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Self Help Group Bank Linkage scheme, Andhra Pradesh, 2015

  • In Andhra Pradesh, self help movement through savings has been taken up as a mass movement by women.

Self Help Groups

  • The members of SHGs are poor with low or nil saving capacity, and who depend on moneylenders or private sources to meet their expenditure and other obligations.
  • Self Help Groups (SHGs) are village-based, usually economically and socially homogeneous groups of 15 to 20 women who come together voluntarily to pool their small savings which they use initially for micro-lending among members of the group.
  • There are about 5.79 lakh women SHGs in Andhra Pradesh covering nearly 74.58 lakh rural poor women.
  • Non-Government Organisations (NGOs) involved in rural development activities are also largely operating through Self Help Groups


  • Self-help groups are seen as instruments for goals including empowering women, developing leadership abilities among poor people, increasing school enrollments, and improving nutrition and the use of birth control.
  • The state used the development of self-help groups (SHGs) extensively as a primary tool of poverty alleviation and empowerment.
  • To stop exploitation of women from financial crisis.
  • The primary aim of the SHG-Bank linkage program is to integrate informal savings and credit groups with mainstream banking by providing them with credit to enhance their fund base.

Mission Goal

  • All the 30 lakh poor families to have improved quality of life by accessing services from all organizations through their own strong self-reliant and self-managed institutions are some of the strategies of formulated to poverty reduction even in urban areas, said by Chandra Babu Naidu, Chief Minister of AP.
  • Empowerment of urban poor women, especially those residing in slum areas is the main objective.


  • The SHGs are not only resorting but are also taking small loans out of the corpus available with the group.
  • The state-sponsored Velugu program working in mandals aims to reach 2.9 million of the poorest of rural poor.
  • The state government has taken several initiatives to extend financial support to these groups.
  • Disability intervention and loans with subsidies for self employment units, having credit card gap funding for women.
  • Having insurance linked old age schemes and scholarship linked insurance scheme to avail insurance benefits.
  • Placement linked skill training for unemployment group with community health and nutrition awareness programmes.
  • Andhra Pradesh has chosen social mobilization and inclusiveness as methods of addressing poverty alleviation.
  • Several interesting features have been observed in the financial dynamics of groups where there is evidence in qualitative shift in loans portfolio in favour of productive purposes as against consumption loans availed earlier.
  • As per the reports of the bankers, the recovery of loans is around 95% as against 87% when comparative to other states.
  • Andhra Pradesh has adopted substantial legislation and introduced numerous government schemes aimed at providing land to poor rural households.

NABARD’s SHG Bank Linkage Program

  • Under NABARD’s ‘SHG Bank Linkage’ program, borrow from banks once they have accumulated a base of their own capital and have established a track record of regular repayments.
  • It is an accepted fact that banks will base their lending rate decisions on three important criteria – their cost of funds, transaction costs and the required spreads.
  • There is an element of indirect subsidy as presently NABARD supports the costs involved in formation and nurturing of SHGs up to the stage of credit linkage and this financial support is around Rs. 3,000 per SHG.
  • In Andhra Pradesh, the use of SHGs to route and implement poverty alleviation programs has to be seen as an evolution over time of government initiative, national and state, as well as NGO efforts.

Source: NARARD, WorldBank, APMEPMA

About Swathi Ragiphani

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