EMPOWERING COMMUNITIES: THE ROLE OF MICROFINANCE INSTITUTIONS AND SHGS

Abstract

Microfinance institutions (MFIs) and Self-Help Groups (SHGs) have emerged as engines of financial inclusion, bridging the gap between marginalized communities and formal banking systems. By empowering individuals, particularly women, to access credit and build sustainable livelihoods, these entities foster socio-economic development and alleviate poverty at the grassroots level. This study examines the impact of MFIs in India, focusing on Telangana, highlighting their role in providing formal credit to disadvantaged communities. An analysis of data from 2009-10 to 2022-23 reveals a consistent upward trend in loan disbursements to SHGs, fueled by government initiatives and NABARD's efforts. Women-centric SHGs showed remarkable progress in savings and loan utilization, emphasizing their pivotal role in rural economic stability and gender equity. The findings underscore the contributions of MFIs in socio-economic development, with recommendations for policy-driven innovation to address challenges and maximize impact.