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Advance Access Publication 23 September 2021

Empowering women through

the Self-Help Group Bank

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Linkage Programme as a tool for
sustainable development: lessons
from India
Nada Amer Abdulhafedh Al-Kubati* and
Doris Padmini Selvaratnam

Abstract The purpose of this study is to look at India’s experience in using the Self-
Help Group Bank Linkage Programme as a core development strategy
aimed to empower women. Self-help groups are seen as socially active
groups that can facilitate a government’s plans towards achieving the
sustainable development goals. Today, the Self-Help Group Bank Linkage
Programme is the largest microfinance programme globally, covering
more than 10 million self-help groups. This article uses descriptive
analysis to provide an overview of India’s experience. It focuses on how
the program contributes to sustainable development by asking how the
Self-Help Group Bank Linkage Programme leads to the empowerment
of rural women, the challenges faced in its implementation, and the
initiatives implemented in India to sustain the programme. This is
followed by a quantitative analysis of the economic sustainability and
the equality status by measuring the programme’s progress and the
disparity between regions in the last decade. India’s experience shows
that the Self-Help Group Bank Linkage Programme can empower women,
facilitate entrepreneurial activities, enhance confidence and trust, pro-
vide technical skills and market access. Those are part of sustainable
development goals and increase sustainable livelihood.

*Address for correspondence: Nada Amer Abdulhafedh Al-Kubati, Faculty of Economics and Management,
Universiti Kebangsaan Malaysia (UKM), 43600 Bangi, Malaysia; email: nadamer11@[Link]

Community Development Journal Vol 58 No 2 2023 pp. 283–308 283

284 Al-Kubati and Selvaratnam

Introduction
The Self-Help Group Bank Linkage Programme (SHG-BLP) is a platform
that can be used to introduce social, economic, and political change.
Self-help groups (SHGs) are socially active groups that can facilitate a
government’s plans to achieve the sustainable development goals (SDGs)
such as no poverty, zero hunger, achieving gender equality and empowering
all women, inclusive economic growth and reduce inequality. SHG-BLP

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brings innovative solutions that go beyond microfinance to encompass
other development challenges such as education and training (Fernandez,
2006), health (Chandrashekar et al., 2019), entrepreneurship (Baily, 2013),
grassroots political participation (Nayak, 2018), and social capital (Desai
& Olofsgård, 2019). India’s experience of forming and supporting the SHG-
BLP has been developed since 1992, when the National Bank for Agriculture
and Rural Development (NABARD) started it as a pilot programme.
There is a large body of literature that looks at SHG-BLP in India from
different angles. A large part of the research was conducted as case studies
to assess the effectiveness of these groups and how participation in SHGs
could change participants’ situations. Other research aimed to highlight the
factors affecting SHGs’ efficiency and the roles of different stakeholders in
promoting and maintaining these groups in specific contexts. This article,
however, provides an overview of India’s experience in using the SHG-BLP
as a development tool towards empowering women. The rest of the article
is organized as follows: first, a literature review that explains the group’s
formation and the debate about the usefulness of the intervention. Next,
the paper discusses the contribution of the SHG-BLP to social sustainability
by first discussing what makes it a powerful tool for empowering women.
Then, the article identifies the issues that can affect the success of this
model, as found in the literature. This is followed by the initiatives that have
been implemented in India to sustain SHG-BLP. In addition, a quantitative
analysis was conducted to look at the programme’s economic sustainability
by analysing the progress in the last decade and the equality issue by
discussing the disparities between regions in terms of the share of SHG-BLP
and the average loan amount. Then a conclusion in the last section.

Literature review
Basically ‘SHG is a small informal group of ten to twenty members who
are homogenous with respect to social and economic background and come
together voluntarily to promote saving habits among members and for a
common cause which is to raise and manage resources for the benefit of
group members’ according to NABARD. These groups were first initiated
 Empowering women through the Self-Help Group Bank Linkage Programme 285

by an NGO named MYRADA in 1984–1985. They had emerged during the

same period when the ‘Grameen Bank’ became a formal bank in Bangladesh
after the success of Mohammad Younus’ microfinance initiative in 1976
(Nayak, 2018). In India, various development programs to achieve the SDGs
are designed to be delivered at the SHG level as a ‘multi-sector’ platform.
Because SHGs aim to empower women, they contribute to achieving SDG 5
(achieve gender equality and empower all women and girls), which, in turn,
is a tool to achieve other SDGs (Dash, 2019).

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SHG-BLP was born when NABARD conducted a pilot project in collab-
oration with non-governmental organizations (NGOs) in 1992 that promote
the linkage of 500 SHGs to banks to provide formal financial services
(Akoijam, 2012). Later in 1999, the government of India adopted SHG-BLP
as a core development strategy with the aim of ‘organizing women into
SHGs to mark the beginning of a major process of empowering women’
(Quiroz-Niño & Murga-Menoyo, 2017). At a later stage, SHG-BLP was
associated with various development programmes (Gupta et al., 2020). Then
in 2011, India adopted the SHG-BLP as part of its federal poverty alleviation
programme and as a secondary approach to integrating health literacy
services for rural women (Niyonsenga et al., 2020).
The SHG-BLP is an Indian innovation that makes partnerships between
three agencies: SHGs, formal banks, and NGOs (Tripathi, 2014; Aluru, 2010).
SHGs facilitate collective decision-making among the poor by promoting
‘doorstep banking’. Banks work as wholesalers of credit. NGOs work as
organizers and facilitators to build the SHGs’ capacity and women’s social
capital (Aluru, 2010; Akoijam, 2012). To connect the SHGs to banks, NGOs
started to promote SHGs among rural women, organize them into homoge-
nous groups and educate the members about group rules and bookkeeping
requirements. In this stage, the group saves a regular amount as decided
by the members. The savings can be used as small loans distributed to
members at a low-interest rate. After seven months, the women become
more experienced in managing financial resources and building financial
discipline. They prove it through bookkeeping which banks consider as
collateral.
NGOs continue to nurture, support, and train the SHGs to start their
income-generating activities (D’Souza, 2010). NGOs also help in building
SHGs’ social capital by networking the SHGs to form clusters. These clusters
are then connected to become a federation which is a formal institution,
unlike SHGs, and have elected leaders. These federations have higher
bargaining power (Dash, 2019) and become supporters of the SHGs instead
of the NGOs after three years. Federations make the SHG-BLP programme
sustainable and can stand on its own. Figure 1 shows the NGOs’ role in
SHG-BLP (D’Souza, 2010).
286 Al-Kubati and Selvaratnam

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Figure 1 NGOs’ tasks. Source: constructed by authors from D’Souza (2010).

The benefit of SHG-BLP is that in addition to meeting women’s financial

needs in rural areas, SHG-BLP strengthens these women’s capacity, thus
leading to their empowerment (Sundaram, 2012). For example, a survey
by Rajeev et al. (2020) showed that women participating in SHG-BLP were
aware of the non-economic benefits of the program, such as self-confidence
and improvement of social status. Active participation and rotation of
responsibilities that are compulsory under SHG-BLP result in improving
their ability to express their views domestically and outside and facili-
tate their mobility (Rajeev et al., 2020). The majority of women surveyed
described becoming more confident in dealing with government officials
and financial resources as an important gain from SHG-BLP, which is unique
to the programme (Rajeev et al., 2020).
However, the program has been under extensive debate about its effec-
tiveness, especially after Andhra Pradesh’s microfinance crisis.1 For exam-
ple, Taylor (2011) argued that stakeholders of SHG-BLP have different
objectives that sometimes contradict each other. For example, NGOs aim
to increase women’s collective power and build their social capital. In
contrast, the government supports SHGs to reduce the transaction costs
involved in financing rural women. Grassroot SHGs, on the other hand,
look at the model as a platform to claim their rights, access to resources
and information, identity, justice, and political participation (Jakimow &
Kilby, 2006). These differences could lead to stress among SHGs and an

1 The suicides of a number of rural borrowers.

 Empowering women through the Self-Help Group Bank Linkage Programme 287

adverse effect on empowerment when the government imposes a top–down

development model. The top–down model further constraints the already
disempowered women, reducing individuals’ ability to realize and pursue
their interests (Jakimow & Kilby, 2006).
Another criticism is that SHGs could lead to further social differentiation
by excluding members who default their loans and the spread of fear from
social stigma due to default, as Taylor (2011) argued. Regarding economic
empowerment, Guérin et al. (2015) argued that poor and marginalized

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groups are less able to start entrepreneurial activities due to the social
constraints and established market relations that constrain them more than
other groups leading to further exclusion. According to Jakimow and Kilby
(2006), ignoring the broader social constraints, SHGs put all the burden of
empowerment on people who are less able to do so.
However, recently, Anand et al. (2020) tried to answer why women are
increasingly participating in SHGs when empirical research shows that
microfinance does not help increase incomes. They concluded that SHG
participation results in significantly higher capability due to increases in
quality of life compared to non-members, and this benefit becomes more
pronounced with longer periods of participation. Unlike other measure-
ments that only focus on the increase in income or household decision-
making, the capability indicators measure several aspects of life quality:
risk of future assault and discrimination, freedom of expression, and family
support. Hence, the authors suggested that human development resulting
from training, regular meetings, financial education, health programmes,
and civic participation is essential, so SHGs are not only about microfinance.
Moreover, Brody et al. (2016) conducted a systematic review for studies
between 1980 and 2014. They concluded that SHGs are positively related
to economic, social, and political empowerment.
Given these debates, this article argues that SHG-BLP has multiple faces
that work together and should not be looked at separately as an endpoint.
Hence, the article follows Jakimow and Kilby (2006) in defining empow-
erment as the ‘process of removing constraints’ instead of an endpoint.
Accordingly, ‘women’s empowerment’ is reconceptualized to ‘empowering
women’, which is defined as ‘the reduction or removal of constraints that
reduce women’s ability to pursue their interests’ (Jakimow & Kilby, 2006).
Hence, governments should work for ‘empowering actions’ through the
gradual removal of constraints. Rowlands (1997) explains that empow-
erment has personal, close relationships, and communal dimensions. It
entails cultivating a sense of self, personal confidence, capacity, the ability
to negotiate and affect the nature of the connection and the decisions
made within it, and collaborating to achieve larger results. In summary,
internalized oppression and unhealthy competition will be undone in this
288 Al-Kubati and Selvaratnam

process, where signs of women being empowered are when they participate
in development programmes—by taking part, making plans, having a role
in decision-making, and negotiating deals (Rowlands, 1997).
In this regard, SHG-BLP, as an Indian innovation, plays this rule of
empowering actions by providing financial inclusion in a more sustainable
way and a social vehicle by organizing rural women into homogeneous
groups. Given the uniqueness of this program and that most studies are case
studies, this article investigates the literature differently to generalize the

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lessons learned from India and guide policy in other developing countries.
Hence, this study looks at India’s experience from four directions: First,
by discussing how SHGs empower women. Second, by analysing the main
challenges for the program found in the literature. Third, by looking at some
solutions developed in India to sustain the program. Fourth, by analysing
the financial part of SHG-BLP and its progress in the last decade.

Method and data

In this article, SHG-BLP as a tool for sustainable development is assessed
in terms of social and economic dimensions. In the literature, social sus-
tainability has three components: representation mechanism (indicated by
participation in the decision-making process of grassroots development
initiatives), collective state (indicated by group membership, trust, family
ties, crime-free environment), and individual access (to education, health
care, job, better housing, food) (Baffoe & Mutisya, 2015). All these lead
towards the enhanced empowerment of women. The article also looks at
the way that SHG-BLP contributes to SDGs such as SDG 1 (end of poverty),
SDG 2 (end of hunger), SDG 5 (achieve gender equality and empower all
women and girls), SDG 8 (promote sustained, inclusive and sustainable
economic growth), and SDG 10 (reduced inequalities). To recognize these
themes, the article uses a descriptive analysis of the reports and literature
review materials.
For the economic measurements, the article uses a trend analysis of SHG-
BLP’s progress in India during the last decade (2010–2020). following Tri-
pathi (2014) and Kumra and Sharma (2018) in using averages, percentages,
and the annual compound growth rates (CGR) to evidence increase in loans,
income and savings, which are measures of economic aspects of sustainable
development (SDG1 & SDG10). Linkages with the formal sector, namely
commercial banks (CB), regional rural banks (RRB), and cooperative banks,
are analysed in terms of credit and saving to highlight the banking sector’s
role as an essential player in the partnership for development (SDG17). This
is followed by an analysis of spatial differences in terms of the share of SHG
credit-linked accounts and the average loan amount provided to the groups
 Empowering women through the Self-Help Group Bank Linkage Programme 289

to highlight more on the financial inclusion capability and the equality of

the model (SDG 10). This will show further evidence of enhanced women’s
empowerment within their family, community, and economy. Those data
are collected from NABARD’s annual reports from 2010–2011 to 2019–2020.
Numbers are in Indian Rupees.

Social sustainability

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How SHG-BLP works towards empowering women? Scholars disaggre-
gate power into four types in the development field, namely ‘power over’,
‘power to’, ‘power within’, and ‘power with’ (Mathie et al., 2017). ‘Power
over’ refers to the traditional meaning of control and domination of few
people. ‘Power to’ refers to ‘the new possibilities or actions that can be
created without using relationships of domination’ (Mathie et al., 2017).
‘Power within’ refers to a person’s sense of their capacity and self-worth
(Mathie et al., 2017) by focusing on an individual’s psychological aspects
of inner strength (Dulhunty, 2020). ‘Power with’, however, refers to the
‘relationships and possibilities that can emerge when people collaborate’
(Mathie et al., 2017). The power of solidarity has long been activated in
social movements and can be found within and across differences within
extended family groupings, class, caste, ethnic, gender, and age differences
(Mathie et al., 2017). ‘Power with’ form the basis of successful collective
actions. At the same time, the successful collective action feeds up into
‘power with’ through greater trust (Rowlands, 1997), which significantly
improves household welfare (Nayak, 2018).
Power dynamics and economic power are widely debated in the literature
(Dulhunty, 2020). Although power dynamics are the basis of feminists’ dis-
cussion, which looks at empowerment as holistic, neoliberal theories focus
on individualism and economic values in the empowerment process (Dul-
hunty, 2020). The focus on individualism empowerment alone is criticized
by advocates of ‘power with’ who argue that ‘an individualistic conception
of empowerment can fail to recognize social constraints and connections that
either limit or enhance empowerment (Dulhunty, 2020). Dulhunty (2020)
emphasized that “power with” through the collective action of SHGs is
critical for empowerment to overcome the ‘oppressive power relations that
disempower individuals.’ It is particularly crucial for isolated women who
live in geographic areas with restrictions on women’s mobility, difficulties
in getting information and networking opportunities, and weak government
service.
The importance of collective action and outside relationships manifests
itself in the Dulhunty (2020) study conducted in West Bengal. The women
investigated conveyed that they were significantly isolated before belonging
290 Al-Kubati and Selvaratnam

to SHGs, and they described their experience with SHG membership as

‘extremely important’. The investigation showed that women belonging to
SHGs are engaged in collective actions to demand their rights or stand
against social norms, discrimination, and domestic violence. According to
Nayak (2018), SHGs are the only prominent tool available to women in many
parts of Indian to act collectively.
SHG-BLP, in this regard, works through several power dimensions such
as ‘power with’ through the collective actions and individuals’ empow-

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erment through microfinance. Microfinance through SHGs-BLP aims to
improve the economic situation and promote entrepreneurship among rural
women, which leads to increasing women’s bargaining power leading to the
individuals’ empowerment. Besides, SHG-BLP promotes complex aspects
of development that contribute to members’ capacity and well-being, such
as training programs in accounting, leadership, self-realization, confidence,
decision-making, and dealing with banks and government officials (Nagara-
jan & Ponnusamy, 2019). Accordingly, SHG-BLP is a ‘community-based
finance’ and self-governing domestic institution which acts as a mechanism
to strengthen the community through ‘collective action’ and enable women
to acquire power (Quiroz-Niño & Murga-Menoyo, 2017).
In this context, Baily (2013) affirmed that empowerment is dynamic
and can be manifested in many different ways; hence, it is difficult to
extract all the different aspects separately. However, Brody et al. (2016)
analysed those pathways in India’s context using the theory of change.
Figure 2 below is the outcome of an evidence-based and mixed-method
systematic review of studies conducted between 1980 and 2014 on the effect
of SHGs on women’s empowerment and how SHG participants perceive
this experience, as developed by Brody et al. (2016). The figure shows that
the process of empowerment in the SHGs model happens at multiple stages.
Access to resources and information and group support could reflect a better
financial situation and increased knowledge and confidence in the short run.
This leads to medium-run effects such as increased ability to make better
life choices, a change in household spending and investment choices, and
changes in the nature of female participation in society. In the long run,
the empowerment is reflected by participants’ ability to transform choices
into actions and awareness of their personal and political rights, which
then lead to the emergence of economic, political, social, and psychological
empowerment.
Brody et al. (2016) conclude that the positive effects of SHGs on economic,
social, and political empowerment go through pathways connected with
‘familiarity in handling money, independence in financial decision making,
solidarity, social networking, and receiving respect from family members
and the broad community. They suggested that there is little evidence
 Empowering women through the Self-Help Group Bank Linkage Programme 291

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Figure 2 The theory of change developed by Brody et al. (2016).

for adverse effects that reduce members’ empowerment. They also found
positive effects of SHG on economic and political empowerment, family size
choice, and mobility, which are parts of social empowerment.
The rest of this section highlights some evidence for some aforementioned
long- and short-run effects. For example, Nagarajan & Ponnusamy (2019)
found that 75 percent of 125 women investigated had the opportunity to
occupy a leadership position for six months to three years. Those who served
more than six months developed into entrepreneurs. Banerjee and Ghosh
(2012) highlight the significant impact of training on women’s empow-
erment. They concluded that SHG members who went through training
programmes are ‘more likely to be both empowered and employed’. Ahmad
(2017) found that becoming a member of an SHG allows women new oppor-
tunities to access information, improve their awareness in various aspects
such as their rights, health, nutrition, family planning, self-confidence, self-
respect, and increase their mobility. Quiroz-Niño & Murga-Menoyo (2017)
suggested SHGs to encourage the adaption of new norms, practices, and
behaviours through peer pressure and commitment mechanisms.
However, the Indian experience in implementing SHG-BLP suggests that
empowerment is not automatic, and various issues could arise. These issues
will be discussed in the next section.

What are the challenges faced when implementing the SHG-BLP? To

answer this question, three themes were found in related literature, namely
equality and social challenges, economic challenges, and internal issues.
Equality and social challenges: Growth with equality requires that all people
in need are included, and no one is left behind. However, the complication of
social relations and society’s characteristics may require a special design for
292 Al-Kubati and Selvaratnam

designated programmes. For example, in India, researchers found that not

all of the poor are equally included in SHG-BLP. Those who are on the upper
level of poverty are more likely to be a member of SHGs, whereas those who
are the poorest are less likely (Reddy & Maliki, 2011; Brody et al., 2016), with
the exception in programmes where the mandatory condition is to prioritize
the poorest (Reddy & Maliki, 2011). Baily (2013) found that women who are
most marginalized in the community continue to be denied opportunities to
participate in SHG activities. One reason for such disadvantage is the lack

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of assets and awareness of their rights (Torri, 2012).
In communities with conservative gender norms, such as in Odisha,
SHG membership negatively affects subjective well-being because of higher
identity losses in those communities, according to de Hoop et al. (2014). This
development policy may work against women’s needs if the social context
is not considered (Torri, 2012). For example, in a complex sociocultural
society like Tamil Nadu, Torri (2012) found that the inherent social and
cultural inequality practised gives the group leader the right to decide,
forcing the disadvantaged members to obey. Hence, we should not assume
that members will behave in ‘a cooperative manner irrespective of local
heterogeneity within the community’ as mentioned by Torri (2012). Thus,
policies should keep in mind the specific contextual requirements instead of
being restrictive (Torri, 2012).
The balance of power in a society should be carefully addressed in the
policy design. According to Baily (2013), SHGs change the role of women in
the household. Accordingly, this intention changes men’s role in society, an
element not often considered in empowerment programmes. Hence, in soci-
eties with limited resources and high poverty levels, neglecting the impact of
women’s changing role in society further ‘complicates the situation’ (Baily,
2013). Additionally, suppose the women involved receive no support from
their households. In that case, a new set of responsibilities will only be added
to their daily work, increasing their burden and disabling them from active
participation in the group (Baily, 2013; Nayak et al., 2019).
In communities with high levels of male domination and where women’s
autonomy and physical mobility are restricted by gender inequality, it
becomes more complicated for women to participate in public forums (Torri,
2012). However, Males are ‘both willing to encourage participation as long
as there are some returns to the family and community’ and subscribe
to the notion that ‘without male permission, there would not be female
participation in such programmes’ (Baily, 2013). It is also important to note
that, in places where women have no financial awareness, only males in the
family use loans and take the responsibility of repaying them, leaving no
effect on women or even adverse effects if they do not pay the loan on time
(Nayak et al., 2019). This problem could lead women to sell their belongings
 Empowering women through the Self-Help Group Bank Linkage Programme 293

to pay the instalments, leading to tension in the household, which could spur
domestic violence (Nayak et al., 2019).
Economic challenges: One of the economic challenges is the low increment
in members’ income. According to Jain & Tripathy (2011), this intervention
focuses on primary sectors in rural areas where economic activities do
not result in high-income generation compared to the service and man-
ufacturing sectors. Furthermore, incentives are absent for more ‘produc-
tive and diversified income-generating activities’ in the agricultural sector.

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According to Sundaram (2012), livelihood activities are growing slower
than the fast growth of SHGs; for example, under the SGSY scheme, only
one-fifth of the groups have launched economic activities. Other problems
include marketing, quality, competition, and knowledge about production
(Ahmad, 2017). Torri (2012) highlighted that group-based lending could
hinder an individual’s entrepreneurship initiative. In addition, social norms
and market relations constrain marginalized and vulnerable groups and
restrict their ability to participate in market activities (Guérin et al., 2015).
Internal issues: One of the internal issues is related to the mechanism of
collective action within the group setting, such as the lack of self-motivation
and awareness amongst some SHG members about the programme’s poten-
tial. For example, Huma and Hasan (2017) found that nearly two-thirds
of the SHG members—the study involved 15 SHGs-joined because their
friends are in SHGs. They highlighted that most members lacked the nec-
essary knowledge about SHG benefits and its transformation role. Another
issue is that group dynamics could break down and cause mistrust among
members. However, SHGs are only effective if the group has developed
enough trust and solidarity (Dulhunty, 2020). Other issues highlighted by
NABARD include bookkeeping quality, lack of transparency, quality issues
in the groups’ formation, lack of accurate history of members, and limited
capacity of banks. Jain and Tripathy (2011) suggested that weak SHG per-
formance, low financial base, and irregular ‘inter-loaning’ among members
are bottlenecks hindering a group’s success. D’Souza (2010) suggested that
quality issues happen due to the short period of grants NGOs receive,
leading NGOs to work on a ‘limited target-based approach’ by focusing on
numbers instead of quality.

What solutions can be adopted to sustain the SHG-BLP? India’s experi-

ence is evolving because the government constantly adopts new initiatives
to sustain SHG-BLP. Some of the main initiatives will be discussed below:
SHG promoting institutions (SHGPI): SHGPIs play a significant role in
organizing women into SHGs, linking them to formal banks, and building
groups’ and other stakeholders’ capacity. The quality of group formation
and the nurturing process depend on these SHGPIs’ quality. NABARD
294 Al-Kubati and Selvaratnam

provides financial supports to SHGPIs, including NGOs, the services of

individual rural volunteers, RRBs, cooperatives, and farmer clubs (Aluru,
2010).
Support for all stakeholders: To maintain stakeholders’ motivation and
awareness, NABARD conducts large-scale capacity-building programmes
for officials ranging from the lowest level of the hierarchy to the highest
level (Aluru, 2010). NABARD also works to spread the SHG-BLP’s concept,
best practices, and innovation among all stakeholders (Aluru, 2010). It also

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provides training and education for SHG members and their federations
in collaboration with other SHGs facilitators. Besides, NABARD has estab-
lished a microfinance equity fund. This fund facilitates microfinance and
provides 100 percent refinance to traditional banks at concessional interest
rates to enhance ground-level credit to SHGs (Kumra & Sharma, 2018; Aluru,
2010).
Microenterprise support: A vital initiative taken by NABARD was sup-
port for SHG members’ livelihood activities through the creation of the
Micro-Enterprise Development Programmes (MEDPs) in 2006. These pro-
grammes are need-based skills development initiatives to bridge the skills
and training gaps of matured SHGs. In 2015, the Livelihood and Enterprise
Development Programmes (LEDPs) were initiated to create sustainable
livelihood among the SHGs and optimize their skills to increase income and
employment. NABARD also provided support to NGOs conducting micro-
enterprise development training on technical, managerial, and marketing
skills for matured SHGs (Aluru, 2010).
SHGs federations (SHGF): SHGFs were first promoted by NGOs and State
Governments in the 1990s (EDA, 2006). SHGFs were designed to overcome
economies of scale in the SHGs model and facilitate the withdrawal of
SHGPI, which makes SHGs self-dependent. They provide the structure
that enables women to negotiate with formal institutions and act collec-
tively (EDA, 2006). Generally, SHGF performs financial and non-financial
functions, such as better access to funds and marketing (EDA, 2006). The
formation of SHGF starts by forming clusters that contain 10–20 SHGs. Then
the clusters are linked to form a federation (EDA, 2006).
Technology adaptation: A recent development is the digitalization of the
SHGs, the project called E-Shakti innovation, which means ‘electronic
empowerment’ (Prabhala & Rao, 2019). NABARD launched E-Shakti in
2015 to spread financial inclusion and help solve transparency problems in
SHG-BLP by providing accountable financial and non-financial data. These
data are essential to banks and other stakeholders to make quick decisions
with less effort, thus increasing their capacity to serve more groups with
better quality (Sarmah, 2019).
 Empowering women through the Self-Help Group Bank Linkage Programme 295

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Figure 3 Growth of E-Shakti.

Figure 4 Number of women covered by E-Shakti. Source: Data were taken from the E-Shakti
website.

Figures 3 and 4 show the latest development of the E-Shakti project. The
figures show that 671,306 SHGs are covered under the programme as in 2020,
and 97 percent of members covered are women.

Economic sustainability
The rural poor’s financial needs are generally characterized by being small
and irregular in terms of time (Aluru, 2010). Hence, there is a severe gap
between the financial need of the poor and the formal banking sector.
The benefit of SHG-BLP for rural women lies in combining the flexibil-
ity, sensitivity, and responsiveness of informal credit (internal credit and
savings between members) with the formal banking’s strong technical and
managerial capacity (Aluru, 2010; Kumra & Sharma, 2018).
296 Al-Kubati and Selvaratnam

The idea of SHG-BLP is to provide a sustainable way to finance rural

women, along with offering other benefits discussed earlier. However, the
financial side works as the main reason why these women come together. In
India, there are three types of SHG-BLP:
1) Banks promote and credit SHGs (5 percent of groups following this model),
2) NGOs promote SHGs, and banks credit them (70 percent of SHGs), and
3) NGOs promote and finance SHGs (25 percent of SHGs).

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Vassallo et al. (2019) described these models as a social innovation because
they mix profit and not-for-profit organizations. They describe the three
types as a for-profit hybrid, a quasi-profit hybrid, and a not-for-profit
hybrid, respectively. These hybrid organizations are non-traditional models
where the creative actions happen between the ‘boundaries between sectors’
(Vassallo et al., 2019).
The second model is more common and is achieving higher usage (usage
here refers to the size of the financial inclusion sector measured as the
outstanding loans for the model relative to local market size) than the other
two models (Vassallo et al., 2019). This prevalence is due to the quasi-profit
hybrid advantages built in the model that balance social and commercial
objectives and optimizes itself in acquiring resources that are further limited
for the traditional businesses and charities (Vassallo et al., 2019). Another
characteristic of the quasi-profit hybrids is the self-sufficient seeker feature,
unlike the charity model that depends only on donors or the commercial
businesses that seek profit maximization. Thus, these organizations expect
lower profitability but enjoy lower market competition (Vassallo et al., 2019).
However, the second SHG model is not the model for all market char-
acteristics. For example, at the bottom-of-the-pyramid, the third model is
more suitable (the not-for-profit model) (Vassallo et al., 2019). The first model
is more likely to achieve better outcomes in the bottom-of-the-pyramid
with lower levels of social diversity (Vassallo et al., 2019). The discussion
above brings a general concept of matching the SHG-BLP type with different
market contexts to scale and spread SHG-BLP social innovation.
Given its promised sustainability and wide usage, the second model
is discussed below. Note that SHGs that MFIs or NGOs finance are not
included.

Progress of SHG-BLP SHG-BLP’s saving and credit progress: The share of

SHGs linked with each agency as well as the average savings and overall
trend are shown in Table 1 below, followed by the credit side in Table 2.
Table 1 shows that SHG-BLP has grown steadily with a 3.6 percent
CAGR between 2010–11 and 2019–20 from 7.5 million to 10.2 million SHGs.
CBs alone accounted for 53 percent of SHGs-BLP in 2019–20 and 54 percent
 Table 1 Number of SHGs’ saving-linked with banks and the average saving per an SHG

Year Saving-linked

Commercial banks Regional rural banks Cooperative banks Total

No. of % SHG Saving Average No. of % SHG Saving Average No. of % SHG Saving Average No. of Saving
SHGs amount saving SHGs amount saving SHGs amount saving SHGs amount
million RS. in Rs. million RS. in Rs. million RS. in Rs. million RS.

2010–2011 4,323,473 58% 42,301 9784 1,983,397 27% 14,354 7237 1,155,076 15% 13,508 11,695 7,461,946 70,163
2011–2012 4,618,086 58% 41,530 8993 2,127,368 27% 13,001 6111 1,214,895 15% 10,983 9040 7,960,349 65,514
2012–2013 4,076,986 56% 55,326 13,570 2,038,008 28% 15,271 7493 1,202,557 16% 11,576 9626 7,317,551 82,173
2013–2014 4,022,810 54% 66,315 16,485 2,111,760 28% 19,599 9281 1,294,930 17% 13,061 10,086 7,429,500 98,974
2014–2015 4,135,821 54% 66,307 16,032 2,161,315 28% 23,466 10,857 1,400,333 18% 20,826 14,872 7,697,469 110,598
2015–2016 4,140,111 52% 90,339 21,820 2,256,811 29% 24,843 11,008 1,506,080 19% 21,732 14,430 7,903,002 136,914
2016–2017 4,444,428 52% 101,700 22,883 2,586,318 30% 36,318 14,042 1,546,129 18% 23,124 14,956 8,576,875 161,142
2017–2018 4,633,712 53% 116,642 25,173 2,807,744 32% 58,074 20,683 1,302,981 15% 21,205 16,275 8,744,437 195,921
2018–2019 5,476,914 55% 132,402 24,175 3,078,473 31% 76,920 24,986 1,458,856 15% 23,922 16,398 10,014,243 233,245
2019–2020 5,473,833 53% 156,622 28,613 3,261,879 32% 78,113 23,947 1,507,611 15% 26,786 17,767 10,243,323 261,520
Mean 4534617.4 54% 86,948 18752.7008 2441307.3 29% 35995.7 13564.7 1358944.8 16% 18672.4 13514.5 8334869.5 141,616
CAGR 2.66% −0.89% 15.66% 12.66% 5.68% 2.03% 20.71% 14.22% 3.00% −0.56% 7.90% 4.76% 3.58% 15.74%

Source: Authors’ calculation, data from NABARD. Note: RS denotes Indian rupee.
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297

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 298

Table 2 Number of SHGS’ credit-linked with banks and average loan per an SHG

Year Credit-linked

Commercial banks Regional rural banks Cooperative banks Total

No. of % SHG Disbursed Average No. of % SHG Disbursed Average No. of % SHG Disbursed Average No. of Disbursed
Al-Kubati and Selvaratnam

SHGs loans loan SHGs loans loan SHGs loans loan in SHGs loans
million RS. in Rs. million RS. in Rs. million RS. Rs. million RS.

2010–2011 669,741 56% 97,246 145,199 296,773 25% 31,976 107,746 229,620 19% 16,256 70,794 1,196,134 145,477
2011–2012 600,807 52% 99,420 165,478 304,809 27% 50,261 164,892 242,262 21% 15,667 64,669 1,147,878 165,348
2012–2013 735,577 60% 133,850 181,966 312,010 26% 56,265 180,331 172,234 14% 15,738 91,378 1,219,821 205,854
2013–2014 767,253 56% 160,375 209,025 333,420 24% 62,881 188,595 265,748 19% 16,917 63,659 1,366,421 240,174
2014–2015 855,724 53% 173,341 202,567 522,139 32% 77,252 147,953 248,375 15% 25,230 101,579 1,626,238 275,823
2015–2016 1,132,281 62% 251,850 222,427 470,399 26% 91,649 194,833 229,643 13% 29,370 127,894 1,832,323 372,869
2016–2017 1,116,442 59% 242,970 217,629 557,540 29% 116,130 208,290 224,138 12% 28,711 128,097 1,898,120 387,812
2017–2018 1,272,886 56% 287,076 225,532 782,563 35% 151,193 193,203 205,683 9% 33,589 163,306 2,261,132 471,859
2018–2019 1,512,907 56% 344,925 227,988 940,818 35% 195,526 207,826 244,675 9% 42,725 174,620 2,698,400 583,176
2019–2020 1,796,099 57% 484,311 269,646 1,093,788 35% 242,316 221,539 256,115 8% 49,966 195,094 3,146,002 776,593
Mean 1,045,972 57% 227,536 206,746 561,426 29% 107,545 181,521 231,849 14% 27,417 118,109 1,839,247 362,498
CAGR 11.58% 0.22% 19.53% 7.12% 15.60% 3.82% 25.24% 8.34% 1.22% −9.09% 13.29% 11.92% 11.34% 20.45%

Source: Authors’ calculation, data from NABARD. Note: RS denotes Indian rupee.

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 Empowering women through the Self-Help Group Bank Linkage Programme 299

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Figure 5 Number of SHGs with saving and credit accounts.

on average during the last decade, followed by RRBs at 29 percent and

cooperatives banks at 16 percent on average. The average savings amount
per SHG is higher in CBs at Rs18,753 and around 13,500 in RRBS and
cooperatives. The table shows stable growth in SHGs linked to all agencies
with higher RRBs (5 percent CAGR). In the last three years, the saving
amount in CBs and RRBs increased by three fold in 2019–20 compared to
2010–11.
In Table 2, generally, there was a tremendous increase in SHGs credited
under the formal sector with about a three-fold increase in 2019–20 com-
pared to 2010–11. The credit amount increases more than five-fold in 2019–
20 compared to 2010–11. CBs also have the largest share with 57 percent
of SHGs credited on average, followed by RRBs and cooperative banks
with 29 percent and 14 percent share, respectively. Similarly, the average
amount of loans per SHG provided by CBs was higher at about Rs206.746
on average compared to Rs181.521 and Rs181.109 by RRBs and cooperatives,
respectively. The number of groups eligible to receive bank loans showed a
steady upward trend for both CBs and RRBs at 12 percent and 15 percent
CAGR, respectively, but at only 1 percent CAGR for cooperatives. Figures 5
and 6 below compare both saving- and credit-linked accounts of SHGs in
terms of the number of groups and total amount, respectively.
Both figures show a noticeable increase in the size of SHG-BLPs for both
savings and credit. The first three bars in both figures show the total number
and amount of savings each year, followed by the credit bars. The amount of
credit dispersed during each year is much higher than savings. In contrast,
the number of SHGs credited is less than those who have saving accounts
which means that only a small part of the SHGs bank-linked are credited.
Tripathi (2014) analysed SHG-BLP’s progress in terms of widening and
deepening from the beginning of the programme in 1992 until 2010. The
author showed that the programme’s take-off was slow at the beginning,
300 Al-Kubati and Selvaratnam

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Figure 6 Amount of savings and credit to SHGs by banks.

where promoting the initial 100,000 bank-linked SHGs took eight years
(1992–2000). However, the programme achieved a key milestone by reaching
one million linked SHGs between 2000 and 2004. By the end of 2010, the
number has grown to 4.8 million SHGs credit-linked with banks (Tripathi,
2014).
It is crucial to notice that India has worked to expand bank branches in
rural areas from earlier stages (Burgess & Pande, 2005), making it possible
to link rural SHGs to the formal financial sector. For example, both RRB and
cooperatives are supported by the government and play a vital role in reach-
ing the excluded poor (Akoijam, 2012). RRBs are dominant in backword
areas, and cooperatives banks are the primary tool to finance the agriculture
sector (Akoijam, 2012). The government also makes it compulsory for CB to
have branches in rural areas (Burgess & Pande, 2005).

Progress within regions In Table 3, generally, the number of SHGs cred-

ited has grown tremendously in the last three years from 1.9 million in
2016–17 to 4 million in 2018–19. In general, SHG-BLPs grow by 11.34 CAGR
between 2010–11 and 2019–20. The highest number of credit-linked SHGs
was in 2015–16 at 7.7 million groups. The amount of disbursed loans
increased from 145.5 billion in 2010–11 to 776.6 billion in 2019–20.
On average, the Southern region has 54 percent of credit-linked SHGs
during the last decade, followed by the Eastern and Western regions at
21 percent and 14 percent. The other two regions have a meagre share at
2.6 percent and 2 percent for the Northern and North-eastern regions. The
average loan per SHG is the highest for the Southern, Northern, and Western
regions at 222.7, 103.2, and 102.5 thousand Indian Rupees. Meanwhile, the
average loan for the Central, Eastern, and North-eastern regions are 94.2,
87.8, and 86.9, respectively.
Figures 7 and 8 below show the fluctuation in number and the average
amount of loan per SHG. For example, in 2014–15, the average loan in the
 Table 3 Regional difference in terms of SHG-BLP share and average loan

Year Northern region North-eastern Eastern Central region Western region Southern region All India

% SHG avg. loan % SHG avg. loan % SHG avg. loan % SHG avg. loan % SHG avg. loan % SHG avg. loan No. of Total loans
(Rs.) (Rs.) (Rs.) (Rs.) (Rs.) (Rs.) SHGs disbursed
(Rs. Million)

2010–2011 3.55% 88,843 3.29% 81,654 20.70% 65,402 4.07% 124,667 7.69% 68,068 60.70% 151,459 1,196,134 145,477.32
2011–2012 2.68% 109,080 4.44% 88,483 17.53% 80,718 5.09% 121,343 8.80% 74,508 61.45% 179,493 1,147,878 165,347.69
2012–2013 2.56% 109,412 2.06% 71,603 14.99% 70,570 5.26% 108,895 5.77% 100,803 69.35% 205,262 1,219,821 205,853.56
2013–2014 1.75% 117,269 1.19% 79,125 21.77% 50,783 4.86% 93,092 6.43% 98,404 64.01% 235,718 1,366,421 240,173.58
2014–2015 4.69% 6649 4.34% 3899 19.81% 14,124 10.62% 10,079 12.23% 11,595 48.32% 17,801 7,697,469 110,598.41
2015–2016 2.08% 126,746 1.42% 84,375 22.52% 84,709 4.60% 141,272 6.14% 167,636 63.24% 258,996 1,832,323 372,869.07
2016–2017 4.32% 123,294 1.53% 98,134 26.19% 95,194 4.32% 82,864 5.63% 139,311 59.89% 272,926 1,898,120 387,811.56
2017–2018 1.18% 104,322 0.80% 102,013 16.40% 126,165 1.58% 80,732 51.47% 208,683 28.58% 279,454 4,393,291 928,207.55
2018–2019 1.39% 112,055 0.67% 107,071 22.63% 131,638 2.12% 84,806 36.50% 12,583 36.69% 290,750 4,018,500 583,176.29
2019–2020 2.00% 134,637 1.20% 153,128 35.71% 158,883 3.53% 93,856 5.54% 143,112 52.02% 335,152 3,146,002 776,593.48
Mean 2.62% 103,231 2.09% 86,948 21.82% 87,819 4.61% 94,161 14.62% 102,470 54.4% 222,701 2,791,596 391,610.85
CAGR -6.19% 4.73% -10.58% 7.24% 6.25% 10.37% -1.58% −3.11% -3.58% 8.61% -1.70% 9.23% 11.34% 20.45%

Source: Authors’ calculation, data from NABARD. Note: RS denotes Indian rupee.
Empowering women through the Self-Help Group Bank Linkage Programme
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302 Al-Kubati and Selvaratnam

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Figure 7 Regional share of SHG-BLP.

Figure 8 Average loan disbursed.

Northern and Southern regions decreased but then climbed again. Another
example is the Western region, where the number of linked SHGs increased
sharply in 2017–18 but fell again in 2018–19.
The analysis confirms a considerable heterogeneity between regions with
higher outreach found in the Southern region. Some studies attributed
the significant growth in South India to the strong presence of particular
development and poverty alleviation programmes such as the Development
of Women and Children in Rural Areas (DWCRA) and the World Bank
(Reddy & Maliki, 2011). According to Reddy and Maliki (2011), experienced
NGOs and broad support from NABARD, the states’ official administration,
and bank managers are behind such growth in the South region. On the
effect on women, Banerjee & Ghosh (2012) note that self-employed mem-
bers of SHGs do better than their wage-earning peers when it comes to
 Empowering women through the Self-Help Group Bank Linkage Programme 303

job stability. Venkatraja (2019) evidences that SHGs supported by the Shri
Kshetra Dharmasthala Rural Development Project (SKDRDP) contribute
significantly to societal reforms, improve rural poor’s capacity, and allow
economic well-being and financial inclusion. As a result, SHG activities
promote inclusive and long-term rural growth. Gupta (2020) agrees that
SGH and NGOs have successfully empowered women and aided them to
venture new entrepreneurship opportunities and gainful livelihood.

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Conclusion
This article used the argument of Jakimow and Kilby (2006), who posited
that women’s empowerment should not be an endpoint but rather a con-
tinuous process in which constraints are reduced. Hence, the concept of
empowering women is preferable compared to women’s empowerment, in
which governments should work towards empowering actions. The article
suggested that the SHG-BLP is not a restricted model but instead is a flexible
and comprehensive tool that can be used to achieve various development
goals. Hence, the article looked at the SHG-BLP from different directions
while it stood on its unique feature as a tool directed to financing women.
Women benefit from such arrangements the most, given the various con-
straints they face compared to men. The article emphasized that the SHG-
BLP’s power dynamics that work in several power domains are significant
features of the programme that empower women by allowing women to
participate in decision-making, planning and develop negotiation skills and
a sense of self.
Through this article, SHG-BLP shows the ability to contribute towards
social sustainability and to various SDGs; in particular, the following goals:
SDG 1 by contributing to ensuring women, the poor and vulnerable in
particular, have access to economic resources and basic services such as
financial service including microfinance; SDG 2 by contributing to increas-
ing the agricultural productivity and incomes of small-scale food produc-
ers, particularly women, through secure and equal access to productive
resources and inputs, knowledge, financial services, and markets; ADG 5
by contributing to ensure women’s effective participation and leadership
rules in their communities and into political, economic, and public life
decision-making.
Also, it contributes to SDG 8 by being a development-oriented policy
that supports productive activities, decent job creation, entrepreneurship,
creativity, and innovation, and encourage the growth of micro-, small- and
medium-sized enterprises, including through access to financial services
and by reducing the proportion of youth not in employment, education
or training. Also, it strengthens domestic financial institutions’ capacity to
304 Al-Kubati and Selvaratnam

increasing the proportion of adults with a bank account and SDG 10 by

contributing to promoting social, economic, and political inclusion.
The lessons extracted in this article suggest that SHGPI’s quality, includ-
ing NGOs, is crucial for the success of SHG-BLP as a tool for empowerment
and development. If the initial stage of the group formation goes wrong,
serious consequences such as disempowerment and discrimination could
exist. In India, the institutional support is remarkable. It is one of the reasons
why SHG-BLP is spreading and evolving as a flagship multi-dimensional

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vehicle for developing and empowering women. On the other hand, social
context needs to be considered, and SHG-BLP should be designed and
nurtured according to the sociocultural aspects. Accordingly, the bottom-
up approach should be adopted instead of a restricted top–down program
(Jakimow & Kilby, 2006).
The banking sector’s role is essential as a player in the partnership for
development (SDG17). It sustainably finances the SHGs while also reducing
informal lending practices that could provide loans at exploitative interest
rates, thus leading to better positions for rural women and better resource
management. This is evidence of the importance of partnerships. In the
last decade, the article showed that the SHG-BLP continued to grow even
after the Andhra Pradesh microfinance crises, where the usefulness of
microfinance was deeply questioned in the literature. The analysis on the last
decade showed steady growth (3.6 percent CAGR) of SHG-BLPs in terms of
new groups linked to banks. A higher growth rate (11.3 percent CAGR) was
recorded for new groups receiving loans. However, the growth was higher
for total savings and total loans dispersed at 15.7 percent and 20.5 percent,
respectively. This suggests deepening instead of widening the SHG-BLP in
the last decade.
India has expanded bank branches in rural areas from earlier stages,
making it possible to link SHGs with banks. The analysis shows that CB
are more involved in SHG-BLP than RRBs and cooperative banks, with
54 percent of total SHG-BLP linkages on average during the last decade.
The growth of SHG-BLP indicates its usefulness not only for women but
also to banks highlighting the benefits of the hybrid models, especially the
quasi-profit hybrid that is most spread in India. Hence, the combination
of the formal sector’s efficiency and the flexibility and convenience of
internal group lending is an essential feature of the program. The lending
at the market interest rate, as in SHG-BLP, makes it financially sustainable,
reduces the burden of governmental subsidies and benefits borrowers who
otherwise will depend on informal lenders at exploitive rates. The spatial
difference shows that the southern region alone has 52 percent of SHGs. This
difference shows the importance of experienced NGOs and development
projects mainly located in the South, and the importance of state planning
and officials’ motivation to spread the programme.
 Empowering women through the Self-Help Group Bank Linkage Programme 305

Acknowledgements
We would like to thank the anonymous reviewers for their valuable suggestions and
comments.

Funding
This paper is funded by Universiti Kebangsaan Malaysia grant code EP-
2018-001.

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Conflict of Interest
The authors declare no conflict of interest.

Nada Amer Abdulhafedh Al-Kubati completed her MSc. in Economics, Universiti Kebangsaan
Malaysia. She holds a BSc. degree in Business Administration from Sana’a University. Her
research interests are in the fields of community development, sustainable development, and
environmental economics.
Doris Padmini S. Selvaratnam is an Associate Professor of Universiti Kebangsaan Malaysia
(The National University of Malaysia). She conducts research-based courses pertaining to Senior
Start-up, Social Entrepreneurship, Economics of Women in Health, Economics of Social Policy;
and Social and Political Aspects of Development. Her focus is among mainstream community,
indigenous and natives of Malaysia, elderly and minority Indians. She organises numerous
community research activities involving various stakeholders – the local community, students,
NGOs and the local government. Experiential learning in the community is emphasised in all her
courses to highlight elements of gender equality, political bargaining power, and volunteerism
in community development, learning from the community and also the richness of knowledge
gained through the process of dialogue and engagement with the diverse stakeholder. Her
community programmes are currently at various Orang Asli villages for provision of basic needs,
digital marketing courses, education programmes and solar powered light. While consultancy
and research works are related to online shopping, consumer empowerment and redress among
youth and elderly. She has journal articles and books related to gerontechnology, wellbeing of
elderly, housing needs of the elderly, ageing in place and currently working on topic of aging
gracefully.

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