‘Micro-Finance as an anti-poverty vaccine, is aimed at asset creation and income security of the rural poor in India.’ Evaluate the role of the Self Help Groups in achieving the twin objectives along with empowering women in rural India.

Microfinance generally refers to the provision of basic financial services such as loans, saving accounts and insurances for low-income but economically active people. Self Help group helps in income security of rural poor through Self-help group Microfinance Model. 

Asset Creation:

● SHGs are linked to banks first with a group deposit account, then for credit, which is disbursed to the group and in turn distributed to the members.

● SHGs are thus seen to confer many benefits, both economic and social, providing new and real opportunities for rural women.

● SHGs enable women to grow their savings and to access the credit which banks are increasingly willing (or directed) to lend.

However, SHG Microfinance model are not free from challenges:

1. Stringent repayment schedule offered by most microcredit institutions.

2. Institutions offering microcredit are unable to judge the risk associated with lending to certain borrowers.

3. Higher rates of Interest

4. Over-dependence on banking sector

5. Lack of awareness of financial services

Suggestions:

● Increased enablement of cash-in, cash-out points in remote areas using biometric authentication.

● Growth in digital transaction infrastructure with new age banks and UPI will all be key drivers of change.

● Operating cost optimisation through IT enablement

● MFIs have to focus on effective cash flow management which would reduce unnecessary blockage of cash. 

The SHG bank-linkage programme has helped in women empowerment by raising their economic capacity, but SHG Microfinance model needs a reform to sustain the progress made and to achieve more.