Microfinance through the Self Help Group-Bank Linkage Programme: impact on ancillary employment

ABSTRACT

The individual-level benefits of the Self Help Group-Bank Linkage Programme (SHG-BLP) in India are well-documented. However, the impact on the formal labor market of establishing, facilitating, and managing SHG-BLPs remains understudied. We address this gap by documenting employment created through SHG-BLPs in Karnataka, India. Data collected from in-depth interviews with promoting institutions show that SHG-BLPs create formal employment, with approximately five individuals employed per 100 SHGs, accounting for 3.8 FTEEs. Given the prevalence of SHGs, findings suggest that many individuals, mainly in rural areas, have entered the formal labor market, representing a critical yet understudied benefit of the SHG-BLP model.

RÉSUMÉ

Les bénéfices individuels du Self Help Group-Bank Linkage Programme (SHG-BLP) en Inde ont déjà été établis. Cependant, l’impact de la création, de la promotion et de la gestion des SHG-BLP sur le marché du travail officiel demeure un sujet de recherche encore peu développé. Nous contribuons à ce domaine de recherche en offrant une étude des emplois générés par les SHG-BLP à Karnataka, en Inde. Nos données, recueillies lors d’entretiens approfondis auprès d’institutions qui les parrainent, montrent que les SHG-BLP génèrent des emplois formels: environ cinq individus sont employés pour 100 SHG, ce qui représente 3.8 FTEE. Compte tenu de la prédominance des SHG, nos résultats suggèrent que bon nombre d’individus, principalement dans les zones rurales, ont intégré le marché du travail officiel – ce qui représente un avantage critique mais encore trop peu étudié du modèle des SHG-BLP.

KEYWORDS:

• Self Help Group-Bank Linkage Programme
• rural employment
• microfinance
• Karnataka
• India

Acknowledgments

We are grateful to the Global Engagement Fund at the University of Pennsylvania for the financial support we received to carry out this research. In addition, we are thankful to Dr. D V. Heggade, Dr. M. N. Rajendra Kumar, Mrs. Mamatha Harish, and Prof. M.S. Moodithaya for their ongoing support and help. We acknowledge and thank the many bank, government, and NGO employees we contacted for our data.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1 In 1995, the Indian government, recognizing the need for rural employment, instituted one of the largest employment generation programs - the National Rural Employment Generation Scheme – which provides 100 days of guaranteed wage employment for all adult employment seekers (Marcesse 2018).

2 The SHGS are not exclusively women; however, the large majority of SHGs (85%) are exclusively women, according to NABARD (2020).

Additional information

Funding

This work was supported by Global Engagement Fund, University of Pennsylvania.

Notes on contributors

Allison Russell

Allison R. Russell is an Assistant Professor of Public and Nonprofit Management at the University of Texas at Dallas. Her research focuses on the nonprofit and voluntary sectors, including volunteering and volunteer management, ethical decision-making in organizations, organizational responses to crisis and change, and global civil society.

Vinod Dixit

Vinod Dixit founded Shrillions Consultancy Services in 2013, catering to human resources and portfolio management. He is a visiting faculty member teaching courses in financial management at several universities in India, including Justice K S Hegde Institute of Management, Nitte, in their MBA Program. He has researched microfinance and rural employment for the National Bank for Agriculture and Rural Development (NABARD) and coordinated financial literacy programs for the Indian Overseas Bank.

Femida Handy

Femida Handy is a Professor of Nonprofit Leadership at the School of Social Policy and Practice at the University of Pennsylvania. Her work encompasses the economics of the nonprofit sector, volunteering, philanthropy, nonprofit management, environmental issues, and entrepreneurship.