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spread and bank-level growth in the NPAs. Also discussed
are the various initiatives of NABARD and the role of
SHG federations. In the second part the major patterns
of change discernible in the MFI model of microfinance
in recent years are presented and analysed. The discussion
centres mainly on the size and structure of the MFI sec-
tor, the trends in financing of microfinance institutions,
their regional distribution and overall performance. Some
recent debates concerning the potential of microfinance
to serve niche production segments are also presented in
this section. Both parts 1 and 2 strive to highlight the
plausible promise microfinance institutional models
have come to represent in the overall financial inclusion
system, the conflicts between the models and the need for
greater policy attention.
PART 1
4.1 SBLP PROGRESS AND PERFORMANCE
The SHG movement represents a rich diversity of inter-
ventions and outcomes difficult to classify and analyse.
As the number of SHGs has multiplied over the years,
so have the types of activities and innovations that have
been designed around them. Within the larger SHG
‘movement’, however, the programme for linking SHGs
with banks has been a core innovation that has been the
mainstay of SHG development over time. The SHG
Bank Linkage Program (SBLP) has now completed more
than 22 years of existence. Though SBLP is a savings-
led and savings-linked program, the main thrust has
been on the provision of microcredit. Over much of
this period credit flow under SBLP grew steadily on
account of support from the governments, public sector
banks and NGOs. However, the SBLP, which followed
virtually an exponential growth path for around 18 years
until about 2010, has shown in recent years signs of
having levelled off. This has included a period when
the fortunes of SHGs became inextricably linked with
the development of the alternative channel of lending
through MFIs.
The decline in the growth of SBLP also coincides with
the period of implementation of the financial inclusion
strategy of government and RBI in the form of FIPs
of banks, aimed at increasing outreach of individual-
centered banking services through expansion of the
banking infrastructure and innovations in outsourcing
financial and non-financial operations of banks through
BCs. With substantial social capital embodied in them,
SHGs can be considered to have emerged as a significant
part of the development infrastructure. Nevertheless,
there has neither been a clear role or strategy as such
for SHGs within the discourse nor within the recently
launched financial inclusion mission, PMJDY.
4.1.1 Overall Performance
The progress of SBLP since 2010 is given in Table 4.1.
The latest data (NABARD, 2014) shows a substantial
decrease of nearly 6 per cent in the number of SHGs
with outstanding bank loans to 4.2 million at the end
of March 2014 as compared to the previous year. This
follows a small increase of 2 per cent during 2012–13
which to some extent had reversed the decline during
2010–12. The number, however, is far short of the peak
level attained with over 4.8 million SHGs as on 31 March
2010. The share of the southern states in SHG loan
accounts remained stable at around 53–54 per cent as
on March 2014. This suggests the decline in the number
of loan clients is a more widespread phenomenon with
varying causes across states. This is discussed in further
detail in subsequent sections.
The volume of fresh loans issued by banks to SHGs
during 2013–14 showed a significant growth of nearly
17 per cent to reach Rs. 240.17 billion. This maintains
the steady and substantial increase over the years build-
ing upon the over 24 per cent increase during 2012–13.
The average loan outstanding was Rs. 102,273 as on 31
March 2014 against Rs. 86,511 a year earlier. There was
a 19 per cent increase in the number of SHGs getting
loans from banks. This increase has been confined to a
few states, mainly in the southern region. In other states
repeat financing and deepening of loans to credible SHGs
is the rule even as the problem of overdue accounts has
begun to constrain lending.
Despite significant growth (20.4 per cent) in bank
savings of SHGs to nearly Rs. 99 billion, the number
of savings-linked groups increased only marginally over
2013–14 with a consequent increase in average savings.
At 7.42 million the total number of SHGs savings-linked
to banks is still lower than that in March 2011. The
decline in number of SHGs could partly be explained by
