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Introduction

The microfinance movement in India, beginning with the SEWA Bank in 1974, empowered rural women through Self-Help Groups (SHGs). By pooling savings and accessing collateral-free loans, SHGs promoted asset creation, income security, and entrepreneurship. Supported by schemes like the SHG-Bank Linkage Programme and Mudra Yojana, they drive inclusive growth and women’s empowerment.

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Role of SHGs in Achieving Asset Creation along with Empowering Women in Rural India

• Access to Credit for Productive Assets: SHGs enable poor women to access formal credit without collateral, which they invest in tools, livestock, or machinery.
  Eg: Women in SEWA Bank pooled savings to buy sewing machines, creating lasting household assets.
• Affordable Housing Support: By linking with government schemes like PMAY-Urban and SHG-bank linkage, women secure loans for constructing or upgrading homes.
• Collective Ownership of Resources: SHGs promote group ownership of land, equipment, or community assets, reducing individual vulnerability.
  Eg: Kudumbashree SHGs in Kerala collectively own and operate rice mills, ensuring food security and local employment.
• Savings Mobilisation: Regular group savings accumulate into significant funds, which are reinvested into productive assets for long-term security.
  Eg: NABARD’s SHG-Bank linkage has mobilised savings, empowering women to finance asset creation.
• Strengthening Social Capital: Asset creation is not only physical but also social, as SHGs build networks that enhance bargaining power and reduce dependence on moneylenders.

Role of SHGs in Achieving Income Security along with Empowering Women in Rural India

• Promoting Entrepreneurship: SHGs provide working capital for microenterprises like tailoring, handicrafts, and food processing, creating stable income sources.
  Eg: Nearly 99% of microfinance loans in India are extended to women from low-income Households(NABARD Report).
• Skill Development and Training: SHGs, under schemes like DAY-NULM (Hunar Se Rozgar), enhance women’s skills for sustainable livelihoods.
• Diversified Income Opportunities: SHGs encourage women to invest in multiple activities like poultry, dairy, or weaving, reducing dependency on one source.
• Reduction in Vulnerability: SHGs enable access to micro-insurance and emergency loans, ensuring stability during shocks.
  Eg: Ujjivan Small Finance Bank’s “Chote Kadam” initiative supported healthcare access for SHG families, reducing income disruptions.

Challenges for SHGs in Achieving the Twin Objectives along with Empowering Women in Rural India

• Over-Indebtedness: Women often take multiple loans from different MFIs and SHGs, leading to repayment stress and debt cycles.
• Low Financial Literacy: Many SHG members lack awareness of interest rates, repayment schedules, and savings management.
• Regional Disparities: SHGs thrive in southern India (Kerala, Tamil Nadu) but remain weak in northern and eastern regions.
• Limited Diversification of Loans: Credit largely supports petty trade and small businesses, neglecting sectors like agriculture or housing.
• Weak Institutional Support: Delays in bank linkages, poor monitoring, and lack of digital access hinder SHG functioning.
  Eg: During COVID-19, many migrant SHG women lacked digital records, excluding them from accessing emergency PDS or credit.

Conclusion

Strengthening SHGs through greater financial literacy, digital access, and diverse credit support in housing, agriculture, and enterprises can enhance their impact. Backed by institutional support, NABARD refinance, and schemes like Mudra Yojana, SHGs can evolve into sustainable drivers of inclusive growth, poverty reduction, and women’s empowerment in rural India.

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