Rangarajan’s Committee on Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.Rangarajan’s Committee on Financial inclusion may be defined as the process of ensuring access to financial services and timely and adequate credit where needed by vulnerable groups such as weaker sections and low income groups at an affordable cost.” With a view to reach financial inclusion to the poor and rural mass in this country the government of India identified the financial inclusion is a strategy to achieve the inclusive growth provided and it is supported by various factors like real initiatives from Banks and Financial Institutions, technological development, financial literacy and so on. Amongst various measures to fight this menace, micro finance practices in India seem to provide a solution. The SHG – Bank Linkage programme had proved its efficiency as a main stream programme for Banking and emerged as one of the need based policies and programmes to cater the neglected groups of society such as woman, poor and deprived sections of rural areas. Several studies made by national and international experts on micro finance have found the SHG profitable, viable and as a successful tool or social empowerment and also no bank has reported any NPA under the SHG Bank linkage. The beautiful advantages of the programme are on time repayment of loans to banks, reduction in transaction cost to the poor and to the banks , door – step savings and credit facilities to the poor and exploitation of the untapped business potential in rural India. The programmed started as an outreach programme has in fact, achieved more than mere provision of thrift and credit facilities to the poor women. The government of India and State governments can play vital roles in encouraging SHGs. They should formulate and redefine their strategies and policies such a way to stress on extensive awareness campaign, skill development and training programmes, co – ordination between banks and SHGs, effective flow of credit need for strong follow – up in those states where it is yet at nascent stage. It is also necessary to develop a sound and transparent regulatory structure for micro finance institutions for healthy growth of the sector along with supportive refinance and legal.
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