Microfinance is basically very small loans (micro-loans) to below poverty and small entrepreneurial segments. Microcredit available for SHGs in the rural area leads to asset creation and securing income through it. The need of microfinance arises because rural India requires sources of finance for poverty alleviation, procurement of agricultural and farm input. Micro finance is a programme to support the poor rural people to pay its debt and maintain social and economic status in the villages. According to the NABARD report (March 2019), one crore SHGs covering 12 crore families had deposits of about Rs 23,300 crore. This data shows that SHGs in rural India have created assets, consequently generated income for themselves.

Role Of SHGs In Achieving Above Twin Objectives

A SHG is a small economically homogeneous affinity group of the rural poor voluntarily coming together to save small amounts regularly, which are deposited in a common fund to meet members’ emergency needs and to provide collateral free loans decided by the group. NABARD provides refinance and promotional support to Banks for credit disbursement under the SHG – Bank linkage programme.

1. As considerable share in it is of women SHGs, women are empowered to scale and replicate it further. Now there are over 66 lakhs SHGs with 7.14 crore rural women in India.
2. SHGs are formed under Deendayal Antyodaya Yojana-National Rural livelihood Mission aiming at minimum one woman member from each rural family joining women SHGs. They could utilize Revolving Funds (RF) and the Community Investment Support Fund (CISF) provided to them under DAY-NRLM programme for asset creation and self-employment for income generation.
3. SHGs including all women stakeholders in rural India have potential to grow like successful small companies, if they get business processes and products reengineered, build capacity, ensure technological support, gain markets and go beyond from social mobilisation and financial inclusion objectives to economic development by making the best or most effective use of their existing assets and microfinance available.
4. Economic empowerment through SHGs, provides women the confidence for participation in decision making affairs at the household-level as well as at the community-level.
5. Un-utilised and underutilised resources of the community can be mobilised effectively under different SHG-initiatives.
6. Leaders and members of successful SHGs bear the potentiality to act as resource persons for different community developmental initiatives.

Role Of SHG In Empowering Women In Rural India

1. SHGs push employment generation as it promotes savings and making credit linkage with credit institutions to perform income-generating opportunities. This is the first step in the economic self-reliance of women.
2. Economic empowerment equips women with autonomy and decision making, therefore increased agency within their families. It also reduces physical, economic violence against women within households.
3. SHGs also act as hubs for skill development of women which therefore builds human capital. For example, NABARD’s Micro-Enterprise Development Programme provides need-based skill development to SHG members. Skill development increases income-generating capabilities of women.
4. SHGs have not only economically empowered women but also take up their cause at different levels. One of them is combating violence against women; for example, Self Help groups in Madhya Pradesh form Shaurya Dals (courage brigades) to combat VAW.

Challenges

1. Many of the activities undertaken by the SHGs are still based on primitive skills related mostly to primary sector enterprises. With poor value addition per worker and prevalence of subsistence-level wages, such activities often do not lead to any substantial increase in the income of group members.
2. Contrary to the vision for SHG development, members of a group do not come necessarily from the poorest families.
3. Lack of knowledge and proper orientation among SHG-members to take up suitable and profitable livelihood options.
4. Patriarchal mindset – primitive thinking and social obligations discourages women from participating in SHGs thus limiting their economic avenues.
5. Lack of rural banking facilities – There are about 1.2 lakh bank branches and over 6 lakh villages. Moreover, many public sector banks and micro-finance institutions are unwilling to provide financial services to the poor as the cost of servicing remains high.
6. Sustainability and the quality of operations of the SHGs have been a matter of considerable debate.
7. No Security – The SHGs work on mutual trust and confidence of the members. The deposits of the SHGs are not secured or safe.
8. Only a minority of the Self-Help Groups are able to raise themselves from a level of microfinance to that of micro-entrepreneurship.

Way Forward

1. The role of the Government in the growth and development of the SHG movement should be that of a facilitator and promoter. The objective should be to create a supportive environment for this movement.
2. The literacy levels of rural women are low and hence efforts to enhance literacy levels in the area should be given priority.
3. Credit needs to be provided for diversified activities including income generating livelihood activities productions, housing consumption loan and against sudden calamities.
4. Training programmes relating to management of finances, maintaining accounts, production and marketing activities etc. should be given.
5. The SHG movement needs to be extended to urban and peri-urban areas. State Governments, NABARD and commercial Banks should join together to prepare a directory of activities and financial products relevant to such areas.
6. A Self-Help Group should not only concentrate on the growth of the group, but should also show active involvement on the social issues and other essential issues like health, sanitation etc. to develop the entire village.