SHG (Self Help Group)

A Self Help Group (SHG) is a small voluntary association of people who come together to address common problems and improve their socio-economic status. SHGs are usually composed of 10 to 20 members, who belong to the same community or neighborhood and have similar interests and economic backgrounds. (Let’s see Diesel Anudan article)

Self Help as a Group



The main objective of SHGs is to promote mutual support and self-reliance among their members. They do this by pooling their resources, sharing knowledge and skills, and engaging in income-generating activities. SHGs also provide a platform for their members to discuss and address issues related to health, education, and other social concerns.

SHGs have been widely promoted as a means of empowering women in developing countries, particularly in rural areas. By providing women with access to credit, training, and support networks, SHGs have been shown to enhance their economic and social well-being, as well as their status within their families and communities.


Self Help Groups (SHGs) are groups of individuals who come together to collectively save money, create a common fund, and lend money to each other. They are typically composed of women from economically disadvantaged backgrounds and provide a platform for members to discuss and address their common problems.

The need for SHGs arises from the fact that many individuals, especially women, from economically disadvantaged backgrounds do not have access to formal financial services such as banks and microfinance institutions. This lack of access makes it difficult for them to save money, invest in income-generating activities, and cope with financial shocks.

By pooling their resources and creating a common fund, members of SHGs can access credit at low interest rates and invest in income-generating activities such as small businesses, livestock rearing, and agriculture. SHGs also provide a platform for members to discuss and address social issues such as health, education, and gender-based violence.

Overall, SHGs empower women from economically disadvantaged backgrounds to become financially self-sufficient, improve their social standing, and contribute to the economic development of their communities.


Self Help Groups (SHGs) are small informal groups of individuals who come together to collectively save money, provide credit, and support each other’s social and economic needs. Here are some common features of SHGs:

  1. Voluntary membership: SHGs are formed by individuals who voluntarily come together with a common interest in improving their economic and social status.
  2. Small group size: SHGs typically consist of 10-20 members who live in the same community or have similar economic backgrounds.
  3. Regular savings: Members contribute to a common fund through regular savings, which are managed by the group.
  4. Internal lending: SHGs provide credit to their members for income-generating activities, emergencies, or other needs. The loans are usually provided at a low-interest rate and are repaid over a fixed period.
  5. Group decision-making: SHGs make decisions collectively, with each member having an equal say in the group’s affairs.
  6. Support and social capital: SHGs provide a support network for their members and help build social capital by fostering trust, solidarity, and cooperation among the members.
  7. Skill-building and training: SHGs often provide training and skill-building opportunities to their members to help them improve their livelihoods and become more self-reliant.

Overall, SHGs are a powerful tool for poverty reduction, as they provide a means for low-income individuals to access financial services, build social capital, and improve their economic and social well-being.

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Eligibility Criteria

The eligibility criteria for Self Help Groups (SHGs) can vary depending on the organization or institution that is creating or managing the SHG program. However, here are some general eligibility criteria that may apply:

  1. Members of the SHG should belong to the same community or neighborhood.
  2. The group should have a minimum of 10-20 members and a maximum of 20-25 members.
  3. The members of the SHG should be from economically weaker sections of society and have a common interest in working together to improve their livelihoods.
  4. The members should have a willingness to save money regularly and contribute to the group’s common fund.
  5. The members should not have defaulted on any previous loans.
  6. The members should be willing to attend regular meetings and actively participate in the group’s activities.
  7. The group should have a clear plan for income-generating activities or a business plan that can be implemented with the help of loans and support from the institution.

These are just some general eligibility criteria, and specific criteria may vary depending on the organization or institution that is creating or managing the SHG program.

Application Procedure

The application procedure for a Self Help Group (SHG) may vary depending on the specific organization or government agency facilitating the formation of the group. However, here are some general steps that can be followed to form an SHG:

  1. Identify the members: The first step in forming an SHG is to identify the members who will be part of the group. These members should be from the same socio-economic background and have a common goal or objective.
  2. Choose a leader: Once the members have been identified, they should choose a leader or president who will be responsible for coordinating the activities of the group.
  3. Define the purpose and objectives: The group should define its purpose and objectives. This may include areas such as savings, credit, livelihoods, social empowerment, or education.
  4. Develop a group constitution: The group should develop a constitution that outlines the rules and regulations for the group. This should include details such as the frequency of meetings, the roles and responsibilities of members, the criteria for membership, and the decision-making process.
  5. Register the group: The group should register with the relevant government agency or organization. This will provide legal recognition and access to various government schemes and programs.
  6. Open a bank account: The group should open a bank account in the name of the SHG. This will enable the group to save money and access credit from banks and other financial institutions.
  7. Train members: Members should be trained on financial management, bookkeeping, and other skills necessary to effectively manage the SHG.


Overall, the application procedure for forming an SHG involves identifying members with similar interests and socio-economic backgrounds, defining the group’s purpose and objectives, developing a constitution, registering the group, opening a bank account, and training members on necessary skills.

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