Self help groups, microfinance, financial inclusion and social exclusion: Insight from Assam

In order to link the unorganised with the formal financial sector in India, the National Bank for Agriculture and Rural Development (NABARD) introduced the Self-Help Group Bank Linkage Programme (SHG-BLP) as a trial initiative in 1992 and mainstreamed it in 1996. Microfinance services are available in Assam through SHG-BLPs registered with the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission (DAY-NRLM). In central Assam, there are the most active SHG-BLP units. In light of this, the present study aims to explore contribution of SHG-BLP in financial along with the social inclusion of the marginalised rural people of central Assam. The impact of SHG-BLP is facilitated by the application of the propensity score matching method. The empirical results show that the SHG-BLP considerably reduces social exclusion among participants relative to their non-participant counterparts and ensures financial inclusion too. Based on this empirical finding, the study recommends that the coverage of SHG registration under DAY-NRLM be expanded. Simultaneously, efforts must be made to expand the alternative model of SHGs, the MFI-Bank Linkage Model, for expanding SHG coverage.