Revision summary
An SHG is usually 10–20 poor women from one neighbourhood who save and lend internally. NABARD’s SHG–Bank Linkage Programme (1992) and DAY–NRLM are the main public frames. Functions are thrift, bank credit, livelihoods, and last-mile delivery of welfare. Federations and State Rural Livelihood Missions sit above the primary group. Elite capture and delayed credit are the chief analytical risks.
Model answer
Introduction
A Self-Help Group is a small affinity group, usually of poor women, that saves first and then borrows together. Composition explains who sits; functions explain why the Indian State treats SHGs as a rural delivery arm.
Body
Composition
- NABARD’s SHG–Bank Linkage Programme (from 1992) and the Ministry of Rural Development’s Deendayal Antyodaya Yojana–National Rural Livelihoods Mission treat a typical group as 10–20 members from a similar socio-economic pocket.
- Membership is voluntary; office-bearers rotate; the book of savings and loans is the real constitution of the group.
- Federations at village and cluster level, and in Uttar Pradesh the State Rural Livelihood Mission, sit above the primary group so that credit and livelihoods can be pooled.
Functions
- Thrift and internal lending build a track record that a commercial bank can then finance under priority-sector norms, which is the core of SHG–bank linkage.
- Groups take up livelihood activity, food security, and social action on schooling, sanitation, and violence against women, which DAY–NRLM funds as community institutions.
- They become last-mile agents for public schemes—pensions, rations, and bank accounts—so composition as a neighbourhood of women is also a function of the welfare State.
Analytical limit
- Elite capture, unpaid care work, and delayed bank linkage can turn the group into a target-fulfilment cell rather than a self-governed cooperative.
Flow diagram
flowchart TD M[10-20 members] --> S[Savings and internal credit] S --> B[SHG-Bank linkage NABARD] B --> L[Livelihood and last-mile schemes] L --> F[Federation and SRLM]
Conclusion
SHGs are composed as small, homogeneous savings circles and function as credit, livelihood, and last-mile welfare institutions under NABARD linkage and DAY–NRLM. Analysis must keep both the internal democracy of the group and the risk that the State only counts groups, not power inside them.
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Is an SHG a registered cooperative?
Usually no. It is an informal affinity group. Some later federations register as societies or producer companies.
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Are SHGs only for women?
NRLM is women-centric. Other departments have mixed or men’s groups, but the national livelihoods architecture is built around women’s SHGs.
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