IRJMST Vol 7 Issue 12 [Year 2016] ISSN 2250 – 1959 (0nline) 2348 – 9367 (Print) International Research Journal of Management Science & Technology http://www.irjmst.com Page 79 THE ISSUES AND CHALLENGES OF SELF HELP GROUPS: A STUDY IN ODISHA Anuradha Samal 1 Lecturer Department of Business Administration Sambalpur University Prof. (Dr.) A. K.Das Mohapatra 2 Professor Department of Business Administration Sambalpur University Abstract Self Help Group (SHG) is a small voluntary association of less than twenty people either registered or unregistered preferably from the same socio-economic background. They come together for the purpose of solving their common problems through self help and mutual help. Self Help Groups (SHGs) emerge as an important strategy for empowering women and to alleviate poverty. India’s SHG movement has emerged as the world’s largest and most successful network of Community Based Organizations (CBOs). However, quality is the major challenge that the SHG movement is confronted with at this point of time in the country. The main objective of this paper is to focus on the problems faced by SHG in Odisha and to provide suggestive measures. Key Words: Self Help Groups, Community Based Organisations, Socio economic back ground. ______________________________________________________________________________ INTRODUCTION India has a dual financial system with an informal and a formal financial sector. The poor and lower- income people are usually left out from the formal financial system. The lack of access to the formal financial sector is due to the lack of the collateral required due to risks involved in lending but also due to high costs involved in small-scale financial services and weak legal enforcement (Ray 1998). The banks have always been reluctant to serve the poor, especially the asset-less, who cannot offer any collateral (Sayantan Bera, 2008). Moreover, rural poor found the formal institutions alien and inaccessible. Inadequacies in rural access to formal finance and the exorbitant terms of informal credit for the poor provide for a strong need and ample space for innovative approaches to serve the financial needs of the poor households in countries like India. Self Help Groups (SHGs) have become the vehicle of change in the rural areas, transforming the lives of the marginalized. Realizing that problems cannot be solved alone, or by a single agency, small voluntary groups get together to pool their resources, skills and talent to better their lives. SHGs organize the poor and the marginalized to join hands to solve their problems and the method has been very successfully used by the government and the Non Government Organizations in achieving several goals. As a form or enterprise, SHG performs the role of collective banks and