Role Of Self-Help Groups (SHGS) In Promoting Financial Inclusion In Virudhunagar District

Abstract

Financial inclusion is a critical component for enhancing the economic resilience of rural communities, particularly in developing regions like Virudhunagar District in Tamil Nadu, India. This study explores the role of Self-Help Groups (SHGs) as a pivotal mechanism for promoting financial inclusion among rural populations. SHGs, comprising small groups of individuals, primarily women, serve as platforms for collective savings, access to credit, and financial literacy training. By facilitating microfinance and empowering members with essential financial knowledge, SHGs have the potential to bridge the gap between marginalized communities and formal financial institutions.

The study employs a mixed-methods approach, incorporating quantitative surveys and qualitative interviews with SHG members and local financial institutions. Findings indicate that SHGs significantly enhance access to financial services, foster savings habits, and encourage entrepreneurial activities among members. Furthermore, the research highlights the role of SHGs in promoting financial literacy, enabling members to make informed financial decisions.

Challenges, such as limited access to larger loan amounts and insufficient training in advanced financial management, are also identified. The study concludes that while SHGs play a vital role in promoting financial inclusion, there is a need for greater support from governmental and non-governmental organizations to strengthen these groups and enhance their impact. By leveraging the strengths of SHGs, Virudhunagar's villages can work towards achieving sustainable economic development and improving the quality of life for their residents.