Glossary term
Self-Help Group (SHG): Meaning and Definition
Reviewed and approved by Dr. Anamika ShrivastavaPublished Last updated
A self-help group (SHG) is a small voluntary group, often of poor women, whose members save small amounts regularly and lend from the pooled fund to one another at reasonable interest. SHGs can link to banks and give micro-credit to people without collateral, promoting thrift and empowerment.
In more detail
An SHG builds credit on trust within a small group instead of collateral. Members decide loan size and repayment, and the group links to a bank for larger loans. Groups of women have used them to start small trades and to gain a voice in household and village decisions.
Example
Ten women who each save ₹100 a month build a fund of ₹12,000 in a year, from which members borrow small sums.
Key points
- No collateral needed.
- Promotes thrift and credit access.
- Helps women’s empowerment.
Common mistake
Assuming SHG loans always fund business. Many are used for consumption.
Related terms
Where it is explained
This term is explained in Class 11 Indian Economic Development Chapter 6: Rural Development.