Self-Help Groups
Self-Help Groups are informal associations of individuals, usually from similar socio-economic backgrounds, who come together to solve common problems. They are primarily composed of women, aimed at improving their living conditions through collective action and internal resource mobilization. These groups operate on the principle of self-help and mutual aid.
Genesis and Evolution
The concept gained momentum in India through the experiments of the Self-Employed Women’s Association in the 1970s. In 1992, the National Bank for Agriculture and Rural Development initiated the Self-Help Group-Bank Linkage Programme. This program bridged the gap between the informal sector and formal banking institutions. It allowed groups to open bank accounts and access credit based on their collective savings record.
Structural Characteristics
- Size: A typical group consists of 10 to 20 members.
- Homogeneity: Members usually belong to the same community, neighborhood, or social strata.
- Savings: Members contribute small, regular amounts of money into a common fund.
- Internal Lending: The accumulated fund is used to provide low-interest loans to members for consumption or income-generating activities.
- Decision Making: Meetings are held regularly to discuss financial matters, social issues, and local problems.
- Leadership: Leadership is often rotated among members to prevent dominance by a single individual and to build leadership capacity.
Financial Mechanisms and Linkages
The financial sustainability of these groups relies on a cycle of internal savings and external credit. Once a group demonstrates financial discipline through regular savings and internal lending, it becomes eligible for credit from commercial banks or cooperative banks. This credit is provided without collateral, known as micro-credit. The primary purpose is to empower members to initiate micro-enterprises such as tailoring, animal husbandry, petty trade, or small-scale manufacturing.
Benefits of Self-Help Groups
- Financial Inclusion: These groups bring the unbanked rural population into the formal financial fold.
- Women Empowerment: Collective strength enhances the social status and decision-making power of women within their families and communities.
- Credit Access: They reduce dependence on high-interest money lenders by providing affordable and timely credit.
- Social Capital: Regular interactions build trust, solidarity, and a platform for addressing social evils like dowry, alcoholism, and gender discrimination.
- Skill Development: Members acquire skills in basic accounting, negotiation, and entrepreneurship through group activities.
Government Support Programs
Several initiatives support the development and scaling of these groups:
- Deendayal Antyodaya Yojana-National Rural Livelihoods Mission: This is the flagship program of the Ministry of Rural Development. It aims to organize the rural poor into self-help groups and provide them with long-term support for livelihoods.
- Mahila Kisan Sashaktikaran Pariyojana: This sub-component focuses on improving the status of women in agriculture by providing training and access to resources.
- Start-up Village Entrepreneurship Programme: This initiative supports the establishment of small businesses in rural areas by members of these groups.
Challenges and Limitations
- Geographic Imbalance: Participation is high in southern and western states but remains low in many northern and eastern regions.
- Internal Issues: Lack of training in record keeping and financial management often leads to mismanagement of funds.
- Dependency: Some groups fail to graduate from micro-credit to viable, large-scale income-generating enterprises.
- Market Access: Members often struggle to find sustainable markets for their products, limiting their profit margins.
- Social Constraints: Patriarchal norms in certain communities continue to hinder the active participation of women.
Comparison of Institutional Support
| Institution | Primary Role |
| NABARD | Policy formulation, promotion of Bank Linkage, and capacity building. |
| Commercial Banks | Providing credit under the priority sector lending mandate. |
| State Rural Livelihood Missions | On-ground mobilization, training, and coordination of government schemes. |
| Non-Governmental Organizations | Facilitating the formation of groups and providing technical assistance. |
Key Facts and Data
- The Ministry of Rural Development maintains the National Rural Livelihoods Mission database to track the progress of these groups.
- As of recent estimates, over 9 crore women are organized into more than 80 lakh self-help groups across the country.
- The repayment rate for loans provided to these groups is higher than 90 percent, indicating high levels of financial discipline.
- The Reserve Bank of India mandates that loans to these groups are classified under priority sector lending, encouraging banks to provide credit.
Many states have implemented revolving funds and interest subvention schemes to further reduce the cost of credit for these members. The focus is currently shifting toward ‘Lakhpati Didis’, aiming to enable members to earn a sustainable income of at least one lakh rupees per annum through diverse livelihood activities.
