How does a Self-Help Group function?

Currently, in India, the banking system has emerged a lot and contributed to development. The main motive of the bank is to accept the deposit and lend that deposit as a loan to investors. In a country like India, an ordinary person does not have any excess money to save as a deposit in the bank especially in rural areas. Nowadays the bank are charging fines for our deposits when they go below; they state that there should be a minimum balance of 1000 to 2000 RS in their bank account which is a big deal for the poor person in India whether in rural or urban areas. Self Help Groups helps to overcome the problem of saving for the ordinary person. Self Help Group is a voluntary organization formed by the women or men to enhance the microcredit for the members in it. The members of the organization save their money by fixing an amount to be deposited weekly, the amount will be such everyone can afford that. That deposited money can be advanced as a loan to any of the member in the group who is actually in need of it, but the loan will be advanced by the consent the group members. There will be transparency in the working of the organization because all the group members will be from the same village and all of them will be neighbours.

When the Self-Help group is registered, they can be linked to the bank through the ‘SHGs linkage programme’ under NABARD. When they are linked, they can get loans with low-interest rate from the commercial banks in which they can accumulate the capital on their own. They accumulate capital by investing the money in small enterprises in which all the members can be employed in which they get self-sustained and their standard of living rises. Currently, there are 2.2 million SHGs, representing 33 million members according to the estimates of the NABARD. These estimates are only which have linked through the Linkage Programme, the southern region of India is a well-functioning example in SHGs through this programme.