Context: The Union Minister of State for Rural Development, in a written reply in Rajya Sabha has given information about Self Help Group (SHG) Bank linkage (BL).

• In 2019, the International Initiative for Impact Evaluation assessed DAY-NRLM, finding a 19% income boost and a 28% increase in household savings compared to the baseline.

• The study spanned nine states: Bihar, Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Rajasthan, Uttar Pradesh, and West Bengal.

• Self Help Group (SHG) Bank linkage (BL) Project was launched by NABARD in 1992 and has blossomed into the world’s largest microfinance project.

• Under this programme, banks were allowed to open savings accounts for SHGs.

Factors for SHG-BL’s Success

• Annual issuance of a Master Circular by RBI and NABARD.

• Specification of minimum loan amounts for each Self-Help Group (SHG) with provisions being modified as needed to meet the scheme’s requirements.

• Regular training of staff and community cadres under State Rural Livelihoods Missions (SRLMs) to enhance their capacity.

• Financial education for Self Help Group (SHG) members through trained Financial Literacy Community Resource Persons (FLCRPs) at the village level.

• Bank Sakhis, trained members from SHGs who act as intermediaries, aiding SHG members in transactions and application processes.

• A web portal was created to overcome information asymmetry in SHG-Bank Linkage, incorporating data directly from Banks’ Core Banking Solution (CBS) database.

• The Bank loans to the tune of Rs. 7.68 lakh Crore have been accessed by SHGs since FY 2013-14.