The financial inclusion and self-help groups in Elappara village

Financial inclusion is the best way that financial service has to reach common people and to overcome the poverty. The technological improvement and communication networked services are accessed or used onlyby the employees and educated persons. Still the poor, low income, illiterate or women are excluded from this financial service. There are number of factors affecting access to financial services by weaker section of the society. The barriers are the lack of awareness, low incomes and assets, social exclusion, illiteracy, the distance from bank branch, branch timings, cumbersome banking procedure & requirements of documents opening bank accounts, unsuitable banking products or schemes, language, high transaction costs and attitudes of bank officials. As a result the weaker sections approach informal financial sector as it is easily available even though it is costly. SHG linkage model is one of the successfully operated models of micro finance in India. Under this model, the SHGs are financed by bank without any collateral. Such model also helps to reduce transaction costs, proper monitoring of funds by group members, economic empowerment of SHG members by collective decision making etc. This paper assess the thrift & credit practices and lending & repayment pattern of loan availed by SHG members. The study concluded that there is a good improvement in the household financial status of the SHG members after joining SHGs. The loan given by banks and the group has enabled them to improve their standard of living. It has also inculcated financial discipline among the members and the collateral free loans at an affordable cost relieved them from the clutches of private money lenders.