Cooperatives and

Farmers Organizations UNIT 8 SELF HELP GROUP (SHG)

Structure
8.0 Objectives
8.1 Introduction
8.2 Concept and Definitions of SHGs
8.2.1 Characteristics of SHGs
8.2.2 Advantages of SHGs
8.3 Process of SHG Formation
8.3.1 Various Stages of Formation of SHGs
8.4 Micro-Finance and SHG - Bank Linkage
8.5 Empowerment of Rural People through SHGs
8.6 Let Us Sum Up
8.7 Keywords
8.8 Suggested Readings/ References
8.9 Answers to Check Your Progress Exercises

8.0 OBJECTIVES
After going through this unit, you will be able to:
• discuss the need and advantages of self-help groups;
• explain the process of formation of self-help groups;
• describe the features and coverage of the SHG-Bank linkage programme;
and
• identify the role of SHGs in the empowerment of rural youth.

8.1 INTRODUCTION
The top-down service delivery approach of development is being discredited.
The trickle-down effect is not much observable at the grass root level.
Scientific and rational planning was its hallmark and the emphasis was on a
centralized delivery system based on the efficiency of civil personnel as
agents of development. Under this approach, at the local level, the rural
people did not feel involved and therefore, never took up the developmental
programmes as their own.

The present-day development paradigm believes the involvement of local

people in decision-making at all levels of the programme can help in
achieving the desired development outcome. Participation is used as a means
to achieve development. Participatory development focuses on local
institutions and local people. The main objective of participatory
development is to support and strengthen the capabilities of local people and
their institutions.

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Self Help Group is a process by which a group of people with a common (SHG)
objective are facilitated to come together in order to participate in
development activities such as savings, credit and income generation. The
SHGs are voluntary associations of people formed to attain a collective goal.
The objective of SHGs is to inculcate the habit of thrift, savings and banking
culture (availing loan and repaying the same over a given period of time),
thereby ensuring economic independence. The principles underlying the
SHGs are financing the poorest of the poor, ensuring excellent recovery
levels and achieving holistic empowerment.

The experience in India shows that the provision of small financial services
and products to poor people through bank linkage of SHGs has contributed to
the process of rural development by creating conditions that are conducive to
human development.

8.2 CONCEPT AND DEFINITIONS OF SHGs

The concept of Self Help Groups became significant, especially after, 1976
when Prof. Mohammed Yunus of Bangladesh began experimenting with
micro-credit and women SHGs. The Self Help Group concept is common in
the context of both rural and urban development. In the rural agriculture
scenario, it is often considered as a group of farmers coming together to
achieve any specific objective that will lead to a better livelihood condition
and a higher income. It serves as an effective mechanism for mobilizing and
organizing farmers and villagers to achieve development objectives. Self-
supporting income generation is the key to rural development, which will
benefit a substantial number of poor farmers in rural communities.

SHG is a small voluntary association of poor people, preferably from the

same socio-economic background. They come together to solve their
common problems through self-help and mutual help. The SHG promotes
small savings among its members. The savings are kept with a bank. This
common fund is in the name of the SHG. Usually, the number of members in
one SHG does not exceed twenty. The members are expected to meet
regularly on a weekly/fortnightly basis. A person who conducts meetings
prepares the proceedings and enables appropriate decisions for action is
chosen by rotation. These SHG members save whatever amount they can
save every month and mutually agree to contribute to a common fund to be
lent to the members to meet their productive emergent credit needs. The
SHGs are linked to the banks and disburse micro-credit to the members and
facilitate their empowerment and development. The SHGs also undertake the
responsibility of delivering non-credit services such as literacy, health and
environmental issues.

"SHG is a small, economically homogenous and affinity-based group of

people who have decided to save and contribute to a common fund to be lent
to its members as per the groups’ decision." Thus, it is an organization
formed to enhance the status of members as participants, decision-makers
and beneficiaries in the democratic, economic, social and cultural spheres of
life (Gurumoorthy, 2000).

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NABARD (1995) describes SHG as a homogenous group of rural poor
voluntarily governed to save whatever amount they can conveniently save out
of their earnings and mutually agree to contribute to a common fund to be
lent to the members for their productive and emergent consumption credit
needs.
PRADAN (2000) defined SHG as an informal association of 10 to 20 rural
poor, socio-economically homogenous with a background of affinity, who
meet regularly to transact the business of saving and credit. It mobilizes the
savings from individual members and extends credit from the funds so
mobilized to empower the rural poor, especially the women. Economic
empowerment is of utmost significance to achieve lasting and sustainable
development of society.

MYRADA (1995) envisaged the Self Help Group as the appropriate people's
Institution which provides the poor with the space and support necessary to
take effective steps towards greater control of their lives in private and in
society. The SHG is not a static institution. It grows on the resources and
management skills of its members and their increasing confidence to get
involved in issues and programmes that require their involvement in the
public and private spheres.
Krishnamurthy (1996) defined SHG as an organization formed by the people
for pooling their resources to help each other. "A group of people who meet
regularly to discuss issues of interest to them and to look at solutions of
commonly experienced problems they may or may not be involved in."

SHGs are comprised of individuals who come together for support because
they share a common concern or experience, hence common benefits of
SHGs include:

• Sharing information, mutual support, problem-solving, overcoming

isolation.
• Empowerment and inclusion through non- hierarchical decision-making.
• SHGs provide support in difficult times and help people deal well with
stressors.
• Give individual SHG members the benefit of helping and being helped
by someone (one of the main strengths of SHGs).
• Emotional and at times spiritual benefits.
• Reduced dependency on moneylenders.
• Reduced interest burden on total borrowings.
• Gradual increase in income.
• Definite shifts in the loaning pattern from consumption to production
activities.
• Knowledge sharing.
• Increased civic community involvement.

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8.2.1 Characteristics of SHGs (SHG)

Important characteristics of SHGs are:

• Small size- usually limited to less than 20 members per group.
• Homogeneity in terms of socio-economic conditions and levels of living.
• Periodic meetings- on a weekly or fortnightly basis.
• Inculcating the habit of thrift.
• Generation of a common fund through contributing regular equal savings
from members.
• Lending to members.
• Availing credit support from financial institutions without collateral
substitutes.
• Each member contributes a certain amount and members can turn to the
joint savings for loans.
• After six months of being monitored, the group becomes eligible for a
bank loan.
• The revolving fund helps the members to draw from it for medical and
education expenses, to perform marriage and social functions, and to
undertake family obligations or to support their husband's enterprise.
• The more educated women tend to hold leadership posts, particularly the
more powerful posts; they have to deal with financial functions and the
dealings with the bank and government officials. They also are involved
in calling and conducting the meetings.
• All the decisions regarding the selection of borrowers, the amount of the
loan, and the rate of interest and repayment schedules are decided by the
group.
• SHGs may be formed for any purpose, saving, mutual help groups, or
learning groups.
• An external facilitator may facilitate the formation of the group but the
group is controlled by its members.
• The goals of the SHG need to be clear, to arise out of the aspirations of
its members and should be known to all members.
• The SHG is better sustained if all its members have contributed to its
formation in some way.
• SHGs are dynamic. Hence, their composition may change, and their life
span is as long as the members felt needs persist.
• Intra-group conflicts may reduce the cohesion of the group, resulting in
its dissolution.
• Ownership of this group remains with the associated members.
• Collectively break the socio- cultural-barriers.
• Forum for collective learning, inter-agency dialogue and cooperation.
• Cost-effective technical and financial delivery mechanism.
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• Dejure and de-facto female heads of households essentially constitute the
members.
• Mature SHGs assist in the formation of new groups and promotion of the
federation of SHGs.
• SHGs are formed outside the activities of the bureaucracy and political
parties with limited scope for the latter’s intervention and its risk, cost
and benefits are shared among members on an equitable basis.
• SHGs follow a truly participatory mode since they are peoples'
organizations and involve participatory decision making and their
functioning is based on the felt needs of the people and based on the use
of local resources.

8.2.2 Advantages of SHGs

The general and specific advantages of the self-help groups in their attempts
to the betterment of society as a whole and poor people, in particular, are
discussed in this section.

General Advantages
• Isolated and dispersed poor who do not have the power to influence
those aspects that affect their lives have the authority to protect their own
interests and enhance their opportunities once organized.
• The poor women's ability to articulate their own demands and
mobilization for collective action gets fructification through SHGs.
• The poor help themselves. Their own group helps them by taking steps
for their upliftment.
• SHGs teach rural women the finer points of savings.
• Extend credit.
• Facilitate taking decisions that help them to help themselves.
• Enables and empowers them to move forward and expand their horizons.
• Fills and boosts up confidence when applying for bank loans.
• Ability to take on leadership roles for community work.
• Pooled resources that are important to members for use in times of crisis.
• Enhance their income thereby improving the sense of security.

Specific Advantages
• Emergence of collective self- efficacy. Goals that are visualized by
community members as external to their control are then viewed as
within the grasp of their collective forces.
• Increased ability of women to mobilize public and private sector services
for their benefit.
• Enhanced social status of women in family and community.
• Inculcation of thrift habit.
• Development of credit management skills.
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• Increased income in the hands of women used for the welfare of the (SHG)
family, education of children, improved child health and nutrition, and
reduced poverty.
• Belonging to a group can change the way women think about themselves
and their ability to act independently.
• Groups give women social leadership through the collective strength to
lobby and campaign and achieve tasks beyond the ability of a single
woman.
• Groups can help women feel valued and know their needs are being
considered.
• SHGs can achieve economic security for women and their families
leading to their personal development

Check Your Progress Exercise 1

Note: a) Write your answer in the space given below.
b) Match your answers with those given at the end of the unit.
1. Explain the concept of self-help groups.
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2. Enumerate the major advantages of SHGs.
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8.3 PROCESS OF SHG FORMATION

The initial phase of group mobilization may include awareness/ theme
camps, prabhat pheris, putting up of posters, charts, writing on walls, street
plays, puppet shows etc. Participatory Rural Appraisal techniques like
transect walk, social mapping, wealth and resource ranking and timelines also
help in building rapport. A participatory survey can be undertaken to explore
the availability of markets and social structure, existing credit and debit
system, potential for goods which can be used or produced by women etc.
Needs assessment and sensitization of opinion leaders are also important.

Sociometry techniques can be used to identify leaders. This first stage is also
characterized by a number of meetings and group discussions. Resource and
social mapping undertaken regularly proves to be a useful exercise for
rapport building, enhancing group cohesion and collecting information. It is
also useful in participatory planning and monitoring of activities.
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• Capacity building and training
SHG members need to be equipped through skill upgradation, personal
effectiveness, entrepreneurship training, etc. to undertake more
remunerative on-farm and off-farm activities. Training is essential for
capacity building, to increase their production skill and productivity.
After the mobilization and group formation, capacity building of
members and group leaders is very important. The motivation plus
enabling approach is a step towards empowerment. Training if well
designed is an effective tool for capacity building. It broadens horizons
and encourages the members to take a diverse role. The capacity building
is to be done in a planned and continuous manner. Training should be
intensive, interactive and participatory. Some of the areas for training
may include loan management, group dynamics, entrepreneurship
development etc.
• Group meetings
Group meetings are a must for group formation, discussing problems,
prioritizing them and arriving at solutions. They are also an endeavour to
bring the SHG members together and bring a true team spirit which will
lead to synergy. These meetings need to be regular-weekly, fortnightly or
monthly. NGOs or government organizations need to act as facilitators,
ensuring the participation of all members. Regular meetings serve as a
platform for discussion and for resolving social and common issues and
conflicts.
• Visits for awareness, exposure and motivation
To sustain the interest of members in various activities, field visits need
to be arranged for SHG members. These visits may be conducted to other
effectively functioning self-help groups, exhibitions, trade fairs etc. The
exposure visits are useful as the members can see how the other groups
are carrying out the activities. This is also used as a platform for sharing
experiences and building confidence.

8.3.1 Various Stages of Formation of SHGs

The stages followed in the formation of a self help group are discussed in
detail as under:

Stage 1 – Getting to Know stage

Facilitating: Facilitating helps each member to know about the other more
meaningfully to help them to become the smallest group to achieve or
accomplish their work.
Stimulating: Stimulating is a psychological function that provides a boost to
the members of the SHGs to perform better.

More personal knowledge: Each member of the SHGs must open him/herself
and provide, if possible, to other members about personal information, and
knowledge of each member to develop better understanding and team spirit
among the members of the group.
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Invite members to share their options for action: Each member invites (SHG)
others to know each other and take the initiative to act for the benefit of the
total group.

Encourage consideration of the individual strengths and weaknesses: Each

member of the Self-Help Groups (SHGs) should be encouraged to use his/her
strength for the SHGs functioning and continuance.

Stage 2 – The experimenting stage

Begin to involve members in the review of team performance: Each member
of the SHGs must be involved in reviewing the performance of the team for
any kind of group activities or assignments. This will help improve team
performance.

Networking among individual members: SHG member often does various

innovative works to attain SHG group objectives. However, the collective
actions of all the members will provide better understanding among them and
will enthuse them with group dynamics to perform better group activities.

Allow conflicts to surface, try out decision-making and problem-solving

methods: Sometimes, it is better to allow conflicts with lower intensity
among the members, which ultimately helps better decision-making to solve
the problems.

Stage 3 – The developing stage

Develop problem-solving skills: Each member of the SHG should be
facilitated to develop problem-solving skills, which ultimately help to solve
bigger problems in the group.

Develop decision-making strategies: Decision-making is important in group

activities. Hence, strategies for decision-making are to be developed among
the members of the SHGs.

Develop the team’s capacity to compensate for individual weaknesses:

Every member of the SHG may not have the same understanding,
background, competencies and skills to attain specific duties. Hence, the
group members should form a team to enable the members to compensate for
each other’s weaknesses and strengths to perform the specific task.

Encourage people to share strengths: In the developing stage, the members

of the group should be encouraged to share their strengths among the
members.

Celebrate successes: Whenever SHG brings some success in their

performance or in attaining specific goals; they should celebrate successes for
their rejuvenation.

Stage 4 – The expansion stage

Networking with other groups: Each SHG should extend support and expand
its activities to other SHGs and its members. In the process, SHG’s motto and
values are spread for the larger benefit of other SHG members.
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Experiment with different forms of leadership: The SHG must experiment
with varied forms of leadership to attain various work objectives to help and
build an effective team to perform better and generate more monetary
resources.

Allow leadership to change with the needs of the tasks: The SHG leadership
should change the group leadership from time to time. Some members can do
better to perform a particular task, which he/she may not be able to do for
other kinds of tasks. Hence, task-based leadership to attain suitably its work
objectives.
Expose group functioning for external visibility: The SHG’s group activities
and different kinds of functions must be visible to influence and propagate its
objective to external members and the general public. Hence, every SHG
should try expanding its base by exposing its group functioning to outsiders.

Source: RAE002- Advances in Agricultural Extension, IGNOU study

materials

8.4 MICRO-FINANCE AND SHG - BANK

LINKAGE
In India, micro-finance is emerging as a powerful instrument for poverty
alleviation and is dominated by SHGs. Based on the philosophy of peer
pressure and group savings as collateral substitutes, the SHG programme has
been successful in meeting the peculiar needs of the rural poor and in
strengthening collective self-help capacities of the poor at the local level
leading to their empowerment. Micro-credit involves giving very small loans
to the very poor who cannot meet the basic qualifications to gain access to
traditional credit. The small amounts of loans are given to establish or expand
a small, self-sustaining business. The micro-credit has ushered in a revolution
by bringing the banking system to the doors of the poor and the
underprivileged and bringing about peaceful social and economic
transformation in their lives. Micro-credit does not require clients to have
collateral to receive loans. The intangible guarantees are peer pressure and
peer monitoring. The SHGs are free to decide the interest rate to be charged
to their members provided the rate of interest is not excessive. In general,
the rate of interest charged is higher since the loan amount is small and the
cost of personally servicing such clients is high.

Important features of microcredit are:

• Loans under microfinance programmes are very small.
• Microfinance targets rural and urban households.
• Credit under microfinance follows thrift that mobilizes savings and lends
the same.
• Low transaction cost.
• Transparency in operation.
• Shorter repayment period.
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• No collateral security is required for loans. (SHG)
• Need-based loan disbursements.
• Prompt repayment and also there is no ceiling from RBI in respect of
minimum and maximum amounts.

• SHG - Bank linkage

In India, banks lend micro-credit through SHGs. The Bank SHG linkage
programme is now the biggest in the world.

The programme now covers 14 crore families, and 119 lakh SHG groups
having cumulative savings of Rs. 47240.48 crore as of 31 March 2022. The
credit linkage is also impressive insofar that 34 lakh SHGs have been credit
linked during FY 2021–22 and loans worth Rs. 99,729.23 crore disbursed.
The credit outstanding as of 31 March 2022 is Rs. 1,51,051.30 crore for
67.40 lakh SHGs (an average of Rs. 2.24 lakh per SHG).
Source: Status of Microfinance in India, 2021-22, NABARD.

The micro-finance scheme of NABARD has made a smooth foray into the
rural economy by bridging the gap in demand and supply of funds in the
lower rungs of the rural economy, thereby generating self-reliance and self-
sufficiency in the Indian rural scenario. The Indian micro-finance is a unique
scheme dominated by SHG and its linkage to banks. Aiming for women's
empowerment is the most cost-effective strategy since women form the basis
of social mobilization.

The SHG movement in India has proved that the poor can save, borrow and
repay loans and hence are bankable. The SHGs have enabled rural women to
save small amounts regularly in banks. Even for the banks, it would not have
been viable to transact small and intermittent deposits. Micro-finance can be
a powerful instrument initiating a cyclical process of growth and
development. The savings of the poor generated out of very small but regular
contributions improve access of the poor women to bank loans in the absence
of collateral. It also helps in strengthening poor family's resistance to external
shocks and reduces dependence on moneylenders.

Unique aspects of the SHG-Bank micro-credit linkage programme are:

• It allows for collective decision-making on issues like meetings, thrift
and credit decisions. The participative nature of the group also makes it a
more responsible borrower.
• It provides financial services to its members at their doorsteps.
• It complements the banking system and does not supplement it.
• The linkage cuts costs both for the bank and borrower and it has shown
that the repayments are as high as 95 to 100 per cent.
• The focus is exclusive on the poor. It initiates an empowerment process
for the poor, especially women.

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Cooperatives and
Farmers Organizations 8.5 EMPOWERMENT OF RURAL PEOPLE
THROUGH SHGS
Empowerment, in the context of gender and development, is most usefully
defined as a process (or processes) rather than an end product. A review of
the literature on empowerment suggests that empowerment focuses on three
areas: individual action or self-empowerment; organizational or interpersonal
context for empowerment; and social action (Perkin, 1995).

Empowerment is a slow process, hard to measure and to establish evidence.

The core of the empowerment processes involves fundamental psychological
and psycho-social processes and changes, mobility and establishing a public
presence. Women empowerment, in the context of an SHG member, can be
seen as having the following six components: (MYRADA, 2002).

i. Influence over economic resources of the family and participation in

economic decision-making.
(Ability to influence decisions are - the purpose of the loan, household
infrastructure, major household purchases, occupational issues, sale or
mortgage of assets).
ii. Ability to influence/participate in decisions related to her professional
status, her educational attainment and her own development as an
individual.
iii. Power over local polity and participation in socio-political decision-
making (involvement in the formation of SHG, SHG meetings, and its
political activities, village panchayat meetings, and panchayat elections).
iv. Influence over other decisions about the general welfare of the family
with respect to all members and with respect to children only.
v. Increased interaction with other members of her group/community.
vi. Improvement in the technical and managerial skills of the members.

The relevance and utility of human development initiatives are enhanced

when there is congruity with human nature and the feeling of self-worth
becomes the core, as in the case of empowerment through the SHG
movement. Empowerment is a core element in community development
based on self-help principles. In the development sphere- 'the gaining of
power by the vulnerable is often called empowerment." Hence,
empowerment is a multidimensional process that enables individuals or a
group of individuals to realize their full identity and powers in all spheres of
life. It consists of greater access to knowledge and resources, and greater
autonomy in decision-making to enable greater ability to plan their lives.

Case of Grameen Bank: Grameen Bank in Bangladesh is a successful

example of microcredit in Bangladesh started by Md. Younus.

A detailed case study of Grameen Bank is found at the following links:

https://www.fao.org/3/S3607E/s3607e02.htm
https://www.gsb.stanford.edu/faculty-research/case-studies/grameen-bank
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Check Your Progress Exercise 1 (SHG)

Note: a) Write your answer in the space given below.

b) Match your answers with those given at the end of the unit.
1. Discuss the important features of SHGs- Bank Linkage.
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2. Discuss the role of SHGs in the empowerment of the rural poor.
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8.6 LET US SUM UP

Self-help is a community-building strategy based on people's participation
and the premise that people can, will and should collaborate to solve
community problems and build a stronger sense of community and
foundation for future collaboration. It is now the centrepiece of national,
social and economic development strategies. Effective participation is
essential for self-help to occur. In fact, the golden principles of self-help and
participation can serve as the foundation for a coherent set of goals and
priorities. The self-help groups involving millions of people have become a
well-recognized force, which conceivably qualifies as a ubiquitous national
and socio-economic movement. The Self Help Group (SHG) approach has a
cumulative impact on rural development and it can make important
contributions to a member's sense of identity. The SHG can provide an arena
for individuals to consolidate an identity, develop a feeling of belongingness,
and develop coping skills. Self-help groups thus strengthen the individual and
give the individual both permission and power to act on his or her own behalf
as well as on behalf of the group. This leads, in essence, to empowerment.

Self-help groups have been well recognized in our country as one of the most
suitable conduits for delivering micro-finance services to the poor. The
principles of self-help and micro-credit thus hold the key to economic and
socio-cultural freedom for India's millions of poor. The SHG-bank linkage
approach of NABARD has been a successful venture in increasing its
outreach to the poor. The SHG members imbibe the essentials of financial
inter-mediation including prioritization of needs, setting terms and conditions
and account keeping, thus building financial discipline and credit history. The
collateral for bank loans is replaced by peer pressure and monitoring which
ensures timely repayments. The greatest impact has been for the 187
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empowerment of the rural poor in terms of socio-psycho-economic
indicators.

8.7 KEYWORDS
Empowerment : A multi-dimensional process that enables the
individual or a group of individuals to realize
their full identity and powers in all spheres of
life.
Facilitation : A process of catalyzing action by an outside
agency.
Micro-finance : It involves giving very small credit/loans to the
very poor who cannot meet the basic
qualifications of traditional credit.
Paradigm : A design or model.
Participatory : Process to sensitize people and thereby increase
Development the receptivity and ability of rural people to
respond to developmental programme as well as
encourage local initiatives.
Participatory Rural : A method for eliciting, analyzing and evaluating
Appraisal (PRA) information and hypotheses about rural life and
resources with the participation of villagers
themselves.
People’s : Involvement of people in decision-making at all
Participation levels of programme i.e., needs identification,
planning, designing, implementation as well as
monitoring and evaluation.
Self Help Group : A small voluntary association of poor people,
preferably from the same socio-economic
background.
SHG- Bank linkage : It is a cost-effective strategy wherein banks lend
micro-credit through SHGs. It helps strengthen
poor families’ resistance to external shocks and
reduces dependence on money lenders.

8.8 SUGGESTED READINGS/ REFERENCES

1. Chamber, R (1994). The Origins and Practice of PRA, IDS, University
of Sussex, Brighton, UK.
2. Chamber, R. (1994). Participatory Rural Appraisal: Challenges,
Potentials and Paradigm. In World Development, Vol.22, No.10, Great
Britain, Elsevior Science Ltd.
3. Gadewar, A.U. and Jagdeesh C. Kalla. (Undated). Participatory Rural
Appraisal: Concepts and Procedure. National Academy of Agricultural
Research Management, Rajendranagar, Hyderabad.
4. Gurumoothy, T.R. (2000). Self Help Groups Empower Rural Women.
188 Kurukshetra, 48:5:36-40.
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5. Harper, Malcom. (1995). Self Help Groups - Some Issues from India. (SHG)
Small Enterprise Development. 7:20:36-41.
6. Krishnamurthi, B. (1996). Self help organization: A case study of thrift
and credit societies, Adilobad district, Andhra Pradesh. In: Rajagopalan
(Ed) Rediscovering co- operation, Indian Institute of Rural Management,
Anand, Gujarat.
7. Kumaran, K.P. (1997). Self Help Groups: an alternative to institutional
credit to the poor- A case study of Andhra Pradesh. Journal of Rural
Development.
8. Mukherjee, Neela (2002). Participatory Learning and Action. Concept
Publishing Company, New Delhi.
9. MYRADA (1995). Self Help Groups. The concept of a Mysore
Rehabilitations Agency. p-1-5.
10. NABARD (1995). Report of the working group on non-government
organizations and self help groups, Mumbai.
11. Nambodri, N. V. and Shiyani, R.L. (2001). Potential role of self help
group in rural financing. Indian Journal of Agricultural Economics.
56:3:2001.
12. Perkin D. D. (1995). Speaking truth to power: Empowerment ideology as
social intervention and policy. American Journal of Community
Psychology: 23:5:765-794.
13. PRADAN. (2000). System Setting Document. Self help group promotion
programme. New Delhi.
14. Ramakrishana, R. (2001) Credit needs of the rural poor and the role of
Self Help Groups. Indian Journal of Agricultural Economics. 56:3.
15. Ray, G.L. (1991). Extension, Communication and Management.
Kalayani Publishers, New Delhi.
16. Sharma, K.C. (2001). Micro Financing through Self Help Groups. Indian
Journal of Agricultural Economics, 56:3.

8.9 ANSWERS TO CHECK YOUR PROGRESS

EXERCISES
Check Your Progress Exercise 1
1. SHG is a small voluntary association of poor people, preferably from the
same socio-economic background. They come together to solve their
common problems through self help and mutual help. The SHG
promotes small savings among its members. The SHGs are linked to the
banks and disburse micro-credit to the members and facilitate their
empowerment and development. The SHGs also undertake the
responsibility of delivering non-credit services such as literacy, health
and environmental issues.

2. The major advantages of SHGs are: give the authority to poor to protect
their own interests and enhance their opportunities, articulate their own
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Cooperatives and
Farmers Organizations
demands and mobilization for collective action, help themselves,
mobilise savings, extend credit, enable and empower them to move
forward and expand their horizons, boosts up the confidence, leadership
development, sense of security, etc.

Check Your Progress Exercise 2

1. It allows for collective decision-making, makes more responsible
borrowers, provides financial services to its members at their doorsteps,
complements the banking system and does not supplement it, cuts costs
both for the bank and borrower, focuses on the poor are the important
features of the SHG- Bank linkage.

2. SHGs facilitate greater access to knowledge and resources, greater

autonomy in decision- making to enable greater ability to plan.

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