Responsible Finance Forum

Self Help Group Bank Linkage: Through the Responsible Finance Lens

Parul Agarwal, Misha Sharma and Amulya Krishna Champatiray
01 November 2013
Source:  Access-Assist
 Centre for Micro Finance

A Study on State of Practice in SHG Bank Linkage in Madhya Pradesh, Bihar and Karnataka

The self-help group (SHG) program, which began as a women’s empowerment initiative in the 1980’s added a significant component in 1992, when a NABARD initiative linked a small number of SHGs with banks. In India today, there are over 73.18 lakh savings-linked SHGs and 44.51 lakh credit linked SHGs, covering approximately 95 million households1. SHGs are more than just a conduit for credit – they also act as a delivery mechanism for various other services, ranging from entrepreneurial training to savings deposits and now with changing paradigm, channel to deliver community level development programmes.

Given the success of the SHG model, it is surprising that there is little evidence that tracks the intra group dynamics across financial and social interactions. There have been several rigorous studies on the social and economic impact of SHGs on the livelihood of women (Deininger & Liu, 2009), however not many studies have focused on the qualitative aspects of SHGs that covers the behaviour, performance, preferences and aspirations of the group members. This study helps in understanding these aspects of the group so as to formulate relevant policies in the SHG space.

The objective of the research from which this report has been derived is to understand the financial and non-financial interactions of SHGs with external agencies as well as to review the group dynamics in terms of financial transactions, decision making, cohesiveness, transparency and acceptance towards technology and new policy.