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SHG-Bank Credit Linkage, Savings Mobilisation, and Women’s Economic Empowerment

Author(s):Leena Kumari Panda

Affiliation: Department of Economics, Ravenshaw University, Cuttack, Odisha, India

Page No: 94-97

Volume issue & Publishing Year: Volume 3, Issue 3, March 2026

published on: 2026/03/16

Journal: International Journal of Advanced Multidisciplinary Application.(IJAMA)

ISSN NO: 3048-9350

DOI: https://doi.org/10.5281/zenodo.19334360

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Abstract:
India’s SHG-Bank Linkage Programme, launched by NABARD in 1992 and subsequently scaled through the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission, represents the world’s largest microfinance programme by reach, connecting an estimated 67 lakh self-help groups and their 9.17 crore women members to the formal banking system as of March 2024. The programme’s foundational design logic — that peer-group solidarity, regular compulsory savings, and demonstrated repayment discipline can substitute for collateral in creditworthiness assessment, thereby overcoming the information asymmetry barrier that excludes rural women from formal credit — has been validated in principle by the programme’s remarkably low non-performing asset rates relative to other rural lending portfolios. Yet the extent to which credit access translates into the deeper empowerment outcomes that motivate the programme’s continued public investment — decision-making autonomy, mobility, asset ownership, reduced vulnerability to economic shocks — remains contested in the empirical literature.
The geographical diversity of SHG programme implementation across India creates natural experimental variation that this study exploits. Andhra Pradesh and Telangana, where the Velugu and IKP missions have operated since the early 2000s with a saturation model covering virtually all rural women through SHGs, represent the programme’s most mature ecosystem, with SHG members in their second or third credit cycle and multi-generational SHG participation in some clusters. Tamil Nadu’s TNSRLM represents an intermediate maturity tier, with strong bank linkage coverage but a shorter average membership duration. Odisha represents the programme’s expanding frontier, with rapid recent growth in DAY-NRLM coverage creating a population of recent joiners whose trajectories can be compared to the more mature SHG populations in the southern states.
This longitudinal study tracks a cohort of women SHG members across these three states at four time points — at programme entry and at one, three, and five or more years of membership — measuring empowerment across six dimensions: economic decision-making, financial services access, mobility and freedom of movement, self-confidence and public voice, asset ownership, and children’s education decision-making. The study’s specific analytical contribution is to disaggregate the empowerment trajectory by state, by SHG grading (NABARD grading criteria), and by credit cycle access, enabling estimation of the marginal empowerment returns to SHG membership duration, to credit access beyond savings linkage, and to skill training completion that distinguishes active from passive participation in the SHG programme.
The economics of women’s empowerment in this context connects to two broader debates in development economics: the microfinance effectiveness literature, which since Banerjee et al.’s (2015) Andhra Pradesh randomised evaluation has grappled with the gap between credit access and transformative empowerment outcomes; and the intra-household bargaining literature, which predicts that women’s control over earned income and credit resources shifts bargaining power toward household investments in children’s health and education that create inter-generational poverty exit pathways beyond the immediate income gains from SHG participation.

Keywords: SHG-Bank linkage, women's empowerment, microfinance, DAY-NRLM, NABARD, self-help groups, financial inclusion, intra-household bargaining, poverty exit, Tamil Nadu, Andhra Pradesh, Odisha, longitudinal, credit access, rural development

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