Self-help group (finance)

Members are usually women from similar social and economic backgrounds, all voluntarily coming together to save small sums of money, on a regular basis.

[1][2] The group members use collective wisdom and peer pressure to ensure proper end-use of credit and timely repayment.

In India, RBI regulations mandate that banks offer financial services, including collateral free loans to these groups, on very low interest rates.

Self-help groups are seen as instruments for goals including empowering women, developing leadership abilities among the poor and the needy, increasing school enrolment and improving nutrition and the use of birth control.

This model has attracted attention as a possible way of delivering micro-finance services to poor populations that have been difficult to reach directly through banks or other institutions.

"The SHG Banking Linkage Programme since its beginning has been predominant in certain states, showing spatial preferences especially for the southern region – Andhra-Pradesh, Tamil Nadu, Kerala, and Karnataka.