A Review of SHG-Bank Linkage Program in India

This paper examines the spread of the self-help group (SHG)-bank linkage program (SBLP) in India. It analyzes disparities in the reach of the program among geographies and the poor and suggests ways to overcome these differences. National Bank for Agriculture and Rural Development (NABARD) launched SBLP in 1992. As of March 31, 2009, the program covered about 86 million poor households. SBLP targets reaching 100 million households by 2015. Since its inception, however, SBLP's outreach has been spectacular in the southern states, especially Andhra Pradesh while north, west, and eastern states have lagged behind. Further, the program has not succeeded in reaching the poorest. Suggestions for strengthening the SBLP program include:

• Evolving models suited to the local context;
• Capacity building of government functionaries;
• Checking corruption and commissions while sanctioning and upgrading loans;
• Identification of the poor by NABARD;
• Incentive package for NGOs;
• Transparency in maintenance of records;
• Setting up resource centers;
• Identifying employment generating activities;
• Encouraging SHG federations;
• Exploring the use of information and communication technology and product innovation.