The key objective of the Micro Credit Innovations Department has been to facilitate sustained access to financial services for the unreached segments of the population viz. the poor in rural hinterlands, through various products and delivery channels in a cost effective and sustainable manner. The department came into being in the year 1998 with mainstreaming of the microfinance innovation viz. SHG-Bank linkage programme to a nation-wide scale. NABARD, through the department of ‘Micro Credit Innovations’, has continued its role as the facilitator of microfinance initiatives in the country.

Core Functions of the Department

NABARD has been continuously focusing on bringing in various stakeholders on a common platform and building their capacities to take the initiatives forward. This has resulted in tremendous growth of the microfinance sector in India through various approaches as discussed below:

A. Promotion of Self Help Group – Bank Linkage Programme (SHG-BLP)

Based on the observations of various research studies and an action research project carried out by NABARD, the model of SHG-BLP’ was evolved as a cost effective mechanism for providing financial services to the unreached and underserved poor households. What started as a pilot to link around 500 SHGs of poor to the formal financial institutions during the year 1992-93, has now become the largest microfinance programme in the world in terms of client base and outreach.

The NGO sector has played a prominent role by working as a Self Help Group Promoting Institution (SHPI) by forming and nurturing SHGs and by enabling their credit linkage with banks. NABARD later co-opted many others as SHPIs including the rural financial institutions (RRBs, DCCBs, PACS), Farmers’ Clubs (FCs), SHG Federations, NGO-MFIs, Individual Rural Volunteers (IRVs) etc. These stakeholders were encouraged to take up promotion of SHGs by way of promotional grant assistance from NABARD.

The savings-led microfinance model has now become the largest coordinated financial inclusion programme in the world, covering 17.75 crore households in the country. With 83.52% of the groups being exclusively women groups, the programme has provided a much needed push to women empowerment in the country. The current status of the programme, as on 31 March 2024 is given at the end.

B. Promotion of Joint Liability Groups (JLGs) and their financing by banks

JLGs are essentially credit groups of small/marginal/tenant farmers/asset- less poor who do not have proper title of their farmland. These informal groups of four to 10 members are engaged in similar economic activities and are willing to jointly undertake to repay the loans taken by them from the Banks. Financing of JLGs was introduced as a pilot project in 2004-05 by NABARD in eight States with the support of 13 RRBs. The scheme was later mainstreamed for the banking system in the year 2006.

NABARD also extends financial support for awareness creation and capacity building of all stakeholders under the Scheme. NABARD also extends grant support for formation and nurturing of JLGs to Banks and other JLG Promoting Institutions (JLGPIs).

Others Initiatives

• Livelihood promotion: To enable the SHG members to take up livelihood activities, NABARD has been supporting Micro Enterprise Development Programmes (MEDPs) and Livelihood and Enterprise Development Programmes (LEDPs).
• Microenterprises through Skill Upgradation for Women (m-Suwidha) to provide sustainable livelihood solutions in farm and off-farm sector by identifying skill gaps, occupational fitments, choosing suitable professions/ activities, providing skills through identified Knowledge Partners/Resource Agencies along with marketing tie-ups and credit support from banks/financial institutions.
• Publications: The department brings out various publications relating to SHG- Bank linkage and other microfinance activities on a regular basis. The book “”Status of Microfinance in India is one of the most important annual publications, which is used as a reference material by research scholars, policy planners, Govt. departments etc./li>
• Supporting training and capacity building of personnel of partner agencies such as banks, NGOs, government departments and other institutions/li>
• Extending support to NGOs and other institutions for formation and credit linkage of SHGs and JLGs with banks.
• Supporting and sponsoring training and capacity building programmes, seminars and workshops for the benefit of all stakeholders viz. the bankers, government agencies, NGO partners and more importantly the SHG members.
• Support for training on onboarding onto E-Commerce platforms/ ONDC/ social media platform
• Support for Physical Marketing of Products

Achievements of SHG-Bank Linkage Programme - March 31, 2024

Contact Information

L Leivang
Chief General Manager
Micro Credit Innovations Department
4th Floor, 'D' Wing
C-24, 'G' Block
Bandra-Kurla Complex, Bandra (East)
Mumbai 400 051
Phone No. : 022-26539031
E-mail Address: mcid@nabard.org

Information under RTI – Section 4(1)(b)