FUNCTIONING OF SELF HELP GROUP

SHGs have no written bylaws for their formation or functioning but some basic
norms, ensured through regular interventions of the facilitator, can help the SHGs become
vibrant entities as functional efficiency is the foundation stone of the successful edifice of
bank linkage and income generation.1 It decides their own functioning and it varies group to
group as SHG is an informal group.

The basic functioning profile of the SHGs includes the holding of meeting, deposit of
saving amount, issuing of receipt or personal passbook of the deposit, safety of deposit,
maintenance of records, grading, linkage with banks, issuing of revolving fund, capacity
building and training programmes. All these variables are meant for social cohesion,
transparency, assessment and monitoring, and capacity building exercises to ensure quality
working and sustainability of SHGs2

The functioning of SHG is as follow:-

The group which functions contains 2-3 office members which are elected by the
group itself importantly containing president and secretary and a treasurer which is optional.
The group meets at fixed interval of time to discuss on the problems, socio economic issues,
present their ideas and agendas and finding their solutions where participation of all the
members is essential. The office members should also meet accordingly at least once in two
years. All the decision are taken by the group unanimously. The president and the secretary
has to manage the administration of the group as per the bye laws of the SHG. The decisions
that are taken in the meeting can be related to-

i. Collecting savings, fines, interest on loans, instalments of refund of loans, and

ii. Contribution for nominal administrative expenses.
iii. Decision on loan applications, and the amount to be sanctioned.
iv. Decision to take up any social or common activity in the village.
v. Decision to take up a common economic activity to build up the group’s corpus
vi. Deliberation and decision on disciplinary action against any member.
vii. Deliberation and decision on disciplinary action against the President or Secretary in case
of mismanagement of the affairs of the group or the funds of the group.
viii. Decision on application for admission as a member or for resignation from membership.
ix. Decision to participate in any SHG meeting or training program organised by the
government or by any NGO.3

1
Journal of Rural Development, Vol. 32, No. (2) pp. 181 - 189 NIRD, Hyderabad.
2
ibid
3
Journal of Business Management & Social Sciences Research (JBM&SSR) ISSN No: 2319-5614
Volume 2, No.8, August 2013
 SHG also maintains all the transaction of the group as records to ensure that there is
transparency in the group. The records, help in grading and auditing, if done. In addition,
banks inspect the records and books of accounts for the purpose of linkages.4

In rural India SHG the function of is to promote the savings of the poor people and
providing them loan from the own self organised group at a lower interest. The members of
the group are involved in lending money, producing income by their own consent. The
economic activity, empowerment profile and bank linkage decides the functioning of the
SHG. The functional efficiency leads to the growth of SHG whereas the functional
inefficiency can lead to gradual fail in the group.

The regular meeting of the group is the base on which a group functions. The
meetings are mandatory as members has to frame the rules and regulations as how the group
will be working. Besides discussing the functions and issues, it plays a great role in
empowering women and giving them a platform to organize themselves and talk about their
problems. The cultural meeting is also an important function of SHG as it helps the women
members of the group to be aware of the socio economic conditions and the constraints they
face and all these aspects are analysed by the group.

The SHG is also involved in management training. training includes the functional
and management modules, which acquaint the group leaders and/or the members with the
operational skills of the group from organisation and conducting of meetings to record
keeping, team management, fund management5. All the resources of the group are managed
with equal participation of the members and they have an free access to the funds and
resources of the group as all the members are considered as one team having common goals.

4
Journal of Rural Development, Vol. 32, No. 2, April - June : 2013
5
ibid