S.K. Kalia Committee

The Reserve Bank of India (RBI) in November 1994 constituted a working group comprising eminent NGO functionaries, academicians, consultants and bankers under the Chairmanship of Shri S.K. Kalia, the then Managing Director, NABARD to study the functioning of SHGs and NGOs for expanding their activities and deepening their role in rural development.

The Working Group held the following view: The linking of SHGs with the banks is a cost effective, transparent and flexible approach to improve the accessibility of credit from the formal banking system to the rural poor.

• SHGs can offer much needed solution to the twin problems being faced by the banks, viz recovery of loans in the rural areas and the high transaction cost in dealing with small borrowers at frequent intervals.