Different Models of Microfinance in India NABARD publishes its annual report on microfinance.

In the report, two models of microfinance are involved for credit linkage with banks viz; SHG - Bank Linkage Model and MFI - Bank Linkage Model. There are some other models related to SHGs, which are described here.

1. SHG - Bank Linkage Model: This model involves the SHGs financed directly by the banking agencies viz. Commercial Banks (Public Sector and Private Sector), Regional Rural Banks (RRBs) and Co-operative Banks. In this model, three bodies are working viz; members, SHG and Bank. On the one hand, the saving of the members goes to SHGs which, in turn, credit their savings to them at rates decided by members. On the other hand, these savings are deposited in banks in the name of group where bank credit at the rates decided by the bank. 2. SHG-NGO Model: Here, NGOs (Non-government Organizations) are introduced besides SHG, its members and banks. Members saving go to group and in turn, group also lends to the members. At the same time, SHG saving are deposited in bank and bank lends to the group. These all activities are supported and linked by NGO. They actually provide their services to the both, bank as well as SHG. Thus, NGOs plays the role of promoter and supporter for the bank and group. 3. MFI - Bank Linkage Model: This model covers financing of Micro Finance Institutions [(MFIs, that may be an NGO] by banking agencies for on-lending to SHGs and others small borrowers covered under microfinance sector. Member saves in a group and these saving are deposited in Banks directly but banks, in turn, credit the SHGs indirectly. They provide credit (may be in grant form) to NGOs and NGOs lend directly to the members and also tries to provide raw material or job work. Thus, NGOs are playing the role of creditor and facilitator. A good example of this type of model can be Bank of Baroda -SEWA, Lucknow. 4. SGSY Model: The most important feature of this model is the addition of Monitoring authority that is District Rural Development Authority (DRDA). It monitors for all the five like, Members, Group, Bank, Department and NGO. Processing of the model is like this, members saves and submitted their savings in the name of a Group then Group deposits this amount of

saving to banks where banks, in turn, lends to the group directly. Here NGO and concerned department associated with SHG, Bank and DRDA and Members, DRDA and Banks respectively with their promotional and support services.