Is the number of Self Help Groups (SHGs) a measure of development?
Banks are not interested in dealing with 20 lakh or 30 lakh SHGs. The transaction cost to reach out to individual groups is too great and may not be profitable for banks. If 1000 SHGs form a federation, then they can leverage a better deal from the financial sector and even banks will be interested in monitoring the health of the federation. Federations can help one another with funds and with expertise. However, as soon as federations gain control, SHG will become weak. So this has to be a natural process where SHGs come together by themselves. Government or external agencies should not force federations on SHGs. For a bank as large as the State Bank of India, loaning out Rs 30,000 to a group is not a big thing. What we need today is a consolidation of groups into newer structures so that banks can deal with them profitably. Does NABARD have a credit plan for all districts of India? How is it prepared? Yes. NABARD prepares a potential link credit plan for each district based on the po
