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The trends over time suggest that the SHG-BLP experienced three phases of growth (Chart 3) with steeper
growth in the third phase. The initial phase until 2000 is the period of intense learning and there have
been affirmative resolutions, policy framework, standardizing models, partnering with various agencies and
key players, during this phase, to push the movement ahead. The Second phase between 2000 and 2010
recorded rapid growth in SBLP in terms of formation of SHGs, horizontal and vertical expansion in credit
penetration and holistic participation. Capacity building of SHG members for graduation as entrepreneurs
through entrepreneurship programmes supported the members to upscale their skill for income generation.
Matured SHG members were encouraged to form Joint Liability Groups to get credit support. The third
phase, 2010 onwards, remains more of a consolidation phase following the Andhra Pradesh Crisis that
brought in its wake stringent regulation on microfinance. SHGs reached 10 crore households. It is in this
phase that NABARD rolled out SHG2 guidelines for revitalizing SHG-BLP and SGSY got restructured
as National Rural Livelihoods Mission (NRLM). SHG2 introduced the concept of voluntary savings,
switching over to cash credit system in place of term loans and allowed carving out JLGs out of SHGs.
NRLM envisaged building people’s organisations in terms of clusters and federations and brought the
livelihood framework to the centre stage. During this phase, digitisation of SHG and SHG data is another
major innovation. MIS was generated on CBS platform. ICT was used for digitization of SHGs with a view
to improvement in MIS and facilitate credit linkage.
One vexed issue in SHG-BLP has been getting SHGs credit linked with banks. Chart 4 gives the number of
SHGs savings linked as well as credit linked as at the end of each fiscal year.
The proportion of SHGs bank credit linked declined to less than 60 per cent in the second half, from around
70 per cent in the first half of the period (Chart 4). Fast rise in number of SHGs formed, non-availability
of hand holding support to SHGs for repeat finance and competing MFIs for financing SHGs are some
of the reasons for reduced bank-linkage proportions. In this context, recent initiative by NABARD for
digitization of SHGs, through E-Shakti portal, is intended to strengthen the monitoring and facilitate better
credit linkage.
MFIs AND MICROFINANCE
In India, the MFI sector has grown remarkably during past two
decades, spreading across the country and surviving the 2010 Andhra Pradesh microfinance crisis. As on
31 March 2016, they reached out to 40 million clients with an outstanding credit of
r
63,853 crore
5
. There
was a steady growth in the average credit outstanding per client, by 76% from
r
7481 in 2011 to
r
13162
in 2015. Interestingly, in the recent past MFIs are growing fast in the states like Punjab, Haryana, Gujarat,
Himachal Pradesh, and Uttar Pradesh, which are left uncovered by SHG-BLP. Though MFIs provided loans
for both consumption and productive purposes, a major part of the credit flow, 94% in 2016, is channelized
for income generating activities. Agriculture, Animal husbandry and small trading are the major income
generating activities that account for 79% of the micro credit provided by MFIs in 2016
6
. Non-income
generating loans are mostly used for consumption, housing and education of children.
MFIs played a significant role in bridging the gap between the formal financial institutions and the rural
poor. However, of late, their increasing urban orientation and providing pure credit products without the
capacity building component have been criticised, for the situation in rural areas is not of credit shortage
alone. It is more of shortage of entrepreneurial capabilities and lack of technical skills. These aspects needs
attention.
