structured and organized sources and channels. Accordingly, Self-help groups have materialized as the most operative and efficacious mechanism for delivery of microfinance services to the poor. Microfinance has developed as a larger drive whose goal is a world in which everyone, particularly the poor and socially unprivileged people have access to a wide basket of reasonably priced, high-quality financial goods and services, together with not just credit but also insurance, savings, payment services, and fund transfers (Christen et al., 2004).
Self-Help Groups are practicable, reasonable, and sustainable alternatives (Lal, 2007) to realize the goals and targets of rural development and to get communities involved in all the rural development programmes. The rural income is a function of the productivity levels of self-help groups but, in contemporary times, self-help groups lack effectiveness consequently, the researchers and social scientists cum experts should develop models that will increase the efficacy of self-help groups so that their income will increase which will escalate employment and women empowerment as well.
Consistent and coordinated link between the efficiency and self-help groups through proper actions can improve the monetary status and quality of life of the society in general and members , in particular, and may provide them with the better market incentives and inducements imperative for the extension and development of economy in the first place and shrinking and dwindling rural industries in the second place. A self-help group is a structural and organizational arrangement to distribute microcredit to the rural people in general and women in particular so as to make them innovative and resourceful and boosting and reassuring them to enter into ground-breaking and entrepreneurial activities, it must be encouraged and promoted for the revitalization of backward industries.
The women led SHGs have surely developed the mobilization and management of penny-pinching and credit requirements in a positive and effective manner, support and maintain linkages and associations with the banks and put into effect financial and fiscal self-discipline (APMAS, 2003). Nonetheless, in present times, self-help groups are not working up to their optimal capacity and for that reason, their role and significance in Growth and Development of a rural economy remain largely unseen. Many factors may be held responsible for less effective and deteriorating capacity and low real growth of the self-help groups.
The essay has argued that self-help groups have grown in quantity but not in quality and hence, researchers and social experts must try to explore the causes behind the less effective and low-quality growth of self-help groups. The SHGs should have a strong bond of affinity so that they can benefit their members by increasing their social capital, assets, income, and employment. We should develop ideal SHGs so that the borrowers are able to reduce their reliance on informal sources of finance and work towards perpetual or operational inclusion into the formal banking networks. Gyratory or rotatory management or governance should be developed as well as encouraged for the dissemination of power and provision of leadership chances to all the members so that their productivity will be enhanced.
Szreter, Simon. (2000). ‘‘Social Capital, the economy, and education in historical perspective.’’ Pp. 56-77 in Social Capital: Critical Perspectives, edited by Tom Schuller. Oxford University Press. APMAS. (2003).
SHG-Bank Linkage: A study in Andra Pradesh. Retrieved fromhttp://apmas.org/study-reports.php.
Robert Peck Christen et al. (2004). Financial institutions with a double-bottom line: Implications for the future of microfinance. CGAP Occasional Paper.
Fernandez, Aloysius. 2006. History and Spread of the Self-help Affinity Group Movement in India: The Role Played by IF AD. Occasional Paper produced by Asia and the Pacific Division, IF AD. Retrieved from http: //www.ifad.Org/operations/projects/regions/pi/paper/3.
Deininger, Klaus; Liu, Yanyan. (2009). Economic and Social Impacts of Self-help Groups in India. Policy Research working paper. No. WPS 4884. World Bank.
Lal, M. (2007). SHG-Bank Linkage In India Empowerment And Sustainability, Indian Council for Social Sciences Research, New Delhi.
The author is a Research Scholar at the Department of Economics, Central University of Kashmir, an Academic Counsellor, IGNOU STUDY CENTRE 1209,S.P. College, Srinagar. She is also an Editor in EPH – International Journal of Business and Management Science & Asian Journal of Managerial Science; Ezine Articles Expert Author and IJRULA title awards, 2018 winner (Best Researcher, 2018). She can be reached at: email@example.com