SHG-Bank Linkage Mechanism - Exploring Facts and Roadmap

Against the backdrop of the global agenda of SHG-Banking, the disillusionment with government programmes of poverty alleviation and the recommendations of different Committees, the logical foundation for promoting micro-credit was laid down in India. Contrary to the earlier readymade credit delivery programmes, SHG-Bank linkage is a savings-led model designed on the lines of participatory development. An advantageous bank linkage operates at all levels as it can lead to the functional efficiency, economic activity of SHGs and economic empowerment of the members. But, several factors like maturity level of SHGs, repayment ethics, borrowing profile of the members, use of bank loans, etc., are responsible for the sustainability of the linkage mechanism. The paper attempts to study the SGSY SHG-bank linkage at a micro level in the background of the allegations of target-based formality where banks do not play the desired role. The fact-finding leads to some reflections, which show the roadmap to the way ahead.