SHG–Bank Linkage Programme: Supporting Vulnerable Households in Accessing Credit Evidence from the States

Over the decades, with the support of banks and other f­inancial service providers, the self-help group - bank linkage programme (SBLP), initiated by the National Bank for ­Agriculture and Rural Development (NABARD) has expanded significantly. The programme has reached out to more than 50% of households nationwide. Such outreach is a major breakthrough as a large proportion of the population is excluded from formal financial services. ­After three decades of the existence of the programme, the present study attempts to examine the level of indebtedness and dependency on self-help group (SHG) credit by households’. The study also diagnoses credit usage ­patterns and factors affecting access to SHG credit. The findings of the study are based on the sample size of 216 SHGs and 432 SHG member households spread across 8 districts of 2 states, viz., ­Maharashtra and West Bengal. The study found that the ­programme ­supported the credit needs of the most ­vulnerable and ­marginalised segment of the ­society, who own a little land and lack ­access to ­formal sources of ­financing. Samplehouseholds owe ­multiple sources of ­credit. However, SHG is the major source of ­credit for households’ and a ­significant part of their debt. The ­majority (70%) were totally ­indebted to SHG. It is ­observed that ­dependency on SHG credit is ­directly correlated with years of association with SHG. ­Senior SHG members, due to their long years of the ­association, were mostly dependent on SHG. The SHG ­credit was mostly used for income-generating