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Management Information System (MIS) SHG Bank Linkage Programme

Analyzing the progress of self-help groups and bank linkage programs in India
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This report discusses the progress and success of self-help groups (SHG) and bank linkage programs in India. National Bank for Agriculture and Rural Development (NABARD) in partnership with GTZ has been spearheading the world’s largest and fastest growing microfinance program-the SHG Bank Linkage Program.

The report elaborates on the methodology behind collecting data from various SHGs and banks, and analyzes the findings which show massive outreach of the SHG Bank Linkage Program. Findings include:

  • Considering that Non-Performing Assets (NPAs) under the program are at a level of just 1.36%, this niche has relatively low cost of risk, and is an attractive option for banks;
  • Training and capacity building of the stakeholders in the program has been a key contributor to the success of the SHG Bank Linkage Program;
  • As SHGs have an advantage in reaching out to the poor because of proximity, trust, commitment, flexibility, and their affinity to each other, establishing financial services to the poor was easier on using SHG’s financial service delivery;
  • More than 90% of these SHGs comprise women, who have proven to be the better cleints who regularly save and repay loans on time;
  • As SHGs mobilize their own savings, circulate these savings as loans to members and invest their earnings from interest income back into equity, there is substantial reduction in transaction cost for both the bank and client.

About this Publication

By Ramakrishna, R.V.
Published