What are self-help groups and what is its importance? Is it successful in India?
To get a loan from banks is very difficult as they require collateral which prevents poor people from getting a loan and even the moneylenders who are ready to give loan charge high interest. So, the women in rural areas organised themselves in a group and collected their savings. This group came to be known as Self-help groups. Self- help groups are important because –
• To fulfill the needs, the member of the self-help group takes small loans from the group.
• These groups also charge interest, but it is less than what moneylender charges.
• If the bank observes that group is regular in his savings, these members became eligible for the loans from the bank.
• The loans provided is to create self- employment opportunities such as for releasing mortgaged land, for meeting working capital needs (e.g., buying seeds, fertilisers, raw materials like bamboo and cloth), for housing materials, for acquiring assets like a sewing machine, handlooms, cattle, etc.
• The important feature of such groups is that they don’t have need collateral to get loans.
• It helps women to become financially stable.
• It also helps the member to focus on social issues such as health, nutrition, domestic violence, etc.
In India, poor people and the individuals with low income, have no opportunity to avail for loan and the lack of banks in rural areas and financial instability of women made them form a group and ask for small loans. Thus, such groups are successful in India.
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