Performance of Microcredit Program in India - Key Areas for Improving Effectiveness
Micro-credit program which made a modest beginning in the year 1992-93 has now completed more than 13 years & has been under implementation in 563 districts of 31 States & Union Territories in India. As on 31st March' 05,
- Number of Self-Help-Groups [SHGs] linked with banks were 1,597,804 & bank credit disbursed was of the order of Rs. 68,665.9 million;
- The number of poor persons [one SHG representing 15 members] assisted under the program were 23. 96 million reflecting rise by 7.26 million persons in one year alone;
- Around 90 per cent of SHGs were exclusive women SHGs & on time repayment rate was as high as 95 per cent as reported by several studies
It may be, however, disheartening that during the last 13 years 560 banks through their 35,294 branches have touched only 23.96 million[12.4%] out of 193 million below poverty line people in rural India under the micro-credit program. It would be most essential to deepen & widen the coverage of the program in all villages more importantly in hilly, tribal, desert, drought prone & backward areas of all States having significant population of Scheduled Castes & Tribes by all 56,000 rural branches & 112,000 Primary Agricultural Credit Societies in the next five years. In this process while banks in close collaboration with accredited NGOs would promote, form, nurture, train & link SHGs with credit [and provide repeat credit for economic activities in several tranches to SHGs] , the State Governments & Panchayati Raj Institutions may necessarily have to create enabling environment & establish physical & social infrastructure for the sustainable growth & development of SHGs.It should also be appreciated, Let this Micro-credit program not turn out to be another Integrated Rural Development Program which was very well academically conceived but failed during the implementation process. It is against this background an attempt is made in this paper to briefly describe the key areas for improving the effectiveness of this program in the light of analysis of its performance & initiatives taken by National Bank.[Author's abstract]
