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

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.