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 DAYNRLM be expanded. Simultaneously, efforts must be made to expand the alternative model of SHGs, the MFI-Bank Linkage Model, for expanding SHG coverage.