SHG-BANK LINKAGE: AN INSTRUMENT FOR RURAL DEVELOPMENT AND FINANCIAL INCLUSION

Abstract

The Indian banking sector today is grappling with the issue of financial inclusion. Financial inclusion is defined as the process of ensuring access to timely and adequate credit and financial services by vulnerable groups at an affordable cost (Kamath, 2007). Financial inclusion was envisaged and embedded in Indian credit policies in the earlier decades also, though in a disguised form and without the same nomenclature (Rao, 2007) and emphasis. Increasing access to credit for the poor has always remained at the core of Indian planning in fighting against the poverty. Starting in the late 1960s, India was home to one of the largest state interventions in the rural credit market (Khandelwal, 2007).