A Review of SHG-Bank Linkage Programme in India

Microfinance has made tremendous strides in India over the years and it has become a household name in view of the multi-pronged benefits from microfinance services to the poor in our country. Self Help Groups (SHGs) have become the common vehicle of development process including microfinance. SHG–Bank Linkage Programme (SBLP) launched in 1992 envisaging synthesis of formal financial system and informal sector has become a movement in India. NSSO data reveal that 45.9 million farm households in the country (51.4%), out of a total of 89.3 million households do not have access to credit, either from institutional or non-institutional sources. Further, despite the vast network of bank branches, only 27 percent of total farm households are indebted to formal sources (of which one-third also borrow from informal sources). Farm household’s not accessing credit from formal sources as a proportion to total farm households is especially high at 95.91, 81.26 and 77.59 percent in the North Eastern, Eastern and Central Regions respectively. As on 31 March 2009, there are more than 6.1 million saving-linked SHGs and more than 4.2 million credit-linked SHGs and thus, about 86 million poor households are covered under the programme. The SBLP targeted to reach 100 million of households by 2015. The paper tries to examine the spread of SBLP among geographies and poor and suggest ways to overcome regional and class differences in reac