Self-Help Groups: A Keystone of Microfinance in India - Women Empowerment & Social Security
This paper examines the SHG operating model, the state of SHGs today, their impact on civil society and how they need to be supported going forward. The rise of SHGs and more formal SHG Federations coupled with SHG Bank Linkage has made this a dominant model in microfinance.
It is estimated that there are over 2 million SHGs in India. Of these, 1.6 million SHGs have benefited by financing. Undoubtedly, SHGs have been able to improve penetration and outreach of financial services to the poor. However, the paper identifies key areas of weakness that undermine the sustainability of the SHG movement. They are:
- Financial management;
- Weak to average governance;
- Human resources.
SHGs have evolved into political and social units of society with an impact greater than that of a financial intermediary. There is a need to support the SHG movement in terms of financial management, technology, government policy in order to reap the benefits of its social impact and make the model sustainable.