The Concept
Self help group is group of below poverty line individuals coming together with goal of making each other financial self reliant or independent.
How does it function ? Each member contributes some amount to a revolving pool which acts as a collateral for taking up loans from bank. Point here is each individual individually is incapable of taking up a loan as he is unable to come up with sufficient collateral . Loan taken further acts a start up fund for individual member's business.
Issue of Default - Informal social pressure of group forces an individual for efficient utilization of fund and subsequent loan payment as their (group) own money is at stake (collateral). Moreover it helps bank to tackle only one account (of group) as opposed to many (each of individual) making handling of such small account(bigger than individual's) financially viable.
Contemporary relevance - Government promoted tool for fighting poverty
The brilliance of this idea is that it is simple enough yet so immensely strong. Strength lies in its ease in mass application, its concept roots in individualism and liberalism and most of all its free from government evils of corruption and inefficiency.
This simple idea empowers the unprivileged to write their own future without being dependent on government or others.
Still not convinced of its ingenuity ! Remember the landmark ideas of money, banking, insurance, credit cards. All these ideas bear a characteristic feature that all are immensely conceptually simple and such hugely influential. This idea goes a step further as it fulfills a social cause.
No comments:
Post a Comment