Microfinance by a Mainstream Bank: The Case of a Leading Public Sector Bank (PSB)

This case study discusses Public Sector Bank's (PSB) contribution to India's self-help group (SHG)-bank linkage program (SBLP).

The National Bank for Agricultural and Rural Development (NABARD) launched the SBLP in 1992 to provide formal banking services to the poor through SHGs. PSB is a leading public sector commercial bank that has participated in SBLP since its inception. The paper states that:

• About 80 percent of PSB's rural and semi-urban branches have taken up SBLP;
• PSB has cumulatively linked with 5,08,396 SHGs for savings and credit as of March 2005;
• PSB SHGs have an estimated membership of about 4.48 million and have saved about INR412 crore as of March 2005;
• PSB has cumulatively disbursed INR1,312 crore under SBLP from inception up to March 2005;
• Number of linked SHGs has increased nearly 6 times between 2001 and 2005, with similar growth in terms of mobilized savings and disbursed loans.

PSB's major SBLP strategies include adopting the approach suggested by NABARD, target-based scaling up, following a combination of social and commercial approaches and using different models.