An SHG essentially is comprised of an average of 12 to 15 women. The salient reasons
for the formation of SHGs are as follows:
· fostering women’s participation and empowerment at community level
· serve as a forum for addressing micro-credit needs
· effective fund rotation
· higher level of sustainability
· taking up income generation
activities (IGAs)
· establish the habit of thrift and enhance savings
· taking ups social issues and social service activities
Group mobilization
i) Formation of Self Help Group: As the first step in mobilizing community for their development, members are encouraged to get together to form a group known as self-help groups (SHGs) consisting of exclusively women. A minimum number of members is defined which has been in the range of ten to twenty. Through this newly set up institution the rural womenfolk receive a number of training and awareness on capacity building to recognize their indigenous knowledge and capabilities.
ii) Group discipline: The initial activity in working with the groups is to provide trainings on:
(a) Conducting regular meeting
(b) Setting –up rules & regulations for the group
(c) Financial discipline, like members enrolment fee, mobilizing saving, sources of group income through social works & group business.
Collective Efforts:
a. An integrated approach is required for meeting over-all credit needs of a poor family in terms of backward linkages with technology and forward linkages with processing and marketing organisations.
b. Credit needs to be provided for diversified activities including consumption loans and against sudden calamities.
c. Credit in the right amount and at the right time to farm-women should be ensured for various purposes like income-generating livelihood activities, production, housing and other emergency needs of the family.
d. The delivery system has to be proactive and should respond to the financial needs of the farmers. Cooperative Banks and Rural Regional Banks should be strengthened which should formulate new products for diversified & integrated farm and non-farm activities, including insurance, commensurate with the demand and to provide cheaper and timely credit.
e. Provide easy access to loans to lease land through SHG’s especially women’s SHGs.
f. Simplify the process of giving loans, i.e. reduce the number of questions to important, non-repetitive ones.
g. Provide gender sensitization training to bank staff so that they are sensitized to the needs of rural clients, especially women.
h. Give employment to at least one male and one female local rural unemployed 10- 12th class pass youth in all rural institutions so they can fill applications and forms and help the community to benefit from the various Government schemes.
i. The outreach of the formal credit system has to expand to reach the really poor and needy. There is an urgent need for a paradigm shift from micro-finance to livelihood finance, comprising a comprehensive package of support services including financial services, (including insurance for life, health, crops and livestock: infrastructure finance for roads, power, market, telecom etc and investment in human development), agriculture and business development services (including productivity enhancement, local value addition, alternate market linkages etc) and
institutional development services (forming and strengthening various producers’ organisations, such as SHGs, water user associations, forest protection committees, credit and commodity cooperatives, empowering Panchayats through capacity building and knowledge centres etc.).
j. A network of capacity building institutions should be set up to strengthen and develop SHGs to undertake the various functions into which they are expanding, including ToT, and to nurture and mentor them during the process.
k. a more detailed understanding of the place of SHGs in women’s multiple livelihoods may be built, as well as mapping the location of women in the rural and agricultural sector.
Thus, the use of SHGs as a tool emphasized for improving the quality of life of the poor women is one of the key areas for bringing the change in women's livelihood standards.
Micro-credit through Self-Help Groups (SHGs) has proved to be a strategic tool for organizing rural women in groups and promoting savings and thrift habits to gain access to institutional credit for their socio-economic development and empowerment. The rural sector requires credit policies that lead to the creation of productive processes and assets and sustainable institutional development. SHGs continue to engage in traditional stereo-typed, low return activities and the fundamental livelihood concerns of the rural poor women remain largely un-addressed.