In a country like India where a large number of population comes in the category of â€œBelow Poverty Lineâ€ and where around 6.5 Crore live in Jhuggies, micro finance plays key role in helping poorest of poor in improving their economic condition. Micro-finance broadly refers to high quality financial services to poor. It not only includes credit but also micro saving, micro insurance and micro fund transfer and micro leasing. Micro finance sector consistently focuses on understanding the needs of poor and devising better ways of delivering services in line with their requirements and developing most efficient and effective mechanism to deliver finance to the poor.
Amongst many participants in micro finance self help groups occupies key position. As per estimates of NABARD , there are 2.2 million self help groups in India with a total membership of 33 million which clearly speaks of their large coverage. At the national level, NABARD is playing enabling role to make these SHGâ€™s in effectively performing their expected role.
A SHGâ€™s is group of about 20 people ( man or women ) from a heterogeneous class who come together for addressing their common problem. These groups are formed to create a common fund by their contribution and using this fund for providing loans to group members at a very low interest rates. In case of need, group can also borrow money from financing institution to meet the credit needs of group members.
Key objectives if self help groups are:
- To motivate members for savings and habit of banking.
- To avail loan for productive purposes and its timely repayment.
- To learn managing finance and distribution of surplus amongst group members.
- To save them from exploitation of money lenders.
- To secure financial, technical & moral strength.
This self help methodology is a novel approach for a developing economy like India in ameliorating conditions of poor people.
Author:- Mr. B.K. Jain