In India, self help group have been in operation for a long time in many fields such as environment, dairying etc. Mutual help in agriculture or household matters is an important characteristic of the rural community in India. However, SHG as an organized way for poverty eradication was immerged during the 7th Five Year Plan (1985-90). The plan had emphasized the need to closely associate NGO-with rural development programmes, particularly for poverty alleviation. In response to government plan, MYRADA has consistently fostered the SHG concept and strategy as the Indian model of banking with the poor. The formation of SHGs for savings and credit, and their linkage to commercial banks was initiated in India by MYRADA in the mid-1980’s. NABARD management had also been exposed to similar experiences in Thailand and Indonesia, and they responded favorably to MYRADA’s suggestions that this could be a useful way to bring formal financial services to the rural poor. Accordingly NABARD developed a SHG-Bank linkage approach in 1992 as the core strategy that could be used by the banking system in India for increasing their outreach to the rural poor. NABARD initiates the move for promotion of SHGs either through the bank branches or though NGOs and their ventual linkage with banks. With the growing importance of the micro-credit through SHG-bank linkage in India, the Reserve Bank of India in 1996 included financing to SHG as a main stream activity of bank under their priority sector lending. The government best wood national priority to the programme through its recognition in the 1999 Budget. As a part of the poverty alleviation measures, the Government of India launched the Swarnjayanti Gram Swarozgar Yojna (SGSY) in April, 1999 where the major emphasis is on SHG formation, social mobilization and economic activation through micro-credit finance. For supporting SHGs, government support the NABARD to take up activities for SHG formation, micro finances and economic activation.
Rashtriya Mahila Kosh (RMK) and the Department of Women and Child Development have their own programmes on SHG for empowering the rural women poor. SHG is an important component of ATMA model of extension reforms under Ministry of Agriculture, India. ATMA model was pilot tested in 1998 through NATP in seven states.