Self Help Group (SHG) - Bank Linkage Model – A Viable Tool for Financial Inclusion

Abstract

Financial inclusion is a vital factor in eliminating poverty and promoting social empowerment. Despite policy initiatives, the extent of inclusion is very low in rural and semi - urban India. There are still 90 million people who are excluded from the formal banking system for various reasons like lack of knowledge in the rural poor related to banking and banking products, high transaction costs and illiteracy. In this scenario, microfinance, which is defined as the provision of financial services to the low income and vulnerable groups of the society is playing a challenging role in achieving twin goals of financial inclusion and poverty eradication in economically viable manner. SHG- Bank Linkage model of micro finance is playing a critical role in the expansion of banking outreach. The current study is an attempt to throw light on the SHG-Bank linkage model and its role in promoting financial inclusion.

Keywords: Financial inclusion, Microfinance, SHG- Bank Linkage model, poverty