Page 193 - DMGT303_BANKING_AND_INSURANCE

Banking and Insurance

Notes that rural poverty continues to assure their prosperity. Indian economy being a developing are
is no exception to this event. It is where the role of all concerned arises to inculcate savings habit
among villagers for self sustenance. Formation of self help group is one such effort.
Self help groups refer to a homogeneous group of 10-20 members formed with intent to save a
small amount regularly to help each other in times of need. Homogeneous group imply common
characteristics they share amongst themselves. Pooled savings one kept in Savings Back account
in the name of SHG.

Given below one some possible queries and their answers on SHG:
1. How many members can be there in a Self Help Group (SHG)?
Ans. 10-20. In case of common water user group, members, can be 5.
2. Can more than one persons of a family be the members of a SHG?

Ans. No, only one person of a family can be the member of an SHG. Here, minor cannot
become the member of the group. NGO also cannot become the office bearer of the SHG.
3. Can persons of different social, cultural & financial background constitute an SHG?

Ans. The group formed by the members of heterogeneous background cannot depict a strong
group dynamics, hence can't be sustainable. Therefore, the group should have persons
from homogeneous social, cultural and financial background.
4. Generally it is said that members should save something to create a group corpus/fund
corpus, but what is really saving means?

Ans. Concept of SHG is based on thrift, which means cutting their expenditure and sparing for
the purpose, Whereas saving means to save something from the existing income.
5. Can savings mobilized by Self help Groups (SHGs) be deposited in a Saving Fund Account?

Ans. Yes. The group can open the saving account with the bank branch with the initial deposit
of Rs. 100/-. Branch should not insist upon depositing entire group corpus while opening
their SF a/c and bringing all the members to them for opening of SF account, only office
bearers like president, secretary and treasurer can approach the branch for opening of
account. Hence, photograph of all the members may not be insisted upon, but the same be
obtained of the authorized persons by the members. For this purpose, resolution passed
by the group should be kept on record.
6. What is meant by group corpus/fund corpus?
Ans. Amount held in SF account + amount internally lent amongst the members + cash in hand
with the authorized persons + amount received as interest on the loans + any other
contributions received by the group like grants, donations etc. However, for working out
the loan eligibility the fund corpus will include the amount outstanding under the inter-
loaning, cash balance with the group and balance with the bank.
7. What are other activities of the SHGs for strengthening group dynamics?

Ans. Regular periodical meetings, regular periodical saving, maintenance of books like cash
book (summary of receipts and payments), register of individual account of members
both for deposit and loans, minutes register and issue of passbooks to individual members.
8. It is generally considered that transparency in working of the group renders more cohesive
group, what is the transparency?

Ans. Group should not revolve one or two members, but all the members should be aware of
the happenings of the group like savings, inter-loaning amongst members (to inculcate

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