Microfinance in Banks with Self Help Group- (Shg)

Abstract

The Self-Help Group (SHG) movement is a noble mission on the lines of the microfinance movement which originated in Bangladesh under the Leadership of Noble Laureate Mohamed Yunus. The innovative concept, that has roots in Bangladesh, has touched every part of the globe. In order to achieve the mission of reaching those families who did not have access to credit by any formal financial institution and, therefore, were dependent on informal sources and moneylenders, the National Bank for Agriculture and Rural Development (NABARD) introduced the “SHG-Bank Linkage Programme” as a pilot project in 1992. The Reserve Bank of India (RBI) had then advised commercial banks to participate actively in this programme. Subsequently, the programme was extended to all Regional Rural Banks (RRBs) and cooperative banks. The SHG-Bank Linkage Scheme has the following objectives:

1. Develop mutual faith and confidence between bankers and rural poor,

2. Expand credit flow to the rural poor with less transaction costs.

3. Combine flexibility, sensitivity and responses of the informal credit system with the strength of technical and administration capabilities and the financial resources of formal financial institutions.