Microfinance through the Self Help Group-Bank Linkage Programme: impact on ancillary employment

The individual-level benefits of the Self Help Group-Bank Linkage Programme (SHG-BLP) in India are well-documented. However, the impact on the formal labor market of establishing, facilitating, and managing SHG-BLPs remains understudied. We address this gap by documenting employment created through SHG-BLPs in Karnataka, India. Data collected from in-depth interviews with promoting institutions show that SHG-BLPs create formal employment, with approximately five individuals employed per 100 SHGs, accounting for 3.8 FTEEs. Given the prevalence of SHGs, findings suggest that many individuals, mainly in rural areas, have entered the formal labor market, representing a critical yet understudied benefit of the SHG-BLP model.