Promoting Financial Inclusion - United Nations Development ...

mutual funds and pension funds. Achieving
a higher level of financial savings also
requires a benign inflationary environment
since high inflation rapidly reduces the
value of money and undermines individuals’
incentive to save.
The analysis of bank deposit accounts
by region in Figure 3.3 shows a substantial
increase in coverage of the adult population
in all regions. The coverage through deposit
accounts is more than 75% in all regions
except the Northeast and East.Though the
increase in the all India figure from 57.1%
to 86.2% is encouraging, the likelihood
of there being multiple accounts for an
individual is substantially higher for deposit
accounts than it is for credit accounts. This
makes it difficult to correlate the level
of penetration of banks through deposit
accounts to increased financial inclusion.
3.4 COVERAGE THROUGH
MICROFINANCE
The microfinance sector in India, is
considered to be one of the main contributors
to financial inclusion in the country.
There are two major models for delivery
of microfinance services – the SHG Bank
Linkage Programme (SBLP) and the MFI
model.Under the SBLP model, NABARD
has been refinancing bank loans to SHGs
through commercial banks but the credit
risk is carried by the banks. The MFI model
uses a variety of methodologies ranging
from the very popular SHG methodology
traditionally pursued in the country to
Grameen and joint liability groups, as well as
individual banking arrangements. The MFIs
use external borrowings from commercial
sources (apex financial institutions including
NABARD and SIDBI, commercial banks
and other financial institutions) and their
own equity in on-lending to their microborrowers.
OUTREACH OF SBLP
The SBLP in India has emerged as the largest
microfinance programme in the world with
an apparent coverage of 89 million low
income households through 6.81 million
SHGs on March 31, 2010. Table 3.4 below
summarizes the progress of SBLP since
2006–7. M-CRIL estimates that the actual
outreach (of unique households not covered
by the MFI model) of SBLP is around 50
million households on March 31, 2010.
TABLE 3.4 Progress of SBLP.
Year
Reported – No. of SHGs
(million)
Estimated^ (million) M-CRIL estimate # of
Savings Bank loan O/s No. of No. of No. of households
linked (year-end) members Borrowers covered (crore)
2006–07 4.16 2.89 58 41 34
2007–08 5.01 3.63 70 51 42
2008–09 6.12 4.22 86 59 47
2009–10 6.81 4.58 89 64 50
NABARD, 2008-9. ‘Status of Microfinance in India’.
^ NABARD has assumed an average group size of 14 members; Since all SHGs are required to have a bank
savings account and save regularly to become eligible for credit, it is assumed that all SHG members are also
savers. It is also assumed that all members of credit linked SHGs are borrowers.
#
The estimation is based on the no. of borrowers of SBLP. It is assumed that SHG members who are
saving but not accessing credit may be accessing credit from MFIs. Srinivasan N., SOS 2010 refers to a CMF
study in AP which indicates 13% of the SHG members had loans from MFIs. For estimation, M-CRIL has
assumed that there would be around 40% overlap with the MFI model (meaning that 40% of SHG borrowers also
take credit from MFIs). This analysis assumes that the average number of members per SHG is 13 as indicated by
research studies (NCAER, 2008; EDA/APMAS 2006).
10 PROMOTING FINANCIAL INCLUSION