Case Study

Linking Self-Help-Groups with Banks in India: "Need for Expanding Banks' Role"

Can banks play a more pro-active role in self-help-group microcredit programs?
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This paper highlights key areas for improving the effectiveness of the self-help-groups (SHGs) - banks linkage program; it calls for an expansion in banks' role beyond providing credit.As its background the paper has:

  • The "Millennium Development Goals" adopted by the United nations in September 2000;
  • A review of the performance of programs of linking SHGs with banks;
  • Initiatives taken by the National Bank of India.

The paper discusses:

  • The significance of microcredit;
  • The dynamics of SHGs and their year-wise performance;
  • Innovative SHG models;
  • SHG performance in various regions in India.

The paper details the expansion of the banks' role in SHG programs and states that it would entail:

  • An improvement in the performance of participating banks and involvement of more banks;
  • Time-bound strategies and action plans for each of the banks;
  • Increase in the loan amount to SHGs and the provision of repeat loans;
  • Transformation of SHGs from every-day survival to planning for the future.

The paper concludes that:

  • It is essential to widen and deepen the coverage of India's microcredit program in remote villages and amongst rural and tribal people;
  • Banks could work in collaboration with non-government organizations (NGOs) to promote, train an link SHGs with credit;
  • State governments and Panchayati Raj Institutions may have to create an enabling environment and establish physical and social infrastructure for the sustainable development of SHGs.

 

About this Publication

By Patel, A.
Published