With over 11 million poor households accessing banking services including micro-credit through their 700 thousand Self-Help Groups (SHGs), the SHG-bank linkage programme led by NABARD in India is now the largest and the fastest growing microFinance programme of the world in terms of its outreach. Today, over 2800 NGOs and 30,000 branches of 500 banks are associated with the programme making it the most cost effective microFinance initiative as well, thanks to the economies of scale involved.

Considering the need for upscaling the microFinance interventions in the country, a micro Finance Development Fund has been set up in NABARD through initial contributions aggregating Rs 100 crore ( approximately 20 Million US $) from RBI, 11 Public Sector Commercial Banks and NABARD. NABARD has further contributed Rs 6 crore from its surpluses to the fund. Such augmentation of funds for microFinance development will go a long way in furthering the cause of banking with the poor. As part of the strategy for wider consultation on the operational aspects relating to governance and management of the Fund, NABARD has been consulting the Contributors to the fund on a regular basis.

• During fiscal ending March 2003, 255,882 new SHGs were provided credit by the banks under the SHG-Bank linkage programme.

• During the year, Rs. 10,223 million (US$ 212 million) were disbursed by banks as loans to SHGs. Against this, the banks claimed Rs. 6,223 million (US$ 130 million) as refinance from NABARD.

• Cumulatively, 717,360 SHGs are now credit linked with different banks as on 31 March 2003.

• Cumulative disbursed to SHGs as on 31 March 2003 stood at Rs. 20487 million (US$ 427 million).

• More than 12 million poor households have gained access to the formal banking system through the SHG- bank linkage programme as at March 2003.

• More than 90 percent SHGs have exclusively women members.

• On-time Repayment of bank loan was above 95 percent from SHG members.

The significant success of the programme was due to the active involvement of-

• over 2800 NGOs

• over 30,000 branches of 500 banks

• Policy support from GoI, RBI and State Governments

• Development policy initiatives and capacity building of its partner agencies by NABARD

SHG-bank linkage programme covered over 500 districts in 30 States and UTs. NABARD has provided, upto 31 March 2003, Revolving Fund Assistance (RFA) of Rs. 180 million ( US $ 3.75 Million) to 29 NGOs, SHG Federations and credit unions for on-lending to SHGs and to build their financial intermediation capacities. Over 30,000 bank officials including faculty members of training establishments of banks were trained by NABARD in microFinance (mF) during 2002-2003. Cumulatively, over 80,000 bank officers and 1,200 faculty members of training colleges of banks have been trained by NABARD. Cumulatively about 14,000 participants from lesser experienced NGOs in mF have been trained by NABARD in association with experienced NGOs.

[Source: NABARD Website]