Bridging Horizons: Exploring Digital Banking Dynamics in Rural India's Self-Help Group Landscape

1. Introduction

Basically, SHGs are comprised of individuals who come together in small groups to address common issues (Katz & Bender, 1976). As per a world bank report “The SHGs has emerged as a crucial factor during India's initial days of lockdown aimed at curbing the spread of the coronavirus, which affected a staggering 1.3 billion individuals” (Bhanot & Bapat, 2020). If we look at the history, during the last twenty years of its involvement, the Bank has witnessed the development of India's SHG movement. This movement has progressed from modest savings and credit groups aimed at empowering impoverished people, into one of the most substantial institutional frameworks for the economically disadvantaged individuals (Tankha, 2012). SHGs have played a comprehensive role in tackling the economic and social demands arising from the Covid-19 pandemic at the community level. SHGs have collaborated to address concerns such as maintaining social distancing, wearing masks, quarantining, addressing the psycho-social requirements of migrants, caring for elderly members of society, and supporting mental health and wellness, among other issues (Parida & Sinha, 2010). Furthermore, it is commonly understood that the term “self-help group” encompasses a variety of organizational structures, such as networks, non-profit organizations, computer bulletin boards, and even informally organized groups. Self-help agencies in which individuals with personal experience provide services to their peers in exchange for payment are considered distinct from SHGs. However, self-care or “do-it-alone” efforts are not included in the definition of self-help groups.

Over the past five years in India, there has been a growing recognition of the crucial role that strong community networks in rural villages play in establishing credit links in those areas. There is evidence, both in India and other areas, that the creation of Self-Help Groups has a multiplying effect on elevating people's social standing within both society and the family (Sinha et al., 2012). This results in a betterment of their socio-economic situation and an increase in their self-esteem. This has also become crucial because a majority of the individuals who benefit from government programs belong to marginalized and disadvantaged communities. Therefore, their involvement in Self-Help Groups ensures social justice. Presently, banks are motivated to lend to Self-Help Groups due to Priority Sector Lending regulations and guarantees of returns. The SHG-Bank linkage program, pioneered by NABARD India, has facilitated access to credit and decreased reliance on conventional moneylenders and other non-institutional sources (Sinha et al., 2012). However, it is notable that a significant proportion of Self-Help Groups are unable to capitalize on recent technology breakthroughs and obtain new skills. The aforementioned issue might be attributed to a lack of knowledge of new technologies and a dearth of requisite competencies for their effective use. Furthermore, there is a scarcity of efficient procedures to assist the implementation of novel technology. There is some empirical evidence that shows the revenues generated by certain units are not sufficiently reinvested inside these units. Instead, these funds are diverted for personal and household purposes, such as weddings or building homes. Earlier research suggests that in most Self-Help Groups, the digital financial assistance provided by the relevant agencies is inadequate to meet their actual requirements. Furthermore, financial authorities are not offering adequate support to encourage the use of digital banking among SHGs.