SHG GROUPS

Over 40% of the population of India belongs to the economically poor/ weaker sections of society and a large majority of this number live in urban slums. The more marginalized among these hold menial jobs, working as coolie laborers, vegetable vendors or domestic workers. Theirs is a hand-to-mouth existence, with the household managed in large part by the women. With large families and/or high incidence of alcoholism among their menfolk, the women often resort to borrowing from moneylenders at heavy interest rates (interest upto Rs.20 for every Rs.100 lent). Banks are unwilling to lend money to the poor and even pawnbrokers demand security. Though the government has made financial inclusion a priority agenda, accessible savings systems and credit facilities are still very much out of reach of the poor, particularly in slum communities.

Empowerment is a crucial component of any attempt to tackle the root of poverty. The Self Help Group (SHG) program is designed to provide the poor with access to savings and credit systems, seeking to catalyse that process of empowerment through stimulating economic change within the lives of the group members. Mercy Welfare Society started the Self Help Group (SHG) program in October 2012 in 3 slums primarily because the formal banking system did not consider the poor a good credit risk. The program provided a means to the urban poor to get out of the clutches of moneylenders, provide them with access to savings and credit and educate people to cut down on borrowing for wasteful expenditure. Micro-credit or SHG programs were seen to be successful in rural areas, so MWS thought of extrapolating these learnings to SHGs in urban areas.