self help groups for 5 August 2025

Self - Help Groups are small organisations that are community based where members pool their resources together for mutual economic support with a focus on savings and credit activities. The group plays an important role in marginalising communities, providing financial assistance and promoting sustainable livelihoods. In this article, we are going to cover all about Self Help Groups, their meaning, role and contribution in socio-economic development. 

Self- Help Groups (SHGs)

• Self-Help Groups are groups of people who come together to pool their resources and work for a mutual economic benefit. 
• Self-help Groups have managed to treat a transformative movement in India as well as other developing countries. These groups work on the principles of mutual aid, self-reliance and collective empowerment. 
• The groups focus on mobilizing people, take charge of their economic, social and personal growth.  

Self- Help Group Meaning 

• A Self-Help Group (SHG) is a small, informal group of individuals from similar socio-economic backgrounds who voluntarily unite to pursue shared goals.
• They contribute regular savings, pool their resources, and utilize the collective fund to address personal needs or initiate income-generating ventures.

Self-Help Groups (SHGs) Objectives

Self- Help Groups have the following Objectives: 

• Access to credit and promotion of entrepreneurship 
• Build confidence among marginalised groups, with a special focus on women to foster a sense of community. 
• Connect unbanked populations with proper official financial institutions. 
• Improve skills, awareness and decision-making capabilities. 
• Improve the standard of living of poor households through sustainable livelihoods.

Self-Help Groups (SHGs) Important Features

Following are the features of Self-Help Groups- 

• Group Size: SHGs usually consist of 10–20 members, a manageable number that supports effective communication, coordination, and a strong sense of responsibility among members.
• Homogeneity: Members typically come from similar socio-economic backgrounds, fostering trust, mutual understanding, and collaboration in addressing shared challenges.
• Savings and Credit: Members regularly save to build a common fund, which is used to provide low-interest loans for personal or income-generating needs, promoting financial self-reliance and internal resource circulation.
• Collective Decision-Making: SHGs follow a democratic approach where decisions are made collectively, ensuring equal participation and shared ownership of group initiatives.
• Training and Capacity Building: Members undergo training in financial literacy, entrepreneurship, and skill development, empowering them to manage finances and run small businesses effectively.
• Bank Linkages: Through initiatives like NABARD’s SHG-Bank Linkage Programme, SHGs connect with formal banks, gaining access to credit and enhancing the group’s financial stability and community impact.

Role of SHGs in Socio-Economic Development

• Women Empowerment: SHGs empower women by promoting financial independence, boosting confidence, and involving them in decision-making, which enhances leadership skills and rights awareness.
• Poverty Alleviation: By providing access to microcredit for income-generating activities, SHGs help uplift families from poverty.
• Financial Inclusion: SHGs bring marginalized populations into the formal banking system by facilitating savings and credit access.
• Skill Development & Employment: Members receive training in trades like tailoring, handicrafts, and farming, enabling self-employment and job creation.
• Social Cohesion: SHGs strengthen community bonds and collectively tackle social issues such as domestic violence, child marriage, and illiteracy.
• Disaster Management: SHGs enhance community resilience by mobilizing resources and support during emergencies like natural disasters or pandemics.