Structure of Small Help Groups (SHGs)

Size of SHG:

i. The ideal size of an SHG is 10 to 20 members. Though there is no hard and first rule as regards to the membership, still in a bigger group, members cannot actively participate. Also, legally it is required that an informal group should not be of more than 20 people.

ii. The group need not be registered.



i. Only one person from a family can become a member of an SHG. (More families can join SHGs this way).

ii. The group normally consists of either only men or only women. Mixed groups are generally not preferred, since it may obstruct free and frank discussions, opening up typical personal problems.

iii. Women’s groups are generally found to perform better. They are better in savings and they usually ensure better end use of loans.

iv. Members should be homogenous i.e. should have the same social and financial background. This makes it easier for the members to interact freely with each other. If members are both from rich as well as poor class, the poor may hardly get an opportunity to ventilate their view points.


v. Members should be between the age group of 21-60 years.

vi. Members should be rural poor. By poor one should be guided by the living conditions, as given herein before; and this has no relation to poverty line. People living above poverty line (APL) can also form SHG like BPL.

Functions of Small Help Groups (SHGs)

The basic objective of a SHG is to develop a group into a well-managed Self Help Group. The members should evolve rules and regulations, which are to be followed, after discussions with all the members for compliance in full. Some illustrative guidelines for the formulation of such rules and regulations are given as under-



i. The group should meet at regular interval. Ideally, the meetings should be in each weekly or at least once in a month. This helps them to understand each other’s difficulties better. They can chalk out their plans and programs effectively.

ii. Compulsory Attendance: Full attendance in all the group meetings will make it easy for the SHG to stabilize and start working to the satisfaction of all. Every member should make himself present and express his/her views freely.

iii. Membership register, minutes register etc. are to be kept upto date by the group by making the entries regularly. This helps in keeping up date information about the SHG easily. It also helps to build trust among the SHG members.

iv. Fixed day for meetings: The group should have a specific day or date for the meetings to help the members to plan their works in advance


v. Commonplace: The group should fix a common place to conduct the meetings. All should present in that place in time to participate in the meeting.


i. Members what have generated as income during the course of business should be deposited by all the members in the meeting itself. This will help to inculcate the habit of regular savings. By depositing savings i the meetings before all members will create confidence among each other.

ii. No interest will be paid to the members for their money with the group


iii. The members will not be encouraged to adjust their savings amount again; their loan due to the Group. Only at extreme circumstances the Group shall consider to adjust.

Keeping of Accounts:

i. Simple and clear books of accounts for all transactions to be maintain.

ii. If no member is able to maintain the books, the SHG may take outsider help for the purpose. Because that is the most vital task before the group


iii. All registers and account books should be written and presented during the course of the meeting. This creates confidence in the minds of member who are unable to read and write.

Books to be maintained by an SHG

i. Minutes Book: The proceedings of meetings, the rules of the group, names of the member etc. are recorded in this book.

ii. Savings and Loan Register: Shows the savings of individual members and that of the group as a whole separately. Details of individual loans, repayments, interest collects balance etc. are entered for future record.

iii. Weekly/Fortnightly/Monthly Register: Summary of receipts and Payments, updated i every meeting are to be kept updated to know the growth and financial status of the group.

iv. Members Pass books: Individual member’s pass books in which individual’s saving and loan balance outstanding is regularly entered.

Major functions of a SHG

Savings and Thrift:

i. All SHG members regularly save a small portion for their income.. The amount may be small, but saving habit should be regular and continuous with all the members.

ii. “Savings first-Credit later” should be the motto of every SHG member.

iii. SHG members take a step towards self-dependence when they start small savings. They acquainted themselves with financial discipline through savings and internal lending.

Internal lending:

i. The SHG should use the savings amount for giving loans to its members only.

ii. The purpose, amounts, rate of interest, schedule of repayment etc. are to be decided by the group itself. It should be uniform for all members.

iii. Proper accounts to be kept by the SHG as regards to savings, loan amount, repayment and balance after each transaction.

Mutual Agreement:

In every meeting, the SHG should be encouraged to discuss and try to find out solutions to the problems faced by the members of the group. Individually, the poor people are weak, cool and calm and lack resources to solve their majority of problems. The group should try to help its members so that, it become easier for them to overcome the difficulties and come up with solutions.


The SHG should prepare plans for the future so that each member can collectively contribute for the achievement of the same. It should plan to get financial support from Government, Bank and NGO for its sustainability. It can take up some development programmes in the locality and all the members should involve themselves in implementation and monitoring of the programmes. That may increase their financial position to a greater extent.