SHG

A self-help group (SHG) is a village-based financial intermediary committee usually composed of 10–20
local women or men. A mixed group is generally not preferred. Most self-help groups are located in India,
though SHGs can be found in other countries, especially in South Asia and Southeast Asia.

Members also make small regular savings contributions over a few months until there is enough money in
the group to begin lending. Funds may then be lent back to the members or to others in the village for any
purpose. In India, many SHGs are 'linked' to banks for the delivery of micro-credit.

What is self-help group:

The definition of SHG as approved by National Bank For Agriculture and Rural Development [NABARD]
the apex banking body in India, is “An SHG is a small, economically homogeneous and affinity group of
rural poor voluntarily formed to save and mutually agree to contribute common fund to be lent to its
members as per group decision for their socio-economic development”.

As the name indicates, self-help group is an informal group of about 15-20 people from a homogeneous
class, who come together for addressing their common problems. Group itself becomes a base to convey
necessities and sort out social economical problems of their group members.

Main aim of SHG is to make group members self sufficient and self reliant [independent] by self-
employment and empowerment through group dynamics.

Principle of SHG:
“Unity is strength”

Self-help group is a best way to get strengthen. Ex:- A single wooden piece can be easily broken,
but a bundle of 15-20wooden pieces can’t be broken easily. As like this a group of people can easily sort out
any of the problem, because group decisions carry more weightage than individual decision.

Characteristics of an ideal SHG:

According to MARADA[2000] well functioning SHG should have following structural features:-

1. An ideal SHG comprises 15-20 members.

2. All the members should belong to the same socio-economic strata of society.
3. Rotational leadership should be encouraged for the distribution of power and to provide leadership
opportunities to all the members.
4. Member should regularly attend meetings, save money and participate in all activities
VOLUNTARILY.
5. The procedure of decision-making in SHG should democratic in nature.
6. The group frames rules and regulations, which are required in its effective functioning.
7. Transparency in account keeping and accounts should be maintained and updated regularly.
8. An SHG should be socially viable institution.

Structure

A SHG may be registered or unregistered. It typically comprises a group of micro entrepreneurs having
homogeneous social and economic backgrounds, all voluntarily coming together to save regular small sums
of money, mutually agreeing to contribute to a common fund and to meet their emergency needs on the basis
of mutual help. They pool their resources to become financially stable, taking loans from the money
collected by that group and by making everybody in that group self-employed. The group members use
collective wisdom and peer pressure to ensure proper end-use of credit and timely repayment. This system
eliminates the need for collateral and is closely related to that of solidarity lending, widely used by micro
finance institutions. To make the bookkeeping simple, flat interest rates are used for most loan calculations.
Goals

Self-help groups are started by non-governmental organizations (NGOs) that generally have broad anti-
poverty agendas. Self-help groups are seen as instruments for goals including empowering women,
developing leadership abilities among poor and the needy people, increasing school enrollments, and
improving nutrition and the use of birth control. Financial intermediation is generally seen more as an entry
point to these other goals, rather than as a primary objective. This can hinder their development as sources of
village capital, as well as their efforts to aggregate locally controlled pools of capital through federation, as
was historically accomplished by credit unions.

NABARD's 'SHG Bank Linkage' program

Many self-help groups, especially in India, under NABARD's 'SHG Bank Linkage' program, borrow from
banks once they have accumulated a base of their own capital and have established a track record of regular
repayments.

This model has attracted attention as a possible way of delivering micro-finance services to poor populations
that have been difficult to reach directly through banks or other institutions. "By aggregating their individual
savings into a single deposit, self-help groups minimize the bank's transaction costs and generate an
attractive volume of deposits. Through self-help groups the bank can serve small rural depositors while
paying them a market rate of interest."

NABARD estimates that there are 2.2 million SHGs in India, representing 33 million members, that have
taken loans from banks under its linkage program to date. This does not include SHGs that have not
borrowed. "The SHG Banking Linkage Programme since its beginning has been predominant in certain
states, showing spatial preferences especially for the southern region – Andhra-Pradesh, Tamil Nadu, Kerala
and Karnataka. These states accounted for 57% of the SHG credits linked during the financial year 2005–
2006."

Advantages of financing through SHGs

 An economically poor individual gains strength as part of a group.

 Besides, financing through SHGs reduces transaction costs for both lenders and borrowers.
 While lenders have to handle only a single SHG account instead of a large number of small-sized
individual accounts, borrowers as part of an SHG cut down expenses on travel (to and from the
branch and other places) for completing paper work and on the loss of workdays in canvassing for
loans.
 Where successful, SHGs have significantly empowered poor people, especially women, in rural
areas.
 SHGs have helped immensely in reducing the influence of informal lenders in rural areas.
 Many big corporate houses are also promoting SHGs at many places in India.
 SHGs help borrowers overcome the problem of lack of collateral.

Business incubator
The term incubation refers to the process of support, while incubator stands for the organization and
infrastructure that are set up for these purposes.

The definition of business incubator (or startup incubator), according to Entrepreneur’s Encyclopedia, is an
“organization designed to accelerate the growth and success of entrepreneurial companies, through an array
of business support resources and services that could include physical space, capital, coaching, common
services, and networking connections”. They are often sponsored by private companies or municipal entities
and public institutions, such as colleges and universities.

A business incubator is a company that helps new and startup companies to develop by providing services
such as management training or office space. The National Business Incubation Association (NBIA) defines
business incubators as a catalyst tool for either regional or national economic development. NBIA
categorizes their members’ incubators by the following five incubator types: academic institutions; non-
profit development corporations; for-profit property development ventures; venture capital firms, and
combination of the above.

Types of services

Since startup companies lack many resources, experience and networks, incubators provide services which
helps them get through initial hurdles in starting up a business. These hurdles include space, funding, legal,
accounting, computer services and other prerequisites to running the business.

Among the most common incubator services are:

 Help with business basics

 Networking activities
 Marketing assistance
 Market Research
 High-speed Internet access
 Help with accounting/financial management
 Access to bank loans, loan funds and guarantee programs
 Help with presentation skills
 Links to higher education resources
 Links to strategic partners
 Access to angel investors or venture capital
 Comprehensive business training programs
 Advisory boards and mentors
 Management team identification
 Help with business etiquette
 Technology commercialization assistance
 Help with regulatory compliance
 Intellectual property management


Amity Innovation Incubator

The Amity Innovation Incubator is a pioneering concept in the context of Indian Universities. Supported by
DST, Ministry of Science & Technology, GOI, ‘Amity Innovation Incubator ‘ has in a very short time of its
existence earned an enviable position for itself with start-ups which have regularly been on top of the
innovation curve and have been recognized on platforms like ‘The Power of ideas’, Read Herring Global
winner, Tata NEN and NASSCOM Innovation Awards to name a few.

Location: Noida

Founded In: 2008

Focus Area: Rural Innovation and Social Entrepreneurship, Information and communication Technologies
(to include Social media and ecommerce, Mobile computing and technologies, Analytics, Cloud computing
and Big Data), Education and Education Technologies, Food and allied Technologies, Biotechnology and
Life Sciences, Nanotechnology and Material Sciences.

Funding: Upto INR 1 Cr

Notable Startups: ApnaCircle.com, Anduril Technologies

Science and Technology Entrepreneurship Park

Science and Technology Entrepreneurship Park, Technology Business Incubator is based out in IIT
Kharagpur. It helps the young firms to survive and grow by providing specialised support services during the
critical period of a business venture i.e. the start-up phase. The goal is to nurture successful indigenous
technologies and growth oriented entrepreneurs/enterprises. It provides space as well as seed fund to the
startups.

Location: Kharagpur

Founded In: Established in 1986 and commenced operations in 1989

Focus Area: N/A

Funding: N/A

Notable Startups: Ikure Techsoft Pvt.Ltd.

Angel investors
Angel investors are globally understood to be high net worth individuals who invest their personal income in
business start ups or small and medium scale companies. Unlike venture capitalists, they use their own
personal savings for investing in startup firms while not being insistent on membership in the board of
directors of the investee company.

In India, the term angel investor is defined in Chapter III –A of SEBI (Alternative Investment Funds)
(Amendment) Regulations, 2013, issued on 16 September 2013.

Here, Angel investor means any person, whether an individual or a company, who proposes to invest in an
Angel funds and satisfies one of the following conditions, namely

1. An individual investor who has net tangible assets of at least two crore rupees excluding value of his
principal residence, and who:
i. has early stage investment experience (prior experience in investing in start-up or emerging or
early-stage ventures), or
ii. has experience as a serial entrepreneur (a person who has promoted or co promoted more than
one start-up venture), or
iii. is a senior management professional with at least ten years of experience;
2. a body corporate with a net worth of at least ten crore rupees; or
3. an Alternative Investment Fund registered under the SEBI Alternative Investment Fund Regulations
2012 or a Venture Capital Fund registered under the SEBI (Venture Capital Funds) Regulations,
1996.

Angel investors encourage entrepreneurship in the country by financing small startups at a stage where such
start ups find it difficult to obtain funds from traditional sources of finance such as banks, financial
institutions, etc. Further, such investors provide mentoring to the entrepreneurs as well as access to their own
business networks. Thus, angel investors bring both experience and capital to new ventures.