Self Help Groups: Bank Linkage Model in India

Self Help Groups: Bank Linkage Model in India

Shruti Agrawal (Banaras Hindu University (BHU), India)
DOI: 10.4018/978-1-4666-9908-3.ch016
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The chapter is based on the Self Help Group-Bank linkage Programme in India. The objective of the chapter is to assess the SHGs access to credit under SHG-Bank Linkage Programme, to know the progress of SHG-Bank Linkage Programme in India and to evaluate the impact of SHG-Bank Linkage Programme in India. Finally the chapter ends with suggestions to improve self help group-bank linkage programme and concludes that SHG-Bank Linkage Programme has provided a more favorable environment for enhancing India's potential for greater equitable growth with empowerment while considering the positive signs in their performance.
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SHG-Bank Linkage Programme is considered as a major strategy for providing financial services to the poor. It has its inception in 1990s and has made considerable and rapid strides exhibiting democratic functioning and group dynamism. It gathered momentum in the country during 1999-2000, as the credit linked during this period was more than twice the cumulative performance of the bank in credit linking of SHGs as on 31st March 1999.

The credit for such progress of Bank Linkage Programme in India is due to the active participation of NGOs, RBI, Commercial Banks, RRBs, Cooperative Banks, SIDBI, Private Banks, etc.

The National Bank continued to provide 100 per cent refinance assistance to banks for financing SHGs. The journey so far traversed by the Self Help Group – Bank Linkage Programme (SHG-BLP) crossed many milestones – from linking a pilot of 500 SHGs of rural poor two decades ago to cross 8 million groups a year ago. (

Similarly from a total savings corpus of a few thousands of Indian Rupees in the early years to a whopping Rs. 27,000 crore today, from a few crore of bank credit to a credit outstanding of Rs. 40,000 crore and disbursements touching Rs. 20,000 crore during 2012-13. The geographical spread of the movement has also been quite impressive -from an essentially Andhra Pradesh – Karnataka phenomenon in the beginning now spreading to even the most remote corners of India. Over 95 million poor rural households are now part of this world’s largest micro Credit initiative (Table 1).

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