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Abstract
Microfinance is the developmental intervention devised after the failure of the directed credit
programs world over. In India microfinance was adapted into the unique program of linking Self
Help Groups of poor women to banks in the year 1992. It is visualized that the linkage of the poor
women through SHGs with the formal financial institutions will also promote financial inclusion
at the macro level, while providing a platform for encouraging entrepreneurial activities, and thus
eradicating poverty. It has been twenty two years since the SBLP was adopted at the national level,
and the program has witnessed exponential growth along the length and breadth of the country.
The objective of the present paper is to assess how far the program has been successful in
enhancing the level of financial inclusion in the economy. And, it also intends to devise a
framework for making successful assessment of the objective. The paper concludes, after fitting a
simple regression equation between two specially designed indices to measure the degree of
financial inclusion and the level of SBLP in each state in India, that only less than one quarter of
the financial inclusion level attained is explained by the program of SBLP and that any program to
enhance financial inclusion has necessarily to be context specific, especially in a country like India
which nests diverse interests and standards in every conceivable sphere of life.
Alappatt Palatingal House, Sweet Bazar Road, Irinjalakuda, Kerala, India, PIN 680121. Tel:
9496347172. Fax: 91480 2825708. E mail: jose_paul09@yahoo.co.in
1. Introduction
The failure of the interventions based on
directed and subsidized credit aimed at dealing
with poverty led to the emergence of a novel
tool in the later decades of the last century, and
soon became the buzzword among the planners
Microfinance. It was in Bangladesh where
Microfinance was first tested on a large scale
under the leadership of the Nobel Laureate
Mohummad Unus. Soon the term Microfinance
became familiar throughout the world as a
trustworthy tool of poverty eradication
intervention in developing as well as developed
world. Microfinance is essentially a scheme of
granting small time loans coupled with other
financial services like micro savings and micro
insurance based on a hitherto unheard scheme
of group liability of the poor especially poor
women with the ultimate aim of enabling
them to financing profitable entrepreneurial
activities, which would eventually lead them
out of poverty. Group Liability, which is the
most important feature of microfinance,
involves the coming together of women from
homogeneous background into small groups
with the common aim of fetching loans for
supporting entrepreneurial activities from
financing institutions based on the non
collateral personal guarantee they provide on
behalf of one another. Probably the driving
force behind the implementation of the
program of microfinance on a phenomenal
scale supported by Government as well as
private agencies like NGOs throughout
developing world is the distinct understanding
that savings and credit accessibility to the poor
from formal sources can, as stated by Brar
(2004), strengthen the links between financial
inclusion, financial development, economic
growth, and thus poverty alleviation. It is well
established that financial exclusion results in
non accessibility and non availability of funds
from formal sources, which, in turn, will lead
to dependence of, especially the poor, on high
cost credit from informal sources such as
moneylenders. Such dependence aggravates the
livelihood circumstances of the poor and
drastically reduces the chances of getting out of
Progress of SBLP
mD
1 4
4 d DI ,
1
D ^GP , DP , BP , BU `
IFI of E th State
(2)
D ^AS , EC , PS `
1 3
3 d DE
1
(4)
5.
Data and reasons for the Limitations
in the Study
The study is solely based on the secondary data
retrieved from various sources like Registrar
General and Census Commissioner (2006) for
the details on the population of India for
various years, Planning Commission (2013) for
the Gross State Domestic Product at current
prices and various Reports of NABARD. The
study period is limited to five years from 2008
to 2012 on account two reasons: first, the data
regarding the various dimensions of SBLP
recognized for this paper are available from
NABARD only from 2008, and secondly, the
details of the number of accounts, amount of
6.
Results
SBLP
2009
2010
2011
2012
2008
2009
2010
2011
2012
Northern Region
Haryana
Himachal Pradesh
Jammu & Kashmir
Punjab
Rajasthan
North Eastern Region
Arunachal Pradesh
Assam
Manipur
Meghalaya
Mizoram
Nagaland
Tripura
Eastern Region
Bihar
Jharkand
Orissa
Sikkim
West Bengal
Central Region
Chatisgarh
Madhya Pradesh
Uttar Pradesh
Uttarakhand
Western Region
Goa
Gujarat
Maharashtra
Southern Region
Andhra Pradesh
Karnataka
Kerala
Tamil Nadu & Pondicherry
2008
State
0.29
0.30
0.22
0.45
0.14
0.28
0.29
0.19
0.43
0.12
0.30
0.30
0.20
0.45
0.12
0.29
0.26
0.16
0.43
0.10
0.33
0.32
0.21
0.48
0.11
0.37
0.17
0.36
0.27
0.11
0.37
0.28
0.24
0.22
0.22
0.53
0.26
0.48
0.25
0.19
0.50
0.30
0.12
0.22
0.16
0.34
0.32
0.19
0.30
0.20
0.12
0.13
0.03
0.14
0.13
0.04
0.14
0.10
0.10
0.01
0.12
0.11
0.02
0.13
0.10
0.11
0.01
0.13
0.12
0.02
0.14
0.08
0.10
0.01
0.11
0.09
0.04
0.13
0.09
0.11
0.01
0.14
0.12
0.03
0.15
0.10
0.13
0.10
0.17
0.31
0.18
0.19
0.20
0.22
0.08
0.17
0.30
0.42
0.34
0.15
0.29
0.16
0.17
0.46
0.14
0.41
0.12
0.21
0.40
0.13
0.14
0.16
0.34
0.24
0.26
0.10
0.16
0.65
0.23
0.53
0.15
0.15
0.14
0.23
0.27
0.15
0.15
0.14
0.23
0.27
0.15
0.15
0.15
0.19
0.28
0.14
0.14
0.14
0.17
0.27
0.14
0.16
0.17
0.20
0.29
0.17
0.08
0.25
0.21
0.16
0.23
0.20
0.39
0.46
0.49
0.23
0.19
0.38
0.14
0.22
0.11
0.26
0.34
0.17
0.29
0.17
0.23
0.42
0.21
0.26
0.07
0.34
0.21
0.31
0.10
0.09
0.19
0.27
0.11
0.11
0.20
0.25
0.10
0.10
0.19
0.22
0.12
0.12
0.21
0.28
0.20
0.13
0.19
0.36
0.22
0.20
0.26
0.44
0.19
0.21
0.24
0.38
0.18
0.19
0.22
0.26
0.21
0.26
0.33
0.48
0.85 0.84 0.85 0.84 0.86 0.48 0.35 0.59 0.26 0.39
0.22 0.20 0.21 0.18 0.21 0.21 0.20 0.28 0.15 0.17
0.42 0.41 0.41 0.40 0.43 0.15 0.35 0.21 0.24 0.34
0.25
0.35
0.52
0.35
0.24
0.34
0.50
0.35
0.26
0.36
0.51
0.36
0.24
0.32
0.49
0.33
0.28
0.21
0.43
0.39
0.44
0.40
0.26
0.60
0.63
0.42
0.50
0.73
0.60
0.41
0.36
0.50
0.53
0.46
0.47
0.43
0.70
0.69
0.62
0.50
IFI
Regression Line
0.08 0698 SBLP
R P Value
0.28 0.003
2009 IFI
.0799 0.453SBLP
0.15
0.039
2010 IFI
.0398 0.633SBLP
0.27
0.004
2011 IFI
0.12
0.072
2012 IFI
.0607 0.575SBLP
0.23
0.010
muenchen.de/54154/1/MPRA_paper_54154.
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DOI: http://dx.doi.org/10.5296/rae.v1i1.304