3.3.1 Self Help Groups (SHGs)

NABARD has played a pivotal role in pioneering and scaling the SHG-Bank Linkage Program (SBLP) across India. By linking SHGs with formal banking institutions, NABARD has not only facilitated access to microcredit but has also fostered a culture of saving, financial discipline and collective responsibility. These small, community-based groups, often comprised of women have improved the socio-economic status of millions of rural families, promoting entrepreneurship, and contributing to overall rural development.

3.3.2 Joint Liability Groups (JLGs)

NABARD’s innovative JLG model has enabled individuals who typically lack collateral or credit history to access loans through collective borrowing. By bringing together individuals into groups, NABARD’s JLG model fosters a system of mutual accountability and financial discipline. This innovative framework not only enhances access to credit for rural population but also strengthens their ability to invest in agriculture, small businesses, and income-generating activities, thereby improving their economic stability.

NABARD offers both technical and financial support to financial institutions aimed at establishing and developing Joint Liability Groups (JLGs), thus enabling the programmes to extend its reach to the most isolated regions. Additionally, NABARD assists JLG members in securing timely, collateral-free loans through formal banking systems and promotes income diversification by facilitating the growth of micro-enterprises in the non-agricultural sector. Furthermore, NABARD provides concessional refinance to the banks financing JLGs. Over the past five years, JLG accounts have grown at an impressive CAGR of 43.76%¹, showcasing NABARD’s impact in strengthening rural credit systems. Together, SHGs and JLGs now cover more than 50% of Indian households, reaching 10% of the country’s population², further solidifying NABARD’s pivotal role in transforming rural economies.

3.3.3 Expansion of Rural Banking Infrastructure

The Financial Inclusion Fund (FIF), managed by NABARD, is instrumental in facilitating efforts to provide banking and financial services to populations that are underserved or unbanked, especially in rural and remote regions. FIF promotes financial literacy, enhances banking infrastructure, and supports various initiatives, including village knowledge centres, micro-credit programmes, and digital financial solutions. Through its financial assistance, FIF aids in the development of banking infrastructure in these areas by funding the establishment of banking outlets, branchless banking options such as Business Correspondents (BCs), and village knowledge centres. To advance digital financial inclusion, FIF endorses the deployment of digital payment systems, mobile banking, and e-wallets in rural communities. By offering grants to institutions and organisation dedicated to these objectives, FIF ensures that marginalised groups have access to vital financial services, encompassing credit, savings, insurance, and remittance services.