NABARD’s Self-Help Group-Bank Linkage Program (SHG-BLP)

NABARD’s Self-Help Group-Bank Linkage Program (SHG-BLP): Fostering Financial Independence for Women through Microfinance

The Self-Help Group-Bank Linkage Program (SHG-BLP) by the National Bank for Agriculture and Rural Development (NABARD) is one of India’s largest microfinance programs, specifically designed to empower women through collective economic activities. Through this initiative, NABARD has facilitated microfinance to self-help groups (SHGs), enabling women to access formal financial services and engage in entrepreneurship, with the goal of fostering self-reliance, financial independence, and community development.

Purpose and Objectives of the SHG-BLP Program

The SHG-BLP program was initiated by NABARD in 1992 to bridge the gap between rural women and formal financial institutions. Recognizing that many women in rural areas lack collateral and financial history, the program leverages the power of SHGs to bring women into the financial fold. SHGs typically consist of 10-20 women who come together to save, invest, and support each other’s financial and entrepreneurial needs.

The core objectives of SHG-BLP include:

• Enhancing Financial Inclusion: By linking SHGs to banks, women can access savings accounts, loans, and other financial services without traditional collateral requirements.
  
  

• Encouraging Collective Entrepreneurship: The program promotes micro-enterprises, encouraging SHG members to start small businesses in agriculture, crafts, retail, and more.
  
  

• Building Financial Literacy: Training and workshops are provided to improve women’s understanding of banking, savings, credit, and financial management.
  
  

Key Features and Benefits of the SHG-BLP Program

1. Microcredit Access: Through SHG-BLP, SHGs can access loans from banks without collateral, allowing members to engage in income-generating activities.
   
   

2. Gradual Credit Scaling: SHGs typically begin with small loans, and as they demonstrate good repayment history, banks increase their credit limits, enabling business expansion and diversification.
   
   

3. Interest Rate Subsidies: In some states, interest subvention is offered, reducing the cost of borrowing and making it affordable for women to undertake economic activities.
   
   

4. Group Savings: SHG members are encouraged to save regularly, which builds a collective fund used for emergency needs, internal loans, or for members who need additional business capital.
   
   

5. Skill Development and Training: NABARD organizes regular training in areas like financial management, business skills, marketing, and technical skills to empower SHG members.
   
   

How SHG-BLP Works: The Step-by-Step Process

1. Formation of SHG: A self-help group is formed, typically with 10-20 women from similar economic backgrounds, often from the same village or community.
   
   

2. Bank Linkage: The SHG opens a group savings account with a partner bank, where members contribute savings and build a financial history.
   
   

3. Internal Lending: After accumulating sufficient savings, SHG members can take small loans from the collective fund for individual or group needs.
   
   

4. Access to Bank Credit: Upon establishing a repayment history, the SHG applies for a bank loan, which can be used to fund larger ventures or micro-enterprises.
   
   

5. Loan Repayment and Scaling: After successful repayment, SHGs can access larger loans for expanding business activities, creating a sustainable model for economic growth.
   

Eligibility and Requirements for SHG-BLP

The SHG-BLP program is open to women-led SHGs across India. Requirements include:

• SHG Membership: A group of 10-20 women who voluntarily come together to save and support each other’s economic activities.
  
  

• Bank Account: The SHG should have a bank savings account to track group contributions and manage loan transactions.
  
  

• Active Savings and Lending: The group should demonstrate regular saving activity and show willingness to adhere to the terms of the bank linkage.
  
  

Success Stories: Empowering Women through SHG-BLP

The SHG-BLP program has helped countless women across rural India break free from financial constraints. One such story is of the women of the “Jeevan Jyoti” SHG in Karnataka. After forming an SHG and saving collectively for a year, they applied for a bank loan under SHG-BLP. They used the loan to start a small dairy business, which now generates a sustainable income for each member. Through their entrepreneurial journey, these women not only achieved financial independence but also gained recognition as community leaders.

Cultural and Social Impact

The SHG-BLP initiative resonates with the ancient Indian concept of sahaayog (collaboration and collective strength) found in the Vedas and Puranas, which emphasize unity and mutual support. Programs like SHG-BLP not only empower women financially but also instill a strong sense of community and purpose. By working together, women learn essential business and leadership skills, reinforcing the concept of Naari Shakti, or the strength of women in numbers.

Programs like RisingWoman® by RisingIndia ThinkTank complement NABARD’s SHG-BLP by offering skill-building, mentorship, and market access for women-led SHGs, creating an ecosystem where entrepreneurial ideas can thrive.

Broader Economic Impact

The SHG-BLP program has shown significant impact on India’s rural economy. By promoting financial independence and sustainable income-generation, SHG-BLP has contributed to reducing poverty and enhancing quality of life. NABARD reports that over 10 million SHGs, representing more than 100 million members, have been linked to banks under this program, showcasing the expansive reach and impact of SHG-BLP in promoting women-led entrepreneurship and rural development.

How to Join or Start an SHG under SHG-BLP

1. Form an SHG: Women interested in the program can start by forming a group of like-minded individuals committed to saving and supporting each other’s business needs.
   
   

2. Open a Group Savings Account: Visit a local bank branch that partners with NABARD and open a savings account in the name of the SHG.
   
   

3. Save Regularly: Establish a routine of regular savings and record keeping to build a strong foundation.
   
   

4. Apply for a Bank Loan: Once the SHG has demonstrated a consistent savings and lending record, apply for a bank loan to expand business activities.

The Self-Help Group-Bank Linkage Program (SHG-BLP) by NABARD stands as a transformative model for empowering women entrepreneurs in rural India. By providing access to microfinance and fostering a culture of collective economic activity, SHG-BLP enables women to take control of their financial futures, create sustainable businesses, and uplift their communities. This program serves as a crucial step toward a more inclusive and resilient economy, where women in even the remotest areas can contribute to and benefit from India’s economic growth.

Through SHG-BLP, NABARD has made it possible for women to leverage their collective strength, gain financial literacy, and establish their place as vital contributors to India’s entrepreneurial ecosystem.