Performance of Microfinance NGOs As Facilitators In The Formation Development and Credit Delivery Towards SHGs A Study In The Select Southern Districts of Tamilnadu

Abstract

In spite of having diversified regional development with different languages and communities in a vibrant democratic administrative framework, India has made remarkable progress in recent years on a scale, size and place that is unprecedented in its own history. India, with all the resources to its credit, has a population of the 121 crore with 83.3 crore living in rural areas while 37.7 crore live in urban areas. It was estimated that about 33.8 per cent of rural population and 20.9 per cent of urban population live below the poverty. The rural development and the alleviation of poverty are the two major goals of the developing nations, like India. Micro finance is expected to play a pivotal role in poverty eradication besides income and employment generation. In order to reduce poverty, the NGOs and the Central as well as State Governments initiated a number of programmes to raise the overall economic development. However, in programmes with temporary employment can also lead to sustainable development if the resultant income could be deployed in profitable activity through Self Help Groups (SHGs). Since poverty reduction on a permanent basis requires a sustainable income stream, it is worth initiating scheme with such end results. The poverty alleviation programmes target the people living below poverty line or just above poverty line through SHG units that are given loans without any mortgage at a reasonably lower interest rate. SHG-Bank Linkage Programme was designed as partnership model between three agencies namely SHGs, banks and NGOs. Thus, the formal financial institutions in India along with NGOs have ventured into micro finance in the massive way by adopting the SHG-Bank Linkage Programme. In India, three types of SHG models have emerged in the credit delivery to the poor. The following are the models: Model I: Bank SHG Members: In this model, SHG are promoted and financed by the banks. Model II: Bank NGO (Facilitating) SHG Members: