Microfinance and Socio-Economic Impact: An Assessment of SHG-Bank Linkage Programme

Abstract

Microfinance improves ability of the poor to have access to finance, which generally results in improving their socio-economic conditions. Microfinance not only provides poor access to finance, but provides them the opportunity of being a part of formal financial setup. India being in the phase of development has considered microfinance as an important poverty alleviation tool, and has initiated a number of schemes focusing the poor. The current study attempts to assess the impact of a microfinance scheme based on the SHG-Bank Linkage Model (Swarnjayanti Gram Swarozgar Yojana, SGSY) on the socio-economic conditions of the beneficiaries. The study has been conducted while taking four districts of Kashmir Valley into consideration. Overall the scheme has been successful in providing access to finance to a large number of financially excluded people. Results reveal that people have improved in terms of income and savings. Microfinance has been a source of social empowerment as people have felt a positive change so far as their decision making, awareness and participation, leadership quality, self confidence, communication skills bargaining and negotiation and respect and recognition dimensions are concerned. All the four districts considered under study show a significant positive improvement, which signifies that SGSY is evenly setting a positive impact.