Self help groups-bank linkage programme: Problems and Prospects

The paper has attempted to highlight on status of micro finance, role of banks, challenges and prospects of SHG-Bank linkage programme in India. It is based on secondary data. Micro financing through self-help groups has proved to be a strategic measure for organizing poor people in groups and promoting savings habits to gain to access to institutional credit for their socio-economic development and empowerment. The experience shows that the micro finance programme has a high degree of outreach to poor. Chakarabarti (2004) had attempted to evaluate the progress of micro finance and its impact on poverty alleviation programmes. The study observed that the banks, particularly RRBs and NGOs had played a pivotal role in supporting micro finance programmes reached over to 1.50 million for poor people by the end of 2006. The need for rural credit in India had been recognized even before British era but the real focus was given in 1793 when the British government issued regulations regarding Taccavi loans to the farmers and sub tenants. In 1904, the co-operatives societies’ act was announced to regulate agriculture credit. This was the first attempt to institutionalize rural credit. Malcolm Darling (1925) had rightly observed that Indian peasant is born in debt, lives in debt and dies in debt. The same situation prevails today after 66 years of independence and the severe incidence of indebtedness of the farmers has been a matter of serious concern causing thousands cases of suicides. According to NASSO report (2003), on an average, 48.6% of the rural households were indebted in the country. The fact is that shrinkage of rural credit is responsible for widespread agrarian crisis in post reform era.