NABARD issued operational guidelines for a pilot to link about 500 self-help groups (SHGs) with banks. The pilot tested whether informal savings groups could reliably use bank savings accounts and receive loans without traditional collateral. This step established a national model for using group-based finance to reach poor rural households, especially women.
Within the pilot period, hundreds of SHGs established credit links with commercial banks and regional rural banks. Early progress reports emphasized regular savings, small loans, and strong repayment, helping banks see SHGs as viable clients. These results encouraged NABARD to plan for a much larger rollout beyond the initial pilot districts.
Following working-group recommendations, RBI and NABARD advised banks to treat SHG lending as a normal, mainstream banking activity rather than a temporary experiment. Guidance also supported SHG savings accounts and clearer treatment within priority-sector lending (bank credit to socially important sectors). This policy shift made it easier for banks to scale SHG lending across states.
The Government of India launched Swarnjayanti Gram Swarozgar Yojana (SGSY) to support self-employment among the rural poor, organizing beneficiaries into SHGs and linking them to bank credit and subsidies. SGSY increased demand for SHG formation and financing, complementing the SHG Bank Linkage Programme (SHG-BLP). This broadened SHGs from a finance channel into a platform for livelihoods and asset-building.
By March 2003, large numbers of SHGs were credit-linked, and millions of households had entered the formal banking system through SHG-BLP. Reports also highlighted that most SHGs were women’s groups and that repayment performance was high. The scale-up showed that group-based lending could reduce transaction costs for banks while expanding rural outreach.
A special effort began to promote and finance women’s SHGs in identified Left Wing Extremism (LWE)-affected and backward districts, implemented by NABARD with the Department of Financial Services. The goal was to expand SHG coverage and credit access in areas where social and financial inclusion lagged. This period marked a stronger use of SHG-BLP as a regional inclusion tool, not only a general rural program.
India launched the National Rural Livelihoods Mission (NRLM) to build strong institutions of the rural poor, with SHGs as a core building block. NRLM’s focus on women’s mobilization and federations helped standardize SHG promotion and strengthen links with banks. This repositioned SHG financing as part of a wider poverty-reduction strategy, not only a microcredit product.
NABARD started a pilot to digitize SHG records under the E-Shakti initiative, aiming to improve data quality and make bank interactions faster and more transparent. Digitization addressed a practical scaling problem: paper records and inconsistent group data made credit decisions slow and monitoring difficult. The shift supported safer expansion of lending by improving the information available to banks and program managers.
NRLM was renamed Deendayal Antyodaya Yojana–National Rural Livelihoods Mission (DAY-NRLM). The renaming signaled continued emphasis on poverty reduction through women-led SHGs, community institutions, and improved access to finance and livelihoods. It also helped align SHG mobilization and bank linkage with a broader set of rural development priorities.
NABARD’s retrospective publication on 25 years of SHG work recorded how SHG-BLP evolved from a small pilot into a long-running national program with sustained policy support. It highlights a key institutional lesson: SHG bank linkage persisted because banks, NABARD, and government programs repeatedly reinforced it through guidelines, refinance, and promotion. This documentation also helped standardize how the program’s history and design are understood by practitioners.
By 31 March 2024, reporting showed about 144.22 lakh SHGs linked to bank savings accounts, with 77.41 lakh SHGs having loans outstanding. The average loan outstanding per SHG was reported around ₹3.35 lakh, indicating larger credit sizes compared with earlier years. These figures reflect a mature national system, while also showing that not all savings-linked groups are actively credit-linked at the same time.
Recent reporting emphasizes persistent challenges such as dormant groups, uneven credit linkage across states, and the need to improve the accuracy of SHG data used by banks. At the same time, the program remains a core financial-inclusion pathway for women’s groups, with ongoing attention to digitization and better monitoring. The current phase can be seen as consolidation: sustaining large-scale lending while improving quality, coverage, and transparency.
India Self-Help Group (SHG) Bank Linkage Programme (1992–present)