Page 196 - DMGT303_BANKING_AND_INSURANCE

Unit 9: Priority Sector Lending

entrusting them to banks for credit linkage or financial intermediation like borrowing Notes
bulk funds from banks for on-lending to SHGs.
7. What are the latest Micro Credit disbursement indicators?

Ans. With a view to facilitating smoother and more meaningful banking with the poor, a pilot
project for purveying micro credit by linking Self-Help Groups (SHGs) with banks was
launched by NABARD in 1991-92 with a view to facilitating smoother and more meaningful
banking with the poor. RBI had then advised commercial banks to actively participate in
this linkage programme. The scheme has since been extended to RRBs and co-operative
banks. The number of SHGs linked to banks aggregated 4,61,478 as on March 31, 2002. This
translates into an estimated 7.87 million very poor families brought within the fold of
formal banking services as on March 31, 2002. More than 90 per cent of the groups linked
with banks are exclusive women groups. Cumulative disbursement of bank loans to these
SHGs stood at Rs. 1026.34 crore as on March 31, 2002 with an average loan of Rs. 22,240 per
SHG and Rs. 1,316 per family. As regards model-wise linkage, while Model I, viz. directly
to SHGs without intervention/facilitation of any NGO now accounts for 16%, Model II,
viz. directly to SHGs with facilitation by NGOs and other formal agencies amounts to 75%
and Model III, viz. through NGO as facilitator and financing agency represents 09% of the
total linkage. While 488 districts in all the states/UTs have been covered under this
programme, 444 banks including 44 commercial banks (including 17 in the private sector),
191 RRBs and 209 co-operative banks along with 2,155 NGOs are now associated with the
SHG-bank linkage programme.

Did u know? The number of SHGs linked to banks aggregated 4,61,478 as on March 31,
2002. This translates into an estimated 7.87 million very poor families brought within the
fold of formal banking services as on March 31, 2002. More than 90 per cent of the groups
linked with banks are exclusive women groups.
While the SHG-bank linkage programme has surely emerged as the dominant micro
finance dispensation model in India, other models too have evolved as significant micro
finance purveying channels.
The other successful models that have emerged are:
(a) An Intermediate Model that works on banking principles with focus on both savings
and credit activities and where banking services are provided to the clients either
directly or through SHGs;

(b) There is also a wholesale Banking Model where the clients comprise NGOs, MFIs
and SHG Federations. This Model involves a unique package of providing both
loans and capacity building support to its partners; and
(c) Further, there is an Individual Banking-based Model that has its clients as individuals
or joint liability groups. While programme management and client appraisal in this
model may be a challenge, it is best suited to lending to enterprises.
Keeping these validated models for delivery of credit to the poor and the unorganized
sector in view, RBI is moving towards a system perspective for providing effective policy
support not only because a number of different institutions, viz. banks, MFIs, NGOs and
SHGs are involved, but also because these institutions have very different institutional
goals. With this in view, a series of initiatives is being planned in the coming months for
putting in place a more vibrant micro finance dispensation environment in the country
where complementary and competitive models of micro finance delivery would be
encouraged to co-exist.

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