The objectives of forming SHG is
(i) to build mutual trust and confidence between the bankers and the rural poor people.
(ii) to encourage banking activities, both on the thrift as well as credit sides, in a segment of the population that the formal financial institutions usually find difficult to cover.
(iii) to meet the needs of the poor by combining the flexibility, sensitivity and responsiveness of the informal credit system with the strength of technical and administrative capabilities and financial resources of the formal credit institutions.