Financial Inclusion in Action

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Key Facts
As on 31 March 2015

The Government of India has mandated nationalised banks and regional rural banks, with their widespread networks in rural India, to provide hassle free credit to the poor under the policy of priority sector lending. RGMVP makes use of this robust institutional mechanism of formal banking and credit linkages to ensure that SHG members can access hassle-free, low-cost bank credit. While at an individual level formal banking institutions alienate the poor, the SHG acts as social collateral. This model is sustainable along both temporal and geographical lines.

The three-step SHG-bank linkage process works as follows:

For process oversight, a Programme Implementation and Monitoring Committee was formed which also brought out specific operative instructions on SHG-bank linkages at the national level.

The VOs and BOs also function as the Banks' business facilitators, assisting the SHG-bank linkages.

Through a series of random sampling, RGMVP determined that presently 93 percent of its SHGs are engaged in monetary savings activities either through a bank or independently within their SHG group. Over 25 percent of SHGs are linked to bank credit. Furthermore, 91 percent of loans availed are used to fund livelihood activities.

RGMVP has created a cadre of trained Bank Sakhis or activists. These Bank Sakhis serve as community trainers on bank and credit usage and also as liaisons between the SHGs and bank officials. Their ultimate goal is to spread financial literacy and foster awareness on the bank procedures for effective credit utilisation and management. RGMVP's Business Correspondents also help SHG and non-SHG members open accounts and make deposits without having to visit a bank in person. RGMVP works closely with bank officials to ensure that a resource demand from the women is created and banks are prepared to meet their needs without prejudice. Sensitisation programmes and exposure visits are organised regularly for bank officials to this end.