The Self-Help Group (SHG) is an institution/concept in India, defined as an informal, self-governed, and peer-controlled association, typically consisting of 10 to 20 members, mostly women, from similar socio-economic backgrounds. The concept's origin is traced to the establishment of the Self-Employed Women's Association (SEWA) in 1972. SHGs emerged to solve the problem of the rural poor's lack of access to formal credit and their dependence on exploitative moneylenders.
The institutionalization of the movement began when the National Bank for Agriculture and Rural Development (NABARD) launched the SHG-Bank Linkage Programme (SHG-BLP) in 1992, which is now the world's largest microfinance programme. The mechanism works on the principle of "savings first, credit later". Members meet regularly to save small amounts, which are pooled into a common fund. This fund is used to provide collateral-free loans to members, with repayment ensured through peer pressure and collective guarantee. In 1993, NABARD, in collaboration with the Reserve Bank of India (RBI), authorized SHGs to open savings accounts, linking them to the formal banking system.
The SHG movement is primarily connected to the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM), a centrally sponsored scheme launched in 2011. The DAY-NRLM replaced the earlier Swarnajayanti Gram Swarozgar Yojana (SGSY) of 1999. A significant recent change is the Lakhpati Didi initiative, which aims to enable 3 crore SHG women to earn at least ₹1 lakh annually, with the target raised in the Interim Budget 2024–25. The core mechanism of thrift and credit remains the same, but the focus has shifted from mere microfinance to large-scale livelihood promotion and women's economic empowerment.