---
title: "Self-Help Group (SHG): Definition & Function"
description: "A Self-Help Group (SHG) is a collective of 10-20 poor individuals, mainly women, that pools savings to access microcredit for livelihoods and consumption."
url: "https://modeldiplomat.com/learn/glossary/self-help-group-shg"
---

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Model Diplomat Research Team · Last reviewed June 22, 2026

TL;DR

- A Self-Help Group is a voluntary association of 10 to 20 poor people, usually women, who pool savings and access collective microcredit to fund livelihood and consumption needs.
- How does an SHG differ from a Joint Liability Group?
- What is the SHG-Bank Linkage Programme?
- What role does DAY-NRLM play in the SHG ecosystem?
- Why are SHGs predominantly composed of women?

[Civil Service & Diplomatic Exams](https://modeldiplomat.com/learn/civil-services/glossary)Updated June 22, 2026

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### Supporters

Contemporary scale is substantial. By 2023, the SHG-Bank Linkage Programme covered tens of millions of groups and over a hundred million households, with women constituting roughly nine-tenths of members. The Ministry of Rural Development administers DAY-NRLM, while Lakhpati Didi—an initiative announced by the Union government in 2023 and expanded in the 2024 interim budget—targets enabling several crore SHG women to earn at least one lakh rupees annually. State implementations such as Bihar's JEEViKA (launched 2007 with World Bank support), Tamil Nadu's Pudhu Vaazhvu, and Telangana's continuation of the SERP model demonstrate federal-state co-financing through the World Bank's National Rural Livelihoods Project.

### Opponents

The SHG is distinct from the Joint Liability Group (JLG), which comprises four to ten members formed primarily to access credit against mutual guarantee without the prior-savings discipline central to SHGs. It also differs from the Microfinance Institution (MFI) model, in which a registered non-banking financial company lends to individuals or groups as a commercial intermediary; SHGs by contrast are member-owned and self-governed, with no external profit motive. The SHG further diverges from cooperative societies registered under state cooperative acts, since most SHGs remain unregistered associations relying on collective trust rather than statutory legal personality, though their federations are frequently registered as societies or producer organisations.

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In 2007, the Bihar government launched JEEViKA with World Bank financing, mobilising rural women into Self-Help Groups that by the 2020s had federated millions of members into village and cluster organisations across the state.

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