The self-help groups (SHG) has 1 have 0 members, usually belonging to one neighbourhood, who meet and save regularly. The members save their money according to their capacity and can take small loans. The SHGs are the building blocks of the organisation of the rural poor because of the following reasons:
- The SHGs provide small loans to its members at a reasonable rate of interest to meet their needs.
- The SHGs help borrowers overcome the problem of lack of collateral.
- Not only does it help women to become financially self-reliant, but the regular meetings of the group provide a platform to discuss and act on a variety of social issues such as health, nutrition, domestic violence, etc.
- After a year or two, if the group is regular in savings, it becomes eligible for availing loan from the bank.