The Changing Dimensions of Micro Finance through SHGs in India; an Analysis

Micro finance is the fastest and cost effective financial service for the poor and needy in the developing world. At present, it is seen as the key instrument to eradicate poverty and empower women. In India, Micro finance scene is dominated by Self Help Group (SHGs)- Bank Linkage Programme as a cost effective mechanism for providing financial services to the unreached poor, which has been successful not only in meeting financial needs of the rural poor women but also strengthen collective self help capacities of the poor, leading to their empowerment. Rapid progress in SHG formation has now turned into an empowerment movement among women across the country.In 1992-93, the number of SHGs financed by the bank were 255 with 0.29 Crore bank loan and 0.27 Crore of refinance assistance. In 2011-12, 114800 SHGs were financed with 16534.71 Crore of bank loan and Rs.3072.59 crore were refinance assistance. During the year the cumulative SHGs number of SHGs financed by banks stood at 10112626, where Rs.86606 Crore was bank loan and 18479.60 crore was refinance assistance.79.60 lakh SHGs were financed by banks in 2011-12 and their savings was 6551.41 Crore; of them 79 percent (62.99 lakh) were exclusively women SHGs which saved 5104.33 Crore which is 77.90 of total savings of SHGs.The Key success for the rapid growth of Microfinance through SHG was prompt repayment by the members and NPA on loans outstanding was negligible. But unfortunately the NPAs against loans are increasing which may hamper the growth of Micro finance-SHG growth. Suitable initiatives have to be undertaken by the government to make microfinance more focused and a success story in the eradication of poverty in India