66

CHAPTER-III

ROLE OF NABARD IN WOMEN EMPOWERMENT

THROUGH SHG- BANK LINKAGE PROGRAMME IN

INDIA

Content Page No.

3.1 Introduction 67 – 68

3.2 NABARD and Microfinance 68 – 71

3.3 Self Help Groups 71 – 72

3.4 Models of Micro Finance practice in India 72 – 74

3.5 NABARD and SHG Bank Linkage Programe 74 – 80

3.6 SHG – Bank Linkage Programme at National level 80 – 91

3.7 Progress of SHG Bank Linkage programme in Karnataka 91 – 100

3.8 SHG Bank Linkage programe and women Empowerment 100 – 105

3.9 Conclusion 105 – 106

67

3.1 Introduction

The present chapter focuses on role of NABARD in women Empowerment

through SHG- Bank Linkage Programme in India. In 20th

century the term ‗women

empowerment‘, women welfare, Gender justice was in lime light in the social,

economic, and political development of both developed and developing nations. India

remains predominantly a rural economy, with 70% of its people living in rural areas.

Higher incidence of poverty and unemployment are main problems in India. It is

affecting the rural economy as well as the overall economy of the nation.

Marginalized groups have virtually no access to credit. Hence SHG- Bank Linkage

Programme plays a key role in poverty alleviation and financial support to the poor

people. The micro finance initiatives of NABARD yielded remarkable success and the

SHG- Bank Linkage programe has emerged as the largest micro finance programme

in the world. The pilot project started in 1992 has turned into a national movement,

linking more than one million SHGs with bank credit and lending to the socio-

economic empowerment of women.

The Committee to Review Arrangement for Institutional Credit for

agricultural and rural development set up by the RBI under the Chairmanship of Sri.

B. Shiva Ram in its Reports submitted to Governor, RBI on November 28, 1979

recommended the establishment of NABARD. The parliament through the Act 61 of

81 approved its setting.

NABARD was established by an Act of parliament on 12th

July 1982 to

implement the NABARD Act 1981. It was established in the place of the Agricultural

Credit Department (ACD), Rural Planning and Credit Cell (RPCC) of RBI and

Agricultural Refinance and Development Corporation (ARDC). The Capital of the

National Bank shall be 100 crores of rupees Provided that the Central Government

may, in consultation with the Reserve Bank and by notification increases the said

capital up to 5000 crores of rupees.

This study reveals that, NABARD has been playing a very important role in

financial, developmental and promotional-in the growth of SHG-Bank Linkage in

India. NABARD as an apex level institution prepares the potential linked credit plans

(PLPs) every year. Annual Action plans at district level are based on the PLPs

68

prepared by NABARD. Apart from this, NABARD also brings out the state focus

paper, which covers among other things agriculture and rural economy of the state,

performance of rural credit delivery system, policy initiatives of union and state

Governments and NABARD‘s involvement in supporting credit, developmental and

supervisory functions. NABARD, particularly at grass root level by creating an

opportunity for rural poor to have access to institutional credit through innovations in

micro finance like promotion of SHGs and development of rural non-farm sector etc.,

(Karnataka economic survey 2008-09)

3.2 NABARD and Microfinance

Figure-3.1 NABARD and Microfinance

Source: NABARD (2007-2008) Status of Microfinance in India

Figure-3.1 shows that role of NABARD in Micro finance programme and

policies. NABARD has been playing a vital and complementary role in providing

financial services to the poor and also bank and non bank services. NABARD is also

involving institutions to take up the empowerment task, motivating partners,

maintaining coordination with partners, giving technical support and influencing

Training and

capacity building

Coordination

with partners

Technical

support

Credit

support

Influencing

policy

Encouraging

Innovations

Motivating

partners

Group

formation

Group

linkage

Involving

institutions

NABARD

69

policy making at macro level. NABARD is also actively participating in group‘s

formation, group linkage, training and capacity building and credit support.

NABARD has been instrumental in facilitating various activities under

microfinance sector, involving all possible partners at the ground level in the field.

NABARD has been encouraging voluntary agencies, bankers, socially spirited

individuals, other formal and informal entities and also government functionaries to

promote and nurture SHGs. The focus in this direction has been on training and

capacity building of partners, promotional grant assistance to Self Help Promoting

Institutions (SHPIs), Revolving Fund Assistance (RFA) to MFIs, equity/ capital

support to MFIs to supplement their financial resources and provision of 100 per cent

refinance against bank loans provided by various banks for microfinance activities.

Financial support and promotional efforts of NABARD towards development of the

microfinance sector have also been outlined in this study. (Microfinance in India

2007-08) .

In this context, India can at present, boast of having the largest micro finance

programme in the world. SHGs have become the delivery channel for micro credit.

They have effectively and successfully demonstrated that poverty reduction and

empowerment of rural poor, especially of women, can really be achieved. The year

2005 has been declared by the UNO as the ―International year of Micro credit‖. The

Self-Help Groups have proved beyond doubt that they have immense potentiality in

transforming a poor economy by being successful delivery channels of micro finance.

Micro finance is a financial service of small quantity provided by financial institutions

to the poor. These financial services may include savings, credit, insurance, money

transfer, etc. NABARD provides information with regard to those SHGs which are

linked credit of financial institutions includes SHG credit.

Microfinance sector has travelled a long journey from micro savings to micro

credit and then to micro enterprises and now entered the field of micro insurance,

micro remittance and micro pension. This gradual and evolutionary growth process

has given a great opportunity to the rural poor in India to attain reasonable economic,

social and cultural empowerment, leading to better living standard and quality of life

for participating households. Financial institutions in the country continued to play a

leading role in the microfinance programme for nearly two decades now. They have

70

joined hands proactively with informal delivery channels to give microfinance sector

the necessary momentum. In recent years too, microfinance has registered an

impressive expansion at the grass root level. This study aims to provide a snapshot of

the progress in the microfinance sector.

Moreover micro finance emphasizes the importance of creating an appropriate

enabling environment to facilitate the provision of financial services to the poor

household and the broader community. Access to finance can contribute to improved

nutrition, housing and health, especially among female clients. By borrowing, saving

or buying insurance the poor can plan for their future beyond the short term. They can

build up assets and invest in Education and health. Financial services can help the

poor cope in times of need and hardship. Beyond the sever tangible impacts, access to

financial services promotes social inclusion and builds self confidence and

empowerment. Thus Micro finance provides monetary fuel for economic growth and

it is considered critical for achieving inclusive growth.

Micro-finance programme piloted by NABARD is one of the largest

programme in the world and marginalized asset-less, resource-starved rural poor

especially women in unbanked and under-banked rural areas are successful for

unrestricted access to micro-credit and micro-insurance. Microcredit or microfinance,

acknowledges that both bank and non-bank service providers have vital and

complementary roles to play in providing financial services to the poor. Microcredit is

the provision of small loans to poor people to assist in the development of small-scale

businesses to address poverty and exclusion. Microfinance is the provision of a wider

array of financial services including credit, savings and deposit services, payments

and transfer services, and insurance products.

Hence, study reveals that households with access to microfinance are more

likely to send their children to school and those children are more likely to stay in

school for longer. Improvements in income and better access to credit, savings and

insurance services can reduce the need to rely on children as labour. Micro finance is

a financial service of small quantity provided by financial institutions to the poor.

These financial services may include savings, credit, insurance, money transfer, etc.

NABARD provides information with regard to those SHGs which are linked credit of

financial institutions includes SHG credit. (Rajaram Dasguptha 2005) .

71

Microfinance clients are overwhelming female, and the contribution of

microfinance to women‘s empowerment is widely recognized. Microfinance can help

to build women‘s self-confidence and assertiveness, often resulting in women

obtaining greater decision-making power, control over assets, and mobility, including

more timely use of health care, greater awareness of health issues and prevention

methods, and higher rates of child immunization in client families compared with

non-client families ( B B Barik, 2004).

Over two-thirds of microfinance clients around the world are women. The

strong participation of women in microfinance programs can be attributed to a number

of factors. Women borrowers tend to have higher repayment rates relative to men and

that when women are provided with access to finance, the whole household benefits,

not just the individual client. Furthermore, targeting women is recognized as an

effective mechanism to improve gender equality with in communities. Microfinance

can enable women to diversify their income flows, accumulate assets and increase

their economic activity. Women with access to microfinance can have greater control

over their incomes and more power in household decision making. Through

microfinance programs, women often gain new vocational skills, self-confidence and

greater leadership, resulting in an enhanced ability to drive change within both the

household and the community. The programme envisages organization of the rural

poor into SHGs for building their capacities to manage their own finances and then

negotiate bank credit on commercial terms.

3.3 Self-Help Groups (SHGs)

The study also reveals that role of SHGs in empowering women in India.

Empowering women is empowering the nation. The massive changes caused by the

era of women empowerment have been witnessed in the shift of women status from

traditional level to modern level. This trasformation occurred in the status of women

due to the influence of the SHGs which is contributing in greater extent to improve

the status of women. In this regard women SHGs play an attractive role in their

development.

A Self Help Group in its strict social content can be defined as a self governed,

peer controlled informal group of people with similar socio economic background and

72

having a desire to collectively perform a common purpose. A SHG is a group of about

20 people from a homogeneous class, who come together for addressing their

common problems. They are encouraged to make voluntary thrift on a regular basis.

They use this pooled resource to make small interest bearing loans to their members.

The process helps them to imbibe the essentials of financial intermediation which

includes prioritization of needs, setting terms and conditions and accounts keeping.

This gradually builds financial discipline & credit history for themselves, as the

money involved in the lending operations is their own hard earned money saved over

time with great difficulty. This is ‗warm money.‘ They also learn to handle resources

of a size that is much beyond their individual capacities. The SHG members begin to

appreciate that resources are limited and have a cost. Once the groups show this

mature financial behavior, banks are encouraged to make loans to the SHG in certain

multiples of the accumulated savings of the SHG. SHGs are continuously striving for

a better future for women as participants, decision-makers and beneficiaries in the

domestic, economic, social and cultural spheres of life. (Pattanaik Sunanda 2003).

3.4 Models of Micro Finance practice in India

There are a variety of delivery models for microfinance like,

1 The SHG Bank Linkage model

2 Micro finance Institutions/NGO-SHG model

3 NGO/MFI Federation-SHG model

4 Grameen model

5 The Co-operative model

In India, SHG- Bank Linkage Model and MFI - Bank Linkage Model are more

popular model. Under these model, groups are formed by different agencies know as

Self-Help Promoting Institutions (SHPIs).These could be NGOs, Voluntary

associations, Government agencies, Panchayathraj institutions, Vikas Volunteer

Vahini(VVV) Clubs, Banks, Co-Operative societies, etc, Under this model the

financial interaction takes place in the following channels.

73

Figure-3.2 SHG- Bank Linkage Model

Without financial intermediation of NGOs/VAS

With the financial intermediation of NGOs/VAS

In the model, a part of bank‘s work is externalized to the NGO/VAS

The three models of credit linkage of SHGs with banks

Model I: SHGs formed and financed by banks. In this model, banks

themselves take up the work of forming and nurturing the groups, opening their

savings accounts and providing them bank loans. Increased role of banks in

promoting and nurturing SHGs. Model I, 16 per cent of SHGs are formed

Model II: SHGs formed by formal agencies other than banks, NGOs and

others, but directly financed by banks. Here, NGOs and formal agencies in the field of

microfinance act only as facilitators. They facilitate organising, forming and nurturing

of groups, and train them in thrift and credit management. Banks give loans directly to

these SHGs. Model-II, 75 per cent of SHGs are formed

SAVINGS

MEMBER

LOAN

S

SAVINGS

LOAN

S LOAN

S

SHG

NGO BANK

MEMBER

SAVINGS SAVINGS

LOANS LOANS

SHG

BANK

74

Model III: SHGs financed by banks using NGOs and other agencies as

financial Intermediaries comes under Model-III. 9 per cent of SHGs are formed as

model III (Erhard .w. Kropp 2002)

3.5 NABARD and SHG- Bank Linkage Programe

Linkage Banking in India is in fact, mainly the story of the evaluation,

structure, process, progress and trends, constraints, strategies and perspective of the

project of linking informal SHGs with formal banking system launched by NABARD.

Linkage banking in India has emerged as a successful model which has the potential

and promise of being a sustainable, successful, cost effective and transparent means of

providing micro finance to the unreached rural poor. (Mohanty B.B 1997). SBLP is

making headway in its efforts for reducing poverty and empowering rural women.

SBLP through the network of Co-Operatives, Commercial Banks, Regional Rural

Banks, NABARD and NGOs has been largely supply-driven. NABARD saw the

promotion and bank linking of SHGs not merely as a credit programme but as part of

an overall arrangement for providing financial services to the poor in a sustainable

manner.

There was remarkable improvement in social empowerment of SHG members

in terms of self-confidence, involvement in decision -making, better communication,

etc.NGO promoted groups edge over BANK promoted groups on targeting more

weaker sections spreading SBL programme more in inaccessible areas, improvement

in assets , savings , income and employment generations, capacity building and

human resource development, etc. SHPI groups performed relatively more in

institutional loan repayment. There is greater scope for bank groups for improving the

conduct of SHGs and capacity building of its members. Sustainability of SHGs was

well established through the better performance of older groups than the recently

formed groups in terms of increased value of assets and saving rate, better access of

institutional loans, higher rate of repayment of loans, elimination of informal sources

and impressive social empowerment. For greater acceleration, rate of economic

empowerment, future strategy must focus more and more on training and capacity

building of members besides ensuring adequate linkage supports. SHGs‘ role may

further be enhanced through its involvement in developmental programmes

implemented in the areas. While expanding the programme for wider coverage,

75

efforts also need to be focused on strengthening the existing groups and institutional

building such as federal structures. (Puhazhendi,V., Badatya K. C. 2002).

In the post nationalization era, the banking sector in India witnessed

substantial growth and expansion unparalleled in the world. Institutional credit came

to be recognized as a remedy for many of the ills of poverty. Credit packages and

programs were designed based on the perceived needs of the poor. Programs also

underwent qualitative changes based on the experience gained.

The SHG- Bank Linkage Programe (SBLP) of NABARD has emerged as the

primary model for providing micro finance services in the country. It is a proven tool

of extending to the unbankable clientele access to formal financial services. Congruity

with human nature enhances the relevance and utility of human development

initiatives. The core of SHG-Bank Linkage in India has been built around an

important aspect of human nature - the feeling of self worth. Over the last ten years, it

has come to symbolize an enduring relationship between the financially deprived and

the formal financial system, forged through a socially relevant tool known as Self

Help Groups (SHGs). An amazingly large number of formal and non-formal bodies

have partnered with NABARD in this unique process of socio-economic engineering.

The SHG-Bank linkage programme of NABARD which started with the objective of

sustainably expanding the outreach of the formal banking system to the unreached

rural poor has now created doorstep micro finance system for the poor. ( Erhard. W.

Kropp, B S.Suran 2002).

The study also showed that the existing banking policies, systems and

procedures, deposit and loan products were perhaps not well suited to meet the most

immediate needs of the poor. It also appeared that what the poor really needed was a

better access to these services and products, rather than cheap subsidized credit.

Against this background, a need was felt for alternative policies systems and

procedure, savings and loan products, other complementary services and new delivery

mechanisms, which would fulfill the requirement of the poorest, especially the

women members of such households.

The high level of dependence of the informal sector on non-institutional

sources continued despite a rapid growth of banking network in India in the last five

76

decades. It was also seen that households in the lower asset groups were more

dependent on the non-institutional credit agencies. The main hurdle faced by banks in

financing the very poor seemed to be the comparatively high transaction cost in

reaching out to a large number of people who required very small doses of credit at

frequent intervals. The same held true of the costs involved in providing savings

facilities to the small, scattered savers in the rural areas. Feelings were mutual among

the very small savers and borrowers in the rural areas as well, as they tended to view

banking as an institutional set up for the elite; even if they tried to reach the bank

branch the long distances and loss of earnings on being away from work while

visiting bank branch were hurdles and they were never sure whether they would get

any service or not if they did approach the branch. The levels of mutual

inconvenience and discomfort made the poor look at banking as an almost

inaccessible service, and the banks felt that banking with the very poor was not a

‗bankable‘ proposition. (V. Puhazhendi, K. C. Badatya 2002).

Many of the poverty alleviation programmes through organized credit

channels have not achieved the required success. In the course of the last few years,

NABARD has been making progressively much greater efforts towards improving the

access of the rural poor to formal banking services through the SHGs and other

microfinance initiatives. (Laxmi .R. kulshrestha and Archana Gupta (2001).

In the above backdrop NABARD launched its pilot face of the SHG-Bank

Linkage Programme in February 1992 which could be considered as a land mark

development in banking with the poor. The SHG, an informal thrift and credit group

of poor came to be recognizes as bank clients under the pilot phase. The strategy

involved was simple viz forming small, cohesive and participative groups,

encouraging them to pool their thrift regularly and using the pool thrift to make small

interest bearing loans to and in the process learning the nuances of financial

discipline. Subsequently bank credits also become available to the group, to augment

its resources for lending to its members. It needs to be emphasized that NABARD

sees the promotion and bank linking of SHGs not as a credit program but as part of an

overall arrangement for providing financial services to the poor in a sustainable

manner and also an empowerment processes for the members of these SHGs.

77

SHG banking is a programe that helps to promote financial transactions

between the formal rural banking system in India comprising of public and private

sector Commercial -Banks, Regional Rural Banks and Co-Operative Banks with the

informal SHGs as clients. They usually start by making voluntary thrift on a regular

mostly fortnightly or monthly basis. They use this pooled resource together with the

external bank loan to provide interest bearing loans to their members. Such loan

provides additional liquidity or purchasing power for use in any of the borrower‘s

production, investment or consumption activities.

SHG- banking through SHGs and the existing decentralized formal banking

network including several organizations in the formal and nonformal sector as

banking partners allow for large scale outreach of micro finance services to the poor

in India. These banking services are made available as low cost, are easily accessible

and flexible enough to meet poor people‘s needs.

SHG banking is an ideal combination of the formal banking sector‘s banking

with and banking by the people, through informal SHGs. This also shapes the

introduction of a basic element of an informal insurance sector with gradual access to

the formal insurance sector.

NABARD‘s SHG- Bank Linkage is the most important and immediate

banking needs of the poor households. The formal financial institutions in India have

ventured into microfinance in a massive way by adopting the SHG-Bank Linkage

Programme model. The SHG - Bank Linkage Programme is a major plank of the

strategy for delivering financial services to the poor in a sustainable manner. The

search for such alternatives started with internal introspection regarding the

innovations which the poor had been traditionally making, to meet their financial

services needs. It was observed that the poor tended to come together in a variety of

informal ways for pooling their savings and dispensing small and unsecured loans at

varying costs to group members on the basis of need. (NABARD Annual Report

2007-08).

The banks in India have disbursed a massive volume of credit to the rural

areas. Not withstanding the proactive role of banks in implementing government

sponsored poverty alleviation programs such as IRDP, the economic enablement

78

through capital transfer and application could not gather the desired momentum. The

Indian banking Industry has been plagued with low returns on micro credit operations,

coupled with the high cost of microfinance services and has become apprehensive in

providing the much needed impetus to this socially and financially important sector.

The banks in India have credit barring the last few years, they have worked in a

regulated interest rate regime and mandated target lending. Thus, the banks have

traversed through the security oriented individual banking to subsidy oriented

individual banking. However, the large volume of mandatory lending has piled up

unmanageable nonperforming assets and has affected the viability of the banks. The

search for a viable and sustainable means of purveying credit to the poor

continues.(Kishanjit Basu, krishan jindal 2000).

In 1999 RBI had set up a micro credit cell to make it easier to micro credit

provides to pursue institutional development process in the active financial and

technical support of NABARD. NABARD refinance is available to SCBs, RRBs, CBs

and other financial institutions approved by RBI. However as per micro credit special

cell of the Reserve bank of India, the borrowed amounts up to the limit of

Rs.25000/could be considered as micro credit products and this amount could be

gradually increased up to Rs.40000/over a period of time which roughly equals to 500

dollars, a standard for south Asia as per international perception.

Acceptance of SHG- banking by the formal banking system in India

SHG banking has become a big challenge to the formal banking system to

India and has led to a process of ―downscaling‖ (Seibel) and new capacity building in

banks to handle SHG banking.

1. SHG banking looks as an escape from well established banking practices

which required written contracts with individuals, a clearly defined activity for

loan use, which has been exclusively one purpose oriented, required legal

character of the borrower collateral etc. when it comes to banking with the

poor the most rigid requirements of the formal banking system have been

overthrown.

2. SHG banking cannot be desorbed in the usual frame of credit policies and

bank management. Bankers as an instrument of a credit delivery mechanism of

79

the Government following exclusively Government instruction and not their

own professional institution in doing bank business. SHG banking is therefore

an extremely innovative approach in banking.

3. It allowed substantial freedom to operate in the low income client market

segment which was not considered bankable so far SHG banking allowed a

flexible and more unregulated service design and most flexible credit product

design in order to fully meet the requirements of the low income households

and particularly of women.

4. It requires different attitudes and a different motivation of bank staff involved

in SHG finance to do ―social banking‖ with the poorer section of the village

society and especially with women. And to do this banking purely under

commercial conditions.

5. Those bankers handling the SHG banking portpolio enjoy this complete new

banking experience, very careful and sensitivity conceived loan applications

by SHGs near perfect loan recovery, the discovery of financial discipline and

money allocation skill of poor people and their reliability entrepreneurial

capacity and dignity.

6. SHG banking gave the participating bankers whom we met during our field

survey a new dimenssion of job satisfaction that they never had experienced

before in ―directed lending regime‖

7. SHG banking initiated a change from supply ordered ―directed‖ loan delivery

to demand oriented service structures but the programme does not necessarily

entail provision of advisory services support to low income people except to

some cases of NGO promoted SHGs.

8. SHG banking made subsidiary attitudes towards autonomous SHGs possible

and contributed to challenge the traditional banker‘s attitude of interference

and a belief that the banker has all the solutions for his client.

9. SHG banking is predominantly women oriented.

80

3.6 SHG – Bank Linkage Programme at National level

Table-3.1 Status of SHG- Bank Linkage at National level

Year No. of SHGs

1992-1993 255

1993-1994 365

1994-1995 1502

1995-1996 2635

1996-1997 3841

1997-1998 5719

1998-1999 18678

1999-2000 81780

2000-2001 149050

2001-2002 197653

2002-2003 255882

2003-2004 361731

2004-2005 518173

2005-2006 620109

2006-2007 1105749

2007-2008 1227770

2008-2009 1609586

2009-2010 1586822

2010-2011 1196000

Sources: NABARD (1992-2011) annual reports, NABARD (2006-2007)SHG Bank Linkage

programme in Karnataka .

81

The SHG-Bank Linkage Program progressed by leaps and bounds has passed

through various phases viz, pilot testing (1992-1995) main streaming (1996-98) and

expansion (1998) and metamorphoses into one of the largest microfinance moments

in the world. Table-3.1 shows the progress of SHG Bank Linkage Program in India.

In 1992-93 only 255 SHGs were credit linked with banks, but after 1998, SHGs credit

linked with banks were gradually increased. It was growth and expansion stage of

SHG Bank Linkage Program. During 2009-10 and 2010-11, 1586822 and 1196000

SHGs were credit linked with banks. Table-3.1 shows that after 2009 it has decreased.

It is shown in the below chart.

Chart-3.1 SHG bank linkage at All India level

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

19

92

-19

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19

93

-19

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19

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-19

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19

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-19

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-19

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-19

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-19

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-20

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-20

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-20

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-20

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-20

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-20

11

No.ofSHGs

No.ofSHGs

82

Table-3.2 SHG credit link and Number of household benefits

Year No. of SHGs

credit linked

No. of households

benefited

2001-2002 197653 78 lakh

2002-2003 255882 116 lakh

2003-2004 361731 167 lakh

2004-2005 539385 242.5 lakh

2005-2006 620109 329.80 lakh

2006-2007 1105749 409.5 lakh

2007-2008 1227770 5.80 crore

2008-2009 1609586 7.01 crore

2009-2010 1586822 8.6 crore

2010-2011 1196000 9.7crore

Sources-NABARD annual Reports (2001 - 2011)

Table-3.2 shows, during 2002-03, 255882 new SHGs were credit linked with

banks and 116 lakh poor households in the country gained access to microfinance

facilities from the formal banking system.Up to 2008-09 continuously it has been

increased. During 2009-2010 it has been decreased to 1586822 SHGs credit linked

with banks benefited 8.6 crore poor households in the country to gain access to

microfinance facilities from the formal banking system. During 2010-11 also it has

decreased to1196000, but 9.7 crore poor house holds are benefited.

83

Table-3.3 All India level data for SHG- Bank Linkage and Bank loan financed

(1992-93 to 2010-11)

Year No. of SHGs Bank loan (Rs

lakh) financed

Average loan

per SHG(Rs)

Average loan

per family(Rs)

1992-93 255 30 11765 692

1993-94 365 36 9863 580

1994-95 1502 179 11917 701

1995-96 2635 361 13700 806

1996-97 3841 578 15048 885

1997-98 5719 1192 20843 1226

1998-99 18678 3330 17828 1049

1999-00 81780 13590 16618 978

2000-01 149050 28789 19315 1136

2001-02 197653 54554 27601 1624

2002-03 255882 102231 26985 1799

2003-04 361731 185550 36180 2412

2004-05 539385 296180 42971 2864

2005-06 620109 309613 64155 4277

2006-07 1105749 657039 59420 3961

2007-08 1227770 884926 72076 5148

2008-09 1609586 1225351 76128 5436

2009-10 1586822 1445330 91073 6505

2010-2011 1196000 1454773 121637 8688

Sources-NABARD annual Reports (1992-2011), NABARD (2006-2007) SHG Bank Linkage

programme in Karnataka

84

The performance of SHG Bank Linkage in India from 1992-2011 in terms of

number of SHGs.Linked and Bank loan given has been captured in Table-3.3

presented above. The SHG-Bank Linkage has achieved progress in leaps and bounds

over the years. During the year 1992-93, only 255 SHGs were credit linked with

banks. Rs. 30 lakh bank loan are financed and average bank loan per SHG was

Rs.11765. During the year 2009-10, 1586822 SHGs were credit linked with banks as

against 255 during 1992-93.In 2009-10 bank loan and average bank loan per SHG

also increased. During the year 2010-11, 1196000 SHGs were credit linked with

banks; table shows that it has been decreased comparatively from previous year. But

bank loan and average bank loan per SHG are increased to comparatively previous

year. It is shown in below the chart.

Chart-3.2 SHG-Bank Linkage and Bank loan financed (1992-93 to 2009-10)-All

India

0

200000

400000

600000

800000

1000000

1200000

1400000

1600000

1800000

No. of SHGs

Bank loan (Rs lakh) financed

Average loan per SHG(Rs)

Average loan per family(Rs)

85

Table-3.4 Region wise cumulative growth in SHGs linked to Banks

Year Northern

Region

North

Estern

Region

Estern

Region

Central

Region

Western

Region

Southern

Region

All India

2001 9012 477 22252 28851 15543 187690 263825

2002 19321 1490 45892 48181 29318 317276 461478

2003 34923 4069 90893 81583 42180 463712 717360

2004 52396 12278 158237 127009 54815 674356 1079091

2005 86018 34238 265628 197365 96266 938941 1618456

2006 133097 62517 394351 267915 166254 1214431 2238565

2007 182018 91754 525881 332729 270447 1522144 2924973

2008 208166 203045 1074043 644896 472734 2406910 5009794

2009 310998 240093 1233635 712915 796262 2827244 6121147

2010 351801 292188 1374242 765965 945620 3223434 6953250

2011 372772 324739 1527618 786436 960921 3489460 7461946

Source: NABARD publications, NABARD (2001-2011) status of Micro finance in India

Table-3.4 shows that, during 2001-2011 in all regions cumulative growth in

SHGs linked to banks are continuously increased.During 2001, in India 263825

SHGs are linked to banks; it has been continuously increased up to 2011. During

2011, 7461946 SHGs are linked to banks. In southern region 3489460 SHGs are

credit linked to banks, it is highest in comparatively other regions.

Table-3.5 Savings of SHGs with Banks in India

Year No. of SHGs (lakh) Amount (crore)

2005-06 781958 2330.45

2006-07 4160584 3512.71

2007-08 5009794 3785.39

2008-09 6121142 5545.62

2009-10 6953250 6198.71

2010-2011 7462000 7016.30

Total 30488728 28389.18

Sources- NABARD (2005-2011) status of Micro finance in India

86

Table-3.5 shows Savings of SHGs with Banks during the last five

years.During 2005-06, Savings of SHG with banks was Rs. 2330.45 crore, but it has

increased to Rs. 7016.30 crore during the year 2010-11. This clearly indicats that, in

recent years Government, banks and NGOs are more encouraging to SHGs. They also

give some training, awarensess programmes and financial support to SHGs. So it

leads to improve the savings and women empowerment.

Table-3.6 Total amount of loans disbursed to SHGs in India

Year No. of SHGs (lakh) Amount (crore)

2005-06 620109 3096.13

2006-07 1105749 6570.39

2007-08 1227770 8849.26

2008-09 1609586 12253.51

2009-10 1586822 14453.30

2010-2011 1196000 14547.73

Total 7346036 59770.32

Sources- NABARD (2005-2011) status of Micro finance in India

Table-3.6 shows the total amount of loans disbursed to SHGs during the last

five years. During 2005-06, the amount of loans disbursed to SHGs was Rs.3096.13

crore, but it has increased to Rs. 14547.73 crore during the year 2010-11. Table

clearly shows that in recent years banks give more importans to SHGs, because it is

one of the Channel to women to improve their income level and standard of living.

87

Table-3.7 Bank loan out standing with SHGs -All India

Year No. of SHGs (lakh) Amount (crore)

2005-06 2246321 9764.86

2006-07 2894505 12366.49

2007-08 3625941 16999.91

2008-09 4224338 22679.84

2009-10 4851356 28038.28

2010-2011 4787000 31221.17

Sources- NABARD (2005-2011) status of Micro finance in India

Table-3.7 shows that bank loan out standing with SHGs during the last five

years. During 2006-07, bank loan out standing with SHGs was Rs. 12366.49 crore,

but it has increased to Rs. 31221.17 crore during the year 2010-11.

Table-3.8 Position of women SHGs

(Rs in crore)

Particul

aRs

Year Total SHGs Exclusive women

SHGs

% of women

SHGs to total

SHGs

No. Amount No. Amount No. Amount

Saving

linked

SHGs

2008-2009 612147 5545.62 4863921 4434.03 79.5 80.0

2009-2010 6953250 6198.71 5310436 4498.66 76.4 72.6

2010-2011 7462000 7016.30 6098000 5298.65 81.7 75.5

Loan

disburce

d

2008-09 1609586 12253.51 1374579 10527.38 85.4 85.9

2009-2010 1586822 14453.30 1294476 12429.37 81.6 86.0

2010-2011 1196000 14547.73 1017000 12622.33 85.0 86.8

Loan

outstandi

ng

2008-2009 4224338 22679.84 3277355 18583.54 77.6 81.9

2009-2010 4851356 28038.28 3897797 23030.36 80.3 82.1

2010-2011 4747000 31221.17 3984000 26123.75 83.2 83.7

Sources- NABARD (2008-2011) status of Micro finance in India

88

Table-3.8 shows that 2010-2011, the share of women SHGs in the total

SHGs with saving bank accounts was 60.98 lakh forming 81.7 percent as compared

to the previous years share of 76.4 percent .During 2010-11, a total of 74.62 lakh

SHGs were having saving bank accounts with the banking sector with saving of Rs

7016.30 crore as against 69.53 lakh SHGs with savings of Rs 6198.71 crore as 2009-

10. All this is a clear indication that SHGs and micro finance has a lot to do with the

poor in particular women in terms of their welfare and uplift.

Table-3.9 Savings of SHGs with banks-Agency wise position (Rs in crore)

(SHGs in lakh)

Year Commercial Banks RRBs Co-Operative Banks Total

SHGs Savings SHGs Savings SHGs Savings SHGs Savings

2006-07 2293771 1892.42 1183065 1158.29 683748 462.00 4160584 3512.71

2007-08 2810750 2077.73 1386838 1166.49 812206 541.17 5009794 3785.39

2008-09 3549509 2772.99 1628588 1989.75 943050 782.88 6121147 5545.62

2009-10 4052915 3673.89 1820870 1299.37 1079465 12225.44 6953250 6198.71

2010-

2011

4323473 423006.42 1983397 143539.67 1155076 135084.19 7461946 701630.28

Sources- NABARD (2006-2011) status of Micro finance in India

The motto of microfinance is to improve the income earning position of the

poor. Data on savings of Self- Help Groups with banks is given in Table-3.9 Table

discloses the number of SHGs maintaining their savings with the banking sector is

4160584 lakh with amount of savings of Rs.3512.71 crore in 2006-07; the

corresponding figures in 2007-08 were 50.10 lakhs and Rs.3785.39 crore. The share

of Co-Operative banks remained almost same.During 2010-11 the number of SHGs

maintaining their savings with the banking sector is 7461946 lakhs with amount of

savings of Rs. 701630.28 crore. This progress obviously reflects the extent of income

position of poor who were clients of microfinance.

89

Table-3.10 Loan disbursed to SHGs-Agency wise position (Rs. Crore)

(SHGs in’ 000)

Year Commercial Banks RRBs Co-Operative Banks Total

SHGs Loans SHGs Loans SHGs Loans SHGs Loans

2005-06 344 28284 176 12226 99 4481 619 44991

2006-07 407 44101 171 17089 109 5242 687 66432

2007-08 735 5404 328 2652 165 794 1228 8849

2008-09 1005 8061 406 3198 199 999 1610 12254

2009-10 9775 9780 3767 3333 232504 1339 1586822 14453

2010-

2011

669741 972455.27 296773 319761.59 229620 162556.33 1196134 1453773.19

Sources- NABARD (2005-2011) status of Micro finance in India

Table-3.10 shows that the share of Commercial Banks, Regional Rural Banks

and Co-Operative banks in providing credit to Self-Help Groups during 2005-06 and

2010-11. They have provided loan amounting a share of 63%, 27% and10% in 2005-

06, which accelerated to 66% in Commercial Banks while decelerated to 26% and 8%

in RRBs and Co-Operative Banks respectively in 2006-07. The share of Commercial

Banks has gone up in 2010-11 in respect of both the number of loans and amount

disbursed at the expense of Regional Rural Banks in respect of share of number of

loans and of the Co-Operative banks in respect of loan disbursed.

90

Table-3.11 Recovery performance –Agency wise (All SHGs)

Agency No. of Banks

reported

recovery

data

No. of banks based on % distribution of

recovery performance of bank loans to SHGs

as on 31 March 2010

>95% 80-94% 50-79% <50%

Commercial

Banks

33 14 13 6 0

Regional

Rural Banks

70 17 28 21 4

Cooperative

Banks

199 72 59 43 25

Total 302 103 100 70 29

% of Banks 34.1 33.1 23.2 9.6

Sources- NABARD (2009-2010) status of Micro finance in India

Table-3.11 represents Microcredit recovery performance rate. It clearly shows

the recovery performance of formal sector institutions namely Commercial Banks,

Regional Rural Banks and Co-Operative Banks. The recovery performance of banks

varies from agency to agency. On the basis of data reported by banks, out of 302

banks which have reported the recovery data, 302 banks (67.2%) had more than 80%

recovery of SHG loans as on 31 March 2010 which remained about the same as on 31

March 2009. Chart -3.3 shows the recovery performance of SHGs too.It reflects a

high percentage of recovery. As on 31 March 2010, of the 302 reporting banks, like

33 Commercial Banks, 70 RRBs and 199 Co-Operative banks reported recovery

above 80 percent. And also chart indicates that comparatively the Co- Operative

Banks are highest recovery performance other than CBs and RRBs.

91

Chart -3.3 Agency-wise Recovery performances of bank loans to SHGs

3.7 Progress of SHG- Bank Linkage Programme in Karnataka

The rural bankers, NGOs and some government functionaries have done

splendid work in the development of SHGs in the state of Karnataka. The state of

Karnataka has been a pioneer in the programme of SHG bank linkage and is indeed

hailed as a laboratory for micro finance innovations. Commercial Banks, RRBs and

Co-Operative Banks have promoted thousands of SHGs and have credit linked them a

commendable service indeed.

In this context the study reveals, SHG bank linkage programme through SHG

experiments is being viewed today as one of the powerful tools for alleviation of

poverty and empowering the rural women in Karnataka. Karnataka occupies the third

position in promoting SHGs among all the states in India. Ten percent of the SHGs

operating in India are in Karnataka. Commercial Banks, Regional Rural Banks, and

Co-Operative Banks are playing an active role in promoting SHGs.

The state of Karnataka has been among the top three states in the country in

terms of credit linkage and has initiated many innovations in furthering the growth of

SHG movement in the country. The growth of SHG-Bank Linkage continued

unabated during the year 2007-08 signifying the fact that the movement had taken

firm roots in the state and reached the stage of consolidation. Dakshina Kannada

District has the largest number of SHGs promoted and Credit-linked. Dakshina

0

10

20

30

40

50

60

70

80

>95% 80-94% 50-79% <50%

CBs

RRBs

Co-Operative Banks

92

Kannada district with 14156 new SHGs credit linked topped list, followed by Uttar

Kannada (12261) and Mysore (10156).In terms of number of existing SHGs having

been given repeat loans also Dakshina Kannada topped the list with 9675 followed by

Uttar Kannada (6460) and Udupi (5700). In 2010-11 Mysore district has a prominent

place in SHG movement with 29560 SHGs promoted in this district.

Thus, the history of SHG promotion started with NGOs taking the lead in the

mid 1980s and the lead passing on to NABARD by the late 1980s.After the SBL

programe was launched in 1991-92, the very first loans to SHGs in the country were

given in Kolar district of Karnataka, by the Vysya Bank, Bangarapet branch to

Venkateswara Mahila Sangha of Muduguli on December 9th

, 1991 and by the

Corporation Bank, Andersonpet Branch to Saraswathi Mahila Sangha of Boduguriki

on January 30, 1992. NABARD upscale the programe in Karnataka by initiating a

series of measures that included training of NGO and bank staff, and launching the

first RRB, the Cauvery Grameen Bank of Mysore District, as a SHG promoting

institution. In the 1990s, IFAD, with World Bank collaboration and in partnership

with the Government of India and six state Governments, including Karnataka,

launched a similar programe titled Swashakti. This experience encouraged Karnataka

to launch a state-wise programe called Stree Shakti, passed on the SHG strategy.

The initiatives of the various stake holders (the Government, NGOs, banks)

increased SHG coverage in Karnataka significantly. At recent estimates, 40295

Anganawadi workers, of the Department of Women and Child Development, 561

NGOs 8 Regional Rural Banks, 20 district Central Co-operative Banks and 2

Commercial Banks are engaged in SHG promotion. Together they are estimated to

have facilitated the relation of close to 1, 95,000 SHGs in Karnataka. In Karnataka,

conveying services to poor women through Self-Help Groups has emerged as the

dominant strategy for combating female Poverty. The state has several programmes

running SHGs and two of the most significant Schemes in terms of funding and

outreach are Stree Shakti and Swashakti, both of which are implemented by the

Department of Women and Child Development. (Karnataka Human Development

Report (2005).

There are 27 public sector banks, over 16 private sector banks besides 6

Regional Rural Banks operating in the state. The rural bankers, NGOs and some

93

Government functionaries have done splendid work in the development of Self- Help

Groups in the state of Karnataka. The state of Karnataka has been a pioneer in the

programme of SHG Bank Linkage and is indeed hailed as a laboratory for micro

finance innovations. Under the ―Stree Shakthi‖ programme of Government of

Karnataka, the Department of Women and Child welfare is actively involved in the

promotion of SHGs. On the other hand, the Regional Rural Banks have themselves

promoted thousands of SHGs and have credit linked them a commendable service

indeed.

In Karnataka, there has been a quantum jump during the year 2006-07 in terms

of fresh SHGs formed and credit linked, provision of repeat finance to existing SHGs,

average loan per SHGs, etc. which is a pointer to the deepening and widening of the

program in the state. The progress in the program in terms of formation, credit

linkage, spatial distribution, agency-wise position, etc.

The progress in physical and financial outreach of the SHG-Bank Linkage

Program in Karnataka since its inception is given in table-3.12

94

Table-3.12 Performance of SHG Bank Linkage in Karnataka (1992-93 to 2010-11)

Sources- NABARD (2006-2007) status of Micro finance in India,

Year No. of SHGs

credit linked

Bank loan (Rs.

Lakh)

Refinance (Rs.

Lakh)

1992-1993 114 5.73 5.73

1993-1994 515 5.51 5.51

1994-1995 481 77.71 70.71

1995-1996 1046 145.08 145.08

1996-1997 760 159.12 159.12

1997-1998 1138 232.19 228.10

1998-1999 2002 429.86 422.28

1999-2000 5018 1054.81 649.00

2000-2001 8009 1714.00 1404.44

2001-2002 18413 3475.39 2229.00

2002-2003 25146 7249.50 4073.55

2003-2004 41688 13960.37 6090.22

2004-2005 59332 26653.00 9951.00

2005-2006 61730 44266.02 6695.43

2006-2007 92708 81638.87 15599.24

2007-2008 94280 100646.47 12699.52

2008-2009 60319 120702.37 19219.00

2009-2010 57975 123355.55 22463.30

2010-2011 49759 144702.80 16477.80

Total 579969 670454.48 118587.59

95

SHG Bank Linkage programme in Karnataka (2006-07), Micro finance in

Karnataka (2010-11).

The above table- 3.12 clearly shows that the progress in physical and financial

outreach of the SHG Bank Linkage Programme in Karnataka.The performance of

SHG Bank Linkage in Karnataka from 1992-2011 in terms of number of SHGs

Linked and Bank loan is shown in Table-3.12. During the year 1992-93, only 114

SHGs were credit linked with banks. Rs. 5.73 lakh bank loan was financed and

refinance of bank loan was Rs.5.73. During the year 2010-11, 49759 SHGs were

credit linked with banks. Rs. 144702.80 lakh bank loan are financed and refinance of

bank loan was Rs.16477.80. It shows that after 1998, banking institutions in

Karnataka as promoting agencies of SHGs lent micro credit for different activities.

The SBLP has come to be a part and parcel of business for all the Commercial

Banks, RRBs, and Co-operative Banks are operating in Karnataka. In recent year the

number of SHGs credit linked by CBs, RRBs, and Co-Operative banks has been on

increased. Most of the Commercial Banks operating in the state registered an

impressive growth in SHG Bank Linkage Programe during 2008-09. There has also

been a perceptible improvement in disbursement of repeat loans to the existing SHGs.

RRBs are playing significant role in Karnataka. Regional Rural Banks are the

most suitable agencies for extending micro-credit, organizationally and

temperamentally. Their core competence in this area needs to be encouraged.

NABARD may have to device suitable means to enable the banks to play the pivotal

role. Wherever necessary, they may be allowed to open special branches for

promoting and assisting the SHGs in the state, where they operate.

Regional Rural Banks have also played a significant role in providing bank

loans to SHGs and even Cooperative Banks also participated in promoting SHGs in

Karnataka. Savings made by members are pooled and loaned to one another. SHG

members determine the terms and conditions. Loans are provided for all purposes

without making the traditional distinction between consumption and income

generation. The SHG model provides its members with the space and flexibility to

make decisions that are appropriate to each situation. Only private moneylenders lend

for such a varity of purposes with minimum fuss and paper work; all financial

96

institutions and government schemes lend only for productive purposes. But it is the

life events and emergencies that drive the poor to debt traps. It leads also to the

diversion of loans taken from formal organizations/government into consumption

loans.

In Karnataka Cauvery-Kalpataru Grameen Bank topped the list by extending

loans to 4986 fresh SHGs followed by Pragathi GB (4730) and Karnataka Vikas

Grameen Bank (4608).

Table- 3.13 Savings of SHGs with Banks in Karnataka

Year No. of SHGs (lakh) Amount (crore)

2005-06 391665 35385.32

2006-07 425989 37428.43

2007-08 484376 38849.06

2008-09 457389 56686.54

2009-10 534588 62705.32

2010-2011 564545 96502.87

Total 2858552 327557.54

Sources- NABARD (2005-2011) status of Micro finance in India and NABARD Document

Table-3.13 shows Savings of SHGs with Bank during last six years.During

2005-06, Savings of SHG with banks is Rs. 35385.32 crore, but it has increased to

Rs.96502.87 crore during the year 2010-11. This clearly indicats that, in recent year‘s

government, banks and NGOs are more encouraged to SHGs. They also give some

training, awarensess programmes and financial support to SHGs. So it leads to

improve the savings and women empowerment.

97

Table-3.14 Savings of SHGs with banks-Agency wise position in Karnataka

(SHGs in lakh) (Rs in crore)

Year Commercial

Banks

RRBs Co-Operative

Banks

Total

SHGs Savings SHGs Savings SHGs Savings SHGs Savings

2006-07 186211 10604.74 115663 10848.53 124115 15975.16 425989 37428.43

2007-08 195345 10523.63 148137 12307.83 140894 16017.61 484376 38849.17

2008-09 159338 25375.60 161113 12614.70 136938 18696.24 457389 56686.54

2009-10 219056 21224.22 157359 14304.26 158173 27176.84 534588 62705.32

2010-

2011

351110 67332.31 286170 37710.84 266140 32392.28 903420 137435.43

Sources- NABARD (2006-2011) status of Micro finance in India and NABARD Document

Table-3.14 clearly shows the number of SHGs maintaining their savings with

the banking sector. During 2006-07, 425989 lakh SHGs are savings with the banks,

the amount of Rs.37428.43. The corresponding figures in 2010-11 were 903420 lakhs

and Rs.137435.43 crore. This shows increase the income level of the people who were

clients of micro finance.

98

Table 3.15 Credit linkage by various Agencies (cumulative) in Karnataka

Year(as

on 31

March)

Commercial banks RRBs Cooperative banks

No.of

SHGs

linked

Bank loan

(Rs.lakh)

No.of

SHGs

linked

Bank loan

(Rs.lakh)

No.of

SHGs

linked

Bank

loan

(Rs.lakh)

1995 316 42.85 340 46.10 NCL NCL

1996 1034 143.00 658 91.03 NCL NCL

1997 1425 206.00 1022 186.65 5 0.50

1998 2008 297.27 1528 314.57 54 13.50

1999 2974 473.61 2417 513.34 201 68.25

2000 4829 1017.60 4735 1000.20 1046 212.30

2001 6395 1452.00 8334 1647.70 3890 576.80

2002 14425 2426.24 13279 3021.70 9328 1951.70

2003 20987 4539.58 23473 6048.29 17718 3973.05

2004 35912 10227.38 38631 10947.28 29323 7346.63

2005 54814 20210.36 62732 21973.31 45652 12991.16

2006 78520 36420.85 83383 38413.39 63025 24600.61

2007 139341 85925.91 99931 55718.50 78364 39429.31

2008 198262 134572.32 117038 82387.80 96616 64560.04

2009 223853 201563.77 136690 113339.14 111692 87319.62

2010 256796 263095.00 149097 147144.00 124317 115512.00

2011 280236 329085.50 162624 184854.84 137109 156513.46

Source: NABARD (2010-11) Micro finance in Karnataka, NABARD (2006-07) SHG Bank

Linkage programme in Karnataka (2006-07)

Note: NCL represents not credit linkages.

99

Table 3.15 indicates that, Credit linkage by various Agencies (cumulative) in

Karnataka. In 1995 only 316 SHGs are credit linked to Commercial Banks and Rs.

42.85 lakh bank loan are having. In RRBs also having only 340 SHGs are credit

linked and 46.10 lakh bank loan are having. During 1995 Co-Operative Banks are not

credit linkages to SHGs. During 2011, it is considerabaly increased.

In Karnataka, 31 March 2010, total projects are 156, ongoing total projects

are 89 and completed projects are 67. In 31 March 2010, 15187 total SHGs are to be

promoted and credit linked. Rs 287.17 lakh amount of grant sectioned to NGOs.

Progress made as on 31 March 2010, Rs 138.77 lakh total amount of grant released

and 11467 SHGs are promoted. In 31 March 2010, 11255 SHGs with Bank Account

and 8462 SHGs are credit linked.

As on 31 March 2007, NABARD has sanctioned a grant support of Rs. 78.25

lakh to 14 DCCBs for promotion and credit linkage of 8375 SHGs in the state, against

which an amount of Rs. 54.85 lakh has been released. Four projects sanctioned to

Bidar, Hassan, Kodagu and South Canara DCCBs have been completed. Kodagu

DCCBs has been sanctioned additional grant assistance for expansion of the programe

during the year. During the year 2005-06 Kodagu gets Rs. 24.63 crore NABARD aid.

The banks have given Rs. 5 lakhs to SHGs in the district through the Kodagu District

Co-Operative Central Bank. There are 4431 SHGs in the district of which, 2561 have

taken loans to the tune of Rs. 12.03 crores. (HINDU-jan-31 -2006).While the target

under promotion of SHGs has been achieved, the performance of DCCBs under

credit-linkage has not been in with the promotion.

NABARD initiated a pilot project for promotion of micro enterprise among

members of matured SHGs in 10 districts in various states. Mysore district has been

selected in Karnataka. As a part of thrust given to micro enterprise promotion among

SHGs, NABARD has evolved a scheme entitled Micro Enterprise Development

programe (MEDP) for matured SHGs for providing grant assistance to

NGOs/SHPIs/Banks for organizing short duration, local specific programs in skill

upgradation by matured SHG members. Karnataka Regional Office has been in

forefront in sanctioning a number of MEDPs in different districts. During the year

2006-07, NABARD has sanctioned 49 MEDPs with a total grant assistance of Rs.

9.50 lakh benefiting 1410 individual SHG members. Of these, 35 MEDPs involving

100

assistance of Rs. 7.01 lakh have been completed during the year 2006-07.Bider

district topped the list with 10 MEDPs having been sanctioned to SAHARDA (Bider

DCCB), followed by chitradurga with 8MEDPs. Activity-wise analysis of MEDPs

sanctioned indicates that there is a predominant tilt towards non-form sector activities.

There has been a good demand for MEDPs in making of organic

manure/vermicompost under farm sector and fashion designing, making of food

products and home products under non-farm sector. (SHG Bank Linkage programme

in Karnataka (2006-07)

Although the member of SHGs either on group basis or on their own

individual capacity take up diverse economic activities like agri-related, soap making,

handicrafts, agarabathi, etc. for supplementing the income of their families initially

and these activities have proved to be the major source for the sustenance of the

family needs. Karnataka regional office has taken several initiatives to provide

marketing support to SHGs in Karnataka. Regional office supports for

exhibitions/fairs/melas. NABARD has launched a pilot scheme for setting up of

marketing outlets ―Rural Marts‖ at district level and sub district level to enable the

SHGs to market their products. Karnataka Regional office has sanctioned six rural

marts for better marketing prospects of RNFS products being made by SHGs.

Recognizing the importance of marketing in sustaining women enterprises scheme for

marketing of Non-farm products of Rural women (MAHIMA), aimed at supporting

agencies engaged in marketing of products manufactured by rural poor women. In

Karnataka, one NGO, Samanvaya, Chamarajanagar district, was supported under

MAHIMA to print labels and plastic container kits for marketing of herbal home

remedies being made by SHG women.

3.8 SHG Bank Linkage Programme and women Empowerment

The empowerment of women for equitable access to resources, power, and

decision making is essential to gender equality. We recognize that such a process

requires a realignment of power in decision making at the household, institutional and

all levels of society. The ultimate goal, we believe, should be an equitable partnership

between women and men built on the strengths of shared knowledge, energy,

creativity and skills. Such a partnership is of intrinsic value. It can also bring positive

101

benefits to society as a whole, and contribute to solving many of the world‘s most

pressing problems. (Swaminathan M.S.1995).

Women are often considered as better in the management of capital than men.

Women are more likely to reinvest profits back into human capital than are men.

When women have economic power-defined as control of income and capital, they

gain more equality and control over their own lives, while contributing directly to

their children‘s development and there by indirectly to their nation‘s income growth.

Several studies evidence women as the important engines of growth and development.

Women have strong ability to earn, save, and invest in rural economy. In rural areas

their largely unrecorded role in agriculture sector explains the survival of traditional

subsistence community. Yet in many phases, traditions, social stigma, and lack of

voice or access to information make women the most marginal group. With the men

seeking work elsewhere, women tend to work in the fields and look after the children,

the elderly and the farm animals, fetch fuel wood and water, and prepare food for the

family members. Some 80 percent of economically active women in Africa and Asia

are in agricultural activities, largely subsistence farmers in female headed households

or day laborers on larger commercial farms. Theses economic realities are beginning

to give women more influence. (MD.Saiful Islam and Nourin Shabna 2005).

The emerging changes in the values and attitudes of the members of the SHGs

are a clear manifestation of socio- economic empowerment interventions yielding

relatively quicker results. The socio economic programmes reinforce each other and

promote all- round development of the children, the women, the households and the

communities. It is a process which ultimately leads to self- fulfillment of each

member of the society. It is in this direction that SHGs are moving towards fulfilling

their objectives with a meaningful strategic direction. (Gangaiah, C., Nagaraja, B.,

and Vasudevulu Naidu, C 2006)

Economic empowerment

It is undeniable that SBLP through its access to credit to the poor has helped

them to escape from the clutches of money lenders. SHGs have brought about

economic transformation through savings and loans. Women were able to start

income generating activity, which means they were able to be self employed and they

102

enjoy improved economic status now. IGA has eased their problem of hunting coolie

work and the irritation from the land lords. The purpose of loan availed from the

group by the women was utilized for income generating activity, children‘s education

and health and to increase the assets. Micro finance is benefited women entrepreneurs

to increase their family income; there is significant decline in poverty levels among

the SHG members.

The empowerment is not essentially political alone in fact; it is a process

having personal, economic, social and political dimensions with personal

empowerment being the core of the empowerment process. Political empowerment

will not succeed in the absence of economic empowerment. The scheme of micro

financing through Self Help Groups (SHGs) has transferred the real economic power

in the hands of women and has considerably reduced their dependence on men. This

has helped in empowerment of women and building self-confidence. In this regard

women become economically empowered. ( M.K.Ghadoliya 2004)

Political empowerment

Under the trickledown theory in the planning process, it was expected that

women will equally benefited along with men. Though the government has continued

to allocate resources and formulated policies for the empowerment of women, it has

become strikingly clear that political and social forces, that resist women‘s rights in

the name of religious, cultural or ethnic traditions, have contributed to the process of

marginalization and oppression of women. The basic issue that prevents women from

playing full participatory role in nation building is the lack of economic

independence. Planners and policy makers have been eagerly searching for certain

alternatives. The participatory approach to development has emerged as a vital issue

in developmental policies and programmes for women. SHGs are considered as one

of the most significant tools to adopt participatory approach for the economic

empowerment of women. It is an important institution for improving the life of

women on various social components. (Gupta .M L, Namita Gupta 2006).

Empowering women socio- economically through increased awareness of their

rights and duties as well as access to resources is a decisive step towards greater

security for them. Women are in for a new deal today as they are the focus of

103

economic development. All possible steps are being taken to strengthen them to

achieve their economic, social, cultural and political growth and welfare. (Valsamma

Antony 2006).

Karnataka is a role model to other states in the country in empowering women

in the Panchayat Raj system, particularly Grama Panchayats. Decentralization of

power, which is confined to a particular section of society, has empowered women in

the state; it is time women find ways to play an effective role in making Gram

Panchayats strong and vibrant. Women members faced fewer charges of irregularities

then men in power. Nearly 80000 elected members of Gram Panchayats in the state

have taken training through satellite, women to focus on stree shakthi and economic

activities.

To some extent, it has curtailed male domination, Women, who managed

households, can be good administrators. Women stay united and exercise Rights in

tune with the established rules. The network objectives was to bring together elected

women representatives in Panchayats in the state to empower them politically and to

make them take part actively in the process of democracy.(Hindu-jan-19-2005).

Social empowerment

Women SHGs have brought about social change and opportunities for

economic empowerment for poor women in rural areas. Women contribution and

share in decision-making both at the family level and society level has increased. On

the other hand, they are taking active role in development process and decentralized

governance. In certain states, SHG members are more vibrant and sensitized towards

the social problems and they are strongly opposing these social evils. The women

SHGs have also emerged as a social pressure groups for bringing about social change

and transformation.

As member of SHGs, women felt that their relationship in the family has

improved. There is a better understanding between the husband and wife, and their

children. They have cordial relationship with their neighbours. They work as one unit

and help one another in solving their problems, support and encourage one another.

Besides these it has built self confidence, self esteem, leadership abilities and decision

making power and has improved knowledge, skill and attitude in women.

104

The growing social awareness across the globe has brought a number of issues

to the fore among which gender equality and empowerment of women are very

significant. Discrimination against women in the form of male-female differentiation

constitutes the core of the gender-biased system. The education is the biggest

liberating force and the rise in the levels of education which nourishes progressive

outlook and the advent of industrialization and modernization have effected a sea

change in the attitudes and thinking pattern of the people. But lack of education often

comes in the way and many a times they had to seek help from their husbands for

day-to-day work viz; bank, accounts, etc. The education provides an opportunity to

these women to improve their skills. The higher level of learning will help them to

learn skill and vocations and play an effective role in the management of SHGs. The

Government must take effective measures to enroll the members of SHGs in the

schemes of open Schooling. It is observed that open education at present is mainly

catering to the needs of elites in the urban areas and it has to make inroads into rural

areas where India lives. The Policy planners must think to integrate the economic

benefits with education. Author suggests the differential rate of interest for women

doing any course through Open Schools. The economic incentives and effective

NGOs participation will definitely make the women empowerment a reality from a

distant dream at present. (Proffesor.M.K.Ghadoliya 2004).

Gender empowerment

Group lending in Micro finance involves peer monitoring by other members of

the group. Hence it is likely to provide protection to women within their household. In

particular violent acts and abuses by men against women are now being subject to

third party. This will act as a warning against domestic violence. Increasing family

income also may tend to decrease conflicts in the family. Some studies like Hashemi,

Schuler, Riley (1996) and Kabeer (2001) report micro finance in Bangladesh has

reduced violence against women.

Technological empowerment

Though women in rural areas are involved in almost all agricultural

operations, yet, they have inadequate technical competency due to their limited

exposure to outside world. This has compelled them to follow the age old practices

105

which in turn result in poor work efficiency and drudgery. Appropriate training

programme, appropriate technology for women leads to technological empowerment

of women. (Dr.Indrabhusan Singh and Dr.Usha Kumari 2007).

3.9 Conclusion

In this twenty first century, the society must take an active people centered and

growth- oriented poverty alleviation strategy – a strategy which seems to incorporate

women‘s aspirations, dynamism and involvement. It is envisaged that SHG Bank

Linkage Programme plays a vital role in such strategy. But there is a need for

structural orientation of the groups of new business. Micro- credit movement has to be

viewed from a long term perspective under SHG framework, which underlines the

need for deliberate policy implications in favour of assurance in terms of technology

back-up product market and human resource development. Hence, there is a need for

the development of an innovative and diversified micro finance sector, which leads to

a real contribution to women empowerment.

Micro finance through SHG programme has provided women access to

financial services. This service to a certain extent has improved their ability to harness

their capacity. In this process of capacity building, they can uplift themselves. The

result of the programme can be assessed in terms of converting non credit worthy

women into credit worthy women of small groups and also the high repayment rate

and cost recovery. Women seem to be reliable when it comes to repaying their loans.

The study also presents the Role played by NABARD in women

empowerment through in this programe. The study reported that progress of SBLP in

all India level, after 1998 SHGs credit linked with banks were gradually increased. It

was growth and expansion stage of SHG Bank Linkage program. Study also finds that

9.7 crore poor households benefited in this programme. Bank loan, average loan per

SHG and average loan per family are increased. Savings of SHGs with Banks, total

amount of loans disbursed to SHGs also increased. This clearly indicats that, in recent

year‘s government, banks and NGOs are more encouraged to SHGs. Also give some

training, awarensess programmes and financial support to SHGs. So it leads to

improve the savings and women empowerment. Region-wise analysis during the

study period shows that regarding the promotion of SHGs, the Commercial Banks,

106

RRBs and Co-Operative Banks have done better in southern region, north eastern

region and eastern region respectively.

The present study makes an attempt to role of NABARD in women

empowerment in Karnataka. The study also refers to SHG- Bank Linkage programe in

Karnataka and how women‘s are benefited in this programe. The state of Karnataka

has been among the top three states in the country in terms of credit linkage and has

initiated many innovations in furthering the growth of SHG movement in the country.

Banking institutions in Karnataka as promoting agencies of SHGs lent micro credit

for different activities.The SBLP has come to be a part and parcel of business for all

the Commercial Banks, RRBs, Co-operative Banks are operating in Karnataka. In

recent year the number of SHGs credit linked by CBs, RRBs, and Co-Operative banks

has been on increased. Most of the Commercial Banks operating in the state registered

an impressive growth in SHG Bank Linkage programe. All this is a clear indication

that SHGs and micro finance has a lot to do with the poor in particular women in

terms of their welfare and upliftment.

A few impact on SHG- Bank Linkage Programme conducted by NABARD

reported many positive results, in so far as transformation in the living standards of

the SHG members and income levels are concerned the following maters like,

ownership of assets, increase in savings and borrowings, income-generating activities

and creation of entrepreneurship, etc. Therefore, the impact and success of SBLP has

to be seen from wider perspective of graduation of SHG members to micro enterprises

with focused attention of this programme on the economic social and political

empowerment of SHG members.

107

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