NABARD - National Bank For Agriculture And Rural Development

Micro Credit Innovation

NABARD, through its Micro Credit Innovations Department has continued its role as the facilitator of microfinance initiatives in the country. The - vision of the department is to facilitate sustained access to financial services for the unreached poor in rural areas through various microfinance innovations in a cost effective and sustainable manner.

NABARD has been continuously focusing on bringing in various stakeholders on a common platform and building their capacities to take the initiatives forward. This has resulted in tremendous growth of the microfinance sector in India through different approaches -which are discussed below.

Self Help Group – Bank Linkage Programme (SHG-BLP)

Based on the observations of various research studies and an action research project carried out by NABARD, the model of ‘SHG-BLP’ has evolved as a cost-effective mechanism for providing financial services to the unattended and underserved poor households. What started as a pilot to link around 500 SHGs to the formal financial institutions during the year 1992-93 has now become the largest microfinance programme in the world, in terms of client base and outreach. The SHGs which follow ‘Panchsutras’ viz. conduct of regular group meetings, regular savings within the group, internal lending based on the demand of members, timely repayment of loan and maintenance of proper books of accounts are considered to be of good quality and over years have proved themselves to be good customers of Banks.

The non-governmental sector has played a prominent role of working as a Self Help Group Promoting Institution (SHPI) by organising, nurturing and enabling credit linkage of SHGs with banks. NABARD later approved many others as SHPIs including rural financial institutions (RRBs, DCCBs, PACS), Farmers’ Clubs (FCs), SHG Federations, Individual Rural Volunteers (IRVs) etc. These stakeholders were encouraged to take up promotion of SHGs by way of promotional grant assistance from NABARD. This savings led microfinance model has now become the largest coordinated financial inclusion programme in the world covering almost 16.19 crore households in the country. With more than 80 percent of the groups being exclusively women groups, the programme has provided the much needed push to empowerment of women in the country

Other than championing the movement and providing promotional support, NABARD has enabled an entire ecosystem of support through policy advocacy at Bank and Government level, organising and sponsoring a large number of training and capacity building programmes, seminars and workshops for the benefit of all the stakeholders, viz. bankers, Government agencies, NGO partners and more importantly SHG members themselves. Banks are also provided 100 percent refinance support by NABARD for financing of SHGs.
Product level changes like allowing voluntary savings in the group, sanction of cash credit/ overdraft system of lending to SHGs, allowing formation of JLGs within SHGs, improving risk mitigation systems, building second tier institutions of SHGs, etc. were brought in subsequently to address operational issues emerging from time to time. Further, to enable SHG Members to take up livelihood activities, NABARD has been supporting Micro Enterprise Development Programmes (MEDPs) and Livelihood and Enterprise Development Programmes (LEDPs) for SHGs. NABARD is implementing/supporting implementation of various Schemes announced by Govt. of India viz. Promotion of Women SHGs (WSHGs) in backward and Left Wing Extremism affected districts of Ministry of Finance, National Rural Livelihoods Mission (NRLM) of Ministry of Rural Development.

Financing of Joint Liability Groups (JLGs)

Financing of JLGs was introduced as a pilot project in 2004-05 by NABARD in eight states with the support of 13 RRBs. The scheme was later mainstreamed for the banking system in the year 2006. JLGs are informal groups of four 04 to 10 members who are engaged in similar economic activities and are willing to jointly undertake the liability to repay the loans taken by the Group from the Banks. JLGs basically are Credit groups of small/marginal/tenant farmers/ asset-less poor who do not have proper title of their farmland. Regular savings by the JLG members is purely voluntary and their credit needs are met through loans from financial institutions and such loans could be individual loans or group loans against mutual guarantee.

Apart from extending refinance support of 100 percent to the financing Banks, NABARD also extends financial support for awareness creation and capacity building of all stakeholders under the Scheme. NABARD also extends grant support for formation and nurturing of JLGs to Banks and other JLG Promoting Institutions (JLGPIs

NABFINS Ltd.

NABARD, while promoting NABFINS had envisaged that NABFINS shall evolve into a Model Microfinance Institution to set standards of governance among the MFIs, operate with exemplary levels of transparency and operate at reasonable/moderate rates of interest. It is an NBFC – MFI which commenced its operations in November 2009.

NABARD is the major shareholder in this MFI, others being Government of Karnataka, Canara Bank, Union Bank of India, Bank of Baroda, Federal Bank and Dhanalakshmi Bank. NABFINS extends loans to SHGs through its own trained Business & Development Correspondents (BDCs). NABFINS also extends loans to other second level organisations like the Federations. NABARD is continuing its refinance assistance to NABFINS. Further details regarding NABFINS can be seen from www.nabfins.org

NABFINS was sanctioned a pilot project as JLGPI for promotion and self- financing/ direct credit linkage of JLGs in the States of Chhattisgarh, Madhya Pradesh, Maharashtra and Jharkhand.

Support for training and capacity building of clients

Giving due recognition to training and capacity building of various stakeholders such as bankers, NGOs, Government officials, SHG members and trainers, NABARD has trained 47.33 lakh participants under FIF and 4.90 lakh participants under WSHG Development Fund till 31 March 2023.

Micro Enterprise Development Programme (MEDPs)

NABARD, since 2006, has been supporting need-based skill development programmes (MEDPs) for matured SHGs which already have access to finance from Banks. MEDPs are on-location skill development training programmes which attempt to bridge the skill deficits or facilitate optimisation of production activities already pursued by the SHG members. Grant is provided to eligible training institutions and SHPIs to provide skill development training in farm/off-farm/service sector activities leading to establishment of micro enterprises either on individual basis or on group basis. Cumulatively, 5.85 lakh SHG members have received training through 20,174 MEDPs with total grant support of ₹ 52.39 crore as on March 31, 2023.

Livelihood and Enterprise Development Programmes (LEDPs)

As skill upgradation trainings alone have limited impact on livelihood creation among the SHG members, it was thought prudent to create sustainable livelihoods among SHG members and to attain optimum benefit out of skill upgradation. Thus, a new scheme titled Livelihood and Enterprise Development Programme (LEDP) was launched in December 2015. It envisages conduct of livelihood promotion programmes in clusters. There is provision for intensive training for skill building, refresher training, backward-forward linkages and handholding as well as escort supports. It also encompasses the complete value chain and offers end-to-end solution to SHG members. It is to be implemented on a project basis covering 15 to 30 SHGs in a cluster of contiguous villages where from SHG members may be selected.

The skill upgradation training is provided in batches of 25-30 members and covers agri and allied activities as well as rural off-farm sector activities. LEDP will not only facilitate promotion of sustainable livelihoods but also derive full advantage from promotional assistance. NABARD will provide grant support for skill upgradation programmes, establishment of demonstration unit and need-based critical infrastructure. LEDP has been mainstreamed in May 2017. Cumulatively, 2.67 lakh SHG members have been supported through 2149 LEDPs as on March 31, 2023 with a total grant support of ₹ 106.10 crore.

Pan India LEDP TO NABFOUNDATION

A unique Pan India LEDP "MY PAD MY RIGHT" covering 35 districts was launched on the International Day for Rural Women i.e. 15 October 2020, through NABFOUNDATION. The project was launched by Smt. Smriti Irani, Hon’ble Minister for Women and Child Development and Textiles. Padmashri Shri. Arunachalam Muruganantham, who has designed the award winning low cost pad making machine is the Technical Partner for the project.

Under this project, LEDP channel is used to provide livelihood opportunities to SHGs through sanitary pad making machine with the required training skills for producing and marketing the pads. Apart from generating livelihood for the concerned SHGs, project aims to improve the menstrual hygiene accessibility for women in rural India. A total of 2038 villages have been covered under the project, with around 7,204 pads distributed free of cost.

Revision in JLG and MEDP/ LEDP guidelines

With a view to make enterprise and livelihood programmes more effective, MCID-NABARD updated the guidelines under MEDP and LEDP. The programmes now includes JLG members as participants, provision of daily stipend to participants, additional training on market linkages, e-marketing, branding and packaging, demonstration unit and issuance of Training Certificates for enabling participants to obtain Bank loan to set up enterprises. The grant assistance has been enhanced for MEDPs budget from ₹ 1.00 lakh to ₹ 1.50 lakh for MEDP. Further, two models under LEDP have been introduced i.e. Model I for participants upto 120 (Farm Sector) and participants upto 90 (Off Farm Sector), Model II for participants upto 60 (Farm & Off Farm Sector). Following is the respective increase in LEDP budgets:

Farm Sector	Model I (60 to 120 participants)	₹ 9.60 lakh
Farm Sector	Model II (30 to 60 participants)	₹ 4.86 lakh
Off Farm Sector	Model I (60 to 90 participants)	₹ 10.80 lakh
Off Farm Sector	Model II (30 to 60 participants)	₹ 7.00 lakh

Pilot projects for Entrepreneurship Development

NABARD continues its endeavour to develop micro-enterprise models for SHG/ JLG members. During 2021-22, two pilot projects, with the objective of providing end-to-end solution to women SHG members to become entrepreneurs by identifying skill sets, capacity building, enabling & facilitating credit and market linkages, were sanctioned to Friends of Women’s World Banking, India (FWWB) & Arthimpact Welfare Foundation, respectively.

The pilot project on ‘Nurturing Women’s Livelihoods and Entrepreneurship’ was sanctioned to FWWB in 2021-22 with a financial assistance of ₹ 65.42 lakh. It is being implemented in 9 districts of 3 states, viz., Gujarat, Nagaland and Manipur including 3 Aspirational and 5 WSHG districts for promoting micro-enterprises by 800 rural women, of which, 400 enterprises were to be linked with credit. Enhancement in family income by 25% was anticipated under the project. As on 31 March 2023, 842 beneficiaries across the 3 States were imparted training in various skills, viz., bamboo craft, baking, pickle/jam/papad making, fruit processing, tailoring, etc. Of these, 570 trainees have also been credit linked.

Another pilot “Micro Enterprise Development model” is being implemented in 3 districts of Uttar Pradesh viz., Lucknow, Raebareli and Ayodhya for promotion of micro enterprises of 500 women SHG members. The total number of beneficiaries trained by this project is 251 (139 in Lucknow, 50 in Raebareilly and 72 in Ayodhya). The training is provided through renowned Resource Agencies viz., Chikankari – NIFT, Beauty Parlour/Saloon- VLCC, Food Karts – Swiggy, Financial Inclusion Sakhis – Microsave Consulting, E-Rickshaw – Azad Foundation. As on 31 March 2023, a total of 1018 SHG/JLG members have been covered under the project out of which 144 participants have successfully completed the training programme and 156 women have adopted livelihood activities post training.

Scheme for promotion of Women SHGs (WSHGs) in backward and LWE districts of India

Subsequent to the announcement made by the Hon’ble Finance Minister in the Union Budget 2011-12, a scheme for promotion and financing of Women Self Help Groups (WSHGs) in association with Govt. of India is being implemented across 150 backward and Left Wing Extremism (LWE) affected districts of the country since March-April 2012. The scheme aims at saturating the districts with viable and self-sustainable WSHGs by involving anchor agencies who shall promote and facilitate credit linkage of these groups with Banks, provide continuous handholding support, enable their journey to livelihoods and also take the responsibility for loan repayments. Under the Scheme, in addition to working as an SHPI, the anchor agencies are also expected to serve as banking / business facilitator for the nodal implementing banks.

To facilitate implementation of the Scheme, an exclusive fund viz. ‘Women SHG Development Fund’ was set up by Dept. of Financial Services, Ministry of Finance, Govt. of India in NABARD with a stated corpus of Rs 500 Crore Grant support @ Rs 10,000/- per SHG to the Anchor agencies. The cost of publicity, training and other capacity building initiatives is met out of this fund.

As on March 31, 2023, the total number of WSHGs promoted and credit linked are 2.11 lakh and 1.29 lakh respectively.

Support for activities, introduced in the Financial Year 2020-21, like Gram Dukan, funding of impact assessment studies, films, exposure visits, publications, exhibition, melas, promotion of tie–ups for marketing etc. improved off-take from ₹ 725.42 lakh in 2019-20 to ₹ 1066.01 lakh in 2022-23

Collaboration with other Stakeholders

NABARD continues close coordination with all stakeholders in SHG BLP sector. Coordinated efforts like conduct of National-level seminars and workshops, mutual dialogues and capacity building of stakeholders on SHG-BLP have now become very regular.

Conduct of Village Level Programmes (VLPs)

With a view to foster better understanding of mutual requirements between banks, SHGs & SHPIs and to sort out issues like credit linkage and repayment etc. at ground level, Village Level Programmes (VLPs) are being conducted with the support of banks and NRLM. These VLPs sponsored by NABARD are also helping in opening of SHG accounts, their credit linkage and regular loan repayments. A total of 27,589 Village Level Programmes covering 5.52 lakh participants were sponsored during 2022-23 taking the cumulative number of VLPs and beneficiaries covered to 50,563 and 16.79 lakh, respectively.

Status of Studies conducted by MCID

NABARD, since inception, has been giving emphasis on research and development and studies in various fields to acquire new insights into the issues of farm and non-farm sectors, so that the findings can be used for formation of new policies, innovative products and approaches for further development in the sectors. The studies conducted can be broadly grouped into three sub-heads, viz., LEDP, MEDP & WSHG related, apart from studies undertaken by CRFIM with support from NABARD.

Following studies were conducted during the FY2022-23:

Impact Assessment Study of 03 MEDPs conducted by Rajasthan RO through NABCONS
Study on ‘Analysing Micro Enterprises financed by Public Sector Banks (with SHG linkages), SFBs and MFIs’ in 04 states viz. Uttar Pradesh, Tamil Nadu, Karnataka and Maharashtra by CRFIM
Study on ‘One Decade of MFI Crisis: Revisiting Rural Credit Market in Andhra Pradesh and’Telangana jointly conducted by CRFIM and LEAD at Krea University (Formerly IFMR LEAD).

New Initiatives

1) A scheme for provision of Grant Support to SHGs/ JLGs/Producer Organizations(POs)/Microentrepreneurs for training, onboarding and marketing of products on online/digital marketplaces on E-commerce, social media platforms and ONDC was launched in 2023. The programme is envisaged in two parts

Part I: Support for training /capacity building on E-commerce, social media platforms and ONDC for SHGs/ JLGs/ Producer Organisations/ Microentrepreneurs and
Part II: Support for onboarding of SHG/ JLG/ Producer Organisations/ Microentrepreneurs products onto E-commerce, social media platforms and ONDC.

2) Scheme for Grant Support to SHGs/JLGs/Producer Organisations for Physical Marketing of Products

The scope & objective of this Scheme is to support various physical marketing interventions for SHG/ JLG products, in rural, semi-urban & urban centres to maximize access to markets.
If SHGs /JLGs/ POs and their members are to run viable independent businesses, market access and price discovery is to be enabled. One of the barriers in commanding remunerative prices for their products is that while the production process is in the rural areas, the final consumer is in the semi-urban & urban areas. The SHGs/ JLGs are unable to bridge this gap, as they do not have the necessary product volume, physical access and capital to gain a hold in the urban markets. As SHG members are primarily women, it is all the more difficult for them to access final consumer/ market and get a fair share of the Consumer Rupee
To expand market access and bridge the gap between rural producers and urban markets, efforts need to be made to bring the markets closer to the producers. For SHGs, the major channels for selling the products remain traders, local haats, fairs/ exhibitions, rural marts, buyer tie-up by NGOs, etc., which are limited and seasonal. Therefore, efforts need to be made to facilitate access to urban markets and newer avenue of physical markets including those in rural areas. This would include support for marketing of products of SHGs/JLGs by way of support for shops, kiosks/ stalls, push carts, etc.

3) Pilot project: Microenterprises through Skill Upgradation for Women (m-Suwidha)

As the SHG movement grew and groups started using some of their credit for productive purposes, NABARD launched dedicated programmes in the form of MEDP and LEDP to graduate SHG members as micro-entrepreneurs. However, with the changing market dynamics and the felt need for higher credit dose & government call of ‘Vocal for Local’, NABARD has come out with a new scheme namely ‘Microenterprises through Skill Upgradation for Women’ (m-Suwidha)
The objective is to enhance the income levels of SHG/JLG members, build the capacities of SHG/JLG members, business development & marketing and facilitating the Resource Agencies/Knowledge Partners for imparting skills & training, marketing linkages and business tie-up arrangements.

SHG Films

MCID has been bringing out films on a regular basis to disseminate the progress achieved by rural women entrepreneurs, who got assistance from NABARD.

Some important films that highlight the concepts and successes of SHGs are listed below: