Microfinance: The Shg-Linkage Program

Prabal Roy Chowdhury

in The Oxford Handbook of the Indian Economy

Published in print March 2012 | ISBN: 9780199734580
Published online November 2012 | | DOI:

Series: Oxford Handbooks

 Microfinance: The Shg-Linkage Program

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  • Economic Development and Growth


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The microfinance sector in Indian has followed two different models: the microfinance institute (MFI) model and the self-help-group (SHG) linkage model. The MFIs mostly follow the Grameen model, with some variations, whereas the SHG-linkage model has some interesting features typically not found in other microfinance institutions. This article focuses not only on the SHG-linkage program but also on its role as a conduit for channeling credit and on the role played by NGOs in this process. It provides a brief overview of the genesis and spread of the SHG-linkage program, and examines the social impact of microfinance, especially in the Indian (and Bangladeshi) context. It builds a simple formal model capable of comparing the efficiency implications of the SHG-linkage approach vis-a-vis the Grameen. Finally, the article concludes with some suggestions for future research.

Keywords: self-help group; microfinance; SHG-linkage model; NGOs; credit channeling; efficiency implications

Article.  8372 words. 

Subjects: Economics ; Financial Markets ; Economic Development and Growth

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