how are SHG beneficial for poor people
Answers
Most of us believe the idea is for the members of a group to save money and “pool” it together in order to form a somewhat unofficial bank. They lend this money out to their community.
(My opinion) this helps the poor by allowing an otherwise none lender-able indervidual to have access to local money to build a business, develop their house, invest in some other form of development.
In basic economics there is a term called the multiplier effect. This idea means that (for instance) if ten people are given 100$ each to spend in the local community, by the time it gets back to GDP it has substantially grown. (Note: my economics is a bit rusty, so if anyone has an edit please comment…. BUT that is the general idea)
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Most of us have heard about the SHG model in passing, and a few even get an opportunity to see their interaction on a day-to-day basis.
Despite all these, when faced with a question “how well do we really know SHGs?” it is sad to see that majority of us don’t seem to have a clue about the mere basics like what they do or how they work.
The lack of awareness is rather astounding. The reason behind this might be the abrupt dismissal of the concept by envisioning it as just ‘group of women who save and get a loan.’
Not many desire to delve deeper into how SHGs are contributing to poverty alleviation through women empowerment. A very few are ready to look beyond the concept of empowering rural women.
Answer:
An economically poor individual gains strength as part of a group. Besides, financing through SHGs reduces transaction costs for both lenders and borrowers. ... SHGs have helped immensely in reducing the influence of informal lenders in rural areas. Many big corporate houses are also promoting SHGs at many places in India.