Self Help Group -Meaning, Historical Background, Evolution, Importance, Objectives and Role of SHG in India

What is Self Help Group?

The small voluntary association of weaker section people for the purpose of solving their common problems through self help and mutual help is called self help group. Generally it is denoted as SHG that promotes small saving among members.


Self help group is a small or self organised group by the weaker section people of the society. Self help group helps this people for increasing standard of living in day to day life. Self help group mostly valuable and useful in the rural areas of the country.The aim of self help group is to create a unity of them to defense from difficult time.

Self help groups also known as mutual help groups or support group. Self help groups are very much helpful in rural areas specially women. Self help groups are the way for the better opportunity for ladies and women.


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Historical Background:


Self help group first started from the Gramin Bank of Bangladesh. This group was created by Chittagong University economist Professor Mohammed Yunus in 1975. SHG’s were created only for the benefit of the rural or backward people.


SHG’s became the path for rural loan in many regions of the world in a short period of time. In 1947 at the world microcredit summit in Washington many developed and rich countries offered to use micro credit facilities in rural areas to avoid rural poverty.


Evolution of Self Help Groups in India:


In India Self Help Group was introduced in the year 1970 with the formation of the Self Employed Women’s Association (SEWA). Later in the year 1992 NABARD’s SHG Bank linkage. Project has grown SHG to become the world’s largest microfinance intiative.In year 1993 NABARD and RBI jointly permitted SHGs to have a saving account in banks. This step provide a clear path for the SHG Bank linkage programme.


Government of India began swarn jayanti Gram Sworojgar Yojana (SGSY) in 1999 to promote self employment in rural areas and skill improving programmes. Later the programme changed as a national movement in the year 2011 and became the National Rural Livelihoods Mission (NRLM). NRLM is the world’s largest anti-poverty programme.


Today the state Rural Livelihoods Mission (SRLM) is operated in 29 states and 5 union territories of India.


Importance of Self Help Group:

i.Increases wealth

The formation of SHGs has benefited its members to a large extent. It enables them to increase their assets, incomes and wealth. It also creates employment opportunities for its members.


ii.Self dependant

The formation of a self help group makes it’s members self dependence. It also reduces their dependence on formula sources of finance and develop a format banking network.


iii.Attain Financial Inclusion

The self help group also aims at attaching financial inclusion and enabling poor people to take nutrients as per requirement. It also develops health consciousness among women and children.


iv.Empowered  Women

Another importance behind the formation of self help groups is to empower women by enhancing their contribution to household income. It enables them to increase the value of their assets and giving a better control over the decision of their life.


Member of SHG:


1.The individuals who belong to a social and economical background can become a member of a self help group.

2.One person from each family can join the self help group.

3.The members of the self help group from each family are either men or only women.

4.Generally the number of people who join a self help group is 10-20. This is the ideal size of a self help group for operating or leading smoothly.


How SHG Meeting Held?


Generally the group meetings should be conducted weekly or monthly so that the members become closer to each other. All members must attain the meeting for group discussion monthly interval. All members sign in monthly or weekly membership register for the better transparency and up to date information.


Objectives of SHG:


1.Self help group focusing on empowerment of women in rural areas.

2.Self help group also helps people from unemployment.

3.It creates saving habits among group members.

4.The primary objective of the self help group is to “Saving first, Credit later”.

5.It promotes entrepreneurship skills among economically backward men and women.

6.Providing awareness among the group members about  economical and financial problems.

7.Providing loans for the group members in minimum interest for increasing standard of living.

8.Self help group believes in solving the problems of group members by collective leadership and mutual discussion.


Role of SHG in Economic Development:


Self help group not only creates or provides awareness about social and economical factor but also increase economic of the country. Some of the major role of SHG in economic development are pointed below:-


1.Decrease poverty in rural areas:

Self help groups also helped the group members to save some amount from their income. It increased the assets, income and created employment opportunities in rural India. The certain amount saved by the group members helps to achieve future credit or loans. The use of loans for personal use for increasing the income source of group members.


2.Financial Strength

According to the survey of NSSO (59th round) more than half of the marginal farmers and households are not able to access  the credit or banking facility. Thus the members of SHGs are able to reduce their dependency or financial problems. Self help groups can help to fulfil the financial strength of rural India.


3.Human Resource Development

Self-help groups help the group members to become financially stable. The financial stability of the group members encourages them to spend more on the education of the children. The Financial stability helps members to increase children’s education, improve health, good nutrition, housing health and especially among women and children.


4.Empowerment Of Women

The main contribution of SHG for economic development of India is women empowerment. Self help group operates through central and state Govt for empowerment of women by providing entrepreneurship skill and training.It gave them a better control over the decision making and increased household income.


Self help groups welfare schemes increase awareness about various organisations and access to such organisation. The expenses on girl education in members’ families has increased by self help group.In other words self help groups increase the economy in rural or backward areas in india.


5.Political Empowerment

Self help groups also empowered political skills by providing training in rural or village areas.Political empowerment reflects the self help groups member in village panchayat election and zila parishad. After the pass of 73th amendment act the 33% reservation of women in panchayat election. Self help group helps to improve the communication skill for public meeting by providing training programme.


6.Credit availability

Some years back bank credits did not facilitate individual or poor families in rural areas. But nowadays by the help of small help groups members of groups are avail loan facility at minimum rate of interest.



The Government of India should establish a better climate for the SHG movements, growth and development in rural areas. The Govt. of India functions as both facilitator and promoter.

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