Describe the role of shg in …

SELF Help Group are small groups of 15-20 members of rural people in particular women belonging to one neighbouhood who meet and saves regularly. The members of the group can take small loan to meet their needs on low interest rate.
Role:

• Most of the decisions regarding the savings and loan activities are taken by the group members.
• The group decides as regards the loans to be granted- the purpose, amount, interest to be
  charged, repayment schedule etc.
• Group is responsible for the repayment of the loan.
• Any case of non-repayment of loan, by any one member is followed up seriously by other members in the group.
• The SHG help borrowers overcome the problem of collateral.
• They provide timely loans for a variety of purposes and at a reasonable interest rate.

• Self-Help Groups (SHGs) are informal associations of people who choose to come together to find ways to improve their living conditions.
• It can be defined as self governed, peer controlled information group of people with similar socio-economic background and having a desire to collectively perform common purpose.
• Villages face numerous problems related to poverty, illiteracy, lack of skills, lack of formal credit etc. These problems cannot be tackled at an individual level and need collective efforts.
• Thus SHG can become a vehicle of change for the poor and marginalized. SHG rely on the notion of “Self Help” to encourage self-employment and poverty alleviation.

Functions

• It looks to build the functional capacity of the poor and the marginalized in the field of employment and income generating activities.
• It resolves conflicts through collective leadership and mutual discussion.
• It provides collateral free loan with terms decided by the group at the market driven rates.
• Such groups work as a collective guarantee system for members who propose to borrow from organised sources. The poor collect their savings and save it in banks. In return they receive easy access to loans with a small rate of interest to start their micro unit enterprise.
• Consequently, Self-Help Groups have emerged as the most effective mechanism for delivery of microfinance services to the poor.