The basic idea behind Self Help Groups (SHGs) is to organise the rural poor, particularly women, into small groups to help them access credit and become self-reliant.

A typical SHG has 15-20 members from one neighbourhood who meet and save regularly. Members pool their savings, which varies from Rs 25 to Rs 100 or more depending on their ability to save. Members can take small loans from the group itself to meet their needs at interest rates lower than what moneylenders charge.

The group makes important decisions regarding savings and loan activities—the purpose, amount, interest to be charged, and repayment schedule. The group is responsible for loan repayment, and any case of non-repayment is followed up seriously by other members. This is why banks are willing to lend to poor women organised in SHGs even without collateral.

SHGs help borrowers overcome the problem of lack of collateral. They provide timely loans for various purposes like releasing mortgaged land, meeting working capital needs, buying housing materials, and acquiring assets like sewing machines, handlooms, and cattle.

Beyond financial benefits, SHGs are building blocks of organisation for the rural poor. They help women become financially self-reliant. The regular meetings provide a platform to discuss and act on social issues such as health, nutrition, and domestic violence.