You are here
Explain the functions of "Self Help Group".
Answer:
-lock-
Points to Remember
- Organise rural poor , especially women and collect their savings
- SHG has 15-20 members who meet and save regularly
- After a year or two the group becomes eligible for a loan and members can take a loan from the group with a low-interest rate .
- Members take all the decisions
- SHG helps in dealing with the lack of collateral
Answer to be written
- The idea is to organise rural poor , in particular women , into small self-help groups (SHGs) and pool (collect) their savings .
- A typical SHG has 15-20 members who meet and save regularly. Saving per member varies from Rs. 25 - Rs.100 or more depending on the ability of the people to save.
- After a year or two, if the group is regular in savings, it becomes eligible for availing loans from the bank. The loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members. Members can take small loans from the group itself to meet their needs. The group charges interest on these loans but this is still less than what the moneylender charges.
- Most of the important decisions regarding savings and loan activities are taken by the group members . The group takes decisions about loans to be granted - the purpose , amount , interest to be charged , repayment schedule etc.
- Thus, the SHGs help borrowers overcome the problem of lack of collateral.
-endlock-
