Question

How self help groups are beneficial for the poors?

Answer 1

An economically poor individual gains strength as part of a group.Besides, financing through SHGs reduces transaction costs for both lenders and borrowers.While lenders have to handle only a triple SHG account instead of a large number of small-sized individual accounts, borrowers as part of an SHG minimise expenses on travel (to and from the branch and other places) for completing paper work and on the loss of workdays in canvassing for loans.Where successful, SHGs have significantly empowered poor people, especially women, in rural areas.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.

Answer 2

Self Help Groups or SHG’s as they are commonly known as are basically rural based financial committees comprising of 10 to 20 men or women.Here members save some amount of money and and then mutually agreeing to contribute it to a common fund which is then utilized to help them in case of emergency or other financial needs.This makes the group members not only financially independent but also creates a mutual trust among them to help each other in help each other in the time of need.Originally a brainchild of Dr. Mehmud Yunus, Professor of Economics in Chitgaon University of Bangladesh who started it as an action research project called Grameen Bank which was finally recognized as bank which used ‘solidarity groups’ or Self help groups as they are known in India to ensure repayment