NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

KOLKATA: Call it a business with a good cause. A strong but silent social revolution is taking place beyond urban borders. Surpassing all targets, an overwhelming number of 18 lakh credit-linked ?self help groups? (SHGs), being predominantly women-oriented, are working wonders in rural areas and in managing micro finance matters.

Cumulative bank lendings to SHGs have grown to almost Rs 8,000 crore till November 2005.

The southern states of Andhra Pradesh, Tamil Nadu and Karnataka have recorded the largest number of SHGs. Orissa follows close behind.

Interestingly, while public sector banks, regional rural banks and cooperative banks provide maximum loans to SHGs, private sector banks have begun assisting SHGs with credit facilities in recent times. And, recovery levels have by far been the highest from these SHGs, who are otherwise denied of banking facilities.

National Bank for Agriculture and Rural Development (Nabard) spearheading all micro finance projects has, in fact, asked banks to lend more to these groups. ?For banks, the amount may be small in their entire loan portfolio, but these people can be customers of the future,? Muralidhara Rao, general manager, Nabard told DNA.

As part of its exercise in bringing more people under micro finance, Nabard has initiated involving rural volunteers to help in creating different SHGs. While the numbers in the southern states have been the highest, Nabard is working on measures to step up activities in the northern and eastern states.

?Some states like West Bengal have the highest share of credit coming from state and district central cooperative banks. The growth in credit-linked SHGs have grown very fast and has led to them to be credit worthy,? Rao said.

Perhaps the greatest benefit comes in the form of social change. ?There are distinctly less instances of school dropouts, alcohol drinkers, domestic abuse and harassment in a family. Moreover, with access to bank finance, dependence on money lenders is minimal,? said Ganesh Tawte, CGM, Nabard.

According to Tawte, the financial discipline among the SHGs has been very high. ?The moral strength, confidence and empowerment levels are definitely higher among women who have become confident decision makers, investors and mentors for their families,? he said.