Explain the role of Self Help Groups for the poor.

The role of Self Help Groups for the poor is explained below:

a. Self-help groups exist in the rural parts of India.

b. It organizes the rural poor especially women into small groups and collects their savings.

c. It has 15 to 20 members usually belonging to the same neighborhood who meet and save regularly.

d. The saving may vary from rupees 25 to rupees hundred or even more depending upon the ability of the people to save.

e. The members can take small loans from the group itself to meet the requirements.

f. The group charges rate of interest on these loans but it is less than the interest charged by the moneylender.

g. After a year or two if the group is regular in savings it becomes eligible for availing loan from the bank.

h. The loan is sanctioned in the name of the group and is meant to create self-employment opportunities for the members.

i. For example, the loan is given to the members for releasing mortgaged land, to meet the working capital requirements, to purchase assets and housing material.

j. The members take the decision regarding the Savings and loan activities of the group.

k. It also decides on the nature of the loan to be granted including the purpose, amount, rate of interest and the repayment schedule.

l. In the case of nonpayment of the loan by any one member is followed up seriously by the other members in the group.

m. Due to this reason, banks are willing to lend to poor women when organized in a self-help group even though they have no Collateral as such.

n. It solves the problem of a lack of collateral.

o. It provides timely loans for various purposes and at a reasonable interest rate.

p. It helps women to become financially self-reliant.

q. It provides a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.