Micro Credit Innovations Department
1.  Genesis

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 the mainstreaming of the microfinance innovation viz. SHG-Bank linkage programme to a nation-wide scale.

With the vision to facilitate sustained access to financial services for the unreached poor in rural areas through various microfinance innovations in a cost effective and sustainable manner, NABARD, through the department of ‘Micro Credit Innovations’, has continued its role as the facilitator and mentor of microfinance initiatives in the country.

2.  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 microfinance sector in India through different approaches like:

A.    Promotion of Self Help Group – Bank Linkage Programme (SHG-BLP) in the country:
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 the client base and outreach. 
The NGO sector has played a prominent role of working as a Self Help Group Promoting Institution (SHPI) by organizing, nurturing and enabling credit linkage of SHGs 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. This savings-led microfinance model has now become the largest coordinated financial inclusion programme in the world covering almost 101 million households in the country. With more than 86% of the groups being exclusively women groups, the programme has provided a much needed push to women empowerment in the country. 
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 4-10 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 8 States with the support of 13 RRBs. The scheme was later mainstreamed for the banking system in the year 2006.
Apart from extending refinance support of 100% to the financing Banks, NABARD also extends financial support for awareness creation and capacity building of all stakeholders under the Scheme. NABARD also extends start up grant support for formation and nurturing of JLGs to Banks and other JLG Promoting Institutions (JLGPIs).
C.  NABARD Financial Services Ltd. (NABFINS):
NABFINS is an NBFC-MFI which commenced its operations in November 2009. NABARD, while promoting NABFINS has envisaged that it shall evolve into a model Microfinance Institution and set standards of governance among MFIs, operate with exemplary levels of transparency and operate at reasonable rates of interest. NABARD is the major shareholder of this NBFC-MFI. NABFINS extends loans to SHGs through its Business & Development Correspondents (BDCs). NABFINS also extends loans to other second level organizations like Federations of SHGs. Further details regarding NABFINS operations can be obtained from
Existing role of the department
NABARD continues to support and enable the entire ecosystem of support for the SHG-Bank linkage programme and other microfinance innovations. Following are some of the major functions under Self Help Group – Bank Linkage Programme (SHG-BLP):
  • Innovating and making product level changes in the existing SHG product, improving risk mitigation systems, building second tier institutions of SHGs to address operational issues.
  • Extending support to organisations and NGOs for formation of SHGs and JLGs.
  • Organising and sponsoring large number of training and capacity building programmes, seminars and workshops for the benefit of all stakeholders viz. the bankers, the govt. agencies, the NGO partners and more importantly the SHG members themselves.
  • 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).
  • WSHG scheme of GOI:    NABARD is implementing and supporting the Women SHG scheme (WSHGs) announced by Govt. of India in backward and Left Wing extremism affected districts 
  • Digitisation of SHGs: 'The department is making efforts to digitize the bookkeeping of SHGs by launching pilot project called  across the country. The project has gone from strength to strength. Details of the achievement can be viewed from the project website 
  • Publications: The department brings out various publications relating to SHG- Bank linkage and other microfinance activities on a regular basis.
  • Administration of Interest Subvention Scheme for Women SHGs under National Rural Livelihoods Mission (NRLM) of Ministry of Rural Development 
B.  Microfinance Institutions (MFIs):
Additional Information
Achievements of SHG-Bank Linkage Programme – 2016-17
Sr. No. Particulars Achievements


(No. in lakh)
(Rs. in crore)
1 Total number of SHGS saving linked with banks 85.77 16114.23
(i) Out of total SHGs – exclusive Women SHGs 73.22 14283.42
(ii) Out of total SHGs – under NRLM/SGSY 37.44 7552.70
(iii) Out of total SHGs – under NULM/SJSRY 5.45 1126.86
2 Total number of SHGs credit linked during 2016-17 18.98 38781.16
(i) Out of total SHGs – exclusive Women SHGs 17.16 36103.13
(ii) Out of total SHGs – under NRLM/SGSY 8.86 17336.26
(iii) Out of total SHGs – under NULM/SJSRY 1.06 2675.77
Total number of SHGs having loans outstanding as on 31 March 2017
48.48 61581.30
(i) Out of total SHGs - exclusive Women SHGs 42.84 56444.24
(ii) Out of total SHGs - under NRLM/SGSY 24.91 29994.43
(iii) Out of total SHGs - under NULM/SJSRY 3.18 4133.29
Data on Joint Liability Groups

(i) Cumulative JLGs promoted as on 31 March 2017 24.53
(ii) Cumulative loan disbursed to JLGs as on 31 March 2017

Contact Information

Shri K.V. Rao
Chief General Manager
4th Floor, 'D' Wing
C-24, 'G' Block
Bandra-Kurla Complex, Bandra (East)
Mumbai 400 051
Phone No. : 02226530084