Ideological schisms in Indian microfinance have often been interpreted at the level of practice through the adoption of different delivery models including the community empowering Self Help Group (SHG) model and the financially efficient...
moreIdeological schisms in Indian microfinance have often been interpreted at the level of practice through the adoption of different delivery models including the community empowering Self Help Group (SHG) model and the financially efficient Joint Liability Group (JLG) model. While the SHG is a savings- led slow growth model and unique to India, JLG is a credit-led fast growth model, loosely based on the Grameen model of Bangladesh. The article strives to develop a comparison between the two models along several parameters. The paper argues that both models have their advantages depending upon external factors like competition, homogeneity within the population, among other things. Both models live up to their optimum promise when in alignment with organisational features like culture and its strength, leadership, etc. In a country like India afflicted by a range of external factors from predominantly socially-driven and stratified social structures in rural areas to the financially-driven urban poor population, with the majority living below the poverty line to a substantial mass living just above it, there is a requirement for both models depending upon the diversity of the target population and characteristics of the implementing microfinance organisation, in order to maximise the impact of microfinance.
