Context:

Banks should divert loans to Self help groups in order to generate employment in the unorganized sector in the country.

Introduction:

  • The number of people who work in the unorganized sector are much more higher than those in the organized sector. Thus, there is a need to divert more loans to unorganized sector.
  • This will help in creation of more jobs and empowerment of people associated with unorganized sector.

What is Self Help Groups (SHGs)?

  • Self-Help Group (SHG) is a small voluntary association of poor people, preferably from the same socio-economic background.
  • They come together for the purpose of solving their common problems through self-help and mutual help.
  • SHGs is a holistic programme of micro-enterprises covering all aspects of self-employment, organization of rural poor into self help groups and their capacity building, planning of activity clusters, infrastructure build up, technology , credit and marketing.
  • The SHGs comprise very poor people who do not have access to formal financial institutions.

Purpose of creating SHGs:

  • It provides a cost effective delivery mechanism for small credit to its members
  • The SHGs enables the members to learn cooperate and work in a group environment.
  • The SHGs significantly contribute to the empowerment of poor.
  • To sensitize people of target areas for the need of SHGs and its relevance in their empowerment process.
  • To create group feeling among members.
  • For equitable development of all the section of society especially the urban slums, tribal areas, people on the margins because they do not receive much benefit.
  • To enhance the confidence and capabilities of members.
  • To develop collective decision making among members.
  • To encourage habit of saving among members and facilitate the accumulation of their own capital resource base.
  • To motivate members taking up social responsibilities particularly related to development.

Actors involved in formation of SHGs:

  • Non Governmental Organisations (NGOs) Social Workers, health workers, village level workers, etc. Informal Associations of local people Development oriented government departments Banks Bank personnel and other individuals (in their personal capacities) Farmers’ Clubs under the Vikas Volunteer Vahini ( VVV) Programme of NABARD Other development institutions

Problems of Self-Help Groups (SHGs): The SHGs face problems in different areas. The important problems are briefly stated below:

1. Ignorance of Members and Participants:

Even though the authorities take measures for creating awareness among the group members about the schemes beneficial to them, still majority of the group are unaware of the schemes of assistance offered to them.

2. Inadequate Training Facilities:

The training facilities given to the members of SHGs in the specific areas of product selection, quality of products, production techniques, managerial ability, packing, other technical knowledge ate are not adequate to compete with that of strong units.

3.Problems related to Raw Materials: Mostly each SHG procures raw materials individually from the suppliers. They purchase raw materials in smaller quantities and hence they may not be able to enjoy the benefits of large scale purchase like discount, credit facilities etc.

4. Problems of Marketing: Marketing is an important area of functioning of the SHGs. This area faces different problems in the marketing of products produced by them. Some problems includes lack of linkage with marketing agencies, lack of adequate sales promotion measures, and last but not the least includes poor packaging system.

5.Exploitation by strong members Strong members try to earn a lion’s share of the profit of the group, by exploiting the ignorance and illiterate members 6.Weak financial management

7.Inadequate and ill trained staff to meet challenges

8.Non- cooperative attitude of the financial institutions

9.Low Return: The return on investment is not attractive in certain groups due to inefficient management, high cost of production, absence of quality consciousness etc. Suggestions to minimize the problems associated with SHGs:

  • All the members in the SHGs may not have same expertise so NGOs can identify the inefficient members of the group and can impart proper training to them.
  • Frequent awareness camps can be organised by the Rural Development department authorities to create awareness about different schemes.
  • Arrangements by financial institutions for providing adequate financial assistance to the SHGs strictly on the basis of their actual performance without any discrimination.
  • There should not be any discrimination among members based on caste, religion or political affiliations
  • There is need for transparency in its functioning.

Conclusion: The significance of SHG’s is integral to make people livelihood below poverty line , and further help them to be self reliant and empowered. SHGs enable them to increase their income, improve their standard of living and status in society.

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