Self Help Group – Bank Linkage Programme (SHG-BLP)

Self Help Group – Bank Linkage Programme (SHG-BLP)

Subject – Economy

Context – 30 years of SHG -BLP

Concept –

• NABARD, through its’ Micro Credit Innovations Department has continued its role as the facilitator and mentor of microfinance initiatives in the country.
• The model of ‘SHG-BLP’ has evolved as a cost-effective mechanism for providing financial services to the unreached and underserved poor households.
• What started as a pilot to link around 500 SHGs of poor to the formal financial institutions during the year 1992-93 has now become the largest microfinance programme in the world, in terms of the client base and outreach.
• The SHGs which follow ‘Panchsutras’ viz.
  • conduct of regular group meetings,
  • regular savings within the group,
  • internal lending based on the demand of members,
  • timely repayment of loan and
  • maintenance of proper books of accounts – considered to be of good quality and over years have proved themselves to be good customers of Banks.
• The NGO sector has played a prominent role of working as a Self Help Group Promoting Institution (SHPI) by organizing, nurturing and enabling credit linkage of SHGs with banks.
  • NABARD later co-opted many others as SHPIs including the rural financial institutions (RRBs, DCCBs, PACS), Farmers’ Clubs (FCs), SHG Federations, Individual Rural Volunteers (IRVs) etc.
  • These stakeholders were encouraged to take up promotion of SHGs by way of promotional grant assistance from NABARD.
• This savings led microfinance model has now become the largest coordinated financial inclusion programme in the world covering almost 100 million households in the country.
• With more than 84% of the groups being exclusively women groups, the programme has provided the much needed push to empowerment of women in the country.
• Banks are also provided 100% refinance support by NABARD for financing of SHGs.