This delivery mechanism is indeed a blend of the proximity, responsiveness & flexibility of an informal system and the financial & infrastructural back-up of a formal system. Self Help Groups are playing a very important role in the process of financial inclusion. SHGs are groups of people who get together and pool money from their savings and lend money among themselves.
The SHG is given loans against the group members’ guarantee. Peer pressure within the group helps in improving recoveries. The SHG-Bank linkage program, in India, which commenced in 1992, has grown phenomenally. The program which started with a target of 500 SHGs in 1992 now has 74.62 lakh SHG covering over 97 million rural households.