Based on the recommendations of S.K. Kalia Committee, NABARD launched the SHG-Bank linkage programme in 1992 to link the unorganised sector with the formal banking sector.
Under this programme, banks were allowed to open savings accounts for Self-Help Groups (SHGs).
Banks provide loans to the SHGs against group guarantee and the quantum of loan could be several times the deposits placed by such SHGs with the banks.
Later, RBI declared the SHG-BLP as a priority sector lending activity in April 1996.
