Do SHPIs play a role in credit access among SHGs? Experiences from the SHG–Bank Linkage Programme VEERASHEKHARAPPA
Despite the vast expansion of the formal credit system in India, the dependence of the rural poor on informal credit institutions continues in some areas, especially for meeting the emergent credit requirements. Such dependence is pronounced in the case of most vulnerable sections, particularly in the resource-poor areas. As the credit needs of these sections are determined in a complex socioeconomic milieu, it is diffi cult to adopt a project-lending approach as followed by banks, and the dividing line between credit for ‘consumption’ and ‘productive’ purposes is blurred. It is in this context that people’s participation in development process assumes signifi cance. The participatory approach brings out the mutual trust and overcomes the asymmetric information between the members, which is necessary for initiating banking relationship based on trust and confi dence.