Discuss the Challenges before Self Help Groups (SHGs). What are the Measures to Make it Effective and Beneficial?

In India and many other developing countries, poverty, unemployment, and lack of access to finance have been big problems for decades. To fight these issues, the government, NGOs, and community organizations have encouraged people to work together in small groups. One such popular initiative is the Self Help Group (SHG) model.

A Self Help Group is usually a small group of 10–20 people, often women, who come together to save money, provide small loans to each other, and improve their social and economic conditions. SHGs are based on the idea of mutual help, cooperation, and trust. They help poor people, especially women, gain access to credit, improve their income, and become more confident in society.

SHGs have played a very important role in rural development, women empowerment, and financial inclusion. However, like every system, SHGs also face many challenges. Unless these challenges are solved, SHGs cannot achieve their full potential. In this article, we will discuss the major challenges before SHGs and also suggest measures to make them more effective and beneficial.

Importance of Self Help Groups

Before we talk about the challenges, let us briefly understand why SHGs are important:

1.Financial Inclusion – SHGs provide credit to poor people who cannot get loans from banks easily.

2.Women Empowerment – They give women a platform to come out of the house, discuss problems, and take part in decision-making.

3.Poverty Reduction – By encouraging saving and small businesses, SHGs help in reducing poverty.

4.Skill Development – Training, workshops, and group activities help members learn new skills.

5.Community Development – SHGs solve local problems like sanitation, health, education, etc. through collective action.

Even though SHGs are very useful, they face some serious obstacles that reduce their effectiveness.

Challenges before SHGs

1. Lack of Proper Training

Most members of SHGs come from rural areas with low education levels. They do not have much knowledge about bookkeeping, loan management, or business planning. Without proper training, many SHGs fail to keep financial records or plan income-generating activities.

2. Financial Problems

Though SHGs collect savings, the amount is usually very small. Banks are supposed to provide loans to SHGs, but sometimes banks are hesitant because they doubt the repayment ability of poor members. Delays in bank linkage create frustration.

3. Dominance of Few Members

In many SHGs, a few dominant members take decisions. Other members, especially women, remain silent due to social pressure or lack of confidence. This reduces the democratic spirit of SHGs.

4. Lack of Awareness

Many members do not know about government schemes, subsidies, or training programs. As a result, they cannot take full advantage of the support available.

5. Irregular Meetings and Poor Participation

SHGs are supposed to meet regularly to discuss savings, loans, and problems. But in practice, meetings are irregular. Members may not attend due to work, family responsibilities, or lack of interest. This weakens group bonding.

6. Marketing Problems

Even if SHGs manage to produce goods like handicrafts, pickles, or clothes, they face problems in selling them. They do not have proper market links, branding, or packaging. Without access to bigger markets, their products cannot compete with large companies.

7. Social and Cultural Barriers

In some conservative societies, women are not allowed to participate freely in SHGs. Male family members may restrict their involvement. This reduces the empowerment goal of SHGs.

8. Political Interference

Sometimes SHGs are used by local politicians to gain votes. Instead of focusing on real development, SHGs become tools for political gain, which weakens their purpose.

9. Loan Defaults

Some members take loans but do not repay them on time. This creates mistrust and financial stress within the group. If one or two members fail to repay, the whole group suffers.

10. Lack of Professional Support

Unlike big companies, SHGs do not have professional managers or accountants. They depend on voluntary efforts. Without expert guidance, many SHGs remain at a very small level and fail to expand.

Measures to Make SHGs Effective and Beneficial

Now that we know the challenges, let us discuss the solutions.

1. Capacity Building and Training

Regular training programs should be organized for SHG members on topics like financial literacy, bookkeeping, entrepreneurship, digital payments, and marketing. When members become skilled, they can run SHGs more effectively.

2. Strong Bank Linkages

Banks should be encouraged to provide easy loans to SHGs without unnecessary delay. Government can give incentives to banks that support SHGs. Digital banking and mobile banking can also help SHGs in rural areas.

3. Promoting Collective Leadership

SHGs should ensure that every member gets a chance to speak and participate in decision-making. Rotating leadership can help avoid dominance by a few people.

4. Awareness Campaigns

Government and NGOs should spread awareness about SHGs, their benefits, and available schemes through radio, television, social media, and village-level meetings.

5. Regular Monitoring and Evaluation

SHGs should be monitored regularly to check their financial health, meeting records, and progress. This will prevent corruption, misuse of funds, and irregularities.

6. Market Linkages and Branding

To solve the marketing problem, SHG products should be linked with e-commerce platforms like Amazon, Flipkart, and government portals like GeM (Government e-Marketplace). Training in packaging, branding, and quality control will also help.

7. Encouraging Men’s Support for Women SHGs

Families and communities should be sensitized to support women’s participation in SHGs. Men should understand that women’s empowerment benefits the whole family.

8. Using Technology

Digital apps can help SHGs maintain records, track loans, and sell products online. Social media can be used for promoting SHG products.

9. Federation of SHGs

Small SHGs can form federations at the block or district level. This will increase their bargaining power, improve market access, and reduce dependence on middlemen.

10. Government Support and Policies

Government should continue to support SHGs through schemes like NRLM (National Rural Livelihood Mission) and provide financial assistance, training, and infrastructure. Policies should be flexible and focused on long-term sustainability.

Success Stories of SHGs

1.Kudumbashree in Kerala – One of the largest SHG movements in the world, Kudumbashree has empowered millions of women in Kerala. They are involved in farming, catering, retail, and many other businesses.

2.Jharkhand Women SHGs – In Jharkhand, SHGs have successfully run poultry farms and handicraft businesses, improving income and reducing migration.

3.Andhra Pradesh Model – SHGs in Andhra Pradesh have shown how proper bank linkages and government support can help women become financially independent.

These examples show that with proper guidance, SHGs can transform rural society.

Self Help Groups are not just about saving and lending money; they are about empowerment, cooperation, and social change. SHGs give the poor a sense of dignity and self-reliance. However, they face challenges like lack of training, poor finance, irregular meetings, and marketing problems.

To make SHGs effective, there should be continuous training, easy access to loans, strong market linkages, use of technology, and supportive government policies. If these measures are taken, SHGs can become powerful agents of rural development, women empowerment, and poverty reduction.

In simple words, SHGs are like small seeds that, if nurtured properly, can grow into big trees providing shade, fruits, and strength to society.