Overview
NABARD, through its Micro Credit Innovations Department has continued its role as the facilitator of microfinance initiatives in the country. The - vision of the department is 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 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 different approaches -which are discussed below.
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’ has evolved as a cost-effective mechanism for providing financial services to the unattended and underserved poor households. What started as a pilot to link around 500 SHGs 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 SHGs which follow ‘Panchsutras’ viz. conduct of regular group meetings, regular savings within the group, internal lending based on the demand of members, timely repayment of loan and maintenance of proper books of accounts are considered to be of good quality and over years have proved themselves to be good customers of Banks.
The non-governmental sector has played a prominent role of working as a Self
Help Group Promoting Institution (SHPI) by organising, nurturing and enabling
credit linkage of SHGs with banks. NABARD later approved many others as SHPIs
including rural financial institutions (RRBs, DCCBs, PACS), Farmers’ Clubs
(FCs), SHG Federations, 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 16.19 crore households in the country. With more than 80
percent of the groups being exclusively women groups, the programme has
provided the much needed push to empowerment of women in the country
Other than championing the movement and providing promotional support, NABARD is enabling an entire ecosystem of support through policy advocacy at Bank and Government level, organising and sponsoring a large number of training and capacity building programmes, seminars and workshops for the benefit of all the stakeholders, viz. bankers, Government agencies, NGO partners and more importantly SHG members themselves.
Product level changes like allowing voluntary savings in the group, sanction of cash credit/ overdraft system of lending to SHGs, allowing formation of JLGs within SHGs, improving risk mitigation systems, building second tier institutions of SHGs, etc. were brought in subsequently to address operational issues emerging from time to time.
Further, to enable SHG Members to take up livelihood activities, NABARD has been supporting Micro Enterprise Development Programmes (MEDPs) and Livelihood and Enterprise Development Programmes (LEDPs) for SHGs.
Financing of Joint Liability Groups (JLGs)
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. JLGs are informal groups of four 04 to 10 members who are engaged in similar economic activities and are willing to jointly undertake the liability to repay the loans taken by the Group from the Banks. JLGs basically are credit groups of small/marginal/tenant farmers/ asset-less poor who do not have proper title of their farmland. Regular savings by the JLG members is purely voluntary and their credit needs are met through loans from financial institutions and such loans could be individual loans or group loans against mutual guarantee.
Apart from extending refinance support at 95% of eligible bank loan to financing Banks, NABARD is also extending financial support for awareness creation and capacity building of all stakeholders under the Scheme. NABARD further extends grant support for formation and nurturing of JLGs to Banks and other JLG Promoting Institutions (JLGPIs).
Support for training and capacity building of clients
Giving due recognition to training and capacity building of various stakeholders such as bankers, NGOs, Government officials, SHG members and trainers, NABARD has trained 50.20 lakh participants under FIF and 5.17 lakh participants under WSHG Development Fund till 31 March 2024.
Micro Enterprise Development Programme (MEDPs) and Livelihood and Enterprise Development Programmes (LEDPs)Micro Enterprise Development Programme (MEDPs)
NABARD, since 2006, has been supporting need-based skill development programmes (MEDPs) for matured SHGs which already have access to finance from Banks. MEDPs have been leveraged to impart/upgrade skills to/of SHGs to serve as a foundation for setting-up of microenterprises in farm and off farm activities. Cumulatively, 6.12 lakh SHG members have been trained through 20,822 MEDPs.
NABARD initiated the Livelihood and Enterprise Development Programme (LEDP) in 2015-16 to foster sustainable livelihoods among Self-Help Group (SHG) members by focusing on SHG clusters engaged in both farm and off-farm activities across contiguous villages. Support includes skill building, refresher training, linkages, handholding, and escort services over two credit cycles. As on 31 March 2024, 3 lakh SHG members have been supported through 2449 LEDPs with grant support of ?128.41 crore.
With a view to make enterprise and livelihood programmes more effective, MCID-NABARD updated the guidelines under MEDP and LEDP in 2023-24. The programmes now include JLG members as participants, provision of daily stipend to participants, additional training on market linkages, e-marketing, branding and packaging, demonstration unit, etc, and the grant assistance have also been enhanced.
MOU between NABARD and NRLM
Marking a strategic alliance to benefit rural women SHGs, NABARD and DAY-NRLM under MoRD, GoI have entered in an MoU. Under the arrangement, physical and online marketing, graduation of SHG clusters to Producer Organizations both in farm and non-farm sectors for sustainable economic activities and promotion of climate resilient agriculture for women SHGs, livelihood interventions to women SHGs in NABARD’s Wadi and Watershed development project areas along with deepening of financial inclusion etc., will be facilitated. The MoU further aims to develop new avenues for SHGs supporting through SRLMs.
Conduct of Village Level Programmes (VLPs)
With a view to foster better understanding of mutual requirements between banks, SHGs & SHPIs and to sort out issues like credit linkage and repayment etc. at ground level, Village Level Programmes (VLPs) are being conducted with the support of banks and NRLM. These VLPs sponsored by NABARD are also helping in opening of SHG accounts, their credit linkage and regular loan repayments. A total of 15794 Village Level Programmes were sponsored during 2023-24 taking the cumulative number of VLPs to 66,353.
Refinance support to Banks
To boost bank credit to SHGs, JLGs and MFIs, NABARD refinances banks upto 95% of their lending to this sector. During 2023-24, NABARD extended refinance of ?10099.55 crore to banks. As on 31 March 2024, cumulative disbursement of refinance by NABARD for SHG lending stood at ? 1,17,895.32 crore.
Status of Studies conducted by MCID
NABARD, since inception, has been giving emphasis on research and development and studies in various fields to acquire new insights into the issues of farm and non-farm sectors, so that the findings can be used for formation of new policies, innovative products and approaches for further development in the sectors. The studies conducted can be broadly grouped into three sub-heads, viz., LEDP, MEDP & WSHG related, apart from studies undertaken by CRFIM with support from NABARD.
New Initiatives
Support for training on onboarding onto E-Commerce platforms/ ONDC/ social media platform:
The programme includes training on online marketing platforms as also onboarding and handholding support on online/digital marketplaces, viz., E-commerce, social media platforms such as Instagram, Facebook, WhatsApp, etc. and ONDC. During the year, 65 training programmes covering 1103 SHGs/ JLGs/ POs were organized and 1264 members of SHGs/ JLGs/ POs on-boarded to ONDC. Further, to provide opportunities for online sale of products on ONDC, NABARD in association with M/s. Mystore Seller App has designed and curated a dedicated page for SHG supported by it for improved visibility of their products. Support for Physical Marketing of Products:
Part I: Support for training /capacity building on E-commerce, social media platforms and ONDC for SHGs/ JLGs/ Producer Organisations/ Microentrepreneurs andUnder the scheme, support is being extended for setting up Gram Dukans, moveable carts on stand-alone basis, stalls/ movable carts near bus stands/ railway stations/ shopping areas, outlets at AAI airports under the GoI’s AVSAR (Airport as Venue for Skilled Artisans of the Region) scheme. During the year, 31 Gram Dukans, 5 moveable carts and 9 stalls were sanctioned to support the marketing needs of 5261 members of SHGs/ JLGs/ POs.Microenterprises through Skill Upgradation for Women (m-Suwidha)
Part II: Support for onboarding of SHG/ JLG/ Producer Organisations/ Microentrepreneurs products onto E-commerce, social media platforms and ONDCm-Suwidha scheme has been launched as a pilot to implement projects under DPR mode with the objective of providing 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. .-
NABARD has also initiated two additional pilots viz.
(i) Money Purse Application for Grant Support to SHGs/JLGs/Producer Organisations for Physical Marketing of Productsfor real-time banking solution for SHGs. It is expected that SHG members will be facilitated to undertake various financial activities including account opening (both group and individual), savings and loan collections, credit linkage, internal loan disbursement, real-time book keeping, and grading - all facilitated by BCs in digital mode and Application for real-time banking solution for SHGs. It is expected that SHG members will be facilitated to undertake various financial activities including account opening (both group and individual), savings and loan collections, credit linkage, internal loan disbursement, real-time book keeping, and grading - all facilitated by BCs in digital mode and
- Graduated Rural Income generation Project (GRIP)The scope & objective of this Scheme is to support various physical marketing interventions for SHG/ JLG products, in rural, semi-urban & urban centres to maximize access to marketsto build capacities and enable asset generation by ultra-poor rural women and graduating them to access formal financial services through the innovative concept of returnable grant..
SHG Films
MCID has been bringing out films on a regular basis to disseminate the progress achieved by rural women entrepreneurs, who got assistance from NABARD.
Some important films that highlight the concepts and successes of SHGs are listed below:
Some important films that highlight the concepts and successes of SHGs are listed below: