The SHG-Bank Linkage programme is an important initiative in India aimed at providing microfinance to women in rural areas. The programme was launched in the 1990s and has since become a key strategy for poverty reduction and women’s empowerment in the country. Here are some details about the SHG-Bank Linkage programme:
- Self-help groups (SHGs): SHGs are groups of 10-20 women who come together to save and borrow money. The members of the group are from the same village or community and are usually engaged in similar economic activities. SHGs are promoted and supported by government agencies, NGOs, and microfinance institutions (MFIs).
- Bank linkage: Under the SHG-Bank Linkage programme, banks provide loans to SHGs. The loans are given to the group as a whole, and the group members are jointly liable for repayment. The loans are typically used for income-generating activities such as agriculture, livestock rearing, and small-scale enterprises.
- Advantages of SHG-Bank Linkage programme: The SHG-Bank Linkage programme has several advantages. First, it provides access to credit for women who do not have collateral or credit history. Second, it encourages savings and financial discipline among group members. Third, it promotes social cohesion and collective decision-making among group members. Finally, it reduces the dependence of women on informal moneylenders who charge high interest rates.
- Progress of SHG-Bank Linkage programme: The SHG-Bank Linkage programme has made significant progress since its inception. As of March 2020, there were over 88 lakh (8.8 million) SHGs linked to banks, with a total credit outstanding of over Rs. 1.21 lakh crore (approximately US$ 16.3 billion). The programme has been particularly successful in reaching out to women in rural areas, who have traditionally been excluded from the formal banking system.
- Challenges faced by SHG-Bank Linkage programme: Despite its success, the SHG-Bank Linkage programme faces several challenges. One of the major challenges is the lack of financial literacy among SHG members, which can lead to over-borrowing and defaults. Another challenge is the lack of transparency and accountability in the operations of some MFIs that promote SHGs. There have also been concerns about the high interest rates charged by some MFIs.
- Future of SHG-Bank Linkage programme: The SHG-Bank Linkage programme is likely to continue to be an important strategy for poverty reduction and women’s empowerment in India. The government has launched several initiatives to strengthen the programme, including the National Rural Livelihoods Mission (NRLM) and the Deendayal Antyodaya Yojana (DAY-NRLM). The programme is also expected to benefit from the increasing use of technology, such as mobile banking and digital lending platforms. However, there is a need for greater transparency, accountability, and financial literacy among SHG members to ensure the long-term sustainability of the programme.