Microfinance Self-help Group Bank Linkage Model with Growing Seeds and Saplings: An Assessment

Abstract

Micro-Finance Self-Help Group Bank Linkage Model with Growing seeds and saplings: An assessment

The new developments promise to bring about an era of change to a sector that has seen surging growth. The gross loan portfolio of India's microfinance sector accounts for more than 7 per cent of the sector's world-wide loan portfolio size. As much as 30 per cent of the world's microfinance borrowers are in India. While the average size of a microfinance loan is $522.8 globally, according to MIX Market data, the average loan size in India is only about a fourth of that at $144. India is the largest microfinance market in the world, with some 120 million homes with no access to financial services, estimates CRISIL Research. In the recent past Micro finance is growing very rapidly and getting its due attention from banks, Non-Government organizations and the Government. Its concept is based on the empowerment of the best known programmes among the administrators, NGO sand bankers. Microfinance has found the SHG profitable, viable and as successful tool of social empowerment and no bank has reported any NPA under the SHG bank linkage. Rural penetration of banks in India is low around 18%. Annual credit from banks to SHGs in Rajasthan is stagnant in the range of Rs. 160-220 crores. Only about 60% of SHGs have been able to take credit from banks in last 10 years. Whereas the annual credit in state like Andhra Pradesh is to the tune of Rs. 5000 crores.

Innovation in microfinance could foster multiple folds could only bring by initiative in rural up-bringing through the effective approach of financial inclusion. With the new philosophy and policies pertaining to micro credit, micro finance institutions (MFIs) such as Self-Help Groups (SHGs) have emerged and they now have a strong footing in the developing countries such as Bangladesh, India etc.