Key Terms & Concepts — UPSC Mains
SHG-Bank Linkage Programme
"The world's largest microfinance programme connecting Self-Help Groups to formal banking for savings, credit, and financial inclusion"
The SHG-Bank Linkage Programme is a microfinance model launched by NABARD in 1992 that connects informal Self-Help Groups (typically 10-20 women) with formal banking institutions. SHGs first save collectively, then receive bank credit based on their savings track record. This model has become the world's largest microfinance programme, reaching over 12 crore women across India.
Frequently tested in Prelims (NABARD, RRBs, microfinance) and essential for GS3 (financial inclusion) and GS1 (women's empowerment) Mains answers. The programme is a cornerstone of India's financial inclusion strategy.
- 1 Launched: 1992 by NABARD
- 2 World's largest microfinance programme
- 3 SHG size: typically 10-20 members (mostly women)
- 4 Model: savings-first → credit linkage → bank account
- 5 Coverage: ~12 crore women in SHGs across India (2025)
- 6 DAY-NRLM (Deendayal Antyodaya Yojana — National Rural Livelihoods Mission): umbrella programme
- 7 Bank linkage: SHGs maintain savings accounts, then receive loans at 4:1 ratio (loan:savings)
- 8 Interest subvention: 3% for prompt repayment under DAY-NRLM
- 9 Three models: SHG-Bank direct, SHG via NGO, SHG via microfinance institution
Karnataka Grameena Bank received the National Award for SHG-Bank Linkage (FY 2024-25) after extending Rs 2,835 crore in credit to 80,904 SHGs.