Question

Role of self help groups in community development

Answer 1

Self-Help Groups are informal associations of people who choose to come together to find ways to improve their living conditions. They help to build Social Capital among the poor, especially women. The most important functions of a Self-Help Groups are (a) to encourage and motivate its members to save, (b) to persuade them to make a collective plan for generation of additional income, and (c) to act as a conduit for formal banking services to reach them. Such groups work as a collective guarantee system for members who propose to borrow from organized sources. Consequently, Self-Help Groups have emerged as the most effective mechanism for delivery of micro-finance services to the poor. The range of financial services may include products such as deposits, loans, money transfer and insurance.

Characteristics of a good Self Help Group

a) An ideal SHG comprises 15-20 members.

b) All the members should belong to the same socio-economic strata of society specifically poor.

c) Group should have strong bond of affinity.

d) Rotational leadership should be encouraged for distribution of power and to provide leadership opportunities to all the members.

e) Members should attend meetings, save and participate in all activities voluntarily.

f) To provide gainful employment and to involve the poor in productive activities.

g) An SHG should be socially viable institution.

h) The procedure of decision-making in SHG should be democratic in nature.

i) It should be non-partisan in nature.

j) The group is frames rules and regulations which are required for its effective functioning.

k) To involve women in decision making and to promote leadership qualities among them.


Benefits of self help group

a) The formation of SHGs has benefited its members by increasing their assets, incomes and employment opportunities.

b) The borrowers are able to reduce their dependence on informal sources of finance and a certain degree of loyalty towards SHGs, which can work towards permanent or effective inclusion of these borrowers into the formal banking network.

c) The financial inclusion attained through SHGs has led to reduced child mortality, improved maternal health and the ability of the poor to combat disease through better nutrition, housing and health – especially among women and children.

d) It has empowered women by enhancing their contribution to household income, increasing the value of their assets and generally by giving them better control over decisions that affect their lives

Answer 2

Role of Self help groups in economic development.
Self-Help Groups are informal associations of people who choose to come together to find ways to improve their living conditions.
They help to build Social Capital among the poor, especially women.