Concept of SHG

Concept of SHG

     Self Help Group (SHG) is a small Voluntary association of poor people preferably from the same socio-economic background. They came together for the purpose of solving their common problems through self-help and mutual help. The SHG promotes small savings among its members. The savings of the members is kept with a bank. This common fund is in the name of SHG. Usually the number of members in one SHG does not exceed twenty. The concept of SHG is based on the following principles:

·        Self-help supplemented with mutual help can be a powerful vehicle for the poor in their socio economic development.

·        Participative financial services Management is more responsive and efficient.

·        Poor need not only credit support, but also savings and other services.

·        Poor can save and are bankable and SHG, as clients result in wider out reach.

·        Creation of a common fund by contributing small savings on regular basis.

·        Flexible democratic system of working.

·        Loaning is done mainly on trust with a bare documentation and without any security.

·        Amounts loaned are small, frequent and for short duration.

·        Defaults are rare mainly due to group pressure.

·        Periodic meetings, non-traditional savings.