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Micro Credit Innovation

NABARD, through its’ Micro Credit Innovations Department has continued its role as the facilitator and mentor of microfinance initiatives in the country. The overall 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 microfinance sector in India through different approaches like: 
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 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 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 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 coopted many others as SHPIs including the 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 100 million households in the country. With more than 84% 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 has enabled an entire ecosystem of support through policy advocacy at Bank and Government level, organising and sponsoring a large number of training & capacity building programmes, seminars & workshops for the benefit of all the stakeholders viz. the bankers, the Government agencies, the NGO partners and more importantly the SHG members themselves. Banks are also provided 100% refinance support by NABARD for financing of SHGs.  
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 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.
NABARD is implementing and supporting implementation of various Schemes announced by Govt. of India viz. Promotion of Women SHGs (WSHGs) in backward and Left Wing Extremism affected districts of Ministry of Finance, National Rural Livelihoods Mission (NRLM) of Ministry of Rural Development.  
Financing of Joint Liability Groups (JLGs)
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. JLGs are informal groups of 4-10 members who are engaged in similar economic activities and who are willing to jointly undertake 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 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 grant support for formation and nurturing of JLGs to Banks and other JLG Promoting Institutions (JLGPIs). 
NABARD Financial Services Ltd. (NABFINS)
NABARD, while promoting NABFINS has envisaged that NABFINS shall evolve into a Model Microfinance Institution to set standards of governance among the MFIs, operate with exemplary levels of transparency and operate at reasonable/moderate rates of interest. It is a NBFC – MFI which commenced its operations in November 2009
NABARD is the major shareholder of this MFI  others being Government of Karnataka, Canara Bank, Union Bank of India, Bank of Baroda, Federal Bank and Dhanalakshmi Bank. NABFINS extends loans to SHGs through its own trained Business & Development Correspondents (BDCs). NABFINS also extends loans to other second level organizations like Federations as well. NABARD is continuing its refinance assistance to NABFINS. Further details regarding NABFINS can be seen from
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 around 39.40 lakh participants as on 31 March 2018, in the process giving shape to a strong back up team for implementation of the programme.
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 are on-location skill development training programmes which attempt to bridge the skill deficits or facilitates optimization of production activities already pursued by the SHG members.  Grant is provided to eligible training institutions and SHPIs to provide skill development training in farm/off-farm/service sector activities leading to establishment of micro enterprises either on individual basis or on group basis. Over the years around 4.68 Lakh SHG members have been covered through 16,406 MEDPs.  
Livelihood and Enterprise Development Programmes (LEDPs)
As skill upgradation trainings alone have limited impact on livelihood creation among the SHG members, it was thought prudent to create sustainable livelihoods among SHG members and to attain optimum benefit out of skill upgradation and a new scheme titled Livelihood and Enterprise Development Programme (LEDP) was launched in December 2015. It envisages conduct of livelihood promotion programmes in clusters. There is provision for intensive training for skill building, refresher training, backward-forward linkages and handholding & escort supports. It also encompasses the complete value chain and offers end-to-end solution to the SHG members. It is to be implemented on a project basis covering 15 to 30 SHGs in a cluster of contiguous villages where from SHG members may be selected. 
The skill upgradation training is provided in batches of 25-30 members and covers agri & allied activities as well as rural off-farm sector activities. LEDP will not only facilitate promotion of sustainable livelihoods but also derive full advantage from promotional assistance. NABARD will provide grant support for skill upgradation programmes, establishment of demonstration unit and need based critical infrastructure. LEDP has been mainstreamed in May 2017. Cummulatively 15,382 SHG members has been supported through 324 LEDPs upto 31st March 2018.
Scheme for promotion of Women SHGs (WSHGs) in backward & LWE districts of India
Subsequent to announcement made by Hon. Finance Minister in the Union Budget 2011-12, a scheme for promotion and financing of Women Self Help Groups (WSHGs) in association with Govt. of India is being implemented across 150 backward and Left Wing Extremism (LWE) affected districts of the country since March-April 2012. The scheme aims at saturating the districts with viable and self-sustainable WSHGs by involving anchor agencies who shall promote & facilitate credit linkage of these groups with Banks, provide continuous handholding support, enable their journey to livelihoods and also take the responsibility for loan repayments. Under the Scheme, in addition to working as an SHPI, the anchor agencies are also expected to serve as a banking / business facilitator for the nodal implementing banks. 
To facilitate implementation of the Scheme, an exclusive fund viz. ‘Women SHG Development Fund’ was set up by Dept. of Financial Services, Ministry of Finance, Govt. of India in NABARD with a stated corpus of Rs. 500 Crore Grant support @ Rs 10,000/- per SHG to the Anchor agencies and also the cost of publicity, training & other capacity building initiatives is met out of this fund. 
Collaboration with NRLM
NABARD continues close coordination with all stakeholders in SHG BLP sector. Collaboration with NRLM is being regularly maintained and enhanced for the support of SHG BLP. Coordinated efforts like conduct of National level seminars and workshops, mutual dialogues and capacity building of stakeholders on SHG BLP have now become very regular. Coordinated efforts in following areas have particularly proved immensely fruitful.
  • Training of Trainers (TOT) programme
NABARD and NRLM are collaborating on capacity building needs of bankers and grass root level functionaries to strengthen the Self Help Group bank Linkage Programme through a number of initiatives. With the goal of training all rural bank managers, a series of Training of Trainers (TOT) programmes for Bankers, SRLM staff, DDMs & Officers drawn from 17 states have been held at BIRD, Lucknow. These trainers have further conducted training programmes of bankers in their respective states during the year. 
Moreover, as a part of the collaboration, state specific trainings of trainers of SHGs on financial inclusion were conducted by BIRD for 9 priority states. These trainers are providing financial literacy training to SHG members and leaders in these states. The financial literacy material developed under NABARD RFIP were used for these trainings. BIRD also conducted two training programmes on Bank Sakhi model for NRLM and SRLM participants during the year. 
  • 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 & 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.
  • Smooth transition of WSHGs  promoted in NRLM intensive blocks to SRLMs
In order to ensure that all Women SHGs promoted in the NRLM intensive blocks, irrespective of promoting agencies receive eligible benefits like subvention, RFA, CIF etc. under NRLM, meetings have been organized between Anchor NGOs, SRLMs and nodal Banks and a list of SHGs formed in the intensive blocks under WSHG programme have been handed over to SRLMs for ensuring handholding over a long period.
Some of the salient features of the scheme are as below:
  1. An anchor NGO / support agency will be selected by LDM in consultation with the DDM, NABARD and DLCC in each of the identified districts for implementation of the project.
  2. The scheme would be implemented through bank branches with CBS facility.
  3. The identified Bank branch will enter into an MoU with the identified NGO / support agency.
  4. The identified NGOs will be eligible for grant assistance upto a maximum of Rs. 10,000 per WSHG.
  5. All loans to new WSHGs promoted shall preferably be under the cash credit mode.
  6. NABARD will provide need-based awareness and capacity development programmes for key stakeholders under the project.
As on 31 March 2018, the total number of WSHGs promoted and credit linked are 2.05 Lakh and 1.20 Lakh respectively.
Following are the studies commissioned by MCID in the recent year.
Sr. No Title of Study Agency
1 Impact and Sustainability of SHG BLp in India APMAS
2 Status of Matured SHGs IRMA
3 Comparative study on Livelihood Models for SHGs DOORS
4 Status, progress, challenges to SHG BLP in NE states – Way forward for microfinance Mid Stream Marketing & Research Pvt. Ltd
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:
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