In India micro credit groups are being recognized by the Government as an effective tool for achieving the distributional objectives of monetary policy. In the recent period, considerable emphasis has been placed on promotion of micro credit enterprises in view of perceived inadequacies of existing agencies in providing productive credit to those with little or no previous access to formal credit facilities. In a country like India, where almost 70% of the population is in rural areas, with little or no access to mainstream financing options, SHGs has a large role to play and a huge population to uplift. Micro credit, thus simply brings SHGs and offer best form of credit for reaching the unreached and under reached.

The SHG-Bank Linkage Programme has made considerable progress since its inception in the early 1990s, both in terms of the number of SHGs credit linked with banks as also the bank loans disbursed to SHGs. The purpose of this paper is to analyze the progress attained by banks in financing these SHGs in the recent past. After highlighting the need for SHGs, their objectives and features, performance of micro credit institutions in terms of number of SHGs financed, extent of credit provided and the status of recovery are analyzed in this paper.