Micro Finance and Financial Sustainability of SHGs

Abstract

Micro Finance has gained a lot of significance and momentum in the last decade. It is a novel approach to "Banking with the poor". In this approach, bank credit is extended successfully to the poor through Self Help Groups (SHGs), Non- Government Organizations (NGOs), Credit Unions etc. India now occupies a significant place and a niche in global micro finance through promotion of the SHGs and the home-grown SHG-Bank Linkage Programme (SBLP). Micro credit attempts to combine lower transaction cost and high degree of repayment. This is essentially because of the involvement of potential beneficiaries of njral credit in the credit delivery system. More than 30,000 branches of Commercial Banks, RRBs and Co-operative Banks in over 520 districts in 30 states and Union Territories are now implementing the SBLP, introduced and encouraged by NABARD.