The self-help group (SHG) model is an indigenous microcredit model in India that is facilitated by NGOs and accredited as a successful model. SHGs obtain loans from banks through the SHG-bank linkage program developed by NABARD. NGOs play a prominent role in organizing, nurturing, and linking SHGs to banks. SHGs maintain their own savings, internal lending, loan repayments, and bookkeeping. The objectives are to develop trust between rural communities and banks, expand affordable credit, reduce poverty, and empower women. SHGs go through formation, strengthening internal processes, enterprise promotion, and becoming independent over 12-18 months. They provide financial services like savings and credit as well as

1. SELF HELP GROUP MODEL
Presented by-
Anadi Naik - 21201005
Anushka Parashar - 21201010
Dharitri Karjee - 21201020
Manish Kumar Behera - 21201033
Mansi Patel - 21201032
Sagar Joseph 21201046
Sipun K Majhi - 21201054
Sunandan Biswas - 21201059

2. SHG-BANK LINKAGE MODEL
SHG-bank linkage model which is generally facilitate by third party (NGO) . It is the indigenous model of
micro credit spread in INDIA and has been acclaimed as a successful model .
The program developed and managed by NABARD , allows SHGs to obtain loan from bank like
commercial, rural and cooperative bank .
SHG-bank linkage model has evolved as a cost-effective mechanism for providing financial services to the
unreached and underserved poor household
The NGO sector has played a prominent role of working as a self help group promoting institution (SHPI)
by organizing, nurturing and enabling credit linkage of SHGs with banks.

3. SHG members maintain everything themselves like, regular saving within the group, internal lending
based on the demand of member, timely repayment of bank loan and maintain books of account.
Objective
 To developed mutual faith and confidence between the rural poor and bankers .
 To expand credit flow and / financial services to the rural poor with less transaction cost
 To reduce the poverty and empower women

4. FUNCTIONS OF SHG:
ACTIVITY AND FUNCTION DURATION
1.Formation Initial meetings ,Identification of
members, Resolution ,Election of office
bearers ,Bank account opening
3-6 Months
2.Strenthening the internal
process
Internal lending, Training of office
bearer, Training of members,
Strengthening the record keeping
6-9 Months
3.Enterprise promotion and
bank linkage
Identification of enterprises,
Developing proposal, Bank loan
application and fund raising, Hand
holding for running enterprises,
Repayment of loan
12-18 Months
4.Withdrawal Federation of building, Facilitating
independent decisions, Hand over
charges
6-12 Months

5. SHG PRODUCTS & SERVICES
• Financial services – This includes savings, credit, insurance, pension and remittance, in recent
times, micro leasing has also come up as in important service in microfinance.
• Non-financial – This includes institution building, technical support and business development
services.

6. SAVINGS
• Savings bank – Savings bank account can be opened in any bank and withdraw at small amount of
interest like 3.5 to 4% per annum.
• Fixed deposit(FD) – Deposits can be make from a week or 3 months to max 5 years with interest
rate fluctuates 6 to 8% per annum and penalty is charged for before maturity withdrawals.
• Recurring deposits(RD) – Deposit of small amount for specific period and after end of that
period(3 to 5 years) one can withdraw the amount plus interest.
• Festival savings – Duration is less than a year as one can cash before the festival.
• Savings for marriage – People save in terms of valuables like gold, silver and other valuables.

7. • Loan for investment purpose – Income generation activities(iga) or housing(fixed asset) which
generate a stream of income.
• Loans for consumption purpose – Loan for day-to-day expenditure just to meet basic necessities
and do not provide any return.
• Loans for life-cycle needs – Loan for various occasions, such as child birth, marriage and death
and celebrated with large number of relatives, neighbours and others.
• Loans for emergency needs – These events are unexpected like accidents and then
hospitalisation, act of god and illness of head of the family.
• Loans for improving quality of life – Loans for the durables or basic amenities like television,
refrigerator, cooler, bike for improving quality of life
MICRO-CREDIT

8. • Micro-insurance is the protection for low income people against specific perils in exchange for
regular premium payments proportionate to the likelihood and risk involved.
MICRO-INSURANCE
MICRO-PENSION
• It is the provision for the pension of the poor.
• Many destitute women are in need for support in their old age when they are left alone by their
care takers

9. REMITTANCE
• Remittance is synonymous with migrants. As many of them move out from their native places in
search of job and send money to their dependants.
MICRO-LEASING
• There are two parties involved here, a lessor, who owns the equipment, and a lessee, who takes
the equipment in lease for using. Thus, lessee not being the owner can still use the equipment by
paying the lease rental to the lessor.
NON-FINANCIAL SERVICES
• Non-financial services are primarily of 3 types –
• Institution building
• Technical services
• Business development services

10. ADVANTAGES OF SHG MODEL
• SHGs are independent institutions and irrespective of whether lending is done by the MFIs or not
SHGs are likely to continue.
• An SHG operates as an autonomous financial institution in its own right. The SHG is responsible for
dealing with individual members which reduces cost of delivering the financial services.
• Group members decide on the amount to be saved per member, the maximum loan size to be
sanctioned, the repayment schedule, and guarantee mechanisms during loan sanctions. Collective
learnings take place. The members meet regularly & discuss their problem and issues
• As a part of the SHG promotion, the SHPI undertakes a lot of training and exposure programmes
that enhances the capacity of the members.
• Flexible in nature and platform for empowerment of members.
https://www.researchgate.net/publication/287470345_The_best_model_for_micro-
lending_Self-Help_Group_or_Joint_Liability_Group

11. Limitations:
 Building Institution:
The SHGs institution building process takes lots of time and required significant amount
of resources it takes almost three years on an average to promote one SHGs.
 Unawareness of Members/Participants:
Even though the authorities take measures for creating awareness among the group
members about the schemes beneficial to them, still majority of the group are unaware of the
schemes of assistance offered to them.
 Exploitation by Strong Members:
It is also observed that in the case of many SHGs, strong members try to earn a lion‘s
share of the profit of the group, by exploiting the ignorance and illiterate members.

12.  Weak Financial Management:
It is also found that in certain units the return from the business is not properly
invested further in the units, and the funds diverted for other personal and domestic purposes
like marriage, construction of house etc.
 Low Return:
The return on investment is not attractive in certain groups due to inefficient
management, high cost of production, absence of quality consciousness etc.
 Inadequate Financial Assistance:
It is found that in most of the SHGs, the financial assistance provided to them by the
agencies concerned is not adequate to meet their actual requirements. The financial
authorities are not giving adequate subsidy to meet even the labor cost requirements.

13. THANK
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