Evaluating the SHG-BLP and MFI Models in India's Microfinance Sector: Insights and Developments (2021-2022)

Abstract

The Self-Help Group-Bank Linkage Programme (SHG-BLP) has emerged as a transformative microfinance initiative, positively impacting around 14.2 crore households globally. This paper assesses the programme's progress and outcomes from 2019-20 to 2021-22, with a focus on savings, credit disbursement, and non-performing assets (NPAs). Findings demonstrate a steady increase in SHG savings with banks, with a growth rate of 26%, rising from ₹37,477.61 crore in 2020-21 to ₹47,240.48 crore in 2021-22. Furthermore, the number of SHGs with savings-linked accounts grew by 5.97% in 2021-22. Credit disbursement also expanded significantly, recording a 72% increase, with ₹99,729 crore distributed across 34 lakh SHGs. However, regional disparities were observed, with the Southern region leading in both savings-linked and credit-linked SHGs. Although NPAs showed a general decline to 3.8%, the Southern region exhibited a rise in absolute NPA figures. A deeper look at agency performance revealed that commercial banks dominate both savings and credit disbursement activities, while cooperative banks face challenges with higher NPAs.  This analysis underscores the effectiveness of the SHG-BLP in fostering financial inclusion while also identifying regional and institutional variations. The study offers valuable insights to guide future policy development and enhance implementation strategies.